Monday, March 22, 2010

Morning Update/ Market Thread 3/22

Good Morning,

Equity futures are lower this morning, below is a 60 minute view of the DOW on the left and a 5 minute view of the S&P on the right showing the overnight action:

The dollar is higher, mainly at the expense of the Euro which is taking another leg down, bonds are flat, and both oil and gold are sharply lower. Watch the commodities, they look like they are correcting here.

There is no economic data released today. Tomorrow will be Existing Home Sales, later in the week come New Home Sales, Durable Goods, Jobless Claims, and on Friday will come 4th quarter GDP.

Of course the Healthcare Bill/ Insurance Industry Bail Out act passed the House last night and is now headed to Obama for his signature. This will be the first Federal law in history that mandates you buy something from a private company. It adds at least $1 Trillion onto our deficits over the next ten years, it draws funding away from Medicare, away from Social Security, and people on Tricare are going to have to switch. This bill was written and sponsored by the insurance industry. Once again your government and special interests have become the pushers of debt. Even Dennis Kucinich who has railed against such insanity was bought off. Very few adults are left, they have almost all been co-opted.

Within the context of a debt backed dollar system, this is yet another accelerating event placing us deeper into insolvency. It adds the burden of more taxes onto an economy that is already debt and tax saturated. The markets will get this eventually, and I note the lack of a Monday morning ramp job so far today. So far.

Meanwhile, the impossible math of debt backed money continues to express itself in Europe and with Greece. That’s because the money has to come from somewhere. Are the European banks going to provide loans? How do loans solve a debt problem anyway? Who do they come from, the IMF? Regardless of who issues any loans, the people of Greece, and the world, are facing a future of debt servitude should they agree to any such loans. Again, finding solutions within the box that work for anyone besides a central banker is simply impossible.

The markets are very much rhyming with the top that occurred in late ’07. The 1,150 SPX area is support, if prices get below there then you’ll know a correction of some magnitude is underway. Oil is down nearly 2.5% on the open, gold is beneath $1,100 an ounce, and it’s not uncommon for the commodities to lead the start of a correction.

Below is a 3 month view of the SPX daily, you can see that there’s quite a bit of support near the 1,150 area, and thus I would not be surprised by a bounce off that area (run up occuring as I post this). Last Friday’s down stroke came on much higher volume and the internals are again showing great stress.

The number of new 52 week highs reached that historic 601 figure and collapsed. That is typical of major tops, but it’s also typical that they take a long time to form as the dip buying mentality is certainly firmly entrenched after a year of nonstop run-up’s based upon accounting fraud and government debt.

The Government Can: