They've found Gold in Hell ...It's all about price now

DJIA 9236 +165 SPX 995 +20.22 VIX 25.66 +.25 Gold 935.70 +8.50 Silver 13.48 +.2170 Oil66.08 +2.73 RBOB (Whsl Gasoline)1.93 +.08 Dollar Index 79.45 -.33 EURO 1.4059 +.0028 (Long Term Gov Bonds 91.35 -.35 IEF (7-10 Yr Gov Bonds89.62 -.28 XLF (Tech Index)12.96 +.37 XLE (Oil Index)50.22 +.78 XLF (Financials index) 12.96 +.37 EEM (Emerging Markets)35.91 +1.16 FXI (China Index)42.37 +1.11

Stocks rallied Thursday as investors were encouraged by the latest jobless report and round of corporate earnings.

The Dow Jones Industrial Average was up more than 1.6 percent, putting the average above 9,200. The S&P 500 was closing in on the 1,000 mark and the Nasdaq topped 2,000

Jobless claims rose by 25,000 last week to 584,000 but investors were encouraged as talk on the Street put the number as high as 600,000. Plus, the four week-moving average, which smooths out weekly fluctuations, fell to its lowest level since Jan. 24. And claims were the lowest since April.

This reminds me of a story about a group of stock brokers in a bar talking after work. The door opened and a man rushed in and started yelling...They've found Gold in Hell...They've found Gold in Hell. The oldest broker started to laugh as the rest excitedly ran for the door and went straight to Hell. Then the Bartender saw the oldest broker stand up and run for the door. He said where are you going and the oldest broker said there may be some truth to that rumor.

This is where today's market story is. The rumor is that the economy is improving and they are starting to run for the door even the the story is absurd. Why, there may be some truth in that rumor. It is all about price now we will worry about the reality later.

No trades today.

Observations of note.

I am noticing that Gold is lagging on this rally, at 938 is it well off of its highs.
MCD is also showing relative weakness to I will short below 55.
GDX Gold miners index is also showing weakness. Looking to short this below 36.75
The beat goes on ...MIkey

Good day for the Dollar and Bonds Bad day for equities and inflation hedges

DJIA 9031 -68.09 SPX 970.41 -9.17 VIX 25.98 +.97 Gold 931 -7.70 Silver 13.38 -.3650Oil 63.83 -3.40 RBOB (Whsl Gasoline)1.85 -.07 Dollar Index 79.71 +.7950 EURO 1.4016 -.0154 (Long Term Gov Bonds 92.14 +.94 IEF (7-10 Yr Gov Bonds 90.20 +.36 XLF (Tech Index)19.50-.18 XLE (Oil Index)48.97 -1.54 XLF (Financials index) 12.58 -.01 EEM (Emerging Markets)34.69 -.86 FXI (China Index)41.16 -1.70

The Euro rolled over and is breaking its rising 20 day average, touching its rising 50 day average and is at a 10 day low. Still not in a down trend but it may be the start of something. This is knocking down all the commodities.

Gold is still in a neutral trend but acted poorly on the last rally high in the market. Oil is off 3 bucks and again trading sideways. Big moves start this way but as of yet no cigar. Still watching but added a Little to my FXP (China Short) at 10.05

Yesterday, the touts said they were looking for a mild correction in the 5 to 7 % area. This selloff today may be a trial balloon to see if the shorts bite or the longs buy the dip. To have a meaningful selloff the longs have to buy the pullback and be rewarded for it and the shorts have to be spanked for shorting. Topping is a process. It rewards the buyers and spanks the sellers until the shorts give up and the longs feel comfortable.

Trends

S&P Long term ....Down.....Intermediate term ....Up....Short Term ......up

Gold Long Term....Flat....Intermediate Term....Flat... Short term ....Down

Oil Long Term...Down.....Intermediate Term ...UP....Short term ...Flat

Euro Long term ..Flat....Intermediate Term ...UP...Short term ...Down

Almost everything is trading right off the EURO. The dollar and Bonds are inverse to the Euro and the Market and commodities are the same. Still too early to tell which way we go in the near term but I think, as I said yesterday they need good macro economic numbers to tell us everything is OK and therefore I suspect the market will hold up a little longer.



The beat goes on...Mikey

Still Waiting...More better than expected numbers to come

DJIA 9066 -43 SPX 976.26 -5.96 VIX 25.25 +.97 Gold 937.60 -15.90 Silver 13.72 -.27
Oil 67.14 -1.24 RBOB (Whsl Gasoline) 1.91 -.03 Dollar Index 79.05 +295 EURO 141.63 -.0074 (Long Term Gov Bonds 91.10 +.70 IEF (7-10 Yr Gov Bonds89.85 +.19 XLF (Tech Index)19.59 -.06 XLE (Oil Index)50.32 -1.04 XLF (Financials index) 12.59 -.13 EEM (Emerging Markets)35.50 -.21 FXI (China Index) 42.63 -.04

This is instructive because skeptics are still out there. Now the economic news comes in. If I am right they will validate the "better than expected" earnings with " better than expected economic numbers. Read this:

The bulk of the much-anticipated second-quarter earnings season has passed with Wall Street standing on substantially stronger ground.

So now what?

With stocks up 11 percent since Alcoa [AA 11.202 -0.098 (-0.87%) ] kicked off earnings three weeks ago, investors now will be turning their gaze elsewhere to see whether the rally is for real, or if it was just a momentum-driven push that soon will fade.

"When you're in a scenario in the markets when you don't have that many macroeconomic data points and you're beginning to slow down in earnings season, the market tends to obsess about different issues," says Quincy Krosby, general market strategist at Prudential Financial. "Investors will very often just pull back until they can absorb more guidance, particularly when a market is in an overbought scenario."
The market's movements, then, will depend largely on five factors that loom ahead:

1. The Economy

Economic data points—such as unemployment, housing starts, gross domestic product and other statistics—have taken a back seat in investors' minds as companies have reported quarterly earnings.
That's likely to change as Wall Street looks for concrete signs that a recovery is at hand.

"We always say that markets climb a wall of worry, and with that said on every front there's something to be worried about," Krosby says. "The tug-of-war has existed from the very beginning that the recovery was going to be muted against those who say you're going to be surprised that this is going to be a stronger recovery."

GDP numbers due out at the end of this week will help provide a signpost of whether the economy will go positive by year's end.

At the same time, unemployment, considered by many to the biggest fly in the ointment of recovery, may be discounted as a sign of recovery. Talk of a "jobless recovery" has only accelerated in recent weeks.

"The only thing that you're hearing the bears scream about is that without jobs there can't be a real recovery," says Jordan Kimmel, market strategist at National Securities in New York. "Each recovery for the last several decades, the jobs have been more and more of a lagging indicator."

Yet stocks fell Tuesday, precisely on worries that the economy was still sluggish and consumers were not regaining confidence.

2. The Energy Trade

Since the rally began off the March lows, movements in stocks and oil have been closely correlated.

One of the main reasons is that investors have been watching for signs of consumer demand growth. Current demand for oil is relatively anemic, but investors are looking at other signs to gauge the prospects for demand returning in the future.

"In the past few years, there was a $20 to $25 per barrel 'risk premium' added to oil prices. That premium has been replaced by a 'hope premium' as markets believe an improving economy will spur significant demand increase," Marcia Donadio, an analyst at Ernst & Young, said in a study released Monday. "Major players in the energy industry are preparing for the upturn."

Ernst & Young said hopes for a recovery are playing out across the energy spectrum, not just in gas and oil prices.

"While recovery will be slow and gradual, there is a great deal more optimism in the markets going into the third quarter, and that is reflected in oil and gas industry activity," Donadio said.

In the near term look for the following:

Higher oil prices ( I would not be surprised if Israel and Iran, or Nigeria, or Russia popped up again
Much better than expected GDP numbers
Much better than expected employment numbers....this is a biggy I would expected to look very good to validate the rally and kill the bears argument.
Much better than expected housing numbers...and so you get the picture.

When this is out of the way I will play again we my argument does not hold water anymore. This should all be over by options expiration in August which is the 21 st. I think that would wipe out the put buyers from 3 months ago.

When all of this is over and price returns to a downtrend I will be shorting again. I notice that Gold is showing relative weakness to the market I am still long the DZZ now at 21

The beat goes on.......Mikey

Better than expected rally continues...We are close to a top

DJIA 9070 +189 SPX 977 +22.96 VIX 23.78 + .36 Gold 951.20 -2.10 Silver 13.76 +.06
Oil66.92 +1.52 RBOB (Whsl Gasoline) 1.91 +.08 Dollar Index 78.95 +.09 EURO 1.42 -0005(Long Term Gov Bonds)91.17 -1.54 IEF (7-10 Yr Gov Bonds)89.87 -.90 XLF (Tech Index)19.80 +.41 XLE (Oil Index)50.59 +1.66 XLF (Financials index) 12.50 +.36 EEM (Emerging Markets)35.62 +1.32 FXI (China Index) 42.26 +1.84

Dow Soars Past 9,000 as Investors Cheer Earnings

Stocks rallied Thursday as investors shrugged off a rise in jobless claims and focused on encouraging earnings from Ford and 3M.

A third straight rise in existing-home sales also buoyed the market, helping propel the Dow Jones Industrial Average above the 9,000 mark for the first time since January.

Yes its all good with the better than expect rally "breaking out" to a new recovery high above 9000. This tells everyone that price is confirming the recovery story. It must be true. They preped this thing for the last 2 months and now the price confirmation...here we go. The problem is it is not about earnings. There is no income to support this and this rally is doomed.

I will be shorting some time very soon will let you know.


The beat goes on ....Mikey

The earning game and the economy...What is happening

DJIA 8919+3.41 SPX 957.55+2.79 VIX 23.46 -.31 Gold 953.30 +6.40 Silver 13.71 +.22Oil 65.25 -.36 RBOB (Whsl Gasoline) 1.83 +.02 Dollar Index 78.80 -.28
EURO 1.4240 +.0043 (Long Term Gov Bonds)92.464 -.90 IEF (7-10 Yr Gov Bonds)90.80 -.51XLF (Tech Index)19.35 +.07 XLE (Oil Index)49.42 -.29 XLF (Financials index) 12.18 +.05 EEM (Emerging Markets)34.68 +.04 FXI (China Index) 40.55 -.17



Earnings are coming in better than expect. Why? The corporations are cutting jobs and cutting benefits. Many are no longer contributing to their pension and 401K plans. That is slowing the rate of decent of earnings and it is making those earnings look better than analysts expected. The reason is that the analysts did not factor in the large cuts that are taking place in those corporations.

That is all great for now but down the road that means that less and less money goes into the market and less money goes into the economy from the workers of these corporations. Again I remind you that the consumer is 75% of the economy and he is getting his wages cut, his benefits reduced, and his lines of credit pulled.

It is not hard to see where this is going to end up. The expert analysts that talk to the public are saying see look at stock prices that tells you the economy is bottoming. They say you have to buy early and not miss the bottom. They say the recovery although not here now is coming. I say that is a deliberate lie.


Look at this Letter from a confused investor:

Jim: I'm totally confused and could really use your help! Harley-Davidson [HOG 20.28 0.30 (+1.5%) ] announced yesterday that their last quarter's earnings had plunged 93%, shipments of new motorcycles to their dealers had plunged, anticipated rest-of-year shipments have been revised down, and that they'll be accelerating their plant closings and starting a new round of massive layoffs! As a result, the stock's daily volume more than tripled, but the price, instead of plunging as I expected it to, surged over 8%! I don't get it! Can you explain why? How you read this? --William

Cramer says: “This is what happens at the bottom…at the bottom, strange things happen. Harley-Davidson has come down a huge amount. This is the beginning of what I think is the end of the underperformance. People want to get in ahead of that. Don’t forget – Warren Buffett bought a big stake in the company, and that’s driving a lot of buyers, too.”

Look at Cramers comments. He tells you that this happens at a bottom and he also says that Warren Buffet bought it. Very impressive. But the reality is that in 6 months this thing will be blowing out the lows big time.

I will again tell you that he called the bottom in Real Estate in Sept of 2006. Look a a chart of home builder KBH in Set 2006. The price was 48. It rallied to 56 in Jan of 2007 and by November 2008 it was 6.90. I will tell you he said the very same thing to the listeners from Sep 2006 to Jan 2007 about the housing stocks. He said that the market was telling you that the real estate market had bottomed. WRONG!!!! But it did get some buyers in and ran some shorts. The stock price had fallen in half and it looked "cheap" but in the end the markets had not bottomed and the news just kept getting worse.

That is the game now they want you to buy the "bottom" here and not miss it. But you can see by that chart that a lot of damage was yet to come. These guys are not in the business to get you in cheap. They are helping the system distribute stock. Buy the way this guy turned bullish on a bottom in May of this year so we are over 2 months into the bottom song.


I still have not added to my shorts but am getting close. I like CAT AAPL UPS V or just about anything that had better than expected earnings. I will let you know


The beat goes on......Mikey

The "better than expected" earnings extravaganza continues..Do you see the pattern?

Caterpillar Beats Forecasts, Shares Surge

U.S. machinery maker Caterpillar posted stronger-than-expected quarterly earnings Tuesday and raised its full-year outlook, citing what it said were growing signs of stability in the world's credit markets and economies.

The company, the world's largest maker of construction and mining equipment and a closely watched component of the Dow Jones industrial average, said fiscal stimulus programs, especially in China, were beginning to pay off and commodity prices were holding in a range that was positive for investment.

The upbeat outlook, which Caterpillar's chief executive said "set the foundation for an eventual recovery," sent the company's shares surging as much as 13 percent in early trading on the New York Stock Exchange.

Caterpillar [CAT 39.05 2.40 (+6.55%) ] reported a second-quarter net profit of $371 million, or 60 cents a share, compared with $1.11 billion, or $1.74 a share, last year. Sales and revenue fell 41 percent to $7.98 billion.

Sripping out costs associated with layoffs and restructuring, Caterpillar made 72 cents a share. Since the end of 2008, Caterpillar has cut 17,100 full-time workers.

And this one:

Merck Tops Forecasts Sending Shares Higher

Merck said second-quarter earnings fell, hurt by lower sales of its cholesterol drugs, but income from partnerships and a rebound in sales of asthma drug Singulair helped the drugmaker beat profit forecasts.


Merck [MRK 29.44 1.50 (+5.37%) ], whose shares rose more than 4 percent on Tuesday, earned $1.59 billion, or 74 cents per share. That compares with $1.77 billion, or 82 cents per share, in the year-earlier period.

Merck, which plans to acquire Schering-Plough [SGP 26.41 0.84 (+3.29%) ] in coming months, said it earned 83 cents per share, excluding special items. Analysts on average expected 77 cents, according to Reuters Estimates.

Revenue fell 3 percent to $5.90 billion but came in $70 million above the Reuters Estimate forecast. Sales would have risen 3 percent if not for the strong dollar, which undermines the value of overseas sales.

And this one:

Coca-Cola Profit Tops Expectations

Coca-Cola reported a better-than-expected quarterly profit Tuesday, aided by growth in emerging markets, but its shares fell as revenue was lighter than anticipated and investors looked for stocks with stronger growth potential.


The world's largest soft-drink maker's broad geographic footprint, especially in developing markets such as India and China, helped it weather an industry-wide slowdown in the United States.

Coke gets the bulk of its revenue from abroad, where soft-drink sales are still growing despite the weak global economy. Still, revenue declined more than analysts expected as growth slowed and the stronger U.S. dollar reduced the value of international sales.

and this one:

DuPont 2Q Profit Down 61% On Lower Volumes, But Tops


12:24 PM ET 7/21/09
Symbol Last % Chg
DD 27.85 -1.69%
Real time quote.

DOW JONES NEWSWIRES

DuPont Co.'s (DD) second-quarter profit plunged 61% on lower volumes as the chemical company continued to struggle with weak demand. Earnings results beat expectations, though revenue fell short of analysts' views.

Chemical companies have been scrambling to cope with falling demand in recent months as major customers in the construction, automotive and textile industries have slashed inventories. For its part, DuPont has announced 12,000 layoffs since late 2008 and cut its earnings target in April


Wow what great news...

CAT Caterpillar cut 17,100 full-time workers and Sales and revenue fell 41 percent to $7.98 billion.

MRK Revenue fell 3 percent to $5.90 billion and they plan to buy out SGP..why to lay off more workers and take their revenue into their bottom line.

Coke revenue declined more than analysts expected as growth slowed and the stronger U.S. dollar reduced the value of international sales.

DD got the crap kicked out of it but was better than expected


BUT AND IT IS A BIG BUT THEY BEAT ANALYST EXPECTATIONS. I guess those crazy analysts underestimated how many lay offs these stellar corporate citizens could cut. They all had big revenue declines. The way they dummied up earnings was by cutting jobs. I guess that this is going to be a corporate economic recovery. But that only lasts so long as at some point someone has to buy their stuff.

What is funny is that a stong dollar hurt sales at Coke and Merck.

I find it also interesting that the stocks they are highlighting are DJIA stocks..KO CAT..MRK..INTC..IBM...DD

What a great recovery!!!! It's all about the spin. The Emperor has no clothes. Do you see the pattern? This market is going to take the lows out.


The beat goes on...Mikey

Bernanke Testifies on the economy...You be the judge

DJIA 8896 +48 SPX 952.72 +1.59 VIX 24.09 -.39 Gold 947.90-.90 Silver 13.55 -.075 Oil 64.81 +.83 RBOB (Whsl Gasoline) 1.81 +.02 Dollar Index 79.08 +
03 EURO 1.4198 -.0027 (Long Term Gov Bonds)93.55 +1.53 IEF (7-10 Yr Gov Bonds)91.31 +.31 XLF (Tech Index)19.28 +.11 XLE (Oil Index)49.70 +.42 XLF (Financials index) 12.16 -.08 EEM (Emerging Markets)34.64 -.13 FXI (China Index)40.69 -.23

Bernanke: Some Improvement, but Economy Vulnerable

Federal Reserve Chairman Ben Bernanke on Tuesday said the outlook for the long-suffering U.S. economy appears to be improving and the U.S. central bank was carefully reviewing ways to withdraw its massive monetary policy stimulus when conditions permit.

Bernanke repeated the Fed's forecast that the economy should start growing again in the second half of this year, but he warned growth would be slight, leading to higher unemployment.

Despite some improvements—including a stabilization in consumer spending and moderating declines in housing activity—the economy remains vulnerable, he said.

"Job insecurity, together with declines in home values and tight credit, is likely to limit gains in consumer spending," Bernanke said. "The possibility that the recent stabilization in household spending will prove transient is an important downside risk to the outlook."

The nation's unemployment rate climbed to a 26-year high of 9.5 percent in June. The Fed says it could rise as high as 10.1 percent this year, and stay elevated into 2011. The post-World War II high was 10.8 percent at the end of 1982, when the country had suffered through a severe recession.

Expectations for a lethargic recovery should keep a lid on inflation this year, Bernanke said. With consumers likely to stay cautious amid rising unemployment, companies won't be able to jack up prices.

"The (Fed) believes that a highly accommodative stance of monetary policy will be appropriate for an extended period," Bernanke said in remarks prepared for delivery to the House Financial Services Committee.


"The Fed has zero intention of tightening monetary policy any time in the near future. They want to keep the conditions in place to sustain this fragile economic recovery," said Boris Schlossberg, director for currency research at GFT Forex in New York.
The Fed has cut interest rates to almost zero and doubled the size of its balance sheet to around $2 trillion as it pumped money into the economy to fight a severe recession after a financial panic last year cracked global credit markets.


Some economists, including some policy-makers, have worried that this dramatic expansion of Fed liquidity and lending may have sown the seeds for inflation to blossom as the recovery gains traction.

Bernanke, delivering the Fed's semiannual report to Congress on the economy, took pains to promise the U.S. central bank had an array of weapons at its disposal to withdraw its unprecedented monetary stimulus when the time was right, even if its balance sheet remains large for a time.

Three comments I found interesting:

Expectations for a lethargic recovery should keep a lid on inflation this year, Bernanke said. With consumers likely to stay cautious amid rising unemployment, companies won't be able to jack up prices.

Job insecurity, together with declines in home values and tight credit, is likely to limit gains in consumer spending," Bernanke said. "The possibility that the recent stabilization in household spending will prove transient is an important downside risk to the outlook."
The nation's unemployment rate climbed to a 26-year high of 9.5 percent in June. The Fed says it could rise as high as 10.1 percent this year, and stay elevated into 2011. The post-World War II high was 10.8 percent at the end of 1982, when the country had suffered through a severe recession.

So if the consumer is going to be losing his jobs until 2011 and that the recent stabilization in household spending will prove transient and the consumer is 75& of the economy then what kind of recovery are we getting. I get it no recovery.

He is saying no recovery and no inflation. I agree

A recap and a warning

Remember last year I told you that they were going to rally the banks and the market and sell commons stock to tide them over for the next disaster. That phase is now coming to an end. The have sold the common stock and are now selling out the rest of the stock they bought on the hit. This is a a reminder that the gig is about over. I would not want to own anything now. I think August could be a bad month possibly taking out the lows. You have been warned.


The beat goes on....MIkey

Recovery...Hardly

The consumer is 75% of the economy. Let's view the consumer as a whole by looking a him as we would a corporation. The consumers as a whole has lost 12 trillion is assets, mainly stocks and real estate, and has increased it debt from 7 trillion to 14 trillion. This was financed by a banking Ponzi scheme of leverage with the mortgage managed by the Fed and Alan Greenspan.

The scheme ended last year and the system is broken. This game is over and the leveraged gains the economy made from 2002 to 2007 are OVER. The days of economic expansion based on excessive lending are finished. Credit limit are being imposed on out of controlled spenders. No more yachts, expensive cars, vacations or speculation on housing. The financing is not there.

The last expansion was a false expansion based on excessive lending. It lasted for 5years from 2002 to 2007. The problem now is that people think it is coming back. The experts are still saying it is business as usual and they all expect a recovery. The public is also starting to believe it. Mark my words, it will take 2 years for people to believe that it is not coming back. Remember the Mikey rule of 2. The bottom only comes after everyone is a believer and that takes at least 2 years.


The consumer has had their credit card taken away and they will not get it back anytime soon. They are seeing their income falling and their debt levels are forcing them to cut spending. It means that the debt driven expansion is not a very likely event. Next year is when reality sets in. That is when they all start to believe that the game is over. They will also capitulate on their stocks and sell at the lows because that is what the news will tell them to do.


The beat goes on....Mikey

What is a jobless recovery? Look at these earnings reports

DJIA 8718 +7.03 SPX 938.39 -2.35 VIX 24.56 -.86 Gold 938.40 +3.00 Silver 13.43 +.19 Oil 63.22 +1.20 RBOB (Whsl Gasoline) 1.76 +.05 Dollar Index 79.54 +.19 EURO 1.4125 -.0015 (Long Term Gov Bonds)92.22 -.45 IEF (7-10 Yr Gov Bonds)90.20 -.38 XLF (Tech Index)18.86 +.04 XLE (Oil Index)48.40 +.23 EEM (Emerging Markets)33.47 +.34 FXI (China Index)39.31 +.58

A jobless recovery is where the earnings of major corporations "grow" as their revenues decrease. It is where the earnings increases are made by focusing on operating efficiencies while revenues decrease. It is where the economic data says that the economy is in the tank but "its going to get better" next year. Its where income and earnings statements tell the reader that things are getting better but in the fine print say our outlook my be affected negatively by a bad global economy.

Intel says: Ongoing uncertainty in global economic conditions poses a risk to the overall economy as consumers and businesses may defer purchases in response to tighter credit and negative financial news, which could negatively affect product demand and other related matters. Consequently, demand could be different from Intel's expectations due to factors including changes in business and economic conditions, including conditions in the credit market that could affect consumer confidence; customer acceptance of Intel's and competitors' products; changes in customer order patterns including order cancellations; and changes in the level of inventory at customers.

Intel's result that were reported as " better than expected". The Non-GAAP Results (excluding the EC Fine) Q2 2009 vs. Q2 2008 vs. Q1 2009 Revenue $8.0 billion down $1.4 billion. This was a drop of 15% but the operating efficiencies produced income of 1.45 billion (Excluding the effects of the European Commission fine of 1.45 billion), the company had non-GAAP operating income of $1.4 billion, net income of $1.0 billion and EPS of 18 cents. On a GAAP-basis, the company reported an operating loss of $12 million, a net loss of $398 million and a loss per share of 7 cents.

If you read on it says: -- Capital spending: Expected to be $4.7 billion plus or minus $200 million, down from $5.2 billion in 2008. Why are they cutting capital spending. It is all part of the jobless recovery. It makes for a better bottom line.



Look at these headlines:


After Intel's [INTC 18.26 -0.24 (-1.3%) ] big beat earlier in the week, the pressure was on IBM [IBM 113.92 3.28 (+2.96%) ] to beat, and beat big, and the company answered. Big.

So big, in fact, that the $2.32 the company reported, beating the Street by 30 cents, was the biggest beat in IBM's history!

The company also reported $3.1 billion in net income, up 12 percent; the gross margin of 45.5 percent means IBM has increased margins in 19 of the past 20 quarters.

Some other color: IBM closed 17 Services deals on the quarter north of $100 million each so if there's a concern out there of an IT or enterprise spending slowdown, it doesn't appear that IBM is necessarily feeling the pain. Sure, revenue was $23.25 billion, which was a little below the Street consensus of $23.58 billion, but the company's ability to translate topline to increased bottom line continues to impress.


Better still for investors, and something that should resonate through all of tech tomorrow: IBM raised full year EPS guidance to $9.70 from the $9.20 it anticipated a quarter ago.

Mike Holland at Holland & Co. says, "Big Blue blockbuster. I expected good numbers. I was shocked by how good these were."



Look at IBM's revenues in the report:Second-quarter net income was $3.1 billion compared with $2.8 billion in the second quarter of 2008, an increase of 12 percent. Total revenues for the second quarter of 2009 of $23.3 billion decreased 13 percent (7 percent, adjusting for currency) from the second quarter of 2008.
RD&E expense of $1.4 billion decreased 14 percent compared with the year-ago period.

From a geographic perspective, the Americas' second-quarter revenues were $9.9 billion, a decrease of 9 percent (7 percent, adjusting for currency) from the 2008 period. Revenues from Europe/Middle East/Africa were $7.9 billion, down 20 percent (7 percent, adjusting for currency). Asia-Pacific revenues decreased 7 percent (5 percent, adjusting for currency) to $4.9 billion. OEM revenues were $537 million, down 24 percent compared with the 2008 second quarter. Revenues from the company's growth markets organization decreased 11 percent (up 1 percent, adjusting for currency) and represented 18 percent of geographic revenues.

The weighted-average number of diluted common shares outstanding in the second-quarter 2009 was 1.34 billion compared with 1.40 billion shares in the same period of 2008. As of June 30, 2009, there were 1.31 billion basic common shares outstanding. So I guess they bought some stock back which also helps prop up the earnings

The headlines were about the increases in earnings. The stocks of INTC and IBM "surged" as they blew away earnings.

Oh Looky here Bank of Amer has blow out earnings..What a surprise

CHARLOTTE, N.C., July 17, 2009 /PRNewswire via COMTEX/ -- Bank of America Corporation today reported second-quarter 2009 net income of $3.2 billion. After deducting preferred dividends of $805 million, including $713 million paid to the U.S. government, diluted earnings per share were $0.33.

Bank of America finished the second quarter with its strongest capital position in recent memory, with a Tier 1 Capital ratio of 11.93 percent as well as a leading liquidity position among global banks.

Remember all the :experts" have just told us over the last 3 weeks that Bank of America was a buy and now here is the great earnings report.

I don't know about you but just 6 months ago it got 25 billion it TARP mony and just 4 weeks ago it sold tons of common stock and now it has blow out earning? Hey what was the 25 billion for? Eaither they really need it or they stole 25 billion from Uncle Sam. Well it was both, but these earning reports are great works of fiction. That's right I am tell you that this is all a bald faced lie.

This is a jobless recovery:

It is about earnings increasing as revenues and jobs disappear.
It is about cutting spending to increase the bottom line.
It is about buying back your stock to increase the earnings per share number.
It is about the Fed chairman saying the economy is getting better and Merrill Lynch saying the recession is over
It is about setting up a rally by showing the viewers on CNBC that were are forming a short term head and shoulders top.
It is about creating a short squeeze in options expiration's week.
It is about refocusing the attention on "better than expected earnings" just after horrible economic numbers were released.


The message is what does a lousy economy mean to stocks. The answer is nothing. It means nothing because the corporations can make money under any circumstances.

I will tell you that that message is designed to take our attention away from the real problem. It is like taking blood pressure medication but continuing to eat fatty foods. The heart of the problem is the health of the consumer because the consumer is 80% of the economy and the consumer's balance sheet is in bad shape.
You can only "increase" earnings so much by cutting and increasing operation efficiencies. The bottom line is that someone has to buy something to make it all work. The something is a long way off.

That is what they mean by a jobless recovery. They are cutting faster than they were before and earnings are getting better on a relative basis. Cutting does not solve the problem. Consumers are cutting too. They are spending less than they were in the first quarter and their income statements are improving on a relative basis. They are going under slower than they were before because they have changed they way they spend. They are cutting out the fun and expensive things they used to do when their houses were going up.

Over the last few months housing prices have rebounded because the speculator has returned. Flipping houses has returned but at a lower level. The problem is that incomes are still falling and the jobless rate is still going up. To support higher prices you need higher income. This is not happening and is a long way off. They have not solved the problem. The economy and job creation and increasing income is the only thing that will get us going again. I do think that real estate is bottoming because the affordability index is at 50% but I don't think the bounce is going to be as much as people think.

. What we have here is a "earnings" rally brought on by cutting expenses and not increasing income. Think about your own situation if your income continues to fall at some point their is no where to cut. They experts all are aware of this and are all gaming the market with the Fed and the banks. That is what they mean by a jobless recovery.


No new trades this week still looking for a place to add to shorts. I am very very bearish after this rally. I have multiple targets and am close to pulling the trigger. I am guessing that we rally out of expiration next week and I hope we take out the May highs.

The beat goes on ....Mikey

Fed upgrades forecast will sink less this year and grow next year

The Federal Reserve expects the economy this year will sink at a slower pace than it previously thought, but that unemployment will top 10 percent, according to minutes of the June meeting.

The Fed now predicts the economy will shrink between 1 and 1.5 percent this year. The forecast issued in May projected it would contract between 1.3 and 2 percent.

Against that backdrop, the Fed says unemployment will be worse this year. It predicts the jobless rate could rise as high as 10.1 percent, compared with the old forecast of 9.6 percent.

The nation's unemployment rate climbed to 9.5 percent in June, a 26-year high.

A very timely forecast issued will all the other upgrades. It is quite obvious that they are gaming the market here. This is the same Fed that did not see the sub prime problem was going to affect the big banks in Feb of 2007 and the same Fed that did not think the slow down in real estate was going to slow down the economy in early early 2008. You get the picture they flat lied. They are doing it again.

The weakness in the economy was becoming so obvious that they needed to shake off the shorts and keep the longs in. I was seeing evidence that the longs were starting to capitulate. We have a long way to drop and they don't want them out yet. The "critical" support of the S&P at 877 held and eased the fears.

The earnings now are "better than expected" even though they are bad and it supports their story of an economy that is turning up. The rally could stop here but I think they want to get everyone flipped so we go higher near term. I think we need a drop dead nunber that tells everyone that the uptrend has resumed. That will be a good place to short again. This is a full court press and all the "experts" are touting the bottom. What a difference a week makes.

The beat goes on ....Mikey

The recession is over rally

DJIA 8540 +180 SPX 925 +19.33 VIX 25.02 Gold 938.50 +15.70 Silver 13.19 +.34 Oil 60.43 +.91 RBOB (Whsl Gasoline) 1.69 +.04 Dollar Index 79.56 -.80 EURO 1.4111 +.0176 (Long Term Gov Bonds) 92.71 -1.40 IEF (7-10 Yr Gov Bonds)90.59 -.63 XLF (Tech Index)18.42 +.54 XLE (Oil Index)47.20 +1.24 EEM (Emerging Markets)32.98 +1.49 FXI (China Index)38.81 +1.39

On Monday Meridith Whitney turned bullish on the banks and Ben said the economy was recovering, yesterday Merrill said the recession was over and today INTC has much better than expected earnings.

This is options expiration week and it comes after 4 weeks of bad economic news. It is a perfect set up for the shorts to get run as positions are squared into Fridays expiration.

I saw that pessimist Art Cashen, who has been bearish from the lows and has been looking for a sell off, is now saying that if we hold this week we can have a super rally. Lets now let the numbers get in the way of all of those experts, shall we. They all pile on at the same time and here we go. But that is how the game is played. You have to respect that at all times. In this game there is going to be pain no matter what side you are on.

I am standing aside for this week and will add to my shorts after they all are convinced that the worst is over and the shorts run for cover. I am looking to short EWZ, add to my FXP, DZZ, and buy back my SCO and DUG on this oil rally. But for now nothing today or this week.

The beat goes on ....Mikey

Merrill Thinks the recession is over...It must be true Merrill said it

Oh the recession is over now so says Merrill Lynch. These are the guys that were saved by Bank of America that had to be saved by the Treasury. How interesting that Bernanke mentioned recovery yesterday. I would agree that if we had a recovery it would be jobless.

It is nice that over the few days we went from head and shoulders to THE RECESSION IS OVER! I forgot to mention it but this week is options expiration's week and all the puts are now going to options heaven, courtesy of this last rally. That is a common ploy counter trend moves into expiration. That kills the option traders. In other words you can be right and lose. Options are not a good thing to do.

Looking to short EWZ (Brazil ETF) now at 49.90 expect it to take out the lows by the end of the year. Low was at about 30. I think next year it will hit 18 to 20.


This rally was designed for the options market and to spook the shorts. Now they bring out all the experts and show us the "good "earnings". This thing has a long way to go down and they are doing it slowly. It should be a mess by the end of this year and next year looks very very ugly to me.


The beat goes on ....Mikey

Look who's back.... It's the banker babe, Meridith Whitney

DJIA 8335 +3.35 SPX 902.73 +1.68 VIX 25.69 -.69 Gold 925.90 +3.40 Silver 12.90 +.12Oil 60.07 +.38 RBOB (Whsle Gasoline) 1.6557 +.0163 Dollar Index 80.22 -.075 EURO 1.3959 -.0036 (Long Term Gov Bonds) 94.60 -1.09 IEF (7-10 Yr Gov Bonds)91.33 -.49 XLF (Tech Index)17.81 -.01 XLE (Oil Index)45.78 +.43 EEM (Emerging Markets)31.42 +.38FXI (China Index)37.33 +.63


It took a recommendation from the most bearish analyst around to shake the market out of its lethargy Monday. Meridith Whitney has been the hottest hand for the past few years and unbelievably correct in her bearish stance on the financial sector. With her upgrade of Goldman Sachs, the sector and the market woke up.Consensus earnings estimates for Goldman [GS 149.16 -0.28 (-0.19%) ]have the company earning around $3.50 for the quarter just ended. The Divine Miss M sees a good bit more. Bank of America/Merrill Lynch [BAC 12.95 -0.04 (-0.31%) ]jumped on the bandwagon with a Buy recommendation, and they estimate book value will grow to $113 in 2009 and $122 in 2010. Tangible book value, today's preferred metric, would see a similar move. With a forecasted 16% return on equity, BAC/MER (that's all a bit too much to say) feels the stock should trade at 1.6 times book and thus their target of $175.

But now that we have the raised expectations, I think the company has to up the ante by beating the higher expectations to continue to do well. While Whitney feels that the recent "mother of all refinancing" binges will allow a bunch of banks to do better this quarter, she emphasized this is a trading call. Well, the trading call worked, as the financials turned in a wonderful day, with the XLF up over 6%. But (and there is always a but) she sees unemployment rising to 13% (boy, I hope she is wrong on that), and the banks will re-enter their twilight zone as they cannot withstand such a high rate of joblessness without severe strain. The market chose to ignore that part of her forecast.

So she is saying that the banks will trade up in the near term. That's interesting because the XLF has already rallied 82% off of the low. Remember I have her in my blog in the first part of the year saying that they were going to tank.

Notice that in this article they say "Meridith Whitney has been the hottest hand for the past few years and unbelievably correct in her bearish stance on the financial sector." They also said that late last year and earlier this year BEFORE THE RALLY WHEN SHE WAS SAYING SELL. If you read my blog then you can see it.


It was a good excuse to smoke the shorts yesterday after they show you the "head and shoulders" top that projected to 835 on the SPX. Now earning season is on us and the spin begins. You know much better than expected earnings.....Yada Yada Yada. INTC is today. That after yesterday's jobless recovery call by Ben. All good news, right


The beat goes on...Mikey

Bernanke..A jobless recovery..Or The Feds legalize pot

DJIA 8331 +185 SPX 901.05 +21.92 VIX 26.31 -2.71 Gold 921 Silver 12.68 Oil 60.00RBOB (Whsl Gasoline) 1.6460 Dollar Index 80.30 EURO 139.95 (Long Term Gov Bonds) 950.69 -.54 IEF (7-10 Yr Gov Bonds)91.83 -.33 XLF (Tech Index)17.86 +.33 XLE (Oil Index)45.42 +.75 EEM (Emerging Markets)31.17 +.25 FXI (China Index)37 +.13


Fed Chairman Sees Possibility Of 'Jobless' Recovery: Shelby

Federal Reserve Chairman Ben Bernanke sees the possibility of continued high unemployment even after the recession eases
"It was a rather sobering meeting," Sen. Richard Shelby, an Alabama Republican, said in a live interview. "I said...'Could this be a jobless recovery?'...and he said it could be," Shelby said.

Bernanke has predicted the recession will end this year, with many economists forecasting that the economy will start to grow again as soon as the current July-September quarter.

But Bernanke's comment that unemployment could remain high for some time appeared to be more pessimistic than any of his recent public statements.
"I didn't come out of the meeting feeling a lot of euphoria," Shelby said. See video for entire interview.

Earlier Monday, Christina Romer, chair of the President's Council of Economic Advisors, told CNBC that it was difficult to quantify job creation despite President Obama's prediction that his economic stimulus plan could save or create 3.5 million jobs.

The president's council released a report on Monday saying that jobs in the healthcare and environmental sectors are growing at a faster rate than those of the U.S. economy as a whole.

The report, which looks at how the U.S. labor market is expected to develop in the next few years, says a rebound in employment in construction and some manufacturing sectors is expected as stimulus spending approved early this year invests in projects around the country.


The report is based on an analysis of recent labor market data, a White House official said.

The report identifies likely changes in the U.S. labor market as economic drivers shift from sectors like financial services to the growing sectors that are transforming the economy, the official said.


Translation: We are going to have a recovery because we can make it up. Jobs who cares we don't need no stinkin jobs. This only will work for so long at some point the truth comes out and it will not be pretty. I think if they legalize pot it would stimulate the economy or at least no one would give a damn.


The beat goes on...Mikey

Death by 1000 cuts

DJIA 8115 -67 SPX 876.83 -5.85 VIX 29.72 -.06 Gold 912.17 -3.50 Silver 12.61 -.32 Oil 59.85 -.56 RBOB (Whsl Gasoline) 1.6505 -.0133 Dollar Index80.43 +.48 EURO 1.3950 -.0085 (Long Term Gov Bonds) 96.21 +.86 IEF (7-10 Yr Gov Bonds)62.21 +.59 XLF (Tech Index)17.46 unch XLE (Oil Index)44.55 -.45 EEM (Emerging Markets)30.86 -.42 FXI (China Index)36.58 -.56

Everything but the bond market is getting nicked every day now. We are at the 877 neckline of the "head and shoulders" top area now but are holding. The chart formations and technical speak just take away the attention of what is going on. That is a slow strangle of this economy. They say that there are buyers at the 835 area if we top here. That would set up a longer term head and shoulders bottom. What does that mean? Well I will tell you...NOTHING! They want you to focus on the short term and trade. Could we rally here? Of course, but it before its over we take out the lows.

I look for this thing to end bad and I see nothing being done about it at this point. The consumer needs to be bailed out and that is not happening. Until I see real steps being taken in this area I remain bearish.


The beat goes on...Mikey

The Big Picture

The US consumer has driven the world economy for the past 25 years. The expansion in the world economy has take jobs out of the US and reduced income. This loss of income was replace by a massive expansion in debt. The debt was secured by real estate values. Many instruments were created to allow for the expansion of this debt and now the chickens have come home to roost.

The consumer in the US expanded debt from 7 trillion in 2001 to 14 trillion in 2008. In the past year that debt has contracted slightly to 13.95 trillion. That has produced a falling economy as the consumers assets, real estate and income has declined by 12 trillion.

The debt bubble has burst and for the economy to expand again consumer debt must be liquidated or payed down to start up the economy again. The process now is one of falling debt and falling incomes. That is a classic description of deflation. The experts are busy telling us to protect ourselves against inflation. This is now coming back now and neither is the economy.

The other countries particularly the emerging markets have been living off of this debt expansion for a long time and think that the US consumer will come back. The dollar is acting weak because traders believe this bogus story. In the end, all of the economies of the world will follow because Uncle Sugar is tapped out.

What does it mean? It means that the other countries don't believe they have to print as much as we are. That keeps the dollar down and will lengthen their downturn. In the past the game was let Uncle Sugar pump and we get the jobs and the gravy. The game has changed the US can't do it anymore the game is over. The other countries need to inflate and stimulate their economies. Obama is at the G8 now and begging them to stimulate. They don't think they have to but they will find out that they have a big problem too and when they do they print and the dollar takes off.

That is why I am negative on the economy and the world markets. I am negative on the commodities, oil and Gold. They will join us because they have too. At this point it is a waiting game but the hand has been dealt. The game now is to let the air out of this thing a little at a time.

As I mentioned yesterday I bought DZZ (Gold Short) at 22.02 I will double my position if Gold closes below 880. Gold is my favorite short because no one is focused on it. They are looking at oil, the market, and the dollar but not a mention of Gold. This is as Gold breaks below its 90 average and has been dropping with all the talk of a weak dollar. This is the kind of thing you get when something is about to make a big move. I still am looking for Gold to see 400 within the next year


The beat goes on....Mikey

Retailers post weak sales

DJIA 8167 -10.68 SPX 881.54 +1.88 VIX30.13 -1.17 Gold 916.30 +4.00 Silver 12.82 -.032-10 Oil 59.84 -.34 RBOB (Whsl Gasoline) 163.55 +.0022 Dollar Index 80.25 -.75 EURO 1.3997 +.0117 (Long Term Gov Bonds) 95.38 -1.12 IEF (7-10 Yr Gov Bonds)91.55 -.58 XLF (Tech Index)17.44 +.09 XLE (Oil Index)45.24 +.71 EEM (Emerging Markets)31.25 +.51 FXI (China Index)37.11 +.60


Retailers were posting disappointing monthly sales Thursday as consumers curbed spending amid higher gasoline prices and rising unemployment.

Chain stores were facing difficult comparisons with the year-ago period, when consumers had a little extra cash in their pockets from economic stimulus checks.

Based on comment from retailers, shoppers continued to trade down to less expensive products and focus their spending on the essential items. This doesn't bode well for retailers, who are beginning to stock merchandise for the back-to-school shopping period.

JP Morgan analyst Chuck Grom said there are signs the retail sector might be stabilizing, but he does not expect to see a positive increase in sight.

Grom expects to continue to see shoppers focus on value, and retailers who cater to this group doing well.

Although weak results were seen across all sectors, the trend was especially pronounced among apparel retailers.

Target [TGT 38.72 1.46 (+3.92%) ]
same-store sales fell 6.2 percent, wider than the 5.6 percent decline expected by analysts surveyed by Thomson Reuters. Still,

Limited Brands [LTD 10.53 -0.81 (-7.14%) ] posted a 12 percent drop in same-store sales growth last month, compared with the 7.9 percent decline expected by analysts.

JC Penney [JCP 26.40 -1.13 (-4.1%) ] same-stores sales fell 8.2 percent but the company raised its second-quarter earning forecast. The company now expects to see a loss of between 8 cents and 12 cents a share.

Saks [SKS 4.40 -0.35 (-7.37%) ] same-store sales fell 4.4 percent. Despite the decline, it was an improvement over the past six months, where monthly sales plunged at a double-digit pace. Saks said it expects to see second-quarter same-store sales falling in the "mid-teen percentage" rate.

Although Costco Wholesale's [COST 45.4029 -0.6171 (-1.34%) ] same-store sales were in-line with analyst estimate, the wholesale club store said sales for stores open at least a year fell 6 percent from a year ago.


Excluding gasoline sales, Costco's same-store sales were down 1 percent, while on a local currency basis it said international same-store sales rose 8 percent.

Demand remained stronger for food items, Costco said, pointing to consumers' cautious spending.

The long recession, growing job losses and tight access to credit had already constrained shoppers, forcing them to seek deep discounts and buy only essential items like groceries and toiletries while largely shunning clothes and home goods.

That has hurt department stores, clothing chains and other retailers, while discounters have gotten a boost.

"Obviously, the consumer has been under severe pressure here throughout this recession," said Retail Metrics President Ken Perkins. "There just were no catalysts for consumers to spend in June."

Wal-Mart Stores [WMT 48.21 -0.16 (-0.33%) ] recent decision to stop reporting monthly sales has made it tougher to judge the industry's performance, analysts have said.


Retails stocks had big bounces off the lows in the second Qtr in anticipation of the "recovery". You can see that sales continue to slow. This all happened after the stimulus package, and lower refi rates kicked in. This quarter looks weak and thee stock look like their rallies were too much for what we are going to get in earnings.

I am looking to short V 60.17 (VISA)and UPS 47.96 I think the transactions and shipping orders are in for further drops. V is up from a low of 41.78 and UPS is up from a low of 37.99. I think they both blow out their lows at some point this year.

Euro bouncing back today I am short @ 140

Selling Long Positions on DUG @ 21 and SCO @ 22.55..Will buy pullback
Expect some kind of market rally here...will short it


The beat goes on.....Mikey

Commodities Complex Breaking down..Gold breaks Int Uptrend as CNBC touts Dollar weakness

DJIA 8132 -40 SPX 873 -7.43 VIX 32.36 Gold 909.50 -19.60 Silver 12.81 -.40 -10 Oil 60.74 -2.19 RBOB (Whsl Gasoline) 1.6685 -.066 Dollar Index 81 +.13 EURO 1.3845 -.0066 (Long Term Gov Bonds)95.66 +.91 IEF (7-10 Yr Gov Bonds)91.46 +.39 XLF (Tech Index)17.22 -.12 XLE (Oil Index)43.86 -.66 EEM (Emerging Markets)30.50 -.61 FXI (China Index)36.20 -.61

If you are following the price data a the top of each post it shows considerable weakness in the commodities and equities markets and strength in the bond markets. The next thing to happen is the dollar will take off. CNBC is running a piece on dollar weakness today as it is weak against the YEN. If you look at the dollar index it is showing strength particularly against the EURO the Pound and the Aussie dollar. They are the beneficiaries of stronger commodities the Yen and the Dollar are the beneficiaries of weaker commodities.

This is clearly an attempt the mask the emerging strength of the dollar. As this is all happening Gold is breaking below its intermediate uptend. The market message is clear the economy and the equities markets and commodities are breaking down and they are touting dollar weakness.

Don't be fooled It's Showtime

Bought DZZ(Gold Short) @ 22.02


The beat goes on ....Mikey

California Sets Terms on IOUs as Questions Arise...This is a recovery...and they are not the only ones.

On one side, IOU recipients are beginning to trade them like currency, forcing the California state treasurer's office to issue guidelines if they are sold through eBay [EBAY 16.10 -0.35 (-2.13%) ], Craigslist or other means.

Meanwhile, Bank of America [BAC 12.2825 0.1325 (+1.09%) ] , Wells Fargo [WFC 23.67 0.57 (+2.47%) ], JP Morgan [JPM 33.18 0.58 (+1.78%) ] and Citigroup [C 2.695 -0.095 (-3.41%) ], among others, have said they will stop accepting the IOUs on Friday, according to a report in The Wall Street Journal.

A growing number of credit unions also are excepted to stop accepting them as well, and this will force more recipients to search for buyers online, according to the report.

This is situation is making it more necessary for there to be some guidelines for the use of IOUs.

California's treasurer is telling recipients of the IOUs that if they sell them to third parties, they will be redeemed by the state treasurer's office only if accompanied by a notarized bill of sale signed by their listed payee.

"We are in the process of contacting officials of eBay and Craigslist to post a notice of the policy on their sites," the statement said.

Speculation is rising over whether California's tax-exempt IOUs, technically registered warrants, can be bought, sold and traded.

The Securities and Exchange Commission must first determine if the IOUs are securities to regulate them, said Ernesto Lanza, general counsel to the Municipal Securities Rulemaking Board, adding that the board was not working directly with the commis—sion on that decision.

"It looks like it has all the hallmarks of a security," Lanza told Reuters. "If they are securities, I think they're pretty clearly municipal securities."

California last week started issuing "IOU" promissory notes for some bills to conserve cash for priority payments, including payments to investors holding the state's debt, while Governor Arnold Schwarzenegger and lawmakers try to plug a $26.3 billion budget deficit and stave off a cash crisis for the state's government.


The IOUs carry a 3.75 percent interest rate and are payable Oct. 2.

But at least one website aims to offer a platform for selling the registered warrants. Obed Dorceus, owner of ioumarket.com, said he sees a potential secondary market for the IOUs — and potentially other government promises to pay.

"I'm thinking there may be a situation where other states may follow California," Dorceus said during a telephone interview. To sell warrants on his website, holders of the IOUs would pay a fee to advertise them.

"I wanted to offer it as an alternative," said Dorceus, of St. Augustine, Florida. "If you're an average guy, with an IOU for $2,000, you go the website and post an ad ... It's there for a month, and for up to $2,000, you pay $9.99."

Dennis Ciocca, a senior managing director at public finance banker Sutter Securities Inc, doubts financial institutions that accept the warrants will try to sell them because their payment date is relatively soon, they offer an attractive rate and prospective buyers would demand a discount.

"Is it worth it to set up a secondary market for such a short-term instrument? I kind of doubt it would pay," Ciocca said.


California is not the only one with problems. They are getting all the press but New York, Florida, Arizona and Nevada also have big problems. Their revenues ARE NOT going to increase and solve their problem. They are going to have to make cuts and that means layoffs or fur lows. Falling revenues without the ability to raise them is a tough spot. In other words we are deteriorating and this will be the next big problem to hit the economy this summer.

Those economists and experts that say the recovery is coming are plain liars. Nothing that has been done has stopped the decline in the economy. The worst is yet to come. How will the market handle it? In the end bad but for now denial and a slow death.

The beat goes on...Mikey

Aussie Dollar...Euro look real toppy...Techs break

DJIA 8223 -101 SPX 887 -11 VIX 29.47 Gold 922.90 -1.40 Silver 13.13 -10 Oil 62.85 -1.20 RBOB (Whsl Gasoline) 1.7275 -.0129 Dollar Index 81.81 +.12 EURO 139.42 -.008(Long Term Gov Bonds)94.50 + .34 IEF (7-10 Yr Gov Bonds)90.98 +.36 XLF (Tech Index)17.49 -.28 XLE (Oil Index)44.71 -.98

The commoditites and market sell off continues. The sell off is spreading into the Techs. The Currencies Aussie dollar which is just a play on Gold and the Euro which is more of a Petro currency are showin signs of topping and I would not be surprised to see them get clocked soon. Gold is still clinging on to is suopport but I believe it has the same fate as the rest of them.

The Market SPX looks like it should trade to the 90 day which is at 856 now. I woul expect some kind of bounce from there.
Added XLF the SPDR Tech index and the XLE The SPDR oil index to the mix at the top today. Both are industry group stock indexes. You can follow thes now expect them to take out their lows at some point. The low on the XLK is 13.08 and the low on the XLE is 37.40. So you would figure about 20 to 25% room on the downside from here.

Shorted JCP @ 26.79 Trends Long Term ...Down.... Intermediae Term UP
Short term ...Down


The Beat goes on ....Mikey

Commodities, Market continues slide

DJIA 8249 -32 SPX 890 -6.41 VIX 30.14 Gold 924 -7.00 Silver 13.27 -.11 Oil 64.42 -2.41 RBOB (Whsl Gasoline) 1.7459 -.0449 Dollar Index 90.81 +.15 EURO 1.3926 -.0099TLT (Long Term Gov Bonds)93.94 -.36 IEF (7-10 Yr Gov Bonds)90.60 -.06

More weakness today in all markets as the economy continues its slide. Gold is slowly setting in the west and silver has boken down below its intermediate uptrend. Oil has joined the party and is trading at 64.42 or 9 bucks below its recent recovery high.

Bought the EEV at 21.90
Looking to add to my DZZ (gold short) if it trades > than 22

Trend Change

Silver Long term Flat Intermediate Changed to Down Short Term Down

Oil Long Term Down Intermediate UP Short Term Changed to down

Dow Slides Almost 200 After Weak Jobs Report

DJIA 8330 -173 SPX 902.79 -20.63 VIX 28.51 Gold 930 -11.30 Silver 13.41 -.35 Oil 66.90 -2.41 RBOB (Retail Gasoline) 1.7957 -.0633 Dollar Index 80.56 +.58 EURO 1.3998 -1.42 TLT (Long Term Gov Bonds)94.24 +.16 IEF (7-10 Yr Gov Bonds)90.70 +.34

Trends

........Long.....Inter...Short

Gold....Flat.....Flat....Down
Oil.......Down....Up.....Flat
DJIA....Down....Up.....Down

Employers slashed 467,000 jobs from nonfarm payrolls in June and the unemployment rate ticked up one-tenth of a percent to 9.5 percent. Economists had expected a much smaller job loss of 365,000 but a slightly higher unemployment rate of 9.6 percent.

The report indicates the "labor market is still terrible," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients. "[D]on't be swayed by small unemployment [rate] rise. Wages will soon be falling outright, a classic deflation signal," he said.

A separate report showed initial jobless claims fell by 16,000 last week to 614,000.

Meanwhile, factory orders jumped 1.2 percent in May, the largest increase in nearly a year.

Investors will also be looking to Washington as the Treasury Department is expected to name as many as nine fund managers to operate the long-awaited Public-Private Investment Program to cleanse banks of toxic assets.

Automakers will be in focus after the June sales reports.

Ford [F 5.83 -0.08 (-1.35%) ] reported its U.S. sales fell 10.9 percent in June, near the top of expectations, and surpassed Toyota as the No. 2 automaker.


All I can say is this is ugly and nothing I can see down the road is going to make it better. Notice that gold and oil are falling and the dollar is up. This is where they are hiding because they expect inflation. This is going to be deflation and they will wake up to that fact sometime in the next year.

I have added some things to my index watch list. Retail Gasoline (RBOB) and Silver and the Euro because I think people want to keep track of this. RBOB is quoted i $ per Gallon. so today it would be 1.79 down .06. The EURO is listed in dollars so 1.39means that it takes 1.39 dollars to buy a EURO. This currency is secondary to the dollar and gets alot of play from oil prices. is That means today retail Gas is down 6cents.I am also going to list the trends for Gold, Oil, and the market.

Notice that over the past 8 months that Gold was trading counter to the market. Now it is trading with the market. I still think that Gold is a duck here and at some point will trade at 400. To me the whole thing starts to fall apart if we close below 880 but a sign of weakness will be if we get a close below 910.

I am looking to short the GDX (Gold Miners index) on a close below 910 on Gold.

ALERT Silver 13.20 has resumed its intermediate downtrend Long term and short term are also down. Next support at 11.75


If I had a 401K plan it would be 100% in cash now


The beat goes on Mikey

Think oil is going up ,,,Look at this

An ad in USA today:

Hyundai will guarantee buyers of their cars Gasoline at 1.49 a gallon for 1 year.

Remember Chrysler in April of 2008 with gasoline at 4.50 guaranteed to buy gas for its car buyers for 1 year at 3.00.


Whoops what a deal. Think about it. Yep 1.49 is no deal

The Big Picture ...Trends on DJIA

Long Term 200 Monthly 8994 Tilt: Flat

Long Term 200 Weekly 11312 Tilt: Falling

Long Term 200 Daily 8453 Tilt: Falling

Intermediate 90 Monthly 10508 Tilt: Falling

Intermediate 90 Weekly 10562 Tilt: Falling

Intermediate 90 Daily 8016 Tilt: Rising

Short Term 20 Monthly 10214 Tilt: Falling

Short Term 20 Weekly 8028 Tilt: Rising

Short Term 20 Daily 8572 Tilt: Falling

I use the direction of the 200 week as the long term trend. I use the direction of the 90 day as the intermediate term trend. I use the 20 day as the direction of the short term trend.


Therefore the trends are as follows.

Long Term : Down
Intermediate term: up
Short Term Down

I will go long in a downtrend only when we are oversold..the experts are extremely negative and that message is being viewed by the public on the nightly news and the VIX is in the 40's and the intermediate trend turns up

I will go short in a long term down trend when we are overbought.. the Vix is in the low 20's and the experts are selling sunshine and the public is being sold that message on the news and then the intermediate trend tuns down


If the situation becomes very oversold or overbought I will begin to stage in my buys or sells. At this point I think we are overbought in a long term downtrend but not very overbought. The intermediate trend is still up. I will hold off my shorts here until it becomes very over bought or the intermediate trend rolls over.


Mikey
In the future I will post the direction of the trends and overbought or oversold condition of all of my trades.

Denial... Play the Straight Flush

DJIA 8546 +99 SPX 928.35 +9.03 VIX 24.97 Gold 939.30 +11.30 Silver 13.57 +.19 Oil 70.11 +.22 Dollar Index 79.91 -.515 EURO 141.59 +1.28 TLT (Long Term Gov Bonds)93.62 -.95 IEF (7-10 Yr Gov Bonds)90.15 -.52


Headlines for today

Market up 1% on 4th straight month rise of pending home sales.

Stocks got the second half off to a positive start Wednesday after logging their best quarter in a decade.

"We're seeing a classic bull-bear battle here," said Tom Schrader, managing director for U.S. equity trading at Stifel Nicolaus Capital Markets, adding that traders were watching to see if major indexes break above their 200-day moving averages.

The Dow Jones Industrial Average was up more than 100 points, or about 1.5 percent. The S&P 500 and Nasdaq were also up more than 1 percent.

Meanwhile, the CBOE Volatility Index, widely considered the best gauge of fear in the market, dropped below 25 for the first time since September 2008, just before the collapse of Lehman Brothers.

Investors cheered a fourth-straight increase in home sales and shrugged off a disappointing reading on manufacturing and drop in mortgage applications.

Mortgage applications tumbled to a seven-month low and home-refinancing requests dropped 30 percent as rising mortgage rates scared off new home buyers.

On an encouraging note the housing market, pending-home sales rose 0.1 percent in May, slightly more than expected, and April's reading was upwardly revised. This marks the fourth straight month pending-home sales have risen; the last time there were four straight gains was October 2004.

Meanwhile, the Institute for Supply Management reported its manufacturing index rose to 44.8 in June from 42.8 in May, just slightly higher than expected. The gauge is ticking ever higher to the 50 mark, which indicates expansion; readings below 50 indicate contraction.

But construction spending fell 0.9 percent in May, more than expected, to its lowest level in five years.

Now, the market is turning to the employment situation, waiting for the government's June jobs report, due out Thursday. Typically the report is issued on a Friday but is out a day early this month due to the Fourth of July holiday.

Traders are expecting to see fewer jobs lost in June than in May, which would be a boost for the market. But, if the unemployment rate tops 10 percent, you're likely to see some selling, Schrader said.

We got a couple of preview reports on the jobs situation today: ADP reported that private employers slashed 473,000 jobs from their payrolls in June, more than expected, while planned layoffs fell for a fifth straight month.

A separate report from outplacement firm Challenger, Gary & Christmas showed planned layoffs at US firms in June at their lowest level since March 2008.


The game here is to make you think that the economy is going to recover, They will play the expectations game and ignore the bad news in this case Mortgage applications and focus on the pending home sales. The Jobs report will be bad but probably be reported as better than expected.

This is all part of the denial of the bad economy and the selling of the recovery. The trick is to know what hand you have been dealt. They are holding a pair of deuces and want you to think that your straight flush is a loser. To do this they will bury us in a blizzard of economic numbers and interpret them in a way to make their hand look better.

The denial of the bad economy keeps long term rates up and consumer retail prices of commodities such as oil up. This compounds the problems in the bad economy and it the end drags out the time the economy will remain bad. As long as this denial continues we will have continued deterioration, the downturn will last longer, and it will go deeper than if they told the truth now.

Remember Mikey's rule of 2 next year in May they will give up on the recovery then we have a real chance for it to begin. In the mean time the economic numbers keep coming with all of their experts telling us that it's going to be OK.

The VIX (fear index) hit a low today of 24.80. This is the level we were at just before the crash in last Sept. If you remember in my posts I said that in a bull mrket the VIX trades between 10 and 20 and in a bear market it trades between 20 and 40. So in a bull market we buy when the VIX hits 20 and sell when it hits 10. In a bear market we buy when it hits 40 and sell when it hits 20. We are approaching that level now at 24.80. That tells us that the players are not as concerned about a selloff as they should be given current conditions. That is the result of the price rally in the market and the bullishness of the experts message.

To be a successful investor you must keep your eye on the final outcome that you know and not be distracted by the short term noise. The noise is there to distract you from what you know. The long trend is clearly down and they are selling a story that has had its play and is over. The bottom line is that in this game the solid bet is that this is a bear market rally in the market and the economy and the odds are strong it is going to end bad. Play the straight flush and call the bluff.


The beat goes on ....Mikey