• Light volume rally
• Up unless stops are taken out
• Support from international growth, bonds, Fed

Stocks have risen, as suggested in our last postings, but it continues to be on light volume. Heavy institutional buying is still absent. At some point in the not too distant future, the volume needs to pick up or this rally becomes a selling opportunity.

All three stock indexes that we watch have moved back into weekly up trends. Unless they take out their respective stops, we have to give this market the benefit of the doubt and look for higher prices. Stops for the cash S&P 500, Nasdaq 100, and Dow Jones Industrial Average are 1,431,1960, and 13,033 respectively.

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Posted by Michael Chapman at 12:00 PM UTC

Below-market executive loans are loans a nonpublicly held company makes available to its executives as a supplement to their regular compensation. Typically, such loans are interest free or made at a favorable interest rate. In other words, these loans are provided at a rate of interest below the applicable federal rate (AFR), set monthly by the IRS. (The AFR is based on the average yield on U.S. Treasury obligations.)

Caution: The Sarbanes-Oxley Act of 2002 (the Corporate Responsibility Act) was signed into law on July 30, 2002. This law prohibits publicly traded companies from making personal loans, directly or indirectly, to executive officers and directors. Civil and criminal penalties will be imposed for making such loans. Loans to executives of nonpublic companies are not prohibited by the act.

Background

At one time, loans with below-market interest rates were a popular executive benefit. In 1984, however, Congress amended the tax laws to clarify that where a loan’s interest is below the market rate (predetermined by the IRS monthly), interest is imputed under a series of rules. If an executive loan fails to provide for adequate interest, the loan is recharacterized as a two-step transaction in which the company is deemed to transfer additional compensation (or dividends) to the executive equaling the foregone loan interest for the period the loan is outstanding. The executive, in turn, is deemed to pay the foregone interest to the company.
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Posted by Michael Chapman at 12:00 PM UTC