Wall Street Stabilizes
For the time being, Wall Street has taken some solace from a stabilizing Euro currency and appears to be headed towards resistance, 1130-1150 SPX. At those price levels, technicians will notice a head and shoulders top. This will make for an interesting battle between the bulls and the bears. Will the next move be up or down? For now, it appears we are getting upside related activity due to a stable Euro, short sellers being squeezed and fund buying as we head into the end of the quarter. Here at ProfessionalStockTraderLive.com, we believe the stock market will be firm until the end of the quarter (June). The next major catalyst for stocks will be earnings, which begins in full force in the middle of July.
Municipality Troubles
As Wall Street and the world watch the sovereign debt crisis unfold in Greece, could U.S. cities and towns being crippled with overwhelming debt, be the next landmine? I would advise one to watch this very closely as we move through the summer and into the fall.
It certainly appears that state and local governments are scrambling to meet budget shortfalls due to the lack of taxpayers (high unemployment) and lower house prices. This is where municipalities get the majority of their taxes from. Due to these two factors, municipalities are in a major bind, an unenviable position. Generally, municipalities can raise taxes to pay debt, but this time around, there is no chance. Does this mean another government bailout?
Already, we are hearing a few municipalities such as Detroit and Los Angeles talking about the “B” word, bankruptcy. Ouch! Also, we have heard smaller municipalities, such as Harrisburg, PA and Jefferson County, AL talking about bankruptcy as well.
The thought of bankruptcy to bondholders of municipal debt is very unnerving. Municipal securities are a $2.8 trillion market, according to Municipal Market Advisors.
It sounds more and more like municipalities could be the next landmine and are as vulnerable to many of the same forces that plagued some companies and sovereign governments. Here at ProfessionalStockTraderLive.com, we believe the whole system is very fragile.
Economic Troubles Still Exist
Do not let this recent rise in the stock market lull you back into a false sense of security. The economy is still not improving. This past Thursday, June 17, 2010 we saw a poor showing in Initial Jobless Claims as well as in the Philadelphia Fed, which clearly is rolling over. Oh, let us not forget we have mortgage applications at a 13 year low. With no meaningful improvement in economic conditions, we see a stock market moving sideways at best.
Since late November 2009, we have been teaching our members in our nightly video updates and daily live webcasts to be vigilant in this continued complex market environment. We teach our members how to protect their portfolios and actually capitalize and make money in a declining market. We believe for the foreseeable future all rallies in the stock market will be false and fruitless and all MAJOR risks continues to be to the downside.
Regardless of how you play the market, at ProfessionalStockTraderLive.com we always preach for our members to be patient, disciplined and use stops.
