A few words on the Economy from Christopher Probyn of SSGA
I was fortunate to attend a presentation by Christopher Probyn of SSGA
"The Financial Crisis: Causes, Consequences and the Prospects for Recovery."
I spent more time listening than writing things down so pardon me for just providing an outline of what he mentioned that interested me.
- Headwinds to the economy: Weakness Abroad, Deteriorating Commercial Real Estate Markets.
- V Shaped recoveries usually follow deep recessions, Mr. Probyn is looking for a U shaped recovery to play out.
- Unemployment will reach at least 10% (It's close enough now and we shall see Friday if it happens already)
- Inflation will come way down from the current 1.5% due to the higher unemployment rate.
- There is a good chance CPI will break below 0% (It already has in Japan and Europe) Deflation Alert!
- Do need to worry about inflation until capacity utilization rate goes to at least 80% (Currently in the 60's)
That's all Folks. I hope you found it interesting to say the least.
-K
Volatility Index $VIX Is moving higher.
On Friday The VIX went up 23.95% while the market fell well over 2.5%.
VIX is a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index, it represents one measure of the market's expectation of volatility over the next 30 day period.
With the upward movement in the past 2 weeks the VIX has successfully broken a trend line going back to November 2008
See Attached Image (Click To Enlarge)
The VIX also had a bullish candlestick pattern on the 2D frame (2 days per candlestick)
Defeniton of this candlestick pattern is quoted below from Candlesticker:
Bullish Three White Soldiers Pattern is indicative of a strong reversal in the market. It is characterized by three long candlesticks stepping upward like a staircase.
The following are two charts; one showing the Three White Soldiers pattern on the 2D chart the other showing it on the hourly.
2Day Chart (Click To Enlarge)
And finally the Hourly chart (Click to Enlarge)
What does the bullish Vix momentum mean? Well by itself it means nothing to me. But when combining it with the increasing TED Spread, Broken S&P trendline, Numerous bank failings each weekend and many more indicators then it all signals that things are not well and the jobless recovery is not going to last much longer.
As always use caution as these are my observations and I do not make decisions for anyone other than myself.
Happy Halloween! 
-K
The last leg of my August 27th prediction.
Well one last time revisiting my latest predictions since august 27th.
Checklist:
Fake Correction? Check (August 27-Sept 2nd)
Mini Recovery? Check (Sept 3rd to Sept 11th)
Major Correction? In Progress (Sept 14th to ... )
Check the attached Updated chart. (Click To Enlarge)
The Orange Line Scenario Happened for the most part except the fakeout below a trend line (circled above)
From the Sept 1 Blogpost:
Scenario 1: (Orange Lines) Bounce back the next 5 days to reach possible 1040 then drop back to 1000’s and head lower going into October.
I am 2/3 so far looking for a full 100% return on my prediction.
Have a good one.
-K
Mini Correction, Mini Recovery Then Massive Correction?
As I posted a while back, (See the "Fake Correction Followed By Fake Rally?" article if you missed it) the $SPX (The S&P 500 Index) has nicely corrected to satisfy me that there will be another move up 20-40 points to shake off more bears and when they are nearly all out (If market makes a higher high it will be seen as very bullish) it will have a massive correction to trap bulls and make bears cry for getting out too quickly.
I will be revisiting the charts I drew in the previous article mentioned above. Let's start with the closer look in the past 3 days.
I was waiting for the SPX to break either the red or the green line and close below it. Well yesterday it did just that and that was the first clue as to where we were heading today.
The blue arrows are there to just demonstrate the Support line and where yesterday's close was. Grey line was my prediction for the next 2 weeks or so but it was defied by the market as it tanked lower and lower. (Click to Enlarge)
Second chart is the long term view of things and 2 possible outcomes that this investing freak sees realistic.
Scenario 1: (Orange Lines) Bounce back the next 5 days to reach possible 1040 (ADP Nonfarm Employment change tomorrow morning so this could happen if it "surprises") then drop back to 1000's and head lower going into October.
Scenario 2: (Green Lines) Go down further for the next day or to and reach 985-990 for a close (it could go down further and still close above 985 to be valid). Then hit ~1020 shake a few shorts that believe 1000 level has cracked and proceed into 950's.
Scenario 3: That's your opinion and I would like to know
Here comes the updated chart. (Click to Enlarge)
Good luck! and don't forget to follow me on:
Twitter ( http://twitter.com/investingfreak ) or Stocktwits ( http://www.stocktwits.com/u/investingfreak )
For the latest live commentary.
-K
Is Dow Jones ready to recover?
Almost a Month ago I wrote a post about how the dow had yet to bottom. See: The Dow Jones Industrial Index has not yet bottomed ,at that time the index was at 11,842. A week later I followed up with a prediction that the Dow Jones Industrial would bottom at 10,800 (See:Prediction: Dow Jones Industrial bottoms at 10,800.)
On July 15,2008 the Dow Jones Index fell to 10,827 to make a new 52-week low. That new low came very close to my prediction and soon after it began rebounding. Since the weekend came and I found some time to go and revisit the chart for the dow I now think that the index has bottomed out and should begin to climb.
I believe the market will begin recovering because of a few reasons.
1. 10,800 is a very strong support zone going back to 2006
2. Oil prices have recently fallen from $146 to $128 (maybe that bubble is deflating)
3. The chart shows that the sellers are moving out and more buyers are beginning to take over (green and red lines almost crossing. Green is buyers, red is sellers)
4. At the end of the chart is the amount of money being put in the market. Since mid May it was in a downtrend which meant people were taking money out of the market and now it has broken out of the trend.
As you will see in the chart below however, today's action is within the downturn trend line and it needs to close above 11,500 or we might not have hit recovery period just yet.
Without further adieu i present to you... the Dow Jones Industrial Recovery Chart.
At this point i have invested in stock symbol (DDM) which has the top 30 Dow Jones Companies.
It goes mostly parallel to the Dow Jones Industrial Index. You can check out my current holdings at my Covestor page.
If you have any comments feel free to post them.
Prediction: Dow Jones Industrial bottoms at 10,800
From the way the market has been swinging lately even with any recovery time, the dow jones industrial has yet to bottom a week after i wrote about how it had not bottomed. Over 500 points down later i still think the dow jones industrial has a long ways to go (with some rallies in between obviously). I feel like I am too optimistic by calling a bottom at 10,800 because if President Bush and his best friend Dick Cheney start a war in Iran my bottom call will look stupid.
And here is an updated chart.
