Thursday, August 19, 2010

The Daily Note - "Bad" Old Days

Frankly it's wearing on me. I yearn for the days when I was arguing for the "good" side. It was when the Feds, Congress, Media were all publicly pounding the economy and how BAD it was and how many people were out of work, and how everyone was suffering. Does it ring a bell? It should, because you were on the most part witness to it, if you were trading then.

The years were 2004-2007, yep they were; and I recall how the markets tanked on any bit of bad news on the hype. So pardon my disbelief that the markets no longer care now that the unemployment is truly at a high,9.5% conservatively, with record number of new claims filed in todays report,(500K) and the people who have given up or have surpassed the unemployment compensation limit are erased from the books, still existing claims hardly budged lower.

Take a look at the historical data exactly 5 years ago as reported on Aug 18,2005 Initial Unemployment Claims were: 314K compared to today, Aug 19, 2010: 500K
Unemployment rate was 5% compared to today 9.5%
July Leading indicators were .1% compared to today: .1%
August Philadelphia Fed was +17.7% compared to today : -7.7%

Yet the media barely bats an eyelash, and traders go on as if all is just an anomaly and will soon blow over. Take a look at the Dow from 2005-2007. We are currently trading at Dec 05-Dec 06 levels yet collecting less revenue: (2005 - $2153.9B vs 2009 - $2105B ) It was lower or the same as the levels we are currently trading, yet we had what amounted to an almost 100% employment, record revenues collected and far less debt:
2005 - $7932.7 vs 2009 - $11,875.9.

So where do you think the markets are in comparison? Take a look.
Dow Jones Industrials: August,2005 high: 10719.41 compared to: August 2010 high: 10719.94. Nope, you can't make this up.

For 2010 we have a lower revenue outlook and with current unemployment and unknown taxation looming, how do we solve the growing revenue-debt gap to justify a higher market? One thing is for certain: it will not be done with the current policy. So are you yearning for the "bad" old days yet?

Happy Trading, Living and Dancing

The Daily Pick - $DJI

©DayTrading with Anni 2010 All Rights Reserved

No comments: