Emerging Markets

http://www.ft.com/cms/s/0/84595742-f4a9-11de-9cba-00144feab49a.html?nclick_check=1

The Emerging Markets stocks have seen 80B  flow into them, 60B of this is the BRIC countries, which is Brazil, Russia, India, China.   Maybe this BRIC abbreviation is more than just a cute marketing ploy.   Maybe these countries actually have raw materials and make products that people want to buy....hmmmm, thats so old school.

They haven't yet learned that financial gimmicks is all you need for success..... j/k

Bottom line....the emerging markets could blow up quicker and deeper than the US equity markets.

ADR's effectively give you benefit of currency play.  If you are short ADR's and USD goes up while flight to safety occurs, and money runs from EM stocks...you could make good money.

This chart shows, from a previous post, shows how money is flowing into foreign equities, not necessarily the BRIC ones though.  This shows about $60B flowing just from mutual funds into foreign equities.

Putting some shorts on the Nikkei could be a decent diversification also.  Futures /NKD has been rocketing up.  God save you if you were short that and left on a 10 day vacation!  This one gaps all over the place.

And Junk JNK took a dive today.   Certainly a possible sign of a change of tide.

http://screencast.com/t/ZWU2NWQ2OG
Over and Out....remember HBB never sleeps!

Blogshere is dead but GOATMUG rocks on

Goatmug did this awesome tome of a rant at Slope of Hope.  I hope Tim Knight doesn't mind me sending all this bandwidth his way....   :-)

http://slopeofhope.com/2009/12/give-me-something-to-believe-in.html#disqus_thread

And isn't it nice how Ponzi scheme can be a household word?
http://apnews.excite.com/article/20091229/D9CSMKPG0.html
The ES is pounding away at the 50% Fib.    It will give way or reject the advance.  And a fickle bitch that ES is. 

A=C and Classic Ending Diagonal

I consider myself more of an Elliot "Hack" than anything, but then understanding just the basics has a certain beauty to it.  Seriously...trying to explain every little sub-minuette move as a total market reaction is about as silly as trying to ascribe each market move to a specific piece of news.

The "Throwover" is not absolutely essential to the ending diagonal.   There is Throwover Here, but it is also occuring on the low volume days before Christmas and the half day of Xmas eve. 

A spike in volume is not absolutely essential to the ending diagonal, but it nice to have to give more confirmation to the pattern.

Certainly some news does move the market.  The News is announced, the market immediately moves, that minute.  I spent 2 days on the floor of the CBOE in 1988 and it amazed me how the traders hawked every little news blip and tried to place meaning on it.  It seemed silly. It still does.  Funny, in 1988 one could just walk into the CBOE with a friend who worked there, now I wonder what security precautions they have or will have after 3 down has it's run.

Please review the chart and watch this Elliot Tutuorial on Ending Diagonals.  Let me know what you think.

http://www.elliottwave.com/education/trading_education_series/online_trading_course/diagonal_triangles/default.aspx?code=aff

Mutual Fund Money Flows Update, and a neat website

I stumbled across this website, seeing it as a joined site from a new person who joined Hawaii Trading.  It looks pretty cool, with some free EW resources.

http://ewtrendsandcharts.blogspot.com/

Check it out and let me know what you think.

http://www.elliottwave.com/education/trading_education_series/online_trading_course/diagonal_triangles/default.aspx?code=aff

Volcker Interview

No doubt, Mr. Obama has a gift, the gift of gab.   But listening to the same old, old school corruption chearleaders is not going to get the job done, no matter how eloquently that non-sense is phrased.

Volcker is not in that old school corruption camp, he forced the US to take it's medicine and we became healthier by that.




SPIEGEL: As chairman of the Economic Recovery Advisory Board, you advise President Barack Obama on how to prevent such a recurrence. Is he following your guidance?

Volcker: We have various working groups that work on and make recommendations on particular problems like retirement programs and social security. We made some recommendations on financial reforms, which were not accepted, but that is part of the game. The president is more eloquent than I can be on these issues. Getting it done as compared to talking about it is a problem, but we have some suggestions along that line.

http://www.spiegel.de/international/business/0,1518,666757,00.html

Chart of Charts and "Still All In" commentary

If you like these charts, sign up as a follower and add this site to your Google reader or other feed aggregator.

I remember 1999, everyone was into stocks, it was normal cocktail party conversation, then the crash.  I was busy with work, and basically didn't see the benefit  of continuing to follow stocks, a combination of disgust and disinterest, which worked well until 2002/2003 bottom at which time it would have be great to have someone call and say....psst, by the way, market is heading back up.  But I really didn't pay it any mind until around 2004 seeing the obvious housing bubble.  I had one property go up 225% in less than 2 years....absurd, but enjoyable.

So here's the point:  This time the "crash" did not scare 80% of the traders from the market.   People in normal walks of life with "real jobs" still bring the subject of trading up to me, unsolicited.  Many I can't imagine as being traders.   Volume is falling off a bit, but still very strong.

Until a level of disgust is reached, this market will not "be over".  In fact why it will be different this time (well there are maybe 20 good reasons) is that people have now strongly been taught to buy and hold.  This may result in less panic selling.  But it can also result in "retail" holding on as the SPX blasts past 600, 400, 300....

Pretcher's "calls" are usually gamed heavily by HBB, but they come true after 4 to 8 weeks.   This time HBB is keeping the heat on....stealing more bear money and transferring more "assets" to unsuspecting retirement pension funds and the like.   But if Pretcher's call come through, there may be no place left to hide.  It won't matter if you are trading between asset classes, they will all be crushed except maybe Gold.

Chart of Charts

Not Much to say --- Tops can be a complicated affair.

Newt and /NKD

http://video.google.com/videoplay?docid=2798679275960015727&ei=kYU2S7OJFobalQex0ODRDw&q=power+of+nightmares&hl=en#

STTTTLTYT

STTTTLTYT
Sometimes These Things Take Longer Than You Think

We are living in a slow motion train wreck, with an occasional flash and bang.

Total credit just reached a peak in Summer 2009, although you would have thought that maybe that maximum credit level would have been in 2006 or so. 

"They" will keep trying to juice the market, get people to buy/consume, get people to take on debt, for as long as possible, since the "emporer has no clothes" will get downright ugly when this Ponzi scheme is shown in broad daylight for what it is.   And there will be "news" to account for the "turndown", to explain it. 

HELOC's are still over $1T, at 1.05T, down from 1.13T at their peak in 2007

___________________________________________________________________________________


Anything the Government tries to run is done poorly.  I think everyone knows this, am I wrong?  Having the Gov dip more strongly into Health Care and our bank accounts, will be a debacle.   I am flabbergasted that any Government official thinks that this would even be close to the "right time" to add this burden on to the people and the economy.  Maybe sign this petition.

http://www.joinpatientsfirst.com/landing/?cdtrack_creative=d4c01f0b-bbb5-455d-9a45-d58e14dd874a&cdtrack_source=6766ecf9-5d7e-4988-ba24-e120e6fe0873
__________________________________________________________________________________
And just an interesting observation, I am sure there are many reasons people sell houses, like needing the money, and Cher is selling her pad in Kona, Big Island.

In 1988, Kona was a smallish fishing town where you could go stay at Uncle Billy's Hotel for around $60.  You would probably go fishing (best Marlin fishing in the world), hiking, or maybe Scuba diving.  There were a few bars but the nightlife was weak at best.

Kona exploded, it became the hippest of the hip places to go build real mansions and McMansions.  I had one client who wanted energy efficiency for a "house" with a $16,000 per month electric bill.  It is a sign of the times.

http://www.hawaiiluxuryauction.com/Home.html
And this is sad....Pineapple is dead in Hawaii, the last is gone.  We cannot "afford" to grow our own crops.  Probably the Mandatory Employer Provided Health Care that Hawaii ALREADY has, contributes to shipping those agricultural jobs to PI.  Actually I did the calc, and knowing health care costs about a minimum of $250 per employee (1 person covered, other family members add to this cost) per month, I figure this pineapple company paid direct costs of around $6M since 2002, in which they state losses of $115M since 2002.  

And all that land can now be used for "Development".  Yeah right. 



http://apnews.excite.com/article/20091224/D9CPTKNG2.html

On a happy note--another client is converting a 16 acre lot into Aquatonics which is a symbiotic mesh of Fish, Water, and Vegetables.  Of course there are water pumping, aeration, and other power demands that will be met with a large PV system.  The cost benefits of doing PV are amazing, with businesses reaping even greater benefits than residential. 

A $33,850 System ends up costing $1,697 to the user.   And that is ignoring any benefits that depreciation could have in reducing your business tax liability to the State.  State of Hawaii treats depreciation somewhat different than the Federal in some ways that I don't fully understand, but for the most part, the Fed Schedule C (Business Income or Loss) is reduced by the 4562 Depreciation and Section 179 Depreciation, and then the Fed Schedule C flows into the State Income Statement.

So if Hawaii effective blended tax rate is 8%, then 8% times $27,477 depreciation amount would be $2200.   So this system is effectively free, or even a negative cost to small businesses.  It looks like small businesses can have 30 years of energy independence for "free". 

And this PV system will produce $155,500 worth of electricity over 30 years, based on a 6% annual inflation rate.  Is this a no-brainer or what?

The only trick is having the wherewith-all of that $33,850 to start with.

And then the next trick is going from 16 acres of sustainable Aquatonics to 16,000 acres.  Now that would be a real difference in our ability to be sustainable.  Did you ever stop to think what the opposite of being sustainable is?

A Very Merry Christmas

A Very Merry Christmas to all, thanks for stopping in.

And in a rare turn of events, I decline to do even a partial rant.

But I will print what willthethrill had to say yesterday as a Comment on Hawaii Trading.  BTW, y'all can comment too.....it's free!

"I think the sell-off in Jan is as advertised as the Christmas rally if not more. I say we drop 2%+ first of next week to shake out all these late arriving bulls and punish those that covered yesterday and today. Shorting here was risky and I think those that did get rewarded. I think at this point a significant drop in the last few days of the year is the last thing anyone expects."

But for those who are wishing for a Bearry Christmas, please review this link to an October 24 prediction for the DWC Total Market.  And then look below for it's present condition, which is A=C

This may be a transition point for the Bears.

http://oahutrading.blogspot.com/2009/10/dwc-whole-market.html

http://oahutrading.blogspot.com/2009/12/merry-christmas-total-market-turn-point.html

Merry Christmas, Total Market Turn Point

So my sitemter report says there are 60 people looking at these charts at this present time, and yet not a single comment....c'mon folks, drop a comment or two.


We first produced this chart several months back, no joke.  For the DWC Total Market, we are now exactly at A=C, and there are 3 other reasons that this is a logical stopping point, besides the horrific fundamentals.

Now here we are.  If you like this stuff, sign up as a follower and add this blog to your Google reader or other blog aggregator.

Yeah! Merry Christmas for Citigroup....no bonus caps!!!!

http://apnews.excite.com/article/20091224/D9CPBNDG0.html

By "God Man Sacks" the Bears, I think I've got it...

We have pointed out here before, that there have been an exceptional number of gaps in the last 6 weeks or so. 

Here is the deal.

As HBB works so hard to dsitribute from it's strong hands to weak hands...it need to float the market at a high level to suck the highest money from those they have connived to sell to. 

However, in order to do this without supporting the market with it's own money, they simply tell a dozen high money traders that if they want their Christmas bonus that they need to work at night and jack up the futures on low volume. 

There have been 11 large gaps up on open since Novmeber, and 4 gaps down.   This uses the bear's money in short squeezes to juice the market.   This then convinces retail and "sold to" funds like Government employee fund and "higher education" funds to reinvest in the market.

HBB is taking trillions in profits in this maneuver (or perhaps I should say avoiding trillions in losses that they are passing off to others), don't fret about a few tens of billions in trading profits, there is much more going on here.  And it was totally predicted. 

Some chart I have been printing over the last few days.

State Cannot pay it's bills, Holding ON to Money, and COPPER Short

Get ready for more of this type of thing.

http://www.kitv.com/money/22030816/detail.html

NKD Futures on the Nikkei

The Nikkei is effectively uncorrelated to US markets at least over short durations.   By playing this one, you can remove the risk of playing "all one bet" such as being long dollar and short US equities.   The trading hours are different.  Gaps are frequent.

Nikkei 225(Globex) /NKD H,M,U,Z /NKDZ7 S-F 2:00am-3:15pm, 3:30pm-4:30pm

Job Loss Percentages and the Viral Obama Cabinet Lack of Experience

This chart is from calculatedrisk, good place to "over read" at.

The below chart "went viral" showing Obama had poor choices in his Cabinet appointments.  However, also review the link below, in which the author of the chart was interviewed and admits that he did have some facts wrong.

http://blog.american.com/?p=7572

http://www.politifact.com/truth-o-meter/statements/2009/dec/02/glenn-beck/beck-says-less-10-percent-obama-cabinet-members-ha/

And finally, here is a link in which you can click on the Obama cabinet appointments and see more about them. 

BTW I can't remember hearing much discussion about Obama's middle name "Hussein", but maybe that's because I don't watch TV, at all, ZERO!  (Well maybe Saturday Night Live - since Satire is the only real news we have).   But doesn't that name bother anyone?  I guess for the "Bizarro World" that we are living in, that people can just shrug that one off.   After all...we want change that we can believe in, but you don't always get what you want.

http://millercenter.org/academic/americanpresident/obama

10 Minute Chronology of Important US Financial Events 1800 to 2009

For me the little summary below was a great "view from 20,000 feet".  Imagine that....less than 200 years ago, the British were rampaging through Washington with troops and burning the White House.

If you like this stuff....please sign up as a follower, its a simple click on the right hand side.   And you can add Hawaii Trading to your Google Reader, it's good stuff---aggregates your favorite reading material.

1800: New York's population is 60,000
1803: President Thomas Jefferson purchases Louisiana (which extended from the Mississippi to the Rocky Mountains, from Montana to New Orleans) from Napoleon, thus essentially doubling the size of the USA
1812: the USA declares war on Britain

1814: British troops storm Washington and burn the Capitol and the White House

1817: the New York Stock Exchange opens in Wall Street
1819: an economic depression hits the farmers of the south and the west
1824: only 5% of adult USA citizens vote in the presidential elections
1826: James Smithson bequeaths his fortune to founding the Smithsonian Institution "for the increase and diffusion of knowledge among men"

1837: an economic depression follows a wave of speculation

1839: Yellow fever kills 12% of Houston's population
1844: the USA has over 5,000 kms of railway (3,000 in Britain, 2,000 in Germany, 500 in France)
1851: The population of the USA is 20,067,720 free persons and 2,077,034 slaves
1854: the USA forces Japan to sign a trade agreement ("treaty of Kanagawa") which reopens Japan to foreigners after two centuries
1858: a telegraph wire is laid at the bottom of the ocean between Ireland and Canada
1858: the USA stock market crash spawns an international market crash
1859: The Carrington Solar Flare lights up the night sky and creates havoc with telegraph lines1860: Republican candidate Abraham Lincoln is elected president although he gains only 40% of the popular vote
1861: civil war erupts between the northern ("unionist") states and the southern ("confederate") states (26.2 million versus 8.1 million)
 1862: John Rockefeller founds a company to refine oil (later renamed Standard Oil)
1864: all the major powers agree at the Geneva convention on rules for the treatment of prisoners of war
Apr 1865: the Union, led by general Ulysses Grant, defeats the Confederates, slavery is abolished (13th amendment of the constitution) and blacks are given the right to vote (370,000 Union citizens and soldiers and 258,000 Confederate citizens and soldiers have died)
1865: president Lincoln is assassinated
1867: The price of oil drops to $2.40/barrel from the peak of $13.75 a barrel
1869: Goldman Sachs is founded by German immigrant Marcus Goldman and (in 1882) Goldman's son-in-law Samuel Sachs
1871: the National Rifle Association is founded

1873: an economic depression causes rise in unemployment and bankruptcies\

1873: the USA adopts the gold standard
1876: General Custer and his troops are massacred by Sioux Indians at Little Big Horn
1882: the USA bans Chinese immigrants for ten years and forbids existing Chinese immigrants from becoming USA citizens
1885: white miners kill 28 Chinese workers in Wyoming
1890: The work week in the USA is 60 hours
1890: Congress passes the Anti-Trust Act to protect against monopolies
1892: John Muir founds the "Sierra Club", the first environmental organizations

1893: an economic depression causes unemployment and bankruptcies

1900: A six-room house costs $3,000 to buy
1900: Life expectancy in the USA is 47.3
1900: the USA's population is 76 million
1902: Willis Carrier invents the air conditioner
1902: a female journalist, Ida-Minerva Tarbell, exposes Standard Oil's dubious practices
1908: William D'Arcy discovers oil in Iran
1909: The USA forces the dissolution of Standard Oil, an event that creates Chevron, Mobil, Amoco, etc
1910-1911 Stock Market Panic after enforcement started of the 1890 Sherman Anti-Monopoly Act-- "Corrupt business is good profitable business :-)"
1913: John Rockefeller is worth $212 billions, 1/44th of the USA economy, and establishes the Rockefeller Foundation "to promote the well-being of mankind throughout the world"
1913: Ford installs the first assembly line (at Highland Park)
1913: 2% of USA citizens control 60% of the national product (Morgan and Rockefeller alone control 20%)
1914: World War I begins

1914: The Federal income tax is introduced

1916: Merrill Lynch is founded
1916: William Boeing founds a company to manufacture airplanes
1918: an epidemics of influenza kills 20 million people worldwide (500,000 in the USA)
1918: the first world war ends: 2 million Russians, 1.8 million Germans, 1.3 million French, 1.1 million Austro-Hungarians, 0.9 million Britons, 0.6 million Turks and 0.5 million Italians are dead.
1920: alcohol is outlawed ("Prohibition")

1924: boom of the stock market

1927: Pan American World Airways is founded
1928: first daily passenger flight between Los Angeles and San Francisco
1929: Herbert Hoover is elected president

1929: stock markets crash around the world ("great depression")

1929: the richest 1% owns 40% of the nation's wealth, while workers' productivity has increased 43% since 1919
1930: the Bank of Italy is renamed Bank of America
1930: the GDP of the USA falls 9.4% from the year before and unemployment reaches 8.7%
1931: The price of oil plunges to $0.15/barrel
1931: the Empire State Building, the tallest building in the world of all times, opens in New York
1931: Gambling is legalized in Las Vegas

1932: between april 8 and july 8 stocks fall 34%

1932: 10,000 banks have failed since 1929, GDP has dropped 31% since 1929, the stock market has lost almost 90% of its value from boom to bust, and unemployment reaches 23.6%
1933: the Federal Deposit Insurance Corp is created to insure deposits in banks and thrift institutions
1933: the Prohibition is repealed

1936: The economic ideas of John Maynard Keynes are applied in the USA
1940: Karl Pabst invents the jeep
1941: Japanese attack Pearl Harbor (Hawaii) and the USA enters world war II
1941: Roosevelt authorizes a project to develop an atomic bomb (later renamed the Manhattan Project)
1944: the world's monetary system is anchored to the dollar and the dollar to gold, the World Bank and the International Monetary Fund are created ("Bretton Woods agreement")
1945: Germany surrenders and is divided in a Western and a Soviet area, while Soviet troops occupy Eastern European countries
1945: the USA drops two atomic bombs on Japan (Hiroshima and Nagasaki) and World War II ends
1946: George Marshall envisions a plan to promote the economic recovery of European democracies
Tinfoil hat Alert J
1947: the first widely publicized sighting of a UFO
1947: The USA sets up the Central Intelligence Agency (CIA)
1948: the Jews are granted their own country in Palestine: Israel
1951: the first commercial computer is built, the Univac
1956: Dwight Eisenhower signs the Federal Aid Highway Act to build a nation-wide network of freeways
1957: 4.5 million babies are born in the USA, the highest number in its history (the "baby boomers")
1958: Bank of America adopts the credit card
1958: the USA's gross national product is 50% of the world's national product
1960: The ratio of debt to personal disposable income is 55%
1962: Warren Buffett acquires Berkshire Hathaway, the beginning of his multibillion dollar empire
1964: Bear Stearns acquires Orkin Exterminating Company, the first major leveraged buyout transactions
1969: the computer network ArpaNET is born in the USA (it will be renamed Internet in 1985)
1971: the USA imports more oil than it exports

1971: The USA pulls out of the Bretton Woods agreement of fixed exchange rates and forces foreign currencies to float

1973: the USA, defeated, leaves Vietnam after killing close to 2 million civilians and 1 million soldiers, and losing 58,000 men
1973: members of the Organization of Arab Petroleum Exporting Countries (OAPEC) impose an oil embargo against the West and oil prices skyrocket (the first "oil crisis"), thus precipitating a world depression (october)
1973: the World Trade Center is inaugurated in New York, the world's tallest skyscraper
1974: the Sears Towers open in Chicago, the world's tallest skyscraper
1975: The USA accounts for 26.3% of world GDP
1978: the USA abandons the gold standard
1979: the Soviet Union invades Afghanistan and the USA organizes an Islamic resistance led by Osama Bin Laden
1979: an accident at the Three Mile Island nuclear power plant stops development of new nuclear power plants in the USA
1980: billionaire Ted Turner launches CNN, the first cable tv devoted to world news
1980: The private equity industry raises $2.4 billion
1980: the value of gold peaks at $850 an ounce
1980: Inflation peaks at 13.5%
1981: newly elected president Reagan trades hostages for arms with Iran, helps Saddam Hussein's Iraq against Iran, and authorizes funding and training of Islamic terrorists led by Osama Bin Laden to fight the Soviet Union in Afghanistan
1982: the USA government breaks up the largest company in the world, AT&T, worth $60 billion, because it has become a monopoly
1982: Unemployment peaks at 10.8%
1985: between 1977 and 1985 consumption of oil in the USA drops 17%, imports drop 50%, and imports from the Middle East drop 87%
1985: the dollar declines against European and Japanese currencies (it will decline 50% in three years)
1987: Alan Greenspan is appointed chairman of the Federal Reserve Bank
1987 the largest one day percentage drop ever of the us stock market. 508 points 22.61%1989: The private equity industry raises $21.9 billion
1990 US Banking Crisis
1991: The first economic recession ever strikes California

1993: Islamic terrorists try to blow up the World Trade Center

1994: Netscape, the company founded by Marc Andreesen, goes public even before earning money and starts the "dot.com" craze and the boom of the Nasdaq
1995: the Federal Reserve's chairman Alan Greenspan describes the stock market's behavior as "irrational exuberance"
1997: The average yearly income of a USA citizen is $29,000 whereas the average income of a Mexican is $8,000 and the average income of a Nigerian is $900
1998: Osama bin Laden, from his base in Afghanistan, wages a holy war against the USA by bombing two USA embassies in Africa
1999: Blogger.com allows people to create their own "blogs" (personal journals)
2000: More than 50% of USA citizens own stocks
Jan 2000: the Dow Jones reaches an all-time high of 11,723

2000: the economic expansion in the USA is the longest in the history of the US

2000: the NASDAQ stock market crashes, wiping out trillions of dollars of wealth

2000: George W Bush becomes president on a technicality, even though Clinton's vice-president Al Gore wins the majority of votes
2001: the USA enters a recession, ending the longest economic expansion of its history
2001: 3% of the USA population is in jail
2002: USA stock markets crash, following corporate scandals, the third consecutive year of decline
Oct 2002: The Dow Jones falls to 7,286, 37.8% lower than its peak of january 2000
2003: the USA has a record 2 million inmates
2004: the dollar falls to an all-time low against the euro (1.30)
2005: Bernard Ebbers, former Worldcom's CEO, is sentenced to 25 years in jail, capping a string of corporate scandals
2006: Alan Greenspan is retires from chairman of the Federal Reserve Bank
2006: Exxon Mobil posts the largest profit of any company in USA history
2006: Warren Buffet donates $37 billion to charity, the largest donation ever
2006: Enron's CEO Jeffrey Skilling is sentenced to 24 years in prison
2007: China overtakes the USA to become the world's second largest exporter and overtakes Canada to become the main exporter to the USA
2007: after crashing due to the crisis of sub-prime mortgage lenders, the USA stock market sets a new record high
2007: the USA dollar falls to 1:2 to the British pound and to an all-time low of 1.50 to the euro and is worth less than a Canadian dollar for the first time in three decades
2007: at the end of the economic expansion of the 2000s the median income of USA families has declined from $61,000 to $60,500
Dec 2007: The US

jan 2008: the stock market collapses, triggering similar collapses around the world

mar 2008: the price of gold hits $1,000 for the first time ever and oil passes $110 a barrel, while the dollar sets another all-time low against the euro (1.56) and dips below 100 yen (a drop of 6.5% in less than three months), home prices plunge 9.1%, the Eurozone overtakes the USA as the world's largest economy
may 2008: USA's home prices drop by 15.8%, the steepest decline in 21 years
june 2008: oil prices pass $140 a barrel
sep 2008: The USA takes over the two largest mortgage companies, Fannie Mae and Freddie Mac, and the largest insurance company, American International Group

sep 2008: In a financial crisis, Lehman Brothers files for bankruptcy and Merrill Lynch is sold to Bank of America, the two remaining investment banks in the United States, Morgan Stanley and Goldman Sachs, decide to become traditional banks, and the government buys $700 billion of bad mortgages in the largest financial bailout since the Great Depression, and on September 29 the Dow Jones loses 778 points, the biggest single-day point loss ever

oct 2008: the Dow Jones loses more 22% in a week of continuous losses, including the biggest single-day decline since 1987

Jul 2009: The USA budget deficit tops $1 trillion
Aug 2009: The unemployment rate reaches 9.7%, a 26-year high

Banchan Wants You

Chart of Charts 121809

The Chart of Charts is expressing "No Opinion".

If you like these posts and original charts, please sign up as a follower--after all, it's just a click! And put this blog on your Google Reader List.

That said, this market action is obviously either a pause before a further climb or a top. That is pretty basic, no great wisdom. But there-in lies a good point--don't overcomplicate the market.

The market is tricky, but the more you read does not necessarily help you understand or predict the market. You could spend all weekend reading blogs in the hope of gaining insight, but that extreme amount of "research" could actually be detrimental to a clear view. You are probably better off going to get some exercise, go on a 4 mile hike through the woods -- clear your head. And think about staying healthy, because if Primary 3 plays out, there is going to be some serious SHTF, and your overall health and energy levels are going to be factors in how well you and your family get through things.

The fundamentals of the world financial situation are horrific. Mortgage rate resets on large pools of mortgages are entering a phase of big increases. None of the bank and risky asset problems have been solved...at all. Government just transferred money from tax payers to special interests, without solving any problems.

That said, we made a "Top Call" on November 21th, review the Chart of Charts from that era.

S&P closed at 1106 on November 19th. Now it is at 1102 courtesy of that final ramp job to create "Min Pain" to option writers at expiry.

Distribution continues, from strong hands to weak hands.   Interesting how Calpers just now made it against the rules for it's investment decision makers to receive gifts from "Investment Advisors" aka Salespeople.

Debasement of the Dollar

Ron Paul wrote the following on his website. Ron Paul is one of the few that "Get It", but is he strong enough to turn good ideas into laws?

''Because of legal tender laws that force acceptance of the dollar, the Fed has absolute power over the currency.  This absolute power is leading to the absolute corruption of our currency.  The money supply has doubled in the last year or so, which is extremely dangerous.  The banks seem to be hoarding liquidity now but once these dollars make their way into the economy, hyperinflation and economic chaos will be a real possibility.

Every time hyperinflation rips through an economy, the middle class gets completely wiped out.  It is very alarming to watch the purchasing power of an entire life savings reduced to that of a few pennies.  Those savings represent years of real labor, real time, effort and sacrifice exchanged for corruptible pieces of paper that politicians and bankers can destroy at whim. 

Legal tender laws force the people to become subject to this risk for the benefit of the rulers.  Artificial demand for currency allows the authorities to create arbitrary amounts of it to pay for wasteful projects, like frivolous wars and an ever-expanding public sector.  This saps the private economy of jobs and purchasing power, yet the temptation proves too great for politicians, time and time again.  Our government is no different.  Although our dollar has taken nearly a century to lose 98% of its purchasing power, the fact that we are all obliged to participate in this slow burn of the economy on pain of imprisonment is anathema to the principles of liberty.''

Good blog on a quick read, try it out

http://economicedge.blogspot.com/2009/03/moral-and-ethic-morass.html

Perspective ES, DWC Total Market, BKX, XLF

Citi - A Tale of 2 Citi's

Do these stories fit together?

The Treasury Department owns much of Citi, and Citi amazingly states it will just stop foreclosures and evictions, even in process, so that people can enjoy Christmas season. 

The tinfoil hat in me has perked up.

http://apnews.excite.com/article/20091217/D9CKRVJO0.html

http://apnews.excite.com/article/20091217/D9CKS0600.html

The most important thing to do during expiry week -- Laugh

I wasn't a big GW fan, and I thought I was an Obama fan for a while.   But rarely do I burst out laughing at an emailed picture....physical real loud laughing....not just an inner chuckle.

This one got me going.   If you didn't laugh you might have to cry.

Man of the Year....following in the footsteps of "The Man That Stole the World (Hanky Panky Paulson)"

http://www.time.com/time/specials/packages/article/0,28804,1946375_1947251,00.html

And this just in from Tom of the North, from own blog, SNL quality material here!!!!

http://outsidethe-cardboard-box.tumblr.com/post/286334520/heat-rises-in-copenhagen-as-cap-trade-deemed-too

Fedspeak

From FED:

In light of ongoing improvements in the functioning of financial markets, the Committee and the Board of Governors anticipate that most of the Federal Reserve’s special liquidity facilities will expire on February 1, 2010, consistent with the Federal Reserve’s announcement of June 25, 2009. These facilities include the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility. The Federal Reserve will also be working with its central bank counterparties to close its temporary liquidity swap arrangements by February 1.

Steve---so maybe the game it...stuff starts blowing up next January....and then to roust support for a new round of bailout money....the Feb 1 deadline is touted.    


As per "nummy" comment...I guess we have to expect range bound until it is not.

Beginning of the End Game

OK, here is a theory....maybe even an original one.

Fed says something unique tomorrow, after all big Ben is pretty creative.  Market goes wild, rallies 3 to 4 %, sweeping an incredible number of stops that have been tightened up for the FOMC occasion.  Adding fuel to the fire.   Boom.  That's it.  Citi, Fannie sell their last shares they need to unload to Calpers under a "programmed momentum buying program".  

Thursday...crash back, blamed on expiry. 

Well, it's a thought anyway. 

It is amazing that the market has come this far regardless of the amount of intervention, who'd of thunk it possible? 

Stink puts.....set your price low...and see what happens....maybe some will hit.

The great evil bald one speaketh at 2:15 EST, Wed.   

Marisa Tomei and ES, how do they fit together?

http://www.bing.com/videos/search?q=my+cousin+vinny+biological+clock&docid=1076177076414&mid=222A941320CB578A64BA222A941320CB578A64BA&FORM=VIVR2

2X USD and What About Gold, and a Total Market Chart (-.5% today), JNK

I personally think of gold as a long term buy and hold.  You never sell it unless you are in dire straits.

USD now is in a rising wedge....you may see pullback.  It has had quite a pop.

Gold has also had quite a drop.  So a relief rally is in the cards.

Check out this Fund RYSBX....not as squirrely as UUP perhaps.  But you can only buy and sell end of day.

Things are coming to a head, Lines, and Triangles and Bens, oh my!!!!

Thoughts on Options - Roll forward out of "thin" January Expiry

Another blogger pointed out....

Lots of holidays, actually more than 10% of the trading days are holidays until Jan expiry, option pricing may reflect this (appear cheap).  Might be good to roll forward to Feb.

Ol' Buck Has a Little Nighttime Run, Short Russell

Euro break of the BIG 61.8 Fib from Summer 2008 Mega-Drop

 Target is 1.375 which is about the 38.1 Fib of the Big Drop, may find support there.

Cost cutting and ramifications

Corporations have cut cost, cut employees.
Profits may look OK.
Where else is left to cut?
Quality, inventory, maintenance.

There will be larger outbreaks of food poisioning from large processors, like Tyson.

Food quality at restaurants, going down.   Food handling by every more inexperienced people who just don't care will result in more food poisioning from restaurants.

Maintenance on little things like gas distribution systems will be reduced.

Plane / Helo maintenance will be reduced and even cheated on. 

Public transportation systems will see decreased maintenance and less replacements even though at end of service life. 

These things are already happening as "healthy" cost cutting measures to make America more competitive take place.

Not trying to be negative, but these things are coming down the pike.  Adjust your lifestyle to account for them. 

Cost cutting measures can often end up as safety cutting measures, especially when the period of cost cutting exceeds the "standard recession" of 18 months.

Legionella is not a common problem from a city water system when the faciltiy heating system is properly maintained and heated to 140F.  However, cost savings may push facilities to turn down their storage tank temperatures. 

http://apnews.excite.com/article/20091214/D9CJ93701.html

http://www.marionstar.com/article/20091214/UPDATES01/91214007

From the Department of "Alternate Realities Applied to Real World Situations"

This article today talks about the "Abu Dabhi Bailout of Dubai".

The ramifications are that the general populace now accepts "Bailouts" as good strong positive things....the "one government" approach.

I can hardly believe that after all the events since say, the Tech Bubble of 1999, that I can still be astounded.   To have Governmental bailouts be embraced as a good thing, is amazing.

http://apnews.excite.com/article/20091214/D9CJ80KG0.html

Some of the other language is this article is also amazing.  It call Dubai World it's "Chief Growth Engine", reminiscent of some organic growth of industrial strength such as the building of the rail system in the US.

And it describes the possible default as a "humiliation" by the "boomtown's star companies".

Since we have alot of new followers, I am linking back to some other posts I did on Dubai. 

http://oahutrading.blogspot.com/2009/08/mania-chronicles-and-dubai.html

http://oahutrading.blogspot.com/2009/11/dubai-world.html

ES is Extremely Bearish

Sure the market can do anything that it wants.

And...just because your traditional methods have not been sucessful lately, does not mean to throw them under the bus.

If you don't have the cajones to pull the trigger when the target is right in front of you, you will not win.

Look at the weekly MACD.

 You just got to be "Willin'   "


http://www.youtube.com/watch?v=qzLDsg70-JQ

Interesting link.  As Americans, we ought to look across the border more often.  And try to understand what is really going on, not just what our bought and paid for media and Government are telling us.

http://www.sheikhkhalidrak.com/blog/?view=all

http://uaecommunity.blogspot.com/

LQD high quality bonds -- Huge Bearish Engulfing Candle

Bearish Engulfing is very effective as a candle. 
I rarely see these fail and go up.

We will see tomorrow, as Abu Dhabi is not bailing out Dubai World, but giving them a loan until April of $10B, which should keep them from defaulting for a while yet.  I wonder what they took in collateral?  I bet it is a sweet deal.

One day away from default...not a strong negotiating position to be in.

Check out LQD - and you can check the other bonds which are a permanent link on the right hand side of oahutrading blog.

EUR and Doctor Copper

These are both very bearish signs for the US Equities Market.

EUR has clearly broken down.  Copper is on the verge.  60% of copper use in the US is in residential housing construction.  Don't forget China though...they are copper buyers.  However LME stockpiles are rocketing upward.