Friday, June 25, 2010

Stock Market Review - 06/24/2010

Stock Markets Yield to Currencies

The chart below is the DIA showing an intraday look at the past week. The Dow lost some 4% so it was rather nasty. A look at the volume at the bottom of the chart shows several strong buying attempts as denoted by the green volume bars. Comically, the PPT continues to try and jigger the indexes higher. June 22 gave us the strongest PPT attempt of the week. The Fed concluded their scheduled meeting by leaving rates at zero and saying that the economy looked a bit weaker. That was at 2:15 PM. With an already declining market, they stood ready at 2:20 PM to blast the market with a swarm of buying. In ten minutes time, over a million shares of the DIA traded. At $103 per share, that comes to about $100 million dollars. And that's just for one index. They goosed all the other indexes similarly so apparently they didn't think any of us would notice the extra half trillion or so pumped into the markets in a ten minute span. The Dow of course rose 70 points in that ten minutes only to surrender all of the gains by the end of the day. Again, all the big volume attempts of the week came at the beginning of the trading day, the end of the trading day, or at points where it looked like the markets would 'mistakenly' crash triple digits. Need more proof?

New home sales were announced Wednesday. They were down 33% - the most since recording began in 1963. Permits were down. Starts were down. Previous months' starts were 'revised' down. However, the real estate sector, IYR, was up strongly. So were the home builders.

On Friday, Barney Frank and the other village idiots finalized a 'financial reform' package that was sold as the most 'sweeping since the Great Depression'. Supposedly it cracked down on the banks that have been Madoffing the public for the past decade. You know Barney. He's the fellow that has co-piloted Fannie Mae and Freddie Mac to the black hole of eternal losses in an attempt to subsidize the US housing industry. Of course, the tax payer now subsidizes both losers that would not exist under true capitalism. So now Mr. Frank has crafted new financial legislation that was of course jammed through on Thursday night so Mr. Obama would have something to crow about with his G-8 leaders at their meeting in Canada. It was all for the show. The reaction of the market told the story. The financial sector rallied rather smartly on Friday as traders determined that the torpedo fired at the financials was pass by without impact. Hopefully there weren't any South Korean subs nearby to absorb the punishment. Maybe we have already sunk enough of their boats. Hey, that downed sub kept the US on the peninsula of Okinawa! Mystery solved!

So now, banks can get back to their business of fleecing the world and controlling unctuous government leaders. Meanwhile, austerity reigns supreme in Europe and foreclosure reigns supreme in America. All is well. For the first time in history, banks now own more real estate than the private sector. Of course, their end game is not complete until they own it all so those of us who are fortunate enough to still pay our mortgages have a few more years to enjoy our illusion of security and wealth. Letting Barney Frank write any legislation is like letting Ray Charles play goalie for the soccer team. The banks are going to continue to score. That's what the market said with its money. All of this is transpiring as yields on US Treasuries continue to fall. If all was well, why would investors continue to buy Treasuries that yield 3%? One reason, of course is that investors don't feel confident that they could make 3% in the stock market. A second reason is since governments all over the world handed over the Treasury Department of their citizens to the banks, the banks just plow the money back into Treasuries. The last reason is a lot of people, like me, are seeing the end game rather clearly. You want to buy government bonds now because you can still get 3% and the governments will print money to avoid default. Eventually, all debt yield issued by governments will yield zero so banks can manufacture money a zero cost to lend to their customers at something above zero producing a 100% profit.

In the end, the debt is not the issue. The issue is the debt creates the master profit maker - the derivatives that are tied to sovereign debt. As long as derivatives can be used to churn profits, the debt can not only stay on the books forever, but it can grow to the sky! The big banks will continue to write and trade derivatives as they become the sacred cow of profits. Eventually, the banks won't have any reason whatsoever to lend money to you or me. Their business will be sustaining sovereign debt with derivatives. Most importantly to them, they must continue to promote leaders like Mr. Obama who sees no evil in debt. Why does this matter? Eventually, the banks won't even need a stock market either.

DIA - 1 week intraday, 5-minute bars
Chart Courtesy

Friday, June 18, 2010

stock Market Review - 06/18/2010

Santa Tries to Save Europe

There is only one thing you have to know about the current stock 'market'. Well, two things. Actually three things. First, it is no longer a 'market'. Stock indexes have become the manipulated playground of the central banks intent on keeping investors' spirits high by keeping portfolios buoyed via the public investment mechanism we used to call the 'stock market'. Two, the central banks have captured the printing presses of sovereign nations. And three, stocks now move in reaction to the prices of manipulated currencies.

At the forefront of today's investment battlefield is the Euro. Excessive debt has served to run the price of the Euro down in relation to the US dollar. While the US probably leads the world in debt, the Euro has come under attack. Let's remember that the US is a bit unique in that it reports debt at a federal level. Of course, there are 50 states in the Republic that also have crushing debt loads that does not get counted in the federal debt. Therefore, we can assume that like everything that comes out of the federal government's propaganda mouth, the debt is under-reported and thus a lie.

To get to the heart of the matter, I included a chart of the Euro ETF, the FXE, below. The chart pattern is easy to identify and it is the bearish head and shoulders. The neckline crosses under the peak of the head at about 125 and that allows us to set our downside target for the FXE at 90 or .90 to the US dollar. That's about a 30 percent drop. If allowed to play out, that would imply a reactive 30% increase in the US dollar and in turn, that would drive the beloved and worshipped Dow down some 30%. Remember, there is no value in the indexes any more. They are only a function of how much money the Fed pumps in (along with their shill banks of course). The Dow is now simply a function and reaction to inflation as defined by currency value. Currency goes up - Dow goes down. Currency goes down - Dow goes up. Ditto for oil prices and all other commodities and measures of inflation.

Now you know why the battleground of the moment is at FXE 1.22. Central banks are determined to 'save' the Euro and at least keep it above 1.22 or else risk the imposition of reality forcing the FXE to .90 or below. Notice the volume at the bottom of the chart. The trillions unleashed by the ECB (and the IMF) seem to be finding their way into the Euro manipulation. After all, this is all central banks in the west do. They manipulate stock indices and currencies all day long every minute of every day. I think they at least owe the Chinese an apology as Treasury Sec. Geithner keeps babbling about Chinese currency manipulation. The bottom line is if you want to know where the indices are going, keep your eye on the currencies. Earnings and sales and all that crap are now meaningless. Besides, a good accountant can make that stuff up at the drop of a derivative anyway. The only question is will the ECB be willing to spend enough money to prop up the Euro over time? Keep an eye on the volume of the manipulators!

FXE 7 years
Chart courtesy

Friday, June 11, 2010

Stock Market Review - 6/11/2010

The Stock Market Hinges on Only One Thing Now

The chart below is the ETF, FXE - the Euro currency. This is all you need to know. The 'stock market' is no more. There is no 'market'. Stocks and indices now move solely on the reaction to currency valuations. Forget price to earnings multiples or sales or any crap like that. When you even hear someone in the government run media talking about 'fundamentals', run the other way. All that matters now is currency. Why?

The central banks control currency volume and printing. It is their only weapon of enslavement. Unfortunately, the masses can't pay off their debt and that leaves the banks in a bad predicament. Fortunately, the banks have the central banks to print more money and restore their balance sheets absolving them of any responsibility to lending prudence. Europe is now following the United Banks of America into bankruptcy and the ECB is printing money like the Federal Reserve to try and resuscitate their shill banks. The result is a falling Euro currency and a reactionary rising US dollar. I'm not going to get too heavy but any amateur chartist can look at a long-term chart of the Euro (FXE) and see the bearish head and shoulders with the neckline at about $120. A breach of this level would imply a bottom target of something like $85. That's a 30% drop which therefore implies a 30% drop in the Dow as again, indices only 'react' to currency moves. There can no longer be an implied value to the markets. They are run and manipulated by governments who use them for affirmation that the banking controls of the modern era are 'working' to make for strong economies. Of course, this is the most ridiculous idea ever postulated by humans but nobody ever said banks were smart.

So, as the Euro falls, the dollar strengthens. Since there is no longer any value whatsoever in the markets, they move in reaction to currencies. The Dow is now simply a barometer of monetary inflation. As the dollar strengthens, inflation ebbs and so too does the Dow. As the dollar falters, inflation rises and so too does the Dow. Now, the ECB is frantically trying to save their garbage currency with admitted intervention. They learned this from our very own Federal Reserve. Meanwhile, we try to tell the Chinese to not manipulate their currency, the yuan. Of course, the laugh their brains out at this suggestion. The ECB raised a trillion I suppose from the 'fat finger' 1,000 point pummeling of the markets on May 6 when they dumped stocks. They are now using their trillion to manipulate the Euro. Good luck. I don't know if you guys checked on this but the countries that make up the European Union are all bankrupt. So are we so we are not pointing fingers. It seems that it is just a matter of time before Dorothy pulls the curtain back to find that the Wizard of Oz is just a man with a smoke machine of debt instruments. The manipulation has gotten so bad that in the last month, rallies have hit the stock market with the advance-decline ratio bursting higher than 9 to 1 on 5 different occasions. Thursday's rally came in at something like 40 to 1. Gosh, fellows - did you just buy everything that Goldman Sachs and BofA offered? This kind of ratio usually indicated a change in trend. That's what they want you to believe. That's why they try so hard to manipulate the markets every single day. Yet, the selling continues to expand the 'correction'. Or maybe, no one believes the vipers and thieves any more. Bear in mind that there were years in past decades that passed and never saw this kind of advance-decline absurdity.

I had anticipated Santa last week to come on Monday. The Dow was below 10,000 you know. Santa was a little late but he finally showed up on Thursday powering the Dow back over 10,000 with a 250 point rally. Shazaam! What a joke.

Anyway, watch the FXE for clues as to which way the 'markets' will follow. He who buys the con will soon be conned out of everything.

One month FXE
Chart courtesy

Friday, June 4, 2010

Stock Market Review - 6/4/2010

Which Comes First - Moral Bankruptcy or Just Bankruptcy?

It is now almost 11:30 AM on Friday morning and the Dow is down over 200 points to 10,040. The culprit of the day's sell-off has been the announced payroll numbers that were 'disappointing' to market players. Our government claimed that the US economy added over 400,000 new jobs but almost all of them were created by the temporary census worker additions. As always, when the number of workers disappoints, the government lowers unemployment to 9.7%. Again, that was mostly due to over 300,000 workers dropping out of the system. Is this really enough to take the Dow below 10,000? Can't the government manufacture some kind of good news to offset the stock market drop? How about throwing the banks another trillion in bailouts? You know it's coming. Come on, Ben - save the bank from their derivative bankruptcy. Do it. Do it now!!! Simulate. Manipulate. Bailout. Lie. Isn't this the mantra of a central bank?

Hold on. It seems that the nation of Hungary is warning now that they are in serious debt trouble. They want a 'clean slate'. Yeah, I bet they do. However, they won't get one because their debt, like Greece's, has banker derivatives tied to their debt. If they get a clean slate, the bankers lose their pretend capital of derivatives. A clean slate will therefore not be granted. Grinding poverty will be imposed by their banker masters and perpetuated by the sheople of Hungary refusing to accept reality. That reality is that the world is both morally bankrupt and fiscally bankrupt. Which comes first?

I believe that moral bankruptcy precedes fiscal bankruptcy. The sheople of a nation have to first turn their trust in God over to a government of some kind. The government has to lure this trust by promising everything that God promised and more. The government has to convince the Sheople that responsibility for everything rests with the government. The Sheople no longer have to worry about being productive or efficient in their economic decision processes nor do they have to worry about their behavior. The government will serve as an 'equalizer' to make sure they 'spread the wealth around a little bit'. The government will supply retirement funds, health care, food vouchers, shelter, and stipends rewarding non-production. They will also provide education with the government's version of the truth. The government will decide what the media conveys to the profoundly ignorant public. The media will engage in a love orgy with the government who now sees them as their best friend. This is the opposite of a trust in God who promises none of the above. This is moral bankruptcy.

When President Jefferson told us that central banks were more of a threat to our liberties than standing armies, boy - feel free to be a genius, Mr. Jefferson. In our lust for the material good life, we have been more than willing to ignore the financial reality of living beyond our means. We have been deceived by inflated asset prices, conned by the media, and led astray by lenders. Rather than dispensing a capitalistic punishment for egregious indebtedness, we have turned to central bankers and allowed them to usurp our morality from our maker to our new enslavers. Humans never learn from past mistakes. They just find new ways to cover them up. Now we are faced with fiscal bankruptcy.

The simple truth is developed nations of the world have developed on a mountain of debt. The mountain is now crumbling as everyone tried to ascend the peak. The Sheople cannot accept reality. The very governments that induce the moral bankruptcy have also served as a conduit to shuttle the enslavement of the Sheople via fiscal bankruptcy. Nothing can save us now. The indomitable will of Andrew Jackson has been diluted by porous borders, a failed education system, and a greedy, glutenous population whose lust for material goods is only exceeded by its ignorance of the price of indebtedness required to purchase all those goods. Is it any wonder that the reflection of economic productivity, the stock market, is now failing in response to moral and fiscal bankruptcy? Where are you, Ben? It is now 12 noon and the Dow is still down over 200 points. Where is our trillion? Uh, I mean, where is the banks' trillion?

At the heart of everything now is the very currency on which all assets are valued. Clearly since the beginning of the great bear market of 2001, the central banks have been intent on inflating their way out of the mess they created. With both an expansion of credit, an expansion of money supply, an expansion of governmental control, and a hellish tool named 'derivatives', the central banks have acquired a power over the world of which it will not relinquish. The one weapon they have is the currency they issue. Our Congress abdicated responsibility entrusted to them by the framers of our Constitution with regards to controlling our currency with the creation of the Federal Reserve Bank in 1913. And now, the central bank controls currency production and credit issuance. With the Fed Funds rate now at zero for eternity, the Fed can produce credit to its shill banks at zero cost and proceed to run the greatest scam in history. Since the cost of money is free, derivatives can be created and used risk free. This is especially so now that we know the true intent of the central bank is to restore any capital lost by the shill banks in the dealing of derivatives. They use derivatives as the lever to hopelessly indebt the nations who are governed by the hopelessly stupid politicians who are elected by the hopelessly ignorant Sheople based on promises of moral bankruptcy. The dealers in derivatives in the US amount to the banks at the top. They are Goldman Sachs, JP Morgan, Citigroup, Morgan Stanley, and Bank of America. They made over $28 billion last year trading derivatives. Are any of us better off?

Okay, it is 12:15 PM and the Dow has just dropped below 10,000. Okay, Santa, I want a new bicycle, a candy bar, a new baseball mit, and maybe a pony. Yeah, that would be great. Oh yeah, if you could jimmy the stock market higher, that would be great too! Yeah, I know you're already on that one so I'll leave you alone. Why do they call you, 'Ben'? Don't forget - milk and cookies will be beside my portfolio on Monday morning! Yes, my friends, our world has now gotten this absurdly ridiculous.

Okay, so now it is 3 PM and the Dow is down 327 points to 9928. Normally, the PPT led by Chairman Bernanke are in a mad dash to get down to the NYSE to save the markets but they haven't been spotted yet. Has anybody seen him? Is he okay? Maybe he got his tie jammed in the printing press and he is stuck right now? Don't worry. He'll be along. I'm sure his phone is ringing off the hook. Could any of the big five banks suffer a day of trading losses? Nah, that can't happen. They make all the rules. But still - where is Bernanke? I'm switching all my screens to an intraday minute-by-minute live update so I can see the exact moment of Santa's arrival.

Well, it's now 3:30 PM and the Dow is still down over 300 points. Didn't Santa get my wish list? Where is he? I'm really getting impatient now. Let's see. A typical PPT rally is about 200 points per hour. We could still cut the loss in half in the last half hour. I know you can do it, Santa!

It's 4:00 PM and the markets are closing. Santa didn't come. The milk is getting warm. The Dow can barely hold onto 9,900. Well, you know what that means? Here comes a trillion! Where will it come from. Maybe it is China's turn to inject a trillion into the banking system. Maybe it is Australia's? Maybe it is Peru's? Come on. In a morally bankrupt world, somebody is going to have to give the banks some more money. We have a stock market to save. After all, the market is falling because even the Sheople are starting to realize that we can't fend of the impending fiscal bankruptcy.

Let me leave you with this. Since we are dealing with moral bankruptcy, does it strike anyone else, besides me, as odd that the Japanese PM resigned after he agreed to keep the US marines on the island of Okinawa? He came to office pledging the opposite. But suddenly, a supposed North Korean sub sank a South Korean sub heightening tensions enough to force Japanese capitulation. Maybe the North Koreans really didn't fire the torpedo in question. 50,000 marines can't leave Okinawa. Where would they go? Back home? By the time they get here, the census will be over and we won't need them. Unless of course, you believe the fantasy of economic recovery.

Below is the Dow. How about that? The 'fat finger mistake' decline of May 6 really wasn't a 'mistake' after all. Beware, though. We all know that Santa does not allow for the Dow to rest below 10,000. Put the milk and cookies back out on Sunday night. Moral bankruptcy isn't cured over night!

1-month Dow
Chart courtesy