It's still in the cards By Jeff Passan, Yahoo! Sports July 28, 2006
Jeff Passan Yahoo! Sports ANAHEIM, Calif. – I went to a baseball card show and a bling contest broke out.
In the right light, a refractor card may very well blind someone. There is more chrome on cards today than in the world's best-stocked rim shop. A guy is selling parallel cards on special, and it sounds like a great deal, if only I knew what a parallel card was.
I half-expect to see cards sprinkled with diamond dust.
"Good idea," Luther Wallace says.
Wallace is manning a table in the middle of the Anaheim Convention Center. He's at the National Sports Collectors Convention, the world's biggest gathering of card and hobby enthusiasts, and since it's his first card show, he's hoping to make a splash with his collection of signed Felix Hernandez cards. Already Wallace is a well-known trader on eBay, going by Big Loot, which is the nickname he picked up during his four years in Washington-state prisons on weapons charges.
Loot says he's reformed now, out of the drug game and into the card game, which is likewise lucrative and much more legal. Baseball cards, the It hobby of the late 1980s and early '90s, have been reinvented from an industry built on mass collections to one of simple microeconomic principles: Limit supply and demand will spike. Prices have, too, thanks to the short-print-run subsets that include cards paired with jersey swatches and game-used bats and autographs and all sorts of gimmickry to justify charging, in some cases, hundreds of dollars per pack.
Luther Wallace, aka Big Loot, turned to dealing cards after doing a couple bids on weapons charges.
From that have emerged two markets: Older cards, which carry sentimentality as well as appreciated prices, and new ones, which in many cases make the old ones look like penny stocks next to Berkshire Hathaway. Though the fight isn't quite like the stats-vs.-scouts debate among baseball executives, there is some friendly jabbing. As Roger Burns, a dealer in pre-1941 cards, says: "I don't carry shiny stuff."
Yet there is enough interest in the shiny stuff to draw an expected 30,000 people through the weekend. While it pales to the reported 100,000 who graced the 1991 show in Anaheim, it proves that baseball cards are far from dead.
No, they've just changed, and for those who grew up during the card boom, it may well represent their first I'm-getting-old moment. I pointed to an autographed Hernandez card and asked how much.
"I want 25 for it," Loot says.
Not bad.
"But I'll take two," he says.
Two dollars? Deal.
"No, no," Loot says. "I meant $2,500. And I'll give it to you for $2,000."
Loot explains that it was one of 10 Hernandez cards signed with a red pen, which made it rarer than the ones signed in blue or green. And with a grade of 9.5 on a scale of 10, it was the highest graded out there, he claimed. And, well, forget Hernandez's ERA that has spent most of the season around 5. Scarcity took care of that little problem.
Limiting cards was the industry's direct response to a flaccid market, and while it worked in the short term, baseball cards' longer-term prospects are tenuous. The Donruss brand wasn't granted a license from the Major League Baseball Players' Association and isn't making baseball sets. Fleer, one of the big four companies, went broke. Topps, the granddaddy of trading-card companies, allowed three disgruntled shareholders, led by hedge-fund whiz Timothy Brog, to join its board Friday in what could be the first move toward a major front-office overhaul. Conventions have closed, stores have shuttered and still, the industry finds itself here, with 750 booths and young men such as Loot, 29, carrying around hundreds of thousands of dollars in merchandise.
"Excuse me," says a kid, no older than 10, drawing Loot's attention. "How much is that card?"
"Five thousand," Loot says.
The kid laughs, then walks away with his mom.
Before I got to the National, a card-collecting friend issued a warning.
"All those cards we grew up collecting," he said. "If you look in the Beckett, you won't see them. After four pages, it jumps to 1997."
He was right. Today's Beckett Baseball Card Monthly is a thorough compendium of the current market with barely a nod or wink to the past. Fifteen years ago, it was my bible. New issues arrived with all the promise of an oil well. If the price of a card I owned included an up arrow, I felt like I'd struck. I always wanted to write into their "Hot or Not" section and include Cleveland Indians reliever Rich Yett as "hot." Even though calling Yett pedestrian would be a compliment, his 1987 Topps card remains my favorite for its picture, which features Yett's resplendent blond mustache.
"Those were the good ol' days in the sense of simplicity," says Dr. James Beckett, the magazine's founder. "A lot of kids in my neighborhood did collect."
Baseball cards used to be about kids in the neighborhood – first flipping them or putting them in their spokes, then, spurred on by the proliferation of pricing guides such as Beckett's, buying them with a two-fold premise: enjoy them now and sell them later to pay for college.
The days of kids going to one another's house to trade cards are nearly extinct. Some have been priced out, others not interested in baseball.
"Whenever I was on a team, I would ask my teammates who their favorite player was," says Brad Petersen, a 13-year-old from Yorba Linda, Calif., attending the National with his father and two brothers. "I'd go home and get cards out and give it to them."
None of them started collecting. Which leaves Brad to talk cards with his dad, Larry, and his brothers Kevin, 11, and Luke, 10. Every two weeks, Brad gets his allowance. And he heads straight to his local card shop.
There, he scans the selection. Usually it's the same card, but he's got to look, just in case there's a new Derek Jeter. Along a wall, boxes overflowing with packs tantalize him. He wants to buy one with a jersey card, but for that price he could get plenty of inserts in packs that cost $1. It's the same question that has vexed kids for decades: What's the better risk?
Until the discontinuation of Donruss and Fleer, there were almost 100 sets and subsets. They had names like Absolute Memorabilia Tools of the Trade Swatch Single Jumbo Reverse. Topps and Upper Deck sell 40 types of cards today, some mass produced, most in limited numbers, which drives prices, Beckett said, "even if it's contrived."
Cognizant of the industry's direction, Beckett sold his company in January 2005 to a group headed by Peter Gudmundsson, now Beckett Media's CEO and president. Beckett had made a lot of men rich. He turned Mickey Mantle's 1952 Topps rookie from a valuable card into an industry icon. He kept raising the price of the 1909 T-206 Honus Wagner until it passed $1 million. Beckett loves baseball cards, old Roberto Clementes in particular, and can avert his eyes from today's sheen to see their substance.
"You'll always have the traditional thing," Beckett says. "Even in the show, you'll see it. It's the same-old, same-old, basic thing. You're putting cardboard with players on there."
The only thing sheen coming from Alan Rosen's table is off his bald head. A few years ago, Mr. Mint, as he's called, finally gave up the ruse and went Bic. He looks great, and not just for a 60-year-old: With outlandish, if not stylish, glasses, an earring, a distinguished gray goatee, a white T-shirt and jeans, Rosen plays the big-money shark with a coolness that keeps his wife, Marnee, a busy woman.
"I'm an eighth-grade dropout … " Rosen starts a story.
"No you're not!" Marnee yells.
Alan Rosen, aka Mr. Mint, represents the old-school collector.
"Ninth."
"No."
"Tenth?" he says, getting a bit defensive.
"No," she says. "He's got his GED."
Whatever his education, Rosen's standing among his peers is unparalleled: He is considered among the most powerful dealers in the business. Over the first two days at the National, he has spent $83,000, and he's complaining it's been slow. He just bought a Johnny Bench rookie card, from an older couple who told him it was the only one in circulation graded a perfect 10, for $3,000. Minutes later, Rosen finds out there are six other 10s out there, so he finds a buyer and flips the card for $4,000. Fifteen minutes, $1,000 in Rosen's pocket.
For years he has worked like he's on speed. He scans each side of a Tom Seaver rookie card like a gemologist looping a diamond. He thinks fast, talks fast and does business fast. Money doesn't burn a hole in his pocket; it torches his whole pant leg. All of his ads include pictures of Rosen fanning out at least $10,000 in hundred-dollar bills.
"My motto: Flip, flip, flip," Rosen says. "If I buy, I'll sell. Unlike coins, stamps and Pogs, baseball relates to people 7 to 70. Because it's the American game, it will never go away, and this business never will, either."
Still, the direction of baseball cards disenchants him. He scans the room, looking for kids.
"There's one," he says, after a minute of looking, and there aren't any others in sight.
"You know why?" Rosen says. "When I was a kid, it was affordable to collect cards. Now it just costs $17.50 to get through the door here and $75 to buy a pack."
The debate on card companies' social responsibility – are they in business to create a huge market like commodities trading or to help promote the game of baseball to kids shying away from it? – is one without a definitive answer. Rosen entered as a hobby and saw it evolve into a business. Big Loot sells strictly for business, and he's so confident in the industry right now, he's taken on severe debt to finish his purchases.
For all their differences – Rosen doesn't deal in shiny stuff – he and Big Loot share the goal of making money, which still leaves the people who don't flip cards or float them on eBay but buy with the intent to hold.
"That's what this business is about," Rosen says. "Recapturing your past."
We called it the coin shop. I'm not sure why. About 5 percent of its inventory was coins. The rest was baseball cards.
For a kid, it was Mecca. Walk in and Ken, the mustachioed owner, gave warm greetings. Look at the new selection, he said, pointing to a few packs and a few new cards. Buy a box of this '90 Donruss. If it doesn't have a John Olerud rookie in it, he said, I'll give you one. What 10-year-old would turn down that deal?
I remember the first card I got. It was 1986, and Todd Worrell had won National League Rookie of the Year. His rookie cost $2. Sounded like a bargain, and when mom peeled off a pair of singles, I was hooked.
The next year, I got my first box. It was 1987 Topps. Heinous-looking cards – brown borders, funky lettering and awful pictures. What did I care? I had 36 packs to perfect the method of pulling out the gum, then piling the cards straight in my left hand and flicking them with a thumb to the waiting right hand. At 17 cards a pack, I practically doubled my collection.
Nothing could make the author happier than one last, glorious fling with an anonymous 1980s pitcher.
So it was with some surprise that as I meander around the convention center, I run into a man selling boxes of '87 Topps. I ask where they came from. He says he'd kept them in his garage for almost 20 years hoping to get rich. Cards from the '80s and early '90s have plummeted in price because of saturation. When '87 Topps came out, the per-pack price was 40 cents, and the dealer offers me the box for $15, meaning 19 years made him a 60-cent profit.
His bust is my bargain. I hadn't bought a pack of cards, let alone a box, in almost 15 years. I wonder why it had been so long, and as I tear open the first wax pack, I don't have a good answer.
Outgrowing baseball cards is natural, I guess, yet I'm completely drawn to the mystery that awaits inside every pack of baseball cards.
(And I'm not talking about the chewing gum, which I do try. As one may well imagine, gum is not scotch. With every chomp, the 19-year Topps Vintage disintegrates into fetid globules of sugar that curdle my taste buds and leaves an aftertaste of amalgamated dog breath and rotting corpse. The remaining 35 pieces are transported to a local hazmat center, where they are promptly destroyed.)
I wonder whether I will get a Barry Bonds or Bo Jackson rookie (I do, in pack Nos. 19 and 23, respectively). I am stunned to see a Julio Franco card and delighted to see the back of a Jose Canseco card stained – with wax instead of acne, but still. I learn, thanks to the information tidbits Topps used to include on the back of its cards, that Jeff Stone was one of 15 children, Howard Johnson was the co-winner of a rib-eating contest among professional athletes and Terry Mulholland worked as a gas-station attendant in the offseason. Presumably before he made $25 million over a 19-year career.
Satisfaction doesn't come until two packs remain. As I sort through the second-last pack, left to right, I get it. The Rich Yett card. No. 134. The one I really wanted. In Rich Yett's short career, which lasted 414 1/3 innings, I'm guessing the only people happier to see his face than me were pitchers.
The cards begs to be studied. Yett's mustache isn't as resplendent as I remembered. His hair, on the other hand, is classic: poofing out from under his hat and curled up, like a plant reaching for sunlight. Yett's jacket collar looks popped, and he seems in the midst of a deep thought.
Forget the Bonds and Bo and Rafael Palmeiro and Barry Larkin rookies. The card I really want is here, and while it's not the same as I remember, it's still great.
Which reminds me of something Jim Beckett said earlier: What a card is worth isn't always in the book. It's what you think it's worth.
Big Loot can take his Felix Hernandez cards. And Mr. Mint can take his million-dollar collection. They represent the new and the old. It's funny that the generation that collected cards from the middle of the boom is the one that went bust. Oh, well.
I'll take Rich Yett, whose card, according to Beckett is worth 5 cents. Cards like that, ones that are practically valueless, are called common. To me, it's anything but.
Jeff Passan is Yahoo! Sports' national baseball writer. Send him a question or comment for potential use in a future column or webcast.
By Helene Meisler RealMoney.com Contributor 7/28/2006 9:07 AM EDT Click here for more stories by Helene Meisler Technical Analysis
* We don't need the averages to be down 20% before we know it's a bear market. * When stocks go down more easily than they go up -- which is the case now -- I believe it's a bear market. * And utilities have made a most un-bullish reversal.
I know it doesn't feel this way, but the market is up this week, and so far, up big. The DJIA is up well over 200 points this week, the S&P 500 more than 20 and even the Nasdaq is up more than 30. Yet it feels like this has been a major down week.
That's because the stocks that go down fall multiple points, and do so on huge gaps, while the stocks that go up, rise only a few points, and do so rather mildly.
A few months ago, if you were short a stock, you looked to cover it quickly if it went against you, while if you were long a stock and it went against you, you could wait it out and sell a rally. Now, if you're long a stock and it goes against you, it keeps going down; if you're short a stock and it goes against you, you can wait it out, because eventually it'll just come back down.
I point this out because it takes us back to the discussion from Monday about this being a bear market. We don't need the averages to be down 20% before we know it's a bear market: When stocks go down more easily than they go up, I believe it's a bear market.
I believe it also tells us something about sentiment. If a stock can fall on a gap multiple points after already being down, then we know we haven't cleaned out all the longs yet.
Just look at 3M (MMM - commentary - Cramer's Take). It preannounced and the stock went from $82 to $76, and kept on going -- to $70. Just when it appeared all the selling was done, management said something else folks didn't like and the stock fell another $3 or $4.
When sentiment is truly bearish, that doesn't happen. In a bearish environment, no one would have cared to bottom-fish in the stock at $70; the bad news would have cleaned out all the sellers. I believe the price kept falling because folks were betting the bad news was already in the stock.
About a week ago, I highlighted the utilities and said I thought they would stop around 430. I was clearly wrong, as they barreled through that level without batting an eye. Thursday they got all the way to 438.54 -- and then reversed, big-time. I believe it would have been much more bullish for the sector had they stopped at that 430 area, consolidated and then regrouped for another launch higher. But that is not what they did.
We absolutely need to keep our eyes on this, because the previous high, made in October 2005, was 438.74. This reversal is not bullish, especially since it came right at the old high. Maybe the Utes can save themselves by coming down to support and holding, but the reversal has me concerned that they will not hold support and this will end up being a double top.
For the market as a whole, there is still a chance for some rallying attempts as we close out this month and enter the new one, but as I discussed Thursday, the problems are mounting for the market once again. Overbought/Oversold Oscillators
For more explanation of these indicators, check out The Chartist's primer.
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Article Title: "Big Trouble In Thailand " Author: Section: Issues & Insights Date: 7/27/2006 Three more people were killed this week by brutal Islamic separatists. The victims included an old farmer who was stabbed and apparently burned alive and a teacher who was shot, chalk still in hand, in front of his class. Just a few days earlier a 60-year-old Buddhist man was shot to death as he drove a motorcycle with his wife in Pattani, one of three insurgency-torn southern provinces bordering Muslim-dominated Malaysia.
Buddhists, local government officials, police and troops are often targeted by the Islamic militants. Last fall, the terrorists murdered a monk and two boys in raids on Buddhist temples.
Earlier this month, terrorists staged an unusually well-coordinated ambush on a police checkpoint in Pattani, killing three guards. It would have been worse if police hadn't defused a bomb nearby.
It was one of the bloodiest attacks in Thailand since April 2004, when insurgents raided 15 police and military outposts, screaming, "We are ready to die for Allah for our beliefs!" They rallied local Muslims to revolt using the Krue Se Mosque's loudspeakers. As many as five police and military personnel were killed.
Muslims seen as sympathetic to the government are also attacked. Earlier this month, a Muslim who was active in local politics was killed outside a mosque, apparently because he maintained friendly ties with the government. Such sectarian attacks mirror those seen in Iraq and Afghanistan.
A 34-page booklet officials found on dead terrorists in April 2004 urges Muslims to rise up against Thailand, and all non-Muslims to restore the former glory of Islam to the south. The booklet, written in Arabic and the local Yawi language, also threatens Muslims deemed hypocrites.
"If any Muslim betrays Islamic principles, even though he is a father or friend, you should kill him," it says.
Another leaflet warns against cooperating with the mainly Buddhist government forces. "Stop getting close to soldiers and police, being a tool of infidels and cooperating with them," it says. "Otherwise, you could be unsafe."
This is no small uprising. Separatists have an estimated 5,000 combatants and as many as 70,000 sympathizers that help facilitate attacks against police. The rank and file are recruited from Saudi-funded Islamic schools, or madrassas. And al-Qaida appears to be behind their training in terror tactics.
Last year, authorities found a video of an al-Qaida training session among items seized at a school in Pattani. Some of the terrorists have attended al-Qaida camps in Afghanistan and Pakistan. They may have sanctuary across the border in northern Malaysia, with groups tied to Jemaah Islamiyah, an al-Qaida-linked terror group that blew up Western tourist spots in Bali in 2002 and 2005.
In 2003, Thai authorities captured al-Qaida's leader in Southeast Asia, Riduan Islamuddin - aka Hambali - in Ayutthaya, north of Bangkok. He and his wife had stayed in southern Thailand. In 2000, two of the 9-11 hijackers traveled to Thailand for several days after a planning session Hambali sponsored in Kuala Lumpur, Malaysia.
Muslim terrorists are picking up the pace of attacks in Thailand.
In 2004, assassinations in southern Thailand averaged one a day, bombings averaged six a month and raids for the year totaled six,the U.S. Naval Institute estimates. There were no major ambushes.
Last year, by comparison, there were an average of two assassinations a day, 19 bombings a month and a total of 43 raids and 45 ambushes. Violence this year is on course to top 2005's.
Bangkok set a curfew and dispatched more troops to the region.
"We are waging a war in the south. Until now, the state has been at a disadvantage," Defense Minister Thammarak Isarangura Na Ayutthaya told the Thai press. "We have to start retaliating now. We cannot just sit still amidst the attacks."
No doubt. But human-rights activists - ignoring the brutal tactics of the terrorists - have protested the Thai government's crackdown as heavy-handed. Now the United Nations is stepping in to complain about the security forces.
The U.S. must respond in kind. We must show unequivocal support for Bangkok in its efforts against becoming al-Qaida's next domino. More U.S. military aid and training should also be in order.
Much is at stake. Al-Qaida, which recently seized Somalia, already has its claws in Indonesia, Malaysia, the Philippines, Bangladesh and Pakistan.
If terrorists weaken Thailand's government, al-Qaida would have a major footprint in Southeast Asia. Does the world want that?
Global War On Terror: Thailand, the Land of Smiles, is close to becoming yet another front in the global war on terror. A bloody Islamic insurgency in the south has already left 1,400 dead. And al-Qaida may be fueling it.
Sometimes the start of a correction, or bear cycle, will be painfully obvious.
The major indexes will flash a series of big distribution days in a short time. The economy or global hot spots may contribute, ushering in bad news daily. Portfolios will quickly turn to dust.
But other times, the market may provide more subtle hints. You'll see only sporadic selling in higher volume. There may not be any obvious news items suggesting bad times ahead. The masses may often take a bullish stance, just as the market's hitting its peak.
Fortunately, you don't need tea leaves to predict when a bad market will occur. Actually, you don't necessarily need to identify a bad market as it's happening at all.
Following a sound set of sell rules with your own stocks will force you out of a bad market, even if you don't know it's a bad market.
The cardinal rule of investing is to always cut your losses at no more than 7% to 8% from your buy point. This tack allows you to avoid big losses that can cripple your portfolio and your confidence.
If you see your winning stocks showing choppy action, consider taking some moderate profits of about 20%.
Stocks that violate key support levels such as the 50-day moving average can also be sell candidates.
By staying attuned to how your stocks are acting, you can make informed decisions on each one.
Often you'll find that selling stocks at the right time will usher you safely to cash on its own, even if you haven't yet spotted any obvious weakness in the broad market.
United Industrial (UIC) broke out of a nine-week, cup-with-handle base over a three-day stretch Feb. 13 to 15 of this year 1. The stock ran up 52% from its buy point of 46.36 to its peak of 70.38 on May 3 2.
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A look at the Nasdaq's daily chart in the days leading up to that point shows distribution days on April 11, April 17 and April 21 3.
Another down day on higher volume followed on May 3, the day United topped 4. Though the market was nominally still in an uptrend, it was starting to weaken.
Three sessions later, on May 8, United plunged 20% in one of the heaviest volume days in its history 5. This was a clear sell signal.
The Nasdaq hadn't officially ended its rally or started a correction. Three straight distribution days May 9 to 11 made it official 6.
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Click on most financial TV shows and you'll see it: two talking heads, maybe a forum of Wall Street figures, debating the state of the stock market.
As they sit decked out in expensive suits, carrying years of experience, you might be inclined to trust these folks' opinions.
Don't. No matter how impressive an opinion may sound, it's just that — an opinion. The market doesn't care what anyone thinks. It acts on its own, without regard for pet theories.
Want a better way to gauge the state of the market? Use objective analysis instead of opinions.
That means following daily and weekly price and volume cues. A healthy market generally trends upward. It logs gains on higher volume than the prior day or week. Leading stocks hit new highs. On down days and weeks, the opposite tends to occur.
These trends reflect the power of institutions. Given those big boys control three-fourths of the market's action, they'll tell you a lot more about stocks than the brightest market star ever will.
Facts and opinions rarely vary more than at market extremes. When the major indexes sit near a top, sentiment tends to run overwhelmingly bullish. When the market nears its bottom, bears show up in droves.
Studying the charts of the Nasdaq, Dow and S&P 500 can help you slice through the noise to the truth. A big up day after a prolonged down stretch could signal the start of a new rally.
Instead of forming your own opinion based on emotion, wait to see if the market can confirm its attempted rally. A follow-through day, discussed in Wednesday's column, might do the trick.
A look at past opinions at market extremes further shows how objective analysis is your best bet. On March 31, 2000, Robert Robbins of Robinson-Humphrey noted on TV: "We're in a super bull market where the Fed is crushing inflation and . . . has a new paradigm of monetary policy that's anti-recessionary and anti-cyclical, which means the risk of holding stocks is much less."
The Nasdaq tanked 27% over the next two weeks as it kicked off a brutal bear market.
On Sept. 25, 2001, on CNN/fn, Forbes Associate Editor Bernard Condon quoted money manager Seth Glickenhaus, who said the Dow would fall to 6,000 and the market would take 16 years to recover. "I wouldn't dismiss it," Condon said. "The guy's been around for a long time."
The Nasdaq and S&P 500 followed through three days later. Though the market's had its ups and downs, the Nasdaq's still up 18% since then, the S&P 500 14%.
Pacifists versus peace By Thomas Sowell Friday, July 21, 2006 Send an email to Thomas Sowell
One of the many failings of our educational system is that it sends out into the world people who cannot tell rhetoric from reality. They have learned no systematic way to analyze ideas, derive their implications and test those implications against hard facts.
"Peace" movements are among those who take advantage of this widespread inability to see beyond rhetoric to realities. Few people even seem interested in the actual track record of so-called "peace" movements -- that is, whether such movements actually produce peace or war.
Take the Middle East. People are calling for a cease-fire in the interests of peace. But there have been more cease-fires in the Middle East than anywhere else. If cease-fires actually promoted peace, the Middle East would be the most peaceful region on the face of the earth instead of the most violent.
Was World War II ended by cease-fires or by annihilating much of Germany and Japan? Make no mistake about it, innocent civilians died in the process. Indeed, American prisoners of war died when we bombed Germany.
There is a reason why General Sherman said "war is hell" more than a century ago. But he helped end the Civil War with his devastating march through Georgia -- not by cease fires or bowing to "world opinion" and there were no corrupt busybodies like the United Nations to demand replacing military force with diplomacy.
There was a time when it would have been suicidal to threaten, much less attack, a nation with much stronger military power because one of the dangers to the attacker would be the prospect of being annihilated.
"World opinion," the U.N. and "peace movements" have eliminated that deterrent. An aggressor today knows that if his aggression fails, he will still be protected from the full retaliatory power and fury of those he attacked because there will be hand-wringers demanding a cease fire, negotiations and concessions.
That has been a formula for never-ending attacks on Israel in the Middle East. The disastrous track record of that approach extends to other times and places -- but who looks at track records?
Remember the Falkland Islands war, when Argentina sent troops into the Falklands to capture this little British colony in the South Atlantic?
Argentina had been claiming to be the rightful owner of those islands for more than a century. Why didn't it attack these little islands before? At no time did the British have enough troops there to defend them.
Before there were "peace" movements and the U.N., sending troops into those islands could easily have meant finding British troops or bombs in Buenos Aires. Now "world opinion" condemned the British just for sending armed forces into the South Atlantic to take back their islands.
Shamefully, our own government was one of those that opposed the British use of force. But fortunately British prime minister Margaret Thatcher ignored "world opinion" and took back the Falklands.
The most catastrophic result of "peace" movements was World War II. While Hitler was arming Germany to the teeth, "peace" movements in Britain were advocating that their own country disarm "as an example to others."
British Labor Party Members of Parliament voted consistently against military spending and British college students publicly pledged never to fight for their country. If "peace" movements brought peace, there would never have been World War II.
Not only did that war lead to tens of millions of deaths, it came dangerously close to a crushing victory for the Nazis in Europe and the Japanese empire in Asia. And we now know that the United States was on Hitler's timetable after that.
For the first two years of that war, the Western democracies lost virtually every battle, all over the world, because pre-war "peace" movements had left them with inadequate military equipment and much of it obsolete. The Nazis and the Japanese knew that. That is why they launched the war.
The Middle East conflict is hard to solve but easy to explain By Dennis Prager Tuesday, July 18, 2006 Send an email to Dennis Prager
The Middle East conflict is difficult to solve, but it is among the simplest conflicts in history to understand.
The Arab and other Muslim enemies of Israel (for the easily confused, this does not mean every Arab or every Muslim) want Israel destroyed. That is why there is a Middle East conflict. Everything else is commentary.
Those who deny this and ascribe the conflict to other reasons, such as "Israeli occupation," "Jewish settlements," a "cycle of violence," "the Zionist lobby" and the like, do so despite the fact that Israel's enemies regularly announce the reason for the conflict. The Iranian regime, Hizbollah, Hamas and the Palestinians -- in their public opinion polls, in their anti-Semitic school curricula and media, in their election of Hamas, in their support for terror against Israeli civilians in pre-1967 borders -- as well as their Muslim supporters around the world, all want the Jewish state annihilated.
In 1947-48, the Arab states tried to destroy the tiny Jewish state formed by the United Nations partition plan. In 1967, Egypt, Syria and Jordan tried to destroy Israel in what became known as the Six-Day War. All of this took place before Israel occupied one millimeter of Palestinian land and before there was a single Jewish settler in the West Bank.
Two months after the Six-Day War of June 5-10, 1967, the Arab countries convened in Khartoum, Sudan, and announced on Sept. 1, 1967, their famous "Three NOs" to Israel: "No peace, No recognition, No negotiations."
Six years later, in 1973, Egypt invaded the Israeli-held Sinai Peninsula, a war that ended in a boost in Egyptian morale from its initially successful surprise attack. Though nearly all of the Sinai remained in Israel's hands, the boost in Egyptian self-confidence enabled Egypt's visionary president, Anwar Sadat, four years later (November 1977), to do the unimaginable for an Arab leader: He visited Israel and addressed its parliament in Jerusalem. As a result, in 1978, Israel and Egypt signed a peace treaty in return for which Israel gave all of the oil-rich Sinai Peninsula back to Egypt.
Three years later, in 1981, Sadat was assassinated by Egyptian Muslims, a killing welcomed by most Arabs, including the PLO (Palestine Liberation Organization). Why welcomed? Because Sadat had done the unforgivable -- recognized Israel and made peace with it.
The lesson that Palestinians should have learned from the Israeli-Egyptian peace agreement was that if you make peace with Israel, you will not only get peace in return, you will also get all or nearly all of your land back. That is how much Israelis ache for peace.
Think about Israel for one moment: Israel is one of the most advanced countries on earth in terms of culture (most books published, translated from other languages and read per capita; most orchestras per capita, etc.); major advances in medicine; technological breakthroughs; and decency as a society, as exemplified by its treatment of its women, gays and even its large Arab minority (particularly remarkable in light of the widespread Arab and Muslim anti-Semitism and desire to annihilate Israel). This is hardly a picture of some bloodthirsty, land-grabbing society. And Jews, whatever their flaws, have never been known to be a violent people. If anything, the stereotypical Jew has been depicted as particularly docile.
As a lifelong liberal critic of Israeli policies, the New York Times foreign affairs columnist Thomas Friedman wrote just two weeks ago: "The Palestinians could have a state on the West Bank, Gaza and East Jerusalem tomorrow, if they and the Arab League clearly recognized Israel, normalized relations and renounced violence. Anyone who says otherwise doesn't know Israel today."
Give Israel peace, and Israel will give you land.
Which is exactly what Israel agreed to do in the last year of the Clinton administration. It offered PLO Chairman Yasser Arafat about 97 percent of the West Bank and three percent of Israel's land in exchange for peace. Instead, Israel got its men, women and children routinely blown up and maimed by Palestinian terrorists after the Palestinians rejected the Israeli offer at Camp David. Even President Clinton, desirous of being the honest broker and yearning to be history's Middle East peacemaker, blamed the ensuing violence entirely on the Palestinians.
Israel's Camp David offer of a Palestinian state for Palestinian peace was rejected because most Palestinians and their Arab and Muslim supporters don't want a second state. They want Israel destroyed. They admit it. Only those who wish Israel's demise and the willfully naive do not.
If you don't believe this, ask almost anyone living in the Middle East why there is a Middle East War, preferably in Arabic. If you ask in English, they will assume you are either an academic, a Western news reporter, a diplomat or a "peace activist." And then, they will assume you are gullible and will tell you that it's because of "Israeli occupation" or "the Zionist lobby."
Why Some Rallies Must Go On Without Us . . . in Investing | Markets | Psychology/Sentiment | RR&A | Technical Analysis
One of the issues investors face is the "uncertainty" of the future. Since the future is inherently unknowable, some advisors say, then you might as well just buy the dips and not try to market time.
We look at things from a different perspective. All market environments are not equal. Some offer higher probability set ups for investing; While others are mere coin flips. We prefer when making entries into equities to look for set ups that are better than even money. We like to see either an established uptrend, or conditions that are so deeply oversold as to offer a high probability of success.
At present, neither of those circumstances exist. Markets have been choppy, range-bound, volatile. The "One-day Wonder" last week alleviated much of the oversold conditions that existed. we noted previously that prior to that rally, markets were not nearly as oversold as they were on June 13. That doesn't mean they cannot go higher, but it also suggests that the moves will be jerky and unreliable.
Additionally, several technical issues continue to bother us: On Friday, we saw the Dow Transports, breaking their June lows while the Dow Industrials bounced over the June lows. This is rarely a good sign.
Recipes for durable market advances include expanding new highs, expanding overall volume, and advancing volume consistently ahead of declining volume. To quote John Roque, we are getting none of that here.
Thus, we see no technical reasons to rush back into the market at the moment.
This approach means that on occasion, the markets may rally without us. But it also means that over time, we are much less likely to get suckered into false rallies.
Much of the bull case relies on 1) The Fed pausing or stopping; 2) Another double digit earnings period; 3) A quick end to the turmoil in the Middle East.
All three of these beliefs appear somewhat misguided; In the majority of the time, the Fed stopping bodes ill for equities; To many bellwethers have cracked for me to think much of S&P500 earnings going forward;
As to the quick end of the war, consider: The ground war in Lebanon and Israel just started. I do not see the odds favoring a quick resolution. I would be surprised if US Secretary of State Condi Rice's calls for a cease fire are heeded, especially when the US is at the same time speeding up military aid to Tel Aviv. (See this front page Saturday NYT article: U.S. Speeds Up Bomb Delivery for the Israelis) Its only a guess, but I think the bullish hope for a quick resolution to this war is less likely, and it may go on for a few more weeks at least. Indeed, the recent pair of bounces in the Tel Aviv Stock Exchange (TASE) may also just be oversold bounces.
~~~
We like to war game scenarios, and we consider this a possible outcome of the recent market action: The markets have a number of false moves, before making another plunge late July/early August. This creates the deep oversold conditions mentioned above. At that point, we would look for a more advantageous entry.
However, our suspicions at present are that this next oversold move up could be the set up for the final denouement of the markets -- a grand shorting opportunity, or for the less trading oriented investor, a move to cash. Despite all the sturm und drang you heard during the May sell off, we still have yet to experience a 10% correction on the Dow or SPX. Of course, the Nasdaq 100 is a total debacle, and I suspoect we could possibly see a revisit of the late 2002 lows on the index.
Note these scenarios are merely educated guesses, one theoretical path out of infinite possibilities. We use them to create mental maps of how markets might progress, and therefore they are subject to swift and merciles srevisions. We consider them to be "strong opinions, weakly held."
Housing Markets on the Way Up And Those on the Way Down
By Lauren Baier Kim
Here's a look at what's new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)
Soaring prices for Lake Michigan properties
While home sellers across the U.S. are finding they must cut asking prices to secure a buyer, lakefront property owners on Lake Michigan are setting high prices for their houses -- and are getting them, according to an article posted by The Grand Rapids Press. Residential properties priced at a million or below on the lake are becoming few and far between, according to a local real-estate agent quoted by the paper. Prices on Lake Michigan have appreciated 12% to 15% a year since 2000, the paper says. In contrast to the healthy real-estate market on Lake Michigan, sales of inland properties, such as those in the Holland, Mich., area, have been "flat," The Grand Rapids Press says.
Massachusetts sellers in denial
The residential market in Massachusetts is definitely now a buyer's market, according to an article posted by The Boston Globe. Buyers looking for severe price cuts, however, aren't going to find them -- at least, not yet, the paper says. That's because home sellers haven't yet realized that they can't get boom-time prices for their properties, the article says. The Boston Globe reports that while houses appreciated at a double-digit annual rate during the housing boom, they now only gain 3% to 5% in value a year. While the number of single-family homes on the market is up 8% from a year ago and homes are taking longer to sell, median single-family-home prices have dropped by only about 4%, sources quoted by The Boston Globe say. "I think the prospective buyers are taking their time," one homeowner quoted in the article says.
Cool Down For-Sale Signs Multiply Across U.S. As Supplies Rise and Prices Slip
Bottom won't fall out of California market
Despite worries to the contrary, Southern California's housing market isn't going to collapse, says the Los Angeles Times. While some people saw the recent downturn in San Diego County's real-estate market -- where year-over-year median home prices fell 1% last month -- as an indicator of things to come for Southern California, a "strong, diverse economy will help prevent a market freefall," the paper says. In fact, the median home price in Southern California increased 7.4% in June to $494,000 from the year before, the Los Angeles Times says. New-home sales -- which rose 25.1% in L.A. County and 34.6% in Orange County during the first half of this year compared to the same period in 2005, are helping prop up the market, the Los Angeles Times says. Also aiding sales are a steady increase of new residents -- about 200,000 to 300,000 yearly, the article says.
Hope for Orlando sellers
In June, only 258 more Orlando-area homes were up for sale than there were in May, according to an article published by the Orlando Sentinel. This rise was much smaller than the increase of 2,143 properties on the market between April and May, the paper says. This gives some relief to home sellers, who in June, saw existing-home sales drop 14% from the year before in Orange and Seminole counties, the article says. To sell their properties, homeowners are finding they have to compete with home builders, many of whom are throwing in discounts and incentives to sell their properties, the paper says. Yet despite signs that the housing market is stabilizing, June's median home price, $249,000 for the Orlando area, was up 3.97% from the same period the year before, the Orlando Sentinel says.
Booming second-home sales in Idaho
The housing market is slowing on the coasts, but in Teton County, Idaho, the number of homes sold has already surpassed 2005's record, according to an article posted by The Times-News. The number of residential properties sold in 2005 was double the amount sold in 2004, the article says. The Teton Valley shares the Grant Teton range with Jackson Hole, Wyo., where the median home value in 2000 ($260,600) was more than double that of Teton Valley's ($112,500), according to the U.S. Census Bureau. Brokers in the area say that buyers looking for a bargain are coming in from all parts of the U.S., and developers are building hundreds of new homes, including town homes, cabins and custom homes, the article says.
Moguls of New Media The MySpace member with a million 'friends.' The receptionist with a production deal. Some of the Web's amateur entertainers are becoming powerful players. By JOHN JURGENSEN July 29, 2006; Page P1
On the popular Web site MySpace.com, members set up profiles with information about their interests and then network across the site, recruiting other members to link to their pages. Often, the teens and 20-somethings who dominate the site have dozens or hundreds of these registered "friends."
Then there's Christine Dolce, whose MySpace page boasts nearly one million friends -- making her arguably one of the most connected people on the Internet. A 24-year-old cosmetologist who until a few months ago worked at a makeup counter in a mall, she now has a manager and a start-up jeans company and has won promotional deals for two mainstream consumer brands. [image] NEW-MEDIA POWER LIST
As videos, blogs and Web pages created by amateurs remake the entertainment landscape, unknown directors, writers and producers are being catapulted into positions of enormous influence. Each week, about a half-million people download a comedic video podcast featuring a former paralegal. A video by a 30-year-old comedian from Cleveland has now been watched by almost 30 million people, roughly the audience for an average "American Idol" episode. The most popular contributor to the photo site Flickr.com just got a contract to shoot a Toyota ad campaign.
While online stardom can sometimes be fleeting, and some measures of audience size are subject to debate, a look at the rising stars in this world shows how the path to entertainment success is being redefined. Traditional media companies and marketers are already in pursuit of some of these new faces.
"It's an awesome feeling," says Ms. Dolce, who built her MySpace profile with a page that panders to the site's young demographic with a mix of confessional commentary, provocative photographs of herself, celebrity images and music. WHAT TO WATCH
A late-night brainstorm and a video camera can catapult an unknown Internet user to instant -- if sometimes short-lived -- stardom. Below, five creative digital productions rising through the ranks on the Web. 'Unflinching Triumph' http://www.unflinchingtriumph.com [image] This "mockumentary" tells the story of Phillip Rockhammer, an up-and-coming competitor in the faux sport of professional staredown. With the bravado of wrestling but none of the contact, rivals lock eyes until one of them flinches. Featuring slick production, a soundtrack and dozens of actors, the film is being offered free in installments. 'Chad Vader: Episode 1' http://www.channel101.com [image] One of the latest in a long line of "Star Wars" spoofs to hit the Web, this short fish-out-of-water film imagines Darth Vader as a lowly supermarket manager. He bows to his supervisor in the walk-in refrigerator and uses his powers to confront a rival co-worker and impress a cute check-out girl. The video is currently popular at Channel101.com, a site where viewers vote for their favorite comedy clips. 'Nobody's Watching' http://www.YouTube.com (search for 'Nobody's Watching') [image] Bill Lawrence, a writer and producer of the NBC sitcom "Scrubs," helped create this offbeat comedy as a pilot for the WB network. After the network passed on the pilot, it appeared in three parts on YouTube and became a hit, leading NBC to announce this past week that it had ordered a series of scripts and short episodes of the show for the Web with the possibility of broadcasting it on TV in an upcoming season. 'Strong Bad Email' http://www.homestarrunner.com [image] The most popular feature on Homestar Runner, a site of cartoons and games, "Strong Bad" revolves around a sarcastic character in a wrestling mask whose answers to emails are the jumping off point for short cartoons. The emails are real, culled from the roughly 3,000 messages that creators Matt and Mike Chapman receive each day. The Fancy Pants Adventure http://www.addictinggames.com (search for 'Fancy Pants Adventure') [image] Created by Brad Borne, a college student, this simple but fun videogame plays like a minimalist version of Super Mario Bros. Using a few keys on the computer keyboard, players control a floppy-haired stick figure, maneuvering him through a world of mazes, springs and spiders. On Atom Entertainment's AddictingGames.com, the game has been played about 1.5 million times, with a replay rate of 50%, according to Atom, which licensed the game and hired Mr. Borne to help create another one called Celebrity Smackdown.
She joined MySpace in September 2003, adopting the name "Forbidden" for her home page. As one of the first 15,000 members to join the site, launched in July 2003 (MySpace now has 96 million members), she built an early following that grew along with the site's membership. Because users' pages list their friends in chronological order, being an early member has also meant that Ms. Dolce appears near the top of many friend lists.
"I saw the vision that MySpace was growing bigger and bigger and I thought, wow, great," Ms. Dolce says.
While some members are choosy about whom they will accept as friends, Ms. Dolce decided after about a year on the site to accept anyone who put in a friend request. She also took on a manager -- Keith Ruby, another MySpace member with whom she developed a friendship online. A former concert promoter from Calgary, Alberta, he advised her on ways to capitalize on her online popularity. He helped broker deals with companies like Axe body spray and Zippo lighters. In recent months, she's appeared in online promotions for both brands. She commands rates of as much as $5,000 to appear at events like auto shows. In March, she quit her job at the makeup counter.
Advertisements for Ms. Dolce's outside Web site and assorted business ventures, like her jeans business, line the page. Seeing her entire home page requires pressing "page down" about two dozen times on a large computer monitor -- and that page is followed by some 24,000 additional pages holding the photos of all her friends.
Mr. Ruby says Ms. Dolce has never used a computer program to artificially boost her friend list -- a practice that has plagued sites like MySpace in the past. MySpace takes steps to prevent the use of computer-generated mass friend requests, such as limiting users to a few hundred outgoing friend requests a day. Mr. Ruby says Ms. Dolce briefly tried software that automatically accepted requests from others, but now instead relies on family and friends to help her process them all.
Popular members like Ms. Dolce represent something of a dilemma for MySpace. The site says it has no problem with the photographs and content on Ms. Dolce's page, which, while racy, stop short of being pornographic. Recently, however, MySpace, which is owned by News Corp., has been working to promote a family-friendly image to appeal to potential advertisers -- some of whom could be leery of sexually suggestive pages like Ms. Dolce's.
Ms. Dolce's commercial deals have occasionally run afoul of MySpace's rules. The service doesn't allow using the network for direct commercial gain; because of the site's regulations, Ms. Dolce is prohibited from sending mass messages to her MySpace friends about the products she's paid to endorse.
Some of the people who have emerged as digital stars online are true amateurs, people who have simply videotaped themselves in their living rooms and posted the results online. Others are quasi-professionals with some experience in the entertainment industry: writers of a TV pilot that didn't get picked up; first-time filmmakers who were praised on the film-festival circuit but never found distribution or stand-up comedians who couldn't graduate from coffee houses and small clubs.
The creators of one of the Web's most popular video podcasts fall somewhere between these categories. Each week, about half a million people watch a two- or three-minute video starring a man in a ninja costume that includes a Lycra ski mask bought for $6. He typically delivers a sarcastic comic monologue in response to a ninja-themed question a viewer has emailed in. ("Do ninjas catch colds?" was a recent topic.) The weekly series, called "Ask a Ninja," appears on the creators' Web site, as well as on iTunes and video-sharing sites like YouTube and Revver.
Its creators are Kent Nichols and Douglas Sarine, who first recorded the skit in November. Both in their early 30s and living in Los Angeles, the two had dabbled in the entertainment industry: Mr. Nichols had worked as a production assistant on a few TV pilots and Mr. Sarine had spent some time as a paralegal for Disney. Together, the pair, who had met in 2000 at an acting workshop, had written a script for an anime series they hoped to make for the Web, but they grew discouraged by the expense of producing it.
Then they noticed a video online. Titled "Lazy Sunday," it was a sketch that had first aired on "Saturday Night Live," but was being emailed all over the Internet: Millions of people saw it in a matter of weeks. They decided to try an online video series of their own. Around Thanksgiving, Mr. Sarine donned a makeshift ninja costume, and the two wrote and improvised a loose script. Mr. Nichols filmed Mr. Sarine against the wall of his West Hollywood apartment, using a six-year-old camcorder. He edited it on his laptop and posted it on their personal blog and on YouTube.
The skits got little response initially, but in early January, Messrs. Nichols and Sarine submitted the podcast to iTunes and launched an official Web site for it. Editors at iTunes quickly selected the series as a "new and notable" podcast, giving it featured placement on its podcasts page. That positioning landed "Ask a Ninja" a spot on iTunes's list of top-subscribed podcasts, which meant it was one of the first titles anyone browsing for podcasts came across. Mentions in a number of blogs helped to boost viewership as well.
Now the two are trying to turn their podcast into a viable business. In May, "Ask a Ninja" launched an online store and now sells about 150 T-shirts a week, Mr. Nichols says. They'll soon begin selling premium subscriptions at $1.50 a month to fans who want early access to new episodes. This month, they added their first advertisement to the series, a mention of the Sony movie "Little Man" at the end of an episode.
The ad was placed by Podtrac, an agency that links advertisers up with podcasters, and brought "Ninja" revenue "in the thousands" of dollars, according to Mr. Nichols. He hopes to draw more based on the show's popularity and viewer demographic: 90% male, between the ages of 13 and 24, according to a Podtrac survey.
In the spring, Crista Flanagan, a castmember on the Fox comedy show "Mad TV," contacted the duo through their MySpace page and the three decided to collaborate on a new podcast. The resulting series called "Hope Is Emo," features Ms. Flanagan as an emotional young woman in black clothing and eye makeup, frequently moved to tears by items like discarded pizza boxes. After being featured on the Ninja homepage and on YouTube, the first episode of "Hope is Emo" quickly drew more than one million views.
The two see branching out beyond "Ninja" as key to long-term success. "'Ask a Ninja' was always kind of a proof of concept for us," says Mr. Nichols. "We've looked at others who have been successful but they didn't know how to work with new talent and bring fresh ideas into the fold. private Clark makes more money in his sleep producing things than he ever does on camera."
Messrs. Nichols and Sarine are looking for a way around a problem that affects virtually every Internet star. Even if they become wildly popular, amateur podcasters and video producers can rarely make a living from their newfound fame. Podcasts and do-it-yourself videos are generally free to watch online, and even those few creators who manage to attract advertisers seldom make much money. According to research firm eMarketer, current ad spending on online video is expected to double by 2007 to $640 million, but most of that goes to large media companies rather than to amateur videos.
The greatest hope of most Web amateurs is to cross over into "old media" outlets like TV networks and Hollywood. The flagship crossover star in digital entertainment is known by one name: Brookers.
Type the word "Brookers" into the search field of YouTube.com, and a list of some 1,240 videos will appear. Thirty-one of them are videos made by 20-year-old Brooke Brodack of Holden, Mass., who has posted a range of videos starring herself under the screen name "Brookers." In large part, the other 1,200 or so are Brookers tributes, critiques and imitations, posted by Ms. Brodack's fans and detractors in response to the clips she's made.
Though Ms. Brodack's videos have a distinctly amateur feel -- they feature her lip-synching songs, dancing goofily around her bedroom and occasionally adopting silly character voices -- they inspire a passionate following. Many are drawn to her blend of good looks and unselfconscious antics. But she says she can't explain why her videos have been so popular. "I'll never understand it," she says.
Last month, Ms. Brodack, who works as a receptionist, got an email from an executive at the development company of former MTV star Carson Daly. Mr. Daly had seen her videos and liked her performances and production techniques, which typically involve wild camera angles and overlays of text and images over the video pictures. He signed her to a deal to develop entertainment ideas with his production company for TV and the Web. Mr. Daly, who has only spoken to Ms. Brodack over email, says he's still working out what exactly she'll be doing for his company. When it comes to hiring talent from the digital world, he says, "There's no manual. Everybody wants to lock them up and figure it out later."
Ms. Brodack says some of her friends have resented her newfound success. She's also dealt with a downside of viral video stardom that many people on sites like YouTube encounter. Because anyone who watches her videos can post a comment, she's constantly confronted with criticism in a public forum about issues from her appearance to her dancing skills. She sometimes responds to these comments in her videos.
Mr. Daly's company has sent her some new equipment to help her enhance her videos, including a new laptop and extra hard drive, and plans to get her a higher-quality video camera, but Ms. Brodack is nervous about professionalizing her videos. "I don't want it to look too slick," she says. "I'm trying to keep it simple and think of it the way it was eight months ago."
Success is a State of Mind - - Tommy Bahama Profits always take care of themselves but losses never do. The speculator has to insure himself against considerable losses by taking their first small loss. - - Jesse Livermore The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, nor for the get-rich-quick adventurer. They will die poor. - - Jesse Livermore
By Helene Meisler RealMoney.com Contributor 7/31/2006 8:18 AM EDT Click here for more stories by Helene Meisler Technical Analysis
* Lots of folks now believe we'll soar because the Fed is done. * They're looking to 1994-95 as their template, but that's not an accurate comparison. * We'll be overbought by the next Fed meeting.
I wish I had a dollar for every time we've had a "Fed is done" rally in the past two years. Recall spring 2004, when everyone was so concerned that the Fed was behind the curve in raising interest rates that everyone thought the panacea for the market would be for the Fed to start hiking -- the sooner the better.
The Fed certainly did, in late June 2004. And the market? The S&P 500 promptly went into a dive of about 7%. Perhaps folks should be careful what they wish for.
A slowdown is good only if it's an actual slowdown or a soft landing. What happens when the theme goes from slowdown to recession?
Think back further, to January 2001, when there were cries throughout Wall Street for the Fed to ease -- so it eased. And the market? The S&P made a high on Feb. 1, 2001, at 1373, before going all the way down to 1100.
If you think I'm joking, just take yourself back six short weeks when folks were worried about inflation. Copper was $4 a pound then; it's $3.50 now. And palladium, a metal most had never even heard of, was well over $400; now it's hovering around $315.
I have been sent countless write-ups from folks who are using the 1994-95 scenario as their template for today's market. I believe their bullish scenario is that the Fed stopped and the market soared, so the same should happen now.
I can see the points they are all making, and there are many valid ones. But I remember 1994 and 1995 very well, and there was a financial crisis that led to that low. The mortgage market blew up when the Fed hiked rates in early 1994. That was followed rather quickly by huge losses on Wall Street and Main Street. Don't you remember Orange County, Calif., and its bankruptcy issues?
Thank goodness there's no financial crisis now. But that also means, in my opinion, the 1994-95 comparison is tenuous.
As I was posting my statistics over the weekend, I noticed a divergence of sorts. Most technicians watch the cumulative advance/decline line. The theory holds that if the market index makes a lower low and the cumulative a/d does not, we have a positive divergence.
The opposite is also true: If the index makes a higher high and the cumulative a/d does not, we have a negative divergence.
Friday's action took the cumulative a/d to a marginal higher high while the S&P is still below its previous high at 1280 (from early July). That is a bullish development.
However, I also monitor an arcane indicator called the New York Stock Exchange Unweighted Average, or NYUA. It is not readily available, so please do not try finding this in your chart services; you won't find it.
It's derived from a calculation that comes from QCHA, which stands for "quote change." That's the average percentage move for the average stock on the NYSE. In the old days, we retrieved this reading from our Quotron terminals, but with the demise of Quotron, I must now retrieve it each week from Barron's, which very kindly still publishes it.
The number you see in Barron's (Market Lab section) is actually the percentage change. For example, Friday's reading was +108, which means the average percentage move for the average stock was +1.08% on Friday. I calculate an index -- the NYUA -- based on this percentage change. You can see that it tends to mimic the cumulative a/d, but not always:
Please note that while the cumulative a/d went to a marginal higher high this past week, the NYUA did not. The NYUA still has time to confirm, but it currently is 1% away from its early July high, whereas the cumulative a/d is beyond it and the S&P is a mere 2 points away. If the NYUA continues to lag, it will be a warning that, as I suspect, by the end of the week, we will be late in the lifespan of this rally.
We are still not overbought, so there is room for the market to rally this week. But by Monday, Aug. 7 -- yes, the day before the Fed meets -- we will be overbought. Overbought/Oversold Oscillators
For more explanation of these indicators, check out The Chartist's primer.
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By Dan Fitzpatrick RealMoney.com Contributor 7/31/2006 9:59 AM EDT Click here for more stories by Dan Fitzpatrick Technical Analysis
* More critical than spotting the pattern: selecting the entry. * Wait to enter Vornado until the next tag of the support line. * Even if you buy Prudential on a breakout, you can place a stop that limits the potential loss to 8%.
A month ago, I asked for feedback from active traders who use technical analysis as their primary methodology. I wanted to know what type of criteria they used for trade selection: a mechanical trading system, price patterns with specific proven criteria or no specific methodology (i.e., discretionary trading). I broke the poll into two groups, those who had a return of more than 15% over the past 12 months, and those who had a return of less than 15%. The results were interesting.
First, most traders claimed to have made more than 15% over the last 12 months. That's not surprising, although no one had to show an account statement. But the breakdown between mechanical, pattern and discretionary trading did not reveal any significant differences between the two groups. Fewer than 10% of all traders use mechanical trading systems, while about 60% rely on specific price patterns. Around 30% of those polled were discretionary traders.
Because the majority of traders use specific price patterns for their main trade selection criteria, what determines the relative level of success or failure among traders could be the ability to identify the best trade setups among similar patterns. As we saw last week when looking at various head-and-shoulder patterns, not all patterns are created equal. There's more to successful trading than pattern identification.
The more critical task is selecting the entry once the pattern has been spotted.
Technical traders want to use proven price patterns in their trading. But finding the patterns is the easy part. The more important task is looking beyond the raw patterns and assigning a realistic risk-reward profile to each candidate.
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