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Why they won’t raise: Are you kidding? With the economy tripping and stumbling along, especially considering that interest rates are still exceptionally low, anything further “letting off the gas” (the brakes haven’t been touched in many years) may cause it to go into a tailspin.

Why they won’t lower: The recent weakly-positive reports show the economy still tripping and stumbling along, so there’s not enough weakness to “react to” with a cut, thank goodness. And they certainly shouldn’t lower in reaction to the tanking housing market, any more than they raised in reaction to the overheating housing market in the past. The best thing we can do for the housing market (or the overall market) is to let it work itself out. We had our 10%+ yearly gains, now it’s time for the other side of the coin. Remember “reversion to the mean”?

A change in the Fed Funds Rate in either direction would be bad for the stock market, on the one hand because, well, rates would be going up. On the other because if they lower we’ll hear “The Fed is showing us that they think the economy is too weak, which will be bad for corporate profits, etc, etc.”

And of course, don’t forget the ever-present dollar. The Fed Governors, despite what they say for the sound bites, are wary about weakening it any more through their actions. Their best hope, their only hope at this point, is for some magical fire to light under our economic growth so they can “come to the rescue” and start raising to try to contain that growth. Mmm, good for dollar.

And they can hope for spending restraint. Or for pigs to fly. Let’s see, we have the tax- and- spend democrats… and now the neo-Republicans with their cut- taxes- and- spend- even- more gluttony. No spending limits in sight. So, we’re left with hoping for decent economic growth.

Here’s to hoping. Cheers.

• Supper Tonight: Seafood, wine and more wine courtesy of major drug company who makes most of their money from Medicare who gets their money from your taxes. Thanks, it was good!

Ameritrade has launched their StrategyDesk product along with their Command Center 2.0 interface. The new Command Center interface doesn’t appear to offer any new functionality, but just pulls together the previous features in a usable fashion, unlike the previous Command Center, which was worthless.

The StrategyDesk application is the exciting one. It appears that Ameritrade users now have access to a product that’s competitive with some of the direct brokers’ screening/backtesting products.

I’m not familiar with TradeStation syntax (or other similar products, for that matter), but this looks to me like Just Another Freakin’ Language To Learn. After all the different function and macro syntax in all the different spreadsheets over the last 20+ years, plus a few early stock-screening programs on the web which had their own syntax, plus Basic and Pascal back in the early 80s, plus HTML, CSS and PHP… I figure, what’s one more set of jargon in an already hopelessly cluttered brain? Just another pain in the ass, but very do-able.

Anyway, this thing appears to be able to do the important stuff, like if I want it to show me all stocks which have broken their lower Bollinger Band from below on daily bars, are within 1% of the 5-EMA on 15-minute bars, and have formed a doji on 5 minute bars with the last 5-minute bar’s volume being higher than the previous 10 bars. And to backtest this strategy over the period from November thru December of last year. Or whatever.

If you are an Ameritrade client, or are just curious as to what this thing looks like under the hood, here are links to the Formula and Syntax Guide and the User Manual for StrategyDesk 1.0. Being that it’s v1.0, I’m sure we’ll be seeing bug fixes and upgrades as more folks begin to use it.

Cheers.

Some things make such a nice combo.

As I’ve said before, I started dummyspots.com in order to share some of my personal experience with the pitfalls of trading. (Not how to get rich, else I’d be writing this from a beach somewhere, but maybe to help get to the “treading water” phase with less bloodletting.)

As the site grew and I met more and more new folks, some of the most wonderfully serendipitous events in my life began to occur. For one, as I read the ideas and opinions of other traders, my knowledge and, more importantly, my perspective on trading began changing and growing.

And best of all, I’ve made some great new friends. As we get into the rut of “living our lives” (you single college guys are excused now, this won’t make sense), paying the bills, raising the kids, working the job…. eat, work, sleep, repeat… you know the drill– it’s easy to get to a point where your circle of friends doesn’t change significantly for years and years. Only thing that changes is you need a bigger waist size and a shorter inseam on your pants. Well, I think through the trading blog community many of us have expanded our circle significantly.

As I write, I’m sipping a glass of some of the nicest wine I’ve drank (drunk? ). I’m darned-near illiterate when it comes to wines; I’m just one of those simple people who “knows what I like when I taste it.” According to Google, this stuff won the International Wine and Spirit Competition trophy for the best blended red wine. It also scored a “94″ from Wine Enthusiast and was named “One of the top 100 wines of 2006.” It’s supposed to have a a bouquet reminiscent of spicy tobacco leaf and cigar boxes with firm tannins and a youthful palate. I don’t know about the other stuff, but I do note a distinct whiff of tobacco as I sip, and it’s a good thing- makes you think of being over in a private corner of a warm, cozy, dimly-lit restaurant, enjoying some fine food with a gorgeous guest… oh, sorry… drifted off there for a minute.

So to my good friend Lloyd, or Mr. Flatwallet as he’s better known, thanks so much for the wonderful birthday present! I’m enjoying it immensely, to the point where I’m afraid the bottle may not last through the evening. Hope to meet you and your sweet wife one day and thank ya’ll in person.

Oh, and kick some ass with that trading!

Totally off-topic, but my advertisers won’t mind ;-). If you’re a fan of any of the Discovery Channel’s productions, now may be the time to stock up. They are currently having a sale on DVDs for as low as $4.99. I bought a pile of ‘em last night… I bought about 20 DVDs. I got the “America’s Road Trips” series (6 DVDs) for $13.49! Also they’ve got lots of Mythbusters episodes and collections- I owe that show for inspiring the only interest my daughters have ever expressed in physics, and it opens the door for lots of interaction with them about “how’d they do that” kinds of conversations.

Cheers.

As pointed out in this post on Google Blogoscoped, some folks think they found a built-in “bias” in Google due to the fact that its algorithm, when queried with phrases such as “African ingenuity,” “African Pie,” “African Idol,” etc would return spell-checking suggestions such as Did you mean:American Ingenuity.

That was, of course, not bias, it was mathematical accuracy. Within the context of the phrase, the word “American” appears thousands of times more often than any other word spelled “A??rican.”

Accuracy notwithstanding, Google almost immediately has responded to the PC pressure, and has modified its results so this particular situation doesn’t occur.

Google has opened quite a can of worms by selectively killing their algorithm’s accuracy in order to cater to the shrill voices of those who would tear their fingernails off digging this deep to find something to be “offended” by.

As I noted in the comments to that post, at this time, if you search for “South America Johannesburg,” Google suggests “Did you mean: South Africa Johannesburg.” If Google wishes to maintain any sort of consistency, they should also remove this suggestion, as by their own actions of accepting the prior example as “biased,” they have defined this result as “biased” as well. And as you can see, people could find all kinds of “examples” of such “bias” if they were inclined to waste that much time, and each such “example” would actually just be proof that Google is great at returning the most accurate results.

“South America Johannesburg” does return results (31 vs. over half a million for the same phrase with “Africa,” but the numbers don’t matter, right?), and all three words are spelled correctly. It’s just in the context of the phrase that the word “America” obviously is not the expected or common term. But, hey, who are Google to decide what the searcher is looking for? Maybe someone wants to know if there’s a city named Johannesburg in South America.

So, Google suggestions (and who knows, maybe search results, too) are being made selectively less accurate. Certainly not a big red fundamental flag to do anything with the stock immediately, but a small window of insight into the fact that the people behind Google are subject to being blown about by the winds (or maybe even the breezes) of Political Correctness.

Back in my January 11 post, I noted that we needed to redraw our longer-term trendline on the Qs due to their having hit a “higher high.” Well the S&P did the same thing last week, so we’re a bit overdue in redrawing that one. Here’s the previous trendline with the December break:

The previous high was 1431.81, set on both 12/18 and 12/19. A new high of 1433.93 was hit on 1/16, and another one (and the current “highest high”) on 1/17 at 1435.27. This requires us to take a few steps back and redraw the trendline so that it goes through the most recent “minor low before the highest high”:

As you can see, this resets the S&P to “still in an uptrend” status, just like the NDX. What to do about it? Well, for one, it cancels our plans to get short on a retrace- and- failure. For that plan, we now need to wait for a break of the current, correct trendline. In the meantime, we may be looking for a spot to get long if a setup, um, sets up.

Now for the quiz. Here are charts of some famous Nasdaq stocks from the last few days. Can you name ‘em?

No, no. Don’t bother naming ‘em. What I’m actually trying to show here is how similar the first three are, and how the fourth has formed a different pattern. The first three are AAPL, GOOG, and QQQQ. That fourth one is CSCO, and notice how it’s showing some leg.

Here’s the complete chart:

If the top of that hammer were a bit lower (where it left the entire tail hanging down checking how deep the water is), it’d be classic. Its being “in the pattern” makes it a somewhat weaker signal, but still might be good for a long daytrade or swing trade entry tomorrow. And lest we forget, as goes Cisco, often goes the Nasdaq. Let’s watch…

Although CSCO, a major component of the Qs, has broken its longer-term trendline, the Qs themselves still remain solidly above theirs.

The longer-term short setup here is to wait for a break of that trendline and a coincident failure of the recent major support level just above 43.00. The longer-term long setup would be to sit tight if you’re long, or enter on a resumption of the primary (up) trend if you’re not. (Although I can’t see a trend-follower being long here- they would have been stopped out in late December and would be waiting to re-enter. If lots of them are, we’ll see a big volume surge on the next rally.)

And yes, I do find it agonizing just sitting and waiting. Perhaps I need a more comfortable rocking chair…

Very, very interesting negative action in the leaders today. I’m looking at longer-term swings now, so I won’t trade a break of these bars like I “used to woulda,” but the short-sale dawg is lickin’ his chops. Let’s look.

First, my old friend Apple:

Bearish Engulfing, baby. If you’re looking to get short, watch for the break. If you’re long, watch out for the break.

Next, Big Daddy Cisco:

This wide-range candle on high volume extends the current downward thrust significantly. Any little 2 to 3-day pullback on decreasing volume will be a shorting opportunity. Only a huge reversal like that one back at the end of November would negate this setup. This is also a break of the longer-term (6-month) trendline, and a higher high (above 29.00) would be required to re-establish the uptrend for longer-term traders.

Now on to Intel:

This gap breakdown on huge volume is very significant. It establishes the 11/17/06 top of 22.50 as a longer-term first top of a double-top, and the 1/16/07 high of 22.30 as the second top. If price continues downward towards the “middle of the M” bottom of 20.03 on 12/26, a short setup is in the making. Where to get short is a matter of preference. Less aggressive would be to wait for a break of 20. More aggressive would be a break of the 61.8% Fib level the top (22.50) to the bottom (20.03). This is right at 21.00, so using that and a break of today’s low of 20.78 as confirmation is a possibility.

Oh, and watched After The Sunset last night. Poor writing, absolutely terrible directing (or maybe was the editing, I dunno). But it had one redeeming virtue that made it well worth renting. Yes, that would be The Goddess Known as Salma.