Where Are The Markets Headed Now?

Don Vialoux sums up his views of where the markets are headed:

Technical, fundamental and seasonal influences point to another volatile period for equity markets around the world this week, but with less intensity than recorded last week. A bounce from above lows set on August 8th at 1101.54 for the S&P 500 Index, 10,604.07 by the Dow Jones Industrial Average and 11,617.81 for the TSX Composite Index is a most likely scenario. A break below these levels is less likely, but is possible. A break below support, given the substantially oversold level of equity markets and most sectors, suggests minor short term weakness below support. Preferred strategy is to hold/add to sectors that benefit from favourable seasonal influences at this time of year (e.g. gold equities, agriculture, “gassy” equities) and to watch for entry points on weakness in other economically sensitive sectors in October.

Click here for his full, detailed report.

Vialoux also discusses what I think is the all important Federal Reserve meeting in Jacksonville, see my previous post, when he says:

Economic data this week is expected to be mildly positive for North American equity markets (Read: less bad than reports released last month). The focus is on the Federal Reserve’s annual conference in Jackson Hole. Last year, Bernanke effectively launched QE II at the conference. Equity markets rose sharply during the next five months. Will he launch QE III at this year’s conference?

Tempers Flare on CNBC as Market Dives, And More Money Printing.

This video is from August 18.



It reminds me of this video from 2007.



The parallels between the crash of 2007/2008 and now are amazing. However, I expect the markets to move up at least until September. The Federal Reserve is meeting in Jackson Hole to discuss more quantitative easing. That should help the market go up at least short term. After that we can reassess the situation.

Here are some predictions over what will happen in Jackson Hole this week:

How Is The Recovery Going? Metal Thieves and Dog-nappers

How is the economic recovery going in the USA? We've all heard about the recent bad ecnomic numbers and news, forecasts of a more than 50% chance of another recession, but I'm more interested in what's happening in people's everyday lives. Metal thieves reaching to new heights:

Thieves determined to reap value from scrap metal have pried storm grates from streets, sliced catalytic converters from cars and trucks and stripped copper downspouts from churches.
Now they’ve sunk to new depths – or reached new heights, depending on your view.
Lakeville Police Chief Frank Alvilhiera said police who went to a Verizon cell tower off Route 140 earlier this month found a man attempting to steal copper plates used to ground the towers during lightning strikes.
“The officers reported that he was over 100 feet above ground,” said Alvilhiera. “This is the first time we have had a theft from a cell tower that I can recall. This has been the trend with copper prices high. Thefts are on the rise everywhere.”

Dog thefts up 32% this year:

Dog thefts are up 32 percent this year, according to the American Kennel Club. Stolen dogs are almost always resold, and are often used in laboratories or dog fights. Pit bulls and other large breeds are stolen the most frequently. Purebreds are also at risk because thieves think they can get a lot of money for them.

Obviously what we are seeing in the headlines is happening on the streets.

Android, Developing World Domination?

Singularity Hub is running an interesting article that looks at the popularity of an $80 Android phone in Africa:

It seems like just yesterday when only the slickest kid on the block had a smartphone, but now, this revolutionary gadget is selling like hotcakes in the developing world. Earlier this year, the Chinese firm Huawei unveiled IDEOS through Kenya’s telecom titan, Safaricom. So far, this $80 smartphone has found its way into the hands of 350,000+ Kenyans, an impressive sales number in a country where 40% of the population lives on less than two dollars a day. The IDEOS’s success in this market firmly establishes the open source Android as the smartphone of the people and demonstrates how unrelenting upswings in price-performance can jumpstart the spread of liberating technologies. Thanks to low-cost Androids, the geographically-untethered smartphone is here to stay, and it simply cannot be stopped.

The article goes on to explain how IDEOS was able to put together a cheap smartphone.

However, for us the key point to understand is that smartphones are likely the biggest trend in consumer electronics, and Android is poised to dominate the market. In the 80s and 90s PCs dominated the desktop computer market by giving hardware manufactures the freedom to inovate and compete. We are seeing the same thing in the smartphone market with Android. Apple and RIM develop their own software and the hardware, where with Android Google develops the software and any hardware manufacturer can build the device. Android is using the same business model to take over the smartphone market that Microsoft used to take over the hardware market.

Speaking of Microsoft, where do they fit into the smartphone race? Microsoft is late out of the gates with their Windows phone. Although, Microsoft's software good and innovative they have failed to capture significant market share. This could change in 2012 when Nokia, who has a major presence on European smartphone market begins to market Windows phones. Add to this the possibility of Microsoft taking over RIM, who has a strong presence in the North American market and I think we have an Android Microsoft race.

Both companies and both phones use similar, proven models, and I expect to see one of the dominate the market.

Roubinin Says Double Dip Recession Better Than 50% Chance

Nouriel Roubini is one of the economists who predicted the economic crash in 2008, watch this interview to see his views on where the economy is headed.

Economist Nouriel Roubini says the risk of a global recession is greater than 50 percent, and the next two to three months will reveal the economy's direction. In an interview with WSJ's Simon Constable, Roubini also says he's putting his money in cash. "This is not the time to be in risky assets," he says.

China Is Slowing

If the US debt ceiling, Europe sovereign debt, and the down grading of America's credit rating weren't enough, according to this Bloomberg article, it now seems that China is slowing:

Growth in China, the world’s second- biggest economy, is slowing “significantly,” according to The Conference Board, a New York-based research organization.
“The economy is significantly moderating right now and also over the next couple of months,” Bart van Ark, the organization’s chief economist, told Bloomberg Television from New York today. “We still expect it to be pretty much a soft landing.”

The Chinese economy is cooling after the government raised interest rates and banks' reserve requirments and extended curbs on the real-estate market, adding concerns about the outlook for the global economy. Christine Lagarde, the international Monetary Fund's managing director, today urged developed contries to support economic growth even as they make fiscal cuts.

There are some who say the lending and spending in China is out of control. One worrying manifestation of this belief are China's ghost cities. Entire communities built but which lack people.







At the end of the video the reporter states that "Everything is completely different" in China. Those sound like famous last words.

What Now? After The Crash of 2011

Don Vialoux gives his views on the market for this week:

Technical, fundamental and seasonal influences point to another volatile week in equity markets around the world, but with less intensity than recorded last week. Markets have started to recover from a deeply oversold level. Most likely scenario is for equity markets and most sectors to move higher during the next 2-3 weeks followed by a test of lows as part of a base building period during seasonally weak September followed by resumption of an intermediate uptrend by the end of October. Preferred strategy is to hold/add to sectors that benefit from favourable seasonal influences at this time of year (e.g. gold equities, agriculture, “gassy” equities) and to watch for entry points on weakness in other economically sensitive sectors in October.

Read his full report here: http://www.timingthemarket.ca/techtalk/2011/08/15/tech-talk-for-monday-august-15th-2011/

Is The 2011 Crash Over?

Don Vialoux has a great post examining if the markets have bottomed and are ready to start going up. At this point he isn't getting signals that would indicated that the selling has stopped. However, DOW futures are up this morning, and I see that copper is slightly up as I write this.

The list of stocks breaking support was too long to include in this report. The Up/Down ratio fell from 0.13 to (23/453=) 0.05. This is the lowest level for the Up/Down ratio since 2002 when U.S. equity markets bottomed. However, signs of a bottom this time have yet to surface.

The “Fear Index” spiked yesterday to the highest level seen since June 2010. The VIX Index has spiked over 35% on four previous occasions during the past four years. Each spike above 35% recorded a significant short covering rally after the peak had been reached. However, VIX closed at its high yesterday implying that the peak has yet to be reached this time.

I expect that the market's will generate the signals Don is looking for sometime this week. So keep your eye on the market and on Don's site to find a good buying opportunity.

See the full report here: http://www.timingthemarket.ca/techtalk/2011/08/09/tech-talk-for-tuesday-august-9th-2011/

The 2011 Crash Versus 2008

How does the current decline compare to that of 2007/2008? Look at the chart below to see. I'm expecting a rebound this week, but we will have to wait and see how that shapes up.

Thanks to http://advisorperspectives.com/dshort/

"Perfect" Indicator Says Buy

CNBC has an interesting article on why you should think about buying stocks right now: http://www.cnbc.com/id/44038676/

An indicator followed by veteran technical analyst John Roque that has perfect results for almost twenty years just flashed a buy signal. The beauty of Roque's indicator, which has signaled positive returns three months out every time from its trigger point, is in its simplicity.

The fact is that the market is very and a good opportunity to buy stocks on sale is starting to present its self, probably sometime this week.  However, there is something you need to understand:

"Extreme readings in this indicator (so far) have a perfect record with respect to market rallies both two weeks and three months later," wrote WJB Capital's Roque, a respected staple of the technical analysis community, in a note. "We still think this market has issues, notably with the industrial sector, but we're putting our trust in this indicator/data near term."

The major reason the markets are going down, is because the chance of going into a recession is higher. So, buying should be seen as a short term play.

RIM Overhauls BlackBerry for IPhone Battle?

I saw this headline on Bloomberg, RIM Overhauls BlackBerry for IPhone Battle, and I thought this is dead wrong. It shows how the media is missing one of the biggest developments in the smartphone market: Android. RIM isn't battling IPhone, it is fighting against Android. Furthermore, RIM is actually working with Apple and Microsoft to stop Android's momentum.


Watching the media you might be surprised to know that the number one smartphone platform in the USA isn't IPhone, it's Android. See Android Leaves Apple iOS In The Dust which states that

Android's total U.S. share for June came in at 39%, compared to 28% for Apple, according to data compiled by market watcher Nielsen. RIM's BlackBerry OS was in third place with 20% of the market.

And Google Tops Estimates as CEO Page Expands Beyond Search Ads which says

Google’s Android mobile operating system is expected to maintain its lead globally this year with 38.9 percent of the worldwide smartphone market, compared with 18.2 percent for Apple Inc.’s iPhone, according to research firm IDC. Page said on today’s call that 550,000 Android devices are activated on a daily basis.550,000 Android devices are activated on a daily basis.

The momentum of Android is so strong that RIM, Apple, and Microsoft have joined forces and are attempting to use legal means to hold back Android. See When Patents Attack Android for details on how technology companies are using patents to hold back Android and hampering competition in the industry. Software patents are a whole other topic which deserve their own post.


What does this mean for investors? For one, the lack of media attention is good for investors. Because it means the the biggest advance in the Technology sector might sneak in under the radar. Any hardware manufacturer can make an Android device, with companies like Samsung, HTC, Motorola, and Sony-Ericsson leading the way. Keep an eye on these device manufacturers.


Also, it means that the issue of software patents is getting much deserved attention. The patent system as used for software is broken, and stifles competition. I expect having big companies attack a large player like Google will help settle long standing issues with software patents. In fact, that process may already be taking place, see UK copyright system set for massive overhaul which states that

The government will resist the introduction of software patentswithout clear evidence that they would benefit innovation and growth. Hargreaves had recommended this course as a way of avoiding'patent thickets'.

"[Hargreaves's] review paints a picture of an IP system that is the foundation for a substantial proportion of the UK's innovation and economic growth but which needs to adapt to meet the challenge of new technologies," said the response, signed by business secretary Vince Cable, culture secretary Jeremy Hunt and chancellor George Osborne. "The government believes this is fundamentally the right view."

Settling these issues should be benefit innovative software companies and hurt those seeking to protect their markets through legal means. It should also help the economy as a whole as software helps us all become more productive.

See What Google Knows About you

Google collects information about internet users, and then uses that information to target advertisements to them. Have you ever wondered what Google knows about you? Is it accurate? Well you can click on this link and find out what they know about you.

http://www.google.com/ads/preferences/

I feel that Google provides a lot of useful services, and of course, in exchange for that they need to be compensated. If that compensation is showing me advertisements that I might find useful, then I'm perfectly happy about that.