DJIA

[Coytee]

where you can determine the mutliple bids/asks and plot a U-curve

I'm sorry, I missed this question earlier and just now saw it.

Various quote packages will show it for you. Ultimately, it's all a matter of how much do you want to pay? (information costs kinda thing). What is called "Level 2" quotes will show you the inside markets on OTC stocks. It won't really show on listed stocks as that is what the "specialist" does on the floor of the exchange in his little 'black book'. So you're somewhat hand tied for NYSE stocks. For all I know, some of these packages might somehow display that information, I've certainly not seen them all and now, we don't have our level 2 quotes anymore.... just not really needed in our operation. (we're not stock jocks so the extra expense for us, wasn't warranted).

here's some commentary, I've done a simple google on "level 2 quotes" however it might be better to search under "level II quotes"

http://www.wisegeek.com/what-are-level-ii-quotes.htm

http://www.investopedia.com/articles/trading/06/Level2Quotes.asp

It should be pointed out that this kind of detail isn't really needed by the typical investor, ESPECIALLY for one who's going to buy & hold for long term. It's always good to know from the standpoint of trying to finesse a trade a little better than what is currently shown.

It's somewhat similar to (warning, a perverse analogy coming up) asking someone what time is it.... including seconds. Think about it...the MOMENT they tell you the 'exact' time, that information is useless as it's now gone. The dynamics of the inside market on a stock (the fluctuations of the shape of the "U" curves) change continuously so it's really information that is good for that upcoming 30 seconds and not much more as things change in a heartbeat.

[Jeff Matthews]

Coytee, Oldie, OB, Mark. All you folks.... Here's probably my greatest curiosity: What is the next economic stimuluous? We had computers and technology. It boomed, and then plateaud. We had internet (the novelty of which spurned beliefs that if your entity had .com in its name, it was worth another $150,000+). We had real estate. We currently have oil (which is a boon of sorts for a good number of people, but not a shot in the arm across the board). So, what's next? All I see at this point is a faster computer is not that big a deal. The ideas for software for the masses are a bit beyond ripe. Real estate is a no-no for the most part. Stocks are highly questionable. Credit is maxed. People spent pretty much all they can. So, I'm wondering, what might possibly spurn the next charge for the economy? Ideas anyone?

P.S. - it even appears that post counts are dropping. Could it be tightening budgets lead people to focus on things other than luxury speakers? Seems the economy thing is finally opening full-bore.

[oldtimer]

Jeff if I knew the answer to that I certainly would not post it here. What you have to go on is do you think the economy will grow, or wiil it slide backwards? If you believe that the US economy can continue to grow, then there are ways to invest in that. If not, then there are ways to profit from that too (but usually the short side contains more risk). You don't have to guess what the next big thing is, unless you are the type who needs to hit a home run. Tony Guinn made the baseball hall of fame without hitting a ton of home runs.

[colterphoto1]

diversification means you can sink exactly as fast as the Dow.

I just loved that I finally 'made' money (recouped previous losses really) in 2007, paid taxes and fees out the wazoo, then watched it all erode away in the first few months of 2008. Shoulda gone cash in Sept/Oct like I wanted to, but got talked out of (thanks Wachovia)

[Coytee]

Two comments:

1. Michael.... bro..... let em know who one of your little birdies was back in Sept/Oct. (caution readers: solicitation for a cheap plug)

2. Order Flow disclosure on order tickets: Fine print indeed. I just flipped a confirm over and there is the obligatory fine print on the back side. The back of the page is titled "Explanations of coded symbols" and it goes on to give some technical explanations of exchanges, type of account (margin, cash...) and so on. The entire back page is full of fine print. yada yada ...

The LAST paragraph of the fine print says

"Payment for Order Flow Disclosure Echange Act Rule 10b-10(a)(2)(i)©. Your broker/dealer and or Clearing firm receives remuneration, compensation or consideration for directing orders in securities to particular broker/dealers or market centers for execution. The source and nature of any compensation received in connection with your particular transaction will be disclosed upon written request to your broker/dealer. Please review your broker/dealer's annual disclosure on payment for order flow policies and order routing policies."

Oh well... I would have been more surprised if they didn't do this, than that they do. I really don't think you can escape this reality anymore.

[Colin]

Clinton and Gore not only funded the information super-highway, gave away AARPnet and nationalized domain names, which lead to the free Internet, and a stock market boom, they also gave away the U.S. GPS system, which lead to best selling stocks like Garmin and smartphones with GPS. I don’t know what the next big stock market wave will be. Yet with world’s largest accumulation of wealth ($45T) starting to transfer soon from baby boomers to the next generation, I suspect that the next big wave could easily be some form of computer driven medical implant. Perhaps it will be a nano machine to break up plaque in hardened arteries. Maybe it will be new LED TVs with Internet capability to download movies. Or injections to correct DNA deficiencies. BTW, Bill Gates is a very big investor in biotech. His new position allows him to continue those investments and research without the glare of public exposure.

[Coytee]

This is a little off topic but it's worth people knowing.

To become a broker, you're only required to pass an exam (called Series 7). There are different exams and different exams allow different people to sell different products.

Example, a Series 6 allows you to sell mutual funds but not stocks or options. A Series 7 allows you to sell mutual funds, stocks and options. Consequently, the Series 7 exam is a bit more involved and a bit more difficult.

If you are a "Investment Advisor" you must merely pass the Series 65. You can take this exam WITHOUT one of the others as a prerequisite. So, you can now hang a sign on your door as being a "Investment Advisor" and charge a management fee for your advice, but not a trade commission.

If I were inclinded to deal with an Investment Advisor, I'd personally prefer that he ALSO hold a Series 7 registration as that will mean he's probably got a bit more background than someone who doesn't.

ok...(and I'm still not to my main point yet, this is just painting the picture)

If you open an account with an Investment Advisor, he is required to give you a "Form ADV". To keep the conversation simple, it's really nothing more than a disclosure form BUT, he is required to give it to you and that's a good thing. Remember though, "anyone" can take the Series 65 and be an "Investment Advisor". It's possible he was working at Pizza Hut last summer, or cutting grass.

Ok... now with that logic, a broker is NOT "required" to give you anything about his background (yet the investment advisor, operating in that capacity is)

I personally think that is WRONG. I also think this business should require brokers to pass out a copy of their "CRD" (Central Registration Depository) report.

Here's why... a CRD report gives you the history of your broker and most importantly, if he has any regulatory issues (complaints).

Although I won't give out his name, I know a guy (locally unfortunately) who has been with various firms. His last THREE consecutive firms, he has at least one customer complaint and interestingly enough, each one says he was making unsuitable trades and misrepresenting what the investment was.

(I'll bet no one has ever heard THAT kind of commentary on the news before huh?)

This guy is a VERY affable guy... a "good ole guy", one of the 'buddies' that you might go grab a beer with..... he's also a slime-ball who will smile to your face while lying and do what he can to put as much of your money into his pocket.

I'm happy to say that his current CRD (I just looked) says he's no longer with anyone and was terminated. Maybe the next firm will read his CRD and avoid hiring him.

Here's my point...

If you met this guy, you would be VERY comfortable giving your money to him because he's very charismatic and likeable. The fact that he's a sleezeball is well hidden.

If he was REQUIRED to hand you a current copy of his CRD report, you might read more of his background and might NOT want to all the sudden, give him your hard earned savings..... He might also be forced over time, to do what is right by the investor, instead of misrepresenting the investment in order to get a trade (commission).

So... this information happens to also be public!!! You just have to know about it and know where to go

Step 1: http://www.finra.org/index.htm

Step 2: Left column, click on "FINRA BrokerCheck"

Step 3: Middle top, click on "Start Search" in the blue box

Step 4: Check agreement box and then "continue"

Step 5: Enter the name of your broker or a broker you want to check out (or their FIRM for that matter)

Step 6: Click on either "broker" or "firm" depending on who you are looking for

Step 7: Click on name of your broker (probably be a bunch of names so you might have to search a bit... also, is his name "Bill" or "William" because that will matter

Step 8: Fill in the little security box with the code

Step 9: On left side, click "View Full PDF Report" as you can then save or print it...either way, it will be in an easy format to scroll through

"Broker Qualifications" will tell you how many Principal/Supivory Exams he/she has taken and passed as well as General Industry exams (like Series 7) and State exams. You must have a Series 7 to be a "broker", however, you don't have to have any other Principal/Supivisory exams. To get those gets you a bit more responsiblity (perhaps) and the ability to supervise certain things.

Side note: There are dates on this section and those dates do NOT correlate with when the broker took the exam, it reflects when the broker/dealer "picked up" the brokers registration...or in other words, when the broker started working for this firm.

"Registration & employment history" is somewhat self explanatory

"Principal/Supervisory exams" These are extra registrations that someone can get for what ever purpose they may need to get them. The dates next to these exams DO reflect when the exam was taken and therefore, how long the person has been qualified to act in this capacity.

Ok... I'm looking at my own CRD report as I go through the above. I don't have any "issues" on my CRD (unlike the guy I mention above) so I am not sure where all the commentary regarding issues would be located.

If you put some names in and see on the main page (prior to hitting the PDF report), on the right column it says "Are there events disclosed about this broker" followed by a YES or a NO.

If he has a "NO", then there won't be much in this report and a NO is GOOD!!

If he has a "YES" then that essentially means there is an issue/complaint/problem SOMEWHERE with him and on one of the pages, that will be disclosed. It might have a lot of detail it might be brief. The fact of the complaint will be there and the broker has an opportunity to make a comment also (there ARE times when people make false claims, so the broker can respond)

Anyways...

If you go to the FINRA website, you can find out some details about the person you are working with, or perhaps debating on working with.

Again, I personally think that EVERY broker should be REQUIRED to hand out a current copy of his/her CRD report with any new account so that the person opening the account can know immediately if there are any existing issues with the broker. This would also help serve weed out bad brokers (bad in theft, not in bad advice)

It's not a fool proof method of disclosure but it's certainly more information than the investor current gets.

My .02

If "your guy" has a "YES" on his "are there events disclosed about this broker" then I'd urge you to scrutinize him further.

[Colin]

geez, talk about hi-jacking a thread Coytee, this is not even related to DJIA, anyway I just wnated to ask:

What ever happens, there is always money to be made in the $51T market. What I want to know is who bought the front month $2 Bear Sterns calls after the announcement of the Fed loan so JP Morgan could buy Bear, but before the buy-out price was adjusted to $10. Those calls increased about 5,000% over the weekend!!!

[Jeff Matthews]

Hey, I started asking him all the questions. There's no hi-jacking. I have no idea why that term evolved. These threads are just general, and conversation about economic thoeries and all such other theories always ramble into many different aspects. That's what makes them interesting. Please, by all means, hi-jack away. Come one, come all! It would be a very boring place, but for the many interesting twists and turns that occur during a conversation.

Anyway, off to a long week-end. Cheers all, and happy 4th!

[sputnik]

geez, talk about hi-jacking a thread Coytee, this is not even related to DJIA, anyway I just wnated to ask:

What ever happens, there is always money to be made in the $51T market. What I want to know is who bought the front month $2 Bear Sterns calls after the announcement of the Fed loan so JP Morgan could buy Bear, but before the buy-out price was adjusted to $10. Those calls increased about 5,000% over the weekend!!!

Wouldn't it just be a measly 500% increase over that weekend?

[Coytee]

geez, talk about hi-jacking a thread Coytee, this is not even related to DJIA, anyway I just wnated to ask:

What ever happens, there is always money to be made in the $51T market. What I want to know is who bought the front month $2 Bear Sterns calls after the announcement of the Fed loan so JP Morgan could buy Bear, but before the buy-out price was adjusted to $10. Those calls increased about 5,000% over the weekend!!!

lol... well, it's possible if someone is using a broker and trading in stocks that make up the DJIA, they might want to know if their broker has any regulatory issues.... that's my tie in to the DJIA... piece of cake.

[]

[pauln]

The next bubble? It's got to be the "reverse" of some current behavior.

Reverse Auto Industry Opportunities:

Wrecker trucks and repo companies.

Companies that specialize in SUV conversions (into small homes).

Companies that take car titles as collateral for a loan.

Reverse Real Estate Opportunities:

Storage facilities for folks needing to store their stuff when losing their homes.

Yard care companies maintaining abandoned homes whose community associations require pretty yards.

Specialty sign companies that make placards for pre-forclosure, auction, govt. owned, FSBO, and resale of homes.

Reverse Financial Opportunities:

How to get out of the unwinding markets.

How to recover your hosed credit rating.

[Colin]

If 11,000 is not the floor in the DJIA, then next downside target is 10,000.

True diversification is not just theory, it works in practice, the problem for the public however is that they sell when they should buy and buy when they should sell, therefore the public averages a measly 1% return on stocks, although they do much better with real estate!

So 1950 owners of 1 GM share might have as many as 96 shares of stock plus holdings in three other companies today? BTW, GM suspended their rich 10% dividend today.

Neophytes can do well in the stock market, by reading Peter Lynch, money magazine and avoiding the sales professionals, look up John Bogle, Dogs of the Dow (high yield S&P stocks are even better) and go here:

http://moneycentral.msn.com/investor/finder/predefstocks.aspx

High yield stocks pay you to own them while waiting for them to come back. That is what I am doing. See my thread on buying Freddie and Fannie.

BTW, tech, consulting, educational, investment, telecommunications, automotive, creative, mental, cable, hospitals, child, veterinary, data, fitness and healthcare services are booming.

This is a bear market. Nothing proves the current market sentiment more than how it reacts to news. A bear market ignores good news, like Caterpillar sales and exports, while a bull market ignores bad news, like Brazil discovering the fourth largest oil reserves.

Options have leverage. A general rule of thumb is that if the price doubles, the return on investment is twice that amount. There are sites to look up the current price of options. I don’t one that can give me the historical price of the front month Bear Sterns 2 or 10 calls.

[artto]

Don't worry about the DJIA. I'm not sure why the media thinks this is so important.

It's the broader market breadth figures that matter, and those are the things they don't tell you much about anymore. Also sentiment indicators are at historical extremes and yet no panic. For what it's worth, the S&P500 had an advance/decline ratio value of 130 October 1, 2007. By December 7 it was down to 50. As of yesterday’s close it was 0.03125 and its been like this for the entire month, similar relative results for the NYSE and Nasdaq100 and for other breadth indicators. This is very, very weak folks.

But yes, my father (and mother, for a while) worked for GM. I remember him looking at something and smiling, and asked what why. He began explaining to me about the stock and the dividend. The irony here is that he passed away in 1964 and the stock is worth less now than then. Who wants to take bets on how much Wagoner and his cronies will walk off with as a bonus (golden parachute) after running the company into the ground?

[artto]

If 11,000 is not the floor in the DJIA, then next downside target is 10,000.

True diversification is not just theory, it works in practice, the problem for the public however is that they sell when they should buy and buy when they should sell, therefore the public averages a measly 1% return on stocks, although they do much better with real estate!

BTW, tech, consulting, educational, investment, telecommunications, automotive, creative, mental, cable, hospitals, child, veterinary, data, fitness and healthcare services are booming.

Actually (IMO) the next downside DOW target is a little lower ~ 9800, no matter really.

Second, I don't subscribe to the diversification "theory" (fact?) whatever. If were all that simple we'd all be millionaires a long time ago. I agree with Willaim O'Neil ~ "diversification is an excuse for ignorance"

(and now I'm going to rip on you Colin ~ hopefully in a friendly way ~ I know you had plenty of financial experience). I'm going to post a list of all the sectors and industry groups. They are ranked by External Relative Strength, and over a number of time periods, up through yesterday's close. The sectors are bold fonts. The industry groups are color coded according to the sectors they are in. I'll have to make several posts to fit the whole screen shot in.

As you can see, some of the industry groups and/or sectors you've mentioned are not exactly what I would call "booming", and in fact show sigificant continued decline. It is not enough to just say "tech" or "automotive". Some of these are near the top while other are at the absolute bottom in strength.

I go through this exercise everday, first from sector, then the strongest industry groups, then the strongest in the industry group, and compare their ERS to all other stocks in the US market. That Peter Lynch stuff is a bunch of ballywho too. The fact of the matter is the market doesn't give a %$#$ what you or I "know" or what we think. If you want to make money in the markets you must let it tell you want its doing or not doing. If someone can't do that, and they absolutely must be involved, then I suggest you just trade the S&P500 and learn to get out when the 50 day moving average closes below the 200 day moving average. Continue putting money in your account as you normally would, but just don't allocate it to anything but cash. When the 50 DMA moves above the 200DMA again you can start allocating both the cash and new money again. It's that simple. By doing this you will easily beat the average market returns. If you can't devote an hour of time once a week to do this, you shouldn't be in the market unless you don't care about a return on equity.

[artto]

second part

[artto]

part 3

[artto]

part 4 (last)

[Colin]

Artto, can’t read your tables well enough to know what they mean, but I think they show that the market, and the sectors are down

I meant more that those sectors are growing (was looking at a job lists when I wrote that) – not that they are ripe for investment now

Peter Lynch argued for buying value and holding

The moving average crosses is a tried and true method, I prefer Dogs of the Dow, when the market is down, as it applies to the S&P, and fast movers when the market is trending up

[artto]

Colin....I think you might have to click on the chart images if they're not clear on the main post. Another window will pop up with the image in it. You can then click on that one and it will go to full resolution. It kind of depends on your display I think.

The tables I've shown are not showing that the market and or sectors are down. It shows which sectors and industry groups are strongest and weakest. I usually do calculations on the sectors and industry groups separately. I showed them here together for convenience since some of the things you mentioned are either sectors, or an industry group within a sector. The calculations performed are called external relative strength analysis. This is very different from RS/RSI (relative strength) which simply compares the security's performance to itself. I've found its more like shooting fish in a barrel with 3-D sonar & GPS guided laser. For instance, take a look at the top ERS performers. Many of them have been at the top for a while. In fact the ones at the top are also in industry groups that are the very reason why the rest of the market has been going down. It's part of my filtering process. By doing this and cross referencing the strongest stocks in the strongest industry groups against the absolute strongest stocks in the entire market regardless of sector/industry, the cream of the crop rises to the top and you can quite clearly see where the money is flowing to (or out of). You buy the strongest, sell the weakest. Of course there are a few other filters I use such as the S&P500 trend, volume, market cap etc. Unfortunately, the software is very difficult to setup ~ you really need to know what you're doing and looking for to set the parameters correctly. To make matters worse, you need to have some advanced skills with MetaStock, including programming. But I used to spend most of a Saturday or Sunday trying to "kit bash" a number of sources of MetaStock data into something understandable. Now it takes me 11.5 minutes. [Y]