Dark Clouds Over GE.

General Electric, the iconic industrial conglomerate, posted weaker-than-expected earnings for the first quarter and lowered its profit forecast for 2008. The share plunged dragging down the Dow into three-digit losses.

According to The Wall Street Journal:

-Net income fell 5.8% from a year ago to $4.3 billion, or $0.43 per share; analysts were looking for $0.51 per share.

-Revenue grew 7.8% from last year to $42.3 billion, lower than analyst estimates of $43.7 billion.

-The company lowered its full-year earnings outlook to between $2.20 and $2.30 per share, down from previous a estimate of $2.42.

-GE saw strong growth in its global infrastructure business; most of the profit shortfall was attributed to losses in its financial services division.

GE's CEO, Jeff Immelt, said: "We knew the first quarter was going to be challenging, but the extraordinary disruption in the capital markets in March affected our ability to complete asset sales and resulted in higher mark-to-market losses and impairments."

Despite garnering more and more of its income from financial services, GE is still seen as a barometer for global growth. Analysts will be hanging on Immelt's every word on this morning's conference call, listening for clues about the state of the world economy.

After aluminum maker Alcoa posted lower earnings on weak demand from industrial customers, that global economic picture is much bleaker. Like Alcoa, strength in overseas markets was overshadowed by weakness in the U.S. The earnings miss and market reaction thereafter -- which is more important than the news itself -- indicates that analysts are overly optimistic about a recovery in corporate profits.

Losses in the financial sector and slow growth at home will continue to be drag on bottom lines. Unless analysts adjust estimates accordingly, it's going to be a very long earnings season. The continued decay in the financials are making this look more and more like a pre-cursor to "crash 2.0" !

No Pain, No Gain.

I remember why I wanted to be a trader. I figured that the easiest way to make money was to stand near the cash register. Of course, as I discovered through my fifteen-years career, there's a reason why consistent producers get paid the big bucks. Flashy bets and big swings sometimes connect but, in the end, a disciplined approach pays the bills.

I've tripped plenty through the years, the types of missteps that almost cost me my livelihood. But I persevered, climbed the ladder and morphed those mistakes into valuable lessons.

My approach wasn't always constant but, in the end, certain rules allowed me to stay in the game.

Respect the price actions but never defer to it.

The action is a valuable tool when trading but if you defer to the flickering ticks, markets would be "better" up and "worse" down—and that's a losing proposition.

Discipline trumps conviction.

No matter how strongly you feel on a given position, you must defer to the principles of discipline when trading. Always attempt to define your risk and never believe that you're smarter than the market.

Opportunities are made up easier than losses.

It's not necessary to play every day, it's only necessary to have a high winning percentage on the trades you choose to make. Sometimes the ability not to trade is as important as trading ability.

Emotion is the enemy when trading.

Emotional decisions always have a way of coming back to haunt you. If you're personally attached to a position, your decision making process will be flawed. Always take a deep breath before risking your hard earned money.

Zig when others Zag.

Sell hope, buy despair and take the other side of emotional disconnects (in the context of controlled risk). If you can't find the sheep in the herd, chances are that you're one!

Adapt your style to the market.

At various junctures, different investment approaches are warranted and applying the right methodology is half the battle. Identify your time horizon and employ a risk profile that allows the market to work for you.

Maximize your reward relative to your risk.

If you're patient and pick your spots, edges will emerge that provide an advantageous risk/reward. Proactive patience is a virtue.

Perception is reality in the marketplace.

Identifying the prevalent psychology is a necessary process when trading. It's not "what is," it's what's perceived to be that dictates supply and demand. So stop reading those well-organised "intels". Stick to price actions.

When unsure, trade "in between."

Your risk profile should always be an extension of your thought process. If you're unsure, trade smaller--or paper trade--until you get back into "the zone".

Don't let your bad trades turn into investments.

Rationalization has no place in trading. If you put a position on for a catalyst and it passes, take the risk off—win, lose or draw.

There are obviously many more rules but I've found these to be my common threads through the years. Each of you has a unique risk profile and time horizon, so some of these commandments may not apply.

As always, I share these thoughts with hopes that they add value to your process. Find a style that works for you and always allow for a margin of error.

No approach is failsafe and any trader worth his or her salt has endured periods of pain.Good traders know how to make money but great traders know how to take a loss. For if there wasn't risk in this profession, it would be called "winning" rather than "trading" verrrrd...! "Jarr-Dole!" (Ipohites' lingo.)

Badawi : We Will Produce More Rice.

Inflation concerns continue to mount. You can feel the civil unrest percolating and it looks as if full blown strikes and riots will become a norm.

Countries, such as, Mexico, Russia, South Africa and Yemen are all experiencing unrest as the very staples of life have become suddenly unaffordable. Food prices in South Africa are now up 70% from a year ago. At the same time the rand is down 15%. And with the recent power outages, it looks as if electricity costs are set to explode, adding fuel to the fire. Some say electricity prices could increase as much as 50-60% in 2008-09. -So, watch your TENAGA bills! This would be a double whammy and will be sure to maintain inflation in the double figures.

Soaring export taxes on the crops in Argentina recently have lead to rebellious strikes by the farmers. As a consequence, produce and beef are missing from the shelves in the grocery store. Empty shelves make people angry. And Soybean futures hit the roof in CBOT.

This upshot of rising food prices is already being felt in China. Rice is a staple in China and most of Asia and prices have more than doubled. In fact, a quick glance at the Chicago Board of Trade Rough Rice chart rice prices making new high as I write. Just in a week, rice prices are up another 11.5%, as Vietnam has banned export of rice on domestic shortages.

Civil unrest is possible as people in China are eating more rice than is being produced. To counter the effects of higher inflation the government continues to raise the cost of borrowing and imposing price controls on food. Folks in Mexico are in an uproar as the price of corn tortillas goes up. Corn prices are tickling the $6 per bushel level. And the chart is wildly bullish.

We've had a series of higher lows on the monthly chart since August 2007. At the same time, world stocks continue to dwindle. The stocks-to-usage ratio is currently at 13.5%, the lowest since 1973-74. That’s considered a tight market. Remember too, the crop is not even in the ground. A hot, dry summer could be devastating.

Meanwhile, Singapore just registered a 25 year high in inflation. Saudi Arabia is now at 16 year highs and Switzerland is not far behind, at 14 year highs....and Malaysia still in its lala-bolehland! Since Bank Negara is led by the nose, don't expect any surprises coming from cosmetically tame inflation data. And I guess Zeti's measures to counter "significant downturn" is now useless after March 8, 2008!

While commodity prices may consolidate and trade in big ranges for the next few months, the big picture still looks supportive for natural resource plays.

Bernie, The Commodity Dragon Slayer.

As most of you know, commodities went through an overdue correction last week. This shouldn’t have been a big deal.

Here’s the problem. As a result of that correction, some folks are making assumptions that don’t make sense. In fact, some of these assumptions are downright dangerous.

For example, the media and others are giving Federal Reserve Chairman Bernanke credit for “putting an end to commodity inflation” with his brilliant strategies. On March 21st, Bloomberg stated that “the biggest commodity collapse in at least five decades may signal Federal reserve Chairman Ben Bernanke has revived confidence in financial firms.” ..That's a whole load of crap ! This is faulty thinking. To imagine that Bernanke deserves credit as "commodity dragon slayer", even as he lowers interest rates and continues to stoke inflation, is mind-boggling.

So what exactly caused the vicious sell-off in commodities? When all was said and done, by last Thursday’s close, gold had its biggest weekly loss since August 1990. Oil had plunged almost $10 over three days. The corn market was off by 9%.

There were a number of things that contributed to the sell-off. First, the commodity markets had gotten ahead of themselves, and were in a classic “overbought” situation. Second, derivative trading losses and shrinking credit lines forced hedge funds to liquidate their winning trades -- many of those trades in commodities -- in order to free up capital. There was also fear the Commodity Futures Trading Commission, or CFTC, was on the verge of raising margin requirements for commodity positions. This happened at the end of the last big commodity bull market, when the Hunt brothers were forced to liquidate their silver positions -it wasn’t pretty sight. Furthermore, the dollar was oversold and ready for "a bounce". All these factors combined to create a swift break, which has now taken many commodities back to more attractive buying levels.

To say the commodity bull market is over is just, well, a bunch of bull. Let’s take a look at the facts. Well, the big picture has not changed. We still have central banks pumping money like mad into the global financial system. This is long-term inflationary. Bazoooka Ben is not going away. Nor is his one-trick strategy to save the world - running a printing press. This is long-term bullish for gold and silver.

When discussing the general supply-demand imbalance for commodities, I am referring to a very, very big trend. In fact, we now have two “megatrends” colliding. Thirty years of restrained and neglected natural resource supply are coming face-to-face with three billion people intent on discovering capitalism. Irresistible force meets immovable object? We haven’t seen anything yet!

The commodity bull market is alive and well. Last week’s correction let some much needed air out of the balloon, that’s all. It would be healthy at this point to see some consolidation, but we might not get it. Already it looks like commodities could be off to the races once again.

Trader's Rhapsody.

Is this the real trend..?
Is this just a fantasy..?
Caught in a credit crunch..
No escape from volatility..
Open to risk..
Looking for probabilities..
I'm just a trader, I need no buy and hold..
Because it's easy come.., easy go..
Little high.., little low..
Anyway the wind blows doesn't really matter to me, to me........

When studying the S&P going back to its inception in the 1940’s, one can see that many cycle bottoms have occurred in March.

This has been particularly true since 2000. March 2000 was the peak of the bull market. March 2001 was a turning point that saw the S&P rally from 1080 to 1315. March 2002 was a peak prior to a waterfall decline into July 2002. March 2003 was the beginning of a 5-year-plus advance, the first leg of which ended prior to a consolidation in March 2004. March 2007 marked the bottom of a quick, sharp, 100-point S&P multi-week shakeout prior to the beginning of the blowoff into July 2007.

W.D. Gann placed a lot of emphasis on the need to find the zero point, or the beginning point, in measuring time and price. In Gann theory, the beginning of spring and the Spring Equinox on March 21 mark an important inflection point, that's "zero degree". It appears that last week marked an important test of the January low.

At the January lows, I stated that my cycle work suggested that January would be the low for the year. Although those intra-day lows were violated this past Monday, the S&P has not scored a closing low below the January intra-day lows. Consequently, this past week’s large range outside week up with a close at / near the highs of the week suggests a successful test has occurred.

W.D. Gann also liked to say that the tendency of the market is to “put in some time on the side.” In other words, after cyclical tops or bottoms it is common to see the market consolidate in a period of accumulation or distribution before trending in earnest.

Last week’s large range outside up week in the S&P is in fact the first outside up reversal week since the week ending November 30th, 2007. In tracing out three higher weekly highs, that upside reversal week in November turned the three week chart back up. That defined a high on the week ending December 14, 2007. That high at 1523 looks like a right shoulder of the bull market. The low of that week at 1467 should be serious resistance. It is interesting that the 200 DMA is in that vicinity, currently at 1456.

On Monday, the strong surge may be a place to look to lock in some profits as the market is still subject to another shakeout or liquidation; especially if many hedge funds are going out of business before quarter end. However, I would warn against becoming too aggressive on the short side: with many poised to buy pullbacks, if the market doesn’t come in we could see a runaway upside move.

So I'm left with the proverbial $64,000 question of “Was last week 'A' bottom or 'The' bottom for financials?” If this was the bottom, other than “events” like Long Term Capital Management, it would be the fastest bottom to occur in modern economic history. Heck, the last time I checked, economists hadn’t even agreed that we are in a recession. And now, we're declaring “the bottom”?!

To be clear, although I don't believe a bottom has been reached, I neither wish for nor foresee a systemic crisis. In fact, I give the Federal Reserve and U.S. Treasury high marks for their crisis management. And importantly, I believe their aggressive actions will avert the kind of global failure that some might expect.

At the same time, though, I believe there are significant further declines ahead as the weakest firms fail, and the stronger are buttressed through coordinated government intervention and even nationalization. But to those who believe this can occur without further significant common shareholder dilution, I would offer modern banking history as caution.

So, it this a bottom? ..Yes. THE bottom? ..Not close.

Look... Mum, Dad! Look, Wat We Got Back! - Our Way Of Life !

Petshop Boys'- Go West. MP3:http://www.komura.com/urawa/music/Go_West.mp3

Bulls see red in KLCI..Deeper losses expected !

The KLCI plunged last night, as persistent foreign selling activities outweighed any local buying power. For once, the “last-minute Calvary” did not emerge to “falsely prop-up” just a handful of KLCI counters for the previous few days. The market breadth was negative.

The support zone at 1,338 and 1,354 will be much weaker, whilst some very heavy liquidation at the resistance areas of 1,368 and 1,390 will cap any KLCI’s rebound. The March 2008 KLCI Future contract is now dealing at a larger 11.27-points discount against the KLCI cash index.

Investors will dispose on rallies. The KLCI made a key all-time high at 1,524.69 (a Bearish Engulfing Monthly Candlestick pattern) on 14 January 2008 and is the final Wave 5 high of a Flat-pattern that rose from the 547.72 low (April 2001). As a result, selling on rallies will be the best strategy for investors.

Due to the DJIA’s plunge of 314-points last night, the KLCI will remainvery weak. Most sensible fund-managers will trim their portfolios ahead of any imminent “pre/post-election2008” downturn. I expect the market to plunge below the key 1,338-1,340 neckline supportof the obvious “Head & Shoulder” pattern. A sustained break below this level (whether on a pre or post-election basis) would open up great and vast possibilities (85% chance) of my preferred downside target areas of 1,251, 1,155 and 1,137. It is time to move to cash and remain ultra-cautious. Looks like the outcome of the election is less than desirable! - Makkal Sakhti ! ("power to the rakyat!")