Tuesday, April 7, 2009

Morning Update/ Market Thread 4/7

Good Morning,

George Soros finally gave the markets a reason to pull back a little as he said that this was obviously a bear market rally as the real economy has not been fixed yet. No kidding? You mean that giving bankers TRILLIONS while piling TRILLIONS onto the debt of the nation and its people doesn’t really fix the economy whose problem is that it’s saturated with debt? Whoa, that’s a pretty radical concept there George – LOL!

The economy doesn’t need nor does it want more “credit.” What it needs and wants is to clean out the DEBT. What the people need and want is a sound currency, less debt, the derivatives gone, and the central banking system returned to the people of this country who rightly own it.

But Soros’s comments, although accurate, aren’t the reason the market is pulling back this morning. No, it’s just overbought, up against resistance, and needs to pull back, it’s been too long and too far without one, the oscillators are screaming for relief.

People are also a little nervous about earning’s season which starts this week. Just remember that earnings season is not about earnings good or bad, it’s about expectations for earnings and what’s priced in. It’s going to be a particularly nasty season to participate in because the rules have been changing so much that it’s hard to get a handle on what’s going to happen.

The banks are a good example with recent changes to mark-to-fantasy accounting rules that allow the banks to obscure and hide their assets. In other words, we’re going back to Ponzi (oops, I mean business) as usual.

And then we’ll change the rules some more in an attempt to further drive out those evil short sellers. We’ll put uptick rules back in place and make them particularly strong on central banks – LOL. And, we’ll put in newer and better circuit breakers so that no one who owns stocks need risk or worry about catastrophe! Heck, why not just make the uptick rule say that you can only buy a stock at a higher price than the last person who bought it? That would ensure the never ending growth they want! Right?

At any rate, the futures are down pretty good this morning with the /ES now at about 816. I put the /ES on the chart below on the 15 minute scale so that you can see what appears to be a pretty well formed head & shoulders top that has formed over the past few days. It’s worth roughly 30 points if it should be confirmed by a break of the neckline, and that would produce a target of roughly 785 on the /ES. That of course assumes that the neckline is broken and that we make it through support in the 800 area:

I don’t think yesterday’s move was what the McClelland Oscillator was looking for with a large move, so today is likely it.

I’m still busy with taxes and will likely not participate much today and will not have a full update this evening, but I will post some quick observations on the market thread that goes along with this post. Yes, taxes are a ton of fun… I’ve paid to have them done for years and since I’m now less complex with all my real estate holdings gone and down to only one working business, I’ve decided to grind it out the old fashioned way. OMG, the frictional losses in our WAY overcomplicated tax system are staggering. Yet another area that needs fundamental reform…

Have a great day,