Political And Physical Hurricanes Arrive - By Joe Duarte

Hurricane Bill and Tropical Storm Claudette signaled the start of a late blooming hurricane season, coinciding with a significant change in the political weather from the White House. Thus as the scales reach critical mass toward the negative, investors should take the opportunity to reassess the landscape.

Facing daily falls in the polls, and rising opposition at often loud town hall meetings, the White House has softened its stance on health care "reform," backing away from a government run option as part of the overall strategy. To be sure, there is still a significant amount of unknown left in the system.

The key is what will the repercussions be, for the markets, as well as for the political process. The White House and Congress on both sides of the aisle still don't get the health care vibe, although the Republicans will try to use it as a rallying cry to win the Congerssional election in 2010. But, they still don't get it.

And because neither side gets it, because they don't have any problems in getting top notch care due to their status and position, they will continue to struggle with the reality of the situation. That means that the issue will not go away.

And the left won't let it go. They feel as if they had the battle won, only to see it slip away once again. And this time it was worse than when Bill and Hillary Clinton threw in the towel.

What it means is that the political climate is about to get meaner. If the left can't win on health care, then they'll try to squeeze everything that they can out of their other firebrand issues, such as Wall Street, business regulation, and punishing of small businesses.

And that's why the markets are starting to wobble. The politics in Washington just went from gridlock to something worse, a real war over the ideological direction of the United States.

This report is not about ideology, though. It's about looking at where we are and where things could go, for the markets and for the every day people who read it, business owners, traders, and a fairly good representation of physicians.

Times are about to get harder. As the rhetoric and the meanness rise in Washington, so will it get harder to do business, and to make ends meet.

The system is already taxed with rising deficits, an uncertain war in Afghanistan, rising tensions in South America, and an increasingly weak president whose tone deaf administration seems to have forgotten that governing should come before agenda.

And now there is the potential for natural disasters, such as tropical storms and hurricanes to add to the potential misery of events.

Conclusion

After a huge rally that took the S & P 500 up 50%, a confluence of events looks to be taking its toll on the markets.

Rising bank failures, political uncertainty, rising tensions in South America, the war in Afghanistan, a worsening situation in Iraq, and an uncertain recovery in the global economy are starting to take their toll on traders.

That means that anyone who's made any money is about to take whatever they have left in profits and take a vacation during the dog days of August.

There are certainly some bargains available at some choice destinations due to the global economic slow down.

For us working folks, this is a good time to take profits, or let the market take us out by hitting our stops. Selling short is an option, but not necessarily a good one just yet, as the volatility of a market transition can make for difficutl trading.

Our strategies have worked well during this cycle. We have kept our holdings concentrated in areas that have delivered steady gains and have been slowly been decreasing our exposure of late. Cash is a good place to be for the next few days to weeks.

Prepare for what comes next in the markets. Read Dr. Duarte's All NEW Books "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for All Seasons. Also Available As Kindle Books.