Tuesday, February 1, 2011

Morning Update/ Market Thread 2/1

Good Morning,

Equity futures are sneaking higher again this morning, but divergences among the indexes are in place and getting stronger. Bonds are lower, nearing the bottom of their recent range. Oil has pulled back a little, yesterday Brent Crude exceeded $100 a barrel. Gold is up slightly this morning, copper set a new all-time high and the disinformation on Bloomberg calls it due to “growth.” Yeah, growth in the supply of phony dollars. Meanwhile, rice is also setting new recent highs, corn is higher and close to breaking out, and most other food commodities are higher as well.

The dollar is down this morning and is approaching very important support in the 76.70 area, as can be seen on the following weekly chart:

Should that area fail to provide support, then on the monthly chart you can see that this triangle appears to be a pennant, the technical target if this pennant breaks down is roughly 27! However, keep in mind that the dollar is NOT a measure of real worth, it is a relative index to other currencies who are also trying to destroy their own value – thus TA may not be that effective when working on this chart. Still, support here needs to hold or it could slide quickly:

Motor Vehicle Sales will be released throughout the day, the Manufacturing ISM and Construction Spending will be released at 10 Eastern this morning and will be reported within the Daily Market Thread below this post.

The VIX closed yesterday still above the upper Bollinger Band, thus no market buy signal for now, we are still under the effect of the recent VIX market sell signal as well as a Hindenburg Omen.

While the SPX and DOW Industrials have retraced nearly 78.6% of their respective declines, the story is a far different one in the other indices. The Emerging Markets and the DOW Transports have both only retraced about 23.6% of their declines. The Russell 2000 has retraced 61.8% of its recent decline, but is established in a downtrend with lower lows and lower highs, and has only retraced 38.2% overall. This type of weakness in the more volatile and risk filled small caps is typical of tops as investors get conservative and favor the large caps.

Of course we have monetary pumping occurring daily, thus we have copper hitting highs while at the same time shipping indexes are falling. The Transports failing to make new highs here is a signpost warning that all is not right. UPS, however, did beat on earnings with shipments higher over the 4th quarter and that may help to lift the Transports today. They have a long way to go, however, to make a collective new high.

I spent a sickening 15 minutes or so watching CNBC yesterday. Nauseating how disconnected from reality the supposed “expert” guests are. One after the other parading to shill their latest wares. Not to worry about Egypt or the price of oil, it will all be contained. In that short stomach turning 15 minutes of pain, I watched a consensus occur that it was another buy the dip opportunity. None of the guests could pin the revolutions on the real cause and thus their conclusions, in my opinion, are massively flawed. But when you have something to sell, your vision and your judgment becomes slanted. What I see on the television is so slanted... well, hurl.

Food commodities are pushed higher by our money pumping. This pressures already debt saturated marginal people and economically marginal countries. There absolutely is the risk of contagion as there is no sign our “fed” intends to let up on the money printing. Just this morning Jordan’s King replaced his government under pressure – more cronies bite the sand. Change is most definitely coming to the entire globe and to the United States, this is the math of debt expressing itself and it won’t stop until the debt is cleared in one way or the other. Sure, the Bernak can POMO from here to the moon, however, it is not without consequence. The stock market failing to correct and assume some semblance of normal pricing is a WARNING that bigger and badder “other events” are on the way. The very best thing for the globe at this juncture is for the “Fed” to be removed from the power to create money. The “Fed” must be dismantled, it cannot be allowed to exist in its present form where private individuals own shares of private banks who in turn own shares of the “Reserve Banks” who in turn own the office of the “Fed” Chairman. That cannot be allowed to continue, ending it is the most important thing that can be done for the entire world, and for humanity in general. It doesn’t matter WHAT backs the money, what matters is WHO is in control of producing it and maintaining its quantity.

In California, new Governor Jerry Brown, is suggesting massive tax increases and is putting it to a vote of the people urging them to vote higher taxes upon themselves. The alternative, he says, is more massive dismantling of government. I know for a fact that Mr. Brown evaluated a State Chartered Bank, but he has failed to act, and instead is remaining inside the Central Banker box where austerity is the only answer. In my opinion, if you are going to stay inside the stupid and pathetic Central Banker box, then dismantling government is by far the preferred option. Debt saturated people cannot be helped by higher taxes.