Seeking Alpha

Charles Payne's  Instablog

Charles Payne
Send Message
Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
My company:
Wall Street Strategies, Inc.
My book:
Be Smart, Act Fast, Get Rich
  • Bears Koww - By Charles Payne

    Even the biggest number-crunchers, the fundamental analysts on Wall Street, peek at the charts when the sledding gets tough, and it's been very tough lately.

    Speaking of gyrations, after the crumbling at the start of trading, the market rebounded into the green and then the battle was joined. With the buy-on-dips crowd making their move, the bears loathe giving up momentum, pouring on the pressure.

    The good news is that while the major indices all finished lower, unlike prior sessions this week, the market finished at the low of the day.

    Dow Jones

    By the way, lots of traders are talking about the so-called black crows - the S&P closing at session lows three days in a row. I don't take much stock into those things; in fact, it's been more of a buyers strike than wholesale panic, except in areas like biotechnology, where TV talking heads who missed the entire rally have been chasing people out as quickly as possible.

    Broadening out, the chart displays the long-term trend of higher lows, but if we temporarily take out the March 11th low, then on a closing basis, the Dow is looking at 17,164.

    Dow Jones

    So, what should you do about this latest bout of anxiety?

    Today's Session

    Right now, it looks like the bulls and bears are exhausted as the market will open flat, but the bias is still to the downside. Perhaps nothing reflects this lackluster aura than the third update of Q4-2014 gross domestic product (NYSE:GDP) reading being unchanged from the previous release of 2.2%, but down from the advance report of 2.6%.

    Interestingly, consumer spending is at 4.4%, up from 4.2%, and countering other data points that say the consumer has pulled it in.

    Then there's corporations which lost money during the quarter, but domestically and abroad, still paid out big dividends.

    Q4-2014

    Corporate Condition (in billion USD)

    P/L

    -$30.4

    Taxes

    -$4.8

    Dividends

    +18.6

    The market is still struggling for some form of leadership, or a catalyst for reversal to the upside. I'm not sure how that happens today. So a session that sees the Dow off less than 100 points could be considered a moral victory.

    Mar 27 10:10 AM | Link | 1 Comment
  • Maddening - By Charles Payne

    It's a different type of March Madness, and very few people are cheering.

    After early rallies failed back-to-back on Monday and Tuesday, it was unlikely that a lot of buyers would take the bait yesterday. There was a slight bump and suddenly, timber!

    Today marks the 27th day in a row without back-to-back up sessions…that's the longest streak in 20 years. So, why can't the market get off the dime?

    With earnings season right around the corner and the latest jobs report out next week, it's pretty clear anxiety is helping to stall this rally. Except, perhaps, earnings are having a different impact: companies buying their own shares historically dry up in the new blackout period, ahead of the earnings release.

    Obviously, buyers are staying away. These days, it's rare to release an economic report that meets analysts' expectations.

    Actually, I think it's good when the bad news is bad…however, no one is thrilled about bad news.

    Breaking the Bond

    There is a bond market dilemma as economic data might be too weak. Yesterday's five-year note auction had the least demand since July 2009, sending yields higher. The 10-year also saw a five basis point increase in yields.

    We know when things get tough for financial markets, there are no safe havens. With bonds and stocks under pressure, what's the message? And what should investors do?

    US 10-Year Treasury Bond

    Also, one has to wonder if the Fed has lost control of rates at this point. It is too early to tell, but could this be a sign that bonds are finally ready to correct? Of course, that has been a rumor, a hunch, and conventional wisdom for a long time.

    Moreover, in the end, it was an ugly session; there are cracks in the equity and bond armor.

    Today's Session

    The major indices are all trading in the red this morning. Lowered guidance from SanDisk is sending tech names even lower as the company reflected on a deceleration of growth for its first quarter of 2015. We're staying vigilant and looking for the companies that defy the broader market by trading higher.

    Mar 26 10:09 AM | Link | 1 Comment
  • Retirement Dilemma - By Charles Payne

    There's a new movement afoot to ditch 401K retirement plans and replace it with a government run- supervised program. The rationale is that the average fund has only $18,000 and it's been a bust. While I have an issue with that number, it's not 401Ks that have failed Americans- Americans have failed themselves.

    People keep dipping into these plans by using them as piggy banks; the same way they were once used for home equity loans and refinancing. In 2010, Americans had taken out $60 billion prematurely and in 2011, $57 billion.

    The fact of the matter is, while there is a need for more discipline, the real losers are those who have not established a 401K.

    According to the Empower Institute, we need 75% to 80% replacement of current income to live the retirement of our dreams.

    Replacement Income

    With 401K Retirement Plans

    74%

    Without 401 Retirement Plans

    42%

    Replacement Income

    With Financial Adviser

    82%

    Without Financial Adviser

    55%

    However, holding too much cash is the biggest retirement mistake. In savings portfolios (that aren't qualified plans), cash levels on average is 35%, and within qualified retirement accounts, cash is at 55%. I get that people missed the bottom and now feel as though it's best to wait and buy at the top. However, the focus has to be on the next 200% move, not the next 20% to 30% correction/bear market.

    Last night, after the close, Kraft (NASDAQ:KRFT) was put into play with news of a potential bid from the Brazilian investment firm 3G Capital. It is more than Mac & Cheese; however, the day before, some would argue the stock was fairly priced with a 17 price-earnings ratio (PE Ratio) or expensive changing hands with a 4.0 price-earnings to growth ratio (PEG Ratio). The point is, this is a company that will throw-off serious cash for centuries. Since borrowing is so cheap, it seemed like a no-brainer...in hindsight.

    The no-brainer part is that you have to be invested, which is different from trading as the (KRFT) above shows. There is no doubt a lot of people stopped out of short-term trade when the stock got under $63.00.

    Today's Session

    Today's durable goods order report from the Census Bureau provided something more than just disappointment. For the month of February, new orders declined by 1.4% month-over-month which is quite the reversal from a positive 2.0% gain in January and is also below the +0.7% consensus estimate. This is very frustrating. I just don't believe businesses are going to pump up the volume, especially with Obama's policies making it harder for them to operate and manufacture new equipment.

    Though the major indices are indicating slightly higher, yesterday's selloff into the close is still worrisome.

    Mar 25 10:38 AM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.