Monday, 10 August 2009

Weekly Wrap: Your source for stock, stock market, and stocks info

Weekly Wrap:How do you measure the health of the economy? In a short answer--many ways. Economists have devised many methods to ascertain the health of the national economy. One of those methods is the ISM manufacturing index. This index is "a monthly index released by the Institute of Supply Management which tracks the amount of manufacturing activity that occurred in the previous month.” Any number above 50 signals economic expansion, and any number below 50 signals economic contraction. Last week the ISM manufacturing index number was released. It was 48.9 in July, which signals the economy is still in contraction. In June the number was 44.8. So you can see the number is up from the previous month. This information was looked upon favorably by the so-called experts. I think economic reports should be taken with a grain of salt though, because they can't be revised and frequently altered. I believe what truly moves markets are human psychology and social mood. So you should attune to changes in sentiment because this is what "really" drives markets. Along with the ISM number last week, consumer spending was up 0.4% and personal income was down 1.3%. Ford reported that their July sales were up. That wouldn't be due to the "cash-for-clunkers" incentive program that the government is sponsoring, would it? The same incentive program which the Senate approved another $2 billion for and President Obama signed into law? I wonder. That's funny because I don't remember the Senate asking me if I wanted to give free money away to people to keep the car industry going. Meanwhile, GM’s sales fell19%, Chrysler’s 9%, Toyota’s 11% and Honda’s 17%. But those were less than expected. So "less bad" is the new "good"? I guess so. The market was up again last week. The S&P500 managed to eke out a 2.33% which was basically due to the short covering on Friday morning. The bears are getting run over by all the optimism. Remember, opinion doesn't mean much when it comes to making money. You can have an opinion about the market or the economy, but when it comes to making your investments you should concentrate on being able to read the actions of the "market" itself. That means learning how to read charts, recognizing what the "herd" is doing, and then reacting. This week should be pretty interesting. I have said for three weeks in a row that I expect some kind of pullback, but the market has been acting very strong. But again, I have to expect some type of correction because markets never go in a straight line up or down. After several weeks in one direction (UP), I expect the market to take a break. On the final note, there is a lot of resistance to ObamaCare. I think it’s funny how he gets these programs named after him. I mean did anybody say "BushCare" when George Bush was in office. No, because nobody liked him enough to give him nicknames. Anyway, according to a Quinnipiac University poll more than half of Americans disfavor Obama's handling of the medical problem. A poll by CNN found that 45% don't like what Obama is pushing for, and most people of over 50 oppose what he is doing. I would have to agree. Trying to push some plan in 3-4 weeks into law, without some politicians (supposedly representing the people) even reading it seems a bit rushed to me. Why not take a considerable amount of time to plan a long-term (100 years) plan for sustainable healthcare, rather than rushing something because of political pressure? Which makes me think. 4 years from now, I wonder what people are going to remember Obama for? Turning the economy around, bailing out Wall Street banks, fixing health care, solving Social Security, and quadrupling the national deficit. Hmmm.

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