End Of Market Selling

Equity stock market shot up on the last day of a holiday shortened trading week. It appears that now it can be claimed that market bottom has been reached. And market should rebound on an overall improved economy. Three weeks ago, it was observed that long term investors were taking profit as market seemed to have reached recent peak which was close to historic peak. It was reasonable for long term investors to increase the cash level for future bargains if market would collapse which many market participants would expect. Selling was constrained because there was no need for panic selling and liquidation was only for small portion of the complete portfolio. It was expected that the following week would see a rebound in market as sellers completed selling and majority of market participants were waiting on the sideline with cash. But actually market manipulators and day traders continued to drag down market on fear of fiscal cliff where wealthy investors continued to liquidate stocks on potential tax hike.

Finally, selling stopped last week as predicted but a week later. As mentioned, there is tremendous capital in the financial market and households are hoarding cash on saving. With symptoms of market support, bargain hunters begin to pick up shares for trading. There is increasing market participants that speculate market cycles and make a fortune on trading the low and high of market. Therefore trading volume slightly increases recently with more interest from institutional and individual investors. Nevertheless, overall confidence of market participants is still fragile in equity stocks. But the demand for higher yield investment assets are soaring as investors are flooded with cash and do not want the money eaten up by inflation.

Actual economic condition is better than many would expect. Individuals are seeing increase in saving and improvement in living standard. Corporations are performing well and have access to cheap financing. While the economy prospers, companies encounter wage inflation which would hurt profitability. Nevertheless, overall economy is on track to a slow recovery from the trough of financial meltdown. Technology is a driving force which on one hand increases productivity and on the other hand increases economic activities through production and sale of modern gadgets and information technology. Domestic economy in the United States is comparably better than other parts of the world. Europe is still under the threat of sovereign debt crisis and China economy encounters slowdown. Market manipulators and traders would still exploit market news to make profit from panic selling due to weak confidence in equity stocks. As mentioned many times in earlier posts, market trend is up in long run because of technology innovation as well as surplus capital to buoy market in short term.



Waiting For The Dow Industrials To Be Cut In Half: Thomas Kee
There's an old adage on Wall Street that tries to gauge sentiment by characterizing whether investors are more fearful of missing the bus or getting run over by the bus. For the past few weeks, the latter has prevailed, as investors truly fled the stock market at every possible chance to get out of the way of what has truly been a slow moving train wreck that's seen 8% cleaved off the benchmark S&P 500.

"People always want to jump in on the short side after the market has declined," says Tom Kee, President and CEO of Stock Traders Daily in the attached video.

His closing advice for the pessimistically inclined: "you have to do the opposite of the masses and never chase the market on the downside or chase it lower."

Why It's Best for US to Fall Off 'Fiscal Cliff'
While Federal Reserve Chief Ben Bernanke forecasts 2013 will be a "very good year" for the world's largest economy if the "fiscal cliff" is avoided, one analyst argues a cliff-triggered recession is exactly what the U.S. needs.

The $600 billion in tax hikes and government spending cuts, set to take place in January 2013 if policymakers do not reach a compromise for avoiding them, are essential to debt reduction and the long-term balancing of the U.S. budget, Gambles said.

"If we extend the Bush tax cuts and carry on getting deeper and deeper in debt, believe me that's a lot uglier," he added.

Parched Earth Policy: Are We Running Out of Water?
As Americans gather around their Thanksgiving tables for an abundance of food, it will be a sharp contract to what some experts are calling a severe crisis - the scarcity of fresh water.

The scarcity, these analysts say, can no longer be avoided as the effects of a world water shortage will have life-threatening and global economic consequences.

A major reason for the water shortage is drought. Some 56 percent of the United States is experiencing drought conditions - the most extensive area of drought in the U.S. in 12 years of tracking. Other areas of the world, like the Korean peninsula, have endured the worst drought conditions in more than a century.

Adding to the water scarcity is an ever increasing world population - along with increased urbanization - and economic growth, all of which demand and consume larger and larger amounts of water. The United Nations has said that two thirds of the world will live in water-stressed countries by 2025.

"Our climate - whether you want to call it global warming or climate change - is different than it was 50 years ago," said William Moomaw, professor of international environmental policy at Tufts University.

"To have a hurricane like Sandy in October just shows you how the oceans are warming. The weather patterns are only going to change even more and get worse as time goes on." said Moomaw.

"We need to continue to develop desalination technologies that are not so energy intensive or polluting. We need to accelerate our wastewater recycling programs to allow for more reuse of water," said Petrovksy. "And we need to decide as a society whether green lawns and landscaping, golf courses, swimming pools and unnecessary agriculture (like tobacco and coffee) are worth the use of water."