Monday, May 23rd, 2016

Where is the market headed?

Stocks have fallen since the SEC decided to sue Goldman Sachs for fraud.

This the one line nugget you can find on Yahoo Tech Ticker, and there are lots of other reasons there as well. But the main reason why this market crashed and burned with this much ferocity was the Financial Reform Act that has been hopping between House and Senate Floors and now being completed into a law to be signed by the President. According to President Obama’s emails received by me, Wall Street has spent nearly $1 million dollars per member of the house. That’s is a staggering sum of nearly $600 million dollars ! With that much money being spent to block or water down this bill by an army of lobbyists and the subsequent Wall Streets failure to stop the bill, no wonder the mood is so foul these days. This shows up on our charts.  Most of the charts were destroyed and SPX ended up below its 200 day moving average in a hurry. The amount of selling was horrendous and filled with great ferocity and anger. If you owned any long positions you ended up taken huge losses. This is not over yet. This can happen again and the bill is not yet signed into law yet. Imagine how the markets will react when President signs it into law ? Hold on to your seats…

You  can watch the full debates on this Bill at cspan.org and watch how the bill is being reconciled  by the members of House and the Senate. Meanwhile Wall street has temporarily let the S&P 500 move above its 200 day average.   Just imagine these folks have starved too and Vinny the market maker has been making nothing, he has to put milk and coffee on the table. Trading is just precarious as it can be, unless the market rises above 1140 levels which is its downward sloping 50 day moving average.

As a result, most investors have taken to the side lines. Volumes have been very light all this month of June. No one wants to trade and take losses. People are puzzled why the markets are falling when the economy is showing  improvement ? Here are some facts – Instead of losing 700,000 Jobs a month under Bush and Cheney, Obama admin has added 982,00 jobs in 2010.  All the signs are showing that a economic recovery is under way. Yet the markets are being sold off as if we are back in 2008 ? Ever wonder how the lies are spewed by mainstream TV and media where no one will come forward and tell you the  truth? They will place the blame on Euro/ US dollar crisis or  Debt in Greece. The fact of the matter is our economy is much stronger and we are not effected by those smaller countries. Timothy Geithner echoed the same sentiment before Congress.

Yes there are many reasons to be angry, and the public mood is now foul. Public support has made it possible to kick the Wall street reform near completion otherwise you will never seen such a thing. I agree  things are not all round and rosy. Bills have to be paid and jobs have not come back like they should. This time we just missed the second depression by  a hair breadth.

Unless this  Financial Reform Act passes and is signed into law expect market turbulence and vicious sell offs. Trade lightly with an eye to the downside risk.

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