At War With Our Own Stupidity

Monday is Labor Day and the market is closed. I'd like to summarize how I see this week, and the gyrations of our market.

First, know our maxim:

* Try to always sell a stock so the person who buys it can make a profit. This way you enjoy most of the ride. Never go to the top of the ride.
Second, recognize that the typical trading range over the past 10 years is for the Dow to make a move bi-directionally, and to be volatile enough to slightly consolidate, over a 10 market day period.
This has recently been increasing to over 22 market days, a sign of high frequency trading prolonging moves, and perhaps the overwhelming euphoria of the country to say "something is really going right."

Third, my concern with any large run up is that if it is too fast it typically falters, and never regains the ground it had gotten to. A slower and steady move upward shows real buying and commitment to the market.
Instead we've seen day trading on bank stocks, and AIG, as our lead profit gains, around oil, while Gold moves only 6%.

We should be concerned that:

http://www.bloomberg.com/apps/news?pid=20601109&sid=apG_YeCYUyEg

and from Bloomberg:


"On Monday, a glum tone carried through the opening bell in New York after China's benchmark stock index, the Shanghai Composite, fell 6.7% to 2667.75, its lowest finish since May. Fears about an overhang of new stock issues in the Chinese market added to concerns over tightening credit. The volatile market, which is mostly closed to international investors, has given back nearly a quarter of its value since it peaked on Aug 4.

Markets in Europe also slipped, though London markets were closed for a holiday.

Heading into September, a notoriously bad month for stocks, the Dow industrials are up 8.75% for the year. That is just off from the best levels seen since early last November. Though trading volume has been light in recent days, the market has been able to hold on to a rally that sent the Dow up 12% since mid-July and up 45.8% from the March 9 low."
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Yesterday I received the following email from a subscriber concerning my ranting on the soap box on those searching for the Holy Grail, and it speaks my mind perfectly!


> "hello floyd,
>
> yesterday, a potential subscriber wrote to you asking:
>
"I am only able to devote about an hour to trading each day, or to learning about it, and have a portfolio of $60,000 I would like to immediately begin to trade, buying your Level 3 service, with goals of being self employed and earning $10,000 a month clear from trading options within 6 months."
>
> out of curiosity...what do you think to going rate would be for a service that allows you to make roughly $500/ day for only one hour of work on average (winners and losers plus commissions, cost of your level three service, etc.) that you have invested nothing into learning about it?.. since he wants to trade immediately, i assume he wants specific entry points at specific times and exit points given to him for his subscription...
>
> i would imagine that the subscription alone to this "black box system" would be more than his existing portfolio even if there was such a service and if there were a price to it...out of curiosity, what would you charge for such a service if it existed? would you offer it even if you had it?
>
> there are plenty of books out there that show how someone took $200 and turned it into a million and the author is willing to sell his information for $49.95...maybe he should start with one of those...
>
> just wondering!
>
> sincerely,
>
>
> jmp level 2"

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Now the market. Oil may hold steady with this: http://www.bloomberg.com/apps/news?pid=20601087&sid=ayNG0aazJhAY

This may prompt more stimulus, with Europe not raising interest rates: http://www.bloomberg.com/apps/news?pid=20601087&sid=aePx72uwvFMA

This shows the utter games being played on "socialized medicine": http://www.huffingtonpost.com/2009/09/02/gopers-decrying-socialize_n_275196.html

And this shows why our country is at war with our own stupidity: http://mobile.salon.com/politics/war_room/2009/09/02/obama_indoctrination/index.html