Sunday, March 22, 2009

Weekend Update 3/22

Since Friday was Quadruple Witching, it would be natural to play Donovan, “Season of the Witch…” but no, we’ve heard that plenty now and know how appropriate that is already. Steph wanted me to work in “Renegade” by Styx, and since I’m on a Styx kick lately, here it is. I think their lyrics are fitting in this environment (even though others don’t necessarily love ‘em – hey you can’t please everyone), it is EASY to work them in… How about Bernanke’s actions on Wednesday? Renegade! How about Geithner’s upcoming plan to use our money to make the bankers profit on their crap, AND to now give MIDDLE MEN even MORE of our money. That will help the math! RENEGADE!

Styx – Renegade:

And not despite, but BECAUSE of their renegade actions the DOW closed down 122 points, the SPX lost 2%, the NDX lost 1.4%, and the RUT led the decline (a sign) by losing 3.2%. The XLF lost 6%, IYR gave up a massive 7.5%, and the Trannies gave back 4.6% of their recent bounce.

Internals were decidedly negative with decliners outnumbering advancers 3 to 1, declining volume led by 79% on the NYSE. New highs rose to a still very low 14.

Much of the overbought pressure is now removed from the short term indicators. All the stochastic indicators are now oversold up to the 60 minute timeframe which makes a bounce or at least sideways action likely early in the week – or alternatively we could get into crash mode. It will be VERY interesting to see how the market reacts to Geithner’s plan. From what I see so far, it’s a net negative to the taxpayers, but will undoubtedly help the banks/bankers as all their actions to date have.

If we keep moving the debts from the banks and onto the taxpayers, we accomplish worse than nothing to our nation’s situation, and we net NO help to those who are in debt. This plan is just going to bring in the next lower level of pigmen to profit as middle men from the mess and from the taxpayer. Yes, bank stocks may rise from that, but then again, they may have MORE write downs as their toxic waste is removed – toxic waste removal fees.

And then there is Obama now talking up regulations to “make sure this doesn’t happen again!” Is that going to be good for the banks? Well of course! Who do you think will write the new rules? Bernanke wants MORE power and MORE control, and you can bet Congress will give it to him. Just remember that the “FED” is really a representative of the central bankers. They will do what is in THEIR best interests, not yours and not America’s.

And then there’s the G20 meeting in early April. That’s right around the corner. Who is it that meets? THE CENTRAL BANKERS. You can bet that YOUR interests will NOT be represented there.

Do you realize that our government has now provided more than $13 TRILLION in bank bailout money, loans, and guarantees on the back of American taxpayers since this crisis began?! Has any of the debt of the people gone away? NO?

Now I’m going to side with McHugh here to play devil’s advocate… Do you realize that had they simply printed $13 trillion and given it to the PEOPLE, then every family of four would have received $170,491!!!!!! That’s $42,622 for every man, woman, and child in the United States. Those people could have used that money to pay down their debts. That would have freed up the banks balance sheets, kept their derivatives in tact, and would have compensated the people who did not take on debt they couldn’t afford for the future taxes and erosion of their currency that is created. But what’s happening now is we get all the bad effects, but none of the good. That makes the decisions to date system ending which it would eventually do regardless because even if we were to do that as “the right thing” for the people, it would only prolong all the nonsense and would have to be done over again in the future. Thus, the collapse is probably the long term better way to go as it gives us a window to reinvent ourselves. Of course BEWARE of the reinvention, especially if it emanates from the central bankers!

Another outrageous point about what’s happened lately is that Hank Paulson (Renegade), former CEO of Goldman Sachs, turned former Treasury Secretary, arranged for the quick bailout of AIG right before he left which is now approaching $200 billion! We now know that much of the AIG bailout money went to Goldman in which Hank Paulson still has hundreds of millions invested! That is not only outrageous, it is criminal, FAR BEYOND the paying of bonuses to AIG employees. And this is just the latest of his criminal activities. Keep your eye on the debt ball and the real traitors/criminals, Hank Paulson is right up there on my most wanted list.

To the Charts…

Let’s start by looking inside the SPX at a 10 day, 10 minute chart. You can see that the advance finally ran out of steam on a double top in the 800 area. I have a set of fibs on what would be wave 5 up, and you can see that we have retraced 61.8% of that move, but only 23.6% of the entire run. I would expect a minimum of 38.6% or 750ish for a valid retrace. Note, however, the downsloping red lines… those are the wave 5 channel lines, making a 5th wave down still a possibility. A triangle is also still a possibility as is a simple ABC that takes us to a higher high, but likely after more of a retrace:

Zooming out to a one month daily we see a bearish candle with the daily stochastic rolling over about to issue a sell with my slow settings. Here you can better see the support areas on the way back down… pivots at 768, 734, 717, and 696. The next higher pivot is 789 – I could see a short term bounce up towards that pivot followed by more selling. Of course the oscillators haven’t been as helpful lately and I would contribute that to MARKET MANIPULATION. Again a reminder here that our bond market is no longer a free market at all, in any way shape or form. The only thing free about it is that you are free to sell your bonds to the taxpayers, and that’s what I would do:

The DOW daily is the same picture, but here you can see that Friday had rising volume on the selling and if you’ll notice, the selling volume Friday was more than any of the panic volume buying days. That’s a hint, although I note that volume was not as high on the index ETFs:

Let’s look at the Transports. Remember the gravestone doji I pointed out on Thursday? Should have shorted that puppy, a classic. And the selling here is also on rising and higher volume than the bounce days:

Here’s the NDX daily. The rising wedge now has prices well underneath. The NDX sold off hard, but could not break below the 50dma, although I note that the broader Nasdaq index was unable to hold above the 50 and closed below it. I wish I could see index volume, but I can’t. When I look at the futures the volume was lighter and also on the ETF, so there’s some discrepancy there with the DOW and Transports. I tend to believe index volume when it’s available, but don’t like when they don’t match:

Here’s the XLF daily. Note the plummet below the 50dma which couldn’t be held for more than a day. Lower volume on day two of the selling, the daily stochastic is rolling over hard and is about to issue a sell. The XLF has already retraced more than 38.2% of its bounce. MANIPULATION is all I can say about that rally. It started with one CEO talking operating profit on manipulated spreads, then the other CEO saw that worked and all began to talk as if they are a profitable enterprise. BULLSHIT. Now the whole index is influenced by the actions of the pigmen and politicians/Fed. Investing here, long or short is worse than gambling. In a casino you at least know the odds and the rules. Here you know neither:

When we zoom out farther and look at a 6 month weekly chart of the SPX (with my drawings turned off), I see a mixed picture. I see a weekly doji that looks like a potential top, but I also see what looks like an immanent buy signal and a close above the lower Bollinger after being beneath it, that is a buy signal. It could also be that we just needed the technical bounce to relieve pressure on the extreme oversold levels we were experiencing. A lot of people are looking for an extended leg up. It could happen after a little more retrace, but then it again, it may not. There are some GIANT shoes still to drop. Tax revenues are one, the lack of TIC flows is another… there is a LOT of risk out there still with a lot of people with their eye off the ball:

The DOW weekly candle looks an awful lot like a gravestone… it’s not quite thin enough, but it’s close. Like the one on top of the Transports daily, this one will need confirmation with next week’s bar beneath it. If we’re making an ABC, that may not happen, but if we’re starting wave 5 down it probably will or you’ll get a doji with a wave 4 triangle:

The Put/Call Ratio went out of the week at .89, pretty middle of the road for action of late:

Overall our markets are no longer free, the government under pigmen/corporate influence is taking over. The short term indicators say short term bounce or sideways early in the week, then we will probably get back to further correcting the upmove. After that we’ll have to see.

Huge risks are being taken with our money system and the very foundation of America. Bernanke’s actions are saying, “I’ll take any risk!”

Styx – Rockin the Paradise (and I’ll take any risk):

Okay, after this I’ll lay off the Styx for awhile!

So whatcha doin' tonight?
Have you heard that the world's gone crazy?
Young Americans listen when I say there's people puttin' us down
I know they're sayin' that we've gone lazy
To tell you the truth we've all seen better days

Don't need no fast buck lame duck profits for fun
Quick trick plans, take the money and run
We need long term, slow burn, getting it done
And some straight talking, hard working son of a gun.

Whatcha doin' tonight, I got faith in our generation
Let's stick together and futurize our attitudes
I ain't lookin' to fight, but I know with determination
We can challenge the schemers who cheat all the rules

Come on take pride, be wise, spottin' the fools
No more big shots, crackpots bending the rules
A fair shot here for me and for you
Knowing that we can't lose

And we'll be rockin' in Paradise
Rockin' the Paradise tonight
Rockin' in Paradise
Rockin' the Paradise tonight
Tonight, tonight...