Art Cashin Interview

What is interesting is what he is NOT saying but is between the words. He is obviously keenly aware of the dollar issues and probabilities of deflation...I like Art. Like most, he was early in looking for this market to consolidate or roll over...but at least he's good company.

Dow adjusted for inflation

For some long-term perspective, today's chart illustrates the Dow adjusted for inflation since 1925. There are several points of interest. For one, when adjusted for inflation, the bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s. Also, the inflation-adjusted Dow is now a little more than double where it was at its 1929 peak and trades a mere 51% above its 1966 peak – not that spectacular of a performance considering the time frames involved. It is also interesting to note that the Dow is up 54% from its March 9, 2009 low which is actually slightly more than what the inflation-adjusted Dow gained from its 1966 peak to today.

Market Observations - Unfinished Business

As I repeated over and over...the dollar is the arbiter of the markets. The market is trading off the fumes of the burning dollar. If the dollar weakens, the markets rise or bias to the upside. What I have noticed of late, especially with the more speculative indexes such as the Russell, NDX, Nasdaq and Mid Caps, is that they have become less sensitive to the selling machinations of the dollar with the exception of when it strengthens. This is a sign that the rally for equities is fading and the failure of the dollar is also losing momentum.

Today was all about the dollar and until we see the dollar index capitulate, most probably to the 74.5 to 74.3 area...the market will not break down for anything more than a correction. It is absolutely stunning that a 4 day outside down day key reversal can be reversed by relative value dollar movements so easily.

I will post charts later. Needless to say, I am getting very bullish on the dollar here. I am not currently long the Dollar contracts but will go long once something concrete happens.

From the Press: As the Dollar Sinks, Oil Skyrockets

Interesting that they notice the Oil Skyrockets after its already up 15 bucks! Be careful, oil rally is getting mature.

As the Dollar Sinks, Oil Skyrockets

By CLIFFORD KRAUSS

HOUSTON — Crude oil soared to close above $80 a barrel on Wednesday, breaking that psychological barrier for the first time this year, despite weak global economic conditions.

Prices have been up in 9 of the last 10 trading days, owing at least in part to the slide of the dollar. Many oil analysts predicted that prices would continue to rise in coming weeks and could reach $100 a barrel by early next year.

“Oil is just flying,” said Phil Flynn, senior market analyst at PFGBest Research, a futures trading firm. “It’s off to the races.”

Analysts said rising oil prices reflected confidence that the economy was beginning to rebound from a deep recession, as well as higher demand from refineries for superior grades of oil that were cheaper to refine.

Market Observations - Not Pretty - Warning Shots

Apparently, JP Morgan and Goldman Sachs need to sell some of the assets that they acquired using those hundreds of billions of dollars of crony capitalism supplied dollars they obtained through the manipulative tactics of their friends at the Fed and Treasury. Not satisfied that that money was enough, they leveraged up even further - so they could invest even more in risky assets and further the confidence game. Duping american investors and public out of more of they're money is a favorite past time for these guys.

Are assets really risky if you and your friends own most of them? Certainly JPM and Goldman prove the axiom that if you own the market, which these participants alone most likely owned, at the very least. a significant percentage of...you can squeeze prices up and then you can tear them apart when you are good an ready. Mind you I am not here to spout conspiracy theories...these guys are so flagrant do they even count as conspiracies? So, back to the mundane, while Goldman MAY actually survive the upcoming catastrophe, JPM will most likely not. Regardless, remnants of most of the financial firms will certainly exist, but the firms will be shells of their former selves and the economy will likely be significantly damaged by their demise and misdeeds.

Fittingly, financials topped in ironic fashion earlier in October...with an island top. Financials are indeed in need of an island, Rikers Island would be appropriate for the gamesmanship they have demonstrated this year. All the earnings reports from the largest banks inspire distrust and are absent integrity...we will have to see how that flies. In any case, I am happy to report that JPM has more than enough money to lend to the FDIC to bail itself and most of the other banks that will fail out.

Back to the markets, today may not be classified as a confirmed failure for the transports...but a break of 3890 will do so. the SPX closed beneath a recent sell level at 1083.5...it would not be surprising to see some sort of a test slightly above those areas...but I certainly am under the impression that the buy side is extremely dangerous at this point. My diatribe above was important in understanding the motivations of the sellers at this point. The sellers are the largest banks. They MUST sell...given the profits they have made selling will not be ruled by trying to eek out little profits...they already have big ones...they do not have to be choosey about prices. When you are liquidating trillions of dollars of leverages purchases, it takes time and the average prices are more important than any single price. Though there may be attempts to retain prices supports to allow higher priced distribution, there is a dramatic need for these institutions, who misused the benefits of America's money, to get out stage left. The specter of this dynamic means that we have to on guard for waves of downside pressure - probably much more persistent than in last years bear market moves.

Another interesting leading indicator for the markets is the Canadian Dollar which has failed its breakout...something to keep a close eye on.

There is unfinished business - potentailly a remaining pop to the upside for commodities. Gold needs to reach its target of 1080 to 1085, Oil should still make an upside push to the 85 to 87 area, Silver looks primed for a little up move. The dollar looks complete, but also looks like it needs to get that emotional drop below 75 convincingly. As seen today, a dramatic drop in the dollar is no longer fuel for rising equity prices.

So, what I am looking out for are small upside tests for equity markets followed by larger downside swings. There could be some unfinished business with regard to the markets...as per my usual comments - the dollar rules this game. I suggest having extremely disciplined rules for selling resistance and only buying support when its absolutely clear. It is important to recognize, that this type of market has the possibility to not let you in. Everyone is waiting for perfect backtests, retracements and kisses as in the LQD chart above. There is no guarantee that equity market need to give that courtesy. LQD has been breaking down for a month now, unconfirmed by equities. It may be time for some acceleration. Perhaps, some convenient excuses will come out this week - like MSFT earnings on friday.

Personally, I will be extensively using trade automation to trade the upcoming turbulence. Today, in fact, I released a price quantization system with extensive risk controls that absolutely killed it on the CL contract - up $3000 on a single contract today alone.  I think mechanical templates can be a tremendous support for managing emotions during extreme and persistent repricing episodes...especially if you are lucky enough to be able to build some good ones...or get your had on some.

Market Observations - One last bounce?

Elliot Spitzer talking about Fed conflicts

Spitzer, rightfully, rails on Geithner and the conflicts created by the Fed being owned by the banking system. This is an interesting watch.

Spitzer does not totally get it, but at least he basically gets it. China's economy btw, to correct him is not booming...its running on methamphetamine fumes...and the vapors are both poisonous and about to stop. Withdrawal will be very painful for china and anyone who invested there.

Visit msnbc.com for Breaking News, World News, and News about the Economy

Market Observations - Apple and Goliath

Similar to the 2007 high Apple has created a high level of excitement. Apparently enough that most people I saw on CNBC are screaming..."the coast is clear. You have to commit capital to this market." Well, if you look at the chart below of QQQQ, I am pretty sure that you can guess when the last time was that these very same words were being plastered all over the financial media based on Apple's results. If you guessed Oct 2007 - you would be right. That resulted in a throw over of the multi year channel. Followed by a failure and a retest where a new high in Apple shares was not confirmed by the Nasdaq 100 or the Composite. We are at different degrees of trend now, so the QQQQ's may only be confronting that lower uptrend line. But in any case, the optimism is the same. Over 90% bulls in Oct 2007 and over 90% bulls in 2009...with an Apple earnings pop. Very dangerous times for a long if history is any guide.

Additionally, the SP500 only needs one more wave to complete 5 up into the gap zone and the dollar only needs that push down under 75 to complete the wave patterns. Ideal ending points for the dollar is 74.62 and SP500 1,100 to 1,120. Just to reiterate, ideal levels are nice...it does not follow that we have to reach them, we are already within appropriate tolerances.

I would be on guard for a reversal tomorrow...and if a reversal were to occur tomorrow or wednesday - it would most likely be the top of the entire rally...finally.

Dr. Morris Cerullo - Minister, Evangelist - Socionomist?

Morris calls himself a doctor. He created a ministry for which he accepts donations via informercials. And, if you see these informercials you think - "Only in America". In any event, he seems to have capitalized on the negative social mood in rather a timely manner - namely right at the bottom - in March. I guess he must have sold all his stocks then. At that time, considering his potential of capitalizing on loss (his and everyone else's), I imagine he came up with the idea for the "Financial Breakthrough Bible". In any case, I think this video is a telling statement about our times and certainly our social mood. Right now his special promotion of the month seems to be "Debt Cancellation". Interesting...Funny...Sad.

Morris Cerullo is an ordained Assembly of God Minister and Healing Evangelist. His personal ministry mansion and two-story home is over 12,000 sq ft. It is behind two secured gates in the richest neighbourhood in America and has been estimated at over $12 million. Mr Cerullo and his wife are the only two that live there, and report that they are on the foreign field 70% of the time... what a waste of God's money!

Cerullo refers to himself as `Dr. Cerullo,' although he does not have any degree earning him this title," says Lundy. "He runs MCWE from offices in San Diego, which he calls `mission control,' but he does not serve as the minister of any physical church or congregation." Cerullo raised millions of dollars and bought the defunct PTL Network, theme park and conference grounds from bankruptcy court after Televangelist Jim Bakker's career ended when he was convicted and sent to federal prison for fraud."

Morris Cerullo's sky limousine, a Gulstream G4, is estimated to be worth $50 million. He has two full-time pilots and a stewardess who said in depositions that the plane has a gold-plated interior. He has had three similar private jets since.

http://www.financialbible.tv/
http://www.mcwe.com/
A Cerullo Story

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 met...as an aside, a pop in these commodities does not need to be confirmed by the equity or bond markets.

below is a larger chart...click 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 Dollar...watch 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 Stewart	Mon - Thurs 11p / 10c
Dow Jones Rebounds to 1999
www.thedailyshow.com
Daily Show Full Episodes Political Humor Ron Paul Interview

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...

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.