Sunday, June 19, 2005

New Week, New Decline Coming

Just wanted to remind all of you that the market has now finished with its option expiration ritual and we did have some typical quadruple witching volume. The market is now set for a fall and hopefully you have prepared yourselves for this drop.

Oil closed at a record high on Friday and may cause some strain in the market this week. The dollar has been struggling higher during 2005 but we feel some gravity beginning to tug at it. The Fed meeting is looming large next week and traders will be nervous in front of that, too.

Please read our link to the True Contrarian. His sort of regular Sunday Update for June 19th is specific about gold and the NASDAQ. We are in complete alignment with him at the moment.

Good luck and remember...

The Wednesday Update Blog will return next week. See you back here then.

Dow Industrials: 10623.07 +44.42 (What do you know, a close away from 10,500! Enjoy it while it lasts.)
BGEIX: 11.27

4 comments:

Anonymous said...

where are you when we need you

Anonymous said...

Now taking a week off is one thing but I believe Sunday begins a new week. Where's the Blogdate? What does this week have in store? Triple digit losses last week. Are we done?

I'm happy to report that I increased my position in the RYCWX (2-1 Inverse DOW) last Tuesday all by my lonesome. Maybe your tutelage is paying off.


Erick

Anonymous said...

Read a 20 point megabubble story on marketwatch.com

Real estate bubble. Clues: Speculators driving prices. Lenders offer cheap money, short-term loans. Home-equity loans fund short-term spending. Fed chairman sees minimal froth.

Energy and oil bubble. Clues: Crude hits another record. Political turmoil in oil-producing nations. Consumers buy gas-guzzlers at record pace. GM, Ford in trouble.

Foreign-trade deficit. Clues: Monthly deficits top $50 billion. This year's deficit will beat 2004's $617 billion. Foreigners now own $2.5 trillion of America.

Federal-budget deficit. Clues: Federal debt now $7.8 trillion; add another $400 federal deficit this year.

Corporate pensions underfunded. Clues: Airlines, auto, other manufacturers heavily burdened, default to taxpayers.

Local government pensions deficits. Clues: A near $400 billion mess draining local taxpayer resources.

Weak U.S. dollar. Clues: Fear China and other foreign powers will replace dollar reserves. Warren Buffett now betting $20 billion on foreign-currency hedging.

Social Security deficit. Clues: No choice, cut benefits or raise taxes; politicians hate both, so it'll get worse.

Health-care costs. Clues: Burden shifting to employees. Costs above inflation. 43 million uninsured.

Medicare deficit. Clues: Going broke faster than Social Security. Prescription drug benefit added an unfunded $8.1 trillion. Long-term estimates over $36.6 trillion.

Personal-savings shortfall. Clues: We consume not save. National savings rate is zero, down from 8% two decades ago. Average household net worth less than $15,000, excluding home equity.

Consumer debt bubble. Clues: We're living beyond our means. Consumer debt at $2 trillion. At 13%, household interest as a percent of income is at all-time high. Personal bankruptcies rising.

War and defense deficit. Clues: Iraq and Afghanistan wars cost over $200 billion a year, $2 trillion a decade.

Homeland insecurity. Clues: Minimal legislation to protect ports and chemical plants. Federal budget even cut border patrol 90%. Vigilantes patrolling.

Class gap widening. Clues: Superrich and CEOs getting increasing share of wealth, ownership and tax cuts.

Congressional pork. Clues: Both parties act like teenage addicts on a spending spree with stolen credit cards. By not using the veto, the administration acts like a parent who needs Nanny 911.

International credibility. Clues: Image problems: Post-9/11 imperialism, WMDs, Abu Ghraib, Gitmo and more.

Junk mailings. Clues: Mail solicitations increasing for credit cards and hot stock newsletters.

New "Mad Money" cable show. Clues: Frantic, manic entertainment; 1990s irrational exuberance again.

Numerous key mini-bubbles. Environmental, resources, technology, educational, outsourcing, jobs, you pick!

Hope you enjoyed.
Erick

Glenn said...

Good purchase on the RYCWX fund, that must have done well the last week.

I like the megabubble report. It shows a huge credit bubble that will not be able to sustain itself for very much longer.

Thanks for the comments.