Saturday, March 27, 2010

Stock Market Review - 03/26/2010

Storm Clouds Threaten the Rally

I have a feeling that Presidente Bernanke is about to get even busier than he is now. We all know that the immediate goal of the Fed is to get the Dow back to 11,400. That's the pre-Lehman collapse point at which the rest of the world really began to lose serious money as the bear market of 2008 cut its destructive path across portfolios. The process of picking and choosing which companies to be given a life preserver and which companies were allowed to drown was perplexing to foreign investors. To them, it seemed hypocritical to save one and dissolve another. It seemed illogical. They thought we could, or would, simply save all the financial sector. However, the foreigners don't know, or realize, what a corrupt, diabolical, despicable, degenerate country the US has become. The companies the Fed saved were companies that could serve the Fed. Period. To the foreigners who invest their money in the US, that seems unfair. Maybe it is but the Fed needs foreign investors. Therefore, they have felt beholden to return the Dow back to the pre-Lehman collapse level. As we all know, the Fed completed their coup in August of '07 and now have complete control of the country and the stock market. Through repurchase agreements with their shill banks and outright equity purchases, the Fed can make the Dow dance whenever they turn on the music. We finished the week of 3/26/10 above the 10,800 level on the Dow. What now?

I think the Fed is gathering their forces for the final push over 11,000 and then to 11,400. Technically, this will complete the fifth leg of an Elliot Wave. Technically, 11,400 would be the target from the reverse head and shoulders that bottomed in March of 2009. Add to that, the Dow's ascent has been accompanied by a volume descent. That's a red flag. The following chart shows the gathering storm clouds.

Dow 2.5 yrs ending 3/26/10
Chart courtesy

We also have the piling on effect of a massive health tax that will soon work to drain earnings from US corporations and render them less competitive with their foreign counterparts. Higher taxes equal lower economic growth. Period. True, the populace elected a person that promised 'health care reform'. However, the populace of the US is profoundly ignorant and hopelessly stupid. They still don't realize that the real power of the country has been usurped by the central bank and the person sleeping in the White House is simply a finger on the hand puppet of which they manipulate for their own gain. What is their gain in higher taxes?

The central bank's goal is to drain the resources of the US and redistribute the wealth of the US into the hands of the central bank. They do this by extending credit to stupid people that sit in Congress who spend the country into insignificance and bankruptcy. Perpetual debt becomes the business of the day and that debt can only be perpetuated through higher taxes that pay for the credit default swaps that have to be issued to guarantee the income stream on the derivatives that are sold from the securitized sovereign debt. Real health care has absolutely nothing whatsoever to do with the new tax. It is about raising taxes that justify the derivatives that perpetuate the debt. And who makes money on the derivatives? The Fed, Goldman Sachs, JP Morgan, and Bank of America. They are leeches that are latched on to the aorta of our country. Sadly, the populace is far too ignorant to even have the first thought about the real intent of the evil Fed. But, we still have some rally in the market before the storm clouds start dropping rain.

Friday, March 19, 2010

Stock Market Review - 03/19/2010

Loan Denied - Egad!!

The world's financial system continues to smoulder like the super thermite that took down the WTCs 1, 2, and 7. The fire cannot be extinguished. It can be covered up and explained away by the media. It can also be ignored. At least, it can be ignored until another plum of smoke billows forth from the bowels of economic destruction. That destruction has come by way of banker credit consumed by idiots and extended by thieves who use counterfeited currency as their super thermite. The thieves have used the threat of bringing down the entire house with the click of their detonation switch unless their demands are met. All we have to do is hand over the keys to our property, savings, liberties, and soul. They will agree to leave the structures we inhabit upright as long as we agree to allow them free access to the monetary printing press and impunity from the crimes they commit. The banksters use debt like a shoe salesman uses a shoehorn to slip new shoes onto feet accustomed to the discomfort of worn old shoes. Aaahh! We can have something better than that we were used to. All we have to do is accept a bit more debt. Whether it is a plastic card or the 'Federal Reserve Notes' we have in our wallet, we are using pretend money. It's not real. It is all manufactured by the folks that want us to accept payment plans in lue of ownership of anything. And yes, the banksters not only want our stuff. They want our liberties too. They want total control. Don't the new shoes feel more comfortable than the old shoes? You know they do. Just hand over the plastic and the banksters will allow you to walk out of the store with them on your feet. Won't your neighbors be jealous of your new shoes. They too will have to go get themselves some new shoes. They too will accept more debt. Control. Domination. Total dependency. Complete subordination. The central bank will settle for nothing less.

Occasionally, a sovereign nation like Greece will indebt themselves to a point that central banks recoil from additional debt requests. Thus, our markets lost a little confidence as the week wore on because Greece can't cut spending and banks won't back more lending. We have a Greek standoff, if you will. I included a chart to show the week of March 15 - 19 in 15- minute bars. The chart is the SPY so we can see the action in an ETF that mirrors the S&P 500. Yes, we pushed a little higher this week but the interesting point here is the action on Friday. Specifically, the action on Friday afternoon. Specifically, the action in the last 15 minutes of trading. As you can see, the last 15 minutes of the week witnessed by far the most volume of any 15 minute bar all week. Haven't we always been told by bubblevision TV that 'traders go home early' and all that on Friday afternoon? In addition, this has been the first glorious near-Spring afternoon this year. Yes, it was an options expiration Friday but come on! The last 15 minutes of the day shows the most volume of the entire week? Well, the market was in a tale spin and did threaten to negate all of the Fed's hard work in the previous 4 days. And yes, the Fed has put in a lot of hard work since February 5, 2010 when they intervened with both barrels blazing to keep the Dow above 10,000. On February 5, the volume for the SPY was nearly 500 million shares. On February 19, it was a mere 224 million. 224 million is slightly above average but nowhere near the intervention day of the 5th. Yet, the Fed obviously went to work late in the day as always to bring the markets up. This is even stranger if we consider that going into this weekend, the investment world is facing the Greek debt insolvency and the continued march toward insolvency in the US by way of a Congressional vote on a 'health care tax'. With this much in the air, it seems odd that there would be strong buying going into the close. Of course, I think we all know that if the market indices were rallying on their own going into the close, there would not have been a strong volume push in the final 15 minutes of the day. All the Fed wants is complete control. Bend over or fight! I'm Scots-Irish. We don't bend over!

What is going to happen next week? No one really knows. I have no doubts that some kind of health care tax will be passed because the US needs additional income streams to justify the securitized sovereign debt credit default swaps that have to be sold to continue the massive debt issuance that has to be maintained to continue the farce of 'economic recovery'. This is the only way that the banksters can keep the sheople in line so they don't suspect the reality of their enslavement. And, oh yeah by the way, as long as the PPT can keep the stock market going up, they have the ultimate tool of distraction while they commandeer economic control. Know the truth. Investors can play the market up and down. Bernanke made it clear that Dow 10,000 was a mark they would defend with every ounce of ink at their disposal. We may find that the Dow slides back toward this line but it will not penetrate it. Why? Because Bernanke says so. The next week may offer a shorting opportunity but it will likely be short lived. Be nimble and quick but always operate with the truth in your pocket. The sad thing is our Congressional representitives actually think they are voting on 'health care' this weekend. Little do any of them (absent Ron Paul) know, they are voting on credit default swaps sold through Goldman Sachs and ultimately, our souls. Pray for understanding. Pray for a President one day like me.

SPY - 3rd week of March, 15 minute bars
Chart courtesy

Saturday, March 13, 2010

Stock Market Review - 03/13/2010

Shoveling Manure

The economic data seem clear and unified. The economy is getting stronger a little bit at a time. At least, that's what the data says. You name it, and the statistic is better today than it was last year. The economy is losing less jobs. The stock market is up. Consumer spending is up. Banks are stronger. GDP is way up. There is no inflation. Workers' incomes are up. Heck, even home sales are supposedly up in a few cities. At least, that's what the data says. It also said on Friday that consumer confidence slipped a bit in early March. As always, the market sagged for an hour or so and then it managed to move a bit higher. For the week, there really wasn't anything that jumped out. Ho-hum. Mostly it has become apparent that the Fed does not want, nor will they tolerate, very much selling of stock without a strong response of market intervention. Therefore, we all know not to sell and certainly not to short sell.

With the game now obviously 'fixed', why would consumers be less confident? Shouldn't consumer confidence be 100 and not the reported 72? What does it mean? What does it matter? Greece is broke. Portugal is broke. Europe is broke. The US is ridiculously bankrupt. Nearly every state in the union is operating in a deficit. Congress is on the verge of passing a trillion dollar tax package they call 'health care reform'. Maybe reality is bothering the consumer.

But this is a bit like shoveling manure on the lawn. We know the manure is good fertilizer and it will help the lawn. Yet, it stinks like, well, like manure. We have to hold our nose. We stagger to the malls and we stagger to the car lots. We continue to buy stuff that we can't afford because we don't know how to do anything else. It seems to me that the consumer is more like a drunk staggering out to the car after a hard night of drinking. If we get in the car and try to drive home, something bad is likely to happen. We haven't got the car cranked yet. But the key is in the ignition. More taxes, more debt, less jobs, and less income add up to manure. We just keep shoveling. The only thing the Fed has left is the stock market. They have to keep it moving higher to keep society placated. If we all decide to call a cab, it's over. The stink will run us upwind from the lawn.

SPY 5days 03/08/10 - 03/12/10
Chart courtesy

Sunday, March 7, 2010

Stock Market Review - 03/05/2010

36,000 Reasons to Rally

On Friday (03/05/10), the Labor Dept. reported that the US economy only lost 36,000 jobs in the most recent survey instead of the anticipated 75,000. The unemployment rate remained unchanged at 9.7%. That was the 'official' news. The chart below shows the market reaction as Friday proved to be a very strong day with very strong buying volume. To the latest group of poor folks relegated to the unemployment lines, we say 'thank you for your sacrifice'. Had the economy not shed some jobs, the wondrous productivity number might not have been so high. And, there were only 36k in the latest number. Again, it wasn't as bad as was expected. Thus, the markets rallied.

The markets always rally when the economic news isn't as bad as expected. To the market, that means that the economy is improving. Contrarians might argue that the economy is just not getting worse at the same dismal rate. The former makes the market rally so that's what we go with. Never mind that home sales just cratered to the lowest marks on record. Never mind that the county's debt hole continued to grow as the Treasury issued over $100 billion in new debt the previous week. They are scheduled to issue another $80 billion or so in the coming week. Aaahh, the debt.

The markets no doubt rallied in part in response to the news that Greece announced an economic austerity plan backed by a fresh issuance of more debt. Yes, that's double talk but that is our modern market. I'm guessing that enough credit default swaps were created to allow for the absorption of the new debt but that is also the way things work these days. No one really trusts sovereign debt so swaps have to be created to cover the debt. Presto. Problem solved. Our Federal Reserve has re-written the economics books to that in the chapter describing how to cure excessive debt, the solution is the issuance of even more debt. Just keep the printing press humming and all is well.

At the end of the day, debt is all about trust. While all this was going on in Greece and Europe, and the US markets were in in full tilt rally mode, China announced they were withdrawing loan guarantees made by their banks. What? They pumped up the economy with cheap money and excessive lending, and now they withdraw the state backing? Oh my, the world is really getting nasty. You can't trust anybody these days. Does China not know about the credit default swaps? Do they not know that all debt defaults can be covered by printing more money? Maybe they just look across the ocean and see a bunch of idiots running a country like a crowd following Elmer Fudd on a wabbit hunting twip. Maybe the real story is China is applying the brakes. Maybe they understand that economic expansion lifted by the hot air of debt is unsustainable.

Sorry for the negativity of the real world. The US lost fewer jobs than forecast. Let's rally, rally, rally!! Will the rally continue? I still believe the Fed needs to get the Dow back above 11,400. That was where it stood before Lehman fell. Sure, Hanky Panky Hank saved his retirement package from Goldman and all his pals there. But the rest of the world still has losses they blame on the Lehman failure. They don't understand why Paulson and the Fed only saved the companies that benefited them the most. The picking and choosing nature of their decisions was confusing and untrustworthy. Hey, boys, that's our country. Anybody else want to play? Of course you do. There is another ally going on. In case anybody cares, an uptrend is higher highs and higher lows. We are still in an uptrend so the Dow has to push higher than the last high of 10,720. My guess is we will at least knock on the door of 11,000 shortly. All we need is another 25,000 or so people to lose their jobs. Rally Ho!

DIA - 5 days, 1 hour bars - 3/1/10 - 3/5/10
Chart courtesy