Economy Alone does not move the Market

* Use the Dow – Compare the highs and lows in the Dow. If the Dow is making a new high, and your stock is near its resistance high, but not making new highs, it is a warning.

*Break Out Stocks At Risk to Buy:

-Is it breaking out after its peers within the sector?

-Is it breaking out in the late stages of an overall market rally, or as the market begins consolidation?

-Have there been down days with low volume, or a high volume reversal?

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What is causing the stock market moves is not just economic; in fact, more of it may be the trillions in money market funds, earning next to nothing, looking for the next place to go.

In other words, with any consolidation, it is likely that 10,000 will be beat, and new highs will occur, confounding many. Fresh meat to the slaughter.

People, funds, institutions must invest profitably, or at least that is the goal. Most, despite the 50% gains, have still lost money, or are just now rebuilding portfolios to a "perceived break even".

So, much of what we will see in extended upside is the buying of the investor that does not know what to do with his money. Euphoria or simple investing?

Socialized Medicine and how FALSE FACTS hurt traders

As part of this service we often discuss politically charged subjects, like abortion, taxes or socially taboo subjects, like who we are, what we think, and how we are led down the road of false facts.

Trader MP has strong opinions on Obama and socialized medicine, and I'm sharing them below, with my comments in bold. The issue here is not my opinion, or trader MP's, or what is right or wrong, but "how the decision MP makes" is made, as this is what hurts or helps a trader. Your comments I'll be honored to share on our Blue Chip blog.

From MP:

There is no way you can sell me on Obama's healthcare agenda because there are the realities of Universal Healthcare...and any argument against these is mute or weak at best...

1. There isn't a single government agency or division that runs efficiently; do we really want an organization that developed the U.S. Tax Code handling something as complex as health care? Floyd: there is no company that runs efficiently,nor any group of more than 5 that run efficiently. Medicare, and Social Security, as examples, appear to now be considered "rights".
2. "Free" health care isn't really free since we must pay for it with taxes; expenses for health care would have to be paid for with higher taxes or spending cuts in other areas such as defense, education, etc. Floyd: "free" is not even part of this plan. Any country should want to help its poor, however, and make insurance equitable.
3. Profit motives, competition, and individual ingenuity have always led to greater cost control and effectiveness. Sure have. United Healthcare CEO makes 57,000 an hour, and insurance company profits are UP 428% in the past 10 years. The entire argument that "free enterprise" works can be summed up well: Goldman Sachs. Who's kidding who on the lobbyists and their bribes
4. Government-controlled health care would lead to a decrease in patient flexibility. Would lead to an INCREASE as the patient would have CHOICES.
5. Patients aren't likely to curb their drug costs and doctor visits if health care is free; thus, total costs will be several times what they are now. This is one part of a large plan that offers all type of insurance, and in no case is it "free"
6. Just because Americans are uninsured doesn't mean they can't receive health care; nonprofits and government-run hospitals provide services to those who don't have insurance, and it is illegal to refuse emergency medical service because of a lack of insurance. This makes me laugh. Just be poor and go to an emergency room. My Dr. friends tell me they constantly are told to refer dying emergency room patients to government hospitals and not admit them. And, if they are admitted,this raises the cost of health care.
7. Government-mandated procedures will likely reduce doctor flexibility and lead to poor patient care. Then why are 78% of all Dr's in the U.S. for this?
8. Healthy people who take care of themselves will have to pay for the burden of those who smoke, are obese, etc. They are now in the rates of the private insurance.
9. A long, painful transition will have to take place involving lost insurance industry jobs, business closures, and new patient record creation. This is not moving the entire country to socialized medicine, which this is not, but offering an alternative. Our paper system now is what causes the costs to rise, and we need this simply to organize ourselves. NO other country has a paper system like ours in health care, except third world.
10. Loss of private practice options and possible reduced pay may dissuade many would-be doctors from pursuing the profession. This is not proven in any way. Pure propaganda
11. Malpractice lawsuit costs, which are already sky-high, could further explode since universal care may expose the government to legal liability, and the possibility to sue someone with deep pockets usually invites more lawsuits.
12. Government is more likely to pass additional restrictions or increase taxes on smoking, fast food, etc., leading to a further loss of personal freedoms. Govt needs to do this. The average child consumes 1000 calories of sugared drinks a day. This builds obesity. Taxing allows the consumer to choose. We should tax that which is killing us.
13. Patient confidentiality is likely to be compromised since centralized health information will likely be maintained by the government. No proof of this at all. Our records are open now with Medical information act.
14. Health care equipment, drugs, and services may end up being rationed by the government. In other words, politics, lifestyle of patients, and philosophical differences of those in power, could determine who gets what. Where did this come from? Glen Beck. Nothing has even been discussed on this.
15. Patients may be subjected to extremely long waits for treatment. Just like now.
16. Like social security, any government benefit eventually is taken as a "right" by the public, meaning that it's politically near impossible to remove or curtail it later on when costs get out of control. It's out of control now. My wife is 60 and I am 59. My wife has a pre existing condition from 15 years ago. We are self employed. Our health insurance has a $5000.00 a year deductible and runs us 1976.00 per month, and we've bid every insurance company all who seem to have similar rates. How am I to get insurance? Who can stop these companies from raping me to offer lower policies to others? Next, a company I am consulting for has only 4 employees and cannot afford group insurance rates and stay open. Thusly, all four of these employees have no insurance at all.

We have been led by a propaganda campaign led by the drug and insurance companies and their lobbyists. We are the only major country in the world that does not offer either socialized medicine, or government supported medicine programs.

Health insurance is another bubble, and when it breaks we'll see even worse care, higher premiums, and fewer controls without government interaction.

Trader MP continues to write:

After hearing the following 10 minutes of Ronald Regan on socialized medicine, I'm convinced that Obama is making a HUGE mistake...

Ronald Reagan was a great actor. Check the economy of the U.S for the following 7 years after he left office, as taxes had to be raised to cover the deficits created. Somehow listening to a President talking in 1975 doesn't seem appropriate to knowing the situation that has transpired.

There is no way in hell the government should tell any doctor when and where they can practice (and don't say that is not going to happen because it is a FACT that it will)...and let me ask you this....if EVERYONE can go to the hospital and clinic and get checked out for "FREE"...where the hell are all the doctor's going to come from? We don't have enough doctors in our country to treat everyone!!

I'll let the readers just laugh at this one. The government is not saying any such thing, and "FREE" is not even part of the program.

This whole agenda is a joke...this whole universal health care is just stripping away my freedom - and that is a FACT!!!

A fact?

We have a family plan with Blue Cross/ Blue Shield...we pay a bit and my wife's employer pays the majority of the premium...EVENTUALLY, universal health care will cause my family to have inferior coverage because my choice is going to diminish...that is another fact my friend...YOU have drank the socialized cool aid and it is another FACT that socialism DOES NOT WORK!!

I have so many clients that cannot even afford basic coverage. Socialism is not part of this, and by definition, no part of this program is socialistic.

Name one socialized country that has more opportunity for expression, growth and possibility then America...we are the greatest country in the world because we are not socialized....that is why EVERYONE wants to come here!!

I hate patriots. Sorry. France, Canada, and much of Europe is not running to the good old USA. We are not the only and the best.

Do everyone a favor and send this 10 minute Regan clip to your subscribers so they can learn the truth...Obama is a communist! Or at least a socialist...and it appears that you are to...

http://www.youtube.com/watch?v=fRdLpem-AAs

Obama is spending us into oblivion and you blame it all on Emperor Bush...

I blame this on many years, on Greenspan, on our greed, on Bush, and on our lack of thinking as a people. The economic stimulus appears to be working. Spending is what is needed.

Chime in, subscribers. I'm interested in hearing your thinking on the LOGIC behind the argument, the FACTS behind the statements, and HOW a trader like this can have his trading affected by what he is "hearing".

Johnny K.

Trauma is relative. My loving daughter just broke up with her boyfriend of 3 years.

He just dumped my 27-year-old girl, who was madly in love with him.

She is heartbroken, and a lost soul. She has trauma.

As I write: “We are either entering a traumatic period, in one, or just exiting one.”

So, Jenn has trauma, is disillusioned with life, and is a sad young lady.

Which leads me to Johnny K. Johnny lives in North Carolina, and has been a long-term subscriber to our services.

As with many of our subscribers I begin working with them by email and build a rapport and friendship, and many of our longer-term subscribers are truly my friends.

Every day Johnny sends me jokes by email. As you can imagine, I get many jokes and junk mail, and read none of them, but something years ago made me click on a Johnny joke and I’ve been hooked since then. He knows how to find them.

Last week Johnny wrote me and asked if I would please call him. As you know, I do not talk to subscribers purposely, as it fills my trading day and makes it impossible to work, but I immediately called Johnny.

He had asked me to call to “thank me.” His thanks were for my “opening up his mind to all of human potential, and sharing my psychological and philosophical thinking throughout my newsletters.” And, he called to tell me that he had just been diagnosed with a large brain tumor and was being operated on Monday, October 19^th.

The reality is that Johnny could die from this. His odds are not good. Since that first call, I’ve spoken with his daughter Dianna and written with Johnny daily.

Trauma comes in circles, and as a test. Several months ago Johnny had written that he must cancel his subscription, as he had lost his job. I gave Johnny an extended free subscription, and we spoke in email about life, how to handle “loss,” and what “who you want to be is.”

So Johnny’s second trauma, and that of his loving wife Linda and family, is now facing surgery, chemotherapy, and a Dr. suggested “short time to live.”

This letter is to Johnny. Or, really, to all of us that have trauma, is experiencing loss.

Thinking is the source of all problems, and there really are no problems. We always feel older or younger than we are.

There is no reason to move so fast, and to have so much input. None. We create the intensity of life, the “overstress” of ourselves. There is no such thing as stress, it is what we experience based on outside sources.

Earlier stress was coping with life or death, now it has grown to include any experience we allow it, based on the input we allow – moving, job loss, divorce, etc are newer, created stresses.

I can learn from you as much as you can learn from me. This goes back to basic listening, which few of us do well.

Stop all negativity. This is harder than anything, especially when you think how big a statement it is, and how negative you REALLY are. If you haven’t figured it out, this is it. When involved in anything negative you are immediately under the influence of negative. This is stupid.

When you get good, things get better. Whoever you were is over, even a second ago.

And this all goes back to my dear friend Johnny, who may be dying, or may be living. Dr. Bernie Siegel, the famed MD specializing in cancer has taught me “getting cancer is one of the best things that can happen to you; having a near dying experience alone helps you know who you are, and how you have lived.”

My mission statement: To Give. To Flow. To make and have good memories.

We only have what we remember.

And our goals should be how and what memories we have and that we make.

I’ve written this to all our subscribers, as my tribute to Johnny.

I first thought of the word “eulogy.” Eulogy really means giving praise to another person; sadly we have eulogized most as a culture only as someone is dying.

Johnny K is not dying. He is living. He has lived. He has shared with me. He has given of himself to me, unselfishly.

So yes, I am eulogizing, and praising my friend. I offer tribute to a man and family facing the greatest fear, that there could be death, and I offer my love and unconditional spirit.

Because of our belief systems, our traumas, and the events in our lives and how we deal with them we forget the beauty in the world.

Each of us leaves a legacy. I would know Johnny to be a good father, husband, man, and seeker of truth.

I believe that organized religion works well at influencing churchgoers to understand only what that religion understands, and believes. I further believe we as people have misinterpreted the interpretations we’ve read of various spiritual guides, like The Bible, and I will end this with the beginning.

We are each God. God is love. God is within us. It is our goal is life to learn just how much we are, and the spirit that lies within our limited visions of ourselves.

Johnny, I love you, and you are love. You are a part of God. I am here for you.

Listen Well. Do Good. Be Well.

Floyd the Trader

October 18^th, 2009

On Religion, continued

Now, back to the theory of evolution/creationism, and how it affects the trader in the market. On Wednesday we shared thoughts from trader MR, and today, here's thoughts from trader MP:

Hey brother...

I loved the email from trader MR. ..

To lightly touch upon some of your questions...may your subscribers know that these responses are from trader MP (recovering black and whiteist who is STILL convinced in Absolute Truth, Jesus Christ being the only way to heaven and Biblical Inerrancy):

1. If the Sumerians invented glue 7000 years ago, creationism is proven factually wrong.

There are numerous "facts" that "disprove" the 6000 year theory

That is a BIG IF...How can anyone PROVE FOR A FACT that the Sumerians invented glue 7000 years ago? To me that debate goes nowhere.

2. When one thinks in "absolutes" (this must be) how does this affect them as a trader.

It totally affects their ability to trade profitably. The more black and white you are, the more difficult it is for you to "see what is." All too often, you will be stuck "seeing" what you want to occur and not what is actually occurring.

HOWEVER...I believe that it is possible to be black and white is certain aspects (like myself...who still believes that the Bible is the inerrant Word of God and that Jesus Christ is mankind's only hope for eternal salvation and that all other religions are man made (except Judaism expressed in the Old Testament).

I am convinced that one can have these religious beliefs, which in my case is extremely black and white, yet LEARN how to follow a trading system and see the market for what is actually occurring and not what you want it to do. I am learning to do that and my goal is to be the most successful and profitably black and white evangelical Christian within Floyd's subscriber base...I'm not there yet, I'm not even close...but I intend to be.

I am learning how to follow a system. I am learning how to develop technical analysis skills. I am learning the Wychoff method and point and figure charting. I can learn all of this AND implement the strategies and STILL keep my religious faith.

But to answer your quesiton directly, I will admit that my black and white thinking has adversely affected my trading when I first started. But even more so, my character defects (greed, fear, emotionally driven) were the main reason for my initial losses.

3. Could The Bible, Jesus, and faith all be metaphorical in teaching us the great secret is that WE are God.

I've come to learn that people CAN interpret just about any writing in any way they see fit. But that does not make their interpretation correct. To answer this question, "Could The Bible, Jesus, and faith all be metaphorical in teaching us the great secret is that WE are God?" Absolutely NOT.

Nowhere in the teachings of Jesus Christ does it even hint that we are God. C.S Lewis, one of the greatest authors in the 20th century, who was formerly an atheist, said this about Jesus...

People who call Jesus a good teacher but refuse to believe in his deity don't truly understand his teachings. Sevral times throughout his life, Jesus claimed to be God. Claiming to be God is pretty outlandish. In order to make that claim you would either have to a liar, a lunatic or the Lord (meaning God). Jesus made those claims therefore he is one of the three...and if he is a liar or a lunatic...then he cannot be a good teacher.

So my question now becomes, "Who is Jesus to you?"

I am convinced in the Lordship of Christ. I am convinced in his diety and I'm convinced that Christ is the only way for us to be reconciled to God and receive eternal life. I am also convinced that all other religions are based upon made made principles that reject the Word of God and will eventually lead to eternal damnation. As sad as that sounds, I truly believe that. I would like for it to be otherwise, but logically, none of the other major world religions make sense to me at all, especially when they contradict one another.

I believe in Biblical Christianity because it is true, not because it feels good.

I am also convinced that I can think this way and still succeed as a trader.

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From Floyd: The discussions here, and the points of view, are provided to traders to help them understand how fully "black and white" thinking influences trading. For example, I call your attention to the use of the word "absolutely" above, as if this reader factually knows the answers.

WE are All Unhappy?

I read an article that disenchantment is growing at work. "Suicide", proclaimed Albert Camus, is the only serious philosophical problem." How frighteningly true.

And is there more disenchantment? Of course, there must be. People are being asked to do more than they once did, and work usually sucks. We were fed a lie that our work is our life and our work shows our merit, and all the school time stuff. Most work is demeaning, degrading, filled with dread, and 80% of the bosses are arrogant and behind their own value.

The reality is that work has become a different type of work than we knew.

We're beyond coal companies. Or the early auto industry.

Now we have an epidemic of unhappiness. Europe forces 4 week vacations, and proves some value psychologically and in work output in empirical evidence, but the U.S. is in the stages of offering 30 hour weeks, so they don't have to pay benefits. That's the modern employer. Or outsourcing.

People want to stay home more, work less. There is a fundamental change in thinking, yet fear is rampant as there are less jobs, and there may be less jobs for some time, unless jobs are CREATED.

The companies I consult with have all downsized by 25% and have a goal to "stay open" or "eke a profit". Typically these are 4 to 12 million a year privately held family businesses, and I rarely hear "love my job", but can read "have a job", or " am at wits end, but need job".

Is disenchantment growing? As the credit card companies reel in the debt by raising interest rates those that borrow suddenly have less, including small businesses. What do people do? How do they stop spending? How does a small business?

Decisions are being made.

What I read in the euphoria of our rising stock market when I am out traveling the country is truly a nation led by newsbites, caught in silly arguments and presentations, while often being miserable at their jobs, and worry about their 401K,, and for the lucky few with pensions, hoping they stay solvent.