louyah analyst report for those still in the dark room or having 'shock' time

Stocks Careen As Correction Takes Hold

Friday's plunge worsened the stock market's condition, leaving little doubt it is in a correction.

The Nasdaq fell 2.7%, the S&P 500 2.2%, the Dow 2.1% and the NYSE composite 2%. All four indexes closed under their 50-day moving average.

Volume was down across the board Friday, but that didn't prevent a number of leading stocks from suffering damage.

Many leading stocks had already come under selling, while distribution days piled up. All that added up to a bearish picture for stocks.

For the second time since the March uptrend began, Market has shifted to "correction." Three rounds of bad news on three separate days were too much for the market to bear.

On Wednesday, reports said China was curbing bank loans.

On Thursday, President Obama called for limiting the investment choices and size of banks.

On Friday, two Democratic senators declared they would oppose the reappointment of Federal Reserve chief Ben Bernanke. His term expires Jan. 31.

It was clear to the Street that none of these moves — if they stick — would help stocks.

The NYSE composite fell 4.4% for the week, the Dow 4.1%, the S&P 500 3.9% and the Nasdaq 3.6%.

The last time the Market switched to correction was Oct. 27. That lasted about a week before the uptrend resumed. That's no assurance that the market is in for another brief pullback.

History's seven nastiest bear markets show a pattern to the bear-killing uptrends.

Each had a rebound of 51% to 101%. (The Nasdaq's 2009 rebound was 83%.) Each then corrected 10% to 39% before starting a second leg to the uptrend.

This uptrend hasn't corrected significantly yet. And if the puts vs. calls indicator is right, it won't now. This contrarian indicator turned bullish on Friday as it passed the 1.0 mark.

Four times it has signaled a short-term bottom since July, and each time the Nasdaq has turned up. The indicator, though, doesn't always nail the lows.

What should the investor do under these circumstances?

With the market in correction, avoid buying any stocks. If you lightened holdings when the market came under pressure Wednesday or sold stocks that fell 8% below your purchase price, then you should have some cash on the sidelines.

There is no reason to risk that money. Your remaining positions should be watched carefully.

You may have noticed that distribution days aren't listed in today's Market. That's deliberate.

Investors now should be looking for a follow-through day that confirms an uptrend is under way. That's a decisive percentage gain in a major index on Day 4 or later of an attempted rally.

Is China Really Growing That Fast?

Competitiveness: A spate of new reports show China leapfrogging other nations on its way to economic superpower status. Time to concede the global economic lead to the world's most populous nation? Hardly.

The news these days is filled with Chinese triumphalism. The indispensable Drudge Report did us all a favor by collecting a number of very recent headlines about China's soaring, seemingly unstoppable, economy. Among them:

• "China Ends U.S.'s Reign as Largest Auto Market" (Bloomberg).

• "China Becomes Biggest Exporter, Edging Out Germany" (Associated Press).

• "China Banks Eclipse U.S. Rivals" (Financial Times of London).

To top it off, Nobel Prize-winning economist Robert Fogel predicted early in the new year that China's economy alone would hit $123 trillion in 2040, three times what the entire world produced in 2000 and more than twice the world's current output. Per-capita income will be $85,000, more than triple that in the European Union.

Such news is sure to spark a new round of hand-wringing in the U.S. It's only in a matter of time, they will tell us, that China will be top dog — and the U.S. just an economic pup by comparison.

With reported average GDP growth of 10% (even last year, during a global financial crisis, China reportedly grew at an 8% pace and is predicted to grow 9.5% this year), that's a real possibility. Ten percent growth leads to a doubling of the economy in just seven years. At 2.5%, where the U.S. is now, it takes about 29 years.

So China's total GDP of $5 trillion will soon overtake our $14 trillion, right? Not so fast.

First, let's ask the question that economists often ask but is all but ignored in the media: Can China's data be trusted? Many economists believe the answer is no. In fact, no one knows for sure what China's GDP is. The communist government simply announces it — there is virtually no transparency.

These problems go way back. In 1992, China finally stopped using economic accounting methods it learned from the USSR — methods that led to consistent overestimates of Chinese growth.

Yet problems remained. In a 2001 study, economist Thomas Rawski of the University of Pittsburgh declared that "recent growth claims defy economic logic and clash with a broad array of credible information from Chinese resources ..."

Last year, Derek Scissors, a fellow at the Heritage Foundation, likewise critiqued China's economic record-keeping — and asserted China's current economic model of high growth based on forced lending by the government is unsustainable.

"In the past, the People's Bank would report loan growth in the 15% range, supporting better-than-10% GDP growth," he wrote. Last year, China's lending surged by a third, thanks to its own $590 billion "stimulus" package. But growth was just 8%.

Sound familiar? In the late 1980s, Japan was set to own the world based on its vast expansion of lending and exports. Some see a similar Chinese bubble in the making — one that would dwarf the financial tsunami that hit Western economies after 2007.

This is not to say China's economy is not growing. It is. It's just not growing as fast as its officials say.

But the real question is — how well do individuals do in China in terms of output? Even using questionable current data and despite decades of rapid growth, the results aren't so impressive.

Per-capita GDP in China isn't even $2,500 a year, in real dollars (see chart). In the U.S., it's $42,000 a year. In short, it'll be decades, if ever, before China closes that gap.

1) You have to understand the position that economists and analysts are in. They work for corporations, insurance, Wall Street, banking and government and if they thought we were in a depression and they publicly announced that all chances for advancement would be lost or they would be squeezed out of the firm or simply fired.

Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion.

The unpopular legislation is needed to allow the federal government to issue bonds to fund programs and prevent a first-time default on obligations. It promises to be a challenging debate for Democrats, who, as the party in power, hold the responsibility for passing the legislation.

A 1.2% decline in light truck prices pulled core lower. Consumer prices, an actual cost to consumers unlike an accounting entry like light trucks, increased 0.3%. Food prices jumped 1.6%.

But inflation in the pipeline jumped. Intermediate goods prices (both headline & core) rose 0.5%. Crude prices jumped 1.0% headline and 5.0% core in surging commodity prices.

Columbia University professor Joseph Stiglitz, a Nobel Prize-winning economist, said the U.S. should inject a second round of stimulus spending into the economy to avert a “double-dip” recession.

It will be “2012 or 2013 at the earliest that we will be back to normality,” Stiglitz said in an interview today on Bloomberg Television. “This is a scenario that is putting us a little better but not much better than the Japanese malaise.”

http://www.marketoracle.co.uk/Article16746.html

2) Fed tipped to hold its course as clock runs on stimulus

The US Federal Reserve is expected to signal a steady policy course at its upcoming meeting, in an effort to keep a fragile economic recovery on track, analysts say.

The central bank opens a two-day policy meeting Tuesday that could be overshadowed by the drama surrounding Fed chairman Ben Bernanke's reappointment to a second term.

Many economists believe the Fed will keep the ultralow rates into the second half of 2010, or possibly into 2011.

But questions remain on the Fed's plans to wind down a series of special programs aimed at pumping more than one trillion dollars into the financial system, initiatives set to expire in the coming months.

Sohn said he has concerns about what will happen to the mortgage market and the overall economy if the Fed holds to its schedule of ending purchases of mortgage-backed securities at the end of March.

http://www.breitbart.com/article.php?id=CN...&show_article=1

3) shorts ratio r increasing whilst investment advisors r stil 50% bullish, wat does it means? no idea leh



4) SPECIAL - "How To Spot Market Tops"

"How To Spot Market Tops" - When the "big boys" (institutional investors like mutual funds, banks, pension funds, insurance companies, etc) head for the exits, you need to as well.

They control an estimated 80% of the price action of the US stock market, so it pays to know what they are doing. Since they are so big, they leave tracks behind. By keeping a close watch on the markets you can step aside and not have to "ride" the markets down during their "gut-wrenching" declines of 15%, 25%, 50% and more.

The best way to gauge if the institutional players are exiting the market is to watch what for we call "distribution days." Simply, this is when one of the major indexes ( the NASDAQ, S&P 500, Dow Industrials, NYSE Composite) is down more than .2% on heavier volume than the previous session.

Not all indexes have to fall at the same time. If only one of the gauges suffers heavy distribution that still can signal trouble ahead.

When the market racks up four of five of these in a few weeks time, chances are the rally is in trouble and the market may reverse lower.

Below is a chart of the NASDAQ in 2000 as it peaked on March 10th and then started it's massive decline. The first day of heavy distribution came 3 sessions prior to the peak. The index fell for several sessions putting in another distribution day, then tried to rally back.

That rally stalled in late March and then the NASDAQ racked-up three days of heavy distribution in a row. A definite signal to exit the markets. The index also sliced through it's 50 day moving average on heavy volume, another major sell signal.

The NASDAQ put in a total of 9 distribution days in a month's time. During all this, scores of market "pundits" were telling investors to "buy the dips." Many individuals who did not heed the real warning signs lost a lot of money and those who stayed on margin were most likely wiped out. This ended up being one of the biggest collapses in Wall St. history.

Don't panic if the market flashes a few distribution days from time to time. The market can't go higher without taking an occasional breather now and then. It's when they pile up in a very short time that you need to worry.

Also, not every distribution day should cause you concern. Higher volume selling after a holiday usually means that more people are now back after a quiet pre-holiday period.

"Churning" near the top is also a sign of distribution. This is when the market is not advancing near the top but the volume is brisk. This means that there is a lot of institutional trading going on, but the buyers' demand is not strong enough to push prices up.

When you see heavy distribution in the markets you must act quickly. If you are on margin, get off! Sell your weaker acting stocks. If selling persists, raise cash to protect your hard earned assets. Don't listen to the experts, listen to the markets.



[QUOTE]

Ambition: climbing over others to make it; Passion: arriving while everyone enjoyed the climb

This post has been edited by sulifeisgreat: Jan 25 2010, 06:55 PM

Seriously, in every measure, we are in for some tough times. The seesawing between deflation and inflation alone, much less figuring out which sectors of the economy each is occuring in and how it affects the overall picture is quite a chore!

Just know....sometime in the not too distannt future, the S willHTF and you had better be prepared. The Baltic Dry Index is just one of many indicators of trouble ahead.
Lots of new cargo ships will be completed, floated, and put into service in 2010.

Each of the new cargo ships will be larger than the average size of exsting cargo ships built prior to this year.

Almost all of the existing cargo ships will continue to remain in service.

Thus, lots of cargo ships.

Of course, global shipping is below its 2006 peak.

So, lots of cargo ships with much less cargo to be shipped.

Will transportation rates (and profits) go up or down?

Too much shipping capacity.

Too many ships.

You have to order ships many, many years in advance and shipping companies did so expecting a normal rate of growth in the shipping business.

Since the economy has tanked, shipping needs have cratered but the previously ordered new ships are still coming, even though they're not needed...and, worse, they still have to be paid for.

http://seekingalpha.com/article/184318-tro...altic-dry-index