Sunday, July 26, 2009

Stock Market Review - 7/24/2009

Planes, Trains, and Automobiles

Plane companies are fairing poorly right now. Boeing is delaying their new 747. Airlines are cutting back and some are announcing more layoffs. Train companies don't see signs of economic recovery as that include that tidbit in their earnings releases. Automobile companies? Well, you know their story. Ditto. Do you think the market cares? Nah. The stock market senses a rally but that's just because the stock market has had its senses beaten out over the past eight years. It has also been taken over by central bankers who have nothing to offer but money and market rallies. So, we have a rally. Is the central bank a genius for engineering a 'turn around'?

Hardly. The chart below is the DIA ETF and it shows the week's action. Friday was again interesting because Microsoft and Amazon announced poor earnings results and less than stellar guidance. UPS continued to see a weak economy and so did a few train companies. The market sagged on early Friday morning after an ugly futures market overnight. So what. We have the PPT and they were simply not going to let the market, or at least the Dow, fall back below 9000. Who needs earnings anyway. Besides, the PPT has to keep the rally going as we look forward to a record $115 billion in Treasury issuance this coming week. I've said a lot so let's break it down.

The Federal Reserve runs the market now and they don't need earnings and they don't need an economy. Both are just noise. All they need is money and they have a lot of it. To play the con game of 'economic recovery leading to market recovery', they need shills. Enter Goldman Sachs and JP Morgan. Since the Fed gave them their money back from all their real estate Ponzi scheme losses, they assist the Fed in buying up stocks. And, they all make a killing do so. Are they all geniuses? Again, hardly.

One only has to ask where the Fed gets all the money to buy half of the Treasury action while manipulating the markets. Again, notice the volume in the last 20 minutes of Friday afternoon. It picked up significantly and that is not 'normal' for a July Friday. Guess who was buying the rally? Okay, we know the Fed plays the ETFs. We also know they dominate the derivative market. They even admit this. Now, we also know that the preponderance of derivatives and swaps are interest rate oriented. Who knows more about interest rate direction than our very own Fed? How much of the coming $115 billion in Treasuries will they buy and what will be their timing? Insider trading is not genius. Criminal, maybe. But not genius. Of course, they likely call their buddies Goldman, JP, and BofA up beforehand so they can all get in on the action. Hence, all the great earnings reports from the Fed's right hand men. As in the case of BofA, they lost $2.5 billion in credit cards and lending. However, in 'global banking' and 'investment banking' their piles of profits grew to the clouds thus producing a smackdown second quarter that will no doubt result in big bonus checks for the swindlers. Isn't that nice. Two quarters ago they were all headed for bankruptcy. Turn back the hands of time, allow mark to fantasy accounting once again, liar loans, 125% financing through Fannie and Freddie, cook the books, steal from the tax payers, enlist of the help of the dumbest people ever to walk the planet Earth (Congress and the House of Reps - Pelosi, Reid, Dodd, Nit, and Wit), and engage in insider trading and frontrunning and presto! Back to record profitability and executive bonuses! Ain't Americans stupider than a bucket of retarded nails. Who says crime doesn't pay. Hey, enjoy the rally. The Fed sure is. Oh, by the way, the next target to bust up the downtrend on the Dow is 9600 and then 10500. What the heck. We may never even have another down day in the market!!!!!! Rock on, PPT.

5 day, 10 minute bar chart DIA ending 7/24/09
Chart courtesy

Sunday, July 19, 2009

Stock Market Review - 7/17/2009

The PPT Never Sleeps

The stock market is pretty simple. Now that the central bank has taken over the government of the US, they have also taken command of the stock market. As the Dow and the other indices rolled over in early July, the PPT heard the cry of Dow 8200. The bearish head and shoulders was in place. As soon as 8200 was breached, the alarms went off and the PPT swung to action. Emboldened by the fantastic earnings of Goldman Sachs, the PPT helped boost the markets back up. I have to admit that when I heard the earnings of Goldman, I honestly felt like vomiting. I felt physically sick. Two quarters back they were losing money and searching for bankruptcy lawyers. Then Treasury Sec. Paulson ran the coup with the Fed and wrestled tax payer money from the US and gave it to Sachs. Presto. They report positive earnings again. Well, it's not so much that they reported positive earnings. The second quarter of 2009 was the best in the company's 140 year history. Are you kidding me? Have they any shame? They are simply rubbing our noses in the coup. I still have the taste of vomit in my mouth. So now we have a rally instigated by the thieves of the world. Woopi.

Friday, July 17, 2009, was an interesting day. The week's rally threatened to end on a down Friday. Well, not while the PPT was on duty. As you can see from the charts below, the indices came roaring back at the end of the day. And, I mean in the last 30 minutes of a July Friday afternoon. I thought traders went home early on Friday. I thought most real 'trading' wound down long before the Friday closing bell. Not this Friday. There was a strong rally with very strong volume. Gee, I wonder who was trading all that volume going into the final few minutes of the day? The PPT does not go home early. Why do I drag the PPT into the conversation, you may ask? The first chart is the S&P 500 and you can see that it finished slightly down after a strong final few minute updraft of desperate buying by somebody. However, I have always suspected that the PPT uses the futures market to manipulate the markets. Sure enough, the second chart shows that the S&P futures ETF, the SPY, actually made it into positive territory with the strongest volume of the day coming in the last 30 minutes of Friday afternoon trading. Shazaammm!!!! Is this the ultimate green light to put all of our money into the stock market and trust Ben Bernanke and the PPT to act as our trampoline? It would seem so. I'm going to go vomit now.

Chart courtesy
SPX 1-day 5-minute bars 7/17/09

Chart courtesy
SPY 1-day 5-minute bars 7/17/09

Saturday, July 11, 2009

Stock Market Review - 7/10/2009

Larry, Moe, and Curly Run a Country!

Did you ever see the episode of The Three Stooges in which they were hired as plumbers? They keep trying to fix a leak in the basement until they find themselves entangled and trapped in their piping like a caged zoo animal. It's funny in their ignorance and stupidity. Only, they are actually actors going for a laugh in a comedy bit.

Our current set of leaders in America apparently didn't see this episode. Otherwise, they would recognize themselves. The fellow referred to as 'the smartest guy in the Senate', Barney Frank, apparently thinks it is a good idea to get in a time machine and go back to the past as Fannie and Freddie are now once again allowed to permit lending at 125% of the appraised value of homes. And, the amortization tables have been changed to allow for the principal to be more loaded up front so homeowners can pay their loans off faster. I know, I know. I didn't get my hourly dose of LSD like our lawmakers. If a home owner can't pay the current mortgage, what sense does it make to pile even more debt on the guy? Let's assign this incredibly stupid act to Curly.

We all know that the only reason the price of oil went up last year to $147 a barrel was the mean old 'speculators' took advantage of the system and drove the price higher so they could ring up profits. So now our government is screaming at the CFTC (Commodity Futures Trading Commission) to curb the speculators. Well, I have written about this in the past and lectured on it as well. The truth is simple. The CFTC regulates the commodities futures trading such that limits are placed on the contracts that investors are allowed to hold. So, the regulation is already in place. You can go to the CFTC website and read these limitations if you like. What's the problem? Well, you have to remember that banks usurped power from our previous president Dumya while he was searching for an English to English translation dictionary. Turns out that there is a special provision for 'entities' that need to trade futures contracts in order to hedge other portfolio positions. For instance, if you are manipulating and ripping off the world through the use of interest rate derivatives, you might want to counter those with some oil derivatives. You know - if interest rates rise, so does the dollar and down goes oil. All that is theory of course and now in the Federal Reserve dominated world, anything can happen. If you run up, oh, let's say a half a quadrillion in interest rate derivatives, you might want to think about risk control. This requires an enormous derivative position in oil. Up goes oil. Who would do such a thing? The banks. And yes, that includes our central bank. Now the Obamanistas want to further 'regulate' the futures market to put a lid on the speculators? First of all, don't these ignoramuses know there are regulations already in place? Don't they know that 'exceptions' have been made for the banks so they can operate outside of these regulations? I suspect this is some ridiculous babbling nonsense that is put out in the media for all the stupid viewers of the 'teevee' bobbleheads to report to make it sound like our government is protecting us. The truth is, they are sheering us of our wool while drawing the different cuts of meet on our flanks. We are being fed to the banks. Let's give this one to Larry.

Finally, our land of bailouts has become expensive necessitating the issuance of $3 trillion of Treasury notes this year alone. Don't worry. There is a lot more where that came from. So, when you increase the supply of anything the price generally drops. When the price of bonds drop, the attached yield rises pushing interest rates up. What was I just saying about interest rate derivatives? Excuse me. I didn't need to bother you with truth and intelligence while you were being sheered. Anyway, our Chinese landlords own three quarters of a trillion of this junk paper and they summoned the Geithner of Timmyness over to their place for a pow-wow. They didn't need to smoke a piece pipe since this lad was from the states and it has become apparent to the rest of the world that we are smoking something pretty powerful every day. How else do you explain our stupidity? Anyway, our landlords must have made it pretty clear that they would not stand by and watch their portfolio of Treasuries and currency get shredded by our printing press. Immediately, Geithner came home and presto! The dollar reversed its downtrend and began to strengthen. This pulled the yield on the 10-year Treasury bond down from 4% to 3.2% in a matter of two weeks. What makes this even more extraordinary is the Treasury issued $104 billion in paper (a new record) in the week before July 4 and another $80 billion or so the next week. Of course, all this extra supply would have and should have affected the yield by spiking it much higher. Not in Ben's world. He has a printing press and the magic of electronic dollar creation. The Federal Reserve absorbed a lot of the paper as did central banks of the world. When the Chinese make demands, the world snaps to attention. As such, the Federal Reserve will buy $300 billion in Treasuries buy September and stand ready to pitch in for $1.25 trillion in the end. This is a preposterous scheme to manipulate the direction of interest rates away from the true direction. Let's give this one to Moe.

This week, the markets struggled with this insanity leaving the Dow down to 8146. We are losing the 8200 line that Ben the printer has tried so gamely to defend. It will be a psychological blow to lose the 8000 level but that looks almost inevitable. America is broke at every level. The state of California is our most important state in terms of GNP contribution and they are currently handing out IOUs. The pundits will all of course give the central bank props for handling the economic mess at hand but all they have done is enrich themselves and their banking buddies by raping the productive members of the country of their soul. This is perhaps the most despicable act in the history of mankind. Yet, it continues as the Obamanistas are turning their pillage machine toward the 'rich' citizens to pay for some sort of medical insurance program that we can no more afford than GM could afford their retirement programs. The end result will be the same. Bankruptcy. I suspect the stock market will eventually price in American bankruptcy and stocks will trade for their real worth. Let's see. What did the old shares of GM finally trade for? What did you expect when you let the Three Stooges run the country?

The chart below is a look at the relationship between the S&P 500 and the Treasury bond ETF, IEF. As stated above, Ben has made everything artificial through manipulation and when he has to buy bonds, the stock market suffers. If the Chinese insist he support their bond portfolio, the chart indicates further trouble for the stock market. Unless of course, Ben can stand in the pits and buy market index futures all day. The problem is he is so busy buying Treasuries he can't be in both places at once. It is a depressing time to be an American. Brought down by banks and destroyed by our central bank. Get your guns ready to short the market. 

6yr weekly of IEF (blue) and SPX (red)
Chart courtesy

Monday, July 6, 2009

Stock Market Review - 7/4/2009

Are the 'Green Shoots' just spray painted by the Fed?

Well, the Dow fell a few hundred points this holiday shortened week to 8280. I have written endlessly and lectured endlessly about the 8200 level on the Dow. It is vital for the bulls to hold this ground. Bernanke is one of my most ardent followers as he has adhered to the interventionist strategy whenever we need a boost. I'm sure his alarm bells are ringing as I write. While we know he took the Thursday before the Independence holiday off (the Dow fell over 2%), he will be back at work on Monday.

In a nutshell, this is what we have left of a market. Trading volume going into the holiday is very light and the selling is not intense. There is no conviction. Traders are waiting for Bernanke to make his move. Traders are also worried that the 'green shoots' of economic recovery might just be spray painted by the Fed. Unemployment seems to be higher in every individual state that the reported national rate of 9.6%. We can assume that our pathologically lying government has under stated the actual number by quite a bit. The latest numbers were worse than expected even with an almost 200k addition by a wink of the eye and a flash of the magic wand known as the 'birth/death' ratio. So the market occasionally worries that recovery may not be as near as governmental liars and stock market cheerleaders suppose.

Maybe it's just me but I find it absurd to talk economic recovery when the largest state contributor to national GNP, California, is broke and handing out IOUs. Optimism is wonderful but in this case, unfounded. Unemployed, underpaid, debt-ridden people cannot boost an economy. Let me know when more people go to work. Let me know when California can pay her bills again. Let me know when Bernanke gets his foot off of America's throat. Let me know when Bernanke resigns or better, is fired. Let me know when the Federal Reserve is dissolved. Let me know when the government gets out of our life. Then, and only then, will we see economic recovery. Until then, slow death will become more of a worry for the stock market.