Monday, December 28, 2009

Stock Market Review - 12/27/09


As the year of 2009 and the 'decade from hell' come to a close, investors have to be looking forward to the future. Without question, we enter a new decade under completely different rules. The director of the stock market is now the Federal Reserve. Their money machine will continue to pump money into the market else the market will fail. The Fed knows this. And now, they have no choice. They have kept all the stupid people in their portfolios believing that somehow the magic of appreciating monthly statements will continue as long as they don't withdraw. The smart people know the market is broke and the Dow should be in triple digits. However, Zimbabwe has proven that markets can be grown to the clouds as long as money is flooding the streets of the exchange. So, we all play along with the con men that run the banks. If the Fed ever loses its grip, look out below.

Printing money erodes its value. The chart below shows the rising dollar etf, UUP, in candlestick and the 10-year Treasury bond yield in green. It is easy to see the declining dollar. It really accelerated in March when the Fed revealed themselves as the savior of portfolios. It is, after all, their only job. Stock market manipulators to benefit their banking shills so they can control the world. Pitiful. The important thing for investors is the TRUTH. It is something that our government can't even fathom. The government lies about absolutely everything. This will continue. They cannot tell us the truth. The TRUTH is that they are broke. Maybe that's why the dollar keeps descending toward worthlessness. Maybe printing to infinity does this. What is interesting is we can see that in December the dollar suddenly appreciated. Why?

No, the world does not suddenly think the dollar is of any value. The bond yield is moving higher and will close the decade pushing 4%. Ruh-Ro! We are a debtor nation. Congress just approved a raised debt ceiling to something like $12.4 trillion. Debtors don't handle rising rates very well. Without debt, we have nothing. So, it appears that the Fed and their friends are trying to buy dollars so they can try and tamp down interest rates by buying Treasuries. Good luck fellows. The Treasury is going to issue another $500 billion in new debt in the first quarter of 2010. This worry is born out with the very heavy volume in dollar buying that can be seen in the UUP at the bottom of the chart. The question going forward is how many plates of manipulation can the Fed keep in the air? They now must manipulate the stock market, the bond market, the currency market, the mortgage market, economic data. ...

Will they soon drop a plate? Ruh-Ro!!

2009 Ytd - UUP in candlestick, TNX in green
Chart courtesy

Monday, December 21, 2009

Stock Market Review - 12/21/2009

'Selling' the Real Estate Recovery

Our government is pitching 'economic recovery' and that means real estate too. We all know the story of real estate and how it has been ground zero for the terrible economics of the past decade. We all understand too, that for real estate to recover, it needs rising interest rates. What's that? Oh yeah, that's insanity talking. But look what's happening. If you 'sell' recovery long enough, some people begin to believe. If you 'manifest' happy news long enough, some people begin to believe. If you make the stock market rise long enough with free money and insider manipulation, some people begin to believe. Under that belief, the stock market is paved with riches and bonds are a losing bet. Investors and believers sell bonds pushing real interest rates higher. I was in the bank this morning and the manager literally erased the past week's 30-year mortgage rate of 4.75% and changed it to 4.92%. Yes, that's still historically low but debtor nations need low interest rates. Rising bond yields will pressure mortgage rates higher and that can't be good for real estate. Unless of course, the Federal Reserve wants real estate to go higher. I believe they do and they will 'assist' it in a move that will defy logic in the coming year.

The chart below shows the UUP etf that corresponds to rising US dollar valuations. You can see by the lower green vertical bars that volume has been increasing noticeably on days that experienced hard bond selling. The war is on. Investors don't want to hold bonds when rates are rising and inflation is soaring. The Fed has done a good job selling the recovery so we all believe it is true. Down with bonds and up with stocks. Why include the UUP? Our Asian friends hold a lot of Treasuries and they no doubt get nervous when their portfolios fall. Our Federal Reserve friends know that we are now dependent upon our Asian friends to loan us money to give to our big banks like Goldman and Citigroup so they can buy larger chains with which to enslave us. So, the Fed no doubt jumps in with massive buy programs for the dollar and the bond. The war is on between the buyers and sellers. Who will win?

The Treasury is scheduled to issue another $500 billion in fresh debt in the first quarter of 2010. The Senate will pass the trillion dollar tax package they call 'health care reform' in another week. I have to believe that all this selling pressure will eventually win and interest rates will rise. I have to believe that our government will continue to lie about every single economic statistic to keep the recovery sales job going. After all, they are not battling an intelligent population. Look around. All you can see is clueless as far as the eye can focus. Remember this. Health care from our government is a tax. It is a political sham. Senator Nelson from Nebraska threatened to vote 'no' until the authors of the pilfering agreed to let the other 49 states pay for Nebraska's portion of Medicare. I would urge everyone with a functioning brain cell in America, although that is a very small minority, to go to the polls and vote against every politician in office. Vote everybody out on both sides. Vote 'NO'.

Our government has turned on us. This much is clear. They are coming for everything we have. They will tax us to poverty and impose eminent domain over our land and take that too. Let me give an example of the preposterous governmental lying concerning inflation. A local restaurant serves a chicken dish that I like. The menu I have from last year has a price of $6.95. I just ordered the same dish last week and the new menu lists the price at $8.75. That's not only inflation. That is an increase of 26%. As I have been saying for years, inflation is running in the 20% plus range. How much longer will even the stupidest American listen to the lying idiots in Washington? Meanwhile, the average pay is dropping and living standards are falling. Bernanke's printing press is killing Americans and destroying a country from the inside out. Surely the Brits will 'Knight' him too like the did the last imbecile that held his post. Just look at the chart. This is the battle that will determine stock direction in the coming year. Be prepared for a roller coaster of a ride.

Like everything, let me solve a problem. Health care reform. We already have the greatest health care and health care professionals in the world. We just can't afford it. Like my chicken dish, it just keeps getting more expensive. Like my chicken dish, let me solve the problem of 26% inflation. STOP PRINTING SO MUCH MONEY!!!!!!! Geeze - do I have to think of everything???

3mth UUP
Chart courtesy

Monday, December 14, 2009

Stock Market Review - 12/13/09

Santa Has a Problem

The chart below is all you need to know about the market of late. It is probably all you need to navigate the future. It seems that Santa has a problem. He wants us all to be happy and have a nice Christmas stock market rally while he steals everything from our garage and bank account. So, Santa keeps printing and manipulating but for what?

The chart tells the story. Debtor nations can't remain debtor nations if interest rates rise. They then become 'default' nations. We don't don't want that, do we boys and girls? Santa could surely get the likes of Pelosi and Reid to sign surrender papers with an ink pen inserted in their you know where. The red line is the 10-year US Treasury bond. This is the needle used to keep the debt heroin flowing to US dopers. I have dubbed this the 'Asian Phone Call' because when the yield hits 3.5%, it appears to illicit a frenetic action from the bond manipulators. Why? A rising yield says bonds are selling off. Our Asian friends own several trillion of these IOUs. They don't appreciate Santa's debasement of the US currency and the constant devaluation process. Surely they phone the Treasury Secretary, Mr. Gaithner, and demand action. The candlestick line is the UUP - and ETF that correlates to the rising US dollar. In this 2-month chart, there are 3 very clear high volume days that indicate nearly 3 times the normal daily volume. On these days, the dollar had very strong days. The latest was Friday. On each of these days, the Treasury bond yield drifted to the 3.5% yield level. What can we draw from this?

Currency and bonds are no longer assets nor investments. They are tools of manipulators. It is obvious that with the US tens of trillions in debt and a Congress and House that brings to the floor another trillion dollar spending bill each month, that the dollar should be plunging and bond yields should be rising. If there was a market, it would be trying to sell bonds faster than Congress could spend and throw another trillion down a rat hole. Ah, but Santa knows a debtor nation can't handle rising interest rates. Even an ignoramus on somebody's network news might realize that this wouldn't be good for the 'recovery'. So, Santa has a problem. The world wants to sell the crap that Santa sold them and Santa has to buy the crap with more crap he gets from his printing press. This battle will determine success or failure for all portfolios over the next few months.

2mths ending 12/11/09 TNX in red, UUP in candlestick
Chart courtesy

Friday, December 4, 2009

Stock Market Review - 12/4/2009

Pull My Finger

You know the old gag. Someone walks up to you, extends a forefinger, and insists that you pull their finger. Upon doing so, they emit a noxious odor accompanied by the sound of a tired bugle. You know the gag. You know the result. It's annoying and you really don't want to play. Yet, whether or not you pull the finger, you still get the stink.

A week ago on Friday the market was all in a dither about a fund in Dubai asking for a six month extension on a debt payment. Money supposedly rushed to the US dollar for safety and when the dollar rises, the stock market falls. Is the world so confident in the dollar that is printed night and day by a government tens of trillions in debt? No, it's about liquidity. The market is all about liquidity these days and the Dow is the ripple effect of this liquidity.

I give you two charts to review this week. The first one is a 33 month weekly look at the IEF (iShares 7 to 10 year bond ETF fund) in blue and the US dollar in green. As you can see in late 2008, the dollar appreciated and the bond ETF sank. This continued until March of 2009 and following the Fed's master plan, the dollar resumed its descent and bonds rallied. This is the Fed at work. To save the big banks, they went zero with interest rates. Temporarily, this results in a renewed bond interest since bonds were still paying something. The real meaning is money is worthless if it bears no interest coupon. Investors are therefore willing to hold almost anything other than the dollar. It's like the Fed saying, "We can fix everything if you will just pull my finger." But in general, the bond ETF and the currency are trending in the same direction - down.

33 month - TNX in blue, USD in green
Chart courtesy

The stink then begins to waif through the air when investors realize the dollar destruction also destroys everything around it. You would think that a falling dollar would instigate inflation and bonds would sell off as the dollar falls. When we look closer at a 6 month chart of the same two contestants, we see this is true. The market is trying to find balance but the Fed just won't let it. They continue to manipulate the bond market in an effort to tamp down the natural tendency of interest rates to rise in a falling dollar era. This is due to monetary inflation. Of course, our pitiful government cannot admit to inflation. They leave that for each of us to discover at the grocery store, the post office, Fed Ex shipments, taxes, and virtually every monetary exchange point as we know a Federal Reserve Note buys less and less. But, no inflation means no cost of living adjustments to social security recipients. And of course, Obama's boys know a measly $250 appeasement check will quell the senior anger. This is mearly another link in the shackle of ignorance that has incarcerated America's cognition. Many of them are still infatuated with slayer of capitalism. In fairness, the last White House occupant was doing the same thing so we can all be confident that the government is now only a government for the banks and not the people. Anyway, the next chart shows the relationship of bonds and currency. The key point for investors is that we must all remember that foreigners own us now. They own trillions of dollars worth of our debt and they get nervous when bonds sell off violently thus driving up interest rates and drawing down their treasury portfolios.

So a week has passed and Dubai is in our rear view mirror. They played the derivative trump card and central banks no doubt pledged rescue efforts with worthless money. To keep the party going, the US government claimed job losses to the US economy drew down to only 11,000. Unemployment fell to 10%. The markets rallied. The dollar strengthened. Okay kids, what did I say happens when the dollar rallies? That's right, the Dow falls. Besides, no one really believed the numbers. The rally caved in. Certainly the Fed stepped in late in the afternoon to put the market back in the black. In fact, the volume in the IEF was 756,604 for the day. It traded a bit over 100,000 shares in the final thirty minutes of trading as the price surged on Friday afternoon. This of course should serve to lower the Treasury yield which soared over 3% on the day to 3.84%. Of course, IEF is an ETF and it traded up until 4 o'clock. Treasuries shut down at 3. As you know, a 10-year Treasury yield at 3.5% is what I call the 'Asian Phone Call' pattern. This is when Bernanke and the Fed buy the yield down to appease our Asian creditors. Now, who would buy such a large block of bonds at the very end of the day? Who would buy so many bonds late on Friday afternoon knowing that the Treasury is flooding the market with supply next week to the tune of $74 billion? Pull my finger.

6 months - TNX in blue, USD in green
Chart courtesy