Double Dip talk heats up

DJIA 10303.15-16.80 VIX 26.24 +.51 10 year 2.66 30 year 3.85
Gold 1216.70 unch Oil 75.72 -.02 USD 82.92 +.45
Days to option expiration 5

Economic Conditions: Negative -10.3

Mikey OB/OS index Neutral ---55 (80=OB 20=OS)
Mikey Confidence Index (Traders: negative) 32
Ratio Put Premiums/Call Premium Neutral .95
% Advisory Service Bulls 41.7 Bears 27.5 Moderately Bullish
US Mutual Funds cash position 3.5% Low cash (high 6.2% Low 3.3%)
Numbers are from the prior day close

Mikey Power Index (MPI)
BUY 60> SELL 50< Short 40<

Stocks 38 Bonds 68 Emerging Mkts 43
Oil 49 Nat Gas 33 Copper 55 Gold 41 Silver 47
USD 59 Aussie 58 Euro 48 Brit Pd 51

Short ETF SCORE 798
DXD 71 DZZ 49 ZSL 47 DUG 47 EDZ 62 SMN 48 SKF 69 SRS 4 SZK 76
QID 71 SCO 55 RXD 58 TBT 32 SDP 59

Long ETF SCORE 643
DDM 29 UGL 41 AGQ 47 DIG 44 EDC 48 UYM 54 UYG 36 URE 44 UGE 64 QLD 30 UCO 49 RXL 56 UBT 64 UPW 40

Total Score -155(Positive number indicates uptrend)

The Fed is "quantitatively easing". Of course they say that they are buying bonds but I say they are marking them up with the double dip talk to sell them. They need a good old fashioned sell off in the market and a crash in the commodities to cement the deflation story that popped up 2 weeks ago. The idea of a double dip is pretty well accepted now but many of the experts are saying that it does not matter. Here is an example:

Despite Summer Stock Blues, Market Pros Say Don't Panic

While the stock market may look like it was panicking over a possible double-dip recession, this week's selloff may simply be the normal volatility of a range-bound market during August.

Despite this week's losses, advisers caution against reading much into a low-volume market, The stock selloff likely came in part from the Fed confirming that the economy was not recovering quickly.Stocks have been in sell-off mode since Tuesday afternoon, when the Federal Reserve issued another warning about weak economic conditions and said it would continue buying up government debt to keep interest rates low.

While the central bank's statement contained little that was new, Wall Street took the opportunity to sell after a July rally that saw the major averages surge 7 percent. Talk immediately began to spread about the possibility of a second leg down in the recession.

"What is it that the Fed told us that we didn't already know? What is it that has us panicked?" asks Art Hogan, managing director at Jefferies in Boston. "What the Fed really did was confirm our concern that this soft patch is persistent."

In fact, some think the fact that the Fed wasn't more worried and didn't promise more aggressive measures may have sparked the sell-off, which saw the averages lose about 0.5 percent Tuesday, add another 2.5 percent Wednesday, then pile on the losses Thursday.

Cramer in his Mad money blog says "Unemployment? A Double Dip? Who Cares?" You know we already knew it was bad and the market is still up tell us something new.

As I have said many times,in the end, the economy does matter.


Mikey