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Yesterday’s Sept. 1 Downer For Stocks Darkens the Outlook in an Already Bleak Month For Investors

When it comes to U.S. stocks, the first trading day of September typically sets the tone for the rest of the month.

And with share prices having hit a sour note yesterday (Tuesday), investors probably shouldn’t anticipate a positive showing for the rest of September.

U.S. stocks nose-dived yesterday, with the Dow Jones Industrial Average plunging 185.68 points, or 2%, to close at 9,310.60 – the biggest hit that blue-chip index has taken in two weeks. The Standard & Poor’s 500 Index fell 22.58 …

I published “Bob Farrell’s rules for investing” and “More on Bob Farrell’s rule #8” a few days ago, and these posts attracted a large number of readers, obviously in search of some guidance at this juncture in the markets.

Today, I consider rule #9, “When all the experts and forecasts agree, something else is going to happen”, in the context of the current situation.

Firstly, David Rosenberg, chief economist and strategist of Gluskin Sheff & Associates, quoted a CNBC poll of Tuesday showing that 90% of Wall Street economists believed the recession had ended. “It is highly unlikely that 90% of the economics community can be right on the same thing at the same time,” he said. Also, a Bloomberg survey showed that the consensus sees real US GDP expanding at annual rate of at least 2% for the next four quarters, leading Rosenberg to

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Wall Street “gurus” come and go, but in the case of Bob Farrell legendary status was achieved. He spent several decades as chief stock market analyst at Merrill Lynch & Co. and had a front-row seat at the go-go markets of the late 1960s, mid-1980s and late 1990s, the brutal bear market of 1973-74, and October 1987 crash.

Farrell retired in 1992, but his famous “10 Market Rules to Remember” have lived on and are summarized below, courtesy of The Big Picture and MarketWatch (June 2008). The words of wisdom are timeless and are especially appropriate as investors grapple with the difficult juncture at which stock markets find themselves at this stage.

1. Markets tend to return to the mean over time When stocks go too far in one direction, they come back. Euphoria and pessimism can cloud people’s heads. It’s easy to get caught

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Volume eased across the board as the NASDAQ lead the way higher

The NASDAQ spent most of the day in positive territory as GOOG and AAPL’s gains propped up the index.  It was such a rosey day for the S&P 500 or the Dow Jones Industrial average; the Dow down almost .9% narrowly missed another distribution day.  Put buying subsided from Friday’s level as the equity put/call fell from 1.02 to .81 on Monday.  The drop is another sign of complacency on the part of put buyers.  Sellers complacency is not a good thing for bulls, it appears those trading options are far more optimistic about the market than what we are seeing with the Investors Intelligence survey.  Any upside appears to be limited at this point,

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Once again, a lot of back and forth action occurred on the indexes, but not real movement. After the most recent sell-off, the market has begun to move in an ever-smaller price range. For those on either side of the spectrum, there are plenty of arguments as to why a new bull market is being born, or the bear market will continue.

The bulls can be pleased that short-term support levels have been established on the DJIA , S&P 500, and NASDAQ. The bleeding has stopped. Bulls can also revel in the fact that over the past two days bears have pushed the indexes down but failed to follow through. In particular, the recent low on the DJIA, 7936, was undercut but still held. Moreover, volume has picked up over the last few days while the indexes have held their ground- …

You may have read that it is important to leave emotions out of your investment decisions. Over the years, various studies have attempted to measure the deleterious effects of letting emotions play too great a role in financial decision making.

However, there is an advantage to be gained by trying to interpret the emotions of investors in general. Specifically, the ability to detect bullish or bearish investor sentiment can be useful when making decisions about your portfolio.

Technical analysis, the evaluation of securities based on historical prices and other trading variables, is based in part on market psychology and thus looks at a host of sentiment indicators for clues about the near future. Here are some examples of tools used to assess investor sentiment.

Rate of mutual fund share purchases and redemptions: The rate at which investors buy and sell mutual fund shares can indicate whether they are concerned about volatility. If more

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My MoneyandMarkets.com column today, Are Oil-Rich Sheiks Being Scared Into Gold?, is pretty bearish on everything but gold. That said, I also wouldn't be surprised to see a broad market rally this next week. In 13 of the last 15 years, the week before Thanksgiving has been a positive one in the market.And that, in turn, could be the basis for a Santa Claus rally in a very oversold market.Three common indicators used to find a bottom are the bull/bear ratio, convergence/divergence, and capitulation as measured by the VIX (or fear) Index.Note that I'm talking about "a" bottom, not "the" bottom. The Dow’s low of 1932 was preceded by at least seven levels that were considered major market bottoms. Looking at today’s market, we aren't looking for THE bottom, we're looking for a tradeable bottom that can be a springboard for ...

Some people are making this way harder than it is when it comes to making money. I make it very clear when I am going very long and when I am only buying a few to a hundred shares of something. A newbie will not know this but anyone with at least a few months will know that. So when you see that there are so many longs tonight don’t get too excited thinking that this market is going to be super bullish. It is what it is. A low volume rally. But this low volume rally is loaded with short sellers, via the NYSE short interest constantly hitting all-time highs now at 14.27. So as long as the short sellers jump in the market and people continue to deny the rally–bulls fell to 37% from 50% in this week’s investors intelligence poll. I have heard some actually say “I thought we ...

First off I want to thank everyone who dealt with my major problems of heat that I was having due to my MS attacks. There is nothing I can do to control them. Luckily for me they are over and hopefully I can get back to normal. Along, with my chat room, which has been acting funny. Chatblazer is a funny program. Anyways, after Wednesday’s market session, I must say that the potential fear that I had about possibly losing the nice charts have abated, for now. I did take some profits to lock in some stocks and not lose all gains on 5/21 just to play it safe in case the market was going to fail right at the 200 DMAs. Well the good news, so far, is that initial wall was hit, that was the end of the selling. I am ...