Saturday, October 17, 2009

Oil Analysis

Interesting chart on Oil...78 to 79 was my target. We are here...maybe we get some selling or a pullback here - it certainly seems like a good place for it. But since everything revolves around the dollar and the dollar needs some emotional selling the upside targets shown on chart could come into play. If that were to occur then we could also see Gold and Silver targets an aside, a pop in these commodities does not need to be confirmed by the equity or bond markets.

below is a larger on it for a sharper view.

JP Morgan Earnings Fraud

JP Morgan pulled off quite a feat...They made most of their money with the investment bank. This means trading...buying and selling (mostly buying obviously) stocks bonds and other assorted inflation assets. Their banking activities foundered to say the least, deposits declined significantly and cash available declined by 61%.

However, at the very same time they repaid the 25 billion in bailout funds and now are preparing to pay record bonuses for a supposedly outstanding year. A year in which the quality of their fake balance sheet declined even further than it had been during the Lehman debacle. The implications are not insignificant.

The bank will be using its fractional reserve mandate to finance the FDIC. Why not create 100 billion and loan it to the FDIC so you can insure your own deposits with more fictitious cash? And, the question is, will they similarly chose or need to represent or increase loans to the government or its minions to generate interest payments (earnings streams) such as those they will receive from the FDIC to compensate for lack of earnings in their core business in the next quarters. At the same time will depositors continue to withdraw money and the worthless assets on their books continue to be marked at full value despite obvious counterparty insolvency? Will the FDIC be able to insure JPM against its obvious misrepresentations of its financial health?

Recently, despite the public relations push by the Obama contingent for exchange based derivatives markets for the very types of instruments that make up JPM's vast 89 trillion worth of derivatives held on their books...(not to mention the trillions lying around on other banks books), Jamie Diamond wrote a letter indicating that this would NEVER be allowed to happen. Since JPM owns the FED they are dictating the terms - not the reverse. Obama is a pawn in this game. He will need to play the game of Fed, JPM and Goldman Sachs speak to keep the can kicking - including his own.

Since the big banks, JPM, Goldman, Wells, Deutsche Bank etc, made most of their money on the way up using money that was supposed to be lent out to actually buy inflation assets...makes you wonder if they will try to make the most of the coming decline...why else would they be buying large amounts of out of the money puts on the EURO and calls on the Dollar. The key to the market is the it like a hawk...another fraud is about to start...just look closely at JPM's balance sheet. I don't think there are very many believable numbers on it...JPM is short way to many dollars for their own good. They will be buying a lot more of em than they already have soon enough. A lot more most likely than they are expecting to. The naked short on the dollar is about to be covered. JPM started the mess in 1913...JPM will likely take huge payouts for their favored employees and then transfer their default to the taxpayer as per the usual methods.

So, what, pray tell, are they going to do to try to cover up the losses on those derivatives?

Party Like its 1999 - The Dollar and the Dow Jones

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Dow Jones Rebounds to 1999
Daily Show
Full Episodes
Political HumorRon Paul Interview

Friday, October 16, 2009

SP500 Pullback Analysis

Right now we held trend line support which would make this a potential ABC...a break of that trend line creates 5 waves off the high.

Market Observations - Tomorrow...

Wednesday, October 14, 2009

Russell 2000 Chart Revisited

Divergence is still there...Black candle worked for only ONE red candle. Now we are over shooting upper trend line resistance. Amazing and crazy...looks like a trap.

Up/Down Volume for indexes

This chart shows up/down volume with my proprietary indicators for confirming the trend of the internals. As you can see its remaining a trend to the upside...with a few cracks.

TRIN Divergence on Indexes...

Next High looks like a good place for the market o make up its mind...

Russell 2000 is lagging and has not been able to take out its highs.

Triangles setting up on the shorter timed frame chart for a high restest...Up/Down volume on Russell showing cracks.

If this plays out...will post if it stay tuned.

Transportations - Big Backtest

Tuesday, October 13, 2009

Market Observations - Tomorrow...

Well, my scenario is still looking for downside resolution...just as everyone is now really looking up. But it has to happen by tomorrow and in dramatic fashion. Targets for Oil as per my previous Oil posts were around 78 to 79. Gold 1085. Dollar 74.5 to 75. I think we may be able to hit or near those targets on a gap type move. Of course, just to screw around with all the wave counting. In any case, Once anything near 78 to 79in oil is hit and 1085 in is over in my opinion. I would look for a dramatic sell down and to close red...regardless of whether those targets are hit tomorrow or not.

I will post charts later. Just wanted to post my thoughts.

Back to the Future

In 1930 there was a tremendous stock market bounce....this is what they said:

May 1, 1930
“While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States – that is, prosperity.” – President Hoover
June 29, 1930
“The worst is over without a doubt.” – James J. Davis, Secretary of Labor.
June 9, 1931
“The depression has ended.” – Dr. Julius Klein, Assistant Secretary of Commerce.
Sound Familiar?

Monday, October 12, 2009

Market Observations - Resistance and Black Candles

The Russell 2000 is an interesting index. It is comprised of a high concentration of energy and financial components. It is also represent speculative small cap companies, so you can gauge the market's risk appetite from it. Well, as you can see below, the Russell has to break its high. This is a difficult task given the strong resistance and overbought nature of this market. Additionally, the Russell has been lagging which adds to the difficulty but also demonstrates a tiring market overall. The Gap Up open with a close below the Open created a Black reversal candle. These are highly reliable signals especially when they occur at trend-line resistance with divergences. Something to keep an eye on.

If the market is going to reverse down or break resistance it has to happen imminently. There is no spare time. It is my impression that people are so tired of calling for a correction that most are looking up. While I recognize this possibility is not trivial...the downside case seem much better to me and upside seems quite limited.

US 30 year Treasuries - not a pretty chart...and not a good omen for the market. Clearly, Corporate Bonds and Treasuries have disconnected...The structure for the Corporate Bonds is very clear and it looks like the ABC pattern is complete. Look out below.

McClellan Oscillator had two small consolidation moves...Friday and today...this portends a large move of some sort is likely tomorrow. Either way you want to be on the right side of what ever that move turns out to be...and it seems likely to be down to me.

A plan comes into fruition

My scenario is playing out to a tee...get ready for all hell to break loose if things continue according to plan.

Break of 1063 to 1064 starts the wheels in motion. Look at my previous Market Observation posts for my perspective.

Below is a chart from setup on the SPX.

Some interesting charts

thanks to matt fraily,

Sunday, October 11, 2009

Man and put things in perspective

This is an audio post. I encourage you to listen to it...I think there are a lot of lessons to be learned from Alan's exceptionally well told story. In fact, it is a life changing least for me.

There are amazing correlations somewhere here that I think relate to our physiology and psychology as it pertains to trading. I imagine that all traders are born with something equivelant to a stutter and need to find a way to free themselves from it...certainly Alan's story is very interesting on many levels. Let me know what you think.

Alan Rabinowitz
Man and Beast

you can find out more about Alan here.

New York, New York - finance capital of the world...

The other day, I heard Mark Haines, doing his Squawk on the Street opening line: "...from New York City, the financial Capital of the Woorrrld"...and I pondered..."is that really a good thing?"

New York politicos and economic types have been promoting the idea of a resilient NewYork. For years, I have made it clear to anyone I know investing or living in New York...that job losses for city will not be the fictitious 50,000 or 60,000 they have tried to pawn off as real but more like 700,000 to 900,000. We have to remember that New York has been and still is one of the most over priced areas in the country to live and work. Therefore, people will put up with those consequences when they are, appropriately enough, paid very well. When the "paid very well" part goes away lots of things change. People stop buying couture clothes, buying 5 cups of Starbucks coffee a day, going out to dinner regularly, hiring a nanny, renovating their over priced condos, taking vacations to the Hamptons and paying a lot to live in an area where they are not paid a lot. Forget, the impacts of laying off that bean counter or banking executive...simply cut their bonus or base pay and the related job losses will be huge. The effect cascades to real-estate and property rentals and nearly every other business. I am quite sure that the banking/finance industry is still over staffed - at least by 25% probably more. Recognize that the pay scenario follows the path of:
  1. Cut bonus and freeze base pay
  2. Try to retain talent risked by cutting of bonus/freezing base - increase bonus 
  3. Next Cut bonus again and lower base pay
  4. Finally the lay off
So, there bas been complacency in finance in New York since the big banks got to steal even more money than they already have through their fractional reserve money creation ponzi schemes and in that the hope somehow they can continue to delay the inevitable. But, if there is one lesson to be learned from the banking industry, it is that they hired a lot of bean counters, model builders and day dreamers to attempt to do simple math by making it extraordinarily complex - and they failed. A bean counter who can not add - is definitely not worth base pay of $200,000+ with a performance and incentive bonus six digits more. That guy needs to be FIRED NOW...but he got a reprieve so far - yet look at the results in the articles below.

We do not need more bean counters, we do not need more bureaucracy, we do not need more starbucks, credit cards, taxes, brokerages, developers, real estate agents, strip malls, shopping centers, government agencies, bailouts, banks or regulations. And we definitely do not need more bankers!

If you look at the numbers, the average american spends a significant amount of time and resources every year dealing with filling out government related forms and complying with trivial or unecessary regulations that specifically designed to create and transmit no useful value and contribute no useful capability or potential. The subversive mechanisms that the government uses to continue to steal value from value creators and transmit that value to value debasers results in a continuing increase in the amount of potential that is wasted. Once that potential is wasted it is gone. 

The mechanisms are really are amazing and imaginative. Cap and Trade is just one recent example, but many other useless permits, licenses, taxes and other bureaucratic complexities, represent an increasing overall tax on americans and businesses. Those useless mechanisms then require the support of americans, who could be doing something useful, having jobs decoding useless information that transmits or creates no value...but does generate fees. These fees are ultimately paid to bankers, this is by design (and is the reason that you should read the pieces I have written about the dollar and the money system posted in the featured articles section). But the problem is, in New York City, the emblem of this problem lives and breaths. These high powered people who can supposedly afford to live beyond the capabilities and means of almost all other americans - mostly have jobs that involve no creation of value and no transmission of value. Many finance related jobs are actually fairly closely aligned with the theft of value. Those jobs should be and will be gone. Hopefully, most of the fraud will be gone with them. But the results for New York City will be many, many more job losses in finance, and then for every 1 job lost in finance, four jobs lost in the common sectors. New York is very vulnerable. And the articles below are just the beginning of the story...and I for one do not believe that there are any positive underpinnings that are effecting NYC's real estate market dynamics. Its going to get much worse from here.

Manhattan apartment leasing down 59% in year
Rising unemployment and an increase in purchases by first-time home buyers have combined to diminish the number of new apartment leases signed in the third quarter to levels 58.9% below those of a year earlier, according to the latest Manhattan rental market report, released Thursday.
During the quarter, there were 2,549 rentals, according to Prudential Douglas Elliman and appraisal firm Miller Samuel Inc., which conducted the report.
“We saw a significant decline in rental activity from last year,” said Jonathan Miller, chief executive of Miller Samuel.
Meanwhile, the median rental price in the third quarter slipped to $2,950, down 7.7% from year-earlier levels. The drop is likely even deeper than the numbers show because more and more landlords now offer sweeteners like months of free rent and help on the security deposit, concessions that are not reflected in the rent numbers.
see full article here 

Condo prices slashed 25% at big Brooklyn tower
In an aggressive effort to boost sales, the developer of the 303-unit Oro tower in downtown Brooklyn said Tuesday that it is slashing prices of its remaining unsold condominiums by as much as 25%.
To date, just 90 units have closed and 30 are in contract at the 40-story tower in the Flatbush Avenue corridor. The developer also announced that, effective two weeks ago, it has changed brokers and will be launching a new advertising campaign focused on the price reductions and the units' value as opposed to luxury. Rose Associates, which traditionally handles the marketing and management of rentals in Manhattan, has taken over sales at the Oro from Prudential Douglas Elliman.
“The pricing will drive sales,” said Matthew Faris, vice president of Greenfield Partners, the Oro's developer. “Right now it's good to have a cohesive sales and managing team. Buyers need a lot more handholding.”
Prices on units ranging from studios to three bedroom units are being cut by 15% or more. For instance, studios are now being sold for as little as $295,000 and three bedrooms for as little as just over $1 million.
see full article here

Whose gonna buy the cookies? Whose gonna make them?

If everyone was rich again, they would buy Stella D'oro cookies and the union would have been able negotiate in bad faith - but it would have worked and these non-finance jobs would not have to have been lost.
Stella D'oro closes its longtime Bronx factory
Union, owner couldn't settle labor strife. Jobs will move to Ohio. Here's how this cookie crumbled.
After nearly 80 years in the Bronx, the Stella D'oro cookie factory closed Thursday, victim to a labor dispute that dragged on for more than a year.
The closure puts 136 workers out of work at a time when the city's unemployment rate has skyrocketed to 10.3%, a 16-year high.
The workers had been on strike for nearly a year when a judge ruled in June that the company had violated labor law and ordered the workers reinstated with back-pay to May 6. They returned to their jobs in July, but on the same day, Stella D'oro announced plans to shut the factory, arguing the union had failed to make any meaningful concessions that would stop the company from losing money.
Then in September, Brynwood Partners, the private equity firm that bought Stella D'oro from Kraft Foods in 2006, announced it had sold the company to North Carolina-based Lance Inc., which plans to move the operations to Ashland, Ohio.
A spokeswoman for Stella D'oro would not comment beyond confirming the closing. She referred to a statement the company put out last week that blamed the workers for the dispute.
“The union's strategy was to give no ground on wages and benefits, even if that meant the company would be forced to sell the business and shut its doors in the Bronx,” the statement read. “The union got precisely what it knew it would get with its strategy.”
Louie Nikolaidis, a lawyer for the union, said bargaining over the effects of the closure ended Wednesday, without any resolution. “We didn’t agree on anything,” he said. Mr. Nikolaidis contends the company still owes the workers and their union between $15 and $17 million, covering severance pay, back pay, vacation and sick pay, and money owed to the union health and pension funds. “We’ll stay on top of them and make sure they pay it,” he said.
see full article here

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