Just Dow It

The Dow Jones Industrial Average basically matched its all time closing high yesterday, before retreating below 11700. With only 30 points standing between the blue chips and their 2000 highs, sellers came back into the market and booked profits.

Historically, large caps are the last to move among their market weightings, because the larger the company, the more it takes to move the share price (higher, in this case). The DJIA is supposed to represent the broad cross section of American Industry, but really only showcases the largest of the large.

Without prognosticating, a record high in the Industrials would confirm the Transports earlier breakout (to new highs) according to Dow Theory. This of course would be bullish for the market.



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The True Oil Conundrum

While a slide in oil prices may seem to bode well for the broader markets, this is not necessarily the case. Think back to the late 1990’s-2000 when technology stocks went from representing the mid digits of overall S&P 500, to the mid double digits of the index.

Because oil shares comprise such a large percentage of the broader market (still), dramatic sell-offs, like the one underway, are bound to pressure non-energy futures and lead to overall downside.

There is also the question that lower energy prices may be indicative of a slow-down in China, India and other industrialized nations, which would clearly affect our trade balance if their consumption took a nose dive.



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Crude Oil (Continuous Contract) reaching extremely oversold levels.

The Laffer Curve: It Works

Buried in the press, much like every other economic feat accomplished under the Bush administration, we had another gem. Yesterday the U.S. Government announced it had recorded record high overall and corporate tax receipts for the quarter ending September 15th. In addition, total tax receipts on Friday (Sept. 15th) set a one day record of $85.8 billion, eclipsing the previous one day record of $71 billion (last year) by 20 percent.

So, to all the nay-sayers that love to stigmatize tax cuts, the data doesn’t support you. Now if only the government could get spending under control, we may be on to something.

Today the FOMC meets and announces its decision on interest rates. Like most fed watchers, I anticipate the Fed will leave rates unchanged and possibly soften the language even further as a result of a recent deluge of non-inflationary data. The FOMC should continue to be the friend of bullish bond traders for some time to come.



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Dow Jones Industrial Average maintains a steep uptrend into its yearly highs, with its record high of 11750 about 200 points away.

Responsibility

The world has a responsibility to help those that are less fortunate, in every sense of the word. There is rampant genocide in Darfur, starvation in Pyongyang and the Middle East is plagued with human rights abuses (just to name a few). The United States, in conjunction with the United Nations should be spearheading every effort to combat these atrocities spanning the globe. The problem is, the United Nations has no credibility under Kofi Annan and the U.S. is reluctant to provide humanitarian relief (in certain areas of the world) unilaterally for fear of our troops being targeted for the simple fact they are American (i.e. Somalia).

The global economy cannot function properly if many of these troubled spots remain. Perhaps the biggest irony is that in many of these areas natural resources are abundant, and are responsible for fueling the rapid expansion in India and China. Usurping metals, energy and minerals at the expense of the general populace only serves to prop up these illegitimate regimes and turn public opinion against us.

The UN is ineffective and quickly becoming an appendage of the cold war period. Kofi needs to become proactive and enact reform, rather than posing for photo ops with Hezbollah.

If we don’t right the ship now, it will come back to burn us—this I promise. Our national security, our economy and our political system will suffer severe repercussions if this is not rectified. We have the troops (as do the UK—and some of continental Europe), but we need the multilateral banner to operate under.

For God’s sake Kofi Annan! Do your damn job or get the hell out of the way. As the old cliché reads, “if you aren’t part of the solution, you are part of the problem.”

They Answered the Call

It was 5 years ago today that our civilization was attacked. The terrorists took aim at the west, in perhaps one of the most fitting icons of our dominance, the World Trade Center.

3000+ deaths. Thousands of injuries. People combing the streets night and day erecting posters looking for their loved ones. The crumbling of the towers, Pentagon, and the field in Pennsylvania wrecked havoc on our livelihoods—economically, psychologically, politically, and militarily.

These terrorists are determined to bring our fine nation (and the rest of the west, regardless of their coalition status) to our knees. This has not happened and will not happen.

While it may not be politically correct to say in today’s day and age—but God bless the first responders. The Firemen, the Police Officers and the Port Authority Police last seen climbing the stairs, whilst the general public was headed the other way.

God bless the volunteers, now faced with life-threatening illnesses, who spent weeks scouring and searching ground zero for any sign of life.

God bless our leadership, from the Police and Fire Commissioners to the Mayor to the Governor for putting themselves in harms way, all the while offering encouragement to those on the ground and those watching at home. Especially Mayor Giuliani whom exhibited super-human powers, appearing at 25 places at once—attending funerals and giving away a bride (whom lost her father in the attacks), giving press conferences that comforted us and devising a strategy to get NYC functioning once again.

God bless the White House. President Bush endeared himself to the country with his heartfelt speeches from the rubble and the congressional floor to the populace. He committed his administration to protecting the American people at ANY COST and has made good on his promise. At the expense of approval ratings and general orthodoxy—President Bush has taken many unconventional measures to ensure our safety. Knock on wood, there has not been a single attack on American soil since.

As someone that has worked in lower Manhattan since 1999 and saw 9-11 unfold with my own eyes, I can say my life has changed immeasurably since that day. I used to walk by the WTC and NYSE everyday on my way to work, to remind myself exactly why I came to work here. I work down here, I lived down here and I breathe the very air daily that thousands have been deprived of, many sacrificing to protect me.

Let us not forget them. They did not die in vain. We owe it to them, our country and the world to be the best we possibly can. These terrorists still want to kill us. They would like nothing better than to see more blood shed on our soil. The 9-11 commission concluded that intelligence had dropped the ball and that we had squandered numerous opportunities to prevent this attack. Let’s not make the same mistake twice. Remember them, mourn them, but let the people whom dedicated their lives to guarding the homeland work freely, without obstruction.

God Bless America.



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Unhappy Return

The return from the long weekend has been nothing to cheer about thus far. Investors have been selling equities across the board, with only a few sectors escaping the drubbing that has been laid on the likes of the energy and technology sectors.

As pointed out in the last post, the NASDAQ was facing a formidable band of resistance in the low 2200’s and has not been able to crack through:



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The Crocodile Hunter

Crikey! The world today mourns the loss of Steve “The Crocodile Hunter” Irwin. In his 44 years, he had seen more of the planet and its wilderness than most would achieve in several lifetimes. An avid viewer myself, I watched Steve Irwin stare down death several times only to escape unscathed and equally unnerved. This time would be different.

With the summer officially behind us, Wall Street will be back to normal by the end of the week. We should see a pick up in volume, which should determine if the rally from the lows that began in mid-July truly has legs.

The NASDAQ managed a close above its 200 day EMA on Friday. 2200-2230 should be the next area of resistance, with a good amount of supply:



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