Are You More Confident?

The last day of the second quarter has been bearish for the Dow, down 13 of the last 17 years. Institutional investors will be pumping up, or selling off portfolios to try to show a good quarter.

Savings rose in May to 6.9%, a huge change for the American people, and sadly, not good for the economy, as it stops spending :)

The S&P 500 closed below its 200 day moving average last Monday and Tuesday, to Floyd an ominous sign of future market bias. As experienced traders with me know I believe in simple numbers:

*The high/low/open/close of a stock, option, or index posted in a historical pattern (as in a supply and demand point and figure chart, which takes out noise)

*How the market (Dow or SPX or OEX) will perform over the next 14 to 21 day period.

*Use of the moving average and bullish percentages in point and figure charting to see "how things hold up." Last Wednesday and Thursday, for example, the S &P 500 did climb back above its 200 day moving average, but the hesitancy remained clear through the week. Breaking a 200 day moving average typically means signs of a larger sell off.

Many traders have asked me how I feel about our economy, or the market in general. What my "predictions are":

1. We need more industrialization in this country, to "make stuff", to create jobs and move products. We have become a nation of consumers of products we buy from other countries, not because of evil corporations going offshore, but because we all want to "buy at a bargain."

2. Obama's "flow the money" plan is sound. The debacle is much greater than we realize, and further reaching. However, the next corruption will be around the end of "journalism" and "newsbite babbles taking over," instead of the exposing of corruption. The next derivative bubble is already being set up, in "carbon credits", by the boys on Wall Street.

3. We're in crappy shape and it's not really better at all. But, it's not worse.

4. No one knows when it will "really get better." It's all babble, educated or not. The market precedes the general economy in any "emotional direction." This should say it all.

At OEX Options Floyd's job is to teach us what are false facts that influence behavior, and emotion. Here's a perfect example: "Americans Save More, Amid Rising Confidence" is the headline in Saturdays' edition of The Wall Street Journal. "U.S. consumers are saving more of their incomes than any time since 1993 - a major shift towards frugality that's expected to be one of the last effects of this deep and lengthy recession." So far, so good, but what they really said is "Americans are saving more because they are scared SHITLESS." The Journal goes on to say "consumer sentiment has been rising for 6 straight months. " Again true, but not noting it had hit its lowest lows in years at Dow 6200. Much of what we are seeing is the stimulus dollars returning to Americans, and Americans NOT spending out of FEAR, and because they are scared "shitless." Of course, sentiment is better. We are a nation of hope.

Read alone "Americans Save more, Amid Rising Confidence" is fully true, but misleading, as the reasons we are saving, and what our "rising confidence really is" are undefined.

Are you more confident?

To help any educated reader gain true perspective on the financial debacle and WHO really caused it, I suggest studying the following article, written by Matt Taibbi, who I consider one of the finest "exposing" journalists in our country. Matt's basic "lack of respect" and "questioning of facts" helps us see beyond the mirrored glass "they" angle at us.

"The Wall Street Bubble Mafia"
How Goldman Sachs took over Washington by engineering every major market manipulation since the Great Depression. By Matt Taibbi-Rolling Stone Magazine 7/9/09 issue.

This is a fascinating read.