22 July 2010

22 JUL 2010, Thursday


  • Well...market, like Lucy, will keep you guessing.  
  • Took the trendline and 50MA.  So, neutral.  Still below 90MA and prior pivot highs.  Could it improve?  Sure.  Anything is possible...past few years have shown that.
  • Something to consider...Ben Bernanke (Fed Head) said yesterday in his testimony before Congress that the economic future is filled with "unusual uncertainty".  So, even he's hedging.  And this from the man who in 2007-2008 kept saying that sub-prime was contained.  Oops!  He was optimistic then and cautious now.  What to make of that...I'll let you decide.
  • Market has been tough...many indicators are all twisted after these multiple up/down 7-10% moves.  Their is little clarity...I feel for Ben here. 
  • Lately the market has been like this...

21 JUL 2010, Wednesday


  • I've been quiet since there isn't much to say for longer term investors.  I warned in mid-April and May was not pleasant going negative below the 50/90MA's and staying below despite hearty bounces.
  • There is a battle going on right now between the bulls and the bears.  Big overnight gaps that immediately reverse and go the other way big....treacherous.  When volatility starts picking up it can often indicate a negative outcome...it's a warning but not a guarantee.  Possible swoon to the 930/880 area by the fall?  August and September can be some harsh months. 
  • Careful out there.

16 July 2010

16 JUL 2010, Friday


  • Ha ha...very funny mother forker (honoring Eddie Murphy).

14 July 2010

14 JUL 2010, Wednesday




13 JUL 2010, Tuesday


  • The bounce came and once it showed it hasn't stopped...of course that was after it was down day after day after day, as well.  Not much to talk about when you get these streaks...multiple consecutive closes in one direction or the other.  
  • Chart above kind of sums it.
  • Market has expended a lot of energy to the upside and it has just gotten back to its falling 50 dMA (not pictured).  But has yet to get above it.
  • So far, since the flash crash, this has been one big wide sloppy swinging up-down affair inside the pictured channel with an overall downward bias...knocking at the door to break this nonsense?  Or return to the lower level?
  • It's been a market only suited for trading recently...Dayum Da Boyz play this game well.  Gotta respect that.   

10 July 2010

10 JUL 2010, Saturday


  • This remains THE question to be answered in this whole mess.
  • Trying to tease out the fundamentals has been very difficult.  For example....
  • Chart above...gold up indicates inflation...dollar up indicates disinflation...bonds up, against historic levels while government auctions more and more bonds, indicates deflation.
  • Very tricky environment.  No clear signals from any direction.  Perhaps that indicates a transitionary environment?  Yet, the question remains...transitionary from what to what?  And, more importantly, how long does it last?  Timing is always the question.
  • I personally think we're headed toward a deflationary environment...I'm in the minority.  It won't last forever.  But the government remains determined to do everything they can to resist those forces.  I don't think their powerful enough to overwhelm market forces and will eventually lose...just don't know when.  However, they've shown just how much they can do (while turning you, your kids/grandkids into debt slaves since debt equals future tax increases absent totally explosive economic growth)...my only question is what will be the unintended consequences and how painful will those be?  As stated in previous posts, I think they are basically setting up a situation where the pain will be stretched out over a much longer period of time but it will still be painful.  Ever heard the story of boiled frog?  PS...the frog is still gone to greener lily pads.
  • I'm a "rip the band-aid off quickly" kind of guy.  Many folks aren't.  Personal preference, I guess.

07 July 2010

6 JUL 2010, Tuesday

  • WARNING:  Rant coming...Why government interference in markets never works.  
  • For example, let's consider the housing market.  Congress attempted to engineer a "social outcome" and sponsored hundreds of "affordable home" programs which drove prices skyward.  And, ironically, now that housing prices are coming down and becoming more affordable, government is doing everything they can to stop the slide.  Does this make sense?
  • Cash for Clunkers: program to take older cars off the road that burn gasoline.  Well, duh!  Hello...cars burn gasoline.  So, they took the cars out of the used car market and DESTROYED them.  Huh?  Perfectly usable assets and you crushed them and have driven prices up in the used car market via a government forced shortage?  What about the folks that need cheap transport?  You know, like the kids coming out of college with big loan debt into a crappy employment scenario.  Heck you could have raffled those cars off to graduating college kids and made back some of the $4,000 per car paid out.
  • Bank Bailout:  I see...so we identify the banks that couldn't manage their portfolio and we then shove more money into them trusting that they'll now know how to manage their portfolio.  Heck!  Makes sense to me....NOT!
  • For every policy the government makes there comes an unintended consequence.  Government, once again, jumps in with new corrective policies to meet the first unintended consequence which lead to other unintended consequences....
  • Do you sense the trap of allowing market manipulation by the government?  How funny that the old communist and socialist countries are running out of the burning building and our current leadership wants to run in.
  • We have learned nothing.  The script we're following is just like the FDR days...it prolonged the downturn then and it appears to be doing the same now.  
  • "Those who don't know history are destined to repeat it."
 

  • "Drat that blogger!  I'll get you and your little dog, too!" cried the Wicked Witch of the West.

05 July 2010

5 JUL 2010, Monday


  • HFT Market Manipulations on  Display...great video for the uninitiated / unwary.  Ought to put the whole "the market's not rigged by "Da Boyz"" argument to rest.  This happens during regular trading hours but it's much easier to conceal due to the higher volume.  But, in the after hours (Globex...which is pure electronic trading, no pit (humans) trading in Chicago) the gaming is easy to see...and is exactly how they created the 2009 up move...alot of overnight forcing.
  • Cash markets (pit trading) are closed today...but Globex will have a short session.
  • Daily appears somewhat oversold and is entitled to a bounce...but is still negative.  Trick is weekly isn't so what kind of bounce until you get some solid weekly oversold too?  How's that for non-committal!  Market is not very healthy...even if it were to go up there has got to be some repair to the damage that recently occurred.
  • Bounce from current levels to 1,070 area first and then to 950 or 880 if Da Boyz wanna knock 'em down some more?  
  • One day at a time.
 

    26 June 2010

    26 JUN 2010, Saturday (Part II)



    • Something to consider... The Contract from America.
    • The Contract from America

      We, the undersigned, call upon those seeking to represent us in public office to sign the Contract from America and by doing so commit to support each of its agenda items, work to bring each agenda item to a vote during the first year, and pledge to advocate on behalf of individual liberty, limited government, and economic freedom.

      Individual Liberty

      Our moral, political, and economic liberties are inherent, not granted by our government. It is essential to the practice of these liberties that we be free from restriction over our peaceful political expression and free from excessive control over our economic choices.

      Limited Government

      The purpose of our government is to exercise only those limited powers that have been relinquished to it by the people, chief among these being the protection of our liberties by administering justice and ensuring our safety from threats arising inside or outside our country’s sovereign borders. When our government ventures beyond these functions and attempts to increase its power over the marketplace and the economic decisions of individuals, our liberties are diminished and the probability of corruption, internal strife, economic depression, and poverty increases.

      Economic Freedom

      The most powerful, proven instrument of material and social progress is the free market. The market economy, driven by the accumulated expressions of individual economic choices, is the only economic system that preserves and enhances individual liberty. Any other economic system, regardless of its intended pragmatic benefits, undermines our fundamental rights as free people.

      1. Protect the Constitution

      Require each bill to identify the specific provision of the Constitution that gives Congress the power to do what the bill does. (82.03%)

      2. Reject Cap & Trade

      Stop costly new regulations that would increase unemployment, raise consumer prices, and weaken the nation’s global competitiveness with virtually no impact on global temperatures. (72.20%)

      3. Demand a Balanced Budget

      Begin the Constitutional amendment process to require a balanced budget with a two-thirds majority needed for any tax hike. (69.69%)

      4. Enact Fundamental Tax Reform

      Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words—the length of the original Constitution. (64.90%)

      5. Restore Fiscal Responsibility & Constitutionally Limited Government in Washington

      Create a Blue Ribbon taskforce that engages in a complete audit of federal agencies and programs, assessing their Constitutionality, and identifying duplication, waste, ineffectiveness, and agencies and programs better left for the states or local authorities, or ripe for wholesale reform or elimination due to our efforts to restore limited government consistent with the US Constitution’s meaning. (63.37%)

      6. End Runaway Government Spending

      Impose a statutory cap limiting the annual growth in total federal spending to the sum of the inflation rate plus the percentage of population growth. (56.57%)

      7. Defund, Repeal, & Replace Government-run Health Care

      Defund, repeal and replace the recently passed government-run health care with a system that actually makes health care and insurance more affordable by enabling a competitive, open, and transparent free-market health care and health insurance system that isn’t restricted by state boundaries. (56.39%)

      8. Pass an ‘All-of-the-Above” Energy Policy

      Authorize the exploration of proven energy reserves to reduce our dependence on foreign energy sources from unstable countries and reduce regulatory barriers to all other forms of energy creation, lowering prices and creating competition and jobs. (55.51%)

      9. Stop the Pork

      Place a moratorium on all earmarks until the budget is balanced, and then require a 2/3 majority to pass any earmark. (55.47%)

      10. Stop the Tax Hikes

      Permanently repeal all tax hikes, including those to the income, capital gains, and death taxes, currently scheduled to begin in 2011. (53.38%)

    26 JUN 2010, Saturday

    • Chart above from blog.AfraidtoTrade.com for current Dow.  Click here to see interesting resemblance to the Dow in 1930.
    • OK...here's a rant...This morning saw a left-leaning talking head defending allowing the Bush tax cuts to expire since, "afterall, it would merely return the tax rates to those of the Clinton era which were pretty good times."  
    • He's right!  We had a good economy and federal budget deficits shrunk toward zero.  
    • So, let's go all the way!  Let's roll back federal spending levels to that time as well!
    • Why can't these guys ever present a complete argument?  Instead, it's always halvesies...the half that suits there purposes.
    • The recent "financial reform" bill took months of debate in the Senate...yet accomplished nothing.  Sort of seems like the year they wasted on Healthcare which will be regretted long into the future.  Who exactly is running this circus?
    • Since I am, and always have been a fiscal conservative, I've got just one thing to say to those that live in that oh so quaint fantasy world..."Say hello to my little friend!"

    25 June 2010

    25 JUN 2010, Friday

    • Wall Street Financial Reform:  Politicians Lie, Media Applauds, America Suffers.  The new financial reform bill has been successfully gutted by the Bankster Lobbyists.  Despite Obama's tough talk, there is no "Change" (big freakin' surprise considering Goldman Sachs was his biggest contributor).  
    • The Banksters will, ultimately, turn us and our kids into their debt slaves.  So, "Shut up and pay-up America so noone gets hurt...especially our bonuses!" the Banksters say!
    • Heck!  All CON-gress had to do was repeal the CFTC Act of 2000, reinstate Glass Steagle and reinstate the leverage limits on banks / brokerage houses that existed prior to 2004.  For goodness sakes...they didn't have to do any work and write new laws.  All they needed to do was go back to the old ones (ones listed) that worked for over 70 years since the last banking crisis.  What a bunch of clowns.  I'm sorry but where no respect is deserved, no respect will be granted.  
    • The shit-storm continues unabated...gonna need a stronger umbrella!
    • And...Oh, by the way...this is the way a capitalist system works below.  Success is rewarded and failure is swiftly and harshly punished.  But, apparently the Banksters, Fannie Mae/Freddie Mac and auto companies don't experience the downside...since they own CON-gress and that means they own the taxpayers.  So, again, shut the heck up and pay up.  Yes, you are being raped America yet you sleep.  When will you awake.  And to you that think I'm not correct...get your facts together, I'll get mine...I'll buy the first beer and we'll debate for beers.  By the end of the night, you'll be footing the bill.
    • Weekend is here.  I'm going to rest...'cuz I'm really getting tired of this shit!

    23 June 2010

    23 JUN 2010, Wednesday

    • If we were in recovery would New Home sales and rates on 10 Yr US Treasuries be going down???
    • There seems to be a disconnect from what's being said and what is really happening.
    • Being careful!
    • If the market is going to bounce higher, it's at a spot where it better hold and get to it.  Chart from:  http://pugsma.wordpress.com/
    • Otherwise, setting up a potential head and shoulders pattern measuring to the low 900's.
    • Would still like to see more of a bounce for 2-3 weeks for a reasonable potential short...1140's? 
    • One day at a time.  

    22 June 2010

    21 JUN 2010, Monday


    • Great schtick from John Daly on how the recent Presidential Speech repeats the same thing that has been said during "Energy Independence" speeches of the 7 prior Presidents.
    • Which basically means we can expect the same results since oil still has the highest energy density capable of being readily transported through means currently available.
    • Although......he could've vastly accelerated permitting of nuclear power the very day he walked into office to get the 10 year construction process going....instead, of wasting 2 years and just now starting to think about "Maybe, I oughtta actually think with a more open mind and produce results!"  I mean, heck, France gets 80% of its electrical generation from nuclear power plants.
    • Naah!  That's just crazy talk!  
    • Besides, it's easier to introduce a fake carbon trading scheme that will do nothing to resolve "supposed" man-made global warming.  However, it will establish a mechanism so that a whole bunch of people (already appropriately positioned) get to touch a completely new, HUGE, steady stream of cash and skim off of it for their own purposes...AT YOUR EXPENSE! 
    • Yeah!  Go Cap and Trade!  It's just handing Goldman Sachs another market to artificially engineer into a bubble...and they don't even need any true fundamentals in order to do it.
    • Now, for a moment, just think about it...Complete Lunacy, no???
    • So, just shut up and remember to "feel good" when you're paying $5 for gas again and your home utilities increase 50%. 
    • Ya know sumfin....ya can just feel za Change!
    • Oh...the way...who will pay the heaviest price for Cap and Trade?  Is this just?

    21 June 2010

    20 JUN 2010, Sunday


    • Not much to say...bounce continues.  Well sort of.  The bounce this week was basically one day, Tuesday.  Wednesday thru Friday were nowhere days and really tiny compared to recent ranges.  You can barely notice them on the chart.  
    • It's summer time...and a light volume environment so "Da Boyz" and their HFT machines can probably very easily control and "paint" the moves they want.  What will it be?  
    • Still below 50/90 MA's..between them is neutral, above positive, below negative.  It's typically decision time between them....you figure out which way your leaning and decide whether you want the trade or not. 
    • Again, for investors I think late summer / fall may be the next opportunity
    • One day at a time. 

    19 June 2010

    19 JUN 2010, Saturday

    • The IMF has done what is perhaps one of the most thorough studies on recessions that share the combination of a global recession and financial crisis — like the one we’ve recently experienced. And its study shows that the recoveries of past recessions with these dualities tend to be longer and slower than normal recoveries — typically around five years until economies sustainably resume trend growth.
    • PS--This is not meant to infer that we're just starting a Depression.  I dunno.  My point and the facts are that a lot of damage has already been done and it doesn't correct itself quickly...eventually, just not quickly.  This is merely my opinion and a longer term view of the potential slog ahead.
    • This post will be ongoing as additional info is available.
    • The Big Picture, Part I: Following the Worst Crisis Since the Great Depression
    • The Big Picture, Part II: Following the Worst Crisis Since the Great Depression.

    17 June 2010

    17 JUN 2010, Thursday


    • Really hasn't been much to say.  Market appears to be burning off its oversold momentum by going sideways in a broad range.  One plus is...broke through previous pivot highs (but no follow through so far).
    • It could go up more...wouldn't surprise.  However, a few things are stacked against it...seasonally, summer is a week time of year and recent release of the Leading Economic Indicators are showing a weakening economy.  Also, resistance above in JAN highs, mid-MAY bounce pivot and MA's.
    • Next month, the government will start laying off many of the temporary census hires and that could blow a hole in the rosy "employment is improving" scenario.  Also, we are in what should be the strong part of the housing cycle and that is showing signs of weakening...which expanding housing and auto purchases are critical to our economy's health. 
    • All that coupled with Europe imploding, Bernanke should be out of bullets and I really can't see Washington coming out with any new "stimulus bill" tells me "high risk"...not suitable for most.
    • Oddly, the President may be trying to divert attention from the economy by him basically declaring war(???) against an oil spill after being slow to act?
    • I am in no rush...just a trading environment.

    14 June 2010

    14 JUN 2010, Monday


    • Be sure to click on all the links along the way for supportive information!
    • Right out of the gate...here's a cheery note.  Social Security is officially "in the red" 6 years earleir than anticipated.  Hey, Washington!  Here's a crisis you shouldn't let go to waste.  Fix it!  Now!  Reduce spending to at least stop the bleeding...Please, to the adults.  If any are left???  Great video / transcript of Senator Alan Simpson (Debt Commission) being interviewed on Social Security problems.
    • And by the way...when the budget does finally get cut, and it will whether voluntarily or forced through failed Treasury bond auctions, what are the areas that they can get "real money" from?  Hmmm....click on the "2010 US Expenditures Pie Chart" (at the bottom) to make it bigger and then "You can act like a responsible adult and start making some reasonable choices!"  Have fun!  
    • Make no mistake, it must be done or our kids/grandkids are going to pull the plug on us at the first opportunity, justifiably so.  Either that or they'll wring their hands and rend their garments while wailing what amazingly irresponsible knuckleheads we were to hand them such a bag of steamy dog-squeeze.
    • Come November...Do the Right Thing and Vote Responsibly!  Do the research on your representatives and vote anyone / everyone out who voted for ANY big expansions in spending (Bush's Medicare Part D, Protracted War budgets, TARP, Obama's 2009 and 2010 Budgets, Obama's Stimulus, Obama-care, etc, etc).  It's a start!  
    • Sooo, here's a VERY SIMPLE idea!!!  Just open your mind and consider this for a moment...require that our leadership identify and roll back all massive spending and entitlement programs put in place AFTER September 11, 2001 (9/11).  This goes for states and municipalities, too!!!  Seems to me that the country was basically fiscally sound then.  Sure, there would be some pain...but we'd have a balanced budget in 3(?) years and still be able to service Social Security, Medicare and Medicaid.  The bonus by choosing that date is that any opposition from the left could immediately be completely dismissed since it would basically return us to the Clinton era spending programs which were supposedly the "best economic times our country ever knew".   
    • Now, as for the Keynesians out there...You will exhort, "But, during times of slack private demand the government has to step in with deficit spending to keep the economy going until private demand picks up again."  Under the theory, I will agree.  However, I will challenge you with the second half of the theory that many so willingly forget or avoid altogether.  And that requires that the government return its budget to balance as soon as possible afterward through spending reductions / tax hikes.  To do otherwise results in an unsustainable debt curve like we are currently experiencing.  Historically, we've not done that.  Yes, I'm a spoiler...but I prefer real world to fantasy world!
    • "But, what can I do?"  Write your representatives, include your version of the information discussed, then forward this and urge everyone you know to do the same.  Additionally, tell them to do the same and ask them to forward the same request to all they know, etc, etc, etc.  That's the power of the internet...use it!  Do it!  Enter your zip code in to the "Find your lawmakers, tell them what you think" box found at this page and get to it!
    • Over-spending is the problem not under-taxation...just my opinion.
    • Here...don't forget to have some pie..."Hmmmm, pie!" 

    13 June 2010

    13 JUN 2010, Sunday


    • Downside momentum has slowed after 3 weeks of wild whippy sideways action.  Yet no pivots have been broken to the upside yet.  Still below the 50 & 90 MA's.
    • Sentiment is kind of neutral here so no clues...not one-sided.
    • NYSI is just starting to turn up.
    • What kind of bounce do we get here?  One to sell into (right now I'm in this camp) or one that gets some legs?  A subscription to tomorrow's Wall Street Journal sure would be helpful...no?  But it's never that simple...except in a Secular Bull Market.  Each day adds another piece to the puzzle and you try to identify the picture as soon as you can to act.  Below chart shows potential scenarios in this indecisive environment.
    • For me, it's still negative and I don't trust it.  I think that the low of the year still lies ahead...SEP-OCT?  930 area on SP500?


    • As I've said in the past, I believe we are in a Secular Bear Market which will have Cyclical Bull Markets within it.  Since, that is the case, the chart below gives me a healthy respect for risk and the need for taking good profits when you have them (then sit on your hands for awhile) and minimizing losses.
    • I'm not trying to be negative.  I'm merely trying to use the only thing available...history.  Almost everyone investing today is focusing on the 1980-2000 markets.  That environment will return but we may have a few years to go.  
    • Be careful out there.

    08 June 2010

    8 JUN 2010, Tuesday

    chart of the day, U.S. Government Securities At All Commercial Banks, 1947-2010

    • Banks, contrary to popular belief, are lending like crazy!
    • Only, it's not to the public...it's to the Federal government.
    • This simply put is the effect of the TARP, Stimulus, Health Care, etc.  
    • All available capital is being soaked up by the government...business and private citizens are being crowded out of the credit markets.
    • No soup for you!!!

    7 JUN 2010, Monday

    SPX 

    • With volatility so high on a day-to-day level, the daily charts have become rather choppy.
    • The longer term weekly chart above shows we're at a critical level.  Not many more pivot/congestion levels below where we are.  Small one in high 900's then next is 950's.
    • There really isn't much for intermediate-term traders to do right now.  Sure wish there had been a cleaner way to get on this down move for longer term folks.  But it's just been suitable for trading with the volatility initiated by that Flash Crash.
    • One day at a time.

    05 June 2010

    5 JUN 2010, Saturday


    • One item that caught my eye after Friday's close was the ratio of down volume to up volume.
    • Ordinarily when you see distribution spikes you'll see a 10:1 to 20:1 down to up volume ratio or up to down volume ratio.  Check the chart above for yourself.  I think you'll be able to spot the unusual reading if you stare at it really, really long and hard comparing to prior history (kidding).
    • What does a 120:1 ratio indicate???  Capitulation?  Or is it merely fear of holding over the weekend?  And if so, do they reverse it on Monday with a buy fest?
    • This market continues setting new record readings in traditional indicators on both the upside and downside.  Sure makes it tough to use history as a guide when we keep making new history.
    • Still highly volatile and whippy...and negative.  Check the charts on the sidebar.
    • Always amazing how often simple trend lines can act to halt or stall price action.  Example...black trend line has been there since the Flash crash.  Trying to find new lines.
    • One day at a time.
     

      03 June 2010

      01 June 2010

      1 JUN 2010, Tuesday