5 Things On My Mind For This Week

bank executivesJust as I anticipated, we encountered a pretty volatile day which made a sharp u-turn around mid-day, resulting in a pretty strong sell off of most everything, tech holding up the best. Once again we have dipped below the 8000 mark and may stay there to end the week, pending some big announcement that I am not foreseeing. Talk of the town today has been Obama's decision to regulate bank executive's salaries to a maximum of $500,000 annual. They do have stock option bonuses, but there are still lots of restrictions of when they can cash in on those. Sure, there is a need to regulate some of the antics that are going on around some of these companies and an accountability for spending, but I don't know if this is the right move.

I worry about Obama attempting to go to war with the upper class as he will most likely lose. There has to be a cohesive plan that can benefit all parties without dragging the upper class through the mud. We will see what response is given from the banks and the market dealing with this new development.

It has been a different week for the market and there are a few things on my mind which will most influence my upcoming trading. These 5 things are:

Effects of Restricted Bank Salaries
This may look like a good plan on paper, but there could be some pretty bad consequences if this plan backfires. No doubt there has been ridiculous spending by some executives that should result in some accountability. The problem I am worried about are banks losing their top executives to foreign competition. I mean how easy is it for foreign countries to match the $500k cap, not to say blow it out of the water. This filter will not only put a leash on the bad-performing executives, but also the good ones. If we risk losing some of our top executives, I can't see that being a good sign for banks and our overall economy.

S&P Closing Below 820
It has been a while since we have seen a sub 820 close for the S&P. Knowing the technicals are pretty strong at that point, I am very curious to see if we close under 820 sometime this week. If this is the case, I would expect there to be some extra downward momentum, possibly sending the S&P close to 800. Below is the recent market trend analysis for the S&P (get your own symbol analyzed for free, all you need is a name and email, Click Here).

sp chartsp analysisUnemployment - Record Setting
I am very curious to see what unemployment numbers we see reported on Friday, as I personally feel they will be record setting. If you have been tracking the layoffs as I have, you have noticed the daily massive job cuts which have been going on. This is not to mention all of the mom and pop layoffs that are going on behind the scenes. This could be a big drag on the market.

Bad Bank - Nationalization?
I have not been able to wrap my fingers around this bad bank plan. I see them wanting to set up a similar system as the RTC program in the 80's and 90's, but I don't see how this plan works without instilling the nationalization of banks. And if that's the case, I would think that most of the shareholder's equity would be wiped out. Having Citi's or BAC's equity wiped out would most likely kill confidence in the financial markets and maybe cause a market crash.

Stimulus & Government Intervention
I still am waiting for Obama's bag of tricks. He has a good gift of linguistics and can do a great job of selling the country on hope. However, he has been very careful of not leading people's hopes astray. I think that's good. More false hope can cause even more problems in the long run. Still, I can't help but think that Obama has something brewing to attempt to counter this plunge and try to spark a big rally.

These things have been going in and out of my thoughts and continue to keep me guarded of what to buy. Indeed I am still heavily short, but have not gone as short as I would like because of some uncertainties. Hopefully, more clarity is brought the next couple of days and I can get back on track. Until then, I guess these thoughts keep creeping. Your Thoughts? Happy Trading.

PS - Seems as though the chat is working good. Good call on the recommendation. I will try to comment as much as I can during the day, however, I am often away for other business. By the way to clear some of your questions, Zecco.com is still offering free monthly trades, you just need to have more than 25 trades a month, which I'm sure most of you, like me, are doing. Just to answer those that thought the promotion was over.

Free Trading Analysis Video click here

13 comments:

  1. The Premium Collector Says:

    500K is plenty for any banker who's company has failed so badly they're dragging the world economy down with it.

    http://optionpremiumcollector.blogspot.com/

  2. Anonymous Says:

    Obama is unintentionally starting a class war right now. He is stirring up the average Americans to rise up and to lynch corporate leaders of this country.

    In addition, the buy American provision will start a trade war across the globe, regardless of how Harry Reid and Nancy Pelosi fix the wordings.

    I thought that this market could possibly bottom bet. 6,000-7,000. Now, I am lowering my target to depression level, in which the market will bottom at 4,000-5,000.

    No offense to FF. However, I think that the investor community does not react well to Obama's rthetorics at all. Every time he appears on TV, he basically blames the business community for the greed. How the hell is he going to gain support and help from these people, considering that they control at least 80% of America wealth. If these people revolt, the tax system in America will die, shrinking our country's coffer even more. When that happens, America will be forced to let our financial system fail since we don't have any more money.

  3. John Says:

    Anon,
    right on I was saying the samething for weeks and weeks end that charts,EWAVE says 6,000 bottom level. And OBAMA is a fake lie too wallst investors. All he say"s IS CHAGNE IS HERE YES CAN CAN CAN!!! To people of US and all of the rest of world. the target of 4,000 is more year end of
    dec2009.

  4. mangas Says:

    There is no feasible way out this global crisis. Anything short of 5-10 trillion stimulus is not going to help. Brace yourselves everyone.

  5. wymen Says:

    who need those so called analyst on CNBC if we got FF here to really give a picture of what the market is...

    as for the market, only thing i can say is Date them, Don't marry them

  6. Finance Fanatic Says:

    Anon,
    Don't get me wrong, I feel Obama has definitely crossed some boundaries, I just expected a lot more ridiculous rants about hope and change than he has. I agree the market does not react well to him

  7. John Says:

    mangas,
    wymen,
    Finance Fanatic,

    I agree 100% with all you.
    when I was just watching cnbc today. I only was hearing only 2out of 40 analyst"s/Funds said they are bearish and I see sp500 at 600 and dow30 at 6,000 comeing soon.

    From now on when I watch cnbc I will write down on a notepad the names of fund"s and anayst"s
    that are bearish or bullish.
    this new tool I just made now.

    The tool works like this the more funds/anaysts are on the bullside that its time to short. and when there is a lot of funds/anaysts on the bearside its time to buy.

    Today I only was hearing only 2out of 40 analyst"s/Funds said they are on the bearside. most are bullish so there is more downside risk in the markets.

  8. John Says:

    FF,
    you should also a POLL your blog
    ask qestions like how think jobs numbers be -500,000 , -100,000 ,
    -600,000 -1,000,000
    this would the make site more user friendly. poll of the week or day,month.

  9. Finance Fanatic Says:

    Ya I had the polls a while back... Maybe I'll bring them back. I was surprised to see how well Europe did today amidst all our turmoil

  10. Anonymous Says:

    I mentioned this yesterday in the chat but it bears repeating. My fear is that even with all this bearish sentiment across the board we still have not broken through support at 8000+/- by any great degree. I feel as if Obama is doing what ever it takes (via the PPT) to prevent a plunge and have a crisis of confidence on his hands that points directly to his policies. I think he is going to push the market higher and then even if if falls later in the year due to other factors, he can at least point to his initial effort as being successful and blame the "other" external factors (something like Russia defaulting on its debt as an example) as having caused the plunge, not him.
    Thoughts?

  11. Anonymous Says:

    with the short etfs going up in pre-market, i'm always wary of a bear trap. what do you think?

  12. jeff Says:

    hey FF i know you have the new chat which is useful but could you still put big intraday updates on the comments, my HTC cant run the chat on this mobile browser

  13. Finance Fanatic Says:

    Indeed Jeff, so far Im wondering if PPT is out of funds for the day.