Wednesday, March 10, 2010

Morning Update/ Market Thread 3/10

Good Morning,

Equity futures are flat as we head into the open this morning, below is a 60 minute chart of the DOW on the left and 5 minute version of the S&P on the right:

The dollar is flat, bonds are down, both oil and gold are down slightly.

The completely worthless MBA Purchase Applications “Index” came out with yet another wild and highly unbelievable move for the week, up 5.7% supposedly for purchases, but down 1.5% for refinancing. All we know is that two weeks ago they claim it hit an all-time low, but since they don’t tell us their index value or anything else, they would be far better off just keeping it to themselves. Again, since they spew this nonsense in public, we must be aware of others are being shoveled:
Purchase applications for mortgages jumped for a second week, up 5.7 percent following a 9.0 percent surge in the prior week. The back-to-back gains do follow an even greater run of declines and the index is still depressed, but two or three more weeks of such gains would be an early signal that demand is rising ahead of April's stimulus expiration.

The gain wasn't fed by a move lower in rates as rates rose across the board, up 6 basis points for 30-year loans at an average 5.01 percent. The refinancing index slipped 1.5 percent. Next data on the sector will be the homebuilder index on Monday.
Wholesale Trade is out at 10 Eastern, the petroleum report at 10:30, tomorrow is jobless claims and International Trade.

Here’s a great real world example showing how the math of our debt backed money has moved into an exponential growth phase:
The Kansas City Star
Benjamin Franklin, father of the first U.S. census — which cost $44,000 in 1790 — famously said that “a penny saved is a penny earned.”

Were he alive today, Franklin might have a less flattering saying for the bureaucrats running the 2010 census, which is costing taxpayers $15 billion — and rising.

That’s $48 per person counted, compared with $16 in 2000 (about $20 adjusted for inflation) and about a penny in 1790 (or 24 cents after 220 years of inflation).
$48 per person!? Just to count a person? Talk about bureaucracy at its worse.

In just one decade the cost to perform the census grew by exactly 200%! If only it were to grow 200% more, by 2020 it will cost $144 per person, but that’s not the way exponential growth works… if the exponential rate has not collapsed by then, which it is almost certain to do, then it will cost considerably more than even that wild number. Of course it’s okay, it’s a “stimulus” to the economy, never mind the drag that all the debt places on it. At this rate the only people employed by 2020 will be census workers, we’ll all make our living by counting one another.

Again, not to worry, not to worry. The Greek crisis is over and the rest of the region has no problem whatsoever, all the debt has magically disappeared.
Greek Crisis Is Over, Rest of Region Safe, Prodi Says

March 10 (Bloomberg) -- The worst of Greece’s financial crisis is over and other European nations won’t follow in its path, said former European Commission President Romano Prodi.

“For Greece, the problem is completely over,” said Prodi, who was also Italian prime minister, in an interview in Shanghai today. “I don’t see any other case now in Europe. I don’t think there is any reason to think the euro system will collapse or will suffer greatly because of Greece.”
My only response to that is LOL.

Turning to the markets, yesterday they were headed down when guess what happened? A rumor was floated that the SEC was going to ban all short selling on C, FNM, FRE, and AIG. Now go look at those charts and tell me what you see and at what time their ramp jobs began. The SEC has not, to my knowledge, denied this. The people who floated this rumor belong in jail. The SEC is complicit in destroying the rule of law for at the very least failing to act once again. But it’s okay because it caused the market to go higher. I will simply remind people that the odds of a full-on market crash statistically go way up in the days following any talk of banning short selling. Why do you think it’s being discussed and rumors being floated? I can tell you this, that a very large percentage of the overall market volume yesterday was shares in C. This looks like a classic case of pump and dump to exit a position by the game masters. Nice market, nice “investment.”

And that makes talking about the rest kind of pointless, eh? Well, due to the pump, the NDX did reach a new high and so did the Transports. Again, a divergence as the DOW and SPX have not. Volumes are still anemic. Conditions are overbought in the extreme and now the weekly stochastic is overbought once again. By my eye, we are now in wave 5 up of c up of whatever wave this is, I’m still working it as a wave 2 until we make new highs with the DOW and SPX. If we make new highs then it is a wave 5 and not a wave 2. Either way the next wave is down.

The Eagles – Pretty Maids all in a Row: