Friday, June 26, 2009

Stock Market Review - 6/26/2009

Green Shoots or Punji Sticks?

The lie-athon continues. This week, our wonderful government gave us more good news about the economic recovery. I won't run down the list. Everything was better. Home sales, industrial production, GDP past and present, inflation, you name it. We are all even making more money and saving it to boot. Sure we are. Meanwhile, unemployment (government figures) looks likely to sport double digits soon and real unemployment is probably pushing 20%. Only bankers are getting raises and more home owners are drowning in foreclosure and delinquency. Two of our three major car manufactures are in bankruptcy court and the third is pulling on a $3 billion dollar government bailout loan. Our biggest airplane manufacturer, Boeing, just delayed its newest airplane for a couple of years but that's okay, they may not need it as orders are getting cancelled anyway. Fed Ex said business was slow and fertilizer producers cut projections by 50% since farmers don't have money to pay for the stuff. The government is trying to seduce the populace into buying cars and houses by subsidizing the prices. May income was up due to stimulus checks going to Social Security recipients. I didn't know these folks had income in the first place! Better watch out. Those 'green shoots' might turn out to be punji sticks.

Our Treasury auctioned over $100 billion in Treasury notes this week. It was a record amount. It was also in short maturities as they didn't dare push their luck with longer maturities. No one wants to play that game. In a further effort to skew reality, the government changed the statistic that shows how much foreign demand there is for our junk paper to make it look like foreign banks stepped up to the plate big time. Supposedly, this group of Treasury buyers increased their percentage of buying this week to 67% from around the usual 33%. Again, our government just changed the formula. Don't get excited. The foreign banks are not excited to own our Treasuries. Neither is Bernanke but he's in there as well buying big chunks as he follows through on his pledge to buy $300 billion by Autumn. So, at some point, the Fed will need to raise interest rates, what with the economic recovery gaining steam and all, and they do so by selling Treasuries. Won't that damage the Fed's portfolio and balance sheet? I thought the Fed was supposed to be disconnected to the government of the US? Oh, wait a minute - they are the government of the US!!

Below is the one-week chart of the DIA (Dow ETF). It's interesting in that the volume is still concentrated at the beginning and end of each day. The selling came on heavy volume. And, as the Dow slipped back towards 8200, it scared the bejeepers out of the PPT and they hit the market first thing Thursday morning with an impressive couple hours of buying. What are they so afraid of - the truth?

One week ending 6/26/09 DIA
Chart courtesy

Here is another interesting chart. The chart below is the SPX in red and UDN (down dollar) in blue. I don't even need to explain this. The stock market can only go up if the dollar is weakening. Why? The current P/E of the Dow is north of 25 (Barron's says 50) so the markets are not going to rise because they are of good value. They will only rise on the back of pure hyperinflation. I know, I know. The Fed says there is none. If so, then the markets will soon resume their march to zero because the only thing holding them up at these levels is stimulus, mark to fantasy accounting, and lies. Watch these two lines very closely. If they begin to diverge like they should, the Dow will fall with the S&P 500 and the dollar will become next to worthless. They only converged once Bernanke staged his coup takeover of the government in August of 2007. 
2 years SPX and UDN
Chart courtesy

Saturday, June 20, 2009

Stock Market Review - 6/19/2009

Market? What 'Market'?

Maybe there never was a stock 'market' where prices were set by investors. Maybe the power elite and central banks of the world always interfered and manipulated. As I have been detailing in this blog, the charts clearly show certain patterns that scream 'manipulation' and 'interference'. The weekly chart at the bottom again shows major volume in the DIA at the beginning and end of every day just like all previous weeks. This week was a down week. Again, Bernanke has to drive the Dow above 9000 to take out the previous lower high so the government propaganda machine can get behind a 'downtrend has ended' theme for stocks. They spent the past few weeks trying to sell the world on the 'green shoot' idea that the economic downtrend had bottomed or at least was weakening at a slower pace. This is like saying that the swimming pool that was leaking is now leaking at a slower pace so go ahead and dive in head first. It's all good.

Meanwhile, on Planet Reality, unemployment continues to rise and job creation continues to contract. Trillions in wealth, either real or perceived or paper, has melted and it will not return. People don't like me because I tell the truth. That's the truth. Real estate has been the biggest wealth accelerator of the last decade and it is now dead. Our lying government continues to talk it up and act like they have some sort of magical power to revive the sector but it ain't happening. We are broke. We can't afford the houses that we are living in much less a new one. We can't afford new cars. We can barely afford groceries. The insane idiots that run this country think the way out is more debt and more borrowing. Sadly, I think they actually believe that giving big banks all the money back that they swindled in the real estate scam of the early 2000's and then lost is the best approach. What is the result?

Well, aside from the CEOs of these banking institutions playing the American public as the stupid ignorant fool that they are and riding corporate jets to lush vacation spots, all the money in the country is being sucked into the vacuum of the banking institutions. There, they will hoard the money because they now know better than to lend it to us since we are all losing our jobs and can't repay current debts much less future debts. And why not? The banks can borrow at the Fed Funds rate of zero and buy US Treasuries yielding nearly 4%. Meanwhile, Timmy of TARP has taken his comedy act to China (our chief lender and enabler) to tell them that their investments in the US are safe and the dollar is strong. After which, many listeners had to be carted to the hospital with cramps induced from excess laughter. What a bozo! So, when the government goes into the debt well for $10 trillion, the debt has to be issued by the Treasury. Since there aren't enough buyers, the interest coupon has to be raised. Thus, Treasury yields are on the rise and are poised to turn the Treasury yield chart into a Mt. Everest look. To combat this unwelcome development of higher interest rates, President Bernanke has elected to buy large chunks of Treasuries for the Fed. The Federal Reserve is therefore becoming one of our lenders/enablers now. Why is this a problem for the average ignoramus American? The Fed controls our interest rates through their Fed Funds policy. Let's say the Federal Reserve accumulates a trillion dollars in Treasuries. Don't laugh. They soon will at the rate they are buying with purchases of some $15 billion this past week. Ditto for previous weeks and coming weeks. The Treasury needs to sell some $100 billion next week and so on to fund the bank heist that our witless nitwits in Congress condone as 'economic recovery' strategy. So, do you think the Fed will ever raise the Fed Funds rate in the future if they hold massive amounts of Treasuries? Only two things can happen. True investors would see this as suicide and buy treasuries under the idea that the idiots at the Fed would eventually invert the yield curve since raising rates would destroy whatever economy we have left and put us in a depression so deep we wouldn't be able to see the 'green shoots'. Or, bond holders would take the action of the Fed raising rates through sales of their own treasury holdings and sale their treasuries in concert. Bond yields would shoot through the roof. Now, I ask again. Do you think the Fed can ever raise rates in the future? Well, I guess they could. They could always get the Treasury to run off a few pallets of C-notes that they could put back on their balance sheets. Welcome to insanity.

If the current rally stalls and begins to fall back towards Dow 8200, don't let the rally door hit you in the behind. Take the stairs down to Dow 5000. The next leg down should be a doozy! Unless of course, Bernanke gets back to work this week in his primary function of PPT stock market manipulator. Come on back to work Ben. We're counting on you. The party won't start unless you hit the switch.

One-week DIA ending 6/19/09 15-minute bars
Chart courtesy

Friday, June 12, 2009

Stock Market Review - 6/12/2009

The 'green shoots' are there because we SAY they're there!!

To be good at sales, you have to be an optimist. You have to be convincing and you have to instill the call to action. You have to get the customer to believe he has to buy the product right now at the current price. Enter the US government. Some people that are good at sales are character-less and mendacious. They will simply say anything to make the customer buy the product. So, we are being sold on the 'green shoot' idea that the economy is showing signs of recovery. Sure, unemployment in the US is pushing 20% and inflation is growing like a fat man at a pizza buffet. Living standards are dropping and houses have turned from a pot of gold to a dungeon. But our government has to pitch the 'recovery' sales job at us least we put our wallets away for good. 'Green shoots' are everywhere. Just this last week, consumer confidence picked up, house sales went up, and so too did car sales. Fewer jobs were lost and fewer people applied for jobless benefits. Of course, all that came from our government who couldn't tell the truth if Jesus wrote it on an index card and had them read it. And it's not just a lie here and there. It is an avalanche of lies day after day after day. For instance, the government has now taken over car manufacturing, banking, insurance, the stock market, the bond market, housing, and pay limits for American workers. They have also limited the number of times that we are allowed to pass gas each day least we contribute to 'global warming'. In case of excess need, we have to get a permission slip from Al Gore. Anyway, their next target is nationalized health care. How do we pay for it? Let's get the rich man and the business owner to pony up. As insane as that idea is, there is more. Obama claimed that health care premiums were drowning the average American since these premiums had 'tripled' in the last ten years. Yes, I agree. Only, they may have increased more than that. Anyway, isn't that inflationary? Isn't Obama the mouth-piece for the same government that claims there is no inflation so they can screw the retired out of a social security cost of living adjustment? Can they not keep up with the lies they tell or do they think we are that stupid that we don't remember the last lie? Well, for a group that can't run Amtrak even with its monopoly status, I don't think health care will get better or cheaper when Bernanke overthrows that sector. I could go on and on about the preposterous lies that the government tells but let's look at the stock market.

The chart is a chart of the Dow ETF, the DIA, the Latin American ETF, ILF, the German ETF, EWG, and the oil ETF, the USO. This is a intraday 5-minute bar chart. Why did I show you an intraday chart of the last trading day of the week? Well, just as the government now wants to govern and regulate how many times we chew our food, they also dominate and manipulate the stock market every minute of every day. This keeps all the stupid people fooled into thinking there is still freedom and real trading going on. Nothing could be further from the truth. On this Friday, June 12, 2009, there were basically two five minute periods where the indices lurched higher. It looked like it was going to be a down day but Bernanke will not allow weakness to set in. He and the PPT are determined to eliminate sellers and short sellers buy buying in micro bursts when the market needs a jolt. Oddly, the last jolt came in the last half hour of trading on Friday. Normally, everyone is headed for the exits and volume dries up. Not anymore. The PPT uses this time to strike when there is no opposition. And, they don't discriminate. When they buy, they throw their money in and buy everything. That's why the Dow goes up equally with Latin America, Germany, Oil, bonds, and Antarctica all with the same amplitude all at the same time. So stop thinking and strategizing. All that matters anymore is whether and when the PPT stokes a rally.

6/12/09 intra-day chart of the DIA, EWG, ILF, and CRX 5-minute bars
Chart courtesy

Look at this next chart. It is a weekly look at the Dow with 30-minute bars. Notice that every day this week, the Dow had huge volume in the last half hour of the day. What does this tell us? Bernanke is not an early riser and he doesn't get to work until after lunch. It also tells us that the stock market has become more rigged than a WWE title match.

Dow 1 week 6/12/09 30-minute bars.
Chart courtesy StockCharts.

Sunday, June 7, 2009

6/6/2009 - Stock Market Review

The 'Lie-a-Thon' Continues

The Bernanke rally that began March 9 continues. Monday saw a huge spurt higher at the open and the rest of the week stayed strong. You can see that Wednesday morning feel at the open and stayed weak until the afternoon. Obviously, the stock market has become somewhat of a GPS for Bernanke. He was busy Wednesday morning testifying in front of the nitwits we call 'Congressmen' discussing trivial nonsense. What else would these idiots talk about? Anyway, we our man Ben is away from the printing press, the market always falls. When he got back to work in the afternoon, the market went back up. He must have left early on Friday because the nice rally of the morning faded a bit as the day closed. Yes, this is the pathetic state of the American stock market.

The Friday rally was built on the job loss number that came in quite less bad than expected. How can that be? Doesn't everyone know by now that the government is 'selling' an economic recovery and therefore all the news will be good? You know - we aren't losing jobs as rapidly, home sales are getting better, car sales are picking up, we are making more money, everybody is pretty, blah, blah, blah. Our government is a lying propaganda machine the likes of which have never been seen. 

For instance, the White House Economic Advisor, Christina Romer, appeared on Bloomberg Friday morning and when asked why Treasury yields were rising, she responded that 'it was hard to tell' and she really wasn't sure. Well, Ms. Romer has a PhD from MIT and teaches at Berkley. 'Piled Higher and Deeper' has never been applied more accurately than here. Even I know that printing the currency like a drunken Zimbabwean while borrowing like a gypsy is the recipe for higher interest rates. Duh. Would someone please send the link to this blog to Ms. Romer? Then she won't look so stupid the next time the government trots out a hand puppet to disseminate preposterous propaganda of an economic recovery. To recover from the first depression of '29, it took twenty years, massive government spending, and a terrible world war that extinguished the lives of millions. So far in this depression, it has only been a few months and as yet, there has not been a great loss of life. Anything for a rally, Ms. Goebbels. Uh, I mean Ms. Romer.

In the meantime, Mr. Obama has put forth a shining light as to our court system. His nominee for the Supreme Court is Ms. Sotomayor. As a Latino women, she stated publicly that her ethnicity and background rendered her decision-making abilities superior to those of inferior white males. To be specific, her parents are Puerto Rican. Whew! I'm glad we got that in to the open. This revelation by logic, also renders her decision making skills superior to black males, Asians, Indians, Germans, and Australians. It is therefore obvious that the eight other members of the Supreme Court resign immediately so that Mr. O can appoint Puerto Ricans only to the highest court in the land. 

Back to the markets, GM declared bankruptcy on Monday morning. That prompted a rally. Do you get the intoxicating aroma of 'insanity'? Yes, nothing like a behemoth manufacturing company going belly up to stock a market rally. In the process of nationalization, the government is infusing billions of your cash, screwing the bond holders, and partnering with the unions to 'build a better company'.  To that, the President of Venezuela, Mr. Chavez, called Mr. O a 'comrade' in socialism and mused that he and pal Fidel better get on the ball least they find themselves to the right of Mr. O. His words, not mine. I couldn't agree more! 

Here's an idea to save the economy (unless of course Mr. O already did so in 100 days or less). The banks were, and are, broke and needed money. Ditto for average Americans. We, as Americans, owe some trillion dollars to the banks in credit card debt. Instead of giving the banks the money in a nationalization effort, our government could have forgiven all credit card debt and paid the tab off. Wouldn't we all be in better shape now? Why didn't Mr. O think of this? Oh, I know. He's not really in charge, is he? I wonder who is? Whoever he is, he sure is stoking a nice stock market rally with his printing press. Again, we have to take out Dow 9000 first, and then surmount 9600 to officially end the downtrend that is currently in place. You can bank on it!! Did I say 'bank'? Yeah, that's what it's all about!!!! Oh,  have you noticed the price of everything going up? I told you that you would be sacrificed. Peace!

DJIA - 1 Week 60-minute bars ending 6/5/09
Chart courtesy