A pattern analysis of the SP 500 Index Rally- August 5th 2010

Judging by some analysts comments, the bullish heads on CNBC, and fearless Bulls, we have to continue to question whether this is a “corrective” rally up in the markets working off oversold indicators and sentiment in late June…. or…. the start of a major 3rd Elliott wave structure off the 2009 bottoms which takes the markets to new all time highs.

In the interim, evidence mounts that the Bull Trade is getting pretty crowded now just 30 odd days since there were nothing but Bears on CNBC and headlines were pretty negative. I scan CNBC here and there mostly to see how many talking heads and pundits are bearish vs. bullish. Near the July 1st lows there were all kinds of calls to raise cash and for markets to move much lower, indicating a bottom was probably nigh. Now nobody is willing to be bearish after this rally, indicating a near term top is nigh as well.

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The #1 Advantage You Investors Have

Right now, two severe problems are affecting the average investor.

These problems will doom the average investor to mediocrity at best, and a lifetime of financial problems at worst.

One problem is extreme, rosy optimism.
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Warren Buffett's wisdom on when to sell

The Wilshire 5000 - an index of all U.S. publicly traded companies - is selling for right around 30 times earnings and paying a cash dividend yield of less than 2%.

It's no small wonder I'm not finding any cheap stocks. More and more, the best investors I know are either selling stocks and raising cash as their holdings approach or even exceed fair value... or they're selling stocks and increasing the size of their short positions.
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What You Should Do If Stocks Fall Farther from Here

By Dan Ferris, editor, Extreme Value, and Posted by Permission by "Daily Wealth"

Though the big stock market indexes are well below their late 2007 highs, I don't expect investors will make much money in stocks on the long side from current price levels. Record dividend cuts, weak earnings, and unattractive valuations are telling you to be careful buying stocks these days.

Most of the return in stocks over the long term arrives in shareholders' pockets in the form of dividends, not capital gains. Consistently earning big capital gains in public securities markets full of arbitrageurs and big institutions is too hard for the overwhelming majority of investors.

Earning dividends is much easier, providing a steady source of return that only requires you to buy a stock and hold it. And this is where I'm worried...
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The Ginnie Mae 'Inflation Guarantee' ("Buy Gold and Hold On For Dear Life")

The Government National Mortgage Association, known as Ginnie Mae, says it now has a 40% share of the mortgage-backed securities market. Add a comment Add a comment


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