OK, so we started on a good note early in the week and finished on a bit of a sour note Friday. So, what does that mean? Frankly, very little except that at the “magic” Dow 10,000 Industrials level investors need a strong heart to proceed to be buyers. Not a lot of strong hearts out there last week.
Now, if you look at the numbers only, we did tack on 16 S&P points (from 1071 to 1087) and 130 points to the Dow Industrials (from 9865 to 9995) last week. As I see it, that is a positive number no matter how you cut it. But, when you add to that a fairly quiet week in bonds with a drop of only 13/32, just a tad short of a ½ point drop (from 119 31/32 to 119 18/32), all-in-all the price action was pretty much a very normal (and low) weekly range. Key to it all is that the big bond guys are still not at all concerned about the stock market, telling me that the buying will likely continue.
So, what will happen next week? Sure wish I knew! All I know for sure is that I can tell you to continue to be buyers because the Super Chart is still saying that the S&P 1220-1260 is the next target. In my view, investors need only know this and one other fact to continue buying. The second fact is that the S&P 990-1020 area remains the critical support at the moment, about 60-90 points BELOW the close late Friday.
And you are right, if we were to see this lower area, I would begin giving you a whole lot of important facts and trading suggestions about how to treat your portfolio money to protect its value. But, for now, just be a buyer. When to stop buying? My suggestion is that, as long as we continue up, at around the S&P 1150-70 area, I would begin to lighten up on buying and by 1200 I would clearly have stopped.
What we should do when we reach the current target on the S&P (the 1220-1260 I mentioned above) will only be known when we get closer to that price and see what the charts look like. By then, lots of important data will have been issued and some important political steps taken. Patience dear reader, we shall see it all in due time and in time to take profitable action.
Speaking of political steps, as most of you know, I don’t make political comments in this Report, but I do carefully observe the possible effects of major political events on our portfolio. The two I see approaching at the moment are the health bill (everyone has some opinion on that one, some have pages and pages of them) and the off-year elections to be held in several weeks. The health bill is still pretty much a December event, in my opinion, and not much can be said about its possible effects until we are much closer to that period.
As for the comment on the elections, it can be summed up quite succinctly. If entitlement issues on ballots across the country are turned back in a majority of cases, expect the market to surge. If some of the high profile offices up for grabs go to other than Democrats, again, expect the market to surge. But, if either go the way of the Obama Administration policies, expect some real choppy action in the market. You’re right, look for action no matter what happens.
Now, it didn’t take a rocket scientist to figure all that out, but I do want you to be especially alert to election moves that run counter to the Obama policies. A strong counter outcome across the country, even for this off-year election, could find us closing in on my S&P target much faster that I currently expect. More on this next week as we draw closer to the Election Day date.
I will have an updated Super Chart for you next week. This week it is basically just what it showed last week, just that prices have moved a tad higher (16 points) above the Super Chart Keyline currently at 1068.
I do have another stock chart (see below) from one of the top ten sectors I listed for you last week. This one is from the Leisure and Recreation sector. The stock symbol is Multimedia Games; symbol MGAM; It is traded on the NASDAQ National System and has been since 2001. They have been in business since 1991 and their web site will fill you in on the rest of the vital data.
I like its Super Chart, as its price has crossed up the Super Chart Keyline (July 24) at $5.71 a share. It closed last Friday at 5.25 a share. The current Super Chart Keyline is at $4.66 a share, so we are well above it as of Friday. Next resistance level above the current price is at about $7-8.00 a share, above that at about $11-12.00. The all-important lower momentum section of the chart shows low readings that often presage a rally. If I bought it, I would exit the trade if it closes a week below $4.00, I think (remember the chart below is a weekly one). But, use your own risk level judgment for that one.
As I have said, I will be including stock charts like this one from time to time. But do remember, I will not be following the stocks I show on a weekly basis nor will I be issuing either buy or sell signals on these stocks. If you too like the Super Chart I offer, you will need to make the buy (and later) sell decisions for yourselves if you do take a stock position. As I have told you before, I am investigating a way that you might be able to call up Super Charts for stocks you like, but that is still down the road a bit.
Finally, just before I close, if you have any questions about the dollar or gold, here are my brief comments: Buy Gold – The dollar continues to fall, but not as fast as in the last several weeks. I expect the weakness to continue for at least several weeks – Buy Gold.
That’s about it for this week, so I will close for now. If you have questions, do use the comment section to ask them. While I don’t give personal investment advice, I will try to include what I can in future Reports to address questions that crop up most often.
So, do hope your coming investment week is a good one. In the meantime, you keep in touch. I do! See you next week.
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About BawldGuy
max, where can i go to start learning about “how to invest wisely in stocks”? Investment 101? i’ve never dabbled in stock investments except for a brief encounter last year for about 2 months with AXA Advisors… it would be most helpful to find something or someone who can assist me in understanding the ins and outs of investments! thank you for your assistance and luv your segments!
Max,
Our host is a big advocate of a comfort zone and what he calls a Sominex account. Isn’t investing at 1060 and all in at 1200 (S&P) like picking up nickels in front of a steamroller?
Robert — Speaking only for myself here, but knowing Max as I have for a couple years now, I wouldn’t take him literally when he says ‘all in’ in the sense you wouldn’t have cash reserves. There’s all in, and there’s all in.
This ain’t Texas Hole ‘Em.
Hi Robert,
Hi Robert,
Glad to have you visiting the web site. For those that have followed me for 2-3 years, as the Bawldguy says, know that my first priority is a balanced portfolio and that depends totally on YOUR needs. At 30, all-in means that 25-30% in relatively safe interest bearing income investments and 60-70& in growth stocks, with a cash reserve of 5-7% for special ituations. Now if you are 60, the mix is 55-65% in safe interest bearing investments, 20-30% in stocks when the S&P is ABOVE my Super Chart Keyline and the rest in cash for emergency needs if withdrawal is necessary to meet home needs or for short term investments they present themselves. In bewteen that range, each investor needs to structure a mix that WORKS for them. All in, this time around, means that all “stock allocated” monies should be in the market NOW. When we cross down the Super Chart Keyline, as we did on Feb. 8, 2008, all stocks are sold at once and cash invested in safe interest bearing investments. Younger investors might even consider short selling at that point. Hope that helps. You will find that I am not a fast gun, an aggressive shooter for 10 times your original investment, or the like, true, but after 40+years in this business, I have lost count of the advisors that just disappeared from the business selling those kind of recommendations. Sominex I am not. But, still here I am. Look forward to seeing you regularly.
Best regards,
max
Hi Susie,
Glad to met you. Your question is one I see a lot and not just on my web site. There are a lot of answers to your question and dozens of services out there are more than ready to fill your need. If you want my best advice it would be to first take the time to visit your library, the stock section, and look at what books they have on their shelves that address your questions. Why the library? Simple. No one will be trying to convince you of their specific points of view, sell you on buying their books or services, or trying to part you and your money. Take it slow. Read as many books as you can, learn the stock market “lingo” from these books, make notes on things that catch your interest or confuse you. Follow up on the areas that seem of interst by more specific subject books and seek the answers to your questions in the books, too. Some internet seeking might also help, but BE SURE, not to give your phone, address, or e-mail address to anyone until you are very comfortable with your progress. One day, you will find youself beginnning to think seriously about dipping your feet into the investing waters. When you get there – and I would say that you need at least 9-12 months of careful study first, remember you are starting from ground zero – find a good reputable broker with whom to sit down and begin your life long investing activities. Where do you find such a person? Ask your friends who they use – your successful friends – ask relatives, ask your banker who he or she uses, ask your church friends – in other words relatively unbiased sources. If you take the initial learning time, all 9-12 months, I would then say you are ready to begin the FIRST steps to building a sold future in investing. No patience, no good outcome has been my experince. Hope that helps some. Will look to see you at the web site often. God speed.
Best regards,
Max
Thank you Max for this sound word of advice…I will take your wisdom to the next level and take my first step into the library for the next 6-9 months before I start my adventure in investments. I appreciate your guidance and continue to look forward to your segments… Definitely, God speed!
I am not a chartist, but fully appreciate your attention to price. I generally use a PE10 ratio as a guideline to price.
Your advice on how much of your $$$ should be riding in the stock market is right on!
I’m sure you have seen the charts demonstrating superior stock market performance with a Democrat president over a Rep president. Don’t have any explanation for that other that it is there.
As one that rode out the last stock market downturn without selling and then started to buy in April with additional funds, I can appreciate your advise to sell everything. But, I just can’t make myself sell good companies that I have no intention of using the money for the next 20 years! Yes, I follow Buffett’s advice!
Hi David,
In a nutshell, unless you have the foundation that Buffett has, it is always better to find a reliable signal that tells you the market is no longer buying and sell what you have and then when the signal says they are buying again, rebuy what you had (if you like them that much) at a lower price – the experience I have had for over 40 years, so far. Mr. Buffett is right, but only for his situation, not the average investors. But, to each his own. Glad to see you visiting us. Look forward to seeing you regularly.
Best
Max
Max,I was a subscriber to your HIGH YIELD INVESTING NEWS LETTER and when you left, I was like lost as to what to do. I’m glad I found you again and am looking forward to the advise and what your SUPER CHART is predicting.
Ray