Saturday, March 28, 2009

Different Yet Similar Views on the Dollar…



Jim Rogers – On the Dollar, MoneyShow.com (3 minutes):


Glenn Beck – U.S. Dollar Under Attack (4 minutes):





Money and Markets:

What a Difference a Week Makes…

by Jack Crooks

Last week’s big news: The Federal Reserve announced they’d “officially” take up quantitative easing to finance the massive stimulus spending.

The Fed’s decision to buy long-term Treasuries, soak-up more mortgage debt and open up the Term Asset-Backed Securities Loan Facility (TALF) for the sake of consumers and small business inspired optimism …

Risk-takers came out of the woodwork with their wallets wide open. The result: Ongoing strength in the stock market.

Currency traders took the same cue as stock traders, and the U.S. dollar got clobbered. Many comments pointed at blatant debasement of the dollar … and a fiat currency race to the bottom.

There’s nothing to say that this kneejerk reaction is off-base. There potentially could be a new, major rush out of U.S. dollars to fund global investment, just like we saw over most of the previous eight years.

But this Week It’s a
Whole Different Story …


Even though stocks continue to fight higher, the extreme dollar negativity has subsided. Investors are trying to keep their wits about them when others aren’t exactly doing the same …

People’s Bank of China Governor Zhou got buddy-buddy with the media this week. On Thursday, his words aimed at pumping unfounded optimism into the Chinese economy. And before that, he tried getting across his view that the International Monetary Fund’s Special Drawing Right (SDR), a currency basket comprising dollars, euros, sterling and yen, should become a super-sovereign reserve currency.

Mr. Zhou’s remarks didn’t cause much stir among the currency markets. But sandwiched in between his comments was a remark by U.S. Treasury Secretary Geithner …

Geithner basically said he’d be willing to look at Mr. Zhou’s proposal on SDRs. And while Mr. Geithner said he didn’t expect the U.S. dollar to be supplanted as the world reserve currency, his comments were enough to get currency traders thinking it was possible.

All of this has given us little direction. But what’s notable is that the U.S. dollar’s correction has come to a breaking point. Whether it’s a permanent ending or merely a temporary rest remains to be seen.

So far the broader fundamentals and sentiment driving the U.S. dollar and other currencies over the intermediate- and long-term haven’t seemed to change. And at this point, the economic and political developments being dished out are not worrying me.

So the Dollar Could Be
Ready to Move Higher Again …


Two pieces of recent economic data have me expecting more of the same risk-averse capital to be driving the U.S. dollar back higher soon:

Japan’s exports plunged nearly 50 percent in February — an obvious sign global demand has come to a screeching halt. Tack on the slowdown in exports for the U.S., China, and Germany and you’ve painted a real ugly picture for the export side of the global economy.

U.S. fourth-quarter GDP sunk by 6.3 percent. This was more than had been expected. Perhaps it’s a lagging indicator. But such a dramatic slowdown bodes ill for any bounce-back strength out of the U.S. consumer.

As bad as this sounds for the U.S., my expectations for the buck to outperform are based on the fact that the global economy is still so heavily dependent on the U.S. What’s more, the U.S. has led the way down throughout this economic crisis, and now almost everyone else is playing catch-up.

Another potential supporting argument for the U.S. dollar rests on the near-term technical picture. The buck has shown resilience after a deep correction culminating with last week’s onslaught. More specifically, it resisted ongoing selling pressure at a key retracement level.

Check out the chart below:

Source: CQG, Inc.

So what could be the driver for the next leg up in the dollar? My answer: The Group of 20 industrialized nations (G-20) meeting on April 2. The world’s top “leaders” will meet to discuss possible solutions to the world’s economic crisis. Many have called this upcoming meeting a make or break for global markets. I think it’ll be a big, fat bust!

Why?

The Two Key Players
Have Very Different Agendas …

The U.S. wants Europe to commit to additional government spending i.e. stimulus. And Europe wants the U.S. to commit to giving the International Monetary Fund (IMF) more money so the Eurozone banking system can be saved. But neither increasing government stimulus nor saving Eurozone banks will solve the broader problem of plummeting global demand.

And this lack of demand is what’s responsible for the dramatic plunge in global trade, which is falling to levels not seen since the Great Depression.

The upshot of this will be another major bout of what is termed “risk aversion” — a sell-off of risky asset classes with a movement to safe havens. And despite the train wreck within the U.S. economy, the U.S. dollar wins by default.

As I’ve said in previous Money and Markets columns: The currency game is perverse and relative. Ultimately, currency prices are determined by global capital flow. And in a world with no place to hide, money flows back to the deepest financial market in the world … the U.S.

Best wishes,

Jack

Peter Schiff - 3/25 appearance on MSNBC

Peter has correctly identified many of the problem, but he has also been wrong on some of the outcomes.

Peter Schiff - (10 minutes):


I like this interview for pointing out the fallacy of the current administration's actions, but the solutions do not come. I just summarized my solution in the Weekend Update, "I think the way to breathe life back into America is to return the central banking function to the PEOPLE, replace the Fed with free market mechanisms to set interest rates and money supply, and to completely separate corporations and their money from the political system. In my mind that will lead to long term decision making, allow government to shrink to an appropriate size, restore free market principles, and move from a debt and credit infused never ending growth model."

Weekend Update 3/28

Last night, after writing about politicians receiving TARP money, I was thinking about a theme for this update and was reflecting upon how this nation’s politicians and media are controlled by debt money provided by the central bankers when the tune “Bye, Bye Miss American Pie” jumped into my conscious except the words came out “… the day America died:”

Don McLean – American Pie:


While it’s hopefully premature to bury America, there are two themes that I want to keep hammering in an attempt to breathe some life back into her. The first is that the MATH of debt is now completely unworkable. We are so far beyond the tipping point when it comes to income versus debt, that there is no longer any hope whatsoever of reviving what was. That doesn’t mean that America’s dead, it means that Americans must get off their butts and find a long term solution.

That solution brings me to theme number two. The root of the debt can be found in our currency system and in the way that central banks, the Fed, and all corporations interact and influence our political system. I think the way to breathe life back into America is to return the central banking function to the PEOPLE, replace the Fed with free market mechanisms to set interest rates and money supply, and to completely separate corporations and their money from the political system. In my mind that will lead to long term decision making, allow government to shrink to an appropriate size, restore free market principles, and move from a debt and credit infused never ending growth model.

Does that sound radical? It sounds like common sense to me. America will not spring back to life unless changes on this scale occur. A zombie America is the best that can result from the current Administration’s approach.

Not just a zombie banking system, a zombie America whose people are placated with fast food, flat screens, and never ending credit – DEBT.

Along these same lines, Karl Denninger just wrote an article that includes a video that has evidently gotten the Administration’s attention. This is worth spending a few minutes on: What’s Disturbing About The Truth…

Keep in mind that as I write these market updates that WE ARE NO LONGER TALKING ABOUT FREE MARKETS. Our government is now in complete control of the bond market and that market underlies every aspect of all markets, especially the stock market.

But let me more accurately describe what I just said… While I say that they are in complete control, what I mean is that THEY THINK they are in complete control. In fact, the opposite is the truth. They have lost control and they have become the buyer of last resort – using money that does not exist. While this is a game that will ultimately end in heartbreak and disaster, the interim becomes very difficult to play as the rules are shifted and base currency is played with. The short and intermediate results of which are difficult to forecast, to say the least. Opinions range from deflationary collapse to hyper-inflation. That’s quite a range. Of course Bernanke thinks he can find the exact middle plus 2%. He won’t.

So, we are left to do the best we can in evaluating the three segments that make the markets… Fundamentals, Technicals, and Psychological.

For me, the fundamentals are currently ruled by debt. Incomes cannot service all the debt. The normal solution to this problem would be to default on the debt, but that is not being allowed. Instead we are adding massive amounts of debt onto the massive debt we already have. That’s not a way out, that’s a way to disaster. Our government is attempting to change the fundamentals, but they are lost because they are controlled by the central bankers. The true fundamentals always win in the end but can certainly be distorted in the short term.

Those short term distortions of the fundamentals can distort and twist the technical landscape, that’s why you must keep the long term destination of the fundamentals in mind.

Psychology can affect the short term in a huge way. It affects the flow of capital, both the amount and where it flows. But the one thing psychology cannot do is create a world beyond the bounds of math. Yes, positive thinking is powerful, but it cannot create something from nothing and it cannot allow you to defy physics, math, or economic rules.

Right now I have less faith in reading the technicals because of the interference and manipulation. For example, let’s say that we are studying waves on a small lake. If we study and watch the lake over long time periods, we can see that waves are created under certain weather conditions. When the wind blows at X, from Y direction, then we know that waves of Z magnitude are created. But if you drop Paul Allen’s yacht onto our little lake, the waves as we have come to know them will be influenced greatly. How he steers his yacht, we cannot know because we are not him and thus the waves on the lake are no longer free.

That’s an extreme example. I would liken our market in reality to a huge ocean whose waves will overwhelm those who try to manipulate it in the short term. So, in this environment I think it’s helpful to back up and look at the bigger picture.

In that vein, here’s a 20 year chart of the S&P 500. You are looking at the greatest collapse in this index EVER. It is making lows that are lower faster than during the Great Depression. While we have experienced quite the 3 week rally, you will see that in comparison to the losses it is really just a part of the process (which can kill your account in the short run):



And here’s an update of Doug Short’s Four Bad Bears. Note that this chart is comparing the SPX to the DOW during the Great Depression and thus looks like it’s a little ahead, but in fact when you compare the SPX to the SPX, it is making lower lows faster. And note how the math works… while a 20%+ rally sounds and is impressive, once something has been cut by more than half, you are gaining little in real terms compared to what you lost. Thus, despite this impressive rally, we are still at half the level we were only 17 months ago… and we are extremely overbought in the short run and running into volume resistance!



That’s the big picture, now let’s do the best we can with a manipulated short term picture. The tape is still the tape and while we can be right in the long run, making money from it requires us to be right in the short run.

On Friday the DOW closed down 148 points, the S&P lost 2%, the NDX lost 2.3%, and the RUT, as usual, was the most volatile, losing 3.7%. The dollar rose strongly sending gold and oil downwards. The dollar, by the way, is bouncing powerfully off an exact 61.8% retracement of the last rally. Finding support at that level is bullish for the dollar. The XLF lost 3.1% (on Dimon’s manipulations), and IYR lost 4%. Of note, the CMBX indices turned back up slightly on Friday.

The internals were negative with decliners 3 to 1 over advancers and a hefty 86% of the volume was on the downside. Volume, however, was the issue as it was far lower, in fact the lowest of the past two weeks. Since volume confirms price, that indicates that this rally leg may not be entirely over yet (but overall prices have been rising and volume falling during the past week). New 52 week lows rose from zero to five. The Put/Call ratio ended the week at .92. Looking at the advance decline lines, we are back to a small positive divergence on the NYSE, but a very large negative divergence on the Nasdaq telling us that the rally has been mostly on a few of the big names. There are many small negative divergences on RSI and MACD. Below is a one year chart of the Nasdaq with the index in black and the A/D line in red/black:



ALL the hammers that I showed on Thursday night’s update are now confirmed reversal indicators. Doesn’t mean it can’t reverse again, but it would be unusual to do so now. Here’s what the Emerging Market ETF looks like… you can see the hammer I pointed out is a top of at least short duration and the selling here was on higher volume. In fact that candle, like the other one I have highlighted is a good example of a shooting star:



USO produced a hammer on Thursday that is now a confirmed reversal, but it was on lower volume. The stochastic, however, just produced a daily sell signal:



On the DOW weekly six month chart, you can see that we just finished 3 up weeks in a row, very unusual for this bear market, that is a bear killer. The weekly stochastic still has lots of room to run to get oversold, but it hasn’t been making it that far during most of the bear market to date. Note that this week had lower volume than the prior two – rising prices, lower volume:



Here’s a 10 day, 10 minute chart of the SPX. First let’s note what the stochastics are saying… the 10 minute here is basically neutral, but the 30 minute and 60 minute are oversold or close to oversold already, but the slow does have room for further descent, thus picking a direction for Monday is difficult. On this chart, however, I have drawn in what looks like a potential ending diagonal. If that’s the pattern in play, it may need one more run to the top with a possible overthrow to complete. Of course it could break down from here, and a close beneath that lower blue line will be bearish:



When zooming out to look at a one month daily, you can see that the candle failed to close beneath Thursday’s candle. That’s a bullish indication to go along with lower volume on the pullback. The next higher pivot is at 848 and there is now much support in the 790 to 800 area with the 50dma in that region and the next lower pivot is 789 and then 768. Note the fresh sell signal on the stochastic, but I would want to see the fast exit oversold to verify it:



The DOW daily is pretty much the same picture as the SPX, but here you can see the weak volume on Friday. Note, however, that the slope of the volume is down while the slope of the price is up – that’s a clue, and is often what we see just prior to rolling over. Once the roll over becomes clear, THEN the volume picks up (that’s been the pattern in this bear market so far):



The NDX is the only major index that closed beneath Thursday’s candle. That upsloping red line is the bottom of that big pennant. Note how we tapped it and came down – was that a retest? The blue rising wedge is broken again and at best we are now in Doc’s shifted channel that I have marked with the green channel lines:



The XLF is a tough read with Friday’s candle… that inverted hammer candlestick has two meanings to me. It opposes the prior upright candle and thus prices could run up the handle higher. It also looks like a gravestone doji which if is on the top of a run is very bearish. In the big picture, it is close to the top of a run, but not ON TOP. It’s on low volume too, which favors upside, but on the other other hand (lol), the general volume pattern is lower on rising prices. Like I said, it’s a tough call. That makes Monday important as it will tell us the meaning of that candle:



IYR has been moving very similarly to the financials. Note how it is still well below its 50dma and Thursday’s hammer was confirmed with no opposing hammer, just lower volume. Monday becomes an important read here as well. If it weren’t for the low volume I would call it bearish:



The VIX has stubbornly refused to stay below 40, but it did close beneath the 200dma which is currently at 41.50. That’s an inverted hammer that would look a lot like a bottom where it not completely shadowed by the previous day’s candle. So, it could be a reversal candle, but again will need to see confirmation on Monday:



All in all, a tough call for the short term. We are very overbought on the daily with divergences in place, but there could be one more run upwards to complete that potential ending diagonal. We could also be done and just need some more downward push to get out of the channels. Regardless, at some point next week, probably early, I would expect that a retrace of some scale needs to happen. I would also expect that another good run upwards is possible after that retrace. If this market behaves as the market did during the Great Depression, any rally will fail to get through the overhead volume resistance of the large pennant area. Should prices break through that area, then my outlook would turn substantially more bullish in the medium term. Remember that a bear market’s job is to draw in money to be destroyed by creating new believers at each step down the ladder.

While I was looking for the American Pie song on YouTube, I saw and was reminded of his other song that I really like, Vincent. Of course that song is about Vincent Van Gogh, but I think it’s a beautiful song and as I listened some of the lyrics sound very applicable to all of us who have been trying to spread the word of this INSANITY. His lyrics are a terrific poem and his song is moving…

Don McLean – Vincent:


Starry, starry night.
Paint your palette blue and grey,
Look out on a summer's day,
With eyes that know the darkness in my soul.
Shadows on the hills,
Sketch the trees and the daffodils,
Catch the breeze and the winter chills,
In colors on the snowy linen land.

Now I understand what you tried to say to me,
How you suffered for your sanity,
How you tried to set them free.
They would not listen, they did not know how.
Perhaps they'll listen now.

Starry, starry night.
Flaming flowers that brightly blaze,
Swirling clouds in violet haze,
Reflect in Vincent's eyes of china blue.
Colors changing hue, morning field of amber grain,
Weathered faces lined in pain,
Are soothed beneath the artist's loving hand.

Now I understand what you tried to say to me,
How you suffered for your sanity,
How you tried to set them free.
They would not listen, they did not know how.
Perhaps they'll listen now.


For they could not love you,
But still your love was true.
And when no hope was left in sight
On that starry, starry night,
You took your life, as lovers often do.
But I could have told you, Vincent,
This world was never meant for one
As beautiful as you.

Starry, starry night.
Portraits hung in empty halls,
Frameless head on nameless walls,
With eyes that watch the world and can't forget.
Like the strangers that you've met,
The ragged men in the ragged clothes,
The silver thorn of bloody rose,
Lie crushed and broken on the virgin snow.

Now I think I know what you tried to say to me,
How you suffered for your sanity,
How you tried to set them free.
They would not listen, they're not listening still.
Perhaps they never will...

Friday, March 27, 2009

This is the Way America Really Works - Ratigan Gone from CNBS...

Please tie together this article and the one that precedes it Tarp Money Goes to Politicians…

Dylan Ratigan begins speaking the truth yesterday and today is his last day on CNBC. He was one of the few at least partial truth tellers there, and he leaves very few truth tellers behind.

This also ties into the “gagging” of Santelli, the only other truth teller left. America media... tell the truth and you do not have a place.

I’ll say it again… It’s time to wake up America to how America really works!
Dylan Ratigan Quitting CNBC?

Be worried Fast Money fans. Your favorite host Dylan Ratigan could be out the door, at least if we're interpreting this awkward NYPost story correctly.

THERE was high drama at CNBC yesterday as "Fast Money" anchor Dylan Ratigan quit -- sources say today will be his last day on-air -- and an insider is blaming his battles with network big Susan Krakower…

Ratigan on CNBC talking about AIG (oops, supposed to be talking about the DOW):




I'll say this... there's one less reason to watch CNBC. If Santelli does what I think he will do and leaves, CNBC might as well be a Martha Stewart cooking program. Terrific, all the more readers for my still free blog! Ooops, the int e rn et is c ut ting ou t!

TARP Money Goes To Politicians…

You thought TARP money going to AIG bonuses and to Goldman was bad, wait until you hear how it also made it into the hands of politicians, some of who are on the House Banking Panel.

Of course it came indirectly as a contribution, but that’s how it always comes these days.

This is exactly what I’ve been talking about when I say that the root cause of ALL the financial problems lies in the central banker and corporate influence over politics. Separate Corporation from State, and most of the fiscal suicide and big government problems go away.

America, wake up!!! Those are your tax dollars, which are the fruit of your labor!

Follow the Bailout Cash

By Michael Isikoff and Dina Fine Maron NEWSWEEK

There was plenty of outrage on Capitol Hill last week over the executive bonuses paid out by AIG after getting federal bailout money. But another money trail could make voters just as angry: the campaign dollars to members of Congress from banks and firms that have received billions via the Troubled Asset Relief Program.

A NEWSWEEK review of recent filings with the Federal Election Commission found that the political action committees of five big TARP recipients doled out $85,300 to members in the first two months of this year—with most of the cash going to those who serves on committees who oversee the TARP program. Among them: Bank of America (which got $15 billion in bailout money) sent out $24,500 in the first two months of 2009, including $1,500 to House Majority Leader Steny Hoyer and another $15,000 to members of the House and Senate banking panels. Citigroup ($25 billion) dished out $29,620, including $2,500 to House GOPWhip Eric Cantor, who also got $10,000 from UBS which, while not a TARP recipient, got $5 billion in bailout funds as an AIG "counterparty."

"This certainly appears to be a case of TARP funds being recycled into campaign contributions,"
says Brett Kappel, a D.C. lawyer who tracks donations. (A spokesman for Cantor did not respond to requests for comment. A spokeswoman for Hoyer said it's his "policy to accept legal contributions.")

The cash flow is already causing angst inside the Beltway. "The last thing I want to do is wake up one morning and see our PAC check being burned on C-Span," said one bank lobbyist, who asked not to be identified because of the issue's sensitivity. House Speaker Nancy Pelosi and House Financial Services chair Rep. Barney Frank both said recently they won't take donations from TARP recipients. But House Democratic fundraisers have quietly passed the word that the party's campaign committee will resume accepting them—down the road, though; not right now. Said one fundraiser, who also requested anonymity, "These are treacherous waters."



Torches and Pitchforks, Torches and Pitchforks…


Supertramp – Crime of the Century:

Jim Rogers - Geithner Doesn't Know What He's Doing...

Sure he does... he's taking money from the taxpayers and ensuring that the central bankers take as much of it from them as possible.

Jim Rogers Latest - Fox News (sorry, but you'll have to suffer through this shill's "reporting.")

Eliot Spitzer on AIG - His Eye is on the Ball...

Eliot knows most of the truth, and willing to speak out. No wonder he was invited to participate in a little "fun." Too bad he didn't keep it zipped!

He is correct about the AIG bailout, it is a money funneling operation to the central bankers, nothing more.

Eliot Sptizer - CNN interview (20 minutes):

Morning Update 3/27

Good Morning,

Futures are down about 11 points on the S&P or a little more than 100 on the DOW this morning:



While it is possible that the uptrend is ending, keep in mind that there could be one last rally inside this triangle, or it could be complete. This is a 5 day chart, I would normally expect a larger pattern to end such a large uptrend, but those hammers I pointed out yesterday may be in play with the gap down this morning confirming so far:



Obama does more talking today and wooing of the central bankers in public. That’s a joke as it them who originate and benefit from all the bailouts, do not be fooled into thinking that we are begging them to make this latest program work.

It's no surprise to regular readers here that the consumer is being squeezed. All bailout efforts to date rob the consumer and pass their earnings and future earnings onto the banks. The Fed prints money intentionally devaluing consumer’s purchasing power while more and more of them become unemployed or semi-employed as their jobs continue to move overseas.

It’s funny watching the media spin the data. The following article could be spun positive, yet it was spun negatively. Why? Are you noticing a shift in sentiment all of a sudden? Not so much optimism? Is that organic, or is it controlled? I do not fully know, but it’s interesting...
U.S. Consumer Spending Increases for Second Month

By Shobhana Chandra

March 27 (Bloomberg) -- Spending by U.S. consumers in February rose for a second month, mainly reflecting an increase in prices that eroded buying power.

The 0.2 percent gain in purchases followed a 1 percent increase in January that was larger than previously estimated, the Commerce Department said today in Washington. Incomes decreased more than forecast, the report also showed.

Mounting unemployment is taking a toll on confidence and paychecks, indicating spending has yet to rebound vigorously after plunging at the end of 2008. The figures make it that much more critical that the Obama administration’s initiatives to create jobs and Federal Reserve measures to revive credit take hold quickly to prevent the recession from deepening.

“Just because consumers eke out a small gain doesn’t mean we’re out of the woods,” Michael Feroli, an economist at JPMorgan Chase & Co. in New York, said before the report. “There are a whole lot of reasons to be concerned about the health of the consumer.”

Economists forecast spending would rise 0.2 percent, after an originally reported 0.6 percent gain the prior month, according to the median of 68 estimates in a Bloomberg News survey. Projections ranged from a decline of 0.5 percent to a 0.5 percent increase.

Incomes Drop
Incomes fell 0.2 percent, after a 0.2 percent increase in January. The survey median projected a 0.1 percent decrease.

Today’s report also showed inflation accelerated. The price gauge tied to spending patterns rose 1 percent from February 2008, up from a 0.8 percent 12-month gain in January. The Fed’s preferred gauge of prices, which excludes food and fuel, climbed 1.8 percent, more than forecast.

Adjusted for inflation, spending dropped 0.2 percent, following a 0.7 percent gain the prior month.

Disposable income, or the money left over after taxes, decreased 0.1 percent, after rising 1.6 percent the previous month. Adjusted for inflation, disposable income dropped 0.4 percent.

So, real disposable income is falling. That’s the Achilles’ heal of any recovery and why all the bailouts have been all focused on the wrong people. Of course one just has to keep in mind who the Fed really works for to understand their motivation – same with Congress.

Mish just did a good article showing that wage deflation has set in. That will be very bad for our economy if it continues.

The dollar is up today, gold and oil down, bonds up.

Have a good day,

Nate

Thursday, March 26, 2009

Frontline on National Debt...

Frontline - What Obama Inherited/ $10 Trillion and counting (54 minutes):

End of Day 3/26

It was a mellow day for me as I spent less time obsessing over charts and more time getting some much needed projects rolling.

Today the DOW gained 174 points (2.3%) to place it just beneath 8,000, the SPX gained 2.3%, the NDX gained 3.6%, and the RUT raced 4.4%.

Internals were bullish with advancers 4 to 1 over decliners on the NYSE, with 73% of the volume on the upside. Amazing was the number of new lows today which was exactly zero with 10 new highs. The Put/Call finished the day in neutral ground at .92.

The bullish momentum is undeniable, and while I see some very bullish price action in certain areas (like the SOX just broke out), I also know that the fundamentals have not changed, the debt remains and incomes are not capable of supporting it. Just today we learned via John Williams that the total national income fell 7.5% in the 4th quarter. So, total income is falling while debts are zooming and wealth is plunging as a result. It is my belief that too many people are being fooled by Bernanke’s printing into believing in the reflation trade – while a trillion plus is a ton of money, it is not comparable to the trillions that have disappeared. So not yet, maybe later – I also remind everyone that we have had three straight months of negative PPI.

And the stuff that’s going on in an attempt to reinflate is just insane. Hedge fund ETF’s and mutual funds? ARE YOU KIDDING ME? This is nothing but an end run around sophisticated investor rules, one that unwitting Americans will pay dearly for. You would think that we would be heading towards less risk and leverage, but that would imply that you really mean what you say and you really don’t want to go through this again. That’s obviously not the case – they do want to go through it again, they MUST get the credit flowing again.

Now, in regards to the charts, I’m seeing signs that this is possibly done for now or close to done. I think if you are long, you are getting close to overstaying your welcome as we are extremely overbought, divergences are everywhere, and I see some candles that should give you pause. That doesn’t mean that we’re going down the crapper, it means that we should be close to getting a meaningful retrace. And following the retrace I’m sure we’ll probably make another run at it.

Let’s take a look at the medium term picture. Here’s a busy 6 month chart of the SPX. The Blue downslopping line from September is now crossing right at the 848 pivot. I have a double black line drawn there. There is a TON of volumetric overhead resistance just above where we are now, and the 848 pivot is only 16 points away. While today’s candle is not top looking, the SPY and DIA candles are more hammer like:



When I look at the 30 minute SPX, I see what about 19 waves? Lol, this has been quite the run, but it’s already run too long for how wide this channel is. The stochastic is very overbought on all timeframes up to weekly:



The NDX 30 minute shows that we threw under the rising wedge and the green channel lines show Doc’s bent channel which we nailed the top of at the close. YEA! The NDX is positive for the year – I’m sure those who’ve been holding have slept well the past 4 months – not:



While the SOX broke out on the P&F, the NDX is right now in an area of resistance as you can see by looking at this 6 month chart. The large red triangle bottom stopped the advance today right in the same area as the last two tops. It is overbought, the RSI is diverging bearishly on the short time frames, and while there’s not a hammer on the index, there is on the Q’s:



And here are the Q’s on a one month daily. The SPY has a similar hammer just under the upper Bollinger on slightly lower volume:



This is a six month view of the Emerging Markets ETF, EEM. Note that it, too, ran up into its old area of resistance and made a top looking candlestick right beneath that level. It’s very overbought and the volume is falling. If it does manage to get above that Jan 6th high, that would be bullish indeed:



The DOW daily candle looks very bullish like most of the indices that ignore the opening gap. You can see how the Bollinger is turned up and out of the way. But the stochastic has been overbought for a looooong time, volume has been falling and we are just under the big round 8,000 number and there’s a ton of volume overhead as well:



The Transports were on fire today, rising more than 8%. That’s just hilarious, sorry to the folks buying here, you are just so wrong from a fundamental perspective. Today’s candle did break the 50dma, but it also closed above the upper Bollinger, is just terribly overbought, and as you can see is now back up into overhead. The advance back up was easy while there was no resistance, now we get to see what this run is really made of:



Here’s the XLF. Another outside black hammer at the top of the run. It’s been a long time since we had the last one that failed to reverse the direction, but if you are a bull, you are fighting the odds if you think that’s going to happen twice. Volume is beginning to fall again and there is a fresh sell signal on the daily stochastic. There are also a couple of open gaps beneath us, the first one is just beneath the 50dma down to about the 8.25 area, and the other one is way down near the lows. Most financials have those same gaps:



IYR also has that open gap down near the low. Here’s a daily showing an outside hammer on lower volume right in the middle of the megaphone it’s been forming over the past couple weeks. On a relative strength basis, IYR has been a laggard. While the CMBX index continues to come in a little, spreads are still in an area associated with extreme levels of stress and high risk:



So, there is a retrace coming. We are running into resistance finally and it could be that this rally is nothing more than a retest of the big pennant – remember that? The target is WAY down there and is still in play until and unless we get back over the top of that pennant. If we were to do that, THEN I will be longer term bullish as that would also make a new high. While this has been quite the rally, it has been a rally of no substance, of nothing but manipulation and of spending taxpayer money that does not exist. Oh and talk, plenty of talk. Rallying against no or little resistance is one thing… and one thing I know is that nothing moves in a straight line, so I’m just sitting back, watching and waiting playing my mellow yellow…

Donovan – Mellow Yellow:

Morning Update/ Market Thread 3/26

Good Morning,

The latest GDP revision for the 4th quarter of ’08 came in at minus 6.3% growth after being reported in the previous revision at -6.2%. It’s all okay, though, because “economists” surveyed by Briefing.com had collectively guessed -6.6%. I wouldn’t even venture a guess personally; the data to input is completely disconnected from reality. I would tend to look more at the shipping indexes and the fact that imports from Japan are cliff diving to signal what’s really happening. In other words, I don’t trust nor do I have confidence in our own numbers.

And speaking of data that is “molded” by things like seasonal adjustments, the weekly unemployment number for last week came in at 652,000, an increase of 8,000 from the week prior and the 8th straight week of numbers greater than 600,000. The number that is most trustworthy in the data is the continuing claims data which rose this week to 5,560,000. Just remember, once a person’s benefits run out, they are no longer counted at all.

Here’s the overnight action, it was a pretty steady climb and the /ES is up nearly 8 points:



The race off support at 795 was very bullish. On the other hand, I see an odd megaphone forming in the indices and IYR has built a more clear megaphone. Those used to mean ending patterns, but during this bear market that has been a low odds bet. And when they break as a continuation pattern, the break tends to be violent.

I think Doc nailed that curved channel on the NDX, and that is also a bullish development, so you can go back and review his last update to see those charts.

Support seems to be in that 795 area, there’s a pivot 789 below us and the one above us is at 848. There’s also a channel that’s formed with a top in the 830 area today. It’s also the top of the odd megaphone that’s formed.

Watch the bond market again today, yesterday was a warning shot across Bernanke’s bow. The people who ignore what’s happening with our debts are the ones who have been and will continue to be on the wrong side of the overall trend.

The pumpers on CNBS are talking about “generational lows” in stock valuations and thus you need to be in. I’d like to know what they are smoking. P/E ratios are still above historic averages and not anywhere near bear market bottom range. Maybe it’s a generational low if you’re a ten year old…

Have a good day,

Nate

Wednesday, March 25, 2009

End of day 3/25

Oh how this kind of day makes me not only comfortably numb, but it makes me want to just jump on my bike and head out into the country to get away…

Sure was a nice save after the market fell apart on news of a weak 5 year bond auction that follows on the heals of a failed U.K. auction. If people are beginning to wake up to the fact that selling all our debts is going to be difficult then they are FINALLY getting on the right line of thinking. They should be scared. This is not a problem for our grandkids, it’s here and it’s now, you are somebody’s grandkid.

Hopefully your kids will have a job in the future, IBM just announced they are cutting another 5,000 U.S. jobs that will be moved to India. Congratulations to those who support a one world agenda, you may have outsourced yourself. And look at the jobs that leave. They are not pizza delivery jobs, they are living wage jobs. The real income earning potential is leaving, while the debts are staying behind. Obama’s budget and gimmicks to “save” this economy do not make any of that better, it only adds to it. Oh yeah, and he’s surrounded with advisors who are proponents of the central bankers’ One World vision which allows the capital holders (them which they create from nothing) to pit one countries laborers and natural resources against another’s.

The DOW was up 204 points at its high, sold off 313 points, and bounced up 199 points to finally close up 89 points. That type of action is wind the spring stuff which could produce a small movement on the McClelland Oscillator, we’ll see later tonight. Meanwhile, the S&P finished up 1%, the NDX gained .19%, and the RUT managed to regain its 50dma by closing up 2.3%.

The XLF gaines 3.33%, and IYR did not manage to get back to positive even after gaining $2 off the bottom, and finished down .9%. Gold bounced off the 50dma and closed up 1.1%, while USO fell on another build in oil inventories. The VIX fell a little but managed to stay above it’s 200dma.

Internally, advancers led decliners by 2.3 to 1, and upside volume led on the NYSE by 66%. That’s a lot of Seth numbers… and there were 9 new highs, 6 new lows.

On the 30 minute SPX chart you can see that we broke the uptrend line today, but bounced off that critical 795 area to close back in the middle of the range again. The 30 minute stochastic is close to issuing a buy, the 10 minute is overbought, and the 60 minute is just coming up off oversold. If I was going just by the oscillators, I would guess that tomorrow we would move lower initially to satisfy the very short term, but then move up to satisfy the middle, followed by selling later to satisfy the daily:



Next is the 30 minute NDX. We broke the rising wedge and perfectly touched the shifted channel that Doc showed us last night as you can see with the black line I drew across the most recent lows. That puts his shifting channel/ higher scenario right on the table, although the SPX did not come down to touch its lower shifted channel line:



The SPX daily is a fat bodied doji which was made after pinning the 50dma and 23.6% fib line. Note that both the fast and slow stochastic are now overbought:



The DOW daily is much the same. Threw a pin through the upper Bollinger, fell all the way beneath the 50dma and bounced miraculously to stay above critical support, once again preventing a meaningful retrace. Today’s doji was on higher volume which I see across the market:



Looking at the XLF daily, it looks close to a hammer that is dueling with yesterday’s inverted hammer. The second hammer usually has precedence and the price would be expected to travel the length of the handle. This is more of a doji, though, so not reliable:



IYR dipped hard intraday and regained a lot back, but not before tripping a sell signal and a lower target on the P&F charts of only $6!



The Put/Call finished at .85 as a top defining extreme just hasn’t been able to get triggered in the sentiment gauges:



Momentum is still very bullish. Manipulation abounds, and will not win in the long run. Reality and math always win. The bond market is giving hints of that today, the equity people are riding in the short bus. McHugh has another turn date with a best fit of tomorrow, there should be a turn down at some point, but I can’t rule out more parabolic moves higher first, there’s still too many people who believe that the debt is a future problem and don’t see how it is TODAY’S problem. Yes, a little time out in the country is sounding really good about now…

Three Dog Night - Out in the Country:

Selling Long Term Debt Getting Shaky...

If people are awakened to the fact that selling trillions worth of debt is going to be difficult, well, welcome to reality.

U.K. Suffers Failed Bond Auction:


Here’s what Mike Larson had to say about their auction and ours as well…

Weak 5-year auction leads to bond selling

In the wake of the failed U.K. auction of 40-year gilts, the bond market is paying close attention to this week's U.S. Treasury auctions. We're in the process of selling $98 billion of 2-year, 5-year, and 7-year notes, the biggest weekly sales of longer-term debt in U.S. history. And while I wouldn't call the 5-year auction a failure, it certainly wasn't strong.

The $34 billion of 5-year notes were sold at a yield of 1.849%, above pre-market talk of 1.801%, per Bloomberg. The bid-to-cover ratio came in at 2.02, below the average of 2.18 at the last 10 sales and down from 2.21 in the February auction. Indirect bidders purchased just 30% of the notes on offer, down from 48.9% at the last auction and the lowest since December.

Bonds are getting spanked in the wake of this sale. The long bond futures are down 1 26/32 now, with a virulent sell off taking place after the auction results came public at 1 p.m. What makes the sell off all the more interesting is that it is happening DESPITE the first actual Fed purchases of U.S. Treasuries. The Fed bought $7.5 billion of Treasuries with maturities in the 2016 to 2019 timeframe.

Catch that last sentence?

JS-Kit Technical Problems...

Sorry. It's amazing how it stops working right when you need it most.

I just received this message from the CEO of JS-Kit after contacting him for the umptenth time in the past couple weeks...

Re: JS-Kit down... again!

Hi Nathan,

Yes, you are correct, we are experiencing a severe increase in new
sites using the service, see our post today. This was combined with
a flaw in our blogger synchronizing code that froze some comment
services. The system should be back-up now. We have disabled
the sync. software until the bug is resolved so we avoid another
instance of the outage today.

We are working 24x7 to expand the data center. You can trust that
scaling is our number one priority and that our best engineers are
hard at work building a solution.

My apologies for the impact to your site and my thanks for your notifying
me of your experience.

Be Well,

Khris


Khris Loux, CEO JS-Kit

I hope he gets it right, I will not tolerate much more.

Nate

Example of “Little White Lies…”

Please consider the following:
U.S. Durable Goods Orders Unexpectedly Jumped 3.4% (Update2)

By Courtney Schlisserman

March 25 (Bloomberg) -- Orders for U.S. durable goods unexpectedly rose in February on a rebound in demand for machinery, computers and defense equipment.

The 3.4 percent increase, the biggest gain in more than a year and the first in seven months, followed a 7.3 percent decrease in January that was larger than previously estimated, the Commerce Department said today in Washington. Excluding transportation equipment, orders gained 3.9 percent, the most since August 2005.

Combined with reports showing improvements in retail sales, residential construction and home resales, the figures indicate the economy is stabilizing after shrinking last quarter at the fastest pace in a quarter century. Stepped-up efforts by the Obama administration and Federal Reserve to ease the credit crunch may help revive growth later this year.

“It’s not going to be downhill forever,” said Stephen Gallagher, chief U.S. economist at Societe Generale in New York, who had forecast no change in durable goods orders. “Once businesses achieve a reduction in their inventories they will pick up their new orders and production.”

‘Some Stability’
Gallagher expects the economy to resume growth in the third quarter. “I’m feeling better about that with this type of news. After some horrific data, we’re seeing some stability.”
Stock-index futures and Treasury yields were higher after the report. The benchmark 10-year note yielded 2.72 percent as of 8:51 a.m. in New York, up 2 basis points from yesterday.

Economists projected total durable goods orders would fall 2.5 percent, according to the median of 69 forecasts in a Bloomberg News survey. Estimates ranged from a drop of 4.1 percent to a 0.7 percent gain.

Excluding transportation, orders were expected to decline 2 percent, according to the Bloomberg survey.

Demand for non-defense capital goods excluding aircraft, a proxy for future business investment, climbed 6.6 percent after falling 11.3 percent the prior month, a decline that was almost twice as large as previously estimated. Shipments of those items, used in calculating gross domestic product, increased 0.6 percent last month.

GDP Estimate
Business investment in new equipment fell last quarter at the fastest pace since 1958, according to figures from Commerce. The government will issue its advance estimate on first-quarter gross domestic product in April. Economists surveyed by Bloomberg News earlier this month forecast the economy will contract 5.2 percent in the first three months of this year and 2.5 percent for all of 2009.

So, this was terrific news, right? One that shows strength and shows how worthy buying stocks at this time is… right?

Note that this article is revision two and that I cut off over half the article which goes on sounding pretty bullish.

Now, did you catch the revisions in this article? They mention it only once when they said this:
Demand for non-defense capital goods excluding aircraft, a proxy for future business investment, climbed 6.6 percent after falling 11.3 percent the prior month, a decline that was almost twice as large as previously estimated.
That statement was NOT included in this morning’s release. Fortunately PointPark was smart enough to look at the raw data as reported by EconoDay:
The biggest negative in the report were downward revisions to January and December. January was revised to minus 7.3 percent from minus 5.2 percent while December was revised to minus 4.6 from minus 1.5.

This means that the fall in the month of December was THREE TIMES GREATER than we were told! THREE HUNDRED PERCENT GREATER!!! I listen (unfortunately) to CNBC all day long and did not hear this mentioned once. Nothing but good news. And admittedly, sooner or later these indexes get so low that going down further is going to be very difficult. But that does not mean that an abrupt turnaround is underway.

The recent releases of housing data is another case where reality is being distorted. Yes, the numbers for February are better than they were in January. But isn’t that expected for this time of year? Yes it is, and when you look at the year-over-year data, the trend is still very much down.

These types of distortions of the truth happen across almost all the economic data today. All of it has been manipulated to sound much better than it is. These not so little white lies add up to huge distortions over time. They cause capital to be misallocated. This makes forecasting the economy extremely difficult, if not impossible. That’s one of the reasons why weather forecasters seem a hundred times more accurate than most economic and market forecasters.

Inflation is misstated, GDP is grossly misstated, Unemployment is understated by half, on and on and on. John Williams at ShadowStats does a good job of presenting the data in a manner that is more consistent with the past.

Don’t be surprised when this month’s durable goods data is revised downwards next month, and you won’t be told when it happens unless you look for it. My belief is that a true and fundamentally sound economy and market cannot happen until we stop telling ourselves these “little” white lies.

Three Dog Night – Liar:

U.K. Bond Failure - Vigilantes Begin to Show...

How long ago was it that the U.K. began Quantitative Easing? Not very long. And despite their buying, no BECAUSE OF THEIR BUYING, they had an auction fail to find enough buyers yesterday…
U.K. Bond Auction Fails for First Time Since 2002 on Brown Plan

By Kim-Mai Cutler

March 25 (Bloomberg) -- The U.K. failed to find enough buyers for 1.75 billion pounds ($2.55 billion) of bonds for the first time in almost seven years as debt investors repudiated Prime Minister Gordon Brown’s plan to stem the worst economic crisis in three decades.

Gilts slumped after the London-based Debt Management Office, which manages bond auctions on behalf of the Treasury, said investors bid for 1.63 billion pounds of the 40-year securities. The last time the U.K. government was unable to attract enough investors was in 2002 when it tried to sell 30- year inflation-protected bonds.

“This is a warning signal investors are sending to the government,” said Neil Mackinnon, chief economist at hedge fund ECU Group Plc in London, who helps manage about $1 billion in assets and is a former U.K. Treasury official. “Investors are giving the thumbs down to the gilt market.”

Prime Minister Brown’s government plans to sell a record 146.4 billion pounds of debt this fiscal year and as much as 147.9 billion pounds in 2010 as he tries to pull Europe’s second-largest economy out of its worst recession since 1980. Brown’s plan drew criticism yesterday when Bank of England Governor Mervyn King told lawmakers in Parliament in London the government should be “cautious” about spending and deficits.
“Brown’s situation is economically extremely uncertain and highlights how we are now in uncharted territory,” said Mark Wickham-Jones, a professor of politics at Bristol University.

The yield on the 10-year gilt rose five basis points to 3.43 percent by 12:57 p.m. in London. The 4.5 percent security due March 2019 slipped 0.47, or 4.7 pounds per 1,000-pound face amount, to 109.36. The yield on the two-year note rose two basis points to 1.28 percent. Yields move inversely to bond prices.

Past Failures
The U.K. had two failed auctions in the past 10 years, the most recent in September 2002 when the Treasury received bids for 95 percent of the 900 million pounds of the 30-year inflation-protected bonds offered, according to the DMO’s Web site. The other failure was in 1999, when it tried to sell 500 million pounds of inflation-protected bonds.

“The risk of uncovered auctions is a normal part of the process,” said Sarah Ellis, a spokeswoman for the DMO in London. “Today’s auction was at the riskiest part of the curve. An additional factor which may have deterred some bidders is the imminent end of the financial year.”

An official at the Bank of England declined to comment.

Declined comment? I’m sure it’s more like speechless. The bond vigilantes are showing up over there, how long before they show up here?

Here’s a 60 day hourly chart of TLT (20 year bond fund). You can see that we’ve been trapped in a trading range for a month and a half. Every time it reaches that 101 level there’s suddenly buying that magically appears or there’s a statement of some type from the Fed that they are going to begin QE. The recent spike to 108 was on the FOMC announcement, and you can see that we have corrected most of that.



It’s much easier for them to manipulate rates on the short end of the curve, and thus keeping an eye on the relationship between the long and short ends is a must. Mortgage rates are down so much because of the billions thrown at buying up FNM and FRE mortgage paper. The bond market is no longer a free market, and neither is the mortgage market. They are now nationalized, comrade, the invisible hand is temporarily at bay. But don’t lose hope, the reality is that the attempt to manipulate large markets over long periods of time always fail. The market, in the long run, will seek its natural unmanipulated level.

Morning Update/ Market Thread 3/25

Futures are up slightly this morning with the /ES up about 4 points. Bank stocks and the XLF are up this morning after shooting probes higher just after the close yesterday on no news that I could find. More fun and games. Bonds are down a little, oil is down, and gold continues to correct on the downside, now sitting just above its 50dma.

MBA purchase applications came in slightly higher, at an index level of 267 for last week versus the prior week’s 257. The rise is mostly attributable to an increase in refinancings.

Durable goods orders came in higher than expected for February, with a rise of 3.4%. Military orders rose enough to account for 1.7%, or half of the rise. Even without that, a 1.7% increase would have beat estimates, so you have another data point that was better than expected and thus the bulls can sleep comfortable for another day.

Here’s a chart of the overnight action, right now it looks like a bear flag on the indices, but they do have a bullish tilt. Remember that we went out yesterday with oversold conditions on the 10 minute stochastic, so we could bounce in the morning, and possible have the longer term oscillators weigh on the market later:



789 is the pivot below, 848 is the pivot above, and you also have support in the 795 area and the 23.6 is at 787 which is near the 789 pivot. The upper Bollinger is just above yesterday’s high. The CMBX index came in some more yesterday, so keep an eye on IYR and the XLF to see how they react.

Make sure you review Doc's latest update, he has a bullish scenario that is very possible after just a little more pullback, so don't be caught.

Have a great day,

Nate

Tuesday, March 24, 2009

DoctorMad Update – A Mini 03-07 Bull?

The good Doctor has a hypothesis that this run may go parabolic much like the final run up to the ’07 top…
So is the market using the same play for this retrace that played out on the much larger time frame during the 00-03 bull run? Compare it to this NDX 20 day. This is a type of bull move I have seen other examples of in a variety of stocks/ETFs on a whole range of time scales. The market uses only a set number of "plays" like this one when executing price moves. Some of the easier ones are defined by basic EW. Some of the more complex patterns captured best by channels is what I am trying to build a library of.





If you play out the touches along the channel, this afternoon was the equivalent of the start of the 06 decline into the double bottom before the final launch. This would play out as a fairly weak retrace maybe to 775 SPX just enough to scare a few bulls, but not really pay the bears.

Then we surge to new highs in a move that will have bears questioning their thesis and everyone convinced the bottom is indeed in. That final surge just like the one in 07 will suck in all the bulls and get a good number of bears to cave. The price level will be determined by how much ammo the bulls have and how many bears cave in. I actually don't think there is all that much ammo out there so a top around 880 could be it. Wherever the top is, it will be at a point of maximum bullishness. The flag pole up, followed by shallow ascending channel, followed by a final pole up is a brutal pattern that leads to destroyed shorts if you’re not very careful.

The timing of this means the top will probably come some time early to mid next week. I bet this Friday is another bear crusher and the start of the final pole up. Bulls will be dancing in the spring time. Only to get their bells rung before the flowers even bloom.

- DoctorMad

Thanks for your thoughts, Doc. I think everyone needs to be real careful out there in both directions.

Stunning Drop in Japanese Exports...

The numbers on the drop off of Japan’s exports, particularly to the United States is STUNNING…
Japan Exports Drop Record 49% as Global Slump Deepens (Update3)

By Jason Clenfield

March 25 (Bloomberg) -- Japan’s exports plunged a record 49.4 percent in February as deepening recessions in the U.S. and Europe sapped demand for the country’s cars and electronics.

Shipments to the U.S., the country’s biggest market, tumbled an unprecedented 58.4 percent from a year earlier, the Finance Ministry said today in Tokyo. Automobile exports tumbled 70.9 percent.

The collapse signals gross domestic product may shrink this quarter at a similar pace to the annualized 12.1 percent contraction posted in the previous three months, the sharpest since 1974. Prime Minister Taro Aso is compiling his third stimulus package as companies from Toyota Motor Corp. to Panasonic Corp. fire thousands of workers.

Last month’s drop in exports was the sharpest since at least 1980, when the government started to keep comparable data. Economists predicted a 47.6 percent decline.

Toyota, forecasting its first net loss in 59 years, yesterday said overseas shipments plunged 69 percent in February.

Demand fell across all regions. Exports to Europe dropped a record 54.7 percent, shipments to Asia declined 46.3 percent and goods sent to China slumped 39.7 percent.
Imports fell a record 43 percent, helping Japan post its first trade surplus in five months.

Finance Minister Kaoru Yosano said on March 22 that a new stimulus package of as much as 20 trillion yen, double the amount pledged since October, is “not out of line” as the world’s second-biggest economy heads for its worst recession since 1945. The spending would add to public debt already estimated at 170 percent of gross domestic product.

Now that’s what I call cliff diving numbers. Japan’s debt load is gigantic from attempts to save their banking industry nearly twenty years ago now. Despite lowering rates to zero and flooding the country with Yen, they are now only deeper in debt with worse economic problems than ever. Of course they went into their situation with savings and strong global economy. We won’t be so fortunate, and we are making almost all the same mistakes, only worse.

So, if Japan’s exports to the U.S. are down 58% yoy in February, what does that say about the health of our economy? At our current rate of money pumping, how long until we're announcing $20 TRILLION stimulus plans? Let's see, with exponential growth, that's what, about 3 more months?

Prime Minister Brown Takes a Tongue Lashing…

It’s amazing to see the cultural difference between England and United States when it comes to Parliamentary proceedings. Daniel Hannan certainly sees the situation well and isn’t afraid to let his opinion be know. Very entertaining… hat tip Frank.

Daniel Hannan MEP: The devalued Prime Minister of a devalued Government


Frank has a way with words, so I thought I would share his take on the softball questions that get sent Obama’s way. I agree that there’s a reason for it, and think Frank hits the nail on the head:

…If we had a free press that wasn't in the back pocket of the banking cartel this shit would be exposed for the fraud that it most certainly is. His opening statement had more holes than a gopher farm. How can he possibly say in one breath that "the most critical part of our strategy is to ensure that we do not return to an economic cycle of bubble and bust in this country," and devote the rest of his statement to detailing exactly how he intends to reinflate the same freaking bubbles that got us into this mongolian clusterf^%@! to begin with. And the entire premise of this "strategy" is to pile increasing amounts of debt upon every working-class American family. Yes Mr. President, we must recapitalize your benefactors with taxpayer money so that they can then loan said money back to us at more reasonable rates. We must put a floor under real estate values with taxpayer money so that we can reinflate that bubble to the ultimate benefit of the shysters and place a severe disadvantage upon qualified potential buyers that will now be forced to pay more than the market would rightly bear. And yes, we must keep the student loan programs humming along so that the cost of a quality education continues to rocket out of reach, beyond the reasonable means of any average American family. Bubbles abound, long live the bubble... God forbid we actually let the market set the price on anything.

Well said, Frank, bravo!

And maybe our bankers will pay the ultimate price for their sins. Here’s a great article, HT Russ, that shows the global shift in banking power. A good read… Tectonic Shift in Banking’s Center…

End of Day 3/24

Watching the flow… of trillions, of manipulation, of lies, of smokescreens & diversions, of twisted interpretations, of hope. It’s a never ending flow that’s enough to just leave you numb.

Today was another day of hearings. Of good questions being cut off. Of grandstanding, and of showmanship.

And the markets held themselves together pretty well, right up to the end of the day. And for the day, the DOW finished down 115 point, the S&P finished down 2%, the NDX lost 2%, and the RUT led the way down with a loss of 3.9%. The XLF lost 4.8%, IYR lost 7.1%, bonds were up, gold was down and the dollar was up.

Internally, decliners led advancers by a 7 to 3 margin, declining volume led on the NYSE by 82%. New lows fell to 6 from 8 yesterday. The Put/Call ratio finished at .76, the VIX fell, diverging from prices, but remains above the 200dma and below the 50dma.

When we look at a 20 day chart of the SPX you can see that we fell overnight, went back up to yesterday’s high and failed there. That could have been wave 5 of 5 up. Obviously, we are still in the center of the uptrend. The 30 minute stochastic fast is nearly oversold, the 10 minute is oversold, but the 60 minute has barely started down and is on a sell signal. Remember that the daily is overbought and if it comes down, we could make a substantial correction. The fibs are on the chart and you can see the most common retrace levels there. Fascinating to me is that the 23.6% extension of 666 held to the tenth of percent, the exact point:



Here’s a 30 day chart of the NDX. You can see the rising wedge has contained prices so far, but it’s a classic looking formation which I would expect to resolve downwards:



Looking at the SPX daily, we see what looks like a pretty mild and typical retrace of yesterday’s monster candle, and it’s held above the 50dma. However, it does appear that 5 waves up have completed, so there should be more correction. You can see that there’s support on the 50dma and just below there as well:



The DOW daily shows that we came down and closed below the upper Bollinger today after closing above it yesterday. That, all by itself is a sell signal, but you can see that the thin green 50dma stopped the decline as did the co-located dark green 20 year uptrend line (which may not be that accurately placed). Volume was definitely lighter today across the board, the bulls will point to that as non-confirming volume. However, when you go back over the bear market you will find that the first few days of decline are usually on lower volume and that it comes up later. Also note that the overall prices are higher yet, the volume is now declining:



The XLF daily created somewhat of an inverted hammer that’s inside of yesterday’s bar. I don’t think the hammer means anything, but it’s also still above the 50dma, but the daily stochastic has issued a sell signal:



When we look at a 20 day, 30 minute chart of the XLF, you can see what looks like a pretty clear double top and M pattern forming (IYR has what looks like a megaphone top on this timeframe). Again, there’s a large open gap below 8.75, and another down in the 6.50 range. Remember that the XLF P&F is sitting on a fresh sell signal and a 2.50 price target that conflicts with the bullish index targets. Look at the RSI… notice that with equal price peaks, the second RSI peak is lower. That’s a bearish divergence. The fast stochastic is oversold on this timeframe, but not the slow, and certainly not the 60 minute or daily:



The rally is still way overbought and I would expect a retrace at some point on profit taking if nothing else. This may very well be the long awaited start, that’s what the EW count would indicate along with the other things I’ve shown, including the NDX rising wedge pattern. The RUT was the weakest again today, and it tends to lead. It did close beneath its 50dma today, the only of the major indices to do so.

The bulls will be expecting a normal pullback, some consolidation. That may be true, there’s certainly a ton of bullish momentum. Watch the SPX 804 area and then the 795 level. If we get below 795, the odds of a material retrace increase. For me, the minimum retrace should be 38.2% which is down at 763 right now. The next lower pivots are at 789 and then 768.

All in all, it’s all getting a little old to me. Comfortably Numb…

Pink Floyd, Comfortably Numb: