We refuse to be left out of both a discussion of the ‘sub-prime’ problem and those tragic people who neglected to read their loan agreements; we direct that you look carefully at those agreements before daring to point your crooked finger at the borrowers. These onerous documents are written for only the anal class of OCD attorney to either read or understand (an ordinary attorney would fall fast asleep, reading such a document; would need a magnifying glass just to find all the hooks and loops in the document).
Having said that, we agree that the “no money down mortgage” was at least a trifle suspect and, that the borrowers should have looked closer, which, sadly, they didn’t. It was just another typical scam, a poisoned apple, on a grand scale, generated to look great, but bringing with it, financial ruination to those who hungrily stepped up to the plate. These loans were of the stuff of which the dot.com stocks of the last bubble were made; in that they were designed to feed on those who could least afford the loss.
So, now what do we do. Well, we take out our pencil and paper, making sure that the pencil has an eraser on it, and we start to work. First, we write down all our liabilities; all of them, including some bucks for stuff we forgot. Now, write down all our income and ready cash (not including stuff that will take a long time to sell). Here, is where you start! If your numbers add up to a negative, then, try to separate your debts from highest interest-rate costs to lowest interest-rate cost items. Now, take those credit-card debts and start calling your credit-card companies and try to cut a deal. How? Simply tell them the truth, that you have a financial situation, one which will lead you to fail on a payment obligation and ask that work with you, on this problem; your objective: to get this loan timely paid. Ask them to reduce your interest rate to something you can really afford to pay. Yes, they will cooperate, because a failed loan is worse for their bottom-line than is a loan which is paying and current, even if that loan is paying, at a reduced rate. Use this method to renegotiate all your debts. Remember; credit card debt is not a tax-deductible item and, along with store credit cards, which are usually at about 21% interest, these need to be addressed quickly. This is a start. When calculating your liquid assets, remember that this is a pie which is only so big; this pie must feed all, so don’t give away extra portions to those who’ve already been fed.
As to the Fed’s action with this hurricane of debt, bearing down on us, they are in a very difficult spot. Think about it; if they reduce rates and support easy money, they’ll cause a problem for the US Dollar, already in serious trouble. The global community will not look kindly on a depreciating US Dollar; it could move more quickly to replace the US Dollar, as a reserve currency. That sort of action could exacerbate the decline in the US Dollar and could cause inflation, here in the USA. The Fed may opt for inflation rather than for recession or depression, but either result, whether of inflation or recession/depression, will cause problems, major problems. Perhaps the cure is to help these mortgage-holders to find lower rates on their mortgages, if and only if, that mortgage is on a residence in which the family resides, for at least 3/4 of the year. We don’t agree to bailing out all; but certainly, for only those who truly need the bailing. Yes, there will be those who will scheme up ways to beat the system, but that is a part of life. There are always those who will steal the breath of life from others; this time is no different.
As to the market, we can expect to see the continuation of volatility, returning to this market. Volatility has in the past few years, been extremely low, so unusually low, that we are just returning to more normal rates of volatility. Black boxes will again churn out their trades and, hedge-funds will resume their ways. Buy-backs, and leveraged buy-outs will continue, but at a slower, more natural, pace. Get used to it; life has changed and we have to deal with it. History is repeating itself, the names of the players have changed, but the script remains alive, and well.
We continue our bullish stance on gold. Why? Because, as the US Dollar declines and other currencies are brought into question, gold could be seen as a stable reserve currency. Gold is also an inflation hedge. The footnote is that if the globe goes into a recession; who needs gold, anyway. The answer is that the banks will need some and smart people will also keep a stash of it around.
Tuesday: July construction spending and August ISM are both released at 10:00. Wednesday: Challenger, Gray & Christmas issue their August job-cut announcement and the Beige Book is released at 2:00. Thursday: 2nd quarter Productivity is released at 8:30, ISM non-manufacturing index is release, the Bank of England issues its interest rate decision, the European Central Bank issues its interest rate decision, St Louis Fed President Poole speaks, Federal Reserve Governor Kroszner speaks and retail sales for August are reported. Friday: August nonfarm payrolls and unemployment rate is released at 8:30 and at 10:00 we have July wholesale inventories.
The US Dollar index expanded the downside in the Friday session, although it was able to close above the opening level for the day. The stochastic indicator is issuing a buy-signal. The Thomas DeMark Expert indicator is also issuing a buy-signal. Neither our own indicator nor the RSI are trending; rather, going sideways. The 5-period exponential moving average is at 80.843. The top of the Bollinger band is at 81.859 and the lower edge is seen at 80.000. The downtrend line for the Tuesday session is at 80.635; for the Monday session, it is at 80.715. The weekly chart continues to look as though the downtrend will continue for a while longer. The stochastic indicator, our own indicator and the RSI are all tipping, slightly to the upside. The Thomas DeMark Expert indicator is overbought and issuing a solid sell-signal. The monthly chart seems to be narrowly lower. All in all, the US Dollar index appears to be losing steam, on the downside. On the other hand, neither has it demonstrated any upside momentum. This is not a market in which we would be willing to place any bets; therefore, we advise that you stand aside until clearer signals are seen.
The Euro had a disappointing day in the Friday session. Although the market opened higher and seemed to be on an upside tear, by the end of the session, the market closed, near the lows of the session. The stochastic indicator, our own indicator and the Thomas DeMark Expert indicator are all issuing a sell-signal. The RSI is not trending; rather, going sideways, at near-neutral levels. The 5-period exponential moving average is at 136.278. The top of the Bollinger band is at 138.528 and the lower edge is seen at 133.943. We have a gap on the chart from 135.860 to136.170. This market continues to look range-bound. This week we will have an interest rate decision from the European Central Bank. It is widely expected that there will be no change in the rates to be announced. The weekly chart looks as though this market is exhausted. We have a doji-like, narrow candle, on the weekly chart. The indicators are mixed, with both the stochastic indicator and our own indicator pointing lower, and the Thomas DeMark Expert indicator pointing higher. This market continues to remain above the weekly uptrend line; continuing to look as though it is simply backing and filling. We would remain on the sidelines for now, until the market gives us a clear signal.
The Canadian Dollar remains below the downtrend line on the daily chart. That line is at 95.26 for the Monday session, and at 95.13 for the Tuesday session. All the indicators that we follow herein are issuing a solid buy-signal. There is a doji candle on the chart, as a result of the Friday session. The 5-period exponential moving average is at 94.51. The top of the Bollinger band is at 95.87 and the lower edge is seen at 93.06. There is a point of inflection on the chart, due in the Thursday session. The weekly chart continues to look constructive. The indicators on the weekly chart are all negative…well, slightly negative. The uptrend line on the weekly chart is at 93.42. The downtrend line is at 95.22. A move, either above the downtrend line, or below the uptrend line, will move this market out of its consolidation. The monthly chart is simply overbought; but, bullishly overbought. All the indicators for the monthly chart are positive.
The British Pound Sterling has broken above the downtrend line and continues to make upside progress. Remember, this week, we will have an interest rate decision, issued by the Bank of England; so, until that announcement is past, don’t expect to see much action. The stochastic indicator, our own indicator, and the RSI, all continue to point higher; however, they are losing their momentum. The Thomas DeMark Expert indicator is issuing a solid sell-signal. This chart is very gappy; however, there is a gap from 199.17 to 200.15. The weekly chart warns us that a close below 197.55 would open the door to196.21 and to191.92. We do see signs of exhaustion, along with a doji-candle. If long, keep your sell-stop at 197.55. The indicators on the weekly chart are mildly bullish. Only the Thomas DeMark Expert indicator is issuing a sell-signal. The monthly chart looks like it is continuing, in a very organized uptrend. The indicators on the monthly chart are all overbought and all issuing a sell-signal.
The Swiss Franc looks as though it wants to go higher. Although there are definite signs of exhaustion in this currency, we believe that higher levels will be seen. All the indicators that we follow herein are issuing a continued, uniform, buy-signal, with plenty of room to the upside. We would expect to see 120.982, 121.1611 and 121.648. The 5-period exponential moving average is at 120.158. The top of the Bollinger band is at 121.481 and the lower edge is seen at 118.618. The weekly chart looks positive. Only the Thomas DeMark Expert indicator is issuing a sell-signal; all the others that we follow are solidly in the: buy-signal camp
The Japanese Yen touched the uptrend line and closed above it in the Friday session. The uptrend line for the Monday session is at 85.97 and at 86.19 for the Tuesday session. The indicators are very neutral, and not telling us a lot. The 5-period exponential moving average is at 86.69. The top of the Bollinger band is at 88.74 and the lower edge is seen at 83.82. The weekly chart continues above the uptrend line. We, unfortunately, have an 8-count on this chart, with a doji-like candle. These are warning signals, telling us that we could be getting a pull-back, fairly soon.
The S&P 500 rallied in the Friday session, in celebration of the end of the month, and helping the end-of-the-month statements, going out to investors. We need to see a close above 1484.50. This would open the door to 1504 and 1510. The stochastic indicator is overbought, and curling over to the downside; however, this indicator has not yet issued a sell-signal. Our own indicator is close to issuing a sell-signal, and will issue that signal in the next session. The RSI is flat and going nowhere, and the Thomas DeMark Expert indicator is tilting, slightly higher. The 5-period exponential moving average is at 1465.85. The top of the Bollinger band is at 1500.59 and the lower edge is seen at 1417.38. The weekly chart has a hangman candle. The stochastic indicator has issued a sell-signal. Our own indicator is about to issue the same signal. The Thomas DeMark Expert indicator is issuing a buy-signal, and the RSI is simply flat, at neutral. The monthly chart looks as though we have further to travel on the downside. All the indicators that we follow are issuing a sell-signal, on the monthly chart. We would be very cautious with this market. Remember, the moves will be violent and could be short-lived. We are moving away from complacency, into turbulent waters; so, fasten your seat belts and hang on!
The NASDAQ 100 has signs of exhaustion. Both the stochastic indicator and our own indicator are issuing a sell-signal. The Thomas DeMark Expert indicator and the RSI are both flat, going sideways. The 5-period exponential moving average is at 1962.28. The top of the Bollinger band is at 2017.15 and the lower edge is seen at 1861.49. The NASDAQ 100 has closed above the downtrend line, on the weekly chart. We have mixed signals from the indicators. The NASDAQ 100 must stay above 1813.00; or, we would advise: “just go short,” don’t ask, just do it!. As to the monthly chart, all the indicators that we follow are issuing a solid, sell-signal, from overbought levels.
The Russell 2000 is underperforming, on the upside. The indicators are rolling over to the downside and will issue a sell-signal, within a day or so. We are getting very narrow, and seem to be forming a pennant. The 5-period exponential moving average is at 789.35. The top of the Bollinger band is at 808.52 and the lower edge is seen at 760.89. If the Russell 2000 can close above 809.50, we will perhaps have a chance to see the highs again. Frankly, we do not see this in the near future, but we have been wrong before. The weekly chart is less bullish than is the daily chart. The indicators are very mixed, and very flat. Both the stochastic indicator and our own indicator are issuing a mild sell-signal. The RSI is going sideways and the Thomas DeMark Expert indicator is issuing a buy-signal….go figure. The chart looks as though this market is rolling over, to the downside. The monthly chart verifies what we are seeing on the weekly chart.
NYA CASH (9596.98)
Resistance 9607.04 9658.26 9672.99 9688.24 9697.34 9753.96 9787.03 9798.17 9845.32 9831.99 9818.99 9852.00 9876.11 9897.26 9927 9975.34 10009.81 10045.17 10072.93 10099.42 10179.05 10194.01 10238.25(H)
Support 9563.23 9536.98 9478.60 9378.92 9338.48 9314.99 9305.72 9386.91 9277.75 9261.82 9243.04 9214.11 9200 9172.99 9158.27 9122.15 9079.93(I) 8993.10 8951.08 8966 8949.07 8931.61 8923.67 8917.59 8897.17 8885.77 8868.19 8850.61 8812.37 8802.62 8779.87 8747.44 8716.76 8708.11 8684.79 8675 8653.57 8634.88 8610.73 8598 8580 8573.26 8534.32 8499.67 8469.65 8468.97 8449 8424.56 8400 8386 8363.45 8344.67 8311 8294.64 8275.84 8268.97 8236 8209.66 8190 8163.26 8140.11 8108 8071 8022 8009 7953.14 7924.62 7901.40 7897.69 7883 7872 7855 7824.41 7805 7798.30 7780.33 7753.95 7739.47 7716 7708.11 7693 7677 7667.64 7642.81 7634.58 7621.26 7599.78 7566.02 7546.67 7529.15 7516.48 7498.75 7470.90 7455.70 7422.77 7407 7380.75 7369 7339 7316 7293 7280 7263.32 7251.87 7233 7214 7200 7174.95 7160 7138 7116.60 7107 7091 7084 7060 7047 7028 6993.30 6971.22 6958 6936 6924.00 6913 6906.23 6887 6843 6800 6786 6749.41 6701.47 6699.84 6680
RUI CASH (801.22)
Resistance 804 807.87 809.42 811 812.95 816.98 817.50 819.90 821.20 823.79 825.37 829.55 832.02 835.69 838.21 841.40 843.12 845.65 847.42(H)
Support 799.53 795.65 793.02 790 787.32 783.63 779.77 776.29 773.57 769.72 766 764.96 762.60 760 757.32 755.65 752 748.59 746.61 742.89(I) 739.86 737.77 733.82 731.46 728.59 726.08 722.35 718.67 715.95 712.54 709 707.55 704.41 701.86 697.41 694.50 690 688 686.50 684 681 678.33 675.65 672.40 670.69 667.14 665.05 663.18 661.28 658.23 656.20 653.80 650.61 647 644.67 641.46 638.70 635.58 633.87 631 628.46 624.98 621 619.20 617 614.25 611.70 609 607 604.665 602.50 599.39 595.70 593.40 590.58 588 585.27 582 579.24
Russell 1000 Value (824.45)
Resistance 828 830.48 834 836.34 838 840 843.45 846.22 849 852.40 854.59 856 859.26 865.19 867.45 870.43 873.21 876.07 879.17 880.54 882.05 883.97 885.64(H)
Support 823.21 821 818.61 816.39 815.16 810.14 807.37 803 800.46 799.18 798.22 796.67 794.56 792.96 790 787.28 785.49 782.81 780 778.02 776.30 773 769.42(I) 767.82 765.05 762 759 756 754 751.62 748.55 745.14 744.82 742.95 739.24 735.58 733.51 730.19 727.53 725.26 722.96 720 718 715.11 713.53 710 708.98 705.80 703.39 701.38 700.34 697.65 695.98 693.38 690.61 687.26 684.85 683.16 679.76 677 674 671.25 669.40 667.70 666 663.44 661 659 656 653 650 648.11 644.62 641.05 640 638.05 635 632.90 630 627.20 624.61 620 615 613.48 610.29 608.48 607.76 606.92 604.91 599.92 596 593.73 590.6
Russell 1000 Growth (594.19)
Resistance 592.50 594 597.93 601.83 603.50 606..35 611.25 614.51 616.87 618.66 621.67(H)
Support 587.45 584.72 583.10 580.42 877.24 574.14 569.23 566.90 565.49 562.13 559 557.03 554.02 551.82 548.52 547.37(I) 545.34 543.94 541.01 539.41 536.02 534.10 532 530 527 522 520 517 515.62 514.04 511.07 508.41 505.90 503.53 501.78 498 496 493 496 493.36 490.56 488.57 485 481.43 477 475 471 468 464 462 460.87 457.82 455 450.31 445.34 443.88 442 440 438 436 434 432 429 427 425 423 421 418.68 416 414 412 410
TO A0 (Russell 2000 cash) (792.86)
Resistance 795.70 798.93 800.17 802.57 803.07 807 809.52 812.27 821.27 825 827 829 831.74 833.76 836.44 837.03 841 843.72 845.69 848.19 851.84 853.40 856.48(H)
Support 796.93 792.89 787.16 784.32 881 776.00 gap to 768.46 764 761 758 755.29 754.11 752.73 749.70 747.08 743.38 740 738.25 736.00(I) 733.18 729 727 725 721 718.63 714 711 708.54 706.61 704.40 699.24 696.41 693 690 686 682 679 676.39 673.22 671.94 669.05 666.36 663.65 659.35 655.95 653 650 647.35 644.33 642 638 635.33 632.73 630.40 628.54 626.91 624.41 621 618 615.31 612.71 609.41 607 601 596 593 590.53 587 584 579.38 577.93 573 570 567 565.21 559.70 558.58 554.13 551.87 548.45 545 541.96 538 536 533 529 526
SPX CASH (1473.99)
Resistance 1479.37 1488.30 1498 1503.73 1515.95 1523 1534.10 1544.85 1553.19 1555.90(H) 1574.25
Support 1472.06 1460.54 1445.94 1439.59 1432.80 1426.20 1411.26 1404.36 1397.50 1386.95 1380.87 1370.68(I) 1363.98(I) 1344.21 1340.28 1335.64 1329.35 1324.65 1314.78 1311 1306 1298.92 1295.09 1293.57 1289.49 1285.25 1278.90 1268.20 1265.48 1262.08 1257.98 1248.29 1240.29 1235.18 1231.57 1228.45 1222.52 1219.29 1211.27 1202.35 1199.71 1195.90 1192.34 1187.13 1179.59 1175.44 1171.35 1168.20 1164.50 1161.43 1152 1147 1140 1132.84 1130.54 1128 1124.62 1120.19 1118.60 1110 1094 1090.19 1087 1079 1068
NDX CASH (1988.73)
Resistance 1992.53 1997.79 2012.50 2020 2032.28 2035.88 2048.24 2060.29(H)
Support 1973.40 1964.49 1945.11 1924.11 1920.62 gap to1915.10 1913.79 1888.78 1883.36 1877.73 1869.51 1853.87 1838.77 1828.76 1805.66 1798.53 1783.33 1772.36 1763.54 1758.10 1742.23 1740.87 1733.58 1726.03 1711.28(I) 1703.98 1695.21 1693.19 1676.63 1666.03 1650 1645.20 1622.37 1617 1611 1601 1589 1581 1589 1574.71 1570.34 1557.70 1548.07 1539.59 gap to 1534.78 1508.94 1494 1486.74 1479.69 1451.88 1448 1438 1428 1420.79 1412.63 1408.59 1399.05 1397.50 1388.20 1380 1374 1366.73 1356 1348.27 1334 1320.95 1309
DX September 2007 (80.765)
Resistance 80.84 80.98 81.08 81.13 81.20 81.36 81.48 81.53 81.66 81.71 81.91 82.08 82.16 82.29 82.44 82.60 82.70 82.76 82.78 82.81 82.89 82.90 82.94 82.90 8 83.00 83.01 83.15 83.35 83.41 83.55 83.67 83.80 83.92 83.99 84.04 84.14 84.21 84.28 84.32 84.45 84.68 84.75 84.79 84.89 84.95 85.02 85.11 85.17 85.25 85.32 85.37 85.58 85.39 85.43 85.54 85.61 85.68 85.75 85.82 85.88 85.90(I) 85.97 86.06 86.11 86.17 86.35 86.43 86.49 86.52 86.60 86.68 86.88 86.99 87.08 87.24 87.62 87.67 87.77 87.80 87.96 88.08 88.13 88.19 88.27 88.33 88.45 88.33 88.51 88.60 gap to 89.17 89.27 89.37 89.39 89.52 89.69 89.84 89.90 89.99 90.05 90.17 90.26 90.34 90.79 90.99 91.06 91.16 91.18 91.22 91.33 91.49 91.55 91.60 91.68 91.74 91.98 92.05 92.27 92.45 92.54 92.61 92.80 93.00 93.28
Support 80.65 80.61 80.54 80.49 80.39 80.32 80.18 80.14 80.06 79.960 79.87 79.855 78.43 (9/1992)
Jeanette Schwarz Young, CFP, CMT
Box 1952 c/o New York Board of Trade
One North End Avenue
New York, New York 10282
www.optnqueen.com
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