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From: FutureSource.com <fastbr...@futuresource.com> Subject: Fast Break: The Bears Are Growling To: susanti9...@yahoo.com Date: Tuesday, August 25, 2009, 10:05 PM To view this email as a web page, go here. Remember to whitelist us so you receive your Fast Break newsletters. Fast Break Archives | FutureSource.com | Contact Us Trader's Tip It is better to be an expert in two or three markets than to try to be an expert in ten or more. - Alan Bush Quotes & Charts Quote Search: Symbol Help Market Specific Links: Indices/Minis Grains Currencies/Forex Financials Food/Fiber/Softs Metals Energy Meats 2009 Top Trading Systems. What's Hot? Get the Report Here! August 25, 2009 Special Message from Our Author Sign Up For Complimentary Daily Market Research From Top Industry Analysts! Futures Daily Market Research from ADM Investor Services is authored by some of the most well-known and respected analysts in the industry. ADM Investor Services has been a leader in the futures brokerage industry for more than 40 years. It's our commitment to quality through service, research, stability and technology that sets us apart. Sign up to receive our research, and we'll prove it. Sign Up Now For Your Complimentary 30-Day Trial And See For Yourself! Today's Featured Article Stock Index Futures -- The Bears Are Growling By Alan Bush, Archer Financial Services Forward to a Friend About the Author The bears on the market ramped up their rhetoric last Friday, when the University of Michigan Sentiment Index was reported to be much weaker than expected, at 63.2, when 69 was anticipated. This was followed by 4.3% drop in China's stock market on the following Monday that was the biggest decline since last November. Other Asian equity markets, then the European markets and the U.S. stock markets followed suit to the downside. Falling commodity prices, along with talk of tighter lending standards at Chinese banks, contributed to the Global declines. Another negative factor, which was probably more psychological than anything else, was the news that Japan's economy grew less than expected. Japan's gross domestic product increased by 3.7%, on an annualized basis in the second quarter, which compared to the median guess a 3.9% advance. There was some additional pressure when the weaker than anticipated U.S. housing data was released. July housing starts, which are seasonally adjusted, were 581,000, which compares to an estimate of 599,000 and building permits were 560,000, when 577,000 were anticipated. This news added fuel to the fire for the bears, since most of the recent housing data had been coming better than the estimates. The bears were quick to point out that new home sales this year are running about 50% of what they were in 2007, while housing starts are only about 30% of what they were at their peak three years ago. In addition, they cited the fact that home prices have dropped about 15% this year from what they were last year. The bears were not impressed by news that corporate earnings have been much better than expected in the past two quarters. In fact, one study showed that 72% of the companies in the S&P 500 reported earnings for the second quarter that were better than the analysts' expectations. The bears maintained that the strong earnings numbers were only due to cost cutting and that revenues were generally less than expected. In addition, the bears continue to dismiss the bright spots that are beginning to emerge internationally. For example, the most recent gross domestic product data overseas is showing improvement. Germany, France and Japan are technically out of recession now. Keep in mind that the classic definition of a recession is two consecutive quarters of negative gross domestic product. A Word from a Fast Break Sponsor Advertise With Us A rules-based trading system for all world commodities. The LTX Trading System is a robust rules-based trading system that seeks to generate absolute returns in the commodities markets. Features include: a disciplined, systematic, trend following approach; three parameters to determine market entry and exit; two parameters to determine risk; and a customizable market portfolio based upon initial investment. Learn more with a COMPLIMENTARY complete system description and performance report today! The bears are not only pointing to the fundamentals to support their point of view. There appear to be a majority of technicians that are bearish, as well. One of the technical indicators that they are pinning their hopes on is the increase in the values for the VIX Volatility Index, which recently had its largest daily gain since last April. Some traders believe that the higher the Volatility Index the more likely the riskier assets, such as stock index futures, will soon come under selling pressure. Their favorite bearish argument however, is the upcoming monthly seasonal tendencies. History has show that September is the worst performing month for U.S. equity markets. The bears are so confident in their outlook that many of them are saying things like "the only questions to be asked are how deep and how long the selloff will be?" The chartists pointed to the breakout to the downside under the 985.75 low in the September S&P 500 futures as a confirmation of a new leg down in prices. However, that technical sign of weakness now appears to be a bear trap, since prices have recently moved substantially above that point. September S&P 500 Futures -- Daily Chart If you cannot view the chart, go here. Chart provided by APEX One well-known fund manager went so far as to say that U.S. stock markets had topped out, while other analysts were not quite as pessimistic when they said company valuations were far ahead of where the fundamentals are. A Word from a Fast Break Sponsor Advertise With Us Get a demo that will change your trading forever. A.B.C. Indicators pinpoint entries and exits on any market and timeframe with unbelievable accuracy. A- Short Potential, B- Long Potential, and C- Counter short. This system is 100% automated and easy to learn in one day. To get your complimentary demo today, go here. One common theme among the bears is their predictions of the possibility of a double dip recession. There appears to be a growing number of bears on this market, which makes us more comfortable with our bullish outlook. Our analysis, which places considerable weight on the shape of the yield curve, continues to suggest that there will not be a double dip recession and instead, there will be a slow recovery that will gradually accelerate into next year. The debate among us minority bulls is not if there will be a recovery. Instead, the debate centers around what the shape of the recovery will be? The most common viewpoint is that we will see a "U" shaped bottom, which suggests that there will be a slow turn in the economy before meaningful growth returns. Some bulls are expecting a "V" shaped bottom, believing that a very quick recovery is likely and others say that the "W" bottom is most likely, meaning that another leg down is probable before an upturn. Although I am not going to be critical of my fellow bulls, I believe that the shape of the recovery (and for stock index futures) will not be a "U," a "V," or a "W.." My favorite letter, depicting the shape of recovery is the "J," but with a slant to the right. Our analysis continues to show that the worst of the Global economic downturn is behind us and that we can expect the majority of the economic and corporate earnings reports, for the balance of this year and well into next year, to be stronger than the consensus view. This, of course, will continue to support this new bull market in stock index futures. Continue to trade from the long side on weakness. If you would like more information on this article, please contact Alan Bush at 1.800.243.2649 or email him at alan.b...@archerfinancials.com. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright © ADM Investor Services, Inc. About the Author Alan Bush has been a commodity analyst since 1976 focusing on the fundamental and technical aspects of stock index, interest rate and foreign currency markets. He has authored several articles for Stocks Futures and Options magazine and produced the "Futures Tech Focus" program, which is a technically based market outlook. Alan served on the faculty of Oakton College as instructor of a course entitled, "Principles of Technical Analysis." He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been frequently quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago's WMAQ radio business reports. Alan can be reached at (312) 242-7911, or via email at alan.b...@archerfinancials.com. Special Message from Our Author Sign Up For Complimentary Daily Market Research From Top Industry Analysts! Futures Daily Market Research from ADM Investor Services is authored by some of the most well-known and respected analysts in the industry. ADM Investor Services has been a leader in the futures brokerage industry for more than 40 years. It's our commitment to quality through service, research, stability and technology that sets us apart. Sign up to receive our research, and we'll prove it. Sign Up Now For Your Complimentary 30-Day Trial And See For Yourself! a FutureSource newsletter If you are having trouble viewing this email, go here. Disclaimer : The Commodity Futures Trading Commission has asked us to also advise you that trading futures is not without risk. While there is opportunity for incredible wealth building, there is also the risk of losing even more than you invested. Of course, that's not unlike most other businesses. But informed traders are the best traders! Opinions expressed by Fast Break authors are not those of FutureSource. About Your Subscription: You are receiving Fast Break because you have expressed an interest in the futures markets. However, if you are no longer interested in the markets and don't want to receive this complimentary service from FutureSource, we respect that! Just use the "Unsubscribe" link below to leave our service. This email was sent to: susanti9...@yahoo.com This email was sent by: FutureSource.com 208 S. LaSalle St, Ste. 1610 Chicago, IL 60604 USA We respect your right to privacy - view our policy Manage Subscriptions | Update Profile | One-Click Unsubscribe
