Stock Trader Larry

Why Shorting the Market Makes Sense Above 980

The average hourly wage in the U.S. for May 2009 was $18.54, not anywhere near the $10.00 stated in the article. I'm not sure why someone would list such a misleading number in their article when the information is readily available:
www.bls.gov/eag/eag.us...

McDonald's: Looking a Bit Overvalued

Good analysis of MCD. If the general economy continues to decline from here, that will likely add additional downward pressure to MCD from here as well. From looking at the charts, it appears that this is a real possibility. MCD appears to have dropped into a new, lower channel last October and is now near the top (overbought area) of that channel. I agree about the long term for existing shareholders, it does appear like a good opportunity to be selling covered calls at this time. Nice job.

Continuing Jobless Claims Actually Rise

Also keep in mind that the method used today to calculate the unemployment rate is different from prior to the 1980's. If the same method was still used, the numbers would be a lot worse than what they currently are announced as.

Another thing not mentioned in the numbers is the number of cash employed workers in the U.S., especially in the construction industry, who are unemployed. While they may not contribute as far as paying income taxes, they surely spend their money in the economy as we all do. This is added pressure to the economy not showing up in the unemployment numbers.

Hours worked per week down 0.2 to a new cyclical low of 33.3, which could be a sign of things to come. First they cut the hours, then they cut the jobs.

I agree with Mr. Hoover. How can the Fed say they are worried about inflation when all signs point to continuing Deflation? Just as they revised the previous jobless claims downward, wait until they revise todays report.

Hints of Risk Appetite Returning to the Stock Market?

I would be careful to place too much weight on the fact that:
"We're also seeing an increasing proportion of stocks--nearly half across the NYSE--trading above their 50-day moving averages".
That is to be expected when coming off of historic lows in a market which has been trending down rapidly for the last 90-100 days.
It doesn't take that much money and greed that has been sitting on the sidelines for so long to reach the 50 day MA in a down tending market.
Take a look at the chart the last two times the same level was reached, in April and August of 2008. Those were short term tops in the market and quickly reversed.
Be careful out there!

2009 Dow Projections

With unemployment rising, more possible bank write downs, continuing deflation, consumer credit card concerns and commercial mortgage market concerns all still looming, I will have to say the possibility is leaning towards the downside for a year from now. We will have to keep a close eye on the different scenarios as they come about in 2009.

Falling Oil Prices: The Bright Side of the Meltdown

Add to that the current lower gasoline prices are a much needed end of year/Christmas gift. I heard Dennis Gartman mention this morning that even though gas and oil prices are down, consumers are still cutting back on driving. With unemployment rising and layoffs continuing, demand may still have further to decline. I was one of the bright ones who purchased a superduty pickup in 2003, with a diesel engine no less. At the time diesel fuel was cheaper than regular gas, and always had been. As soon as I purchased the truck, that all changed and diesel fuel has been higher ever since. I guess we'll have to see what happens in the coming months before we have reason to celebrate.

Feb. crude down 6.7% to $41.60, while Jan. contract plunges 9.7% to $36.15. OPEC output cut notwithstanding.

The expectations were for OPEC to announce a cut in production of 2 million barrels and that is exactly how Oil was trading prior to the announcement. That is, with those expectations. If OPEC had cut more than what was expected, OIL probably would have had a reason to rise. Since they only met expectations and OIL was already trading to that effect, that is cause for the sell off and will probably continue to put near term additional downward pressure on prices.
That's okay with me though, I don't mind the lower prices.

Constant 'Bottoming Process' Calls Are Meaningless

I have to agree. All of the analysts and commentators calling a bottom are doing so with the "hope" of being right. just think of the publicity they will get if they are the one who called it right. On CNBC you keep hearing about the "Art Hogan bottom". Nothing against Mr. Hogan, but anyone on TV who called the bottom that day would be famous as well.
If there was a way to call the bottom with accuracy, more than one person would know how to do it by now.

Six Ways to Cash in on Obama's Infrastructure Plan

Take a look at JEC, an infrastructure engineering company.

Meredith Whitney on CNBC: She's still more bearish than she's been over the last 18 months. Consumer hasn't factored in until now: banks are pulling consumer lines of credit and Americans are at risks to lose their jobs, which will pressure spending.

It's hard not to agree with Meredith Whitney, but I really do. With unemployment still rising, that means continuing job losses; higher credit card and mortgage default rates; cutbacks in consumer spending. Add to that the fact that banks will have no choice but to pull credit lines as Banks evaluate risk in their accounts.

Mortgage Modifications Don't Necessarily Offer Relief

I think the default rates will continue to rise as well. As added pressure to this is the fact that the number of unemployed individuals is rising. The government can modify mortgages all they want, if someone loses their job and stays unemployed for any period of time, the chances of them defaulting on their mortgage rises drastically. The government has been spending time and money to try and prop up the housing market and look what has happened so far! Maybe its time to concentrate on employment which will serve to prop up housing in itself.

Microsoft: Headed for an Earnings Miss?

MSFT is trading at a 10 year low (without dividends factored in). If they miss earnings this quarter, look out below!

$25 Oil Could Happen Before a Return to $100

I agree that Oil may be going towards $25 before $100 also. With U.S. unemployment rising; continued consumer pessimism in the economy; global demand slowing; and the current possible false market support based on a hope for a market bottom around Holiday and winter seasonality; continued consumer debt problems will cause them to continue to cut back on driving to pay for basic necessities first.

The Treasury may try to bolster the U.S. housing market by reducing mortgage rates for new home loans to 4.5% using Fannie (FNM) and Freddie (FRE), sources say.

You can see by the markets reaction to this today that it was viewed as a positive. The homebuilders rallied after this news. I feel this will only be a short term positive though. After all, with the unemployment rate rising, how long will this provide any boost to homebuying?