ADVANCING A CONCEPT: “A SUPER SPIKE” …….. read more..

50% of the market players allegedly are Bearish and 50% of the market investors allegedly are Bullish, or so it seems from reading the numerous posts in the different financial boards, but especially Yahoo.com/financial, FAS message borad.

Most of the serious press/news articles call for the end of the recession, and point to greatly improved economic indicators.

Yet, the boards have recently been plagued by bearish posters, calling for a massive correction.

The bearish comments are difficult to interpret since many of these comments are charged with political spin, and little citations regarding actual or factual economic data.
Between what Rupert Murdoch’s Fox News, and now also the Wall Street Journal and Baron’s, one could make the inference that Mr. Murdoch’s political views are starting to permeating the accuracy of these two great publications that we have in the past taken for granted for sound objectivity, and as a source of reliable information.

The New York Times, on the other hand, the so called paper of record, is optimistic and upbeat in its business editorial opinions, and seems to advocate the positivism of health care reform, financial regulation, price discovery of toxic assets, global economy and the need for collaborating with our trading partners, all issue that are being advanced by the Obama administration.

Can we therefore, conclude that the American Business environment is being smoked in a cloud of political spins, and polarizing interests, that run contrary with the interest of the public and the investor?

My opinion is, a resounding YES.

However, in dealing with all this confusion we, as investors are running a grave risk.

This great risk in my humble opinion has to do with the risk that we could encounter, if persuaded to sell or remain outside the market, due to the volatility caused by the state of confusion that we find ourselves due to all this rhetoric.

The risk as I see is to fall victim to caning speculators, that are causing the market to decline, while at the same time being the buyer on the declining side, cashing on puts bought weeks ago, and then suddenly, leaving many investors out of the market by driving it up, with what is being rumored in financial circles as the ‘SUPER SPIKE”, where the markets could advance suddenly several hundred points without sufficient time for anyone to react.

A SUPER SPIKE could be cause by PROGRAM BUYING, yes why not? And there would be very little that the average buyer of securities would be able to do, but eventually pay a higher price, a much higher price, as it happens many times during the early stage of the downward correction from September of 2008 to December of 2008, when if you recall we regularly had 400 point moves in the US financial indexes.


Now, in order to define our risk, the best strategy in my opinion is to access the results posted by the government, through, for example the www.census.gov/.

I have included these numbers with this posting for your convenience. After having reviewed them myself, I find it extremely difficult to make a bearish argument.

I think that no matter how volatile some of these short players make it, eventually smart investors will press the buy button, and maybe this time everyone will press the buy button almost at the same time, what has the risk of producing the alluded SUPER SPIKE..

Following is the data I collected from the US Census site

The data is presented by market Groups and By industry Groups.
(of course we have not fully recoverd, but may sectors are showing improvements)

Market Groups
The output of consumer goods strengthened 1.3 percent in August, as the production indexes for both durables and non-durables climbed. The gain in consumer durables was the result of an increase in automotive products. The indexes for the other major categories of durables registered losses: Home electronics fell 1.4 percent; appliances, furniture, and carpeting declined 0.8 percent; and miscellaneous goods decreased 1.0 percent. The output of nondurable consumer goods rose 1.1 percent because of advances in both the energy and non-energy sectors. The index for non-energy consumer nondurable goods jumped 1.2 percent, with gains in all of its major components. The production indexes for foods and tobacco and for clothing moved up more than 1.5 percent, while the indexes for chemical products and for paper products recorded smaller gains. The production of consumer energy goods increased 0.8 percent.
The index for business equipment rose 0.6 percent in August, following a gain of 1.1 percent in July. Within business equipment, the output of transit equipment increased 2.3 percent in August, and the output of industrial and other equipment rose 0.8 percent; these gains more than offset a decline of 0.8 percent in information processing equipment. The output of transit equipment was boosted by advances in motor vehicles and aircraft. The decrease in the production of information processing equipment principally resulted from declines in electromedical equipment and in search and navigation equipment. The index for defense and space equipment was unchanged, following a gain of nearly 2 percent in July.
After a revised increase of 0.7 percent in July, the output of construction supplies was unchanged in August. The index for business supplies advanced 0.6, percent primarily as a result of a gain in sales by utilities to commercial businesses.
The production of materials rose 0.6 percent, with gains in nondurable and energy materials outweighing a small loss in durables. Within the category of durable materials, equipment parts fell 0.4 percent, consumer parts slipped 0.2 percent, and other durable materials inched up 0.1 percent. Nondurable materials increased 0.8 percent with the advances widespread; the indexes for textiles, paper, and chemical materials all rose. Energy materials increased 1.2 percent; a gain in electricity generation accounted for almost 1 percentage point of the advance.
Industry Groups
1. Production in manufacturing expanded 0.6 percent in August,
2. Factory operating rate increased to 66.6 percent
3. The upward revision to manufacturing production in July was led by output gains for steel products and high-tech products that were stronger than previously reported, while much of the upward revision for April through June reflected higher production of chemicals.
4. The output of durable goods moved up 0.5 percent in August.
5. The index for motor vehicles and parts advanced 5.5 percent, after increasing 20.1 percent in July.
6. Primary metals; machinery; electrical equipment, appliances, and components; and miscellaneous manufacturing all posted gains between 1/2 and 1 percent.
7. The output of nondurable goods rose 0.7 percent, with mixed results across components.
8. The index for food, beverage, and tobacco products expanded 1.6 percent.
9. The index for other manufacturing (non-NAICS), which consists of publishing and logging, rose 0.9 percent in August.
10. The index for utilities increased 1.9 percent, primarily as a result of a gain in the output of electricity.
11. The operating rate for utilities climbed 1.4 percentage points, to 78.7 percent.
12. Mining production moved up 0.5 percent, and the utilization rate rose to 82.2 percent.
13. Capacity utilization rates at industries grouped by stage of process were as follows:
14. For the crude stage, utilization increased 0.7 percentage point, to 80.7 percent.
15. For the primary and semi-finished stages, utilization moved up 0.4 percentage point, to 66.7 percent.
For the finished stage, utilization increased 0.8 percentage point, to 68.5 percent.
Note: This release includes the G.17 publication schedule for 2010.
Note. The statistics in this release cover output, capacity, and capacity utilization in the U.S. industrial sector, which is defined by the Federal Reserve to comprise manufacturing, mining, and electric and gas utilities. Mining is defined as all industries in sector 21 of the North American Industry Classification System (NAICS); electric and gas utilities are those in NAICS sectors 2211 and 2212. Manufacturing comprises NAICS manufacturing industries (sector 31-33) plus the logging industry and the newspaper, periodical, book, and directory publishing industries. Logging and publishing are classified elsewhere in NAICS (under agriculture and information respectively), but historically they were considered to be manufacturing and were included in the industrial sector under the Standard Industrial Classification (SIC) system. In December 2002 the Federal Reserve reclassified all its industrial output data from the SIC system to NAICS.