THE DOT - if this turns orange or red be alert

Tuesday, June 17, 2008

The Midas touch - divirgence in the banks

Goldman has the midas touch, used to be the myth about Dick Fuld the CEO of Lehman who seems to have lost it. Goldman has done far better than all its peers so far and due to good infrastructure work at least as long as the Bush administration is at work they keep it. They have managed to spread their fomer top people around on very insightful places. Paulson is Treasury secretary , the man responsible for all capital market transactions at the FED is a former high ranking Goldman partner they have Governors and the top 3 men at Merrill are from Goldman's top ranks.
Its a bit the Rothschild way he
also was always ahead of the crowd then it came to information gathering he even bought the early Reuters to get the news before anyone else which gave him the winning edge. The advanced version would be to create the news - a real good movie about that is 'Wag The Dog' with Dustin Hoffman and Robert De Niro.

The BKX made the new lows as expected and even broke below the 70 support , which it might try to retest these days but the XBD turn around at the 150 support before retesting the lows which was a bit short of my assumption so far. We will have a bit of strength the next days with a lot of manipulation in the expiration week since tons of puts on banks are due which need to be erased.

We are in a tricky situation right now with mixed signals but the market was so oversold that it keeps rising even on bad news which was triggered by Tech and Broker/Bank stocks on Friday. NDX outperforming to the upside is positive momentum - I expected an upside turn into this week but the magnitude is a bit stronger than I thought. I need to see a neutral weekly close to be confident on the 1310 target SPX - but some astrological influences are quite confusing right now. The Friday/Monday turn was triggered by a SUN/Venus square to Uranus which is indeed suggesting sudden volatile turns in markets. We are heading for a full moon with Sun opposite Pluto before on Wednesday Venus will be opposite Pluto which is rather unpleasant energy.

GS and MS earning today will support the upside with no negative surprises I assume. GS has a better balanced book than all its peers for now and MS made plenty money with raising the money for all the broke banks over 300 bil. and both have a strong commodity department which is still booming.

All together we should have a weaker second half of the weak usually if the bear trend is accurate the 4th day should not be exceeded as upside counts and Wednesday is likely to be weak with today staying strong but not like the last two trading days. A basically volatile comes from Uranus going stationary on 26th of June in sextile to Jupiter exaggeration of volatility and natural events like earthquakes are likely.

The next point is from a cycle and fundamental point of view the time for falling markets is running out slowly. End June- early July is the time a new bull campaign should start slowly. The first step is to stop the inflationary momentum by turning the oil around - which right now the dear friends of the Bush family , the Saudi Arabian Kingdom is trying to initiate. Second part is to strengthen the Dollar but the ECB (Europe's central bank) is jeopardizing that by signaling rate hikes thats why Bernanke is countering that effort by signaling the same ambition and the market priced it in already it seems. I doubt they raise rates before election but they will create urgency and inflation is in full rising momentum. We will be in a very volatile triple witching week which should be neutral at the end with a weaker week thereafter.

Have a good week

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