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What Rising Prices May Mean for Stocks

Consumer prices rose again in September, but at a slower pace than previous months. Could investor portfolios see a boost?


According to data released this morning by the U.S. Department of Labor, consumer prices rose 0.3% from August, thanks largely to increases in energy and food prices. It was the third straight monthly increase: prices were up by a monthly 0.4% and 0.5% in August and July, respectively. Over the past year, prices increased 3.9%, according to the report.

Investing experts say the slower growth rate could lead to higher consumer spending and stronger corporate earnings — two things that boost stock performance, says T. Doug Dale, a financial adviser in Jackson, Miss. It could also give the Federal Reserve more freedom to take actions to spur economic growth, he says, such as doing another round of quantitative easing, the bond buying program intended to keep interest rates low.

But the pros caution against celebrating just yet. Prices are still increasing, and if that accelerates, the Fed may have fewer options for tackling both inflation and the slower economy, says Scott Kubie, chief strategist for CLS Investments in Omaha, Neb.  And monthly consumer price figures can change drastically from month to month, often providing little guidance of any longer-term trend. For instance, after falling by 0.2% in June, CPI shot up 0.5% in July, according to the Labor Department.

On top of that, markets don’t always react as expected, say analysts. And investors itchy for guidance have been trading on all kinds of short-lived news the past couple months. Indeed, today stocks inched higher as investors weighed the consumer prices news with mixed third-quarter earnings results from companies.


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    • For an entrepreneur watning a lean, employee-oriented company, it’s a natural position to take: That isn’t employee oriented, as that leanness stands in opposition to being such. If anything, benefits will still be offered. Things will largely not change, and a few spiteful people will have a harder time hiring due to that lack of benefits.

    • You Are Here – October 19, 2011
      by Slipposlappo

      The SP500 Index: consider this the baseline. Do it.

      200 Day Simple Moving Average [SMA(200)] – 1275.18
      100 Day Simple Moving Average [SMA(100)] – 1234.32
      You are here -> SP500 Large Cap Index – 1209.88
      10 Day Simple Moving Average [SMA(10)] – 1198.25
      50 Day Simple Moving Average [SMA(50)] – 1175.41
      20 Day Simple Moving Average [SMA(20)] – 1169.84

      Volume – 3.49 B

      Recent Highs:
      Oct 18, 2011 – 1233.10 on 3.93 B volume
      Sep 27, 2011 – 1195.86 on 3.67 B volume
      Sep 20, 2011 – 1220.39 on 3.00 B volume
      Sep 08, 2011 – 1204.40 on 3.30 B volume
      Aug 31, 2011 – 1230.71 on 3.59 B volume
      Aug 17, 2011 – 1208.47 on 3.02 B volume

      Recent Lows:
      Oct 04, 2011 – 1074.77 on 5.21 B volume
      Sep 22, 2011 – 1114.22 on 5.62 B volume
      Sep 12, 2011 – 1136.07 on 3.59 B volume
      Aug 22, 2011 – 1121.09 on 3.66 B volume
      Aug 09, 2011 – 1101.54 on 7.10 B volume

      Sick yet? One cannot help but look at the charts and see a confused market that is bi-polar at best. The good news is that the SP500 Index is still above the 50 Day Simple Moving Average and has even brought the 10 Day Simple Moving Average with it. At today’s close, the SP500 Index is finding immediate support at the August 17, 2011, high of 1208.47 and the September 08, 2011, high of 1204.40; both of which were formed on the low 3 Billion volumes. Should that break, the next support is at the 10 Day Simple Moving Average at 1198.25. Either way, there is some decent support at ~1200, but this market is not known for its timidity. Should that support break, the SP500 Index will likely just continue downwards to the 50 Day Simple Moving Average around 1175.41, which now has a positive slope for a change! It’s not extremely positive that the world seems to be on the edge of the abyss daily, but it is positive that the SP500 Index is still above the 50 Day Simple Moving Average and the 50 Day Simple Moving Average is still trending upwards now. Factually, these are the first events that would need to occur in order for the SP500 Index to recover higher. On the upside, there is mild resistance at 1220.39, which was established on September 20, 2011, on 3.00 Billion volume. With increased volume on the up days for the SP500 Index, this resistance should be easily surpassed. The more significant resistance will occur at 1230.71, the August 17, 2011, high that was established on 3.02 Billion volume. This resistance is emphasized with the October 18, 2011, high of 1233.10 established on 3.93 Billion volume. To add just one more wall to smash through, this resistance will be further enforced by a falling 100 Day Simple Moving Average at 1234.32. Remaining bold in predictions, the SP500 Index will likely test the 50 Day Simple Moving Average, find support, and then travel upwards again to the 100 Day Simple Moving Average; this all being executed so that it can test the slightly downwards sloping 200 Day Simple Moving Average and bring some resolution to if we’re out of the woods or if the woods are on fire.

      The macro-economic picture remains bleak, but the market may be safer than initially meets the eye because of that very reason. Every up and down day seems to hinge on the leaks emanating from behind the doors of central banks, and that says a lot. That tells the average investor that their financial future has very little to do with anything real and has more to do with the unreal and intangible stimulations executed by central banks. This will be discussed more in a future article, but debt has never done anyone, or more importantly, any government any favors; for that reason, debt will be inflated away. Everyone looks at the Eurozone as a failing economic entity, but the truth is that it is a thriving political entity. The mere fact that so many nations can even agree to vote on a common piece of legislation is incredible, especially for a region as fractured as Europe with so many populations that don’t even speak the same language. Try to imagine Arizona, New Mexico, Texas, and California even agree to bring a single piece of border legislation to a vote simultaneously, and then through political maneuvering force a unanimous vote for or against the issue. Impossible, yet residents in these states even speak the same language (Texas vs. California debatable). Due to the massive political success of the Eurozone, the region and its currency will likely become even closer than its members find to be comfortable. Either way, governments started running the show once they nationalized corporate debt. Everyone keeps looking at corporations and consumers strictly out of habit as if they matter at all. Look around, nothing real has mattered for a long time. Attacking my own methods, the very basis of technical analysis is that it once provided clues about real trends for the little investors that were not able to afford massive research budgets or insider information afforded to the big firms. Now technical analysis is nothing more than tracking and trading the trends that are being followed by other people doing the exact same thing. The entire process of making a trade nowadays is the equivalent to a sandwich eating itself. Clearly, this is not real. In the world of all things not real, especially trillion dollar nationalized debts incurred by unpaid future mortgages and their aggresively traded derivatives, the only entities capable of bringing enough imaginary firepower to bear are the governments themselves. If ever there were a more useless and self-imposed imaginary set of restraints society put upon itself, government tops the list. We’re all mimes stuck in an invisible box: complete idiots, Slipposlappo included. Cheers!

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