State Debt Crisis Looms

California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.

And states are responding in sometimes desperate ways, raising concerns that they, too, could face a debt crisis.

New Hampshire was recently ordered by its State Supreme Court to put back $110 million that it took from a medical malpractice insurance pool to balance its budget. Colorado tried, so far unsuccessfully, to grab a $500 million surplus from Pinnacol Assurance, a state workers’ compensation insurer that was privatized in 2002. It wanted the money for its university system and seems likely to get a lesser amount, perhaps $200 million.

Connecticut has tried to issue its own accounting rules. Hawaii has inaugurated a four-day school week. California accelerated its corporate income tax this year, making companies pay 70 percent of their 2010 taxes by June 15. And many states have balanced their budgets with federal health care dollars that Congress has not yet appropriated.



Some economists fear the states have a potentially bigger problem than their recession-induced budget woes. If investors become reluctant to buy the states’ debt, the result could be a credit squeeze, not entirely different from the financial strains in Europe, where markets were reluctant to refinance billions in Greek debt.

“If we ran into a situation where one state got into trouble, they’d be bailed out six ways from Tuesday,” said Kenneth S. Rogoff, an economics professor at Harvard and a former research director of the International Monetary Fund. “But if we have a situation where there’s slow growth, and a bunch of cities and states are on the edge, like in Europe, we will have trouble.”

California’s stated debt — the value of all its bonds outstanding — looks manageable, at just 8 percent of its total economy. But California has big unstated debts, too. If the fair value of the shortfall in California’s big pension fund is counted, for instance, the state’s debt burden more than quadruples, to 37 percent of its economic output, according to one calculation.

The state’s economy will also be weighed down by the ballooning federal debt, though California does not have to worry about those payments as much as its taxpaying citizens and businesses do.

Unstated debts pose a bigger problem to states with smaller economies. If Rhode Island were a country, the fair value of its pension debt would push it outside the maximum permitted by the euro zone, which tries to limit government debt to 60 percent of gross domestic product, according to Andrew Biggs, an economist with the American Enterprise Institute who has been analyzing state debt. Alaska would not qualify either.

State officials say a Greece-style financial crisis is a complete nonissue for them, and the bond markets so far seem to agree. All 50 states have investment-grade credit ratings, with California the lowest, and even California is still considered “average,” according to Moody’s Investors Service. The last state that defaulted on its bonds, Arkansas, did so during the Great Depression.

Goldman Sachs, in a research report last week, acknowledged the pension issue but concluded the states were very unlikely to default on their debt and noted the states had 30 years to close pension shortfalls.

Even though about $5 billion of municipal bonds are in default today, the vast majority were issued by small local authorities in boom-and-bust locations like Florida, said Matt Fabian, managing director of Municipal Market Advisors, an independent consulting firm. The issuers raised money to pay for projects like sewer connections and new roads in subdivisions that collapsed in the subprime mortgage disaster.

The states, he said, are different. They learned a lesson from New York City, which got into trouble in the 1970s by financing its operations with short-term debt that had to be rolled over again and again. When investors suddenly lost confidence, New York was left empty-handed. To keep that from happening again, Mr. Fabian said, most states require short-term debt to be fully repaid the same year it is issued.


Some states have taken even more forceful measures to build creditor confidence. New York State has a trustee that intercepts tax revenues and makes some bond payments before the state can get to the money. California has a “continuous appropriation” for debt payments, so bondholders know they will get their interest even when the budget is hamstrung.

The states can also take refuge in America’s federalist system. Thus, if California were to get into hot water, it could seek assistance in Washington, and probably come away with some funds. Already, the federal government is spending hundreds of millions helping the states issue their bonds.

Professor Rogoff, who has spent most of his career studying global debt crises, has combed through several centuries’ worth of records with a fellow economist, Carmen M. Reinhart of the University of Maryland, looking for signs that a country was about to default.

One finding was that countries “can default on stunningly small amounts of debt,” he said, perhaps just one-fourth of what stopped Greece in its tracks. “The fact that the states’ debts aren’t as big as Greece’s doesn’t mean it can’t happen.”

Also, officials and their lenders often refused to admit they had a debt problem until too late.

“When an accident is waiting to happen, it eventually does,” the two economists wrote in their book, titled “This Time Is Different” — the words often on the lips of policy makers just before a debt bomb exploded. “But the exact timing can be very difficult to guess, and a crisis that seems imminent can sometimes take years to ignite.”

The Farce continues

DJIA10895.96 +45.67 SPX 1165.52 -.02 Russ2000 678.84 -.34 NASDAQ 2393.50 -3.66 VIX 18.14 -.26

Dollar Index 81.62 unch Aussie 91.67 Euro 1.3488 +.0024
TLT(20yrGov Bonds)88.85 -.10 IEF (7-10Gov Bonds)89.16 -.17

XLK (Tech)23.15 +.15 XLE (Oil Index)57.21 +1.13 XLF (Finan Index)16.07 +.07 KRE (Regional Bank index) 26.21 XHB Homebuilders Index)16.98 +.02 GDX (Gold Miners Index)44.29 +.57 XLB (BasicMatIndex) 33.99 +.31 XRT (Retail Index 41.59 -.07 IYR (Real Estate index) 50.27 +.16

EEM(Emerging Markets) 41.83 +.73 FXI(China Index)41.75 +.92 IEV(Europe350)38.26 +.36 (Brazil)72.58 +2.14

DBC (Commodity Index)23.48 +.51 Gold 1110 -.30 Silver 17.36 -.22 Copper 3.53 -.035 RBOB (Whsl Gas)2.26 unch Nat Gas 3.898 -.018



A farce is a comedy which aims to entertain the audience by means of unlikely, extravagant, and improbable situations, disguise and mistake. To call this a recovery is a farce of the highest order.

Gold has reversed its sell off below 1100 and stocks have continued their relentless uptrend. I have not received a sell signal on the market and the dollar has weakened. This all indicates to me that the Fed is still pouring liquidity into the markets and their minions are still talking about a V recovery and a bull market.

The shorts have got to be blown away by now and like I said the buyers will come into every sell off. I think they feel that Uncle Sugar will be there for them and right now he sure is. Meanwhile, the common folk continue to struggle and in the end it will be about them.

The March employment numbers are coming on Friday. The talk is that the numbers will show improvement. I am sure the boys will make up some good numbers for us. The question is will the market keep going up after those good numbers?

My reversal price is a close below 10700. I have dropped that from the 10834 from last week. A good signal would come on a good employment number and a close below 10700 and Gold closes BELOW 1060. A strong jobs report might do the trick. If both happen I would have my signal.

Mikey

Rocking in a light breeze

DJIA 10486 +5.66 SPX 1165.52 *.02 Russ2000 678.774 -.34 NASDAQ 2393.50 -3.66
VIX 18.14 -.26

Dollar Index 81.95 .45 Aussie .9024 Euro 1.3404

TLT(20yrGov Bonds)88.98 +.29 IEF (7-10Gov Bonds)89.29 +.19

XLK (Tech)23.05 -.05 XLE (Oil Index)53.06 -.03 XLF (Finan Index)15.94 -.03 KRE (Regional Bank index) 26.33 -.28 XHB Homebuilders Index)16.97 +.09 GDX (Gold Miners Index)43.52 +.61 XLB (BasicMatIndex) 33.65 +.22 XRT (Retail Index 41.57 +.31

EEM(Emerging Markets) 41.03 -.13 FXI(China Index)40.80 +.79 IEV(Europe350)37.88 +.27 (Brazil)70.26 -.02

DBC (Commodity Index)22.97 +.03 Gold 1104 +12.00 Silver 16.88 +.13 Copper 33.407 +.02Oil 79.94 -.59 RBOB (Whsl Gas2.20 -.012 Nat Gas 3.87 -.11


The market is going into the close on Friday with an eerie silence. The good ship market rocks back and forth with no wind in it's sails to push it one way or another. No sell signal yet with 20 minutes to the close.


Mikey

This feels like the top to me

A close below yesterdays low of 10825 will seal the deal for me.

Close...Looked like a reversal day today. Commodity stocks very weak. The DJIA was much stronger than the market cloaking the sell off. A follow through tomorrow would set the top.


Mikey

Gold slips below 1100 flashes sell signal..Market flying into Danger Zone

DJIA 10844 -44.37 SPX 1168.45 -5.72 Russ2000 686.33 -3.98 NASDAQ 2401.14 -14.11 VIX 17.53 +1.18

Dollar Index 82.04 +.92 Aussie .909 -.0094 Euro 1.3347

TLT(20yrGov Bonds)89.51 -1.42 IEF (7-10Gov Bonds)89.49 -.86

XLK (Tech)23.04 -.13 XLE (Oil Index)57.06 -.28 XLF (Finan Index)15.90 0 KRE (Regional Bank index) 26.66 -.15 XHB Homebuilders Index)16.93 -.01 GDX (Gold Miners Index)43.57 -1.71 XLB (BasicMatIndex) 34.12 -.09 XRT (Retail Index 41.18 -.52

EEM(Emerging Markets) 41.10 -.53 FXI(China Index)40.64 -.60 IEV(Europe350)37.54 -1.68(Brazil)71.56 -1.59

DBC (Commodity Index)23.11 -.20 Gold 1085 -17.90 Silver 16.59 -.43 Copper 3.33 -.047 Oil 80.53 -1.38 RBOB (Whsl Gas)2.22 -.038 Nat Gas 4.109 -.02


Every day is groundhog day. The market is up, the economic statistics make new lows, the experts on CNBC trumpet a bull market and I can count on hearing 25 Gold commercials during the day.

The Gold chart below shows a price break below 1100. The GDX (Miners index) is trading below its 50 day average of 44.39. The MACD is rolling under zero line and the price is under the 50 day average and it is doing it without fanfare. The move above 1100 on 2/16 was touted as a technical plus ..today's sell off reverses that move. The slimy yellow metal is now in sell mode.

The market is still in a buy mode. I am looking at a break of the low of 3/5 as a reversal. That price would be below 10500. That being said I WILL SHORT ON A CLOSE BELOW 10700. I will put a stop on that trade on a close above 10900.

The shorts and the longs will not believe any sell off from this. The market is set up for the kill now

I will buy the BGZ( Large Cap 3X Bear short) The SMN (2X basic mat short) EDZ (3X emerging market short) on a close BELOW 10700.













Adding to ZSL 4.54 and GLL 10.11 today

Mikey

The Bears have lost the Argument

DJIA 10763 +28.60 SPX 1163.63 -2.58 Russ2000 681.23 -2.95 NASDAQ2387.46 -1.63 VIX 16.49 -.41

Dollar Index 80.45 +.60 Aussie .9218 -.007 Euro 1.3618 -.013 Brit Pound 1.5244

TLT(20yrGov Bonds)91.09 -.38 IEF (7-10Gov Bonds)90.35 -.24

XLK (Tech)22.99 +.02 XLE (Oil Index)58.06 -.99 XLF (Finan Index)15.79 -.13 KRE (Regional Bank index) 26.36 -.15 XHB Homebuilders Index)16.84 -.09 GDX (Gold Miners Index)45.87 -.40 XLB (BasicMatIndex) 33.67 -.28 XRT (Retail Index40.67 -.12

EEM(Emerging Markets) 41.67 -.38 FXI(China Index)41.31 -.31 IEV(Europe350)38.35 -.24 (Brazil)72.50 -1.07

DBC (Commodity Index) 23.73 -.02 Gold 1127 +2.90 Silver 17.44 -.075 Copper 3.40 -.15 Oil 82.17 -.76 RBOB (Whsl Gas)2.30 -.0086 Nat Gas 4.09 -.207

In this game of Bulls and Bears the price and time of a move will make one side a loser. The trend which they say is your friend will assert itself to the point that one side will cry uncle. The losing side will usually have the right reasons but that is all they have. The winning side will have price and time on their side.

The price and time of this up move has clearly given the Bulls the right to claim victory. The number I have heard that the players consider a break out is 1155 on the S&P or about 10644 on the DJIA. That price gives the Bulls validation for their argument. We have broken above those levls.

That victory once achieved is usually the beginning of the end of that trend. Look at the chart below of the DJIA. The bulls lost their argument in Feb of 2009. The DJIA broke the low of 7500 on Feb 20 Th and sold off to 6600 by March 5Th. The news had been very bad and their was talk of banks being taken over by the government.

The bad news was validated by that sell off and I remember that my bullish argument was not being well received. The bulls had lost the argument because,,,look at the price. There were many good things that the Fed was doing at that time. They had announced that they were going to buy over 1 trillion in mortgages. The stimulus bill of 800 billion had been announced. The market ignored this and the price "told" you that these things were not going to work. The buy came when the price reversed above 7500. That told us that something different as happening.

That brings us to today the market is breaking out above its recent highs of 10700. The Fed is pulling out of the mortgage market at the end of this month. They have said that they are reducing the special liquidity provisions instituted last year. The initial claims for jobs have stabilized but the continuing claims are still rising indicating that employers are not hiring. Corporations are merging and buying back stock a sign that the best way to prop up earnings is to reduce outstanding shares or merge and cut costs to prop up earnings. The housing data is abysmal.

The money flow looks like it is going to slow into the markets and the economic numbers look very soft. In other words, the market is ignoring that reality and making new highs. Just the opposite of what it did in March 2009. In summary, we are breaking out on bad news now just as we were breaking down with good news in Feb of 2009.

I am guessing that we try to go up into early April. The public is loading up with corporate and Muni bonds and leaving their bank accounts. They are starved for yield and ae ignored the principle risk they are taking. They are buying any thing with a yield and the brokers are selling it to them. The brokers love the dividend plays and even GE has announced a dividend increase. Remember GE in early 09? They said they were going to cut the dividend.

The brokers are also touting the Emerging market very heavily. This is pure and simple the brokers distributing the stock and Bonds that the "system" bought from Oct 2008 to March 2009. The numbers are bad but the price is telling the public that everything is going to be OK. The ability of the system to create a sustained price move and use the media to validate that move is what the public buys into. Like I said the bears have lost the argument and my argument is not being well received.


The lows in March...breakdown and reversal


The highs today ...the breakout?




The beat goes on....Mikey

Jobless claims tell the story

The number of Americans filing continuing claims for unemployment insurance spiked last week, the Labor Department said Thursday, as sluggish hiring continues to drag on the labor market's recovery.

The number of people filing continuing claims jumped to 4,558,000 in the week ended Feb. 27, the most recent data available. That was up 37,000 from the preceding week's upwardly revised 4,521,000 claims.

Economists were expecting continuing claims to remain unchanged at 4,500,000.

Continuing claims reflect people filing each week after their initial benefit week until the end of their standard benefits, which usually last 26 weeks. The figures do not include those who have moved into state or federal extensions, or people whose benefits have expired.

"Continuing claims represent the pool of workers who have been unable to get back into the labor market quickly," said Robert Dye, senior economist at PNC Financial Services Group. "Long-term unemployment remains a significant problem and will remain a drag on the economy, as it has for some time now."

Dye said the reluctance of small businesses to commit to hiring adds substantial pressure to a jobs recovery.

"The climate for hiring is highly uncertain at small businesses, with health care legislation still pending and tax policies in flux," he said. "I think it will take months before we see hiring there."

Wells Fargo senior economist Mark Vitner added that the sharp increase in continuing claims in the latest data could also be because severe winter weather hindered employers from hiring.

Jobs bill OK'd by Senate
Last week, lawmakers pushed the deadline to apply for unemployment claims to April 5, but the Senate approved a measure Wednesday to extend the deadline until year-end. The bill has moved to the House for approval.

There were 462,000 initial claims filed in the week ended March 6, down 6,000 from the previous week's downwardly revised 468,000, A consensus estimate of economists surveyed by Briefing.com expected claims to drop to 460,000.

The 4-week moving average of initial claims, which levels out volatility, was 475,500, up 5,000 from the previous week's downwardly revised average of 470,500.

"Initial claims are improving, but they are stalling at the current level and are still too high to create sustained job growth," Vitner said. "In a healthy economy that is functioning normally, jobless claims need to come to closer to 350,000."

What this means is that the layoffs are stopping but there is no hiring. The market is ignoring this information.

Fed Statement

The Federal Reserve on Tuesday reiterated its pledge to keep interest rates low for an extended period. Following is the Fed's full statement:


Information received since the Federal Open Market Committee met in January suggests that economic activity has continued to strengthen and that the labor market is stabilizing.

Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly.

However, investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls. While bank lending continues to contract, financial market conditions remain supportive of economic growth.


Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.


To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt; those purchases are nearing completion, and the remaining transactions will be executed by the end of this month.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.

In light of improved functioning of financial markets, the Federal Reserve has been closing the special liquidity facilities that it created to support markets during the crisis.

The only remaining such program, the Term Asset-Backed Securities Loan Facility, is scheduled to close on June 30 for loans backed by new-issue commercial mortgage-backed securities and on March 31 for loans backed by all other types of collateral.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh.

Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.

Terrible Year in Housing produce big gains in stocks

Earlier today, the National Association of Home Builders reported a 2 point decline in their Housing Market Index, back to its level from May of last year. Details revealed that traffic fell to its lowest levels in a year. Tomorrow, we get another read on the real estate market with Housing Starts scheduled to come out at 8:30 am and consensus numbers are expecting a drop there as well.

Despite these indicators, the housing and real estate stocks have fared better than the overall S&P 500 [.SPX 1156.60 6.09 (+0.53%) ] of late. The Dow Jones Real Estate Holding & Development Index is up 6.6% year-to-date and the DJ Real Estate Services Index is up 5.6% YTD as well. The DJ Retail REITs Index is up ~8% YTD. By comparison the S&P 500 is up 3.2% YTD.

From last year's bottom, some of the biggest housing and housing related related gainers in the S&P 500 over the past 52 weeks include household appliance manufacturers Whirlpool [WHR 87.16 0.87 (+1.01%) ] and Black & Decker [BDK 3.07 --- UNCH (0) ], both up over 200% in the past year. Here are some of the biggest housing and housing related gainers YTD by home builder Lennar [LEN 16.35 0.26 (+1.62%) ]:



The market has antisipated something that has not happened. The same thing happened in 2007. The same thing happened between July 2006 and Feb 2007. The wxperts called the bottom in the housing market in the summer of 2006. The chart below is of LEN
Whirlpoool WHR and Black and Decker BDK the stocks mentioned in the article above






In the case of BDK and WHR the stock prices are back to their 2006 levels. They are priced at pre crash levels.

Double Dip on Housing?

The US housing market will face another retreat while mortgage-backed securities and Treasurys are likely to go through a "material" correction, Meredith Whitney, CEO of Meredith Whitney Advisory Group, told CNBC Tuesday.

"The housing market surely will double dip," Whitney told "Worldwide Exchange."

Government programs to support housing have been "murky" and when the modifications caused by them come to an end, a lot of supply may come to the market and that's when the real-estate market is likely to go down, she explained.

Hopes that an improvement in liquidity and continuing investment from China in US assets will prop up mortgage-backed securities (MBS) and Treasurys are exaggerated, Whitney also said.

"The asset classes of MBS and Treasurys are priced for a material correction in my opinion," she said. "The only buyers of agency MBS are the Fed and banks so you see how precarious that market is."

"If the Fed pulls back, that's a really big deal... because there's no substitute buyer."

Banks Model Is Broken

The Federal Reserve can't make banks start lending again because the business model financial institutions used before the crisis is broken, Whitney also said.

"I don't think there's much the Fed can do to get banks to start lending again. That's a structural problem, the model is broken," Whitney told "Worldwide Exchange."

Before the financial crisis erupted in 2007 banks were able to offer customers low-priced mortgages because they were making money on securitizing these mortgages and selling them on, she explained.

But now that the securitization market is effectively closed, the prices of mortgages for consumers have not risen to compensate banks for that loss of revenue, so banks have been playing defense for the past two years, Whitney added.

The Federal Open Market Committee holds a meeting later Tuesday to decide on monetary policy. Fed officials have been saying that interest rates are likely to remain low for an "extended" period of time.


Whitney said she will be watching for anything regarding the Fed's stance on buying mortgage-backed securities in the statement after the meeting.

"The Fed has been supporting the housing market, a third of the Fed's balance sheet is tied to mortgages," she said.

"The banks aren't issuing anything (in terms of mortgages) to hold, they're issuing everything to dump on" Fannie Mae, Freddie Mac and Ginnie Mae, Whitney added.


Much of the profit banks made last year was due to their performance in capital markets and this is "unreplicable" this year, Whitney also warned.

"I think that people that expect an earnings handoff to a normalized scenario are going to be disappointed," she said.

"Normal will not be what it has been over the last 20 years and there's disappointment baked into that."

The longs are fat, dumb and happy....Ready for the slaughter

DJIA 10617 +6.13 SPX 1150.04 -.17 Russ2000 676.12 -1.19 NASDAQ 2366.96 -1.47 VIX 18.06

Dollar Index 79.81 Aussie .9166 Euro 1.3757 Brit Pound 1.5185
TLT(20yrGov Bonds)90.49 +.57 IEF (7-10Gov Bonds)90.15 +.15

XLK (Tech)22.76 XLE (Oil Index)58.44 -.02 XLF (Finan Index)15.62 +.03 KRE (Bank index) 40.13 +.26 XHB Homebuilders Index)16.80 -.07 GDX (Gold Miners Index)45.03 -.30XLB (BasicMatIndex) 33.38 +.22 XRT (Retail Index)40.13 +.26

EEM(Emerging Markets) 41.38 -.13 FXI(China Index)41.14 -.16 IEV(Europe350)38.25 +.16 (Brazil)73.76

DBC (Commodity Index) 23.47 -.19 Gold 1101.7 -6.50 Silver 17.03 -.13 Copper 3.38+ .007 Oil 81.08 -1.03 RBOB (Whsl Gas)2.24 -.02 Nat Gas 4.40 -.04


Ding Dong the Wicked old witch is dead or so say the longs. Hip Hip Hurray the recovery is here and the bull market is resuming the uptrend. The shorts are admitting defeat and running to the sidelines. The Cramers of the world are telling you that they were right and the bears are back in hibernation.

This is exactly what we need for a sustainable sell off. The bulls are so convinced that they are right that they will yell buy the pullback on the next sell off. The market is bullet proof it is immune from the bad jobs numbers and the weak balance sheet of the consumer. They will say that the lesson of the last sell off is, don't panic and if you can't handle it then don't play.

The stage is set I will go with the weakness.

Mikey

Watching gold

DJIA 10567 +2.95 SPX 1145.1 +5.16 Russ2000 674.93 +5.30 NASDAQ 2358.95 +18.27 VIX18.57 +.065 Oil VIX 32.99 -.59

Dollar Index 80.53 +.088 Aussie 91.52 +..24 Euro 1.3627 +.0024 Brit Pound 1.465 -.0008
TLT(20yrGov Bonds)89.59 -.23 IEF (7-10Gov Bonds)90.05 -.15

XLK (Tech22.67 +.14 XLE (Oil Index)58.54 +.48 XLF (Finan Index)15.44 +.14 XHB Homebuilders Index)1.72 -.01 GDX (Gold Miners Index)44.94 -.64 XLB (BasicMatIndex) 32.87 -.08 XRT (Retail Index)39.74 +.26

EEM(Emerging Markets) 41.50 +.29 FXI(China Index)41.50 +.09 IEV(Europe350)37.82 +.19 (Brazil)73.53 +.52

DBC (Commodity Index) 23.70 +.05 Gold 1108.10 -14.20 Silver 16.99 -324 Copper 3.35 -.043 Oil 82.09 +.60 RBOB (Whsl Gas)2.28 +.02 Nat Gas 4.559 +.043

Gold noteably weak today a close below 1100 would be interesting and a close below 1060 would flip it in sell mode again. It has consistantly been ahead of the market


Gold: Note the action of the MACD rising back to zero line. It is starting to roll a cross below zero would put it back in sell mode.



Gold Stock : Notice that although the DJIA is near its highs Gold stocks are way off their highs. The action of the MACD now indicates that the oversold condition has been worked off.




The DBC An index of commodities Light Sweet Crude Oil (WTI), Heating Oil, RBOB Gasoline, Natural Gas, Brent Crude, Gold, Silver, Aluminum, Zinc, Copper Grade A, Corn, Wheat, Soybeans, and Sugar. Look familiar?

Turning the Screws

DOW 10552.52-13.68-0.13% S&P 1138.50-0.20-0.02% NAS 2332.215.86+0.25%
VIX17.790.37+2.12%

TLT(20yrGov Bonds)89.90 -.47 IEF (7-10Gov Bonds)90 -.24

Industry Groups
XLK (Tech)22.42 +.11 XLE (Oil Index)58.06 -.09 XLF (Finan Index)15.22 unch XHB Homebuilders Index)16.87 +.30 GDX (Gold Miners Index)46 -.43 XLB (BasicMatIndex) 33.17 unch XRT (Retail Index)39.61 +.27

Foreign Markets
EEM(Emerging Markets) 40.98 +.03 FXI(China Index) 41.25 +.07 IEV(Europe350)37.69 +.27EWZ (Brazil)71.67 -.53


COMMODITIES

OIL 81.49-0.38-0.46%
GAS 2.2752-0.014-0.61%
NG 4.5790.052+1.15%
Gold 1122.9-1.10-0.1%
SILVER 1722.0-5.20-0.3%

CURRENCIES
Euro 1.3623-0.0004-0.03%
Yen 90.14-0.12-0.13%
Pound 1.5033-0.0032-0.21%
Aussie Dollar 90.9 .0005
Dollar Index 80.48 +.02

The market is hanging around just under the recovery highs and above last weeks break out at 1125 S&P. I see big names like BA, MCD, V, AAPL are making runs at or taking out their most recent highs. I am hearing them tout the techs so I would think that is the next group to "breakout".

This is to the point where the players have to make a decision. The longs don't want to miss any move up and the shorts are ready to jump ship and try again later. The shorts I know are getting margin calls and they usually give then 5 to 7 days to suffer. To the longs this looks like easy money to the upside.

I have said that a close below 103i4 puts me short. I also know that taking out the highs is a. possibility. I prefer the later because the stock would change hands and then a reversal from that spike would be a sitting duck. I think 11000 can happen and would not rule it out. That would be a dagger to the shorts and their argument would be lost.

The fundamentals are bad beyond belief. The presentation is now complete about the "recovery" if we get one more convincing spike that should seal the deal. I believe the Fed is exiting the market on this move. The players are getting the easy money trade as a reward from the Fed.


I notice they are saying it is a good thing that the dollar is moving up with the market. Who said you can't have it both ways? I see some weakness in Gold today and think the commodities are still the best shorts. Gold has been the leader of the pact so let's keep a watch on that to see if it peels over as the market "breaks out"
The price to watch is below 1060. If it does that I think that game is over. I know I have been saying that for 6 months but that is the number I am watching.

I think we are in a good shorting area but will wait to see what they have up their sleeve.


Mikey

Heads up

Mikey's main computer is getting bombarded with Viruses and was taken off line. I will continue to post with my backup.

Mikey

Jobs "better than expected" Market enters shorting zone

DJIA 10536 +87.52 SPX 1135 +12.16 Russ2000 663.40 +10.93 NASDAQ 2321.41 +29.13 VIX 17.59 -1.13 Oil VIX 32.99 -.59

Dollar Index 80.53 -.005 (FXA) 90.77 +.59 Euro 1.3612 +.0032 Yen 90.40 +1.27 Brit Pound 1.5133 +.0032

TLT(20yrGov Bonds)90.76 -1.20 IEF (7-10Gov Bonds)90.13 -.54

XLK (Tech)22.27 +.23 XLE (Oil Index)59.95 +.875 XLF (Finan Index)15.13 +.20 XHB Homebuilders Index)16.46 +.20 GDX (Gold Miners Index)46.25 +.67 XLB (BasicMatIndex) 33.03 +.28 XRT (Retail Index)39.39 +.60

EEM(Emerging Markets) 40.65 +.74 FXI(China Index) 40.97 +.81 IEV(Europe350)37.67 +.60(Brazil)71.22 +1.66

Gold 1135 +1.90 Silver 17.35 +.174 Copper 3.42 +.0485 Oil81.66 +1.45 RBOB (Whsl Gas)2.27 +.0363 Nat Gas 4.57 -.005


I have be talking about a rally back up that would reverse the first sell off. We have now rallied to 10500 in the DJIA and above 1125 in the S&P and have done so amid a collapsing Europe and a pitiful jobs report. That is how good these guys are. That should convince anyone that the market is going to go up regardless of the economic numbers. Talk about putting lipstick on a pig, read this report:

Stocks rallied Friday amid relief that the job loss in February wasn't as bad as expected. The Dow Jones Industrial Average was up about 80 points, or 0.8 percent, at mid morning, led by Boeing [BA 67.14 1.59 (+2.43%) ] as commodity and industrial stocks got a boost from the jobs report, which showed 1,000 manufacturing jobs were added last month. American Express and Disney rounded out the top three.

Employers slashed 36,000 jobs from non farm payrolls last month, far fewer than expected. The consensus estimate had projected a loss of 50,000 jobs but the whisper number went as high as 200,000, given the impact of brutal winter weather in the Northeast. Job losses for December and January were revised to show 35,000 fewer jobs lost than previously reported. And the unemployment rate held steady at 9.7 percent.

Manufacturing showed signs of a modest recovery, adding 1,000 jobs, but construction shed 64,000 jobs — a worrisome sign for the sector at this point in the recovery. Census hiring was just 15,000, less than expected. (The hiring of Cenus workers was less than expected..I can't stop laughing)

Temporary work rose for a fifth straight month, which is usually viewed as an encouraging sign but Todd Schoenberger, managing director at LandColt Trading, said it's the source of some concern.

"After dissecting the report, traders are recognizing that what is keeping the jobs number from falling off a cliff is the amount of temporary hiring," Schoenberger explained. "Unless there is supporting evidence that temps are becoming permanent on company payrolls, the long-range view remains cloudy. This could dampen any bullish sentiment that appeared following the release," he said.

If the economy starts to wobble, the Fed may have to renew some of its stimulus set to expire at the end of March, Bill Gross, of bond giant Pimco, said on CNBC this morning.

"These things have all been very critical but let's face it — they're expiring at the end of March," Gross said. "The critical question...is do we really need Uncle Sam and the check writing to continue?"

Do we need the check writing to continue? That is a critical question? Let me decode that for you. This is what he is saying. Is the Fed going to continue to prop this Albatross up by directly intervening in the markets and directing it's pimps to spin the numbers as "better than expected" after March?

My guess, and of course it is only a guess, is that the Fed is dumping assets into the markets on this feel good move. The securities are being handed over to the Investment bankers for distribution to the public AS WE SPEAK. The million dollar question is how long this process will take. We will know this when the trend reverses.
T
The numbers are all artificial. They call them stimulus. The "stimulus" is not going into the economy but it is going into a select few target corporations. This is the same thing that Madoff did. He was borrowing from Peter to pay Paul. It is the nature of every Ponzi scheme. That is was we are doing here. In the mean time, the market parties on the "better than expected" numbers and the whistle blowers have no creditability because hey "look at the market". What the market is doing has no connection with reality it means nothing. Madoff had the numbers too and just like Madoff it can go on and on but in the end Ponzi schemes blow up.

The earnings numbers are easier to control than the Macro economic numbers. The Macro numbers are spinned to always being better than expected. It is amazing that every number is better than expected isn't it? Well not really because when you have a pig it is still a pig but you can say you like pigs and that would be the truth.

We have reached the target shorting zone and the "breakout" of 1125. I will wait for the weakness before I short. The VIX is now near it's lows which means the players are not afraid of the market. The shorts are being forced out and the bears are losing their argument now. I would say that any short here would be successful but I will wait for a reversal which to me now is a close below 10314.

Mikey

Jobs Tomorrow

DJIA 10412.40 +15.64 SPX 1119.15 +.36 Russ2000 649.22 NASDAQ 2282.38 +1.70 VIX 19.16 +.33 Oil VIX 34.07 -.46

Dollar Index 80.65 +.68 Aussie Dollar(FXA) 89.99 -.61 EURO(FXE)1.3559 -.0134 Yen 89.14 +.68 Brit Pound 1.5018 -.0098

TLT(20yrGov Bonds)91.34 +.35 IEF (7-10Gov Bonds)90.66 +.15

XLK (Tech)21.95 +.009 XLE (Oil Index)56.90 -.48 XLF (Finan Index)14.89 +.11 XHB Homebuilders Index)16.17 -.15 GDX (Gold Miners Index)45.44 -.924 XLB (BasicMatIndex) 32.63 +.10 XRT (Retail Index)

EEM(Emerging Markets) 39.88 -.25 FXI(China Index) 40.10 -.67 IEV(Europe350)36.87 -.15(Brazil)70.48 -.10

Gold 1132 -11.30 Silver 17.13 -.199 Copper 3.365 -.0700 Oil 80 -.87 RBOB (Whsl Gas)2.2272 -.0204 Nat Gas 4.563 -.194



The market is hovering just below the "breakout level" of 1125 on the S&P. The reason they are calling 1125 a breakout is that the S&P reversed a breakdown at 1120 on 1/22. We have rallied back up to that breakdown and it has been in this area for the last 3 days. A break above this area will force the players to make a decision. The longs will add and the shorts will cover.

I hear the experts hyping EVERY group now. I am hearing alot of reccos on the emerging market, the commodities and the retail sector. They are worried about the jobs number tomorrow. I would like to see the trading range resolved to the upside so they can put a stake in the shorts heart. As always after a reversal of this spike would be a signal to add to my shorts. Still premature to do anything now.

I have also have heard that if the market sells off with the employment numbers that it is a buying opportunity. I will go with weakness below 10200.

Mikey

A recovery that would make Madoff proud

DJIA 10463 +56 SPX 1125.46 +7.15 Russ2000 653.83 +5.53 NASDAQ 2293.07 +12.43 VIX 18.43 -.63 Oil VIX 35.38

Dollar Index 79.975 -.60 Aussie Dollar(FXA) 90.74 +.0038 EURO(FXE)1.3718 +.0103 Yen 88.60 -.20 Brit Pound 1.5095 +.0126

TLT(20yrGov Bonds) 90.82 -.40 IEF (7-10Gov Bonds)90.36 -.24

XLK (Tech)22.05 +.71 XLE (Oil Index)57.82 +.69 XLF (Finan Index)14.88 +.11 XHB Homebuilders Index)16.34 +.19 GDX (Gold Miners Index)46.79 +1.28 XLB (BasicMatIndex) 32.90 +.65
EEM(Emerging Markets) 40.59 +.52 FXI(China Index) 41.26 +.36 IEV(Europe350)37.26 +.68(Brazil)72.13 +1.56

Gold 1143 +5.60 Silver 17.31 +.246 Copper 3.468 +.0565 Oil 81.05 +1.37 RBOB (Whsl Gas)2.24 +.04 Nat Gas 4.773 +.065

Stocks advanced Wednesday as reports on the services sector and jobs came in better than expected.

The ISM said its gauge of the services sector rose to 53 in February, its highest since December 2007. Economists had expected the gauge to hold at 50.5, where it was in January. Services account for 80 percent of all U.S. economic activity.

Meanwhile, ADP reported the private sector shed 20,000 jobs in February, less than the upwardly-revised 60,000 loss in January. At the same time, outplacement firm Challenger, Gray & Christmas reported that planned layoffs dropped to 42,090, their lowest level in four years.

The jobs reports were an encouraging sign ahead of Friday's employment report from the government, which is currently expected to show 50,000 jobs were dropped from payrolls last month and the unemployment rate ticked up to 9.8 percent.

White House economic advisor Larry Summers cautioned yesterday that recent winter storms in the Northeast are likely to distort the numbers.

”In past blizzards, those statistics have been distorted by 100,000 to 200,000 jobs,” Summers said on "Fast Money" yesterday.

In Washington, the Senate approved a bill to resume aid to unemployed Americans, after a dispute with Senator Jim Bunning (R-KY) that had held the bill up was resolved.

Still to come: At 2 pm ET, the Federal Reserve issues its Beige Book, the region-by-region assessment of the nation's economy.

This "better than expected" recovery marches on and if losing 20000 jobs in Feb is better than expected then so be it. Plus jobs numbers on Friday are "distorted" by the snow storm so don't be surprised if the jobs numbers were strong relative to the conditions. Well Larry that is not the only thing that is distorted. You and your whole "recovery" is more than distorted its convoluted. He says that ”In past blizzards, those statistics have been distorted by 100,000 to 200,000 jobs,” I get then lets just "adjust" the jobs report up by oh let say 150000 so we can show the "resilience" of the jobs market.


This sounds like what Madoff did for the last seven years. You know borrow money and make up stories about how well he was doing. The SEC refused to investigate because the highest level of government was involved. What are we doing now... borrowing money and making up stories.

I digress, sorry for the rant. The market is still moving up and has cleared the 50 day. The MACD is now back above the zero line and we are heading for 10500 which I said would be the shorting zone. I am hearing that a close above 1125 S&P would be bullish. We are now at 1124.78 so I think they are about to say that we are back in an uptrend. I am still waiting for weakness to short.




Mikey

Madoff scam known for years

Please copy the link below and it will take you to the story of a man who blew the whistle on Madoff years before the story became public. This is a great interview by Mary Thompson of CNBC. You draw you own conclusions.

http://www.cnbc.com/id/35631950