Monday, January 11, 2010

Morning Update/ Market Thread 1/11/10

Good Morning, boy, that’s a lot of ones!

And is it any surprise at all that yet another Monday finds equity futures higher? Usually when a pattern that is so obvious that everyone sees it occurs, it ends at that very moment of recognition. This is a sign of health! It means that the game is not rigged. Guess what… our game is rigged. Here’s what McHugh said about this phenomena last Tuesday after last Monday’s gain:
Since the March 9th, 2009 closing low at 6,547.05, the Dow Industrials have had 30 "up" Mondays (or Tuesdays after a Monday holiday) out of a possible 43, in other words, have been up 70 percent of the time the day after a weekend. Further, 16 of the past 18 Mondays were "up" days, or 89 percent "up" days. 80 percent of all the dollar gains from March 9th, 2009 came on those 30 Monday up days. There were 212 trading days since March 9th, 2009, and 30 Mondays accounted for 80 percent of price gains. I don't know about you, but I find that bizarre. Why? Because only 58 percent of all trading days (Monday through Friday) since March 2009 were "up" days. We should not have seen this many "up" Mondays, and further, we should not have seen 80 percent of all dollar gains for the rally from March 2009 on just 30 "up" Mondays. Think about how much money you could've made buying DIA calls late Friday, and selling them late Monday, since last March. Wouldn't you love to see an investigation of which large Money Center banks made extraordinary profits doing this, or other similar trades including futures?

Why yes I would love to see an investigation, but it’ll never happen. That’s because the government itself is behind it. They are the ones creating money and directly underpinning the bond market. Any child who has ever watched water flowing knows that when you put enough of it into one section then it soon begins to leak out into others. Of course that is their intent. So, forget about the investigation, let’s just go right after it and end the Fed, throwing them out on their asses for destroying what was the greatest free market on Earth. Oh, and now it appears that we are 31 of 44 up Mondays since the Great Deception began back in March of last year, and are up 17 of the past 19 Mondays, just a whisker under 90%!

Here’s a look at the action beginning on Friday afternoon and into this morning on the DOW and S&P. Note that the ramp began about 20 minutes before the close on Friday as people were front-running this now blatantly obvious trend that we have been aware of now for literally months:

The Dollar is back down to the 77 area, bonds are up slightly, oil is up although coming off its highs, and gold gapped higher.

There are no economic reports today. Later in the week we’ll get retail sales, CPI, Consumer Sentiment, to go along with the standard bag of weekly misreports.

But WOW! The U.S. has clearly been outdone as the world’s leading producer of false statistics and worthless paper. Yes, China reported over the weekend that their exports are soaring 17%! And if that’s not impressive, then try on their 56% gain in imports!!! Or how about their 46% gain in auto sales during 2009, a year following the collapse of their stock markets! "December sales of passenger cars, trucks and buses rose 92 percent to 1.4 million." Ninety-two percent in one month? I can't stop laughing! Statistics that are so patently false, that those who have bought into the “miracle” would be advised to RUN, not walk, from this investment miracle. I know, I know, everyone and their brother thinks you should cast your money into that miracle and I say let them knock themselves out.

Oh, did I mention that productivity in the Martin household sector is up 126% in the past week! It’s true, heck, our domestic imports are up a whopping 186%, while our exports are up a tremendous 333%!! Go ahead and one up that, Comrade Enron!

And the politicians back in America are talking about playing shameful and disgraceful games with your retirement accounts. People still don’t realize that the ERISA laws that made 401k’s possible were actually never designed to be a primary means of saving for one’s retirement. They morphed into that as companies realized that they could use them to dump their fixed retirement plans, and the people were snowed into believing this was some miracle that would allow them to get rich at the mythical and magical never ending stock market compounding of 8% per annum, exactly what your stock unprofessional told you has happened over the past hundred years. What he failed to tell you was that only the indexes with substitution bias actually perform that well, and that individual stocks in time actually go DOWN. That’s right, stocks have a life cycle and they die – or at least they are supposed to be allowed to die. This is why there is only one stock remaining of the original DOW Industrials, GE. And GE would have died had the government not bailed out their reckless financial unit. Your advisor also didn’t tell you that you began investing in your now 200.5k after the peak in the Baby Boom Generation, and well after the math of debt had begun to go exponential, exactly the wrong time to be buying in - but hey, you can't possibly "time" the markets, right, just like Greenspan or Bernanke can't see a real estate bubble. So, corporations ditched their fixed retirement plans, reduced their expenses and pushed the management of money onto individuals. This is like telling a 5 year old to go make their own soap, mill their own wheat, and then go balance the check book, because most people simply are not prepared to handle that money management task.

Now that the game of Quantitative Easing is supposedly nearing an end (yeah, right), the criminals running the Obama Administration want to annuitize 401k’s and IRA’s by creating MANDATORY “R Bonds.” Oooo, R Bonds! That sounds exciting and cool, got to have that! The average American, though, and they know this, doesn’t even have a clue that the word BOND actually is just another word for DEBT. And why do you suppose that the Administration would like to force your retirement savings into DEBT? Why that would be to finance their wild and out-of-control deficit spending, of course. Is this going to be a good thing for Americans at this time, while interest rates are at ZERO? NO, there is no worse time to invest in bonds than when interest rates are artificially at zero. As rates snap back higher, bonds will fall in value. This is yet another fleecing and yet another reason why Americans should support our plan for Freedom’s Vision. It would absolutely put an end to all such nonsense.

Want to hear another good one? Financial stocks are clearly too cheap! That’s right, get ‘em while they’re hot! Hey, if you can’t trust Bloomberg, who can you trust? Am I right? Huh, well am I?
Jan. 11 (Bloomberg) -- No U.S. industry has faster profit growth than banks and brokers, and no group is more hated by investors.

Analysts say earnings at financial companies rose 120 percent in the fourth quarter, accounting for all of the income increase in the Standard & Poor’s 500 Index, and will triple by 2011, climbing four times as fast as the market. Should the estimates prove correct, the shares are trading at a 15 percent discount to the index, data compiled by Bloomberg show.

That’s not enough for money managers burned by the 84 percent drop in the stocks from February 2007 through March and more than 160 U.S. bank failures in the past two years. Financial companies are the least-favored equities, according to a Bank of America Corp. survey of investors with $617 billion in assets that showed 38 percent of 123 money managers are holding fewer shares than are in benchmark indexes.

“The stocks are clearly too cheap,” said Mark Giambrone, a fund manager who bought PNC Financial Services Group Inc. and Bank of America stock for USAA Investment Management Co., which oversees about $74 billion in San Antonio. “There may be some bumps in the road ahead, but for the most part those are reflected in the valuations.”

Did you catch that?

"...accounting for all of the income increase in the Standard & Poor’s 500 Index."

That's what I thought. In other words, mark-to-fantasy accounting accounts for ALL of the income increase in the broad market.

Oh yeah, their “profits” will triple all right. In the same way that Enron’s profits were growing exponentially despite no real business initiatives. They conveniently forget to mention the reason for the aforementioned 84% plunge – the very same reason that financial “profits” are back. Namely mark to fantasy accounting. Again, buy into that at your risk. Isn’t doing the same thing but expecting different results the very definition of insanity? Thought so.

As I’m typing the market is falling after the open. Are the big players taking advantage now that everyone’s finally suckered into the Monday up game? We’ll find out by the close.

There’s really not a lot to say about the technicals that you haven’t already heard. Right now we still have two rising wedges in play, one smaller and shorter term and the much larger one that encompasses the entire “B” wave rally since last March. Markets still way overbought and historically divergent. Support remains at 1,133 on the SPX, with overhead at 1,168.

For those who believe all the Chinese and financial market "miracles," false statistics and outright lies, I say go take a gander at the miles of parked cargo ships, at the plummeting price of ship lease rates, at plummeting credit statistics, at plummeting sales tax receipts, and then I say...

Aerosmith - Dream On: