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The Nightly Newsletter

 
Blogs and Commentary - a few different venues

You need to know what we are thinking at all times. 

In order to use our services efficiently, in order to understand our conclusions, you need to understand the basis of our findings.  After you understand the foundation of the methodology, the details will become less important to you than the conclusions, but do not stop paying attention to the commentary.  We often include important details about current and future Market conditions there.

We offer commentary to our subscribers through a few different venues:

 


Topics:

  1. Blogs

  2. Nightly Newsletter

  3. Messages from our Chief Investment Officer

  4. Give it a Try


 Blogs:

We write blogs on a few different subjects.  Each one contains explicit commentary.  In addition, you have the ability to interact with our analysts by using this venue as well.  Here are the topics of our blogs:

  • Stocks

  • Economics

  • ATAP

  • Investment Rate

Stocks. In our Stocks Blog we offer our point of view on select stocks.  Our analysts often use the Random Walk Theory to identify opportunities, and you'll see references to this methodology throughout this blog.  This is where we identify 'buy sell or hold' candidates.

Economics.  In our Economics Blog we explain the impact of select economic data, data which we deem to be most important at the time.  We provide advanced analysis here.  We tell you what to expect from the data before the data is released.  This gives you an opportunity to prepare for surprises.

ATAP.  In this blog we offer commentary about the ATAP (Automated Trading Affiliation Program).  Please read more about this topic by clicking the ATAP link to the left.  You have the opportunity to ask questions about the program using this blog.

Investment Rate.  In this blog we offer commentary about the Investment Rate (our proprietary leading Economic and Stock market Indicator).  Please read more about this subject by clicking the Investment Rate link to the left.  You have the opportunity to ask questions about the IR using this blog.

Here's an example of one of our blgs:

 

 EXAMPLE (Blog date = 9.12.07)

FOMC Meeting: The Good, The Bad, and the UGLY

The FOMC Meeting:

You should already know that I expect the Consumer to weaken considerably going forward.  I expect weak retail sales figures going forward, reduced Consumer Sentiment, and a recession.

In fact, depending on the results of Friday’s Retail Sales figures, the Economy may even be set up for a deflationary period right now. 

The factors above are all coming into play now.  The consumer is getting cautious, and because the consumer is what drives the economy the FOMC needs to pay attention to that.  My main concern is that the FOMC is paying far too much attention to the Stock Market.  In my interview (CNBC)  on Fed Day last month I said that they shouldn’t say a word, just remove the bias towards inflation and let the Market settle. 

They didn’t do what I suggested, but then why would they listen to me anyway, right :-)  I am just a lowly Economist/Market Analyst who has proven that the Market is about to enter the third major down period in US History.

With my bruised ego out of the way, let’s take a look at what the Fed should do, what they will do, and what they better not do.  These are the good, bad, and the ugly scenarios in my point of view: 

THE GOOD:

The FOMC should cut Interest Rate by 50 basis points to lessen the debt burdens on the Consumer side and to allow lenders to feel more comfortable lending to consumers.  In addition, this would ease the pain of the ARM adjustments in the next couple of months.  This could keep the Consumer afloat during the most important shopping season of the year.  This, in effect, would ease the pain of a recession during Christmas Time, which is coming anyway.  Their commentary should be that they see concerns on the economic front and that the concerns about inflation have eased.

THE BAD:

(The most likely scenario) If the FOMC only cuts Interest rates by 25 Basis points they will not do enough to ease the pain of the upcoming recession.  Sure, they can make comments to ensure the Market that they will cut again if needed, but they need to stop playing to the wants of Wall Street.   The Markets are intelligent, quit trying to please them!  Don’t use sophomore tactics!  Actions speak louder than words.  However, the BAD scenario suggests that they will try to ease Wall Street’s concerns and try to explain their actions accordingly.  That’s not needed.  The recession will be much worse if the FOMC waits to cut rates (more than 25 basis points), but they probably will.

THE UGLY: 

(I don’t expect this but some people do)  If the FOMC doesn’t cut rates at all they will have made the worst mistake in modern economic history.  I can imagine them doing this as a way to say ‘we’re not playing to Wall Street, we’re doing what we think is right.’  However, that, in effect, would be playing to Wall Street.  Restraining Fed Action in the face of a borderline absent consumer is a very bad idea.  Not only would the ARM adjustments squash consumer spending patterns during the 4th quarter, but lending practices would remain constrained, and the Markets will start wondering if the FOMC may have an interest in raising rates. 

SUMMARY: 

I think the Fed should cut rates by 50 basis points and offer concerning statements.  I do not think they will though.  I expect them to cut by 25 basis points and tell the Market that they will cut more if needed and try to ease concerns (not the right approach).

During the last Fed meeting, EVERYONE said that the decision of the FOMC was the biggest that Bernake has ever faced, well that doesn’t come close to comparing with the importance of this meeting.  This is, without a doubt, the most critical decision in the last 7 years; it will act as the throttle for the severity of the upcoming recession.

I might add, the FOMC cannot stop the recession from coming; they can only ease the pain.  But they need to act now.

Good Trading. Thomas Kee.

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Nightly Newsletter:

In our Nightly Newsletter we offer updates to our Market Analysis.  The updates are offered in advance of the next trading session.  Typically updates will be ready before 10:30 PM ET. 

Included in the analysis are:

  • Trend interpretations

  • Trader sentiment updates

  • Inflection Parameters

  • A list of upcoming Economic news

  • A 'heads up' of things to watch for.

The principle version of this analysis is offered directly through our website.  Through our nightly newsletter we provide concise reads on the Market.  This is a no-frills venue for this information.  It is clean, formatted, and free of jargon or banter.

We also package this same analysis in a .pdf version, and we send that to your email address every night at midnight ET.  This is a different version of the same information contained on our website; it does not require you to go directly to the site.

Read more on this subject in the Market Analysis link at the top of the Page.

Here's an example of our Newsletter:

 

Example from 9.17.07

 

Summary: Expect the market to begin the day within a converging near term trading channel on Monday.

HEADS UP:  There are 2 very important events this week.  The most obvious is the FOMC meeting on Tuesday.  Look in the Economic Blog for comments about the upcoming Rate decision.  In addition, and possibly equally important, many financial companies are reporting quarterly results this week.  This could have a big impact on market action this week too.

 


Technical Analysis

 

Near Term Outlook The near term charts are telling us that the market is likely to begin the day looking for direction within a near-term converging channel as it opens on Tuesday.  A break below support or above resistance will likely prompt aggressive market moves in the direction of the break.
.Mid Term Outlook The mid term charts continue to tell us that the market is flirting with midterm levels of resistance.  However, because resistance continues to hold, the most likely scenario is for the market to decline back towards a midterm support levels again.  Therefore, so long as resistance remains intact expect aggressive market declines to follow.  the opposite will hold true if resistance breaks higher instead.
Long Term Outlook The longer term charts are showing us that the Market has established lower lows recently.  This means that the Market has turned lower before testing the prior level of resistance.  This could be the first sign that a longer term down channel lies ahead.

We are long term Bears.  The market will experience a turn lower soon that will last for the next handful of years.  Find out why by reading the Investment Rate.   The Investment Rate is the most accurate longer-term leading economic indicator available; it is a proprietary tool.  Because you are a member of Stock Traders Daily you can access this tool and use it to help you make strategic investment and business planning decisions.  Click here: The Investment Rate

   

If

Market Links: Technical Analysis for each Market.
NASDAQ SP 500 DOW JONES

Summary:

Tuesday:    Expect the market to begin the day Tuesday looking for direction within a near-term converging channel.  The market is likely to flounder back and forth within this channel for at least the early part of the day.  However, once this channel breaks aggressive market moves are likely to follow.  The most likely direction is down.  That means, support is most likely to break lower.  However, either way, aggressive market moves will likely follow a break of the initial trading channel on Tuesday.  If support breaks lower likely as we expect, then expect aggressive momentum driven declines afterwards.  However, if resistance breaks higher instead, expect momentum market increases to follow instead.  We have identified all of these important inflection parameters in our market Analysis pages and we have updated the alerts viewers with this same data so that you will be alerted to any test of support or resistance when it occurs.  Review these details now.

Long term Analysis:  We are long term bears.  The Market is about to enter a period which will be, after everything is said and done, unprecedented; significant declines are likely in the next few years.  Find out why by reading the Investment Rate: 

 Click the market links above for details.

 


Traders Psychology

Traders don't seem nervous, they are just ready for action, and looking for reasons to trade.  No one seems to care what direction the market goes.


Economic Reports

 

Date ET Release Consensus
Sep 18 08:30 PPI -0.1%
Sep 18 08:30 Core PPI 0.1%
Sep 18 09:00 Net Foreign Purchases
 
Sep 18 14:15 FOMC policy statement
 
Sep 19 08:30 CPI 0.0%
Sep 19 08:30 Core CPI 0.2%
Sep 19 08:30 Housing Starts 1360K
Sep 19 08:30 Building Permits 1350K
Sep 19 10:30 Crude Inventories NA
Sep 20 08:30 Initial Claims NA
Sep 20 10:00 Leading Indicators 0.0%
Sep 20 12:00 Philadelphia Fed 2.0
 

Potential Market Moving Events

 
Start-Date Event
Sep 18 CMI 2007 Investor Conference
Sep 18 WM 2007 Seattle Investor Day
Sep 18 PFE Analyst Meeting
Sep 18 FOMC policy anncmnt at 14:15 ET
Sep 18 Former Fed head Greenspan
Sep 20 NDAQ Analyst/Investor Day
Sep 20 BRCD Analyst Meeting
Sep 21 Philly Fed pres Plosser
 


Good Trading,

Thomas H. Kee Jr.


Messages from our Chief Investment Officer:

Our Chief Investment Officer sends a nightly email to our subscribers every night with much more revealing information.  He includes personal commentary, easy to read pivot charts, a list of stocks which look good to trade, and detailed trading plans for the next trading session.

The nightly email from our Chief Investment Officer is a straight forward review of the Market and it allows you to prepare for trading opportunities well in advance.  It is easy to read, direct, and easy to use.

With his gloves off, he tells you what he thinks of the Market, he tells you where he thinks the Market is headed, and he tells you what he thinks Traders should be doing to take advantage of it.

Although explanations will be included in his nightly email from time to time, the email from our Chief Investment Officer is not intended to provide detailed explanations of why he thinks what he thinks; those details are found on the website, in the Newsletter.  He just tells you what to prepare for, and how to make money from it.

After you understand the foundation of our methodology this will probably become the most important resource for you.

Here's an example:

 

Example from 9.17.07

Commentary:

By now you already are aware that there is plenty to be looking out for on Tuesday beyond the FOMC meeting.  The FOMC meeting, in fact, although it is the most anticipated news of the day, may turn out to be far less important than the Financial Earnings releases coming this week.  We won't know for sure until after the dust settles, but my anticipation is that the FOMC decision will not be as important.

I have already illustrated my points of view on the FOMC through my blog.  I hope you have had time to review it.  If not, do so immediately 

http://stocktradersdaily.com/clubsite/Club/blogs/

Also, remember that the Market has followed the trend of Interest rates since 2000.  When Interest Rates have been declining so has the Market, and vice versa.  You can find evidence of this in my past blogs as well.  These comments are under the Economics Category. 

Be ready for volatility on Tuesday; the eventual direction is most likely down.


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