Stocks Are Poised For A Tumble: Is Trading Now A Smart Move?
The Underemployed
The Underemployed
The underemployed still make up over 18% of the U.S. population.[1] Retailers, home builders, and banks will continue to be burdened by this. As underemployment remains high, states and cities will continue to take in less revenue than they expect and will realize that they must further reduce their spending.[2][3][4] Recently, California's Governor declared an emergency as California's budget is overdue and presently has a massive shortfall.[5]
Foreclosures
Those who have been foreclosed on will not enjoy the same access to credit that they have been accustomed to receiving.[6] The consequential decline in or leveling out of retail sales is not going to do commercial real estate any favors.[7]
While sellers continue to cut prices, home sales continue to plunge.[8][9] Many homes still have yet to be unloaded by banks.[10]
Tax Increases
Income taxes will increase and new taxes will go into effect at the start of 2011.[11] Higher taxes is yet another impediment to growth.
European Debt Crisis
The austerity packages in Europe will decrease the amount Europeans have to spend, which will affect what they spend on American products.[12] Some believe "Europe is still in deep, deep in trouble."[13] Portugal and Ireland's debt ratings were recently downgraded.[14][15] Hungary's debt rating could be downgraded again shortly.[16] Greece's debt rating is already at junk status.[17]
Why the Plunge Will Happen Sooner Rather Than Later
-Even though the death cross is not a particularly useful metric on its own, it is on the minds of those holding.
-As more housing and jobs reports come in worse or as bad as expected, more weak hands will sell.
-Sentiment is beginning to turn more and more negative. Optimism was the primary driver of this market. Talking heads were constantly spouting that jobs were a lagging indicator and that improving statistics would just keep on improving. The rally was driven by hope, and that hope is waning.
I own SPY puts and QQQQ puts
Resources:
1. sunherald.com/2010/08/05/2385687/us-underemployment-steady-at-184.html
2. usatoday.com/money/economy/2010-07-13-job-openings_N.htm
3. kswo.com/global/story.asp?s=12751713
4. thenewamerican.com/index.php/economy/sectors-mainmenu-46/4017-facing-fiscal-meltdown-municipalities-struggle-with-pensions-
5. news.yahoo.com/s/nm/20100728/pl_nm/us_economy_california
6. politifi.com/news/Consumer-Credit-Plunges-in-May-April-Revised-Downward-911806.html
7. voices.washingtonpost.com/political-economy/2010/07/by_ylan_q_mui.html
8. cnbc.com/id/38244093/Home_Sellers_Slashing_Prices_While_Banks_Mow_the_Lawn
9. finance.yahoo.com/news/Homebuying-applications-sink-rb-2380121310.html?x=0&sec=topStories&pos=3&asset=&ccode=
10. latimes.com/news/custom/scimedemail/la-me-derelict-homes-20100711,0,6945778.story
11. atr.org/six-months-untilbr-largest-tax-hikes-a5171#
12. huffingtonpost.com/2010/06/29/europes-massive-austerity_n_629062.html
13. finance.yahoo.com/tech-ticker/greece-in-%22death-spiral%22-europe-still-in-deep-deep-trouble-says-niall-ferguson-518977.html;_ylt=Ajo2DUEbiEHW4ZXR3JQ6oo.7YWsA;_ylu=X3oDMTE2aDFyMHY2BHBvcwMxMQRzZWMDdG9wU3RvcmllcwRzbGsDZXVyb3Blc3RpbGxp?tickers=udn,uup,ero,fxe,spy,%5Eftse&sec=topStories&pos=9&asset=&ccode=
14. washingtonpost.com/wp-dyn/content/article/2010/07/13/AR2010071306168.html
15. nytimes.com/2010/07/20/business/global/20punt.html
16. reuters.com/article/idUSTRE66M15620100723
17. money.cnn.com/2010/04/27/news/international/Greece_debt_downgraded/index.htm
by: Mike Smith.
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