Daily Investment Interpretations

December 7, 2010

2010-12-7 (Tuesday Night): The markets were mixed again tonight: Rally loses its steam, Why The Dive? (Hint: Computers Having Fun). (Another factor may have been a step-up in the Insider Trading Probe: Authorities Step Up Insider Trading Probe.) The NASDAQ Composite gained 3.57 points (0.14%) to 2,598.49. The Dow fell 3.03 points (-0.03%) to close at 11,359.16, and the S&P 500 eased up  0.63 points (0.05%) to end at 1,223.75. Oil slipped to $88.44 a barrel, and Gold declined to $1,404. The VIX crept down 0.03 to 17.99.
    The markets are currently overextended and are bumping up against resistance levels. They may pull back or they may consolidate sideways Technical Talk: Is All the Good News Out?. Stocks rallied out of the gate this morning on the strength of the tax deal that the Obama administration is proposing to Congress: Obama defends tax deal, Economists ready to raise U.S. growth forecasts,
What the tax-cut deal could mean for you (audio).  
1. The Bush tax cuts will continue for two more years (the end of President Obama's term).
2. There will be a 2% payroll tax cut that will inject $200 billion in fiscal stimulus into the economy. This is expected to boost GDP above current levels. (It will also increase the federal deficit, but that should be at least partially offset by a wealthier economy, leading to increased federal, state, and local tax revenues.)
3. Small businesses will get a special tax break: Small businesses, big break, and
4. This will end the uncertainty concerning tax plans. .

    10 reasons to shun stocks till banks crash  This article, written by Paul Farrell, reports that "Last year we reported that Goldman Sachs made more than $100 million in profit a day for 23 days in one month. This year the con game has gotten bolder. Peter Morici, the former chief economist at the International Trade Commission says 'J.P. Morgan and Bank of America went through the entire third quarter without a negative trading day, no losing days on proprietary trades. Unless you believe in perfection, something stinks about the information they are using. If someone is winning all the time, then someone else is losing. Thatís the ordinary investor. Stocks have become a rigged game.'"
    Banks to taxpayers: Itís time to get over it  David Weidner explains that big investment banks expect the U. S. public to quit complaining about the way we were fleeced by big investment banks, and let them get back to business as usual... fleecing us.
    Banks' mind-boggling losses  In this article, David Weidner expresses shock over the breath-taking losses... many trillions... the big investment banks called upon the U. S. taxpayers to cover, while bragging about the "profits" they were making. Now they're back to anti-government ads.

    What's most significant to me is that these reports is that they  emanate from presumably conservative, presumably Republican columnists for a conservative journal (Marketwatch). They also jibe so well with all the Wall Street diaries and exposťs I've just re-read.
    Goldman Looking For 25% From Stocks Next Year  Goldman Sachs, with an excellent forecasting record, is calling for a 25% rise in the S&P 500 by the end of next year to 1,450. Goldman predicts that gold will hit ~ $1,700/ounce next year, peaking at $1,750 in 2012 as interest rates begin to rise. GS sees oil at $105 a barrel in 2011. "Energy is historically strong in February, March, April, and May."
    Small-caps quietly leading stock rally  This article points out that small-caps tend to outperform large caps during the early stages of a bull market. The chart of IWM, below, depicts the performance of the iShares Russell 2000 Index Fund.
    The next chart, below, delineates the six-month performance of the Direxion Daily Small Cap Bull 3X Shares ETF: TNA..
    As may be seen, it's done rather well, doubling from its August 25th low of 33 to its December 7th close at 67.