February 22, 2010 Free Edition Newsletter

THIS WEEK'S STOCK MARKET TREND SIGNALS *************************************************************************** (The signals shown below are the "regular" MACD signals, NOT the Advanced MACD signals, which are available separately for only $4.95 a month.  See our website for details). Shown below are the current "Weekly" signals for the Dow Jones Industrials, S&P 500, and NASDAQ using the "regular" MACD (as is available for free on many investment websites).  These can change quickly, but can also go weeks or months between changes, so be sure to check each week's email.  The Longer-Term "Monthly" signals (rarely change) are shown below.  Then, at the bottom we provide our big trends for interest rates.   Dow Jones Signal       S&P 500 Signal          NASDAQ Signal        LONGER-TERM (L-T) STOCK MARKET TREND SIGNALS (The signals shown below are the "regular" MACD signals, NOT the Advanced MACD signals, which are available separately for only $4.95 a month). These longer-term signals are based on 'monthly' intervals for the "regular" MACD, meaning that signals can only change at the beginning of the month.  As such, these signals can go for months or years between changes - BUT when they do change it pays to take heed, since it signals a potentially VERY IMPORTANT change in trend or direction for the market as a whole.  Subscribers that don't change their investments very often will usually follow these signals since they don't change very often. L-T Dow Jones Signal   L-T S&P 500 Signal       L-T NASDAQ Signal      INTEREST RATE OUTLOOK These interest rate outlooks are based on the price and yield trends for U.S. Treasury bonds of various maturities.  This kind of information is helpful for those investing in certificates of deposit, applying for a loan, and other reasons where the interest rate outlook is critical.  While rates could move counter to the signals shown below from time to time, we show the LARGE trends for these rates, based on the monthly interval MACD. Short-term (3-6 Months)   Medium-term (2yrs-5yrs) Long-term (10yrs-30yrs)   COMMENTARY: Lessons on Debt, and Let The Trend Be Your Friend "The market's is going to do what it's going to do", as one floor trader put it, and that's how most successful investors view the stock market.  Not even Warren Buffett watches the day-to-day market gyrations.  Day traders make it their job to watch markets, but to them, one hour is like a month to most of us since they watch minute-to-minute and make (or lose) thousands of dollars.  It was John Maynard Keynes that said it so perfectly, when he quipped, "The market can remain irrational longer than you can remain solvent", and it's still true today (no, we do not side with Keynsian economics). The point is, try not to worry about what happens in the markets from one week to the next.  The reason we mention all this, is we heard from some subscribers that were tied up in knots about what's happening in the economy, even though the stock market was going up.  We have a solution for anyone feeling anxious, confused, or worried.  It's called the MACD.  Let your mind rest at ease, since the MACD will let you know 'when' it's time to do something, i.e. when the trend in the markets have changed.  Until then, merely stay informed about what all goes into the net prices you see for stocks.  Yes, this takes patience, and yes, it doesn't feel 'natural' when there are so many problems with our economy, politics, unemployment, etc.  There is so much that goes into each day's market prices, including manipulation (sorry, real world here), that it is impossible to say exactly what the markets will do the next day, month, year or years.  What we CAN say, is when a trend is in place, go with it, and when the trend changes, change with it.  This is what the MACD tells us, and as you've probably noticed going through historical charts, the MACD filters out all the news, events, disasters, wars, depressions, speculations, etc. and let's you know, bottom-line, where stocks are likely headed next.  As market technicians say, "let the trend be your friend", and the MACD is a trend indicator that can ease your mind and be your friend. What we do each week, is give you a quick and easy idea of what the shorter-term and long-term MACD is telling us.  If you want, that's all you need to know.  For those that want a bit more detail on the major factors affecting the markets, economy and our lives, our commentary and analysis is a great way to get up-to-speed in a flash without having to spend hours reading business magazines and newspapers, or watching business TV, only to end up wondering what they are really saying.  We realized years ago, that most of what you see in the media isn't going to give you hard and solid facts.  Much of what's out there passing as "news" is fluff, nonsense, and hype.  Our research and analysis focuses in on what's really driving the markets and economy, presenting it in something you can read in minutes.  Our two newsletters (the other one is the Advanced MACD, "Hard Core" Analysis newsletter), when combined, can ease your mind and put you up there with the best of Wall Street analysts, so-called "market experts", and other talking heads in knowing what's really going on.  That's our mission; creating an even playing field for you is our focus.  We can't possibly know everything, but between the MACD and our commentary, you'll be head and shoulders above the rest of the crowd.  BUT REMEMBER, we don't tell you WHAT to think, and we really, really do want you to do your own research, and make your own decisions.  Our research should only be your "starting point", not the "end point". With all the above in mind, let's look at what the MACD is saying this week.  First, the markets are still moving higher, though the regular weekly MACD hasn't yet turned positive.  Will the MACD turn positive, signaling an uptrend in the future?  Maybe, but we won't know until it happens.  But, there's no need to "worry" or "second-guess" the MACD; just relax and wait to see if it changes.  If the markets keep going higher, the MACD will turn positive and it will be time to think about getting back into stocks.  If it doesn't turn positive, you're properly positioned for further selling or a crash.  Now, let's take a quick look at what happened last week. The whole world is (rightly) focused on debt, and the fact that everyone, and nearly every country has accumulated so much debt in the frenzy of consumption that characterized the 1990's and early 2000's.  Now, it's time to pay up, and the bill is much higher than most realized, due in part to the accumulated interest.  For the U.S., debt for government, business and the consumer is so high, that it threatens our very way of life.  Still, Congress's only answer to turn the economy around is (surprise!), more debt!  Naturally, we'll have to somehow repay it, AND the accumulated interest!  Americans are finally opening their eyes to the crazy non-stop consumption beyond our means, but those in government have no other answer than to add to the debt, in hopes it will stimulate our economy out of the morass.  Perhaps they could benefit from a story told by Benjamin Franklin, called "The Whistle".  Lessons in it fit today's situation perfectly.  Here's an excerpt (with a link if you'd like to read the whole thing): "...You ask what I mean?  You love stories, and will excuse my telling one of myself.  When I was a child of seven years old, my friends, on a holiday, filled my pocket with coppers.  I went directly to a shop where they sold toys for children; and being charmed with the sound of a whistle, that I met by the way in the hands of another boy, I voluntarily offered and gave all my money for one.   I then came home, and went whistling all over the house, much pleased with my whistle, but disturbing all the family.   My brothers, and sisters, and cousins, understanding the bargain I had made, told me I had given four times as much for it as it was worth; put me in mind what good things I might have bought with the rest of the money; and laughed at me so much for my folly, that I cried with vexation; and the reflection gave me more chagrin than the whistle gave me pleasure...  In my opinion we might all draw more good from it than we do, and suffer less evil, if we would take care not to give too much for whistles. For to me it seems that most of the unhappy people we meet with are become so by neglect of that caution..."  (Click Here for the whole story) Have we, as a nation, given too much for our whistles?  Definitely.  This lesson will be painful as the economy deteriorates, and Congress continues to pile on more debt.  We hear a lot of talk from Congress about debt now, and they've even set up a budget "commission".  In Washington, when they want to kick an issue down the road for later, they form a "commission".  We are in a slow-motion train wreck, though some of the events here in this country or around the world could turn the movie projector on fast-forward.  One such issue it the sovereign debt concerns, principally Greece.  Still, the news fails to mention the similar problems with U.S. debt, and the debt of many states, principally California, whose economy is larger than many nations.   What the news isn't telling people is that we may have to pay more for those whistles than previously thought, since some German (and other?) financial institutions could be on the hook for billions in derivatives tied to Greece.  This could be forcing the Germans to assist in the bailout, despite the unpopularity of the moves both in Germany and in Greece.  Yet, the situation is quickly deteriorating.  Perhaps feeling their national pride is a bit bruised, Greece is now demanding more war reparations from Germany.  Leaders in Germany responded by accusing Greece of using accounting trickery and derivatives (with help from Goldman Sachs) to g et into the European Union.  Then, it got really ugly when the MP Nikos Papaconstantinou asserted that Germany was not above such trickery, stating in part, "As if we didn't know that Germany inflated the value of its gold reserves to get into the euro."  What?  If you're like us, you are probably thinking how much of the world's "gold reserves" actually exist?  This could be a critical question as currencies falter and/or collapse.  Then, we must consider our own "Greece", called California (and some other states) that need to face hard realities and make the hard choices to get back on track.  Meanwhile, Americans as individuals need to consider their own 'debt' situation, and resist the old impulses, adopting instead the 'pay as we go' approach.  These actions, taken together, will drain the coffers of those that profit from the impulse to add debt, instead of saving and then buying.  The most recalcitrant are those on Wall Street, our politicians, corporations, marketers, and others behind the scenes that pull the 'puppet strings'.  It's our money flowing to them that gives them the power.  It's up to us decide whether and when to 'buy the whistle', and how much we pay for it.  Fortunately, you and our other subscribers have the MACD that can help you maximize and/or protect your savings and ne st egg and have a better chance of getting out of debt. What all this means is that we have a lot of work to do, paying off all those "whistles" and demanding the politicians make the hard decisions, or resign and let someone else do the job.  Only then, will our markets and economy rest on 'solid' ground, and provide the confidence we need to proceed into the next hundred years.  Meanwhile, let's watch the MACD and let it tell us what the major trend is, and let it be our friend. Take care, and all the best for your health and investment portfolio.  J.E. Rapp, Editor-in-Charge (PS:  We invite our subscribers to try our "Hard Core" Analysis Newsletter FREE for 30 days, no obligation.  This week could be a good one to try for free, since we get into some rather interesting perspectives on what's really going on.  As always, we never give out your email addresses or other information.  Our mission is to give everyone a chance to beat "buy and hold" and have a better idea when to get OUT of stocks, and back IN during rallies.) 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