Month: June 2012

By MoneyMorning.com.au

One day in 1983, my dad asked me a question over dinner after a long day at work.

He wanted to know what I knew about a little computer company called Microsoft. It was the brainchild of the son of one of his partners at Bogle & Gates, William H. Gates, Sr.

“Not much,” I replied.

But I did tell my dad that I loved using MS-DOS in the computer lab with my friends. I was a card-carrying member of the nerd herd back in the day, so I spent a lot of time there and knew Microsoft’s fledgling PC-based software pretty well.

My grandmother Mimi, though, had a different point of view. You’ve heard me mention her before.

She’s the one who was widowed at an early age and became a savvy global investor long before people ever thought to look at the bigger picture.

Mimi didn’t care that the buzz was about the MS-DOS language or even about computers. Having grown up in the Depression, she believed that what people would do with the technology was far more valuable.

She said she had confidence that Sr.’s son, Bill Gates Jr., understood this – which is why she invested heavily in the Microsoft IPO in 1986. Enough said.

Today, though, I think she’d voice an equally strong opinion about Microsoft (Nasdaq: MSFT) CEO Steve Ballmer. In fact, I think she’d fire him. Here’s why…

8 Reasons Why Steve Ballmer Must Go

1.   Ballmer took over Microsoft 12 years ago when Microsoft shares were $60. Now it struggles to  maintain a $30 share price. Microsoft has $58.16 billion in cash and this is the best Steve Ballmer can do?

2.   Office and Windows are dying. Once the business world’s de facto standard, both are being replaced by cheap, easy-to-operate software, much of which is actually free as well as compatible. This is a big problem considering that, according to the Wall Street Journal, roughly 85% of Microsoft’s revenue is coming from just two products: Windows and Office.

3. The company isn’t innovating fast enough or aggressively enough. What’s more, it’s attempting to compensate for its own shortcomings with increasingly ill-conceived acquisitions. For instance, Microsoft forked over $605 million for 18% of the Barnes and Noble Nook e-reader and still has no real ability to compete with Amazon’s Kindle. It also couldn’t seal the deal with Yahoo. Despite a sizable head start using Yahoo’s core search technology, Bing has a mere 15% of the search market today.

Ballmer waited nearly four years to respond to the iPad and his “Surface” tablet was ho-hum when it could have been jaw dropping. One more: Microsoft paid $8.5 billion in cash for Skype. Apparently the fact that Skype was not profitable didn’t matter. Ballmer’s track record suggests to me that he buys businesses that nobody else “must have.”

4.    Microsoft’s Internet offerings remain wannabes and are highly priced at that. Take Yammer. Microsoft just paid $1.2 billion through the nose to acquire a company that was valued at $600 million last fall when it raised $85 million in a venture offering.

Team Ballmer plans to integrate it into Office on the assumption that somehow the Microsoft marriage will endear the brand to customers anxious to socialize business. I think they’re delusional. Most Microsoft users I know, including myself, are actively planning to move away from the legacy software we’ve used for years the first instant we can in favor of software we actually like to use!

5.  Microsoft spent $26 billion on research over the last three years. Meanwhile, Apple spent $5.54 billion and managed to crank out products light years better than anything Microsoft has come up with. No question which group of shareholders is getting the most bang for the buck.

6. Windows 8 is a wreck. Versions I have played with are so unintuitive as to defy belief. There is neither a Control Panel nor a Start menu. It seems to me that very few people actually love their Windows anymore the way Apple users love their Mac OS.

7.  Ballmer can’t do a product launch without jumping around the stage like a Planet of the Apes extra according to Joel Hruska of ExtremeTech. No doubt an apt description if you’ve ever seen him do his thing– albeit not a very flattering one.

That’s a problem. Ballmer doesn’t appear to do anything without appearing sweaty and uncomposed. His competitors look calm, cool and collected. The late Steve Jobs wrote the book on creating real excitement for users, not just inwardly-focused developers who give birth to successive generations of questionable products.

8.    Spellbound nerds, once the company’s backbone, appear to be an endangered species. If you want to see the future, look at what teens are using and writing. Apple now allows teens as young as 13 to participate in its developer’s conference, where thousands of people learn about upcoming offerings (and help take the company to new heights).

A child of the Depression, Mimi knew how to cut to the chase. She was acutely aware of the need to identify companies that did too.

Those who weren’t acting in the best interests of their shareholders and maximizing their investments had no place in her portfolio.

Nor mine…which is why I don’t own Microsoft today and haven’t for years.

Keith Fitz-Gerald

Contributing Editor, Money Morning

From the Archives…

Fortescue’s Fight Against the State
2012-06-22 – Kris Sayce

Don’t Let the Fed Fool You, This Isn’t the Time to Abandon the Market
2012-06-21 – Kris Sayce

An Addicted Stock Market About to Suffer Withdrawals
2012-06-20 – Murray Dawes

Why Liquefied Natural Gas Makes Australia The Next Energy Hotbed
2012-06-19 – Don Miller

Why Greece is Just a Side-Show to the Economies of Spain and Italy

Why You Should Sell Your Microsoft Shares

We’re sharing 8 Conquer the Crash chapters FREE to celebrate!

By Elliott Wave International

In June of 2002, the notorious dot.com bust was making way for a powerful housing boom, the European Union was growing, and American involvement in the Middle East promised a “quick and easy victory.”

Yet when EWI President Robert Prechter’s first edition of Conquer the Crash published ten years ago on this date, he wrote:

• “Home equity loans are brewing a terrible disaster.”
• “What screams bubble — giant historic bubble — in real estate is the system-wide extension of massive amount of credit.”
• “The Middle East should be a complete disaster.”
• “Look for nations and states to split and shrink.”

Today, 10 years later, the U.S. housing market still hasn’t overcome its worst downturn since the Great Depression; the eurozone is in crisis, and the expected quick victory in Iraq became a drawn-out mess.

Prechter’s analysis — based on the Elliott Wave Principle and socionomics, the study of how social mood motivates social actions — enabled him to foresee these changes in the economic, social, and political landscape.

What other eye-opening forecasts do the pages of the Conquer the Crash reveal? How about:

Banks: “Banks are not just lent to the hilt, they’re past it. In a fearful market, liquidity even on these so called ‘securities’ [corporate, municipal, and mortgage-backed bonds] will dry up.” (Remember the 2007-2009 “liquidity crisis”?)

Bonds: “The unprecedented mass of vulnerable bonds extant today is on the verge of a waterfall of downgrading.” (Remember the 2011 downgrade of the U.S. Treasury bonds?)

Credit: Credit expansion schemes — the primary role of the U.S. Federal Reserve Bank — “have always ended in a bust.” (Again, think back to the “credit crunch.”)

And — “Like the discomfort of drug addiction withdrawal, the discomfort of credit addiction withdrawal cannot be avoided.” (You could say that again.)

Anticipating “shocks” to the global system is a remarkable and true, decade-long achievement of Prechter’s Conquer the Crash. And on the 10th anniversary of its publication, we’d like to offer you 42 pages of excerpted material to commemorate Prechter’s work.

Take advantage of this FREE, 8-lesson report that can help you prepare your financial future. You’ll get valuable lessons on: What to do with your pension plan What to do if you run a business How to handle calling in loans and paying off debt And so much more Get Your FREE 8-Lesson “Conquer the Crash Collection” Now >>

By Central Bank News

By Central Bank News

By The Sizemore Letter

One of my favorite scenes in Martin Scorsese’s The Departed is the exchange where Jack Nicholson asks Leonardo DiCaprio what a nice kid like him was doing in the South Boston projects. “And if I can slander my own environment, it makes me sad, this regression.”

Unfortunately, I find myself asking the same question about my profession at times.  If I may slander my environment a little, it makes me sad to see people trust their financial security to the fickle whims of the stock market.  At best, it is a cold game of chance, and at worst—as the debacle of the Facebook ($FB) IPO showed—it’s a game that has been rigged against them.

To be sure, there are ways to mitigate the worst risks of stock market investing.  Never buy or sell on a “hot tip” unless you’ve done your homework first and have reason to trust the source.  Avoid microcap and penny stocks with anything other than your “play money.”  If you use an investment advisor or money manager, make sure they use a reputable third-party custodian, lest you fall victim to a Bernie Madoff-style Ponzi scheme.

Getting more into my areas of expertise, focus on dividends, though beware of chasing high dividend yields. Focusing on dividends and cash flows offers a degree of safety that a buy and hold (and pray) strategy can never offer, and you can realize a respectable cash return even in a down market.

But the best way to avoid taking unnecessary risk in the capital market is to refrain from putting your entire life savings into it.  Make sure that a significant chunk of your net worth and current income come from outside the traded markets.

This might sound like odd advice coming from a man who earns his living investing in the capital markets, but it is the only sound advice.

Think about it for a minute; what did your grandparents do?  Before the democratization of the stock market through mutual funds and 401k plans, people still invested their savings.  They still accumulated wealth, but they were more creative in how they invested it.

Let me throw out an example. My grandfather owned a small warehouse and shop floor in Fort Smith, Arkansas.  The rents generated from that property alone were sufficient to cover my grandmother’s modest retirement needs after he passed away.  He would have never left her financial security hanging on something as fragile as a 4% withdrawal rate from an index fund. (Ironically, given the theme of this article, his stock and bond portfolio ended up throwing off a lot more income than his warehouse, but he had no way to know that ahead of time.)

I’ve written before about rental houses as an investment (see “Here’s the catalyst for a housing rebound”), and I would like to reiterate that recommendation today. I know of no other legal investment that allows for both tax free current income (technically “tax deferred” for you accountants out there) and capital appreciation that will likely at least keep pace with inflation and allows you to do it all with borrowed money.

Yes, I know.  Home prices are falling.  Americans are broke.  There’s an enormous backlog of foreclosed properties that have to be worked off.  All of this is true.

But it is also true that new construction has been close to nil in recent years even while the population has grown and that mortgage rates—even for rentals—are at low levels most of us never dreamed possible.  Nationally, the price-to-rent ratio has fallen to levels not seen in well over a decade, and in many markets it is far cheaper to buy than rent.

On balance, it would seem that flattish prices would be more likely than large declines in most areas, but that is not really the point.  I’m not recommending you buy-and-hold the Case-Shiller Housing Index (sadly, there were ETFs to track this for a while; thankfully, they folded).  I recommending you put on a good pair of walking shoes and that you look around for a handful of rental properties that you can reasonably expect to rent out at a profit after allowing for debt service and expenses.

To clarify, I’m not recommending you quit the stock market altogether.  There is money to be made for those with the patience and emotional temperament for it, and stocks—like rental real estate—can be fantastic generators of cash income.

But they shouldn’t be the only asset you own, and you shouldn’t bet your retirement on capital gains that may never come.

If you liked this article, consider getting Sizemore Insights via E-mail.  This article first appeared on MarketWatch.

No related posts.

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 28 June, 08:45 EST

WHOLESALE PRICES to buy gold ticked back above $1570 per ounce in London trade Thursday lunchtime, but held onto a 0.5% loss for the session as stock markets fell ahead of today’s Euro crisis summit in Brussels – the 12th such meeting in 12 months.

“Nein! No! Non!” said the front-page of German finance daily Handelsblatt, urging chancellor Angela Merkel not to concede to calls for weaker monetary or fiscal policy across the 17-nation currency zone.

Syria’s state TV meantime reported what it called “terrorist” bomb attacks on the main court in Damascus, while neighboring Turkey deployed anti-aircraft rockets along the border.

“There’s no semblance of a safe-haven [in gold] at the moment,” says Société Générale’s Robin Bhar, quoted by Reuters.

“But as the price goes lower that bid [to buy gold] does come back as you maybe get some renewed investor interest,” he adds, citing sovereign wealth funds and central banks.

Silver prices also slipped again early Thursday, “feeling the effects of lower base metals and crude oil prices,” according to one dealer, and retreating towards last week’s new 2012 lows beneath $26.70 per ounce.

Brent crude – Europe’s benchmark oil price – today slipped to $92.25 per barrel, only just above the marginal cost of production according to analysts at Sanford C. Bernstein & Co.

The recent drop “marks the start of the next oil price up-cycle,” they believe.

Back in silver bullion, “I suspect some fairly chunky stops will be lurking just under these levels,” says refiner and financier MKS’s senior trader in Sydney, Alex Thorndike.

“If we get closer, especially considering how thin this market is currently, we could see larger players gunning for these” to drive silver prices still lower, he believes.

Major government bonds meantime pushed higher Thursday morning, nudging 10-year German interest rates down to 1.51% per year as the Euro currency slumped one cent to a 3-week low of $1.2410.

Italy had to pay 6.19% per year today at a sale of new 10-year bonds, up from 6.03% a month ago.

Today in Greece – where bank deposits have apparently turned positive since the election of pro-bailout Samaras party last week, and where police in Thessaloniki said they’d broken up a Euro-coin counterfeiting ring, the country’s first such discovery – the new Parliament was sworn in.

New prime minister Antonis Samaras’ government yesterday dismissed the senior management of the Greek national bank, risking a revival of “the practice of making political appointments” according to one banker.

Cyprus was granted formal approval for a joint European Union, IMF and European Central Bank bail-out worth €10 billion – well over half the country’s annual economic output.

Slovenia “will see a Greek scenario” said its prime minister, Janez Jansa, in a radion interview unless debt-growth is stemmed by further spending cuts and tax hikes.

German unemployment today showed a rise of 7,000 for June, only its third rise of the last 3 years but suggesting that “the resilience of the German labour market is slowly cracking up,” according to analysts at ING bank.

Eurozone consumer confidence worsened in June, falling to its worse level since mid-2009 on the European Commission’s latest survey. Industrial sentiment worsened to 2.5-year lows.

A raft of UK economic data for the first quarter was revised lower, with GDP now seen contracting by 0.3% from the end of 2011.

“The elevated cost of wholesale funding for banks has continued to be passed through” to mortgage and business borrowers, the Bank of England said today in its latest Credit Conditions report.

Looking ahead, UK lenders see credit getting tighter for corporate borrowers than for households, especially in commercial real estate.

“Markets await news on the EU summit,” says Thursday’s note from Standard Bank in London, but “not much progress is expected on the key issues…[such as] a move towards a common bond markets, as Germany remains vehemently in opposition.

“Consequently, we feel that the Euro will stay on the backfoot, lending a downward bias to precious metal prices.”

Investment bank Morgan Stanley today cut its precious metal forecasts for 2012-2014, mapping the cut onto its outlook for global commodity prices, but remaining long-term bullish.

Morgan Stanley’s analysts now see the price to buy gold averaging $1677 per ounce this year, down from the previous forecast of $1825.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

The euro fell to a two-week low against the US dollar during European trading yesterday, as investors remained doubtful that today’s EU summit will produce any meaningful solutions to the euro-zone debt crisis. The USD also saw gains vs. the JPY, as positive economic indicators boosted confidence in the US economic recovery. Today, in addition to any announcements out of the EU summit, traders will want to focus on the results of an Italian bond auction. Poor demand for Italian bonds could send the euro lower against its main currency rivals.

Economic News

USD – Positive US News Helps Boost USD

The greenback saw moderate gains against several of its main currency rivals yesterday, following the release of better than expected US news which boosted confidence in the American economic recovery. The US Core Durable Goods Orders and Pending Home Sales figures both came in well above their expected levels. The news contributed to the GBP/USD falling close to 90 pips during the European session, eventually reaching as low as 1.5544 before staging a mild upward correction. Against the JPY, the dollar advanced close to 40 pips over the course of the day, eventually peaking at 79.82.

Turning to today, dollar traders will want to pay attention to the weekly US Unemployment Claims figure, set to be released at 12:30 GMT. The number of people filing for first time unemployment insurance has steadily increased over the last several weeks. Should today’s news come in above forecasted number of 385K, the dollar may give back some of yesterday’s gains. That being said, any losses could be temporary due to the dollar’s status as a safe-haven currency and the high level of risk aversion among investors at this time.

EUR – EU Summit May Result in Additional Euro Losses

The euro took losses against several of its main currency rivals yesterday, as rising borrowing costs in both Italy and Spain caused investors to shift their funds to more stable currencies. The EUR/USD fell to a fresh two-week low during the afternoon session and was down more than 60 pips for the day. Against the Australian dollar, the EUR dropped close to 70 pips, eventually hitting 1.2361 toward the end of the European session.

Today, the euro is forecasted to see significant volatility as investors will be eagerly awaiting any news out of the EU summit. With no significant breakthroughs expected to take place regarding ways to combat the euro-zone debt crisis, the euro could see additional losses against the USD in afternoon trading. Traders will also want to pay attention to the results of an Italian bond auction. If there is poor demand for Italian bonds today, it may be taken as an additional sign that the euro-zone crisis is worsening, which could cause the euro to extend its bearish trend.

Gold – Euro-Zone News May Impact Gold Today

Gold largely range-traded yesterday, as euro-zone fears combined with a strengthening US dollar kept the precious metal near its recent lows. After falling as low as $1562.29 an ounce during the first part of the day, gold was able to finish out the European session slightly above the $1570 level.

Today, gold is likely to be influenced by euro-zone news, specifically any announcements out of the EU summit and the results of an Italian bond auction. Analysts are warning that without any significant breakthroughs at the EU summit, riskier assets, including gold, may continue falling for the rest of the week.

Crude Oil – US Inventories Figure Boosts Crude Oil

Crude oil saw moderate gains throughout the day yesterday as increased demand in the US helped boost prices. The weekly US Crude Oil Inventories figure showed that stockpiles fell by 100K barrels last week. As a result, the price of oil rose as high as $80.76 a barrel, up close to $2 for the day.

Turning to today, analysts are skeptical about whether oil will be able maintain its upward trend. With no breakthrough’s expected at today’s EU summit, investors may choose to abandon riskier assets, like crude oil, in favor of safe-havens, like the USD and JPY. That being said, any surprise breakthroughs at today’s summit could cause oil to extend its bullish trend.

Technical News

EUR/USD

A bearish cross on the daily chart’s MACD/OsMA indicates that this pair could see an upward correction in the near future. This theory is supported by the Williams Percent Range on the same chart, which has dropped into oversold territory. Going long may be a wise choice for this pair.

GBP/USD

Most long-term technical indicators show this pair range-trading, meaning that no defined trend can be predicted at this time. That being said, the Williams Percent Range on the weekly chart is slowly drifting into oversold territory. Traders will want to keep an eye on this indicator, as it may signal an impending upward correction.

USD/JPY

Long-term technical indicators show this pair trading in neutral territory, meaning that no defined trend can be determined at this time. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.

USD/CHF

The weekly chart’s Williams Percent Range has drifted into overbought territory, indicating that a downward correction could occur in the coming days. This theory is supported by the Relative Strength Index on the same chart, which is currently approaching the 70 level. Going short may be a wise choice.

The Wild Card

NZD/CHF

The Slow Stochastic on the daily chart has formed a bearish cross, meaning that this pair could see downward movement in the near future. Furthermore, the Relative Strength Index on the same chart has crossed into overbought territory. Forex traders may want to go short ahead of a possible downward breach.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: ForexYard

The EUR/USD bounced back from a three-week low during the overnight session yesterday, reaching as high as 1.2523 before staging another downward correction. The pair is once again trading below the 1.2500 level. Traders can expect significant market volatility today, as a much anticipated EU summit is scheduled to begin.

Main News for Today

EU Summit- Scheduled for today and tomorrow

• Investors will be closely watching the summit to see if any new plans to stimulate euro-zone growth will be unveiled
• The overall feeling among analysts is that EU leaders will likely fail to unveil any new significant measures at the summit
• Should the EU summit disappoint, riskier currencies and commodities, like the euro, AUD and crude oil, could take heavy losses to finish out the week

Italian 10-y Bond Auction

• Investors will be watching the bond auction to see how hard the Italian economy has been hit by the euro-zone debt crisis
• Should demand for Italian bonds turn out to be poor, the euro could see heavy losses throughout the day

US Unemployment Claims-12:30 GMT

• The number of Americans filing for first time unemployment insurance has gone up over the last 2 weeks
• Should today’s news come in above the expected 385K, the dollar could take losses against the Japanese yen

Read more forex news on our forex blog

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By MoneyMorning.com.au

Last night US stocks went up.

This morning Australian stocks are going up.

Is this the point where the bulls start beating up on the bears?

Or, as one trading guru told your editor yesterday afternoon, ‘Kris, this could be your last chance to sell.’

We agreed with him…which is why we replied, ‘That’s right, we’re buying.’

Confused? Don’t be. We’ll explain all below…

As we wrote on Monday, we find ourselves in the unusual position of having a bullish view on the market.

It’s unusual because we reckon you could count on two hands the number of months we’ve been bullish over the past four years.

But as a fundamental analyst in the small-cap market, we’re always looking for opportunities. And most of the time that means buying opportunities.

It’s not the trendy thing to say you’re buying when Europe is heading off a cliff and the Aussie economy is getting battered by a slowing Chinese economy, but looking at the market there are a lot (and we mean a lot) of stocks that have taken an absolute beating.

And in our view, that makes them worth buying.

We could show you 300-400 charts of Aussie stocks (probably more) that show the same pattern over the past five years: booming in 2007…crashing in 2008…recovering in 2009…and then crashing again in 2011 and 2012.

But rather than 400 charts, just one pretty much sums everything up. It’s the S&P/ASX 300 Metal & Mining Index (XMM):

That chart looks pretty bad. And it is pretty bad. But for many small-cap mining stocks it’s worse. While the index is still above the 2008/2009 low, hundreds of small-cap stocks have crashed below this level.

And it’s not just small-caps. The ‘Five Stocks to Buy’ we wrote to you about last week are all lower today than they were at the beginning of 2009 – when the global economy was on the verge of collapsing (Myer didn’t list until 2010, but is 60% below its listing price).

Yet if you look at a chart of the blue chip S&P/ASX 200 Index, it’s still about 25% higher than the low reached in 2009. So why is that?

Flight to Australian Stock Safety

Slipstream Trader, Murray Dawes says the Aussie market has had a ‘silent crash’, and that it could still fall further.

That may sound odd seeing how bad things look, but what he means is that the main blue-chip index doesn’t reflect what’s happening to the rest of the market.

Because the Aussie market is concentrated into just a handful of big stocks – BHP, Rio and the big four banks – the performance of this small number of stocks hides what’s really happening.

You could even say that the Aussie banks especially have benefited from a perceived flight to safety, as the following chart shows:

Click here to enlarge

While each of our new ‘Five Stocks to Buy’ have fallen below the 2009 low, Aussie banking stocks (represented by Commonwealth Bank on the chart) haven’t crashed. CBA is still up 90% since 2009.

So perhaps you can see why we’re buying certain stocks while at the same time backing Murray’s view that the market (the index and high-priced stocks) is on a knife-edge.

Australian Stock Market on the Edge

The kind of stocks we look at have already fallen a bunch. And they could still fall further, but that’s part of the risk of punting on small-cap shares. You want to buy small-cap stocks while they’re cheap, when no-one else is interested. Because when they do recover, the early gains are often the best gains.

But just because we see value in some stocks, doesn’t mean we see value in all stocks. And if Murray is right, the market is on the verge of taking another hit, and this time even the ‘safe’ stocks may not be so lucky:

‘The market is currently having a tug of war at the last line of support before keeling over into a multi-hundred point fall. I don’t know how long this tussle will last, but it has lasted for about a month now. Last year when we were faced with a similar technical set-up the market took six weeks of to-and-fro before finally succumbing to selling pressure. It then fell 15% in a week.

‘We may see some buying support next week due to the end of tax loss selling pressure, but the outcome of the European summit will be the catalyst for the future direction. The market expects disappointment, so if there is a big announcement a bounce may be imminent. They are all squabbling like little kids at the moment so I’m not holding my breath for a good announcement. A poor outcome could see the selling pressure return. If the current support can’t hold then there is very little support beneath here. A quick fall to 3850 would ensue and from there it could look very scary indeed if that doesn’t hold.’

If you’re an active investor in blue-chip stocks, it always pays to listen to stock traders. Why? Because traders like Murray don’t care which way the market goes.

He’ll balance the probabilities of it going up against it falling and tell his traders to place the appropriate bets.

At the moment, Murray’s charts tell him the balance of probabilities is for the market to fall further, so that’s where he’s telling his traders to place their bets.

But in this market anything can happen, and it can happen quickly. It all depends on how the market behaves around a key level. As he says, ‘If the current support can’t hold then there is very little support beneath here.’

To find out that key support level and how you can set your portfolio to profit (or protect it) from a huge momentum shift, click here…

Cheers,
Kris.

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