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Hurricane Katrina put an ugly exclamation
point at the end of an otherwise beautiful summer. Other than energy and
building materials, there has been nothing to cover as far as the market
is concerned over this past week. Things should pick up next week as summer
officially ends, kids go back to school, and we all get back to work. No
new BLOG entries this past week.
To use the BLOG, simply go
to the home page at www.otcjournal.com
- the BLOG will scroll down automatically on the right side of your
screen. The most current journal entries appear in the middle of your screen.
Check back frequently for updates particularly when stocks are moving to
overbought or oversold levels or in volatile markets. Your questions and
postings do not automatically appear, so don't bother posting the same
question multiple times. I personally go through to moderate and respond
to every question.
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The Great American
Spirit |
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It's been a horrific weak for residents
of Louisiana, and the media is providing a frenzy of sensational coverage.
Hurricane Katrina blew through New Orleans. The city was already below
sea level. Now it is below water and being evacuated.
In what would otherwise be a slow
news time, especially for the financial media, the TV networks have shifted
into high gear. Our TV screens are inundated with images of looting, destruction,
desperate people, and significant damage. The giant media machine is doing
it's best to come up with the most shocking images possible in the unspoken
ratings competition.
Mother nature has delivered the poor
citizens of New Orleans a crushing blow. In the coming weeks and months
we will all be reminded why America is the greatest country in the world.
We will witness the great American Spirit in action. The country that was
founded by a united group of rebels fighting an oppressive regime, and
for the past 200 years plus has opened its borders to anyone seeking a
better life, will have the opportunity to once again to show what a group
of determined citizens can achieve in the face of crisis. If you have enjoyed
the benefits of living here, now is the time to step up and help those
less fortunate- Help those poor people from whom Mother Nature has taken
everything.
Please join me in giving money, and
give generously. There are a number of organizations involved in relief
efforts. Personally, I have chosen to give to the ever present Red Cross.
American Red Cross
www.redcross.org
800-HELP NOW (435-7669) English,
800-257-7575 Spanish
According to the Red Cross's web
site, 230,273 individuals have donated $33.2 million so far, and money
is pouring in by the minute. Please join both Americans and generous people
from other nations in lending a helping hand. In the face of this horrific
tragedy, America will step up and show its courage and determination.
As of this morning, the updated estimate
for the cost of rebuilding is going to be $100 billion.
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Gas
Prices Rocket at the Pump: Media Blitz Causes Panic |
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About every 1/2 hour CNBC does a
short segment on gas prices all over the country. Hurricane Katrina has
taken 9 refineries and 3 major pipelines offline. Those refineries and
pipelines provide gasoline primarily for the east coast.
Supply disruptions have caused a
panic spike in the price of oil, and delivery problems have resulted in
price spikes and shortages in a few isolated areas of the US.
The media is having a field day finding
high gas prices in certain areas and bringing them to everyone's attention.
This is causing a rising level of fear and panic. Anecdotal reports of
fist fights at gas stations and $5 per gallon gasoline has people filling
up gas cans and lawnmowers in panic mode.
Hurricane Katrina has been the football
equivalent of piling on for oil prices. The last thing we needed at this
point in the energy price cycle was a rare Category 4 Hurricane attacking
one of our most vital energy centers. Nevertheless, this is what has happened.
The month of September will prove
troublesome for the oil market, but as pipelines and refineries come back
on line the price of oil should recede moderately from the current panic
levels, and order will return. Prices will come down.
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Hurricane
Katrina and the Market |
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If it's not energy or building materials,
it's not trading very well. The normally anemic volume Labor Day week has
been far worse than normal. Microcaps are dropping on minimal volume, creating
exciting entry levels and easy money plays.
One potential benefit for the market-
the FED might stop raising interest rates. The futures are now pricing
in two more 1/4 point interest rate hikes, and none beyond.
Another benefit: the rebuilding effort
will put a big charge into the economy's performance in 2006.
This week's sensational news reporting
is flooded with images of destruction, high oil prices, gas lines, panic,
and human misery. Next week these images will be replaced with reports
of heroic rescue efforts, stabilizing oil prices, and massive relief contributions
from America's great companies.
September could be a dicey month
for stocks, but we are setting up for another spectacular fourth quarter.
The market is selling off ahead of October. The price of oil is doing the
FED's job by slowing the economy. The economic activity for rebuilding
New Orleans will start to factor in later this month.
Oversold microcap stocks will be
easy money in the 4th quarter. Next Tuesday I will publish my first idea
for an easy profit as the market returns to normal.
Until then, enjoy your holiday weekend
and please give generously to the relief effort. The best investment you
can make today is a donation to the relief effort in New Orleans. Give
generously to the Red Cross or the charity relief organization of your
choice. Next week we'll look at some easy money makers as it will take
little volume to move them up.
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