14 AUG 2009, Friday

1. Above chart shows "Lame Loans" on bank balance sheets. These are loans that are more than likely going to default. The thing that gets me is this whole rally has been built on the "temporary" suspension of normal accounting standards by FASB which occurred in mid March. To buy time for the banks, they were no longer required to value loans at current value and they could carry it at a price they like. Now, what are the chances that all the crap loans that were on their books have improved as the recession deepened? FDIC (taxpayer) is still responsible to back the banks that go bust. Typically, the longer they wait the worse the problems are getting as can be seen by the increasing number of bank failures. The thing that scares me is what happens when the FASB standards are put back in place. BOOM!!! This has been a mirage.
2. Excellent...and short...video of a gentleman attending one of the Town Hall meetings in Maine. He basically sums it up when he says "Don't trade your freedom for so called safety."
3. Current price action is coiling in a tight range similar to early June. This creates a lot of confusion. June's looked more like it would break down which it did for a short time followed by the recent explosive move upward. The current range is starting to look like it could break to the upside for the final surge. Dunno? Have to wait and see.
4. Indicators are all uncomfortably overbought (snagged from another blog) and sentiment for the small investor is showing too many bulls. Which, of course, makes me nervous...Looking for shorting opportunity. Could be coming soon...waiting...watching.
5. Watching these areas...we're stuck at 1010
   SP500 Resistance: 1010, 1050, 1100, 1130
   SP500 Support: 970, 940, 910, 870, 830