Is this the first bull market of the new century?

Could be, that we are seeing the start of a new long-term bull market. There are plenty of reasons for both sides of the age old argument to claim they are going to be right. On the bull side we have all time highs in the Dow, a Fed who has stopped raising rates and strong corporate earnings. The bears scream about inflation, expensive oil and international tensions. Here is a chart that shows an interesting picture, and I am sure the bulls will love it.

It is basically saying that the first few years of a bull market look just like what we have been through, and it really picks up speed in the 4th or 5th year and becomes a highly bullish market like we saw in the 90s.

Could be interesting, we will have to wait and see I guess.

Oil oil everywhere

Oil has fallen more than $15 off of its peak of $78.65 on August 8. It is currently trading at $64.20 as of 10:20am on Wednesday, Sept. 14th. Brent is down more than 20 percent from its peak, meeting the technical criteria for the start of a bear market.
"Even though we've retraced certain percentages similar to this, it definitely seems that the market is different now," says New York-based ABN AMRO broker John Brady. "Other times I saw (the corrections) leading to great buy opportunities, but I don't necessarily think that this time."

The drop through the 200-day moving average last week and this week's fall below a three-year trend line -- intact since mid-2003 -- both send worrying signals.

Unless we see a large disruption in oil, i.e. war with Iran, or a hurricane hitting the US gulf coast, oil could steadily drop as we go through this price correction. Another factor in the falling prices are the geopolitical concerns are dissipating somewhat. The Israeli war and Iran backing down from its quest for Nukes are easing the minds of traders and investors.

Great news!

http://biz.yahoo.com/ap/060905/major_oil_discovery.html?.v=5

OSLO, Norway (AP) -- Tests of a deep-water well in the Gulf of Mexico could indicate a significant oil discovery, three companies announced Tuesday, in the first project to tap into a region that reportedly could boost U.S. oil and gas reserves by as much as 50 percent.

This is a great find, this means a lot for the global oil markets, but even more for the US markets. Hopefully this field will prove to be of significant size that will allow the US to stop having to rely on the geopolitcal hotspots of the world for energy.

Oil prices dropped slightly after this was announced, but they will not fully price in this discovery until the field sizes are confirmed. Keep your eyes peeled for falling gas prices!

Can we see into the future?

I found (actually my intern found it and showed it to me) an interesting article a minute ago, it is a chart of the S&P 500 and the NAHB housing index charted together. The S&P 500 is known to lag the housing market by about 12 months, with a near 80% correlation (which is pretty strong).

We all know what the housing market is doing and what it is likely to do in the near and mid-term future. This chart suggests that the market is going to tank within the next year, as the housing market is doing now. With the current data coming out showing this is likely the case, it seems that this correlation is only going to get stronger in the near future. Add that to the Feds interest rate hike campaign that lasted so long, we could easily see a recession looming on the horizon if the Feds over did it.


http://www.safehaven.com/article-5772.htm

Long Summer

It has been a very long and slow summer. Many traders out there have taken extended vacations and there really hasn't been anything to write home about.

The little war in Lebanon, coupled with the oil pipeline problem in Alaska has caused some oil jitters recently, keeping oil prices elevated. Adding to the problem of $70+ oil is Iran, they are still up to their old tricks, trying to rock the oil market by threatening everyone. They have blown off U.N. demands and risked sanctions against their country over their nuke program, this has caused a large risk premium to build in the oil markets as traders are unwilling to sell with the possibility of war with such a large supplier to the global oil markets. Today a rumor rippled through the markets that Iran has made a breakthrough in their nuclear program which sent oil north slightly after a surprisingly bearish oil inventory report.

Hopefully, after the coming holiday, traders will return to their posts to get the overall volume back up to a respectable level. Until then, be patient and selective.

Bad week, oil is nearing $80 a barrel, War in the middle east (not us this time) and bad earnings

End of the week market overview from Yahoo! Finance..

I think this is a great explanation of the past week...

The market started the week optimistic about the outlook for second quarter earnings reports. The week ended on a dismal note, with concerns about war in the Middle East and oil prices dominating the action.

The S&P 500 index gained 2 points on Monday. That reflected a decent underlying tone. Merrill Lynch downgraded the technology sector to "underweight" and that led to a 13 point drop in the Nasdaq. The critically important technology sector continues to be the weakest of the ten S&P categories, but the overall S&P held steady.

On Tuesday, the S&P 500 index gained another 5 points. Alcoa reported decent earnings and the general tone was moderately bullish. The Nasdaq even snapped back 11 points. Then, the roof caved in.

Wednesday the market tanked. The S&P lost 14 points and the Nasdaq 38. Semiconductor stocks got slammed and a number of analysts cut earnings estimates for key companies such as IBM, Dell, and Apple for the second half of the year.

Also of concern were increased tensions in the Middle East which pushed oil prices towards $75 a barrel.

The tensions were soon labeled "war" and the S&P plunged another 16 points on Thursday. Oil prices rose towards $77 a barrel. Analysts didn't help, as Wal-Mart and Walt Disney received notable downgrades. There was no sign of a bounce.

It didn't get any better on Friday, as the S&P dropped significantly again. The war and oil prices were a primary factor, but there was also no good news to reverse the selling. Oil prices rose above $78 during the day, and fears of a significant consumer slowdown were exacerbated by a drop in June retail

Feds up rates by 25 basis points. Market rockets 217

5.25% is the result of 17 consecutive interest rate hikes by the Feds. While the market may see this rate as high given the current outlook and state of the economy, the Dow finished up 217.24 points to close at 11,191.80 and nasdaq gained 63 to close at 2,174. The reason we saw an upswing was that the Feds indicated that they will be dependent upon economic data that will be coming out between now and the next Fed meeting in August to determine if the rates should continue thier north-bound course. This suggests a pause might be in the works over at the Fed building. Fed funds futures dropped after the report was given at 2:15pm today from around 80-95% to less than 65%.

This might be the signal that we have seen a bottom in the market for a while, but more importantly, it means that all economic data from now until August is going to be very important and move the markets as traders try to figure out what the Feds will do in the future.