2009

September 5, 2009 · Posted in Investment Philosophy, Weekly Posts · Comment

US markets rallied Friday as traders squared positions before the long weekend and , we expect, some shorts got chased out ate in the day. The rally was on very low volume - we expect it will reverse. In a nut shell, markets broke down out of their near term ascending wedge this week, and then formed what is likely a bear flag prior to the next leg down. This is clearest in the financials which is also one of the sectors that led the previous advance. We have annotated the charts below to illustrate the overall picture. Markets could move somewhat higher before heading down and still remain consistent with the technical picture and breakouts we have presented but we don’t think that move will amount to much.

Stock analysts are still trumpeting all of the money that is yet to come into the market from the sidelines. We have been hearing this for months now. They are also stating that the retail investor is starting to come back. But, and this is critical, insider selling is setting records in the past few weeks and equity funds are seeing net outflows in the billions. So if the retail investor is coming back in, then the “smart” investors must be exiting. The fact is, there is nothing pre-ordained that ll the money on the sidelines is destined to come back.

Below we look at the S&P both daily and weekly, the Russell 2000, S&P Financials, Nasdaq, VXX, US Dollar Index and GLD. This week should be interesting…

SPX 09/04/2009

SPX Weekly 09/04/2009

XLF 09/04/2009

Russell 2000 09/04/2009

COMPQ 09/04/2009

VXX 09/04/2009

GLD 09/04/2009

USD 09/04/2009

Finally, Doug Kass wrote a very interesting article on TheStreet.com earlier this week. We urge you to read it HERE.

If you are not a member of Murdock Global Insight the you are missing half of the content and indeed, the most important half. It is in the Members Only section that we discuss how to trade these markets and specifically what we are doing with our personal portfolio.

To view previous Members Only posts simply follow the instructions under the “Become a Member” tab and select the “Two Week Free Membership” when you get to the Products page. You must complete the checkout process in order for the Membership to complete. Registration is not sufficient. You are under no obligation to continue beyond the Two week Free Trial and your e-mail and address will not be shared with third parties.

For those who are following the looming dollar crisis we urge you to read our free post Watch Out For Sterling where we raise the case that a precipitous fall in Sterling could serve to elevate the dollar near term and trash trading positions betting on an imminent dollar collapse.

Readers should take a look at our post The Most Important Question Facing Investors to understand the risks we are currently facing.

We wrote recently in “The Character of the Dollar Collapse” on the risks to investors in any asset of a dollar collapse.

Murdock Global Insight began discussing the dollar’s impending demise in January when the dollar was still generally strengthening How the US Dollar Will Lose Reserve Status. Now, in August, the idea that the dollar is destined for significantly lower levels at some point has entered the mainstream. The US fiscal position is increasingly being seen as untenable. Interest rates are surging for a variety of reasons but he massive debt issuance by the US is one primary cause. We have established the Murdock Strategic Portfolio for the purpose of growing our wealth in the face of a dollar collapse/surging China scenario The Strategic Portfolioand we have written about the risks that a free fall in the dollar could cause to those investments The Most Important Question Facing Investors.

To find out the details look at our strategic portfolio scorecard. The Strategic Portfolio is how we are investing in the global trend of dollar depreciation and Asian recovery and trading around that trend to ensure we stay profitable. Take advantage of the Free Two Week Trial and read it. We have also update the scorecard for today’s action.

The Strategic Portfolio

Portfolio Scorecard 09/03/2009

In addition, we strongly recommend reading The Most Important Question Facing Investors as recent action illustrates directly what we are faced with if the dollar decline turns into a free-fall.

To view previous Members Only posts simply follow the instructions under the “Become a Member” tab and select the “Two Week Free Membership” when you get to the Products page. You must complete the checkout process in order for the Membership to complete. Registration is not sufficient. You are under no obligation to continue beyond the Two Week Free Trial and your e-mail and address will not be shared with third parties.

The following additional posts are highly relevant:

The Strategic Portfolio

The Most Important Question Facing Investors

On the Edge of the Empire, Dollar Influence is Declining

The Dollar and Gold Near Term

How the US Dollar Will Lose Reserve Status

Chinese Gold British Debt

China: Part 2 - Bonds, Dollars, and Inflation”.

“The Fed and The Bond Market - Will Intervention be Effective?”

“The Coming Bond Debacle”

Fundamental Trends