Market makers did not make significant profit in the last selling as market participants did not push market further down after market makers sold the market for two days. Market participants loss confidence but day traders were afraid of risk in short covering rally. Instead, speculators learned to buy at dip and to take profit after rebound. Panic investors trimmed down the portfolio on speculation of further market decline but were unable to buy back at lower price.
Market makers are currently holding mostly in cash. There may be small amount of stock accumulation in the last two weeks while there is no heavy selling. If market makers have not retreated from market, there should be some turbulence in the market soon. It is unsure whether market makers change the strategy of selling. The next market movement will indicate the strategy as market dynamics has changed since market makers selling strategy is launched during market peak early this year. Market makers realise that selling at current market valuation cannot create panic selling by herding behaviour among the majority of market participants.
It has been mentioned in past posts that one of the threat to economic growth as well as social stability is the concentration of wealth. Recently, the protest in Wall Street shows the tension between Wall Street elites and main street population. Currently the demonstration does not have serious effect on equity stock market. Market participants should not overlook the development in future.
The Perils of Leverage
Folks with higher incomes and access to credit, he points out, are able to maintain their customary standard of living and continue to shoulder their debts without much discomfort. But lower-wage earners and those with less access to credit, along with the 14 million or 15 million unfortunates who have lost their jobs, are really hurting.
A disturbing prospect that, all things considered, doesn't imbue us with confidence that this market can sustain any significant rally.
Short Selling Rises Most Since 2006
Investors are increasing bearish trades around the world by the most in at least five years, convinced the lowest valuations since 2009 will prove no barrier to losses after $11 trillion was erased from equities.
Short selling, where traders borrow shares and sell them, hoping for a decline, is increasing even as equities approach the cheapest valuations on record. The MSCI All-Country World trades at 11.8 times reported profit, compared with 11.9 in the five months after Lehman’s collapse. The measure’s average price-earnings ratio since 1995 is 21, data tracked by Bloomberg show.
Equity valuations are already pricing in a recession and stocks are unlikely to fall much below the lowest levels of last week, according to Binky Chadha, the New York-based chief U.S. equity strategist at Deutsche Bank AG.
“Valuations and short interest are approaching Lehman levels,” Chadha said in a telephone interview on Oct. 6. “It’s not very easy to continue to take larger and larger short positions.”
About 4.1 percent of NYSE shares have been borrowed and sold, up from 3.5 percent at the end of July, data from the bourse shows. U.S. short sales are rising at the second-fastest pace on record after the 2008 financial crisis, according to exchange data dating back to 1995.
Bearish bets last increased faster in March 2009, the same month the S&P 500 began a bull market that doubled its value. The surge in equity prices came seven months after NYSE short interest climbed to an all-time high in July 2008.
Bets that Hong Kong stocks will fall have risen to the highest level since January 2008 amid falling home sales in China and concern that the world’s second-largest economy is slowing.
“The market is so undervalued right now it’s kind of hard to take a short position,” Garbarino said. “But at the same time given the economy, it is hard to be long.”
No Recession for U.S. as Forecasts Improve
“The U.S. economy doesn’t look like it’s double-dipping at all,” said Allen Sinai, president of Decision Economics Inc. in New York. “But it is a crummy recovery.”
The debt crisis in Europe will “likely slow the economy to the edge of recession by early 2012,” Andrew Tilton, senior economist at Goldman Sachs in New York, said in note last week to clients. He sees growth falling to a half percent in the first quarter of 2012.]
Greater consequences could come from the financial links between the two economies and the impact of the crisis on the U.S. stock market and general confidence.
Herman Cain's 9-9-9 tax plan: Break for the rich?
Herman Cain has a plan to radically reform the nation's tax system and make things a lot simpler for taxpayers.
Problem is, it could end up adding to the deficit and shifting the tax burden away from the wealthy and onto the poor, according to some leading tax experts.
"Every change in the tax system shifts who pays how much. If you're trying to be revenue neutral, there's always going to be winners and losers," said Williams.
"We did focus a lot on how do you address the poverty problem," he said. "Clearly, the current system is not working. The advocates of the present system haven't been able to show results for 40 years," Lowrie said.
Class warfare: Who pays fair share of taxes?
Both Republican presidential candidates and President Obama think many Americans aren't paying their fair share of income tax.
They just have very different ideas of who should be paying more.
At issue for the Republicans is the fact that an estimated 46% of Americans don't owe any federal income tax. That's because many of them earn so little that the standard deduction and personal exemption absolve them of liability.
"Everyone should pay something because we all benefit," Bachmann said on a campaign stop this summer. "We need to broaden the base so that everybody pays something, even if it's a dollar."
One issue that unites the Republican candidates is that they don't want to raise taxes. And they are opposed to Obama's plan to ask the wealthy to pay more.
This year, Williams estimates that 75 million households, or 46%, will not pay any federal income tax. Half make so little that the standard deduction and personal exemptions eliminates their liability. Nearly two-thirds of households that pay no tax make less than $50,000.
Most of these households, however, do pay federal payroll taxes to support the Social Security and Medicare systems. Of those that pay neither income nor payroll taxes, the majority are elderly.
The wealthy, however, are the main beneficiaries of the nation's tax code, Williams said. While they still pay some tax, their liability is greatly lowered by various tax rules, particularly the 15% rate on capital gains.
Few of the Republican candidates have laid out specific plans to reform the tax code. But depending on how they do it, they could end up socking the rich with bigger bills.
"Most of the tax breaks go to the wealthy," Williams said.
How to Tame the Volatile Stock Market
Oops — investors on Friday made a $400 billion mistake. That's the amount by which they left the U.S. stock market underpriced over the weekend, judging by Monday's dramatic 3% rise in the Dow Jones Industrial Average.
Maybe stocks have been spasmodic of late because investors are caught between punitively low rates on short-term savings and a darkening outlook for company profits.
While we're trying to figure out the cause of recent volatility, here are some steps worried investors should take.
1. Keep a Historical Perspective.
It's true that stocks have swung more wildly since summer than they did in the spring, and that this year looks kookier than last. But we're not in new territory.
2. Reduce Your Margin for Error.
Value stocks have historically tended to outperform during economic downturns. The best approach for nervous investors now is to focus on value stocks, excluding banks.
3. Average Your Costs.
But, despite the experience of the past decade, it's also true that the market generally goes up over time. Mathematically, the power of a rising market has historically offset the savings of dollar cost averaging and then some. So decide on an asset allocation that's right for you and then put your money to work.
4. Reconsider Your Risk and Reward Assumptions.
If you're still waiting for the stock returns of the 1980s and 1990s to reappear, stop. During those years stocks did twice as well as normal, on average. Plenty of economists think even the concept of "normal" needs a reset. U.S. stocks returned about 7% a year after inflation over the past two centuries, but that period saw America's rise from a farm economy to the richest nation on earth. Growth in coming decades might be more modest, not least because the country has been on a borrowing binge that will need to be wound down.
GE to build large solar panel factory in Colorado
General Electric Co. will build the largest solar factory in the U.S. near Denver.
Solar installations are growing fast, but solar panel prices have fallen precipitously in the past year, driven in part by a glut of panels on the market. The addition of new solar panel factories around the globe has coincided with reduced demand for solar in Europe and especially Germany, by the far the world's largest solar market.
The falling prices have led to the bankruptcies of three solar panel makers in the last two months, including Solyndra, a panel maker that collapsed despite receiving a $535 million loan guarantee from the federal government.
The factory will produce so-called thin film panels made from cadmium telluride. These panels are less efficient at converting the sun's rays into electricity than traditional crystalline silicon panels, but they are cheaper, and therefore produce power at a lower cost.
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