Friday, February 26, 2010

Morning Update/ Market Thread 2/26

Good Morning,

Equity futures are roughly flat this morning following yesterday’s “miraculous” stick save. Below is a 60 minute view of the DOW on the left and on the right is a 5 minute view of the S&P:



The dollar is flat and bonds are UP. Bonds being up is generally not favorable to stocks and yesterday bonds were up as well and did not fall back during the afternoon pump. This is yet another sign that the action in the equity side was not real. Oil was down hard yesterday but is back up a little this morning, gold held up well both yesterday and this morning.

To me that action yesterday afternoon was nothing but proof that our markets have been taken over by computers and thugs. Someone (who?) floated a rumor that AAPL was going to do a 4 for 1 stock split just as prices were trapped below the very important 1,090 level following more very negative economic data. This morning ZeroHedge produced data showing that Goldman placed a huge long in the futures market just prior to the rumor being floated – the rumor was later denied, by the way, and Goldman was selling into the close after pocketing a tidy seven figure profit on the day.

Here’s what my Schwab account daily summary stated:
Unless you are a day trader, this is a difficult market to make a big directional bet. On Tuesday, the DJIA dropped 100 on the dismal consumer confidence number. Yesterday, it rose 90 on Ben's comments on easy money. Today, it was 190 points down in the morning on an unexpected rise in jobless claims and renewed concerns about Greece. But, amazingly, it suddenly popped higher in the afternoon to close with only a 53.13 point (-0.51%) loss at 10321.03.

Oh yes, “Amazingly.”

This type of action is absolutely driving out small investors. Frankly I think a person is nuts to put any money in any market in which any of the big banks have any input whatsoever. I also reiterate that your money should not be on deposit at those institutions, I can assure you that not one penny of my money is.

Since our government has been taken over by the very same interests, the regulators not only look the other way, but they encourage and support this type of market activity. But since the bankers own the markets, they now can and are holding them HOSTAGE, in the same exact manner that they held the economy hostage when it was on a gold standard. Study your history and you will see this same game being played time and again – “favor our crimes against the people, OR ELSE!” This is what happens when you turn the power of money creation over to them – be it backed by gold or debt, doesn’t matter – as Bill Still says, “it’s WHO controls the quantity that matters.”

This morning the 4th quarter GDP data was revised upwards from the previously reported 5.7% annual rate to 5.9% annual rate. My thoughts, Commrade, can be summed up in one word – JOKE:
Highlights: Fourth quarter real GDP was revised up but the details indicate that the revisions were not for the good. Real GDP growth for the fourth quarter was revised upward to an annualized 5.9 percent from the initial estimate of 5.7 percent. The market forecast was for a net unrevised second estimate. The higher estimate reflected more positive contributions from private inventory investment, exports, personal consumption expenditures (PCE), and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased. But overall strength for the quarter increasingly was in the inventory component as businesses slowed the pace of destocking. Final sales growth was revised to a more modest 1.9 percent increase from the original estimate of 2.2 percent. Nonetheless, the fourth quarter GDP advance is the second in a row. The change in real private inventories added 3.9 percentage points to fourth quarter GDP, compared to 3.4 percentage points in the initial estimate. Business inventories fell a modest $16.9 billion, following a sharp $139.2 billion plunge in the third quarter. Within final sales, there was some strength in investment in equipment & software, posting an 18.2 percent jump, while residential investment advanced 5.0 percent. PCEs rose 1.7 percent in the latest period. Net exports shrank by $10.3 billion with exports spiking 22.4 percent and imports gaining 15.3 percent annualized. Nonresidential structures fell 13.9 percent. Year-on-year, real GDP improved to up 0.1 percent from minus 2.6 percent in the third quarter. On the inflation front, the GDP price index was revised down to a 0.4 percent rise, compared to the original estimate of an annualized 0.6 percent. Analysts expected no net revision to the initial GDP price inflation number. Markets should focus on the downward revision to final sales and this should weigh on equities and help interest rates ease.

Well, I can think of one other word... "Whatever." Where to begin? Do I need to explain every flaw in this data every time it is released? The miscalculations and flaws in this report stack high, one upon the other until it is just simply not representative of what is actually occurring in the real world. This type of totally false reporting of economic data doesn’t really fool anyone, what it does is lead to a loss of confidence in government. More and more people are waking up.

Yesterday afternoon I watched one portion of Obama being questioned about the math of his healthcare proposal by a Congressman. It was quite interesting to see Obama sit there after being told about all the accounting gimmicks and mathematical lies that are contained within the release of their healthcare plan. Didn’t seem to faze Obama a bit… But I can assure you that the real math does not lie and that it ALWAYS expresses itself over time. The bankers, the politicians… they are at the root of the bad math, but they will eventually fall victim to their own doing as the math cannot be defeated with lies and it WILL have the final word.

Citizen Sentiment and Existing Home Sales will come out right around 10 Eastern.

Yesterday’s market action produced several unnatural looking hammers, most were inside type of affairs, but on the Transports it created a large outside hammer. This one is at the end of the wave 2 ramp, it may be an indication of a top, but we need to see prices close lower today to validate it as a possible reversal signal:



The up action produced a lower high yesterday and it did set up a channel boundary.



Again, I still don’t think that action was natural at all, it was a manipulated short covering rally pimped along by a company whose survival was based solely on the use of YOUR funds which you did not authorize. So we’ll just have to watch and see what happens. The economic data is turning horrendous very quickly once again. The up action only comes on game playing but the down action when it comes is on higher volume.

Hey, Goldman had a ticket to ride yesterday, did you?

Beattles – Ticket to Ride: