New Video: Waiting on a compromise

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Hello traders everywhere! Jeremy Lutz here with your mid-day market update for Thursday, the 20th of December.

The big news of that day is that the NYSE Euronext, the parent of the New York Stock Exchange, planned to sell itself to IntercontinentalExchange, an upstart and lesser-known exchange operator based in Atlanta. NYSE Euronext's stock surged 34 percent. IntercontinentalExchange fell to a low of $123.46. That signals traders think the proposed deal could be more beneficial to NYSE Euronext than to its potential buyer. The marriage still needs the approval of regulators, and it isn't clear if they'll offer it.

Uncertainty about the approaching fiscal cliff is still heavily weighing on the markets today as the deadline approaches. In other news, The National Association of Realtors said existing home sales rose 5.9 percent to an annual rate of 5.04 million in November from a downwardly revised 4.76 million in October. Economists had expected existing home sales to climb to 4.90 million.

With the bigger than expected increase, existing home sales rose to their highest level since spiking to 5.44 million in November of 2009.

Let's see what the Trade Triangles say about the markets today.

Every Success,
Jeremy Lutz

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When to Pay Off Your Mortgage

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My good friend Rob recently paraphrased Warren Buffett as saying, “If he knew where he was going to live for the next decade, he’d buy a house with a long-term mortgage.” Buffett thought a mortgage was a good hedge against inflation, because the homeowner would pay off the mortgage with cheaper dollars down the road.

My own mortgage caused great conflict between the emotional and logical sides of my brain. When I was contemplating paying it off, I spoke with a financial counselor and explained that I was self-employed and my mortgage was my largest monthly payment. I suggested paying it off to eliminate stress. He pooh-poohed that idea, and insisted that I could easily earn more after taxes than the cost of a first mortgage.

I asked if his mortgage was paid off. He looked at me and said, “Oh hell yes!” I was flabbergasted. How could he advise me to do one thing when he’d done the exact opposite? He explained that his wife was from Germany – the old school where you pay your bills and keep out of debt. Were it not for her, he’d gladly have a mortgage. Continue reading "When to Pay Off Your Mortgage" →

Stocks sink as budget deadline nears

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Stocks dipped Wednesday, recording their first loss of the week. President Barack Obama and Republicans in Congress sniped at each other, and a deadline to avoid sweeping tax increases and government spending cuts drew closer.

General Motors stock surged after the government announced plans to sell its ownership stake in the company.

The Dow Jones industrial average closed down 98.99 points, or 0.7 percent, at 13,251.97. The Standard & Poor's 500 index dropped 10.98 points, or 0.8 percent, to 1,435.81. The Nasdaq composite index fell 10.17, or 0.3 percent, to 3,044.36.

Obama said that he and House Speaker John Boehner were "pretty close" to a deal to avoid the tax increases and spending cuts, a combination known as the "fiscal cliff." The two sides have exchanged proposals this week.

But the president also said that congressional Republicans keep finding "ways to say no as opposed to finding ways to say yes." He said the nation deserves compromise in the aftermath of the Connecticut school shooting.

Boehner, speaking to reporters for less than a minute and in a defiant tone, called on Obama to offer a deficit-cutting plan balanced between spending cuts and tax increases. Continue reading "Stocks sink as budget deadline nears" →

New Video: Optimism turns to uncertainty

Posted on by The INO.com Team

Hello traders everywhere! Jeremy Lutz here with your mid-day market update for Wednesday, the 19th of December.

The optimism that fueled yesterdays rally turned to uncertainty today as traders take a breather. Traders are keeping a close eye on developments in Washington, as U.S. government continues to work toward an agreement to avoid the looming fiscal cliff.

While signs of progress toward a compromise helped to drive stocks higher earlier in the week, traders may be waiting for more concrete signs of an agreement.

On the economic front, the Commerce Department released a report before the start of trading showing that U.S. housing starts came in below economist estimates in November.

The report said housing starts fell 3.0 percent to an annual rate of 861,000 in November from the revised October estimate of 888,000. Economists had expected housing starts to fall to 865,000 from the 894,000 originally reported for the previous month.

At the same time, the Commerce Department said building permits rose 3.6 percent to an annual rate of 899,000 in November from the revised October rate of 868,000.

Let's see what the Trade Triangles say about the markets today.

Every Success,
Jeremy Lutz

 

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What's Wrong With Gold?!?!

Posted on by The INO.com Team

Nothing. It’s what’s wrong with peoples’ expectations and perceptions that is the problem.

Once again I’ll quote NFTRH 208 from October 14 (that edition and a sample interim update can be reviewed here: Samples), not to be an ‘I told you so’ wise guy (I didn’t definitively tell anybody anything), but rather to highlight how important sentiment is to this sector and also I suppose to too the horn a little with respect to good risk management.

“Sentiment is over bullish in the precious metals. Public opinion is over bullish, Hulbert’s HGNSI is over bullish and the CoT data show that the little and big speculators are over bullish. This should be cleared out before we renew our bullish enthusiasm on a risk vs. reward basis. Broad stock sentiment is in a better state than in the precious metals. It is mostly neutral.”

The over bullish sentiment in the precious metals has been ground down to a current state of numbness at best, and full out despair at worst. Actually, it is the reverse; a state of despair is best for a contrarian opportunist.

I have received hate mail over the years for the way I poke at the gold “community” even as I am and have been a gold bull. That is because psychologically, this “community” fancies itself as the battlers of evil, the doers of good; and do you know what? Evil wins some pretty big battles along the way. I want neither NFTRH’s subscriber nor myself fighting that battle.

Rather, a calm perspective is required ALL the time; when a market is surging with bullish enthusiasm and when it is in the grips of despair. It is important to look around the next corner and be prepared. It’s what they taught me in Boy Scouts and it has never failed me.

Putting lectures aside, let’s catch up on gold as measured in a few currencies after a look at the nominal weekly chart. Continue reading "What's Wrong With Gold?!?!" →