Three Bad Reasons for Pursuing Trading as a Career

When I talk with traders who are having problems, I often find that the root problem is that they have pursued work in the financial markets for the wrong reasons. Here are three of the most common problematic reasons that draw people to trading:

1) The Thrill of Gain – While this often masquerades as a passion for markets, a little observation reveals that these traders have little interest either in markets that they don’t trade or in markets while they are not trading. The interest in market action often reveals addictive patterns, in which the roller coaster rides of gains and losses become more valued than the achievement of a smooth, upward sloping equity curve. This leads to overtrading and painful emotional ups and downs.

2) The Need for Independence – These traders are drawn to markets because they don’t want to have to answer to someone else in a structured job. The problem with this pattern is that the very need for independence that leads people away from structured careers also leads them away from the kind of structured practice and preparation that are necessary for trading success. Just as these traders don’t want to be tethered to a 9-to-5 career, they rebel against being tethered to markets. This shows up as poor discipline, poor preparation, and difficulty sustaining even modest efforts at performance development (such as keeping daily journals).

3) The Need to Make It Big – Many traders try to use performance in the markets, not as an expression of their competence, but as a desperate attempt to prove it. They don’t feel successful in other endeavours and are using markets to try to be a success in life. As a result, most of their self-esteem eggs are in the trading basket. That becomes threatening and stressful when inevitable trading slumps occur. Worse still, such traders often feel a need to make more and more to fill the hole of lacking self worth, eventually leading them to take too much risk and blow up.

What is the common theme among the three groups of traders? They are using trading to act out (and try to resolve) personal issues that are separate from risk/reward and opportunity in markets. Their needs lead them to place trades more for psychological reasons than logical ones.

Source: Brett Steenbarger

Stock Trading Psychology

Many of todays highly successful traders will tell you that the general key to success in trading is to be able to comfortably take a loss. It is general knowledge among experts in the trading psychology field and among traders that the market is not predictable and it is safe to say that it never will be. In the world of trading, it is expected to take a loss; even those who are highly skilled traders know that it is inevitable. With that said, let us have a look at things you as a trader should be aware of, how you can take a loss effectively and use it towards the greater good of your trading world.

Trading psychology tells us that when a trader loses he begins to become somewhat of a perfectionist in his dealing. Many traders think that in trading, a good day will always be one that is profitable. Trading psychology experts tells us this is not true.-

A trader should define a good day as one where they have extensively researched and planned with discipline and focus, and have followed through to the entire extent of the plan. Yes, when a trader has mastered the art of accepting losses and working through them with a well thought out plan then good days will become profitable in time.

Because the art of trading in an unpredictable market fluctuates so greatly from one day to the next, experts in trading psychology believe that it is important that you concentrate on what you can control, instead of things that are beyond your control. Looking into the short-term you cannot expect to be able to control the profits of your trading. With that said, look at what you do you have ability to control.

You do have the ability to control the difference between good and bad days. You are able to control this factor by extensively researching the strategies you implement within your trading experiences. By learning to research your chosen strategies, thus controlling the amount of good and bad trading days you experience, you will, in the long-term begin to generate profits, which is the ultimate goal of every trader.

Trading psychology experts tell us that it is important to become realistic in trading instead of becoming a perfectionist. Perfectionist traders, relate a loss with failure, and will become obsessed with the failure, focusing only upon it. Realistic traders understand the unpredictability of the market and taking a loss is simply part of the art.

The main key you must remember in trading psychology to be able to effectively limit your losses, instead of becoming obsessed with them. A common thing seen within the trading psychology world is that traders who are obsessed with their losses often have a hard time bouncing back from them, thus losing in the end.

Experts in trading psychology have organized three basic strategies you can use to effectively stop losses. These strategies are:

Price Based

Time Based

Indicator Based

Stops that are priced based are generally used when the other two have not functioned. To make this work you will need to make hypothesiss about the trade and identify a low point in that particular market. Then you will set your trade entries near your points, thus making sure that losses will not be overly excessive if the hypothesis fails.

Time Based stops constitutes making use of your time. Designate a holding period you allow to capture a certain number of points. If you have no achieved your desired profit within that time limit, you should stop the trade. If effectively used you should stop even if the price stop limit has not been achieved.

The Indicator based stop makes use of market indicators. As a trader, you should be aware of these indicators and utilize them extensively within your trading experiences. Look at indicators such as, volume, advances, declines, and new highs and lows.

Experts in trading psychology say that setting stops and rehearsing them mentally is a good psychological tool to use and will help ensure that you follow through.

10 Rules for Better Trading

Rule 1: Believe you can win. If other traders can do well in the market, so can you. However, if you don’t have enough courage and confidence in yourself, you will never achieve success. The events over the past year have tested many people in this regard and some now think the game is rigged against them. Nothing could be farther from the truth as opportunities remain. Those who will win in the markets first start by believing they can do it. Then they back up that strong belief with serious hard-work and determination to find their trading edge. However, it starts with you first having faith in yourself.

Rule 2: Don’t be seduced by results. You must stay in the present and focused on executing each trade to the best of your ability. Don’t let yourself think about how much you’re going to win (or lose) in the market or how great of a trader you are or not, but instead focus on what matters most – each and every trade you make. Do that and the results will take care of themselves.

Rule 3: Sulking won’t get you anything. The worst thing you can do for your prospects of winning is to get down when things don’t go well. If you start feeling sorry for yourself or thinking the trading gods are conspiring against you, you’re not focused on the next trade. Good traders readily accept their mistakes and move on to the next trade. They don’t let one bad trade carry onto the next one.

Rule 4: Beat them with patience. Every time you have the urge to make an aggressive trade, go with the more conservative one. You’ll always be OK. The moment you get impatient, bad things happen. In tough markets, stay patient and let others beat themselves.

Rule 5: Ignore unsolicited advice. You’ll have lots of well-meaning friends and experts who want to give you advice. Don’t accept it. In fact, stop them before they can say a word. Their comments will creep into your mind when you are trading and conflict with your own strategy. If you’ve worked on your game, commit to the plan and stay confident with it.

Rule 6: Embrace your personality. The key is to find what works best for you. There are many approaches out there, but there is only one trading approach that will utilize your best skills and talent to create and sustain an edge. The worst mistake you can make is to simply embrace a strategy of someone else that doesn’t match your own personality and strengths.

Rule 7: Have a routine to lean on. Every trader should follow a mental routine on every trade. It keeps you focused on what you have to do, and when the pressure is on, it helps you manage your nerves. You may not have control over the market, but you have control on how you trade the market. Having a routine will inject consistency that will keep you calm under pressure.

Rule 8: Find peace in the market. The market has to be your sanctuary, the thing you love, and you can’t be afraid of making mistakes. Yes, you’ll experience both good and bad times, but you must enjoy and revel in the challenge.

Rule 9: Test yourself. Don’t look for easy trades and setups at all times. Test yourself by working hard trades and difficult markets in order to test and improve your skills. For example, if you’re uncomfortable with trading options, spend a month just trading options. If you’re uncomfortable with shorting stocks, spend a month shorting stocks. We only get better if we constantly test what we think is most difficult.

Rule 10: Find someone who believes in you. Having confidence in yourself is important, but it helps to have someone who believes in you, too, whether it’s a spouse, a friend, a teacher, or a mentor. No man’s success can be entirely attributed to his own actions. You must surround yourself with people who believe in you at all times.

This is a powerful set of trading rules that will serve you well.

Source: Damien Hoffman

The Importance of Listening to Yourself when Trading

A fundamental reality underlying trading psychology is that we know, more than we think we know. Much of what we know is a felt, gut hunch–not a set of explicitly formed ideas. Those internal cues are lost when we are swamped by emotions from negative learning experiences. It takes an unattached mind–a mind free from worries, fears, internal demands–to keep tuned to our gut. In quieting body and mind, we gain access to the felt knowledge we possess, but may not realize we possess. That is why so many of the brief therapy techniques that I teach to traders –what I call therapy for the mentally well– are designed to regain control of body and mind. It is not by accident that half of the chapters in my book on self-coaching are devoted to these techniques.

Loss of discipline is the most common concern of traders who seek psychological assistance. But equally important, if not as recognized, is the related tendency to not listen to oneself. So many times, we *know* what we should be doing and do not act. Sometimes out of second-guessing ourselves, sometimes out of fear, sometimes out of listening to others rather than ourselves. We know–and at some level we even know we know–but we don’t listen to that knowledge. This creates a double consequence: a missed opportunity, but also a loss of confidence. It is difficult to sustain confidence in our judgment if we routinely engage in cognitive self-betrayal.

After the hard work of analysis is done–we’ve performed the research, read the news reports, observed the charts, talked to colleagues–it remains for the mind’s implicit mode to perform the synthesis. Without the data that come from long hours of observation, the mind has nothing to synthesize: we need to first see many patterns before we can recognize those patterns in real time. But if we do not listen to ourselves–if we remain stuck in analysis, or if we entertain so much mental noise that we cannot hear our syntheses–the many hours of learning are lost.

Many gurus would have you listen to them for guidance. The only real wisdom, however, comes from listening to yourself.

Source: Brett Steenbarger

Warren Buffett’s Holdings Outperforming In Q4

With the release of Berkshire Hathaway’s holdings as of the end of the third quarter yesterday, we can take a look at how these holdings have been doing so far this quarter.  As shown at the bottom of the table, Buffett’s Berkshire holdings are currently up 8.61% since the start of October, while the S&P 500 is up 4.41%. 

Buffett’s top holding with a value of more than $11 billion, Coca-Cola (KO), is even outperforming the S&P 500 so far this quarter (5.66% to 4.41%).  Unsurprisingly, Buffett’s position in Burlington Northern (BNI) has done the best so far this quarter with a gain of 22.87%.  Buying one of your biggest positions at a nice premium is one way to boost returns!

Other big winners for Buffett this quarter have been AXP (+20.59%), COP (+18.7%), MCO (15.91%), IR (19.99%), NLC (18.2%), NSC (19.28%), and UNH (15.06%).  Ten of his 41 holdings are down so far this quarter, with USG down the most at -15.13%.

Source: Bespoken Research

Top Books on Investment Bubbles and Stock Distributions

Below is my list of the top books that chat about stock distributions and rare events.  I also included some market history and bubbles lists too for comparison.  

Stock Distributions

• Why Stock Markets Crash: Critical Events in Complex Financial Systems - Didier Sornette
  
• The Misbehavior of Markets by Benoit Mandelbrot
• Fooled by Randomness and The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb
• Finding Alpha – by Eric Falkenstein
• Market Volatility – Robert Shiller
• Optimal Portfolio Modeling – Philip McDonnell
• Fractal Market Analysis - Edgar Peters
• More Than You Know: Finding Financial Wisdom in Unconventional Places - Michael Mauboussin
• The Failure of Risk Management: Why It’s Broken and How to Fix It – Douglas Hubbard

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Market Bubbles

• Manias, Panics, and Crashes by Charles Kindleberger
• Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay
• The Prize: The Epic Quest for Oil, Money, & Power by Daniel Yergin
• The First Tycoon: The Epic Life of Cornelius Vanderbilt by TJ Stiles
• Irrational Exuberance – by Robert Shiller

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History of Markets

• Triumph of the Optimists: 101 Years of Global Investment Returns by Elroy Dimson, Paul Marsh, and Mike Staunton
• Stocks for the Long Run by Jeremy Siegel
• Reminiscences of a Stock Operator by Edwin LeFèvre
• When Genius Failed by Roger Lowenstein
• Capital Ideas, Capital Ideas Evolving, and Against the Gods by Peter Bernstein
• Ibbotson Yearbook by Ibbotson Associates
• The CRB Commodity Yearbook by Commodity Research Bureau
• The Essays of Warren Buffett by Warren E. Buffett and Lawrence A. Cunningham
• Fortune’s Formula by William Poundstone
• The Myth of the Rational Market - Justin Fox

Stocks/CFDs on Total Trader

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Stock/CFD Exchanges Available

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DMA CFD Trading – Direct Market Access

Designed to cater to the professional trader and investor, we offer CFD Exchange DMA on most global exchanges. CFD Exchange DMA gives Direct Market Access to the exchange order book on real-time CFD prices. This means a trader can combine the benefits of trading direct on an exchange with the leverage of margin-traded CFDs.

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Live Market Prices - Costs & Rebates

By default, clients have access to delayed market data on the equities and futures exchanges on which they are enabled to trade. To receive real-time market data for stock, CFD, CFD DMA or futures trading, clients will have to subscribe to the individual exchanges. Clients will incur a small monthly subscription fees for the data they elect to receive in real time. An Online Subscription Tool is available on the live trading platforms.

Data fee rebates for active equity trading clients.
For equities clients that subscribe to real-time market data, we have introduced a data fee rebate scheme where fees are rebated per exchange should clients trade the minimum number of times across both stocks and CFDs during each calendar month. Rebates are only applicable for non-professional equities clients subscribing to level-1 data. The definition of Non-Professional and Professional subscribers may vary by exchange.

Will The Vix Crack 20 Soon?

The VIX volatility index slipped below 21 earlier today and currently stands at 21.15.  This is the closest the VIX has gotten to 20 throughout the entire bull market, and marks a 75% decline from the closing high of 80.86 seen during the financial crisis.

The VIX has now been above 20 for 287 consecutive trading days, which is the longest streak since 1990 when our daily VIX data begins.  In the bottom chart, we provide a historical look at the VIX along with all of its streaks of daily closings above 20.  We’ve only seen two other periods where the VIX was above 20 for 200 straight trading days or more, and those ended at 239 days in June 1999, and 236 days in May 2003.  In terms of market performance following these long periods of high volatility, the S&P 500 was on the verge of making a mutli-year peak when the VIX broke below 20 in 1999, but it did very well in the months and years following the drop below 20 in May 2003.

Source: Bespoken Research

Stock Trading: Apple, Amazon.com Approach All-Time Highs

Don’t look now, but Apple (AAPL) and Amazon.com (AMZN) are not only hitting bull market highs, but they’re also approaching all-time highs.  If the economy is still weak, investors in AAPL and AMZN aren’t too worried.  While this is indicative of overall market strength, it’s also a major testament to how well these two companies have done even through the toughest times.  Amazon.com’s all-time closing high is $106.69, reached at the peak of the Internet Bubble.  The stock is currently trading at $97.2.  Apple’s all-time high was reached on December 28th, 2007 when it closed at $199.83.  AAPL is currently trading at $191.28. 

Source: Bespoken Research

Stock Market Wrap 14-10-09

US stocks weakened on Tuesday after disappointing sales from Johnson & Johnson missed expectations.

Market breadth was negative. On the NYSE, losers beat winners four to three. On the NASDAQ, advancers topped decliners seven to five.

Financial shares were under pressure. Goldman Sachs fell 1.5% on an analyst downgrade. JPMorgan Chase, the Bank of America and Travelers Companies also declined. The Bank of America said it will waive attorney-client privilege and hand over legal documents related to its controversial merger with Merrill Lynch. The company has been under pressure from regulators for months to provide more information on the purchase.

Among notable movers in the financial sector was CIT Group, which tumbled 14% after the lender’s CEO said he would resign by the end of the year.

The NASDAQ stayed in positive territory after Cisco Systems agreed to buy Starent Networks Corp for US$2.9B. Cisco’s stock added 0.5%, whereas Starent, which makes telecommunications equipment, surged 16.8%.

Healthcare stocks slid after a key Senate committee endorsed a sweeping healthcare overhaul as it gained the support of an influential Republican. The proposal will be merged with the Senate health panel’s version and moved to the full Senate for debate in the next few weeks.

Johnson & Johnson posted weaker-than-expected quarterly revenue as sales of prescription drugs and cardiac stents disappointed. Third-quarter profit topped analyst forecasts, but that was largely because of cost cuts and lower taxes. Third-quarter revenue fell 5.3%. Earnings beat analyst estimates by 7cps, helped by lower research and marketing spending. Shares in Johnson & Johnson fell 2.4%.

Intel reported its results after close. Third-quarter net income dropped to 33cps. Analysts had expected income of 27cps. Revenue fell 8.1%, but was above expectations. Gross margin was 58% in the third quarter, compared with Intel’s initial prediction of about 53%. The company gave a better-than-expected outlook for the fourth quarter. For the fourth quarter, Intel predicted sales would be US$9.7B to $10.5B, compared with analyst estimates for US$9.5B. Intel was halted in extended trading.

Other major companies releasing results this week include JPMorgan Chase, Citigroup, Goldman Sachs, Google, Nokia and IBM.

Crude oil rose to a seven-week high in New York on speculation world energy use will grow as the economy rebounds and as a weaker dollar spurs commodity demand. The Organization of Petroleum Exporting Countries (OPEC) increased its 2010 global oil-consumption forecast on economic expansion in emerging economies. OPEC predicts that total crude consumption will increase by 700,000 barrels a day to 84.93M barrels a day next year, led by demand from emerging markets. This year, the group forecasts global demand will contract by 1.4M barrels a day to 84.24M barrels a day.

Gold futures rose in New York on concern a weakening dollar and rising inflation will enhance the appeal of precious metals.

The ABC’s of Stock Trading

A wise man chooses to do in the beginning what the fool is forced to do in the end.

Better to be wrong and rich than right and broke.

Create an atmosphere of confidence and you will never choke on the bone of contention.

Develop an edge and stick to it. If you are not living on the edge then you are falling off of one.

Enter the market prepared or you will exit impaired.

Forget the last trade or the market will steal your next one.

Giving in to emotional bias is akin to giving up.

He who chases three rabbits catches none.

If it sounds to easy to be true then it is neither easy or true.

Just say no when the market has said yes one too many times.

Keep what you have by not keeping what you never intended to have.

Losers justify and winners rectify.

Make time for self.

Noise is the mother of doubt.

Obvious trades can lead to blind faith.

Poor execution can result in a broken disposition.

Quitting is not a fork in the road but a dead end street.

Reason looks for support in the past while judgment considers the weight of the future.

Stocks move first and ask questions later.

Timing the market is like winding a clock that has no hands.

Understand yourself first and the market last.

Voice your opinion in mute mode.

Wishers become has beens when what has been becomes a wish.

Xtra time in the market could spell disaster in the home.

Your ability to win is based on your willingness to lose.

Zoos welcome bulls and bears but pigs…

Source: David Blair

Stock Market Wrap 8-10-09

The Australian market soared upon opening and reached a plateau for the rest of the morning, before lifting off again in the afternoon. The All Ordinaries finished Wednesday 99 points higher.

The S&P/ASX 200 closed 104 points up. The Materials sector surged, with winners including BHP Billiton (+$1.16), Rio Tinto (+$3.02), Newcrest Mining (+$2.22), Fortescue Metals (+$0.31), Lihir (+$0.17), Amcor (+$0.15), BlueScope Steel (+$0.08), Incitec Pivot (+$0.21), Alumina (+$0.09) and OZ Minerals (+$0.08). The Financials sector benefited from gains in the four majors: Commonwealth Bank (+$1.80), Westpac (+$0.33), National Australia Bank (+$0.93) and ANZ (+$0.55), plus a strong showing from Westfield (+$0.27), Macquarie Group (+$3.05), Suncorp-Metway (+$0.58) and Stockland (+$0.16). The Energy sector saw Origin (+$0.20), Santos (+$0.18), Oil Search (+$0.08) and particularly WorleyParsons (+$1.61) rise. In the Industrials sector, Leighton Holdings (+$1.27) and Macquarie Airports (+$0.16) gained but Brambles (-$0.41) extended its decline. Another notable loser was Singtel (-$0.14).

On Tuesday night, Rio Tinto took another step towards the development of a world class copper-gold resource in Mongolia with the signing of an investment agreement for the Oyu Tolgoi project with the Government of Mongolia. The government will address the conditions precedent and Rio Tinto and Ivanhoe Mines will commence the development phase. Production is expected to start in 2013.

US stocks rose for a third day as banks climbed on an analyst upgrade, while Alcoa jumped before beginning the third-quarter earnings season.

The S&P 500 fell for most of the day, as homebuilders declined on speculation Congress will not extend a tax credit. Pulte Homes, KB Home and DR Horton were down between 3% and 4%. AT&T led a slump in telephone shares after saying it will allow iPhone customers to use internet phone carriers.

Boeing, United Technologies, 3M and Travelers Companies were among the biggest decliners on the blue-chip average. They were also among the biggest gainers in the early-week rally.

Late in the session, a rally in a variety of financial stocks gave the market a boost. The Bank of America, the largest US lender by assets, and Wells Fargo each added 2.1%.

The benchmark index was further buoyed in the final hour of trading as investors speculated Alcoa, the first Dow company to report earnings, would post better-than-estimated results.

After market close, Alcoa reported its first quarterly profit in a year, as it benefited from improving metal prices and saved money by cutting jobs and reducing other costs. Profit, excluding one-time charges, was 4cps, exceeding analysts’ average estimate for a 9cps loss. Revenue was US$4.62B versus forecasts for US$4.55B. Results were weaker than those a year ago. Alcoa cut 18,000 jobs in the 12 months to June as the global recession depressed demand and prices for aluminium.

In other earnings news, Costco, the largest US warehouse club, reported fourth-quarter profit that fell less than analysts estimated as gross margin improved. Shares gained 1.8% in NASDAQ trading. Net income dropped 6% in the quarter from a year ago. Shoppers join the members-only warehouse club for basics, along with designer goods and other luxuries. Costco has seen sales of non-essential items fall as consumers pull back to cope with job losses and the recession. Costco runs stores in North America, Asia, Mexico, the UK and Australia.

Broad S&P 500 third-quarter earnings are expected to have fallen 25% from a year ago, extending the losing streak to nine quarters. Analysts expect the energy sector to report that profits fell 64% from a year ago. Industrials are expected to post a 45% drop in profits. Financials are expected to post the best results due to easy comparisons against an abysmal third quarter of 2008. The sector is expected to see earnings growth of 59%.

Overnight Stock Markets 6-01-09

Index/Security Close Chg %Chg

Dow Jones (US) 9,600 +112.1 +1.2

S&P 500 1,040 +15.3 +1.5

NASDAQ 2,068 +20.0 +1.0

US stocks rose as data showed service industries returned to growth after 11 months of contraction.

Banks led the advance, with the Bank of America, JPMorgan and Wells Fargo up between 4% and 7%. The KBW Banking index added 3.2%.

Department store chain Nordstrom climbed 9.5% for the biggest advance in the S&P 500 after analysts upgraded the stock. Limited Brands, the owner of Victoria’s Secret lingerie chain, climbed 7.6% after analysts raised their earnings forecasts for the company.

The US services sector expanded in September at a faster pace than expected, with the ISM’s services index coming in at 50.9, compared to a forecast of 50.0.

Alcoa is scheduled to release third-quarter results on 7 October, the first company in the Dow Jones index to report earnings. The company is expected to report a quarterly loss versus a year ago, reflecting a weak materials sector. Overall, S&P 500 profits for the third quarter are expected to have dropped almost 25% from a year-ago levels. Analysts expect companies to report earnings growth in the fourth quarter.

Among notable movers, Brocade Communications rallied 15% in unusually active trading on reports that it has put itself up for sale. Both Hewlett-Packard and Oracle were cited as potential buyers, according to media reports.

Since bottoming at a 12-year low on 9 March, the S&P 500 has gained 51.2% and the Dow has gained 45%. After hitting a six-year low, the NASDAQ has gained nearly 61%.

Overnight Stock Markets 5-10-09

US stocks fell on Friday as weak jobs data gave more evidence that the economic recovery would be less robust than expected.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about two to one. On the NASDAQ, about nine stocks fell for every five that rose.

US employers cut a deeper-than-expected 263,000 jobs in September, lifting the unemployment rate to 9.8%, according to a government report on Friday. The Labour Department said the unemployment rate was the highest since June 1983. Payrolls have now dropped for 21 consecutive months. Friday’s report also showed companies cut working hours, pushing weekly earnings lower. The average work week shrank to 33 hours in September, matching a record low, while average weekly earnings fell to US$616.11.

Industrial companies in the S&P 500 fell 1.5%, the biggest decline among the index’s 10 industry groups. A report from the Commerce Department showed orders placed with US factories fell 0.8%, more than estimated, after a revised 1.4% increased in July. Excluding transportation equipment, orders rose 0.4%.

Energy stocks tracked crude prices lower. Chevron and Exxon Mobil both declined 1%.

More downbeat news came from General Electric (GE), which slid 3.8% after the CEO said the company was holding discussion on partnerships or an IPO for its NBC Universal unit (NBCU). According to media reports, GE and Comcast were discussing a deal under which the US cable firm would take control of 51% of NBCU with GE keeping the rest.

Apple shares were among the bright spots, rising 2.2% on an analyst upgrade.

The S&P index of consumer staples, up 0.6%, was the only positive S&P 500 sector. The sector was buoyed by a 4.2% gain in PepsiCo, which advanced after analysts upgraded the stock.

Alcoa, the biggest US aluminium producer, is scheduled to release third-quarter results on 7 October, the first company on the Dow average to do so. Analysts expect third quarter profits for companies in the S&P 500 to be down 23% from a year ago. For the fourth quarter, analysts expect profits to be up 63%.

ASX200 Stock and CFD 30-09-09

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The SFE Futures down 12 points overnight. BHP and RIO in ADR form overnight, BHP up 0.30% and RIO up 0.21%. BHP was down 0.58% and RIO down 0.60% in the UK. BHP closed at the equivalent of 3781c, down 18c on last night’s close. Metals mostly up on LME Copper down 0.57%, Nickel up 2.37%, Zinc up 0.27%, Aluminium up 1.06%, Lead up 1.24% Oil price down 13c to $66.71 Gold up 30c to $994 Bonds up 10 year yield at 3.292% down from 3.302%  A$ down 87.12c versus 87.27c yesterday morning. CRB Commodities index up 0.08% VIX Volatility Index up 1.25%

 Market trades in narrow range on light volumes. Fourth fall in five sessions. Better-than-expected S&P/Case-Shiller Home Price Report for July. The report’s 20 City Composite Index showed a 13.3% year on year decline, which was not as bad as the 14.2% decline that was expected. US house prices increased by 1.2% in July from June, above expectations and the indicator’s largest intermonth gain since October 2005. Seventeen of the 20 cities surveyed for the index reported increased prices in July, led by a 3.1% jump in Minneapolis and a 2.9% gain in San Francisco.  Larger-than-expected decline in Consumer confidence. September Consumer Confidence Index fell to 53.1 from 54.5 in August. Market was looking for a reading of 57.0. Market sold off on news. Home Depot fell 1.6%. MBIA down 4.7% after S&P cut the credit ratings of the world’s biggest bond insurer.  Microsoft CEO Steve Ballmer said corporate information-technology budgets will remain at their current relatively low levels. Intel down 1.3%, Dell down 3.2% and Microsoft down 0.3%. On the positive side drug retailer Walgreen up 9.2%. Best single-session percentage advance in six months after the company posted better than expected quarterly earnings. Boosted other consumer staples stocks.

 The market is down 11. The SFE Futures were down 12 this morning.

ASX200 Stock and CFD Report 22-09-09

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The SFE Futures down 15 points overnight.BHP and RIO in ADR form overnight, BHP down 2.06% and RIO down 2.69%. BHP was down 1.19% and RIO down 3.43% in the UK. BHP closed at the equivalent of 3800c, down 8c on last night’s close. Metals stronger on LME Copper up 0.26%, Nickel up 1.42%, Zinc up 0.37%, Aluminium down 1.80%, Lead up 1.39% Oil price down $2.33 to $69.71 Gold down $5.40 to $1005 Bonds down - 10 year yield at 3.487% up from 3.474%. A$ weaker 86.34c versus 86.57c yesterday morning. CRB Commodities index down 2.18% VIX Volatility Index up 0.59%

Dell plans to buy information-technology company Perot Systems Corp (up 65%) for $3.9bn drove some buying in tech stocks. Nasdaq rose 0.2% Financials down 0.91% led by decline in Bank of America Energy sector stocks like Exxon Mobil Corp, ConocoPhillips and Halliburton Co down in the face of a lower oil price Gold down for third day in a row. Takes shine off gold stocks Homebuilder Lennar Corp fell by 3% after announcing that a doubling in its quarterly loss in the three months to August The Conference Board Index of leading economic indicators increased 0.6% in August, Post their fifth successive gain. Near consensus forecasts of up 0.7% US$ stronger weighs on oil and gold Some profit taking ahead of key government meetings this week, including the Federal Reserve’s two-day rate-setting meeting.

The market is down 5. The SFE Futures suggested a 15 point fall.

ASX200 Stock and CFD Report 17-09-09

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The SFE Futures up 53 points overnight. BHP and RIO in ADR form overnight, BHP up 3.05% and RIO up 3.33%. BHP was up 2.67% and RIO up 2.85% in the UK. BHP closed at the equivalent of 3946c, up 46c on last night’s close. Metals stronger again on LME Copper up 3.82%, Nickel up 3.23%, Zinc up 4.25%, Aluminium up 3.95%, Lead up 5.89%  Oil price up $1.41 to $72.34 Gold continues to rally up $13.90 to $1020 Bonds down - 10 year yield at 3.471% up from 3.452%. A$ up 87.29c versus 86.33c yesterday morning. CRB Commodities index up 1.84% VIX Volatility Index up 1.15% to 23.69

Broad based rally continues. Eighth gain in past nine sessions For the month, it is up 3.1%.  Nine of the Ten sectors were up. The telecom sector (-0.77%) was the only sector down. Financials up 3.4%. Led by American Express, up 3.4%. General Electric, up 6.3% and JP Morgan Chase, up 3.4%. Insurers were the hottest sector, Hartford Financial up 11%. Energy sector up 2.3%. Stronger than expected growth in US industrial production boosted sentiment. Consumer price index rose 0.4% in August a touch higher than expected. Core CPI, which excludes food and energy prices, increased 0.1%, as expected. US Current Account Deficit narrowed slightly. Oil prices higher. Boosted by a larger than expected decline in US crude inventories. After the close Oracle down 2.17% following Q1 earnings which were in line with consensus.

Another good day for the market. It is up 48. The SFE Futures were up 53 this morning.

ASX200 Stock and CFD Report 16-09-09

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The SFE Futures up 21 points overnight.  BHP and RIO in ADR form overnight, BHP up 1.15% and RIO up 1.83%. BHP was up 0.56% and RIO down 0.04% in the UK.  Metals stronger on LME Copper up 0.98%, Nickel up 0.66%, Zinc up 1.55%, Aluminium up 1.17%, Lead up 2.89% Oil price up $2.07 to $70.93 Gold up $5.20 to $1006 Bonds down - 10 year yield at 3.452% up from 3.406%. A$ up 86.33c versus 86.16c yesterday morning. CRB Commodities index unchanged VIX Volatility Index down 1.84% to 23.42 

Up for seventh time in eight days Eight of ten sectors up. Consumer Goods and Healthcare down. Retail sales numbers much better than expected. Strongest growth rate since early 2006. New York manufacturing Index also better than expected. Fastest growth rate in 2 years. August US PPI numbers were higher than expected. Boosted by higher energy prices. Caterpillar rose 6%, General Electric +4.2%, DuPont +2.7%; Alcoa up 8%. Energy and Materials stocks like Exxon Mobil and Freeport-McMoRan Copper & Gold also up in the wake of higher oil and metal prices. Citigroup Inc fell by nearly 9% on reports that the bank and the US Treasury Department had begun discussing how to sell the government’s 34% stake. Sentiment boosted by Warren Buffet saying his company Berkshire Hathaway was buying equities.

The market is up 95. The SFE Futures were up 21 this morning. After falling 14c to 311c yesterday on the government invitation to separate their businesses the Telstra research is

actually not too bad this morning and the price is up 8c to 319c.

Goldman’s seven big questions about the economy

A recent Global Economics Weekly report from Jim O’Neil and the team at Goldman Sachs Global Economics highlights the answers to seven key questions that, according to them, should provide an indication of whether the improvement in the global economy and performance of world financial markets can be sustained.

1. Will leading indicators, as highlighted by our own GLI, continue to improve?

Will leading economic indicators continue to improve? We capture a wide variety of global data through our global leading indicator (GLI) and the GLI continues to show strong upward momentum. The GLI should lead the economy by a few months and we therefore are still optimistic about the coming months. As a result we have upgraded our economic forecasts for global GDP growth to 4% driven by improved (less bad) forecasts for the US, Europe and Japan.

2. Are the better signs in the US housing market likely to persist?

One of the sources of this crisis seems to have bottomed. The Case-Shiller house price index rose 0.75% in June, the 1st rise since May 2006.

3. What will tighter financial conditions in China do to growth?

Chinese policymakers have indicated they may want to slow the pace of lending and tighten financial conditions, but so far we see no evidence in the data for this.

4. Will Chinese import growth continue to accelerate relative to exports?

Import growth in China has been stronger than export growth. Popular wisdom holds that China only exports. It may be possible that China does have domestic demand and may play a role in the global economic recovery and the rebalancing of the world’s imbalances.

5. Is the recent positive surprise in Euro-area activity a one-off, or is it set to continue?

Europe, particularly Germany and France, surprised on the upside in the 2nd quarter. Looking at the breakdown of German GDP, we noted a 2nd quarter of positive personal consumption, something we believed Germans didn’t do. German forward looking surveys (e.g. PMI, IFO) continue to surprise on the upside, so the Q3 data should be an important item to monitor to see how the Eurozone as a whole will develop.

6. Will inflation continue to behave, despite improving growth and accommodative policies?

As we have argued many times, we don’t believe inflation to be a significant threat in the near term. There is too much spare capacity for inflation to really take hold. Monitoring inflation data should confirm this view.

7. When will policymakers withdraw the stimulus?

Investors are starting to get concerned about exit policies. We believe that policymakers will only start withdrawing stimulus measures once they perceive that their economies can sustain growth without their help. Only if we continue to see significant surprises on the upside, will they start earlier than we forecast now. This would however be a change of strategy for positive reasons. We believe also that the private sector will return at a certain point and that the world will be able to survive without government support.

The Goldman team concludes: “Based on our latest forecasts and recommended trading strategies, we expect equity markets and other risky assets to continue to perform generally well as we move into the final third of the year.”

Source: Goldman Sachs

ASX200 Stock and CFD Report 14-09-09

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The SFE Futures down 4 points overnight. BHP and RIO in ADR form overnight, BHP up 0.71% and RIO up 1.21%. BHP was up 2.97% and RIO up 1.69% in the UK.  Metals weaker on LME Copper down 0.68%, Nickel down 1.43%, Zinc down 2.90%, Aluminium down 0.49%, Lead down 2.39%  Oil price down $2.65c to $69.29  Gold up $9.60 to $1006  Bonds steady - 10 year yield at 3.343% up from 3.342%. A$ down 86.19c versus 86.33c yesterday morning. CRB Commodities index down 1.55% VIX Volatility Index up 2.55% to 24.15

Main Drivers First day down in six sessions. Selling in Energy stocks primarily led the market lower on a weaker oil price. Chevron, down 0.98%, and ExxonMobil, down 0.95%. Financials weaker led by falls in JP Morgan Chase and Bank of America down 1.21% and 1.45%. National Semiconductor Corp down around 6%. Profit result fell short of expectations although the outlook statement was more positive.  FedEx Corp up 6.41% after announcing a better than expected quarterly result.  Gold finally broke up through the $US1000 level. Now near March 2008 highs. Better than expected September Reuters/University of Michigan consumer sentiment index did not do much for the market. A further rundown in wholesale inventories saw economists edge up their thirdquarter GDP forecasts.

The market is down 50. The SFE Futures were down 4 this morning. Japanese market down 2.5% at the moment. Dow Futures down 82 points.