In order for a bear market cycle to take its full course, we must reach a stage during which investors hate stocks. At this point, demand will hit a trough and the stage will be set for strong future money flows into the market.

Clearly, demand for fixed income investments has far exceeded that for stocks. However, now I am starting to hear neighbors and locals talk about how they are “finished” with stocks and have been putting their money into bonds. Is this the first sign of “If your neighbor gives you an investment tip, we’re marking an important moment in an investing cycle?”

As with tech stocks and real estate investments, fixed income securities can remain in vogue for years before the trade becomes overcrowded. However, I see it as a very healthy sign that we’re moving in the right direction through the healing process. Take a look at the classic “Psychology of a Market Cycle” and let us know what you think:

Click for Larger Image

The exclusive Markets Morning Report is supplied by The Precision Report.

The Precise Take – ES pushes just above major resistance ahead of Employment Situation Friday

Big Picture Analysis:  Yesterday’s gain in the equity indexes was impressive, with the ES able to close inside a major resistance area, with nominal highs above it this morning after the weekly Jobless data.  1082.25 is the 50% retracement of the entire August down leg, which we mention because these major retracement levels have stopped the ES cold many times over the summer.  Should the ES open and push above early, then it will be a major accomplishment for the bulls.  If the ES sells off from this level, a push below 1074-76 could gain momentum and put the shorts in control again.  After yesterday’s big gain, and with tomorrow’s monthly Employment Situation, we could see some early volatility, especially around the housing report at 10:00 am, but the markets should settle down in the afternoon.

Trading Today:  The upper end of the projected range contains weekly R1 and the overnight high, from 1083.75 to 1084.75.  If it is broken, the area from 1089.00 to 1089.75 is the next target and would be the likely maximum bound.  The lower end contains the day-session-only pivot and price action from yesterday, from 1074.75 to 1075.25.

Read the whole report here:

http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_September_2_10.pdf

The exclusive Markets Morning Report is supplied by The Precision Report.

The Precise Take – Equities bounce from support as summer draws to a close

Big Picture Analysis:  Yesterday, the third test of 1037 was a charm–for the time being–as a strong close yesterday precipitated an overnight rise to test Monday’s opening area in the low 1060′s.  We would expect shorts to re-exert at the 1069-71 resistance area or 1077-81 area.  The risk markets are friendlier overnight, with the US Dollar down, and the Euro up, against their major crosses.  The three day US Labor Day weekend lies ahead with some major reports in the interim, beginning with ISM today at 10:00 am.  We may not get an intermediate term trend underway until traders return next Tuesday, so be on alert for continued reversals.

Trading Today:  The upper end of the projected range contains the new monthly pivot and day-session-only R3, from 1069.00 to 1071.00.  The 1062.25 to 1063.75 area is also strong resistance and contains the daily R2′s and previous price action.  The lower end contains yesterday’s high and day-session-only R1, from 1053.50 to 1055.25.

Read the whole report here:

http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_September_1_10.pdf

The exclusive Markets Morning Report is supplied by The Precision Report.

The Precise Take – ES again testing 1037–three times a charm?

Big Picture Analysis:  Yesterday’s short term downward trend channel breakout in the ES failed, with equities grinding down all day, and lower overnight.  The ES is once again testing 1037 support, with a low likelihood of it holding.    Even the much lauded Treasury futures downward reversal on Friday has itself been nearly reversed.  The Euro is strong against most currency crosses overnight, save the Swiss Franc, which ominously broke 1.3000 support.  It looks as though preference for risk is being withdrawn across the markets, with the leaders broadcasting the potential for more.  Today features five economic reports, though none is as big as tomorrow’s ISM or Friday’s Employment Situation.

Read the whole report here:

http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_August_31_10.pdf

Join us Tuesday, August 31st at noon EST for a FREE 1-hour webinar special Money Hour!

Space is limited, so reserve your webinar seat now:

https://www1.gotomeeting.com/register/648440584

Here’s what we will be discussing:

- Current Financial Market Conditions (Dow & S&P).

- September catalysts for the overall markets and individual stock plays.

- Technicals and Fundamentals of select stocks utilizing the CHEAT SHEET framework for investing and trading.

Interactive Q&A with Damien & Derek at the end of Money Hour!

See you there!

Damien & Derek Hoffman
Co-Founders, WallStCheatSheet.com

**After registering you will receive a confirmation email containing information about joining the Webinar.

The exclusive Markets Morning Report is supplied by The Precision Report.

The Precise Take – ES attempting to rally on breakout

Big Picture Analysis:  The Bernanke speech did not disappoint in terms of volatility Friday, as the equity indexes managed yet another early morning turnaround, this time to close at their highs.  Again, we have the possibility of a rally, as support held twice last week at 1037 and the ES has broken out of its downward channel (below), but there are several obstacles that shorts can use to kill any rally attempt.  There are inklings that the debt situation in Europe could start grabbing headlines soon, and the Bank of Japan has been shown to be ineffectual in attempting to reign in Yen strength.  Accordingly the Euro and Australian Dollar are down materially.  The one positive is the huge reversal in long term Treasurys Friday–the big one we had been waiting for (though we must admit we had nearly given up), with the T-Bond futures down nearly three big points.  A Treasury market slide won’t by itself create an equities rally, but it can certainly help at certain key times.  Big news items this week include Wednesday’s ISM Manufacturing Index and Friday’s Employment Situation.  The key range to watch the next few days appears to be 1055 to 1081.

Read the whole report here:

http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_August_30_10.pdf

If you would like to be considered for a Letter to the Editor post, pitch us your idea on our Contact page.

Sixty years ago we bought our first house. It was $11,000.00. About ten years later we sold it for $30,000.00. Basically housing prices rose steadily for sixty years. Along the way home ownership became a cult idea. It started with Roosevelt and ended in a crescendo of speculation and absurd overpricing. No one really knew why a house was worth so much and why everybody should have one. There were lots of theories. Are we now faced with a cyclical downturn in housing demand? Or have we reached a tipping point where more and more people say “Hey I don’t need a 3,000 square foot house… I just need a 1,200 or 1,600 square foot home.” That would be a break in the mania, not just a typical cyclical decline. I don’t think too many people would argue with the idea that everyone should have all the “good things in life”, the only real difference of opinion would be how to accomplish that goal.

Abraham Lincoln once had a debate with Stephen A. Douglas. They were both running for Senator of Illinois. Douglas said the slaves of the south were better off than the northern immigrants. His rationale was that slaves were property and generally treated better than the northern laborers. This appeared to be true at the time. Lincoln’s response was that the difference between the northern laborers and the slaves was that northern laborers would eventually be upwardly mobile, one after the other. One would a start business, many would begin to hire their own employees and another would rise up in someone else’s business. Whereas he said that slaves, on the other hand, couldn’t go anywhere. They had their chains.

Unfortunately there are many kinds of chains. One can be chasing an impossible dream that housing prices will rise forever, or that internet prices will rise forever, or that people will stay pessimistic forever or that the government will provide for you forever. We are reaching the point where millions and millions of people are working for the government. We are increasingly restrained by an enlarging government which is viewed as beneficial but instead, in many ways, is becoming a new form of imposed chains.

Almost every significant unionized industry in America has failed. Now the largest unionized segment in America is government. I’m not against unions, anymore than I am pro-incompetent management. But they have both often caused more harm than good and been well compensated along the way.

People don’t leave what they believe to be secure environments. With unionized government jobs you’re unlikely to leave. You give up on opportunity. You generally vote for those in control that convince you that this is a good deal. You are mentally captured by what they seem to be providing and give up almost any chance for significant opportunity. Are we now on the road to the subtle enslavement state? You may be free to go, but how can you. Lincoln was right when he implied that “chains” come in many different varieties.

Government can only be paid for by taxes. If wages and salaries aren’t rising, and stocks aren’t rising, and houses aren’t rising, there isn’t going to be much to pay for future government. Freedom to succeed will ultimately create the equal society. Reducing that freedom, whether well meaning or not, will ultimately prolong the problem. Certainly taxation without representation, where a small percentage of the people pay almost all of the taxes, will not work. The ultra wealthy who attempt to shield their real tax reducing methods, while shouting for equality, don’t help solve our problems.

In the background it may seem as if it’s just another recessionary time. But just as we may have been witness to a very long term secular burst of the housing bubble, are we now facing the same attitude spilling over to our common stocks assets? They haven’t risen in over a decade, they don’t pay high yields and trillions of dollars are wasted by corporate boards and management by buying back inflated stocks that are supposed to be a return of capital to shareholders. Yes, the money circulates through the system but it certainly hasn’t helped stocks go up and hasn’t raised the standard of living for a long time. We haven’t yet really begun the analysis of what’s happening to us. Take a look at why kids study Spanish, Calculus, Physics or Biology and most never learn a thing. It’s symptomatic. Stay Tuned…

Shepard D. Osherow co-founded the Sanford C. Bernstein & Company. You can read more at http://www.sheposherow.com/

The exclusive Markets Morning Report is supplied by The Precision Report.

The Precise Take – Equity futures consolidating ahead of Bernanke speech

Big Picture Analysis:  GDP had been sufficiently talked down that this morning’s revision for the worse was supportive of equities.  Now, attention turns to Bernanke’s speech released at 10:00 am, though Consumer Sentiment released 5 minute prior could also cause some movement.  Per below, it’s evident the ES is still in its downward trend channel, but is basing in the blue value area.  A push above 1059 is needed to generate momentum, which sets up a move to the 1080-81 first major resistance area.  While 1040-41 is support, a break of 1045 today probably signals it will not hold.  While the Yen is weaker against most crosses, which is generally supportive of equities, 10 Year futures are treading sideways.  It would be uncharacteristic for them to top in this fashion, so we should be alert to the possibility of another up move, which would weigh on equities in the coming days.

Trading Today:  The upper end of the projected range contains price action near yesterday’s high, from 1058.25 to 1059.25.  The lower end contains yesterday’s settlement and 4:00 pm close, from 1044.75 to 1046.25.  If the lower end is reached, it has less a chance of holding the later it is reached.

Read the whole report here:

http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_August_27_10.pdf

The exclusive Markets Morning Report is supplied by The Precision Report.

The Precise Take – Equity futures up on Jobless Claims, ahead of weekend financial summit

Big Picture Analysis:  Yesterday, the ES managed a bounce off what was major support prior to the break of the 1035-40 area on June 29.  As we write, bulls are also taking advantage of a moderately less-bad jobless claims report.  The first major upside target is the 50% retracement of the August down leg in confluence with the 50 day moving average at about 1081.  The last of the week’s large Treasury auctions is over today at 1:00 pm EDT, which was favorable to equities the prior month.  We have been waiting for a large reversal in the 10 Year to signal its massive bull run may be over, which would be supportive of equities.  Yesterday was close, but did not quite cut it, however.  The first revision to Q2 GDP is released tomorrow pre-market and, thereafter, Bernanke speaks at Jackson Hole, with many expecting hints of further easing.  Expectations of GDP have lowered significantly in the past weeks, so Bernanke could hold the key to…

Read the whole report here:

http://www.precisioncapmgt.com/wp-content/uploads/Precision_Report_August_26_10.pdf

Earnings: Q2 loss of ($.13) vs. ($.15) consensus and a loss of ($.03 ) in Q2 last year.

Revenue: Decreased 15.9% Year-over-Year from $48.8 Million last year t0 $42.1 Million this year in the same period, versus $41.87 Million consensus, passing expectations.

Tom Rogers, President and CEO of TiVo, stated “TiVo remains on solid financial footing, exceeding our revenue and earnings guidance and with a strong balance sheet of over $240 million in cash and short-term investments, and no debt.”

Comment: Shares of TIVO are trading down 1.71% following the company’s earnings release after-the-bell, trading at $8.32 per share, compared to the closing price of $8.47.

In the chart above, TIVO shares are trading above the 50-day moving average, yet below the 200-day moving average. The company has been plagued by a lawsuit with EchoStar (SATS), but exudes confidence in their ability to win the litigation suit. The proof will reside in the ultimate court decision. Meanwhile, in the 2nd quarter, TIVO inked deals with Suddenlink Communications, the seventh largest U.S. cable operator currently with 1.3 million subscribers, and Cox Communications, the third largest U.S. cable television operator. A key attraction to the stock right now is TIVO’s cash position of over $2 per share and zero debt on their balance sheet. TIVO stock hit a 52-week low in July of this year. Since then, TIVO shares have rebounded and consolidated recently. If TIVO can continue to grow sales while reducing costs, then TIVO shares could become even more compelling than they are today.