Wednesday, October 23, 2013

Faber: Fed could up QE to $1 trillion a month

Marc Faber, publisher of The Gloom, Boom & Doom Report, told CNBC on Monday that investors are asking the wrong question about when the Federal Reserve will taper its massive bond-buying program. They should be asking when the central bank will be increasing it, he argued.

"The question is not tapering. The question is at what point will they increase the asset purchases to say $150 [billion] , $200 [billion], a trillion dollars a month," Faber said in a " Squawk Box " interview.

The Fed-which is currently buying $85 billion worth of bonds every month-will hold its October meeting next week to deliberate the future of its asset purchases known as quantitative easing . (more)

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This Year's Best Timing Indicator Now Says "Sell"

The stock market is overbought and primed to reverse lower... according to one of this year's most accurate market timing indicators.
The NYSE McClellan Oscillator (NYMO) is a measure of overbought and oversold conditions in the stock market. And its performance has been outstanding this year. We've used the NYMO to trigger several profitable short-term trades.
And right now, it's triggering another one...
The NYMO warned us stocks were overbought in mid-July and mid-September. That gave aggressive traders the chance to profit from a couple short trades as the S&P 500 fell more than 60 points within just a few weeks of each trigger.
The NYMO also warned us when stocks were oversold and primed for a rally.
We got "buy" signals in early June and late August. Each of these signals led to big rallies and profits for traders who jumped onboard.
Just two weeks ago, the NYMO triggered another "buy" signal. And the S&P 500 is up nearly 100 points since then.
There's no doubt that the NYSE McClellan Oscillator has been one of the best timing indicators of the year. So it pays to follow it. And right now, this indicator says it's time to sell. Take a look...
nymo overbought oversold graph
This year, the NYMO has reached oversold levels when it dropped below -60. It was overbought when it rallied above 60. In each of these cases, the stock market reversed almost immediately. Traders who bet on a reversal made fast profits.
Today, with the S&P 500 trading at all-time highs, the NYSE McClellan Oscillator is back in overbought territory. So traders should be on the lookout for a reversal and a chance to profit on a short-term decline in the market.
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General Motors Company (NYSE: GM)

General Motors Company (GM) designs, manufactures, and markets cars, crossovers, trucks, and automobile parts worldwide. The company markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Opel, Holden, and Vauxhall brand names, as well as under the Alpheon, Jiefang, Baojun, and Wuling brand names. It also sells cars and trucks to dealers for consumer retail sales, as well as to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies, and governments. In addition, the company offers connected safety, security and mobility solutions, and information technology services. The company, through its subsidiary, General Motors Financial Company, Inc. provides automotive financing services and lease products through GM dealerships in connection with the sale of used and new automobiles that target customers with sub-prime and prime credit bureau scores. The company was founded in 1908 and is based in Detroit, Michigan.
To review potential trading opportunities with GM's stock, please take a look at the 1-year chart of GM (General Motors Company) below with my added notations:
Possible double top for GM GM may have formed a double top price pattern (red) over the last 4 months. Double tops are reversal patterns and are as simple as they sound: Rallying up to a point (T), selling off to a support, and then rallying back up again to approximately the same top (T). As with any price pattern, a confirmation of the pattern is needed. GM would confirm its pattern by breaking below the $34 support (blue) that has been created by the double top pattern.

The Tale of the Tape: GM may have double topped. A long trade could be made at $34 or on a move above $38 (resistance). A short trade could be made on a support break of $34, which would confirm the double top.
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Gasoline Prices Skid as Diesel Burns

Booming diesel-fuel use in Europe and Latin America is paying off for U.S. drivers, as gasoline prices fall to a nine-month low.

October supplies of gasoline are at a three-year high for that month, but refiners are still running at high speed because they are earning fat profits exporting diesel, which is made using the same process that converts oil to gasoline.

U.S. refiners are supplying diesel to rebounding European economies where it is the main fuel used by cars and trucks. South America is another expanding market where local refiners can't match rising demand. Meanwhile, U.S. drivers' demand for their main fuel, gasoline, is coming off its summer peak.  (more)

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Airline Stocks About to Take Off: SAVE, RJET

It’s nearly impossible to discuss any positive news about the airline industry without inadvertently invoking flight-related metaphors. Nevertheless, recent earnings reports have inspired quite a few well-deserved nods of accomplishment.

The Airline Transportation sector of the Zacks Industry Rank list gained 84 positions last week; with several new earnings reports beating expectations. This is a large category of 25 companies, which now holds a rank of #92 out of 260 sectors. This is a boost of +84 positions over just one week. With positive earnings revisions outpacing negative 44 to 13, airlines are now averaging positive Earnings per Share (EPS) surprises of +27%.

There are a number of factors affecting this turnaround: reduced labor costs, increased consumer spending (dollar per mile), fewer flight cancellations, increased carrying capacity and the simple fact that people are just flying more this year compared to last. Combined, this means good news for an industry which has hurt more than most over the past decade.  (more)

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