Monday, May 10, 2010

Morning Update/ Market Thread 5/10

Good Morning,

With equity futures up 400 points overnight, somebody obviously must have “fat fingered” a BUY order this morning? Perhaps we need a full scale investigation and new laws to prevent this type of disorderly market? Actually I would call what the ECB and our Fed did as completely insane, obviously sick psychopaths and TERRORISTS who are hell bent on destroying the world’s financial system. That’s the serious part, they need to be locked up.

According to CNN:
The European rescue package, valued at more than $1 trillion, has three main components. The biggest provision will use nearly $570 billion to create government-backed loans meant to shore up confidence in shaky credit markets.

"Europe has taken its playbook from the [U.S.] Fed[eral Reserve]," Boockvar said. "It's chosen to inflate its way out of the debt problem rather than really deal with it."

$1 Trillion dollars of debt, quantitative easing, and guarantees, oh boy. Is that the rule of law that was in place? I think not. Debt to cure debt? All the debt that was the trouble is still there, plus new debt. As if debt levels weren’t high enough. This instills confidence? It instills all kinds of confidence in me… that is that the world is headed towards disaster. Of course we knew that already, but this is like standing on the accelerator as you race towards a brick wall, the end results are going to be spectacular. How long before the markets figure it out? Who knows, it took 14 months before the market finally woke up over here.

Central bankers put the deal together, and what stocks are the highest flyers this morning? The banks! Sick and demented. What’s even more sick is that our own Fed is in on the action by reinstating dollar swap lines into the European banks. Did you authorize that? Did Congress? No rule of law, no confidence.

Of course this occurred with the markets on the brink of correction – they want and are trying to clear out the debt and the misallocation. Below is a daily chart showing the dollar on the left and the Euro on the right. Obviously they were right up against their channel boundaries, not surprising that the action was taken there:

Actually, looking around, the move in the currencies is not commensurate with the scale of the move in equities.

Bonds are down, oil is up a little, and gold is down a little. The moves in these markets are not commensurate with equities either. We’re just going to have to watch the market for signs.

Speaking of signs, there were warnings that intervention could occur in a couple of measurements I follow. One is the total CBOE put/call ratio that reached above 1.2. Take a look at the other two times it exceeded that level in the past year and what followed with stocks:

We formed a sideways triangle on Friday, since it formed above the bottom and broke upwards, that triangle was a wave b. That means that this wave higher is likely wave c. Again, we’ll have to watch and see how the market reacts to such extreme intervention. It reminds me of a dying heart attack patient, lying in the emergency room after his heart stops – CLEAR! Out come the paddles for another jolt. “Doctor, we’re losing him!” CLEAR! JOLT!

Guess what? This patient is terminal. The math didn't work before and it certainly doesn't work now. No, this move will not instill confidence, it will do the opposite. Give it time, the patient is in the throws of death now – this does not buy time, it is another accelerating event.

Of course the pundits think that it buys time, this is because they don't see the brick wall that they are racing towards.

Yet their lack of vision has them fooled in the short term - again. On the open the VIX is plunging, down 33% already. This will produce a market buy signal with a close beneath the upper Bollinger:

The XLF is up 6%, LOL! Sweet justice for the group that bankrupted the globe, eh? Once again watch Goldman, they still cannot seem to break that $150 mark.

The people of the world don’t yet realize just how deeply they are getting rammed. The criminals are clearly still in charge and they are robbing you and me blind, if not directly then through our purchasing power. We will all work longer and harder to feed the banks, this is truly another sad day in the history of mankind – yet it moves us closer to the end. You’ll know that it’s over when the central banks are no longer in charge of creating and controlling our money. Until then, everything and every action is about them.

The Allman Brothers Band - Stormy Monday: