Let me show you what is wrong with America. The first image below is a photo of the information necessary to comply with IRS regulations requiring me to pay taxes for 2009. I am a small business. Preparing the return cost me $2,000. If you think the answer to solving our problems is to allow the government to impose more regulation, then you are a blithering idiot! Go read something else. Go read something that Hillary Clinton says or read a line from the dopey Dodd or feckless Frank. The reason we pay taxes is the government imposes its will. The reason we collect so much documentation is so we have some means of defense against ruinous regulators who operate in dictatorial fashion. Look at the box. Is it any wonder that business in America has seized up? You would think that of all the people that want a hand out from people like me that go to work everyday, at least one of them would be kind enough to offer to carry my box of documentation in and out of the accountant's office for me. But nnnnooooooooo!
2009 tax documentation.
Alright, let me get back to the stock casino. Yes, I said 'casino' because that's what it is. We just completed the best week in the casino since July of 2009. Remember, the 'best' of everything always comes in the midst of bear markets. This rally is a bear rally but it is a rally nevertheless. I included a chart of the Dow so you can see that even after the fantastic week, the Dow now stands at 10,198. Yippee!! The point of the chart below is to show the real reason for the rally. A downtrend is defined as having lower highs and lower lows. Since April, we have an undisputed downtrend. Worse, the downtrend broke below Dow 9,900 and that is the neckline on a head and shoulders pattern that should be expected to bottom at around Dow 8,200. So, since the Federal Reserve and their shill banks like to play Santa Claus now, they can't let negative patterns play out. The pension plans of the world will have their con games revealed. The banks will be found out to not only be without pants, they don't even have on underwear! Governments are broke and they surely can't lose their oafs. What if we lose all of our money? What about all the morons that 'play the stock market' and still have no idea that the dealer is crooked and can throw down a face card whenever they like? The idiots are glued to CNBC and they think the cartoon they are watching is real life! No, the con game has to be perpetuated.
And so, as the 'correction' that started in April threatened to descend into a 'bear market', the Fed had to do something. They sent Obama to run some oil-soaked sand through his fingers while he pined for someone's 'ass to kick'. They sent Frank and Dodd to the House of Village Idiots to compose more financial regulation to further strangle commerce. This is like hiring the Skipper and Gilligan to take the helm of a three-hour cruise! The Fed sent the ECB out to buy up Euro debt and manipulate the Euro higher with a trillion dollar stimulus package. They sent Hillary to South America to extol the virtues of marxism while she showed off her complete lack of knowledge concerning anything. Downtrend? What downtrend?
Since the Dow rolled over, the ECB announced a trillion in stimulus (May 10), a Euro debt buy back program (June 7) with no garbage too smelly for their liking, and declared the financial crisis dead. Each announcement turned the casino higher. China said they would float the yuan and now as we pondered the bear market of last week, the Fed goosed the casino higher on July 6 after a 150 point rally faded to zero. The jumped the index 60 points in the final 10 minutes of trading. That was the first sign that the PPT was in action and determined to push the Dow. Two days later, the rally began to muddle and the PPT jacked it up 80 points in the final hour of the day storming the markets with 25% of the day's volume in that final hour. Okay fellow, we got your message. Go long and close our eyes. Reality doesn't matter. Bank earnings are great. Although, the 87th bank of the year failed on Friday. Unemployment is falling (according to the government). Although, Merck said they were laying of another 15% of the work force and Well Fargo announced cuts of nearly 4k employees. Retail sales were up. Although, some of that was due to the number of stores no longer in business so those that still are caught some extra business. And, sales tax receipts are still down from last year. I guess the stuff that is selling is the 'tax free' stuff.
Hey, what am I saying here? We now have a fledgling rally in the casino, right? Who is to argue? If anybody sees Captain Ben leave the NYSE, call me. Until then, let's rally! Oh, one more thing. In order to officially blow up the downtrend, the Dow has to surmount 10450. Heck, Bernanke can punch that through in a 10-minute buying flurry at 3:50 PM. And, you want to be there for that 10 minutes! Go Ben!
Chart courtesy StockCharts.com
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