31 January 2010

31 JAN 2010, Sunday

  1. Appears that Intermediate trend has changed to down.  Short term oversold.
  2. Looking to short rallies.

26 January 2010

26 JAN 2010, Tuesday


  1. Two quiet days...waiting for Obama's speech?  Wednesday's Fed announcement?  Bernanke's confirmation?
  2. It is where it needs to stop if it is to resume the uptrend or where it needs to break to indicate a downtrend...or is it just going to become a broad swinging sloppy sideways on the longer time frame?
  3. How's that for definitely non-committal?  But that's where it is.  It is what it is.
  4. With sentiment where it is (bulls conditioned to buy every dip) and the NYSI turned down I favor the downside.  But very short term oversold makes it difficult to press...unless watching it like a hawk.
  5. If it breaks, it's likely that the trend has changed.  Next level seems to be 1030.
  6. If it bounces upward from it's current area...I'd like to see what it does in the 1115-1125 area for possible intermediate short.
  7. I sure hope that "Da Boyz" don't throw this thing into reverse down in a similar manner that they did to the upside since MAR 09.  That would screw both the bulls looking to get out at better prices...and bears looking to get in at better prices. 
  8. One day at a time!

23 January 2010

23 JAN 2010, Saturday


  1. Weekend reading list for those so inclined...
  2. Get your geek on people and read this lengthy but crucially critical treatise on what we are truly up against...despite the pleasant respite recently enjoyed with the upward stock market rise.  John Mauldin sums it up pretty well.  Basically, too much debt with excess industrial capacity tends to lead to deflation not inflation.  This conclusion is drawn from a historical analysis of previous overleveraged economies around the world throughout time...despite people wanting to claim "this time is different"...the single most dangerous phrase in finance. 
  3. The California Gold Rush has officially ended...CA is Broke!  How did they get here?  Due to under-taxing or overspending???  I know where my vote falls.  They really need to face facts and buckle down or...just shut up, quit looking to the taxpayers of other states to bail them out (who have their own budgetary problems) and enjoy their misery.  Oh, one more thought...the US is fast headed in the same direction.  Will we require our leadership to move toward corrective action soon enough to avoid the outlandish consequences?  History says "No" and that they will merely seek a way to kick the can down the road.  At some point, they will find that the can has been filled with cement and they will stub their toes...painfully so!  I hope "This time is different"...the single most overused phrase in the history of mankind.
  4. John Stossel does a wonderful recap on President Obama's campaign promises versus the reality of his first year in office.
  5. Dayum!  Three down days and the Fed's are already starting their hunt to kill the shorts...again???  When they did it in SEP 08, it just accelerated the downside because the built-in buying to cover shorts had been eliminated.  Will they never learn?  This is really getting old...but perhaps it gives a little insight to what may lay ahead once all the "propping up" is exhausted.
  6. One more just to complete the nonsense...Global Warming news flash...scientist who provided claim, to UN Nobel prize winning global warming report, of Himalayan glaciers to be completely melted by 2035 admitted last night that the supporting data was unverified yet the statement was still put in the report to...wait for it..."put political pressure on world leaders."  And the hits keep coming...email-gate, fraudulent computer modeling, tortured data, complete omissions of "inconvenient" data and now this!!?  Enough already!  Time to open full and complete investigations to get to the bottom of this hoax...identify the people involved, prosecute and punish top to bottom...and don't forget the soon to say "we're horrified" political cronies that have been involved in this fraud!
  7. Here's a Global Warming Sanity Check: 2008 & 2009 were coolest years since 1998.  Wait a minute, we evil humans have still been doing our carbon thing non-stop so shouldn't the temperature be "hockey sticking" upward unrelentingly?  Al?  Anyone?  Oh yeah another item tucked in there..."Since 1998, according to NCDC’s own figures, temperatures in the US have been dropping at a rate of more than 10 degrees F per century."  Crap!  Prepare to here about the coming ice age next.  Hmmm...perhaps that is why we're hearing the phrase "climate change" now instead of "global warming."
  8. Here's a good one...weren't we supposed to be getting more frequent hurricanes???  And how come we had more hurricanes annually long before the "hottest decade in history"???
  9. Psst...remember...the debate is over, the science is settled and there is a consensus...about, er, something or other.

22 January 2010

22 JAN 2010, Friday



  1. Yeah, baby, yeah!
  2. Good news for bears seems to be playing out the past few days...intraday trading has become much easier...path of least resistance was definitely down.
  3. Currently in an area where it should begin to slow/stabilize and attempt to recover some of it's recent losses.  If it doesn't, and instead keeps going lower to break the NOV-DEC bottoms, some solid technical damage will have been done and could finally be building an Intermediate Term change.
  4. So, what may happen...hold those pivot lows discussed above, then rally back toward SP500 1120 area then down toward 1050?  Dunno...no one knows with certainty.
  5. First chart below is daily with some comments...second is the daily scrunched up so you can compare price to moving averages and indicator swings over time for comparison's sake.
  6. One day at a time!


21 JAN 2010, Thursday


  1. Wow...some follow through!  But it dropped right into the old highs for support and the 50DMA and some very short term indicators are already oversold but they can get more oversold if this is more than just a correction.  One day at a time!  Let's see how this plays out.
  2. See that...Upmove has been relentless and has made even diehard bears cautious...maybe that's a positive for the downside...LOL.
  3. Intermediate term still up...we'll see how support holds.

21 January 2010

20 JAN 2010, Wednesday


  1. Choppy railroad track days...waiting for a decision.  Would love to see it break out to the upside and then fail.
  2. So, how to make the markets more interesting?

19 January 2010

19 JAN 2010, Tuesday


  1. Still tending upward.  Additional comments on chart.
  2. Short term...Starting to chop sideways similar to the JUN and OCT timeframes...perhaps I'm looking too hard.  Both those occassions looked good but were bear traps.  Although, with sentiment and overbought not really getting relieved...makes me think.  Watching NYSI: daily showed a downturn on Friday but upturn today, weekly still up.

16 January 2010

16 JAN 2010, Saturday


  1. Happy Birthday to me!
  2. Interesting video about people having had enough fo the current Washington DC games.  NOTE:  It has been taken down from YouTube several times already...and put back up by other posters.  Interesting...why and who keeps taking it down???  Freedom of speech infringement?  Who knows...if it's there...enjoy!
  3. Well...Con-gress is back in town and will commence hurtling toward the edge of the cliff once again.
  4. Gosh, I hope Scott Brown wins the Massachusetts Senator seat (Kennedy's old one) and brings some much needed gridlock to allow our illustrious leadership to slow the heck down and actually think about what they are doing both short and long term.
  5. Consider, just for a moment please....
What if the current level of reduced tax revenue to government, at all levels, is closer to the norm of what we may expect over the next 5-7 years??? What true plans, not just "papered over and passed on" plans, are being developed to prepare for that possibility?  This is the nightmare scenario that we will face if the Bond Market finally says to Uncle Sam "Oh no...no mas!" regarding the ongoing ridiculous deficit financing.  At that point the Federal government will force all IRA's, 401K's and all pension plans to purchase 100% US Treasury Bonds.  Can't happen?  Already has...two that come to mind from the 1990's, South Korea (seized all citizen's gold also) and Argentina (hell, the government just took all the money).  We are not immune from financial reality merely because we are America!  Please do not delude yourself or go ostrich when, instead, you need to be as active as you can be.  Anyway, read on...

Below excerpt picked up from Heritage's blog but completely sums up my thoughts....

Harvard’s Stephen Goldsmith has discussed why it’s time for all levels of government, from local to federal, to come to grips with the fact that today’s budget deficits are not a short-term byproduct of the recession. Rather, deficits are due to the long-term dilemma of big government which makes massive promises of public services that it simply can’t pay for. Judging from the agenda of the current Congress, this is a problem which is on the verge of exacerbation, rather than extermination.

To truly address the growing federal deficit, lawmakers must abandon past strategies for addressing economic downturn. Says Goldsmith, “We need to break out of our old patterns of thinking and break some old habits.”

First of all, federal aid for the states will not cure, but simply delay the effects of, state budgetary trouble. The stimulus bill exemplifies this point. Federal dollars provided short term relief, but will force state budgets into the red when federal aid ends. This does nothing but prolong needed change.

Secondly, deficit spending must come to an end. Peterson and Pew Foundations show in a recent report that under current conditions, the public debt could rise to 100% of GDP by just 2022. This would inevitably lead to an unprecedented fiscal crisis. Tax increases won’t solve the problem, either, but would instead stifle economic growth and place heavy burdens on Americans already struggling to make ends meet. Lawmakers must resist the urge to delay the effects of the growing deficit until sometime down the road when someone else will be in office to deal with it. The devastating effects of out-of-control government spending can be averted if elected officials take responsibility and address the problem now.

Finally, state and federal legislators and the public alike need to get serious about the financial crunch the country is facing. Short-term fixes, like hiring freezes and employee furloughs, are not enough to address the issue at hand.

Rather than continue to throw small solutions at a big problem, it is time for the United States to rethink the public sector. The reality is that government’s promises to the electorate are unsustainable in the long-run and will drive the country to ruin if left unaddressed. As Goldsmith puts it, “Like it or not, fiscal crisis is the new normal.”

Oh...and to you military pensioners out there, consider this...FDR passed The Economy Act of 1933 that cut the salaries of federal workers and reduced benefit payments to veterans (by 40%) while intending to reduce the federal deficit in the United States.  The Economy Act had little effect on either the federal deficit or the economy since spending in other areas rose so substantially that it dwarfed the cuts imposed by the Economy Act.  Of note, within a few months Congress and the President slowly and incrementally added benefits back over a period of two years.  It has happened here!

13 January 2010

13 JAN 2010, Wednesday

  1. Holy Crop! 
  2. Someone with really, really, really big pockets wants the SP500 futures market up.  Ordinarily, about 5-8,000 contracts trade each minute.  At 12:03 EST today, 230,000 contracts traded in 1 minute!!???
  3. Hmmm...bad data?  Who the hell has that kind of firepower?
  4. Was that Goldman Sachs flipping the bird to futures traders and saying "We've brought our HFT death machines to you, too."?

12 January 2010

12 JAN 2010, Tuesday





  1. What??!  A down day?  I had to call my data vendor and make sure the feed was accurate.  OK...kidding, but multi day slow grinding moves can be very frustrating.
  2. Below, now that we're in earnings season it's worthwhile to see what's occurred recently.





  1. Below, commentary on chart.  It's still up.  (scratched prior short term trading commentary so as not to confuse investors).
  2. I, personally, am starting to get a bearish itch again that hasn't happened since October and this is very countertrend...but I am watching for clues.  Will see how it plays out.  Solidly break below SP 1120 and stay below and I'll feel way more comfortable. 
  3. Day by day...it's the only way!

09 January 2010

8 JAN 2010, Friday




  1. Thoughts from John Mauldin:
The Great Experiment


So this is the backdrop as we look into the future. Unemployment is rising and is likely to remain stubbornly high (over 10%) for some time, except for the few months this coming summer when the Labor Department will hire hundreds of thousands of temporary census workers. The savings rate is rising, and consumer spending is at the very least challenged. The stimulus starts to drop sharply in the latter half of the year. States, counties, and cities are short about $260 billion and will either have to cut services (and thus jobs) or increase taxes. Housing is likely to get weaker, as there are large numbers of defaults coming because of mortgage-rate resets this year and next (more on that in a few weeks). Valuations on stocks are in the high range, and do not portend well for long-term returns.


Further - and this is the most important item to me - Congress is likely to allow the Bush tax cuts to expire and to add insult to injury with some form of large tax increase for heath care. Between the local, state, and federal tax increases, we could see a massive increase in taxes of perhaps $500 billion in a $13-trillion economy, or about 4% of GDP.


Think about that for a moment. It is likely we will begin 2011 with close to 10% unemployment, if not higher. Christina Romer's work shows that tax cuts have a three-times benefit to GDP. Tax increases presumably have a similar negative effect. (Ms. Romer, by the way, is President Obama's Chairwoman of the Council of Economic Advisors. This is not a partisan idea.)


This is the great experiment to which we are going to be subjected. There are those who agree with Art Laffer and company that tax cuts are a positive for the economy (that would include your humble analyst). And there are those who contend that the economy did just fine in the Clinton years before the Bush tax cuts and that we will do just as well if we take them away. And further, taxing the rich a little more is not really going to change their behavior.


My contention is that if such a tax increase is enacted all at once, the economy will at a minimum dip back into a nasty recession. If I am wrong, then I will have to abandon one of my long-cherished beliefs. I will have to stop arguing that tax cuts are as important as I think. Right now, when I read the data and studies, they confirm my tax-cutting bias. But I have to be willing to change my mind if The Great Experiment proves me wrong.


But if you think unemployment is high now, you will really not like what happens if we dip back into recession. It could go a lot higher. They are truly risking a great deal if they decide to pursue this experiment.


Thus, I am faced with a great deal of uncertainty as I look into the future with my forecasts - and we will get into the bulk of the actual forecasts next week. I almost titled this letter "The Year of Waiting," because there are so many important developments we are waiting on. Will they actually raise taxes in such a soft economy, or will cooler heads prevail and the increases be postponed, or at least phased in over 4-5 years? What will the health-care bill look like? There are so many things that could significantly change any predictions.


As I have written for years, the stock market drops an average of over 40% during a recession. If we go into a recession in 2011, it is highly unlikely that there will be an exception to the bear market rule. But this market seemingly wants to go higher. Smart people like my partner Steve Blumenthal argue with me that the technicals say we could go a lot higher in the short term. And he may very well be (and probably is) right.


This is a trader's market. It is not time to buy and hold large indexes or high-beta stocks and expect to be made whole over the next ten years. Hope is not a strategy. But waiting for the "shoe to drop" is frustrating, I know. However, that is the situation we find ourselves in.


The current environment is quite different than 1982, when the last bull market started. Rates were falling; they are now likely to rise over time. Taxes were going down. Valuations were at historical lows, not high and rising. Inflation was coming down. And on and on. The current environment is not one in which bull markets are born.

07 January 2010

7 JAN 2010, Thursday

  1. Slowly drifting upward.  Click chart for comments.  Tomorrow is employment report which typically makes for big days in one direction or another.  Perhaps that is what everyone is waiting for.
  2. Interesting...Didn't you get the memo warning you of potential increased risk in a rising interest rate environment?
  3. FDIC recommended the following stress testing ... "When conducting scenario analyses, institutions should assess a range of alternative future interest rate scenarios in evaluating IRR exposure. ... In many cases, static interest rate shocks consisting of parallel shifts in the yield curve of plus and minus 200 basis points may not be sufficient to adequately assess an institution’s IRR exposure. As a result, institutions should regularly assess IRR exposures beyond typical industry conventions, including changes in rates of greater magnitude (e.g., up and down 300 and 400 basis points) across different tenors to reflect changing slopes and twists of the yield curve."
  4. A 4% interest rate spike coming?  That'd put a crimp in the economy and housing.  Would put alot of headwinds to stocks too.

03 January 2010

3 JAN 2010, Sunday





  1. Sentiment...things that make me nervous.  That and the market is very extended.  Doesn't mean it has to come down...just a reflection of risk environment.
  2. Here's another slightly longer term view of retail investor bullishness.