Friday, May 15, 2009

Mid Month SP Rates Review

It's only mid-May but I like to look at what might come as we approach month end. Both stocks and interest rates fell today. Many are suggesting that the market power is waning. The Stress Test results are in and the whole review seems to be a sham. Talk is now turning to credit card defaults while the number of homeowners receiving foreclosure notices continue to increase.

I've also been hearing a lot more about Ron Paul's bill that allows an audit of the Fed. There appears to be a growing awareness of the fact that the Fed is a private organization consisting of bankers. That the Fed is taking trillions of taxpayer dollars and giving it to it's own constituents is beginning to trouble a few. Politics aside, there still is a mistrust of Wall Street, especially banks. While the US has assured us that no bank will fail, the banks may cause the US to fail.

The market was down after a two month run. The next two weeks will tell the story. I invite you all to send me an e mail requesting Trendsetter updates and the June edition. I expect to have some great trading ideas over the next two weeks that only subscribers will know about.

Have Rates Topped?

After 30-plus years active in the markets, I know that one must absolutely respect the trend. With two weeks to go still, I'm not sure how this chart will play out. The upside does appear to be running out of steam but I do believe that just as with stocks, the next two weeks are going to be the key.

I did get a little spooked though and closed out my Note Options today one week before expiration. I had one short call position remaining as I expected rates to rise but today, I felt some doubt and closed. We are up 7% for the June option period. I might reestablish the short call position should the 10 year rates hit 3.08%. From this level rates might stage a run at the 3.44% mark. On the monthly chart though, the trendline is coming in at 3.16%. We closed today at 3.13% after trying to get through the 3.16% level.

The next two weeks is certain to be a special time for short term traders. I expect to be active in both stocks and bonds. You might be able to see from these monthly charts that we are close to some serious points in the market.

Again, I encourage you to drop me an email and tell your investor friends. The Trendsetter subscription is still free but it won't stay that way forever.

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