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When an investor receives a newsletter full of stock tips and information, the first instinct is to act quickly on the information in order to make money before anyone else does. However, scam artists realize that investors like to make decisions in a short amount of time and capitalize on this impulsiveness. This is why newsletters work so well to lure in new victims.

There are several things that investors can do in order to protect themselves from bad information that may be found in newsletters, emails, or text messages. First of all, the source of the newsletter needs to be acknowledged. This will give the reader a clear idea as to who might be benefiting from the sale of the stock. Disclosures of the information that are nonexistent or difficult to find might be a clue that the newsletter has other motivations for their advice.

Any newsletter or publication that advises you to invest in small stocks that aren?t filing reports with the SEC should be carefully scrutinized. These kinds of stock tips are trying the famous ?pump and dump? scheme in which a little known stock is strongly advised, causing many investors to invest their money in the stock. The demand for the stock then goes up, along with the prices. However, the scam artists will then sell off their shares of the now-high priced stock, leaving the investors with a loss for their initial investments. These kinds of small stock are almost guaranteed to be scams or stock that won?t do well.

Researching the source of the information is strongly suggested as any holes in the story may be signs of a possible scam. By going to the SEC, the NAAD, and the local regulatory committees, an investor can see where the stock?s company is registered, if they are registered, and even take a look at their financial reports. Asking a lot of questions is the best way to get a fair picture of the stock Read more…

Currently, there’s uncertainty if the economy will fall into recession within a year (e.g. given some of the previous money supply tightenings are in the “pipeline,” and the flattening of the yield curve). In 1994-95, the Federal Reserve achieved a “soft-landing,” and may avert another recession in the current period.

The first chart is an SPX 1993-94 daily chart that shows a top in Feburary ’94, a 9.7% fall in two-months, and then a general uptrend. The second chart is an SPX current daily chart that shows a top three-months ago. The vertical line in the first chart is where SPX was three-months after the ’94 top.

There are some crude similarites between the two charts, including falling to bottoms quickly, making higher highs and higher lows, and the 50-day MAs falling below the 200-day MAs. The two arrows, in the first chart, indicate a more sustainable rally above the 50-day MA, which began to rise. Consequently, it’s uncertain if SPX is currently in a similar uptrend.

The third chart shows intermediate-term technical indicators remain bullish (the CPC 50-day MA, i.e. Put/Call above chart, is particularly bullish, because it peaked at 1.08, which is an all-time high). However, short-term technical indicators are overbought. SPX 1,261 is key support, i.e. breakout point of mid-July high, middle of daily Bollinger Band, and rising 50-day MA. SPX resistance is around 1,290, i.e. June high.

If the FOMC pauses Tuesday, that may ignite a rally, perhaps to around 1,290. Read more…

The SPX weekly chart below shows short-term resistance around 1,325, i.e. yearly high and weekly upper Bollinger Band. On Friday, SPX rose to 1,324 3/4 and was turned-back to close at 1,319 3/4. Also, the FOMC announcement is Wednesday. So, SPX may trade below 1,325 before then.

The daily NYSI (brown line) made lower highs throughout the current cyclical bull market, while SPX made higher highs. On Friday, NYSI closed at 727, which is below the 772 most recent high, while SPX hasn’t reached a new high. So, SPX may rise to a new cyclical bull market high before beginning an intermediate-term downtrend.

Sentiment indicators, e.g. the CPC 10-week MA (above price chart), remain bullish. However, the NYMO 10-week MA (below price chart) has turned bearish. Another major mixed signal is September has been the weakest month for the stock market. However, the price of oil fell below a long-term support level a week ago (see daily oil chart below).

Also, the SPX chart shows there’s major support around 1,280 (i.e. 10

The cyclical bull market, which began in March 2003 (or October 2002 by some estimates), within the structural bear market, that began in March 2000, was fueled by monetary policy. The FOMC began an easing cycle in January 2001 when it lowered the Fed Funds Rate from 6.50% to 6%. The FOMC continued to lower the Fed Funds Rate, until it reached 1% in June 2003, and kept there for a year. In June 2004, a tightening cycle began. The Fed Funds Rate reached 5.25% in June 2006 (to neutral from accommodative), and then the FOMC paused in August for the first time in over two years. Consequently, there has been a great deal of speculation that the tightening cycle is over (a restrictive stance won’t be taken) and perhaps an easing cycle will begin in 2007.

Below is a daily chart of NYSI (red line and right scale) and SPX (black line and left scale). NYSI made lower highs, while SPX made higher highs over the cyclical bull market. Currently, NYSI is near the top of the downtrend line, which indicates SPX is near an intermediate-term top, although NYSI pinpoints lows better than highs. Below the price chart is the NYMO 50-day MA, which is at a level similar to recent SPX intermediate-term tops. However, sentiment indicators, including the CPC 50-day MA (above price chart), which fell from an all-time high, and AAII and ISEE (not shown) show a great deal of pessimism, which is SPX bullish. It seems, almost everyone is expecting SPX to fall.

So, monetary policy and intermediate-term technical indicators are market bearish, while sentiment indicators are market bullish. Also, mid-September through much of October is historically the weakest market period. Consequently, Read more…

The first set of charts include an SPX six-month daily chart that shows a W-pattern and a somewhat bullish inverse head

The SPX daily chart below shows intermediate-term technical indicators remain bullish. However, NYSI (above price chart), which has been making lower highs over the cyclical bull market, suggests SPX may reach an intermediate-term peak in early-September, and fall sharply into October. Also, in early-September, the NYMO 50-day MA may reach an overbought level, around 20, and the CPC 50-day MA may become less bullish (both below price chart).

Last week SPX rallied on a four-day short-squeeze, rising to a three-month high, and closed the week at the high above 1,302. Consequently, short-term technical indicators are severely overbought. The short-squeeze may be completed Monday, if not already finished, and a pullback or consolidation should take place next week. SPX may then rally into the new month and the Labor Day holiday September 4th.

Major resistance levels are 1,300 to 1,310 (extended Price-by-Volume bar of March to May consolidation), and 1,326 (yearly high). Major support levels are 1,290 (early August high), 1,275 (previous support

The first chart is an SPX daily chart that shows bullish intermediate-term indicators. The CPC 50-day MA (above price chart) fell from 1.08 Monday to 1.05 Friday, while the NYMO 50-day MA (below price chart) continues the uptrend (other indicators not shown also show similar bullish patterns). Also, SPX has recently made higher lows and higher highs (the SPX high Friday was 1,280.42).

The second chart is an SPX monthly chart. Monday is the end of July. If SPX closes above 1,285 Monday, the MACD indicator (below price chart) may close the month maintaining the bullish crossover. Also, SPX has closed each month above the middle Bollinger Band, since rising above that level after the cyclical bull market began. Money Flow (above price chart) increased and remained positive in July.

SPX closed at 1,278.55 Friday. Currently, short-term technical indicators show SPX is severely overbought. So, if SPX closes Monday above 1,285, to maintain the monthly bullish MACD, it may fall to at least 1,261 key support later in the week, although the first few days of a new month tend to be bullish. Also, the FOMC announcement is August 8th Read more…

Within the last several weeks the Federal Reserve announced its long range goals for the economy and the stock market rallied.

But then, several days later, the Middle East ignited once more, sending markets sharply lower.

The Fed?s policies quite rightly inform stock valuations, because the Fed directly influences interest rates. When rates rise, investors have the option of moving their money to bonds, to CD?s, and to other interest bearing vehicles, and out of equities.

But what does the Middle East have to do with the value of Altria, parent company of Phillip Morris, maker of Marlboro cigarettes, and majority owner of Kraft?

Altria, along with most other big stocks dipped when investors heard about Lebanon. With world tensions rising, you?d think people would smoke more and Altria would spike on such news.

This example shows that markets overreact to events.

You can take advantage of this fact through diligent observation and patience because bad news is cyclical. There is regularity to it, despite its erratic appearance.

Before 9/11, for example, there was a period of unusual calm, an absence of bad news, especially for the United States. If you live in the Midwest you know that there is an eerie calm before storms, and you can take your cue from it, and seek shelter.

Recently, a stalemate was preventing progress in the Mideast, and pressures were building. The sensitive investor could have predicted there would be an aggressive change in the status quo.

Moreover, the Group of Eight conference was convening in St. Petersberg, and this event is usually accompanied by tensions and protests, with various factions Read more…

The price chart below shows daily SPX (green line and right scale), daily NYSE Summation Index (NYSI; red line and left scale), and the NYSE Oscillator (NYMO) 50-day MA (blue line). Normally, when both NYSI and the NYMO 50-day MA rise, SPX also rises. Moreover, both NYSI and the NYMO 50-day MA fell to low enough levels recently to create an SPX intermediate-term bottom. Also, above the price chart is the CBOE Put/Call (CPC) 21-day MA and below the price chart is the CPC 50-day MA. Typically, a falling CPC 21-day MA is market bullish. Both the CPC 21

The monthly chart below shows SPX managed to close the month above the middle Bollinger Band, maintained the bullish MACD, and held Money Flow steady. So, the cyclical bull market remains intact. Also, intermediate-term technical indicators, e.g. the NYSE’s Summation Index, Bullish Percent Index, and Oscillator MAs, reached low enough levels in June, consistent with other cyclical bull market pullbacks, to indicate an intermediate-term bottom. However, a breakdown of those lows will lead to a larger correction or a bear market. Also, SPX had a classic October to May rally and has entered the seasonally weaker period. Consequently, a volatile trading range will likely take place over the next few months.

The daily chart below may indicate the SPX July trading range. Volume normally decreases over the summer. Major support levels are 1,253 (multi-year Fibonacci level) and 1,246 (previous support