DJIA 11058 11152 +107.16 SPX 1204.74 +13.38 Nasdaq 2495.55 +23.75 VIX 21.10 18.80 -2.28
Gold 1168.2 -3.60 Silver 18.30 +.193 Oil 85.32 +2.10
Dollar Index 82.20 -.335 EURO 1.3237 +.0048 Brit Pound 1.5266 +.0075
IEV(Europe Index) 37.22 +.49 EEM (Emerging Market Index) 42.45 +.58 EWZ (Brazil) 72.70 +1.70 FXI (China Index)40.93 +.05
TLT (LT US Bonds) 90.75 +.05 IEF (7-10 yr US Bonds)90 -.02
Greece readied severe austerity measures on Thursday to secure multi-billion dollar aid, providing relief to financial markets but drawing threats of a mighty battle from Greek unions. A union official said the IMF had asked Greece to raise VAT, scrap salary bonuses amounting to two extra months of pay in the public sector and accept a 3-year pay freeze.
"It's a done deal," said Ilias Iliopoulos, general secretary of public sector union ADEDY after meeting Prime Minister George Papandreou. Sources familiar with the talks said officials were expected to announce the details of a three-year deal by Monday. Hip Hip Hurray!!!! Greece is saved!
Well if Greece agrees to that then they will be buying a multi year depression. There are rioters in the streets and their Air Force is calling in sick. The money is leaving the banks because the government can not longer be trusted to back its deposits. Its just the beginning in Greece. Up until now government borrowing has been unlimited. This says that government borrowing is not unlimited. That has got to scare alot of government officials.
In other news, Goldman Sachs may soon settle its fraud case with the U.S. regulator, the New York Post reported on Thursday, opting to end a legal fight rather than endure a repeat of the public flogging it received this week.
The Post report, citing sources familiar with the matter, said Wall Street's top investment bank was mulling closing the fraud case with the U.S. Securities and Exchange Commission (SEC) to limit damage to its reputation. "It's almost a certainty that there will be a settlement," the paper quoted a source as saying. Hip, Hip, Hurray!!!!! Goldman's reputation is saved!
I don't know how Goldman officials endured such a public flogging. The settlement will say that Goldman will neither admit or deny fraud but they have to pay a fine. Remember Lehman? The public testimony of Richard Fuld? Who has paid for that one? Not the officers of Lehman. They are past that one now. What about the banks? You remember the hearing with all those bank CEO's testifying don't you? What ever happened to them? They all got a public flogging and of course. public money. I think that is a good trade don't you. We sure got our money's worth on those deals. Now its Goldman's turn to get flogged.
I spent 20 years in the stock business and I saw in almost every case the principals of the firms I was with selling products that were not in the best interests of their clients. Not a day went by were I was not appalled by what I saw. The "flogging" of Goldman's CEO by congress was a complete sham. They knew damn well and so did everyone in the industry what Goldman was and IS doing. This is with the blessing of the system. I am still appalled by what I see and that is why I write this blog.
There you go its all fixed. Goldman gets a slap on the wrist and Greece gets the bailout and the workers get screwed, justice served. More well spent public money. I think that if you close your eyes until they are almost shut and let your mind wander you can see a Greece in the US economy. You can only pretend everything is OK for so long before it blows up in your face.
The point is that this type of borrowing is not sustainable. The workers are being screwed and in the end that is what brings things down. They can borrow and wave their magic wands but in the end they have not fixed the economy and we have not either. Now they are paying the price. Do you think Congress and the President are scared about all of this borrowing? You remember in my blog yesterday saying that they have to cut the deficit. Why do you think they are saying this. The handwriting is on the wall for them to see now that Greece, Portugal and Spain are going up in smoke.
The analogy to this is that when sub prime lenders started to blow up in early 2007 and Bear Sterns was going down. The Fed arranged a merger of Bear Sterns and JP Morgan and dropped rates. This saved the system at that time. The big banks saw the handwriting on the wall and started to be more responsible with their lending. If you read the statements of the CEO's of that time they were reassuring the public that it was only the sub prime lenders and not their banks that had the problem. The Fed chairman said to was not a systemic problem and it was contained.
The big banks stocks rallied from Feb of 2007 until the end of May back to their highs as the Fed came to the rescue and merged Bear Sterns to JPM. The break down came in Aug of 2007 but that is where the FED cut rates and proclaimed that everything was OK. The stocks again rallied until October of 2007 before they rolled over for good. To me Greece is a sub prime lender and the US are the big banks in that analogy. This is the beginning of the end similar to May of 2007. I think that the US has gotten the message.
I started shorting the banks in mid 2006 because I saw real estate blowing up. I did not get paid for 18 months and during that whole time it was obvious what was happening. The officials continued to deny it just as they are denying what is happening today.
The stock market is up over 100 points on this wonderful news. Why? Because it shows that the crooks are still in control. At some point the rats will jump ship but they are still slimy enough to pull this hoax of a recovery off. So, for now anyway, Party on boys. I will say that you can only sweep so much under the rug before it starts coming out of the other end. There is still a lot more to sweep under this rug. The lie is so big now that Madoff would have left the country.
This last sell off was another trial balloon. It tells the shorts not to touch the stove or you are going to get burned. It tells the longs buy the pullback no matter what the news. It is about conditioning now. I still have not had a sell signal but the low for the Goldman sell off close below 10973 looks like a sell signal to me.
The beat goes on and on and on!!!
Mikey
Thursday, April 29, 2010
Wednesday, April 28, 2010
Bernanke: US must cut Deficit...Really
DJIA 11058 +61.14 SPX 1192.10 +2.55 Nasdaq 2474.16 +2.70 VIX 21.10 -1.73 Gold 1168 +6.00 Silver 18.12 +.10 Oil 83.20 +.78
Dollar Index 82.56 +.125 EURO 1.3197 -.0012 Brit Pound 1.5196 -.0058
IEV(Europe Index) 36.70 -.21 EEM (Emerging Market Index) 41.87 +.36 EWZ (Brazil) 71.14 +1.09 FXI (China Index) 40.92 +.46
TLT (LT US Bonds) 90.58 -.9 IEF (7-10 yr US Bonds)89.91 -.58
Read my lips no new taxes. Remember those words out of the lips of George Bush Sr. Well now, Obama, who said no new taxes on those making less than 200,000, is saying that everything is on the table. The 12.9 trillion Nat'l debt is on track to nearly double over the next decade. It is expected to consume 90% of the GDP.
They think Greece and Portugal has a problem. Big Ben is saying we have to cut the deficit. We all know that Big Ben runs the country so lets cut the deficit. Thanks for the advice Ben, but what about the economy that is living off handouts now.
The government and the Federal reserve are winding down massive stimulus programs as the "economy recovers". How are we going to continue to "recover" when they both exit without sending us "back" into a recession. Meanwhile, the record 787 billion in Federal spending is peaking now and there is heavy opposition to more spending. The Budget deficit is almost 10% of GDP in fiscal 2009. The US economy faces almost unprecedented fiscal head winds over the next few years.
The stock market has rallied on all the liquidity that has been pumped in by the government and the Fed. The real economy as measure by employment, debt, and asset values that matters most, housing, have not budged after all of this direct intervention in the financial markets. The stock market is out on a limb and it is starting to act like the limb is bending.
Still no sell signal. A follow through from yesterdays sell off is still needed to seal the deal. Today's rally is the same thing we have seen for the past 50 days. Like I said yesterday one of these will keep going. More and more stocks are breaking down each day. The net sum is that the market uptrend is being pressured.
Today The Fed's description of the job market was somewhat brighter than after its last meeting in mid-March, when it said only that employment was stabilizing. It repeated that employers remained reluctant to add to payrolls. The Fed reiterated a closely watched statement that rates were likely to remain exceptionally low for an "extended period" because of low inflation and high unemployment. These are the folks that say we are in a recovery.
"Inflation is likely to be subdued for some time," the Fed said. Gold is rallying today on that statement. Gold remains in an uptrend but Gold is controlled and owned by the very governments that need cash. A source of funds???
A close below 1060 is still the number I am looking at. I am still negative on Gold but am not short on this uptrend. Remember the IMF is selling Gold.
Mikey
Dollar Index 82.56 +.125 EURO 1.3197 -.0012 Brit Pound 1.5196 -.0058
IEV(Europe Index) 36.70 -.21 EEM (Emerging Market Index) 41.87 +.36 EWZ (Brazil) 71.14 +1.09 FXI (China Index) 40.92 +.46
TLT (LT US Bonds) 90.58 -.9 IEF (7-10 yr US Bonds)89.91 -.58
Read my lips no new taxes. Remember those words out of the lips of George Bush Sr. Well now, Obama, who said no new taxes on those making less than 200,000, is saying that everything is on the table. The 12.9 trillion Nat'l debt is on track to nearly double over the next decade. It is expected to consume 90% of the GDP.
They think Greece and Portugal has a problem. Big Ben is saying we have to cut the deficit. We all know that Big Ben runs the country so lets cut the deficit. Thanks for the advice Ben, but what about the economy that is living off handouts now.
The government and the Federal reserve are winding down massive stimulus programs as the "economy recovers". How are we going to continue to "recover" when they both exit without sending us "back" into a recession. Meanwhile, the record 787 billion in Federal spending is peaking now and there is heavy opposition to more spending. The Budget deficit is almost 10% of GDP in fiscal 2009. The US economy faces almost unprecedented fiscal head winds over the next few years.
The stock market has rallied on all the liquidity that has been pumped in by the government and the Fed. The real economy as measure by employment, debt, and asset values that matters most, housing, have not budged after all of this direct intervention in the financial markets. The stock market is out on a limb and it is starting to act like the limb is bending.
Still no sell signal. A follow through from yesterdays sell off is still needed to seal the deal. Today's rally is the same thing we have seen for the past 50 days. Like I said yesterday one of these will keep going. More and more stocks are breaking down each day. The net sum is that the market uptrend is being pressured.
Today The Fed's description of the job market was somewhat brighter than after its last meeting in mid-March, when it said only that employment was stabilizing. It repeated that employers remained reluctant to add to payrolls. The Fed reiterated a closely watched statement that rates were likely to remain exceptionally low for an "extended period" because of low inflation and high unemployment. These are the folks that say we are in a recovery.
"Inflation is likely to be subdued for some time," the Fed said. Gold is rallying today on that statement. Gold remains in an uptrend but Gold is controlled and owned by the very governments that need cash. A source of funds???
A close below 1060 is still the number I am looking at. I am still negative on Gold but am not short on this uptrend. Remember the IMF is selling Gold.
Mikey
Tuesday, April 27, 2010
Greek and Portugal Debt Downgraded
DJIA 11050 -154 SPX 1194 -17.20 Nasdaq 2487.48 -35.47 VIX 21.06 +3.59
Gold 1162 +8.20 Silver 18.16 -.17 Oil 82.24 -1.96
Dollar Index 82.20 +.58 EURO 1.3231 -.0114 Brit Pound 1.5272 -.0182
IEV(Europe Index) 41.83 -1.23 EEM (Emerging Market Index) 41.85 -1.21 EWZ (Brazil) 70.80 -2.67 FXI (China Index) 40.77 -1.29
TLT (LT US Bonds) 91.55 +1.35 IEF (7-10 yr US Bonds) 90.36 +.72
Remember Dubai? It now has company. Standard & Poor's downgraded Greek debt to junk territory amid concerns about the nation's ability to make the necessary reforms to curb its debt problems. And the S&P downgraded its rating on Portugal's debt by two notches to A-minus.
The analogy is the same as the subprime loan problem in early 2007. The bankers and the Fed chairman were quick to tell the world that everything was OK. The problem was that in the financial world the fish swim together in schools so that what affect one affects the other. Once the tuna start to attack the ball of anchovies most of the other predators come in and finish them off.
This is just another example of sovereign debt being attacked by the Tuna. The others will come. I expect them to say it is OK and smooth it over but it is not going to go away and in time will be very damaging to all countries that have taken on too much debt.
We are now nearing the 20 day average of 11033 that has not be broken since 2/16. The parabolic sell is at the same level. The low on the Goldman hit was 10930 on 4/16. A break of 10930 would give me a short term sell signal that should get us back to the 50 day of 10732 in a hurry.
Note: US bonds are making a strong move today nearing 2/5 peak. That coincidentally was the market bottom at 9835. What caused the rally in the bonds then...a European debt crisis
This is the third selling squall since April 7th. In every case the market bounced off of the 20 day average. The traders have been conditioned to buy the 20 and in every case have been rewarded. One of these will go through. My hunch is that they are buying this one too.
Mikey
Gold 1162 +8.20 Silver 18.16 -.17 Oil 82.24 -1.96
Dollar Index 82.20 +.58 EURO 1.3231 -.0114 Brit Pound 1.5272 -.0182
IEV(Europe Index) 41.83 -1.23 EEM (Emerging Market Index) 41.85 -1.21 EWZ (Brazil) 70.80 -2.67 FXI (China Index) 40.77 -1.29
TLT (LT US Bonds) 91.55 +1.35 IEF (7-10 yr US Bonds) 90.36 +.72
Remember Dubai? It now has company. Standard & Poor's downgraded Greek debt to junk territory amid concerns about the nation's ability to make the necessary reforms to curb its debt problems. And the S&P downgraded its rating on Portugal's debt by two notches to A-minus.
The analogy is the same as the subprime loan problem in early 2007. The bankers and the Fed chairman were quick to tell the world that everything was OK. The problem was that in the financial world the fish swim together in schools so that what affect one affects the other. Once the tuna start to attack the ball of anchovies most of the other predators come in and finish them off.
This is just another example of sovereign debt being attacked by the Tuna. The others will come. I expect them to say it is OK and smooth it over but it is not going to go away and in time will be very damaging to all countries that have taken on too much debt.
We are now nearing the 20 day average of 11033 that has not be broken since 2/16. The parabolic sell is at the same level. The low on the Goldman hit was 10930 on 4/16. A break of 10930 would give me a short term sell signal that should get us back to the 50 day of 10732 in a hurry.
Note: US bonds are making a strong move today nearing 2/5 peak. That coincidentally was the market bottom at 9835. What caused the rally in the bonds then...a European debt crisis
This is the third selling squall since April 7th. In every case the market bounced off of the 20 day average. The traders have been conditioned to buy the 20 and in every case have been rewarded. One of these will go through. My hunch is that they are buying this one too.
Mikey
Monday, April 26, 2010
DJIA 11205 +.75 SPX 1212 -5.23 Russ2000 738.86 -3.06 NASDAQ 2522-7.20 VIX 17.47 +.85
Dollar Index 81.45 -1.65 Aussie .93 +.011 Euro1.3377 +.0032
TLT(20yrGov Bonds)90.11 +.006 IEF (7-10Gov Bonds)89.64 +.06
XLK (Tech)24.06 -.02 XLE (Oil Index)61.95 -.14 XLF (Finan Index)16.50 -.28 KRE (Regional Bank index) 28.50 -1.20 XHB Homebuilders Index)19.55 -.09 GDX (Gold Miners Index)48.14 -.07 XLB (BasicMatIndex) 35.12 +.11 XRT (Retail Index 48.40 +.28
EEM(Emerging Markets) 43.03 -.03 FXI(China Index)41.94 -.11 IEV(Europe350)38.63 -.06 (Brazil)73.56 -.07
DBC (Commodity Index)24.35 -.12 Gold 1156.80 +2.80 Silver 18.33 -.20 Copper 3.51 -0.10 Oil 83.92 -.28 RBOB (Whsl Gas)2.34 +.0016 Nat Gas 4.21 -.046
The market has been rallying as studly as a Madoff trading account since Feb 5th. Nary a pullback to shake the bulls. This rally has lasted 12 weeks and is 6 weeks past its breakout of 10732. Meanwhile we are way overbought and at bullish extremes for the market indicators. They are extreme enough to produce a very nasty top. I still have no sell signal. My Parabolic gives me a sell at 11016 which is also the 20day average. The 50 day is at 10732 which was the breakout number on March 17. Shorting here is a no brainer but I will wait for a break. Notice that the MACD is still above the zero line and, therefore, the market is in an uptrend. Uptrends can end in a hurry from this type of extended formation. A break of the zero line would be a top I would chase
Market Indicators:
Ratio of Premiums Puts/Calls .64 High 2.58 low .34
Mutial Fund Purchase/Redemptions 1.23 High 1.50 Low .66
Price to Book DJIA 4.09 High 4.42 Low 1.27
Divident Yield 2.51 High 4.45 Low 2.12
Nasdaq Trading Vol vs NYSE 190 High 290 low 79
Accumulation/Distribution A Accumulation E Distribution
NYSE E
DJIA C-
S&P 500 D
Nasdaq B-
All indicators are at bullish extremes
Mikey
Dollar Index 81.45 -1.65 Aussie .93 +.011 Euro1.3377 +.0032
TLT(20yrGov Bonds)90.11 +.006 IEF (7-10Gov Bonds)89.64 +.06
XLK (Tech)24.06 -.02 XLE (Oil Index)61.95 -.14 XLF (Finan Index)16.50 -.28 KRE (Regional Bank index) 28.50 -1.20 XHB Homebuilders Index)19.55 -.09 GDX (Gold Miners Index)48.14 -.07 XLB (BasicMatIndex) 35.12 +.11 XRT (Retail Index 48.40 +.28
EEM(Emerging Markets) 43.03 -.03 FXI(China Index)41.94 -.11 IEV(Europe350)38.63 -.06 (Brazil)73.56 -.07
DBC (Commodity Index)24.35 -.12 Gold 1156.80 +2.80 Silver 18.33 -.20 Copper 3.51 -0.10 Oil 83.92 -.28 RBOB (Whsl Gas)2.34 +.0016 Nat Gas 4.21 -.046
The market has been rallying as studly as a Madoff trading account since Feb 5th. Nary a pullback to shake the bulls. This rally has lasted 12 weeks and is 6 weeks past its breakout of 10732. Meanwhile we are way overbought and at bullish extremes for the market indicators. They are extreme enough to produce a very nasty top. I still have no sell signal. My Parabolic gives me a sell at 11016 which is also the 20day average. The 50 day is at 10732 which was the breakout number on March 17. Shorting here is a no brainer but I will wait for a break. Notice that the MACD is still above the zero line and, therefore, the market is in an uptrend. Uptrends can end in a hurry from this type of extended formation. A break of the zero line would be a top I would chase
Market Indicators:
Ratio of Premiums Puts/Calls .64 High 2.58 low .34
Mutial Fund Purchase/Redemptions 1.23 High 1.50 Low .66
Price to Book DJIA 4.09 High 4.42 Low 1.27
Divident Yield 2.51 High 4.45 Low 2.12
Nasdaq Trading Vol vs NYSE 190 High 290 low 79
Accumulation/Distribution A Accumulation E Distribution
NYSE E
DJIA C-
S&P 500 D
Nasdaq B-
All indicators are at bullish extremes
Mikey
CEO Vikram Oandit says Citibank is looking outside US for growth
Citibank announces today that it is looking outside the US for its growth. That's interesting in that it received by far the biggest support from the US taxpayer. It would not exist without taxpayer support. Hey Citi how about you lower the rates on your consumer credit cards and payback the people that bailed your ass out.
Here is a summary of his statement:
Citigroup Chief Executive Vikram Pandit is pinning his hopes for an economic recovery on the developing markets where his company already has a firm foothold.
"The world needs new growth drivers besides U.S. consumption and credit creation. Emerging markets offer one potentially powerful source," Pandit said in a speech on Monday at the Global Financial Forum, a conference organized by BritishAmerican Business, Chatham House and the Foreign Policy Association.
That strategy for economic recovery would work especially well for Citigroup [C 4.61 -0.25 (-5.14%) ], which Pandit called "a pervasive force in the more than 100 countries where we have a local presence."
Citigroup may be strong abroad, but at home it is still trying to clean up the effects of the last two years. It suffered huge losses and was forced to accept three government rescues in 2008 and 2009.
Also on Monday, the U.S. Treasury began selling off its 7.7 share stake in Citigroup.
He acknowledged the possibility of a "double-dip" recession but said he believed that the U.S. economy is "likely to avoid slipping backward." Pandit also reiterated recent calls for "responsible finance," urging "strong and clear regulatory reform," including a "level playing field for the global financial industry" and "a clear regulatory authority to resolve the fate of systemically important institutions that become endangered."
You have got to be kidding me Mr. Bandit...errrr....Pandit you and you company has flat stolen from the US taxpayer. You do not deserve to exist and now you want "responsible finance," and strong and clear regulatory reform. How about you lower your rates to the US consumer instead of "looking new growth drivers besides U.S. consumption and credit creation."
You can plainly see by these statements that this is not acting like a US corporation and the statements made by this CEO are being made by every bank and large corporation. They are willing to take money from the US treasury but are looking to expand outside of the US. All I can say is the the rest of the world is or will be in just as much trouble dealing with these thieves as the US is.
I don't think I am going out on a limb by saying that Citi is going to screw up in the developing world too. I would hope that they don't come back to the US taxpayer looking to be bailed out again because we are tapped out.
Here is a summary of his statement:
Citigroup Chief Executive Vikram Pandit is pinning his hopes for an economic recovery on the developing markets where his company already has a firm foothold.
"The world needs new growth drivers besides U.S. consumption and credit creation. Emerging markets offer one potentially powerful source," Pandit said in a speech on Monday at the Global Financial Forum, a conference organized by BritishAmerican Business, Chatham House and the Foreign Policy Association.
That strategy for economic recovery would work especially well for Citigroup [C 4.61 -0.25 (-5.14%) ], which Pandit called "a pervasive force in the more than 100 countries where we have a local presence."
Citigroup may be strong abroad, but at home it is still trying to clean up the effects of the last two years. It suffered huge losses and was forced to accept three government rescues in 2008 and 2009.
Also on Monday, the U.S. Treasury began selling off its 7.7 share stake in Citigroup.
He acknowledged the possibility of a "double-dip" recession but said he believed that the U.S. economy is "likely to avoid slipping backward." Pandit also reiterated recent calls for "responsible finance," urging "strong and clear regulatory reform," including a "level playing field for the global financial industry" and "a clear regulatory authority to resolve the fate of systemically important institutions that become endangered."
You have got to be kidding me Mr. Bandit...errrr....Pandit you and you company has flat stolen from the US taxpayer. You do not deserve to exist and now you want "responsible finance," and strong and clear regulatory reform. How about you lower your rates to the US consumer instead of "looking new growth drivers besides U.S. consumption and credit creation."
You can plainly see by these statements that this is not acting like a US corporation and the statements made by this CEO are being made by every bank and large corporation. They are willing to take money from the US treasury but are looking to expand outside of the US. All I can say is the the rest of the world is or will be in just as much trouble dealing with these thieves as the US is.
I don't think I am going out on a limb by saying that Citi is going to screw up in the developing world too. I would hope that they don't come back to the US taxpayer looking to be bailed out again because we are tapped out.
Sell Mortimer Sell
The feds are selling the warrants they received from the TARP bailout. They are bailing out of the bailout. That should tell you something. These two articles appeared on CNBC today:
Article one:
The U.S. Treasury said on Monday it was launching its plan to sell off its 7.7 billion share stake in Citigroup "in an orderly fashion".
The government's plans to sell its Citi [C 4.69 -0.17 (-3.5%) ] shares marks another step in the withdrawal of the United States as a major stakeholder in the company.
The Treasury said in a statement it had given Morgan Stanley [MS 31.0992 -0.8408 (-2.63%) ], its sales agent, discretionary authority to sell up to 1.5 billion common shares under certain parameters set out in a pre-arranged written trading plan.
The Treasury said it expected to provide Morgan Stanley with the authority to sell more shares after the initial amount.
The U.S. government owns 27 percent of the bank's shares, a stake it acquired during bailouts to strengthen the bank's capital base in 2008 and 2009.
Shares of Citi fell 1.7 percent to $4.77 in premarket trade shortly after the Treasury's announcement.
Article two:
Goldman Sachs and Citigroup stocks remain good opportunities for investors despite obstacles both companies face, analyst Dick Bove told CNBC.
The two banking titans have been in the news for different reasons—Goldman [GS 152.502 -4.898 (-3.11%) ] because it is under fire for its conduct during the mortgage market collapse and Citi [C 4.69 -0.17 (-3.5%) ] for the government's move to start shedding its interest after bailing out the company.
Citi continues its rebound and could see its shares nearly double in price to $8.50, said Bove, banking analyst for Rochdale Securities
Question: Who does Dick work for???? Second, What if they would have used Goldman to do the deal? Third, how much dinero is Morgan going to make on this deal.
Why don't we set up a company call the US federal banking company and let the treasury make the trade and not Wall Street. This happens as financial reform is taking place. These guys are not changing anything. Same old tired bunch of crooks feeding off the public dime.
How much more obvious can it get. The government is spoon feeding Wall Street and the giant corporations as the public sector dies. When they talk about the recovery they always mention the employment and housing as a secondary consideration. Why?
Because to these fat cats the workers and where they live is secondary. Who is making the money and where is it being made? Not in this country.
We are running a massive deficit to bailout the very people that caused it. I don't call this profits as they report. I call it theft. The corporate profits rise as the deficit balloons.
This week they are putting their heads together to figure out how to get the deficit under control. That means tax increases and cuts in public spending. What will be left after the boys dump their stock is not a pretty picture.
Mikey
Article one:
The U.S. Treasury said on Monday it was launching its plan to sell off its 7.7 billion share stake in Citigroup "in an orderly fashion".
The government's plans to sell its Citi [C 4.69 -0.17 (-3.5%) ] shares marks another step in the withdrawal of the United States as a major stakeholder in the company.
The Treasury said in a statement it had given Morgan Stanley [MS 31.0992 -0.8408 (-2.63%) ], its sales agent, discretionary authority to sell up to 1.5 billion common shares under certain parameters set out in a pre-arranged written trading plan.
The Treasury said it expected to provide Morgan Stanley with the authority to sell more shares after the initial amount.
The U.S. government owns 27 percent of the bank's shares, a stake it acquired during bailouts to strengthen the bank's capital base in 2008 and 2009.
Shares of Citi fell 1.7 percent to $4.77 in premarket trade shortly after the Treasury's announcement.
Article two:
Goldman Sachs and Citigroup stocks remain good opportunities for investors despite obstacles both companies face, analyst Dick Bove told CNBC.
The two banking titans have been in the news for different reasons—Goldman [GS 152.502 -4.898 (-3.11%) ] because it is under fire for its conduct during the mortgage market collapse and Citi [C 4.69 -0.17 (-3.5%) ] for the government's move to start shedding its interest after bailing out the company.
Citi continues its rebound and could see its shares nearly double in price to $8.50, said Bove, banking analyst for Rochdale Securities
Question: Who does Dick work for???? Second, What if they would have used Goldman to do the deal? Third, how much dinero is Morgan going to make on this deal.
Why don't we set up a company call the US federal banking company and let the treasury make the trade and not Wall Street. This happens as financial reform is taking place. These guys are not changing anything. Same old tired bunch of crooks feeding off the public dime.
How much more obvious can it get. The government is spoon feeding Wall Street and the giant corporations as the public sector dies. When they talk about the recovery they always mention the employment and housing as a secondary consideration. Why?
Because to these fat cats the workers and where they live is secondary. Who is making the money and where is it being made? Not in this country.
We are running a massive deficit to bailout the very people that caused it. I don't call this profits as they report. I call it theft. The corporate profits rise as the deficit balloons.
This week they are putting their heads together to figure out how to get the deficit under control. That means tax increases and cuts in public spending. What will be left after the boys dump their stock is not a pretty picture.
Mikey
Tuesday, April 20, 2010
Goldman news shrugged off...Good!
I mentioned last week that I would short on a follow through of the first hit that we had. I am hearing more and more touts say don't short and don't be afraid of a little pullback. That is a good set up for, the top. It takes time and it is a process but in my mind it has begun. The next follow through will be the golden one for me
Mikey
Mikey
Friday, April 16, 2010
Expert reaction to Goldman news..Sell off "well contained"
This was posted on CNBC website:
Stunning security fraud charges against Wall Street behemoth Goldman Sachs are likely to roil the markets in the short term but unlikely to have longer-lasting effects, experts said.
Though stocks dropped sharply and Goldman [GS 164.77 -19.50 (-10.58%) ] in particular surrendered well over 10 percent in share price, the reaction on trading floors and from portfolio managers was that investors would get over the shock in short order.
"Everything we're dealing with happened a couple of years ago," said Dave Lutz, managing director of trading for Stifel Nicolaus in Baltimore. "Ultimately, once this noise has washed out, it's going to translate into one heck of a buying opportunity."
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The trick here is the follow through. We have not had enough follow through yet. If this thing gets hit enough and the players see it as a buying opportunity and that would seal the longs fate. Still too early but very interesting.
The market is trading in a way that gets you to believe that this sell off is well contained. It does not seem threatening. That is the way these things begin. I will say that if we have another day like this next week I will be pretty certain that we have topped. Especially if the pimps say buy the pullback. The longs then will be trapped.
Close: DJIA 11019 -124 Perfect close down but not too much and still above 11000.Now we wait to see if there is any follow through next week another day like this next week. If we do, that would tell me that we have something different happening. If we can get 500 points off yesterday's high of 11154 that will do it. The longs will be trapped and committed to buying the pullback
Note: My Parabolic SAR gives me a sell at 10925 and is moving up 25 points a day.
Mikey
Stunning security fraud charges against Wall Street behemoth Goldman Sachs are likely to roil the markets in the short term but unlikely to have longer-lasting effects, experts said.
Though stocks dropped sharply and Goldman [GS 164.77 -19.50 (-10.58%) ] in particular surrendered well over 10 percent in share price, the reaction on trading floors and from portfolio managers was that investors would get over the shock in short order.
"Everything we're dealing with happened a couple of years ago," said Dave Lutz, managing director of trading for Stifel Nicolaus in Baltimore. "Ultimately, once this noise has washed out, it's going to translate into one heck of a buying opportunity."
----------------------------------------------------------------------------------
The trick here is the follow through. We have not had enough follow through yet. If this thing gets hit enough and the players see it as a buying opportunity and that would seal the longs fate. Still too early but very interesting.
The market is trading in a way that gets you to believe that this sell off is well contained. It does not seem threatening. That is the way these things begin. I will say that if we have another day like this next week I will be pretty certain that we have topped. Especially if the pimps say buy the pullback. The longs then will be trapped.
Close: DJIA 11019 -124 Perfect close down but not too much and still above 11000.Now we wait to see if there is any follow through next week another day like this next week. If we do, that would tell me that we have something different happening. If we can get 500 points off yesterday's high of 11154 that will do it. The longs will be trapped and committed to buying the pullback
Note: My Parabolic SAR gives me a sell at 10925 and is moving up 25 points a day.
Mikey
Goldman news could be a big game changer
DJIA 11000 -145 SPX 1190.52 -21.29 Russ2000 712.67 -11.58 NASDAQ 2476.79 -39.19 VIX 19.35 +3.46
Dollar Index 80.98 +.40 Aussie .9272 -.008 Euro 1.3498 -.007 TLT(20yrGov Bonds)89.77 +.56 IEF (7-10Gov Bonds)89.84 +.45
$XAL (airline index) 39.39 -1.19 XLK (Tech)23.71 -.34 XLE (Oil Index)59.31 -1.01 XLF (Finan Index)16.40 -.58 KRE (Regional Bank index) 27.56 -.84 XHB Homebuilders Index)17.76 -.36 GDX (Gold Miners Index)46.28 -1.29 XLB (BasicMatIndex)34.20 -.72 XRT (Retail Index) 43.25 -.69 IYR (Real Estate index)50.76-.60
EEM(Emerging Markets) 42.54 -1.21 FXI(China Index)42.28 -1.62 IEV(Europe350)38.97 -.80 (Brazil)73.50 -1.46
DBC (Commodity Index)24.20 -.50 Gold 1133 -27.30 Silver 127.69 -.73 Copper 3.50 -.09 RBOB (Whsl Gas)2.25 -.07 Nat Gas 4.05 +.07
Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.
The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers.
Goldman is the big Ragu on Wall Street. They do the deals and pull the strings for the boys. The most important thing for an IB firm is its reputation. We'll see if a big name comes to calm the waters if not this could cause havoc in the markets. These guys have their hands on EVERYTHING. The market is way overbought this could spread. By the way this is options expiration day and there may be alot of unwinding to do.
I want to make it clear that this news is an excuse to take the market down THE REAL REASON IS THAT THE ECONOMY IS GOING INTO THE TANK. They will blame it on Goldman but like they say "its the economy stupid."
This may be just a trial baloon. They are testing the waters to see if the shorts come at them here. If they do we go back up. The DJIA is sitting on 11000 still no sell signal yet but a follow through below 10700 would get me short, we'll see.
Mikey
Dollar Index 80.98 +.40 Aussie .9272 -.008 Euro 1.3498 -.007 TLT(20yrGov Bonds)89.77 +.56 IEF (7-10Gov Bonds)89.84 +.45
$XAL (airline index) 39.39 -1.19 XLK (Tech)23.71 -.34 XLE (Oil Index)59.31 -1.01 XLF (Finan Index)16.40 -.58 KRE (Regional Bank index) 27.56 -.84 XHB Homebuilders Index)17.76 -.36 GDX (Gold Miners Index)46.28 -1.29 XLB (BasicMatIndex)34.20 -.72 XRT (Retail Index) 43.25 -.69 IYR (Real Estate index)50.76-.60
EEM(Emerging Markets) 42.54 -1.21 FXI(China Index)42.28 -1.62 IEV(Europe350)38.97 -.80 (Brazil)73.50 -1.46
DBC (Commodity Index)24.20 -.50 Gold 1133 -27.30 Silver 127.69 -.73 Copper 3.50 -.09 RBOB (Whsl Gas)2.25 -.07 Nat Gas 4.05 +.07
Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.
The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers.
Goldman is the big Ragu on Wall Street. They do the deals and pull the strings for the boys. The most important thing for an IB firm is its reputation. We'll see if a big name comes to calm the waters if not this could cause havoc in the markets. These guys have their hands on EVERYTHING. The market is way overbought this could spread. By the way this is options expiration day and there may be alot of unwinding to do.
I want to make it clear that this news is an excuse to take the market down THE REAL REASON IS THAT THE ECONOMY IS GOING INTO THE TANK. They will blame it on Goldman but like they say "its the economy stupid."
This may be just a trial baloon. They are testing the waters to see if the shorts come at them here. If they do we go back up. The DJIA is sitting on 11000 still no sell signal yet but a follow through below 10700 would get me short, we'll see.
Mikey
Thursday, April 15, 2010
The Running of The Bulls and Bears
In my earlier post today I mentioned that the touts were using the Mantra "don't fight the Fed and don't fight the tape". They were saying that it is crazy to do so. This is causing the skeptical Bulls and the die hard Shorts to buy. These end moves are steep but usually from the break out last anywhere from 6 weeks to 13 weeks. We are 5 weeks into the move. In every case the price returns to the break out within 6 months.
In the case of the most extreme, oil, which I don't believe this is. The final move lasted 13 weeks returned to the breakout 6 months later and gave up its entire bull move 1 year from the breakout when it dropped below 40 a barrel. The last move lasted a bit longer than usual but in the end they got the shorts and the longs.
The last move will persist until all of the short are dead. Regardless of the fundamental as with oil on its final run up the demand was collapsing but the price kept going. When these kinds of move are over it is a death knell for the longs who will never believe a sell off again. They will buy the pullback and at some point do it on margin. This is where I believe we are on the final move.I did not think it would get to this point because The real economy is just flat broken but when we get into one of these thing I never believe it can happen. That, however, will be the route that this will take. The boys are ruthless.
What I am saying that by Sept of 2010 we be no higher than 10700 and by March of 2011we will be at 6600 or lower. Hard to believe but that is the way that it works. They kill the shorts and then they kill the longs. For all you craps players it is like the table kills the Don't and then kills the Pass line betters. The shorts are getting killed right now. The pass line betters are all pressed up now and the roll continues as the Don't players pull their money off of the table and switch to the pass line. The table is hot and the players are loud and giving each other high five's now and they will continue to do so until the 7 shows. It always shows and in the end the House takes the money from both sides.
Mikey
In the case of the most extreme, oil, which I don't believe this is. The final move lasted 13 weeks returned to the breakout 6 months later and gave up its entire bull move 1 year from the breakout when it dropped below 40 a barrel. The last move lasted a bit longer than usual but in the end they got the shorts and the longs.
The last move will persist until all of the short are dead. Regardless of the fundamental as with oil on its final run up the demand was collapsing but the price kept going. When these kinds of move are over it is a death knell for the longs who will never believe a sell off again. They will buy the pullback and at some point do it on margin. This is where I believe we are on the final move.I did not think it would get to this point because The real economy is just flat broken but when we get into one of these thing I never believe it can happen. That, however, will be the route that this will take. The boys are ruthless.
What I am saying that by Sept of 2010 we be no higher than 10700 and by March of 2011we will be at 6600 or lower. Hard to believe but that is the way that it works. They kill the shorts and then they kill the longs. For all you craps players it is like the table kills the Don't and then kills the Pass line betters. The shorts are getting killed right now. The pass line betters are all pressed up now and the roll continues as the Don't players pull their money off of the table and switch to the pass line. The table is hot and the players are loud and giving each other high five's now and they will continue to do so until the 7 shows. It always shows and in the end the House takes the money from both sides.
Mikey
The message from the PIMPS
DJIA 11188 +15.26 SPX 1212.19 +1.54 Russ2000 723.69 +1.29 NASDAQ 2514.82 +10.11 VIX 15.84 +.25
Dollar Index 80.64 +.35 Aussie ..9342 -.02 Euro 1.3558 TLT(20yrGov Bonds)89.33 +.22 IEF (7-10Gov Bonds)89.42 +.18
$XAL (airline index) 40.57 +.47 XLK (Tech)24.03 +.08 XLE (Oil Index)60.36 +.03 XLF (Finan Index)17.04 0 KRE (Regional Bank index) 28.43 +.11 XHB Homebuilders Index)18.125 -.19 GDX (Gold Miners Index)47.85 -.50 XLB (BasicMatIndex)34.97 +.04 XRT (Retail Index 43.94 +.13 IYR (Real Estate index)51.73 +.94
EEM(Emerging Markets) 43.83 +.14 FXI(China Index)44.02 -.26 IEV(Europe350)89.42 +.18 (Brazil)75.57 -.19
DBC (Commodity Index)24.64 +.03 Gold 1160 +1.10 Silver18.43 +.186 Copper 3.60 -.85 RBOB (Whsl Gas2.32 -.001 Nat Gas 3.99 -.21
Sentiment Indicators frome 4/13 All are flashing warrning signs
Bulls 51.1% Bears 18.9%
Bull/Bear Spread 32.2
Bull Bear Ratio 2.70
Put/Call .52
Vix 15.84
The message I am hearing over and over now on CNBC by all the Feds pimps is that it would be crazy to short such a strong market. The price action is what is is all about now. That is all you have to know. I am hearing don't fight the FED and the tape. It is amusing to me that they have to use this mantra because NO ONE is shorting this market now. Everyday there is a story saying that no correction is in sight and we are going to DJIA 12000.
Big Ben has testified that the economy is improving and that along with guys like Larry (mama's boy) Kudlow singing the praises of a V recovery and the Fed driving the market higher everyday is enough to convince anyone.
The market is ripe for a hit. I still believe that we are going to take out the March 2009 lows of 6600. I will chase the first sell off. My sell signal is 10895 for the DJIA and 1184 for the S&P. I have taken AAPL off of my short list but will short at 239.
Mikey
Dollar Index 80.64 +.35 Aussie ..9342 -.02 Euro 1.3558 TLT(20yrGov Bonds)89.33 +.22 IEF (7-10Gov Bonds)89.42 +.18
$XAL (airline index) 40.57 +.47 XLK (Tech)24.03 +.08 XLE (Oil Index)60.36 +.03 XLF (Finan Index)17.04 0 KRE (Regional Bank index) 28.43 +.11 XHB Homebuilders Index)18.125 -.19 GDX (Gold Miners Index)47.85 -.50 XLB (BasicMatIndex)34.97 +.04 XRT (Retail Index 43.94 +.13 IYR (Real Estate index)51.73 +.94
EEM(Emerging Markets) 43.83 +.14 FXI(China Index)44.02 -.26 IEV(Europe350)89.42 +.18 (Brazil)75.57 -.19
DBC (Commodity Index)24.64 +.03 Gold 1160 +1.10 Silver18.43 +.186 Copper 3.60 -.85 RBOB (Whsl Gas2.32 -.001 Nat Gas 3.99 -.21
Sentiment Indicators frome 4/13 All are flashing warrning signs
Bulls 51.1% Bears 18.9%
Bull/Bear Spread 32.2
Bull Bear Ratio 2.70
Put/Call .52
Vix 15.84
The message I am hearing over and over now on CNBC by all the Feds pimps is that it would be crazy to short such a strong market. The price action is what is is all about now. That is all you have to know. I am hearing don't fight the FED and the tape. It is amusing to me that they have to use this mantra because NO ONE is shorting this market now. Everyday there is a story saying that no correction is in sight and we are going to DJIA 12000.
Big Ben has testified that the economy is improving and that along with guys like Larry (mama's boy) Kudlow singing the praises of a V recovery and the Fed driving the market higher everyday is enough to convince anyone.
The market is ripe for a hit. I still believe that we are going to take out the March 2009 lows of 6600. I will chase the first sell off. My sell signal is 10895 for the DJIA and 1184 for the S&P. I have taken AAPL off of my short list but will short at 239.
Mikey
Tuesday, April 13, 2010
The road to perdition
Americans will spend more on taxes than clothing, food, and shelter combined. What has the tax payer gotten for their money?
Bailouts of most everyone with a lobbyist.
A coming federal takeover of the health care system
A group of foreign welfare clients
Expanding government bureaucracies determined to run our lives.
Out of control entitlement programs that cannot be sustained
Thousand of pork barrel projects designed to re-elect every politician who voted for the above
A pension benefit Guarantee Corp fund that is running in the red.
A Fannie and Freddie that continues to lose money
Then there is the Social Security and Medicare. which together have 107 TRILLION in UNFUNDED LIABILITIES.
THERE IS NO MONEY IN THE FRAUDULENT "TRUST FUND" TO PAY FOR FUTURE BENEFITS.
America is starting to look like Greece only a few years behind. The President and Congress are attempting to run a welfare state on the cheap. This is like Madoff's ponzi scheme but on a massive scale.
Through all of this the market goes higher. Your tax dollars at work. The public treasury is being robbed and the corporations are showing profit. The banks are getting free money while the tax payer cannot get a loan.
The game that is being played today is the same game that the Bush administration and their investment banker friends played before the crash in 2008. They ran the dollar into the ground by spending and borrowing like drunken sailors.
This is the same game of leverage that was not fixed after the crash. The derivatives are still there but the total of bad mortgages in these leveraged pools are still growing. The problem was not fixed. The public treasury is being used to throw money at a problem that was created by bad financial management. Those same managers are still there doing the same thing they did before the crash except they are doing it on the public dime.
At some point the rats are going to jump this leaky ship and when they do the public will not only have a worthless stock portfolio but a government that is broke. I am truly angered and saddened by what I am seeing now.
Mikey
Bailouts of most everyone with a lobbyist.
A coming federal takeover of the health care system
A group of foreign welfare clients
Expanding government bureaucracies determined to run our lives.
Out of control entitlement programs that cannot be sustained
Thousand of pork barrel projects designed to re-elect every politician who voted for the above
A pension benefit Guarantee Corp fund that is running in the red.
A Fannie and Freddie that continues to lose money
Then there is the Social Security and Medicare. which together have 107 TRILLION in UNFUNDED LIABILITIES.
THERE IS NO MONEY IN THE FRAUDULENT "TRUST FUND" TO PAY FOR FUTURE BENEFITS.
America is starting to look like Greece only a few years behind. The President and Congress are attempting to run a welfare state on the cheap. This is like Madoff's ponzi scheme but on a massive scale.
Through all of this the market goes higher. Your tax dollars at work. The public treasury is being robbed and the corporations are showing profit. The banks are getting free money while the tax payer cannot get a loan.
The game that is being played today is the same game that the Bush administration and their investment banker friends played before the crash in 2008. They ran the dollar into the ground by spending and borrowing like drunken sailors.
This is the same game of leverage that was not fixed after the crash. The derivatives are still there but the total of bad mortgages in these leveraged pools are still growing. The problem was not fixed. The public treasury is being used to throw money at a problem that was created by bad financial management. Those same managers are still there doing the same thing they did before the crash except they are doing it on the public dime.
At some point the rats are going to jump this leaky ship and when they do the public will not only have a worthless stock portfolio but a government that is broke. I am truly angered and saddened by what I am seeing now.
Mikey
Monday, April 12, 2010
Retail sales AND foreclosures surge
The headlines say that retail sales surged at a record pace. How did they do that with foreclosures rising and employment on the critical list? Here is a possible explanation.
Lender Processing Services just put out its "Mortgage Monitor Report," and we have a new record:
The nation's foreclosure inventories reached record highs. February's foreclosure rate of 3.31 percent represented a 51.1 percent year-over-year increase. The percentage of new problem loans also remains at a five-year high. The total number of non-current first-lien mortgages and REO properties is now more than 7.9 million loans. Furthermore, the percentage of new problem loans is also at its highest level in five years. More than 1.1 million loans that were current at the beginning of January 2010 were already at least 30 days delinquent or in foreclosure by February 2010 month-end.
Okay, so 7.9 million Americans are not paying their mortgages.
Studies show that Americans are now far more likely to pay their other bills first before their mortgage (which is a big turnaround historically speaking.)
That means they pay off their credit cards, cable bills, car loans in place of their home loans. Some are forced to, while others are doing so strategically.
Paul Jackson, publisher of Housingwire.com, wrote a fascinating article last week that put this into real cash perspective.
He cites an older stat of 7.4 million delinquent loans, but you'll get the picture.
First he describes a case study of someone who applied for the government's Home Affordable Modification Program.
The person had an $1,880.00 monthly mortgage payment on which they'd defaulted, but said person's monthly bank statement showed payments to a tanning salon, nail spa, liquor stores, DirecTV bill with premium charges, and $1,700.00 in retail purchases from The Gap, Old Navy, Home Depot, Sears, etc.
Writes Jackson:
Even if you assume that just half of the current 7.4 million currently delinquent mortgages fit this sort of ’spending profile’ (that is, they are spending their mortgage) and you assume a $1,000 median monthly mortgage payment for most U.S. homeowners — you get a $3.7 billion boost per month to consumer spending. It’s certainly enough spending to matter in the overall scheme of things.
Other studies have shown that borrowers are more likely to default on loans if they have friends or neighbors who have.
On top of that, the rate at which formerly current borrowers are defaulting now is rising. I guess it's just another, innovative way of using your home as your ATM. It currently takes well over a year, in some cases nearly two years, to go from missing a payment to being chucked out of your home.
The mortgage holders are acting logically. They have a mortgage on properties that are underwater and not increasing in value. They are thinking who cares if the bank takes it over. The banks are dragging their feet on foreclosures and the government is encouraging this kind of behavior.
There are alot of broke people that are putting money into houses that are declining in value. They are getting nothing out of it. They are angry AT THE BANKS and rightfully so. The banks are getting FREE money. Why not get free money like the banks. We are breaking down the structure of society. They are talking mortgage modifications for the unemployed. Santa Maria. Capitalism is becoming socialism. They are acting as if it is the same old same old but it isn't. I ask what is in it for the TAXPAYERS???????
THE AVERAGE CEO MAKES 350 TIMES THE AVERAGE WORKER. WHAT IS HAPPENING IS THAT THE EXTREMES ARE BEING REWARDED AND IT IS BEING PAID BY THE MIDDLE CLASS.
Does this sound familiar? How about looking at Mexico, Venezuela, Russia that's the way it is there. The poor are rewarded because they might riot. The rich are rewarded because they can hire the poor. The middle class has no representation but that has its problems too because the middle class is becoming the poor class and in a hurry!
I don't know about you but I think this is not going to work much longer. the media is selling this recovery so hard but most people see right through it. They are covering up The macro economy that is going to take everything down. The recovery is a phony as the above example.
The rising stock market at this level 11000 is a gift short and great opportunity for the middle class to call BS on the system and that I am doing right here and right now.
The Fed and the treasury are doing their thing in the markets to convince the people that everything is ok. They are masterful at this but in the end the emperor has no clothes. The longer they do this the easier the short gets.
Mikey
Lender Processing Services just put out its "Mortgage Monitor Report," and we have a new record:
The nation's foreclosure inventories reached record highs. February's foreclosure rate of 3.31 percent represented a 51.1 percent year-over-year increase. The percentage of new problem loans also remains at a five-year high. The total number of non-current first-lien mortgages and REO properties is now more than 7.9 million loans. Furthermore, the percentage of new problem loans is also at its highest level in five years. More than 1.1 million loans that were current at the beginning of January 2010 were already at least 30 days delinquent or in foreclosure by February 2010 month-end.
Okay, so 7.9 million Americans are not paying their mortgages.
Studies show that Americans are now far more likely to pay their other bills first before their mortgage (which is a big turnaround historically speaking.)
That means they pay off their credit cards, cable bills, car loans in place of their home loans. Some are forced to, while others are doing so strategically.
Paul Jackson, publisher of Housingwire.com, wrote a fascinating article last week that put this into real cash perspective.
He cites an older stat of 7.4 million delinquent loans, but you'll get the picture.
First he describes a case study of someone who applied for the government's Home Affordable Modification Program.
The person had an $1,880.00 monthly mortgage payment on which they'd defaulted, but said person's monthly bank statement showed payments to a tanning salon, nail spa, liquor stores, DirecTV bill with premium charges, and $1,700.00 in retail purchases from The Gap, Old Navy, Home Depot, Sears, etc.
Writes Jackson:
Even if you assume that just half of the current 7.4 million currently delinquent mortgages fit this sort of ’spending profile’ (that is, they are spending their mortgage) and you assume a $1,000 median monthly mortgage payment for most U.S. homeowners — you get a $3.7 billion boost per month to consumer spending. It’s certainly enough spending to matter in the overall scheme of things.
Other studies have shown that borrowers are more likely to default on loans if they have friends or neighbors who have.
On top of that, the rate at which formerly current borrowers are defaulting now is rising. I guess it's just another, innovative way of using your home as your ATM. It currently takes well over a year, in some cases nearly two years, to go from missing a payment to being chucked out of your home.
The mortgage holders are acting logically. They have a mortgage on properties that are underwater and not increasing in value. They are thinking who cares if the bank takes it over. The banks are dragging their feet on foreclosures and the government is encouraging this kind of behavior.
There are alot of broke people that are putting money into houses that are declining in value. They are getting nothing out of it. They are angry AT THE BANKS and rightfully so. The banks are getting FREE money. Why not get free money like the banks. We are breaking down the structure of society. They are talking mortgage modifications for the unemployed. Santa Maria. Capitalism is becoming socialism. They are acting as if it is the same old same old but it isn't. I ask what is in it for the TAXPAYERS???????
THE AVERAGE CEO MAKES 350 TIMES THE AVERAGE WORKER. WHAT IS HAPPENING IS THAT THE EXTREMES ARE BEING REWARDED AND IT IS BEING PAID BY THE MIDDLE CLASS.
Does this sound familiar? How about looking at Mexico, Venezuela, Russia that's the way it is there. The poor are rewarded because they might riot. The rich are rewarded because they can hire the poor. The middle class has no representation but that has its problems too because the middle class is becoming the poor class and in a hurry!
I don't know about you but I think this is not going to work much longer. the media is selling this recovery so hard but most people see right through it. They are covering up The macro economy that is going to take everything down. The recovery is a phony as the above example.
The rising stock market at this level 11000 is a gift short and great opportunity for the middle class to call BS on the system and that I am doing right here and right now.
The Fed and the treasury are doing their thing in the markets to convince the people that everything is ok. They are masterful at this but in the end the emperor has no clothes. The longer they do this the easier the short gets.
Mikey
Thursday, April 8, 2010
Psychological Market Indicators
The following is a list of market indicators that I use to make my investment decisions. They include both value and sentiment indicators.
CBOE Volatility index ( High is bullish)
Current: 16.1 High 10/10/08 100.4 Low 7/15/05 8.2
In bull market it trades between 10 and 16. In bear markets it trades between 16 and 30. We are now at 16 that is at the low end of the range since the market top in August of 2007. Therefore, if we are in a bear market this is a sell. If we are going into a bull market we have more to go on the upside.
Ratio of price premiums Puts versus calls ( High is bullish)
Current .57 High 10/06/08 2.58 Low Now .57
The higher the premium of puts are to calls the more bearish the traders are in the short term. The traders here see almost no risk of a meaningful sell off now. This is bearish because the premiums are at historic lows. Notice the high premiums came after the meltdown in Oct of 2008. The market did not make a low until March of 09 but that was a good place to begin buying.
NASDAQ Daily trading volume VS NYSE (Low is bullish)
Current 243 High 3/15/10 280 Low 7/30/09 79.1
This is an indication of public interest in being in or out of the market. Notice that as late as 7/30/09 the public had no interest in being in. Now that interest is at very high levels. The public is the last to buy and the last to sell. They can and will be right at the end but that is the point where the greater fool theory kicks in. In other words, you are playing with fire when this number is high.
Mutial Fund Shares buys/sells High Buying is bearish
Current 1.32 High 1.50 12/1/06 Low 10/01/08 .66
Shows a strong buying bias by the public.
Price to book Value DJIA (Low is bullish)
Current 3.99 High 10/09/07 4.42 Low 7/19/09 1.27
The relation valuation of the DJIA to its book value. Notice that in July 09 when the public was out the price to book value was at its cheapest. This indicats the the public goes with the price and news without regard to value. This indicator is at the same level as it was at the top in Aug of 2007. This market is way overvalued.
Current Dividend yield of DJIA (High is bullish)
Current 2.54% High 3/09/09 4.45% Low 2.12% 7/19/07 2.12%
Trend
MACD Daily +129.96 Bullish Weekly 322.41 Bullish
Parabolic SAR Daily Buy stop at 10838 Weekly Buy Stop 9962
Price vs 20 day + Price vs 50 day +
Accumulation/Distribution E (A best E worst)
The true test of any investment is the yield that it produces. The lower the yield the more it relies on appreciation to perform. Again the high on yield came right with the market low in 3/9/09. The low yield of 2.12 came at the market top in 2007.
In summary, it is clear that the value indicators are saying this is not a good time to buy. The momentum indicators are flashing buy. The public on the other hand is buying as shown by the options premium and the Nasdaq % numbers. The public always follows the hype and the price moves. The VIX is at the low of its trading range for a bear market at 16. The accumulation/ distribution is on the distribution side. The trend is up and that is the name of the game. I wait until the distribution to the public is over and the trend rolls over. The greater fools theory is in affect.
CBOE Volatility index ( High is bullish)
Current: 16.1 High 10/10/08 100.4 Low 7/15/05 8.2
In bull market it trades between 10 and 16. In bear markets it trades between 16 and 30. We are now at 16 that is at the low end of the range since the market top in August of 2007. Therefore, if we are in a bear market this is a sell. If we are going into a bull market we have more to go on the upside.
Ratio of price premiums Puts versus calls ( High is bullish)
Current .57 High 10/06/08 2.58 Low Now .57
The higher the premium of puts are to calls the more bearish the traders are in the short term. The traders here see almost no risk of a meaningful sell off now. This is bearish because the premiums are at historic lows. Notice the high premiums came after the meltdown in Oct of 2008. The market did not make a low until March of 09 but that was a good place to begin buying.
NASDAQ Daily trading volume VS NYSE (Low is bullish)
Current 243 High 3/15/10 280 Low 7/30/09 79.1
This is an indication of public interest in being in or out of the market. Notice that as late as 7/30/09 the public had no interest in being in. Now that interest is at very high levels. The public is the last to buy and the last to sell. They can and will be right at the end but that is the point where the greater fool theory kicks in. In other words, you are playing with fire when this number is high.
Mutial Fund Shares buys/sells High Buying is bearish
Current 1.32 High 1.50 12/1/06 Low 10/01/08 .66
Shows a strong buying bias by the public.
Price to book Value DJIA (Low is bullish)
Current 3.99 High 10/09/07 4.42 Low 7/19/09 1.27
The relation valuation of the DJIA to its book value. Notice that in July 09 when the public was out the price to book value was at its cheapest. This indicats the the public goes with the price and news without regard to value. This indicator is at the same level as it was at the top in Aug of 2007. This market is way overvalued.
Current Dividend yield of DJIA (High is bullish)
Current 2.54% High 3/09/09 4.45% Low 2.12% 7/19/07 2.12%
Trend
MACD Daily +129.96 Bullish Weekly 322.41 Bullish
Parabolic SAR Daily Buy stop at 10838 Weekly Buy Stop 9962
Price vs 20 day + Price vs 50 day +
Accumulation/Distribution E (A best E worst)
The true test of any investment is the yield that it produces. The lower the yield the more it relies on appreciation to perform. Again the high on yield came right with the market low in 3/9/09. The low yield of 2.12 came at the market top in 2007.
In summary, it is clear that the value indicators are saying this is not a good time to buy. The momentum indicators are flashing buy. The public on the other hand is buying as shown by the options premium and the Nasdaq % numbers. The public always follows the hype and the price moves. The VIX is at the low of its trading range for a bear market at 16. The accumulation/ distribution is on the distribution side. The trend is up and that is the name of the game. I wait until the distribution to the public is over and the trend rolls over. The greater fools theory is in affect.
Wednesday, April 7, 2010
A quiet sell off
DJIA 10897 -72.55 SPX 1182.46 -6.98 Russ2000 699.43 -2.05 NASDAQ 2409 2431.16 -5.65 VIX 16.78 +.54
The DJIA peaked over the last 2 days at 10988. Just short of the magic 11000 number. The 20 day is sitting at 10800. I have seen numerous stocks touch that average over the last week so I would thing the DOW does it too. I mentioned that the fear of a significant sell off does not exist in the traders now. This may be the start of something but still no sell signal.
The consumer credit drop has been blamed for the weakness. They expected a decline of 1 billion and got 11 billion. That shows again that credit is contracting and that will hurt the economy. For now still no sell signal but interesting weakness.
Here is the article on consumer credit:
WASHINGTON—Americans put their credit cards back into the drawer during February, an indication they aren't ready to spend briskly despite the economy's improvement.
Consumer-credit outstanding declined at a seasonally adjusted annual rate of 5.6%, down $11.5 billion to $2.448 trillion, the Federal Reserve said Wednesday. Credit-card use fell a 16th time in 17 months.
Economists surveyed by Dow Jones Newswires had forecast a $1 billion drop in consumer credit for February. January consumer credit was revised way up; it rose 5.2%, or $10.6 billion instead of the originally reported 2.4%.
The consumer-credit report is important because spending by households makes up 70% of the gross domestic product. GDP is the broad measure, or scoreboard, of U.S. economic activity.
Spending by Americans has been modest in the economic recovery. A sign of their reticence revealed itself in a report this week by Family Dollar Stores Inc. The discount retailer said second-quarter earnings topped expectations. And same-store sales rose, prompting Family Dollar to lift its profit outlook.
The 5.6% February decrease in consumer credit marked the 12th drop in borrowing in 13 months. The recession and Wall Street crisis forced Americans toward frugality.
Joblessness has held back spending and the overall economy. But the job market might be getting better. The Labor Department last week said 162,000 nonfarm payroll jobs were created in March, the biggest gain in three years. Continued job growth could boost spending.
Revolving credit, or credit-card use, dropped $9.44 billion in February, or 13.1%, to $858.15 billion. Credit-card use climbed in January, up 2.1%; originally, the Fed had reported a 2.3% drop for the month.
Home mortgages and other real estate-secured loans aren't included in the consumer-credit data. But the report still has interesting details on how Americans finance their lifestyles and spending habits.
For instance, it reports on loans for cars, mobile homes, boats, and education. The category, known as nonrevolving credit, decreased in February 1.6%. Federal government credit, including student loans, climbed; the recession threw millions out of work and some people returned to school. But finance company credit and commercial bank credit both shrank.
Mikey
The DJIA peaked over the last 2 days at 10988. Just short of the magic 11000 number. The 20 day is sitting at 10800. I have seen numerous stocks touch that average over the last week so I would thing the DOW does it too. I mentioned that the fear of a significant sell off does not exist in the traders now. This may be the start of something but still no sell signal.
The consumer credit drop has been blamed for the weakness. They expected a decline of 1 billion and got 11 billion. That shows again that credit is contracting and that will hurt the economy. For now still no sell signal but interesting weakness.
Here is the article on consumer credit:
WASHINGTON—Americans put their credit cards back into the drawer during February, an indication they aren't ready to spend briskly despite the economy's improvement.
Consumer-credit outstanding declined at a seasonally adjusted annual rate of 5.6%, down $11.5 billion to $2.448 trillion, the Federal Reserve said Wednesday. Credit-card use fell a 16th time in 17 months.
Economists surveyed by Dow Jones Newswires had forecast a $1 billion drop in consumer credit for February. January consumer credit was revised way up; it rose 5.2%, or $10.6 billion instead of the originally reported 2.4%.
The consumer-credit report is important because spending by households makes up 70% of the gross domestic product. GDP is the broad measure, or scoreboard, of U.S. economic activity.
Spending by Americans has been modest in the economic recovery. A sign of their reticence revealed itself in a report this week by Family Dollar Stores Inc. The discount retailer said second-quarter earnings topped expectations. And same-store sales rose, prompting Family Dollar to lift its profit outlook.
The 5.6% February decrease in consumer credit marked the 12th drop in borrowing in 13 months. The recession and Wall Street crisis forced Americans toward frugality.
Joblessness has held back spending and the overall economy. But the job market might be getting better. The Labor Department last week said 162,000 nonfarm payroll jobs were created in March, the biggest gain in three years. Continued job growth could boost spending.
Revolving credit, or credit-card use, dropped $9.44 billion in February, or 13.1%, to $858.15 billion. Credit-card use climbed in January, up 2.1%; originally, the Fed had reported a 2.3% drop for the month.
Home mortgages and other real estate-secured loans aren't included in the consumer-credit data. But the report still has interesting details on how Americans finance their lifestyles and spending habits.
For instance, it reports on loans for cars, mobile homes, boats, and education. The category, known as nonrevolving credit, decreased in February 1.6%. Federal government credit, including student loans, climbed; the recession threw millions out of work and some people returned to school. But finance company credit and commercial bank credit both shrank.
Mikey
Sunday, April 4, 2010
Sentiment Indicators
The Put/Call volume ratio on equities shows that a bullish extreme has been reached.
The percent Bulls is a high but not extreme 48%. Readings of 60% were recorded in late 2007 before the top. Readings in the 50% range were recorded in early January
The Percent bears is a very low 19%. These are the same readings we had before the top in late 2007. A very low reading of 15% occured in January of this year.
The Bull bear spread is nearing 30% a reading of 40% would be extreme. The 40% readings came in 2007 at the top. We did have a reading near 40% in early January
The percent Bulls is a high but not extreme 48%. Readings of 60% were recorded in late 2007 before the top. Readings in the 50% range were recorded in early January
The Percent bears is a very low 19%. These are the same readings we had before the top in late 2007. A very low reading of 15% occured in January of this year.
The Bull bear spread is nearing 30% a reading of 40% would be extreme. The 40% readings came in 2007 at the top. We did have a reading near 40% in early January
Friday, April 2, 2010
The Fed is printing all that money...Oh Really?
This is a chart of M3 money supply "growth" take a look at the last year. This is growth? That's right it is a negative 4%.
As you can see the real economy is being hit with the double whammy of massive unemployment and falling money supply. The FED and their cronies on Wall Street are singing the praises of this recovery. This is an outright con game and they are manipulating the stock market higher to "prove" their argument.
The Fed removed their special liquidity provisions in March. The special provisions were added in June of 2009. Look at a chart of the DJIA after June 2009.
Mikey
As you can see the real economy is being hit with the double whammy of massive unemployment and falling money supply. The FED and their cronies on Wall Street are singing the praises of this recovery. This is an outright con game and they are manipulating the stock market higher to "prove" their argument.
The Fed removed their special liquidity provisions in March. The special provisions were added in June of 2009. Look at a chart of the DJIA after June 2009.
Mikey
What is the real unemployment rate...How about 22%
The unemployment rate was reported by the government as 9.7% and 162000 new jobs were created. Here is a real look at the numbers.
The SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
Why were discouraged workers removed from the data? The reason is that since 1994 jobs have been sent overseas so that corporatiosn could have access to cheap labor. The new data series without discouraged workers shows a tamer picture. The rising stock market into 2008 covered up this trend. The same thing is happening today. A rising market and rising unemployment but the new measurements are showing no change. The real rate is 22%.
The SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
Why were discouraged workers removed from the data? The reason is that since 1994 jobs have been sent overseas so that corporatiosn could have access to cheap labor. The new data series without discouraged workers shows a tamer picture. The rising stock market into 2008 covered up this trend. The same thing is happening today. A rising market and rising unemployment but the new measurements are showing no change. The real rate is 22%.
The rally is starting to make sense now
Jobs Report: Economy 'Is On Path to Sustainable Recovery'
US employers created jobs in March at the fastest rate in three years as private firms stepped up hiring, the strongest signal yet that the economic recovery is on a solid footing and needs less government help.
Non-farm payrolls rose 162,000 and the unemployment rate held steady at 9.7 percent for a third straight month, the Labor Department said Friday.
The payrolls increase was only the third since the economy sunk into recession in late 2007 and was the largest gain since March 2007.
Private employers hired more workers than expected, while temporary hiring for the U.S. decennial census came in below economists' forecasts.
"The economy is on a path to sustainable recovery. The fragility of the recovery is becoming less worrisome," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.
Job growth is critical to keeping alive the economic expansion that started in the second half of 2009 once government stimulus efforts and a boost from a rebuilding inventories by businesses fade.
Market reaction was mostly positive, though muted because of the Good Friday holiday. US stock futures rose slightly in a shortened session, while the cash market was closed. The US dollar rose broadly , while US Treasury prices fell, pushing the yield on the 10-year bond up to near 4 percent.
I will not bore you by a disussion of the relative strength or weakness of the economy. That is a personl thing and it does not make anyone money.
Let's see how the market handles "good" news now. My guess is not very well. If we get a sell off now the longs will be willing buyers and the few brave shorts will cover. This thing is really set up for hit. I still believe we see the March 2009 lows taken out. I suspect it will be a slower decline so that the "value" players can buy the "cheap" prices along the way. I know for a fact that the public is now buying and has bought into the recovery story. I also know that it takes them a long time and price to change their minds.
Earnings season is also coming. I am guessing the earnings will be good BUT less than expected. I think that the boys will blow that off as profit taking. I noticed that the DJIA is out performing the NASDAQ and the S&P but not enough yet to make anything out of it. It is worthy of note. The VIX is on its lows and the players see no risk in this market now. These are excellent conditions for a top. A close below 10700 will get me back short.
Happy Easter break Mikey
US employers created jobs in March at the fastest rate in three years as private firms stepped up hiring, the strongest signal yet that the economic recovery is on a solid footing and needs less government help.
Non-farm payrolls rose 162,000 and the unemployment rate held steady at 9.7 percent for a third straight month, the Labor Department said Friday.
The payrolls increase was only the third since the economy sunk into recession in late 2007 and was the largest gain since March 2007.
Private employers hired more workers than expected, while temporary hiring for the U.S. decennial census came in below economists' forecasts.
"The economy is on a path to sustainable recovery. The fragility of the recovery is becoming less worrisome," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.
Job growth is critical to keeping alive the economic expansion that started in the second half of 2009 once government stimulus efforts and a boost from a rebuilding inventories by businesses fade.
Market reaction was mostly positive, though muted because of the Good Friday holiday. US stock futures rose slightly in a shortened session, while the cash market was closed. The US dollar rose broadly , while US Treasury prices fell, pushing the yield on the 10-year bond up to near 4 percent.
I will not bore you by a disussion of the relative strength or weakness of the economy. That is a personl thing and it does not make anyone money.
Let's see how the market handles "good" news now. My guess is not very well. If we get a sell off now the longs will be willing buyers and the few brave shorts will cover. This thing is really set up for hit. I still believe we see the March 2009 lows taken out. I suspect it will be a slower decline so that the "value" players can buy the "cheap" prices along the way. I know for a fact that the public is now buying and has bought into the recovery story. I also know that it takes them a long time and price to change their minds.
Earnings season is also coming. I am guessing the earnings will be good BUT less than expected. I think that the boys will blow that off as profit taking. I noticed that the DJIA is out performing the NASDAQ and the S&P but not enough yet to make anything out of it. It is worthy of note. The VIX is on its lows and the players see no risk in this market now. These are excellent conditions for a top. A close below 10700 will get me back short.
Happy Easter break Mikey
Thursday, April 1, 2010
Even the Bears are buying
DJIA 10932 +75.35 SPX 1178.93 +9.50 Russ2000 685.14 +6.50 NASDAQ 2409 +11.04 VIX 17.00 -.59
Dollar Index 80.95 -.33 Aussie .921 +.0039 Euro 1.3569 +.0062 TLT(20yrGov Bonds)88.68 -.82 IEF (7-10Gov Bonds)89.02 -.47
$XAL (airline index) 38.09 +.40 XLK (Tech)23.15 +.05 XLE (Oil Index)58.95 +1.03 XLF (Finan Index)16.08 +.13 KRE (Regional Bank index) 26.25 +.04 XHB Homebuilders Index)17.05 +.73 GDX (Gold Miners Index)1128 +13.90 XLB (BasicMatIndex)34.53 +.61 XRT (Retail Index 41.79 +.50 IYR (Real Estate index)50.06 +.28
EEM(Emerging Markets) 43.11 .98 FXI(China Index)43.25 +1.15 IEV(Europe350)89.02 -.47 (Brazil)75.17 2.08
DBC (Commodity Index)23.94 +.42 Gold 1128 +13.90 Silver 17.93 +.40 Copper 3.58 +.27 RBOB (Whsl Gas)2.32 +.016 Nat Gas 4.08 +.21
Brace For 5-10% Market Correction: Portfolio Manager
Markets climbed on Tuesday following some big news in the smartphone industry and on a strong consumer-confidence report. How long will stocks continue to rally? David Hefty, chief executive of Cornerstone Wealth Management, and Sarat Sethi, partner and portfolio manager at Douglas C. Lane & Associates, shared their insights.
“As bearish as I am, you can’t ignore the fact that there’s a tremendous amount of momentum left in this rally,” Hefty told CNBC.
“Today, we’re making our last buy into the market to be fully invested in anticipation of this next rally forward.”
Hefty said although the economy does not look like an attractive place to invest fundamentally, investors should participate for now because the market continues to rally.
“But if you don’t have a trigger finger ready to pull, you’re better off sitting in cash—you have to know when to get in and you have to be ready to exit, otherwise, you can get caught in the wrong side of the trade,” he cautioned.
In the meantime, Sethi told investors that the markets are ahead of themselves and to brace for a 5 to 10 percent correction.
“For some of the stocks that have appreciated, we’ll get a better chance to buy them in the next couple of months,” he said. “You start buying the industrials when they come back because they’re already projecting great earnings, you also start going after consumer staple companies that are going to outperform in a slower GDP environment.”
This is the weird logic that prevails at tops. I am buying because hey it's going up. To Hell with the fundamentals. He then says that he is going to buy the pullback on the correction. I am still waiting for that correction and will short into it when it comes.
Trading Signals
DJIA is on a buy now Short term sell signal is at 10844 a reversal comes on a close below 10700.
Gold and Silver have reversed from their sell signal and I am closing my short trade for now on these. Sell signal would be short term...1100 reversal 1060.
30 year bond is at the low end of its trading range of 114.50 and 117.60
Oil Top end of a trading range of 74 to 82
Dollar Index At its highs
Mikey
Dollar Index 80.95 -.33 Aussie .921 +.0039 Euro 1.3569 +.0062 TLT(20yrGov Bonds)88.68 -.82 IEF (7-10Gov Bonds)89.02 -.47
$XAL (airline index) 38.09 +.40 XLK (Tech)23.15 +.05 XLE (Oil Index)58.95 +1.03 XLF (Finan Index)16.08 +.13 KRE (Regional Bank index) 26.25 +.04 XHB Homebuilders Index)17.05 +.73 GDX (Gold Miners Index)1128 +13.90 XLB (BasicMatIndex)34.53 +.61 XRT (Retail Index 41.79 +.50 IYR (Real Estate index)50.06 +.28
EEM(Emerging Markets) 43.11 .98 FXI(China Index)43.25 +1.15 IEV(Europe350)89.02 -.47 (Brazil)75.17 2.08
DBC (Commodity Index)23.94 +.42 Gold 1128 +13.90 Silver 17.93 +.40 Copper 3.58 +.27 RBOB (Whsl Gas)2.32 +.016 Nat Gas 4.08 +.21
Brace For 5-10% Market Correction: Portfolio Manager
Markets climbed on Tuesday following some big news in the smartphone industry and on a strong consumer-confidence report. How long will stocks continue to rally? David Hefty, chief executive of Cornerstone Wealth Management, and Sarat Sethi, partner and portfolio manager at Douglas C. Lane & Associates, shared their insights.
“As bearish as I am, you can’t ignore the fact that there’s a tremendous amount of momentum left in this rally,” Hefty told CNBC.
“Today, we’re making our last buy into the market to be fully invested in anticipation of this next rally forward.”
Hefty said although the economy does not look like an attractive place to invest fundamentally, investors should participate for now because the market continues to rally.
“But if you don’t have a trigger finger ready to pull, you’re better off sitting in cash—you have to know when to get in and you have to be ready to exit, otherwise, you can get caught in the wrong side of the trade,” he cautioned.
In the meantime, Sethi told investors that the markets are ahead of themselves and to brace for a 5 to 10 percent correction.
“For some of the stocks that have appreciated, we’ll get a better chance to buy them in the next couple of months,” he said. “You start buying the industrials when they come back because they’re already projecting great earnings, you also start going after consumer staple companies that are going to outperform in a slower GDP environment.”
This is the weird logic that prevails at tops. I am buying because hey it's going up. To Hell with the fundamentals. He then says that he is going to buy the pullback on the correction. I am still waiting for that correction and will short into it when it comes.
Trading Signals
DJIA is on a buy now Short term sell signal is at 10844 a reversal comes on a close below 10700.
Gold and Silver have reversed from their sell signal and I am closing my short trade for now on these. Sell signal would be short term...1100 reversal 1060.
30 year bond is at the low end of its trading range of 114.50 and 117.60
Oil Top end of a trading range of 74 to 82
Dollar Index At its highs
Mikey
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