Oil prices rise above $106 a barrel

Oil prices rose to near $106 a barrel Thursday after soaring more than $4 in the previous session as lower U.S. fuel inventories and the further depreciation of the dollar spurred buying.

U.S. stockpiles of gasoline and distillates, which include heating oil and diesel fuel, fell more than forecast last week, the U.S. Energy Department's Energy Information Administration reported Wednesday.

The inventory report in particular stoked worries that stockpiles of gasoline are falling right when analysts would like to see them rising - in advance of peak summer driving season. Gasoline inventories fell 3.3 million barrels last week, more than four times the decline analysts had expected.

Light, sweet crude for May delivery added 6 cents to $105.96 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract increased $4.68 to settle at $105.90 a barrel Wednesday.

The EIA reported that U.S. refinery activity also dropped, which analysts attributed to some refiners cutting gasoline production due to low profit margins. Gasoline inventories are 9 percent higher than a year ago.

Oil prices were also supported by U.S. economic news. The Commerce Department reported that new home sales declined in February to a 13-year low, and that orders for durable goods fell in the previous month while analysts had expected an increase.

Many investors view weak economic news as a sign that the U.S. Federal Reserve will cut interest rates more sharply than expected later this year. Lower interest rates tend to further weaken the dollar, which boosts oil prices.

Job losses possibly worst in 50 years

By the end of the recession, the drop in employment may be the highest it has been since the 1957-58 recession.

Job losses in the current U.S. recession are likely to be the worst in 50 years, but fiscal stimulus will provide some relief, according to an economist at the San Francisco Federal Reserve Bank.

As of January 2009, employment had fallen by 2.6% from the December 2007 business-cycle peak, still less than the roughly 3% decline seen during the 1981-82 recession, research adviser Sylvain Leduc wrote in the bank's latest FedViews newsletter.

By the end of the recession, "employment should have decreased by roughly 4% from December 2007. We have to go back to the 1957-58 recession to see a larger percentage drop in employment," Leduc said.

The bleak assessment came as the U.S. Labor Department showed initial jobless claims at 627,000 for the week ended Feb 14. Continued claims for the week ended Feb. 7 were a record 4.9 million.

Leduc forecast that U.S. real GDP would turn positive in the second half of 2009 on the back of Obama administration's $787 billion economic stimulus.

"The fiscal stimulus package has a sizable impact on our growth forecast, particularly in 2009. Moreover, we forecast that the unemployment rate would climb to nearly 10%, absent the fiscal initiative," he said.

Real GDP for 2009 will likely be minus 1%, according to the bank's forecasting staff. Without the stimulus program 2009, GDP was forecast to fall 2.2%.

The fourth-quarter 2009 jobless rate was pegged at 8.9%, falling to 8.5% by the fourth quarter of 2010. Without fiscal stimulus, the rate in both instances was forecast at 9.6%.

Leduc said the inflation rate should stabilize "at a very low level" after plunging in the fourth quarter of 2008.

The San Francisco Fed's forecasters expect the core personal consumption expenditures index, a measure of inflation, to rise slightly from the 0.5% annual rate hit in the fourth quarter, and remain at about 0.75% throughout 2009.

Several Fed officials recently have noted that even if outright deflation does not occur, very low inflation will push up "real" interest rates at the worst possible time for the struggling economy.

Silver !?

One of the strongest ETFs out there right now has been SLV (silver). This ETF has been moving higher since last November but has really accelerated to the upside over the past 4 weeks. Gold has also rallied nicely but silver has outperformed gold and is the choice metal in my opinion.

Part of the reason for silver's strength over gold is due to the long-term chart below. What we have here is a ratio chart of Silver vs. Gold over the past decade. As you can see, this ratio has held major support and is now moving higher. What this chart is telling us is that silver is undervalued compared to gold and that silver should now continue to gain over gold in the month's to come.

If we look at the chart above you will see that silver is now testing a resistance area which means this is NOT a good place to get long especially since silver is overbought. What I'm looking to do is buy a pullback to the 50 day moving average followed by some kind of buy trigger such a stochastic buy signal or a bullish candlestick formation etc.

Whether the metals continue to rally remains to be seen but if they do maintain their uptrends I think silver will be the metal to buy.

If bankers were firemen,...

Very amusing Pat Bagley cartoon, via The Salt Lake Tribune

Mega Bear Quartet

Today I'll show you the overlays of the 4 major bear markets of the past century onto one chart. Its a comparison of today’s S&P 500, the Dow post 1929, the Nikkei post 1989, and the NASDAQ after the tech bubble!
Chart via Doug Short.

Making money in today's stock market!

RULE 1: WHY DO YOU INVEST?

Make more money, this is the answer to most people.
If your reason is to make more money, then ask yourself these three questions:

1.Is your strategy making money?
2.Is your strategy safe?
3.How to increase the profit and minimize the risk?

RULE 2: HOW TO CREATE WEALTH IN STOCK MARKET WITH JUST $1,000

Let say we invest some lower price stocks with just $1,000 in the stock market, invest twice a year for short-to-medium term. If each time the return is double, you will make one million dollar cash within 5 years. If your starting capital is $20,000, after 3 years you will make one million dollar cash.

If you are using the same $1,000 capital, invest twice a year, but the return is only 50%, you will make one million dollar cash after 9 years.

So we can always start small. However, it is very important that we know how to select high profit and low risk stocks.

RULE 3: DON'T GET OBSESSED WITH STOCKS

Sitting and monitoring the market whole day long will not bring you profit. Instead, it increases pressure and misleads your judgment.

RULE 4: NEVER GAMBLE

95% of the people always buy at the highest price. They don't really know when to buy, just relying on news, rumors and tips. Only 5% of the people knows how to trade at the lowest price. That's why 95% are losing money, only the 5% are making money.
Investment Builds Wealth, Gambling Definitely Lose !

RULE 5: SAY GOODBYE TO NEW

News used to be able to predict the market trend. But not anymore, it is difficult to judge which news could actually influence the market nowadays.

RULE 6: DO YOUR OWN ANALYSIS, FORGET ABOUT TIPS

Before investing, ask yourself these four questions:

1.How many people have already heard about the tips before you?
If many have heard about it before you, this news is already obsolete. The price is already high.

2.How long have the tips been spreading before it reaches you?
The next day?

3.Who told you?
Listed company director? Or friends?

4.Assuming that the tip is true, would you possibly know about it?
Normally insider news is not disclosed.

RULE 7: SELL YOUR STOCKS EVEN LOSING MONEY

It is easier to be said than done.

Sell at a loss is a difficult decision. Your heart will object, and your feeling will say "It is going to rebound, don't sell." Eventually price dropped further, causing a much tragic lost.

RULE 8: DON'T JUST FOCUS ON MAKING MONEY

How to protect your capital is much more important. Don't try to make 100% profit. It is already good enough to have a 60% profit margin.

RULE 9: HISTORY WILL NOT ALWAYS REPEAT

Everyone expects to make some money from the stock market before Christmas, New Year, annual budget announcement or election, but the stock market is not always bullish during these events. We can say history is not always repeated.
The best way is "Let the Market Lead us".

RULE 10: QUOTES FROM WARREN BUFFET

There are only two rules to make money in stock market:

The first rule: Never lose your money.
The second rule: Never forget the first rule.

RULE 11: TURN BAD STOCKS INTO GOOD STOCKS, DON'T JUST HOLD YOUR STOCKS

Don't hold your stock too long, there is a value when stocks are sold.

How long have you been holding your stocks until now?
Since Year 1993? 1997? Or Year 2000?

Why didn't you exercise your stocks? Long term investment strategy is not practical anymore. Even the blue chips also crash when the market collapses.

The best strategy is to sell the stocks that are not earning money, and reselect some good counters. Buy low, sell high for several times will earn you more than enough to compensate the lost.

RULE 12: WAKE UP FROM MISTAKES

Stop investing if you are not sure of when to buy or sell.

Without the knowledge of investment, you are bound to lose again. This is an age of information. Investors are using knowledge, techniques and strategies to make money. Without investment knowledge, how do you protect your money?

Building wealth through investing starts with securing your capital.