Dartline™ First Look – morning directional planner

December 11, 2009, 7:00 pm … The Standard & Poor’s 500 index futures up 5.20 to 1102.50, as Britain’s FTSE 100 rose 1.0 percent, Germany’s DAX index gained 1.1 percent, and France’s CAC-40 rallied 1.8 percent. Japan’s Nikkei stock average was up 2.5 percent, while Hong Kong’s Hang Seng index up 0.9 percent. News that China’s exports declined last month by the smallest amount this year was the latest evidence that the global economy is rebounding. China’s November exports fell 1.2 percent following a 13.8 percent plunge in October. The report followed government data Thursday that showed a big jump in U.S. exports. Low interest rates and weakening currencies have helped raise demand for goods and services around the globe. … Traders are hopeful that a report on retail sales will show consumers are opening up their wallets this holiday season. Dartline expects retail sales up 0.5 percent last month, slowing from a 1.4 percent increase in October, but will be spun positively to project “better 2010.” The Commerce Department will release the report at 8:30 a.m. EST. However, high unemployment and weak consumer spending are seen as the economy’s biggest obstacles to a robust recovery.

Reports that Obama Nation plans to channel money from the government’s massive financial bailout program to small businesses as part of an effort to limit the political and economic damage of high unemployment. One plan under consideration involves spinning off a new entity from the Troubled Assets Relief Program that would give banks access to federal funds without restrictions, including limits on executive pay, as long as the money was used to support loans to small businesses. But officials are not yet certain whether carving the program out of TARP would be the best way to encourage banks to boost small-business lending, according to sources familiar with the matter who spoke on the condition of anonymity because the plans are not final. As an alternative, officials are prepared to ask Congress to modify TARP itself, easing the pay limits and other restrictions that would be imposed on small-business lenders taking the money. A further example of FREE MONEY SCHEMES to keep the “sugar stock rally” going.

Three versions of the truth. What is your truth? For starters to answer the question —- preconceived ideas often distort the actual truth. Two or more people may look at the same subject and yet see different things. Some look at stocks and see a new bull market as part of a V-shaped recovery. Others look at the same stocks and see a W-shaped recovery. Yet, others look at the same stocks and conclude the worst is yet to come. Since there are so many opinions formed over the same subject, investors can come to one of two conclusions: 1) There is no consistency among the total sum of conclusions, therefore it is impossible to ascertain an outcome with any degree of certainty – investing is basically an arbitrary process. 2) There are certain indicators with a track record of accuracy. Those indicators point towards the real direction without being clouded by preconceived viewpoints. If you have come to the conclusion that investing is an arbitrary process (conclusion No. 1), you should seriously re-examine why you are invested in the first place. If you believe that there exist indicators which allow you to ascertain the market’s direction, you will find it interesting to see what those indicators are and how they should be applied correctly. The first and most important lesson to be learned is that the vast majority of investors (individuals and institutions) are usually wrong, that’s right; wrong. Here’s why: The herding effect – apparent truth. The herding effect could be explained in one sentence: If it’s too apparent, it’s apparently wrong. Herding is a social behavior; in fact, it is a phenomenon that reflects a contagious emotional, collective feeling. This feeling (positive or negative) spreads among investors progressively. If this doesn’t make sense quite yet, hang in there – it will be the single most important contributor to your investment success. Right now the HERDING EFFECT with the full support of the financial media control the direction of the market. As for fundamental values and the true — they do not exist. …  Support for the Standard & Poor’s 500 index at 1094.35 will hold. Yesterday’s action confirms upside conclusion — stocks spent the session in a sideways chop, but managed to settle with solid gains. The advance came in the face of modest strength in the U.S. dollar, weakness among financial issues, and a mixed weekly jobless claims report. Trade the market on both sides, take profits, reduce laggards and go with the flavor of the day. Herding effect at work!