Wednesday, February 18, 2009

End of Day 2/18

All I can do is laugh. I made the following prediction at 11:26 this morning and posted it in the comments section, “Okay... Odds of a negative DOW close? I'm saying it happens... until the last minute, then after the bell rings the number suddenly adjusts and it closes up 2 points! LOL”

And when the bell rang it was negative and adjusted to plus 3 points! Ha, ha. You can say that the market has free will all you want, but the truth is that all the little manipulations add up over time. The same as all the stimulus and economic distortions add up over time. Eventually they correct, and since they have been so large and pervasive over such a long time period, the correction will be and is, in fact, huge. And, I sincerely hope that it will be game changing in regards to morals and ethics - right and wrong.

So despite the fact that the Transports finished down another 1.4%, the Industrials were finagled into a 3 point positive close to avoid the DOW Theory sell signal for yet another day. Ah, the games people play… you can call that an epic bear/ bull battle if you want, I call it holding sell orders until after the close as yet again the selling continued immediately afterwards, in fact 60 points worth within the next two 5 minute bars.

And not to harp on it, but it really illustrates what’s wrong with our entire screwed up financial system. Nothing’s real… it’s all fun and games run by insiders who think they are fooling someone. Our entire financial system is built upon such foolishness. I’m sure the market makers think that their tinkering is no big deal. I’d just like to staple this poster onto their foreheads:



At any rate, the S&P finished down .1%, the NDX finished up .15%, and the RUT was down 1.3%. The XLF finished on the exact point it started.

Basically a nothing, sideways day killing time and working off oversold conditions. But it wasn’t a nothing day economically. Forget about home construction or all the other bull… the important news is that we are adding another $275 billion to our nation’s guarantees and who knows how much to our debts. Combined with the $787 signed into law yesterday, that’s $1.062 TRILLION in two days ($3,481 per person, or $14,000 for my family of four). And we haven’t even gotten the bank bailout numbers yet.

And did the markets jump for joy? NO? Why not? They are definitely sending a message, unfortunately the bankers are the ones pulling the strings.

Internally the market was WEAK. On a nothing price day, advancing issues and volume both trailed decliners by 2 to 1. The number of new 52 week lows is expanding substantially with 324 issues on the NYSE reaching new lows.

Today’s down, up, down, sideways action may have produced a small movement on the McClelland Oscillator, I’ll get that tonight and let you know in the morning. If so, expect a large price movement soon.

As far as charts go, the most important thing I can show you tonight is the chart of the dollar. It moved up again today, ignoring yesterday’s outside hammer. It pinned overhead resistance and is very near breaking out. What’s more important than that is that gold continued to rally strongly, up 1.5% into the face of a rising dollar! That’s talking to you, do know what it’s saying? I have looked at the historical charts of gold and it does not usually perform well in strongly down equity markets when the dollar is rallying. This is different, why? Is it signaling inflation, and if so, why aren’t the other commodities up just as strongly? We added over a trillion dollars in debt and/or guarantees in the past two days:



You know, when I am making important decisions while flying with people’s lives on the line, I usually stop to ask myself, “What’s the worst thing that can happen if______?” President Obama is the Captain of this ship, he better start thinking instead of just talking.

Don’t get me wrong… I’m not saying a strong dollar is bad. What I’m saying is that the only reason it’s strong is because the rest of the globe is imploding and dollars are needed for deleveraging and safety. But to have gold going up at the same time is a tell... underneath that “safety” is fear.

I’m only going to show one daily chart, that of the DOW. All the charts are the same, they produced spinners or just down days and some are beneath the bottom Bollinger still bending it downwards. Yes, we’re reaching oversold on the daily with the DOW and S&P, but the NDX still has plenty of room. Yes, dojis like that can be a bottom indicator, but these do not look that way to me, and we have yet to see any type of capitulation:



Inside the DOW on the 10 minute chart, you can see that we are at the mid-point of that green down channel, we have a little bit of positive RSI divergence, and the stochastic indicators have room now in either direction, but the 60 minute slow is just coming up out of oversold now. It can turn right back around and stay oversold, so not a lot of guidance there:



On a 30 minute SPX chart, you can see the red lines of a potential ending diagonal… prices did manage to stay inside it today at the close. Note that we had a second close in a row right on the 789 pivot point. 768 is the next lower pivot:



The only other thing I have for you is that the Put/Call ratio has risen to a point were bottoms potentially occur. Below is a one year chart, if you look at prior peaks above 1.2, you will see bottoms that correspond. We’re not quite there, but getting close:



As Americans we like to believe that we have “free will.” To some extent that is true, but we are very boxed in by society, by politics, by money… and our picture of the world is colored by people who are always trying to sell you something. In my case, I’m trying to sell you on the fact that our system is not working for the people. I don’t have anything to gain from that but the knowledge that my children might be left with a better system that’s capable of lasting into the indefinite future. I don’t believe the present systems will. Change is coming, I want to be able to affect some of that change and to ROB the bankers of their opportunity to grab the future and control the planet with their pervasive debt. It doesn’t have to be that way, our money system belongs to us, not to central bankers. Thomas Jefferson understood that well:
“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
- Thomas Jefferson, Letter to the Secretary of the Treasury, Albert Gallatin (1802)
Some dispute the context of this quote, but that’s not the point. The point is one of freedom and free will:

Rush – Freewill: