THE DOT - if this turns orange or red be alert

Thursday, February 26, 2009

Long term astrological impact on markets

First My technical evaluation is almost exactly in sink with astro cycles as we will have a severe bottom (interim) first half of March and a big rally (bear market rally) will develop for a few weeks up to August probably we will see a big consolidation in shape of an ascending triangle. The magnitude to put it in round numbers will be 650-700 bottom and 950-1000 top in SPX terms.

Short-Term Geocosmics

Last week’s large price swings in financial markets and precious metals was not unexpected. As stated last week, “…heliocentric Mercury starts its 10-day trek through Sagittarius on Friday, February 20. Not only are one’s opinions expressed with exaggerated urgency, but so too are prices swings in many financial markets, especially precious metals, during this period. Yet none of this compares with the strength of the geocosmic signatures coming up March 6-12, when Venus turns retrograde, and the Full Moon will take place on the same degrees of the zodiac as the Saturn-Uranus opposition. Everything is building up into that time frame, like the pressure in a boiling pot of hot water. Everybody’s talking (shouting) but nobody is listening. And that can result in sharply falling stock prices, unless the mood and intention change quickly.” The mood and intentions did not change last week, and in response, the markets continue to fall in this next leg of the economic panic of 2008-2009. Welcome to the Cardinal Climax.

The Venus retrograde of March 6 is like a magnet, pulling prices sharply in their particular trend direction into the two weeks surrounding that event. The heliocentric Mercury in Sagittarius is exaggerating these price swings, with psychological fears of an economic disaster in the making. I don’t see this trend changing until it peaks out, March 6-23. If you are on the right side, it can be a very profitable period. If not, it can be painful waiting for the reversal.

Now some longer term pattern which will have a huge impact, the Jupiter Neptun conjunction will do 2 things in my opinion blow up stock prices as hope overrules common sense and give oil a big boost after the sharp drop which might rise up to 80 Dollar.

The Gold bugs may have it right this time. After declining 9% in December, the PPI (Producer Price index) shot up a remarkable +.9% for January, an upward swing of 2.8%! The CPI (Consumer Price Index) was down .8% in December but up .3% in January, a change of over 1%. As stated previously, this is consistent with the principles of Jupiter and Neptune approaching their conjunction in Aquarius, which is coming up May through July, 2009, with a third passage in December.

In November 2009 Saturn will square Pluto that's a very disastrous energy and will send markets into a very destructive downside move ( likely triggered by crashing bond markets) to new lows and the economy will go into a sharper contraction. Starting in October 2011 Uranus will square Pluto which is explosive and destructive energy and last til 2014 that's the time when things hit the bottom but it will be a tough landing last time we had that was early 30's the big depression. Its not hard to imagine with prevailing conditions where we are heading. Whatever Obama does promise it will not happen as we are in a natural cycle of contraction which is a healthy thing even it it sounds cruel but the excesses of the last 20 years have turned into a steep bill but we have to pay the piper.


Wednesday, February 25, 2009

The realative less bad version and the ugly perspective of DOW targets

First of all the DOW monthly chart on the left in log scale shows we might trade sideways for at least a decade around the 200 month MA like in the 70's ( that's unfortunately the less likely version). The point is though as we are heading for the big support around 6800 at a deeply oversold monthly MACD we are up for a severe upside consolidation starting very likely in March. The evidence is though that every big bear market in history has made a trough around 8 times trailing earnings and in the case of the SPX we might be heading for 100-200 within 2-3 years as the implosion of earnings will be continuing as the total collapse of the global financial system can not be healed anytime soon and the distress on governments will have similar magnitudes soon. A total collapse of the global economies is inevitable over the next years and they just buy time by inflating the world with worthless money but it will create a mini bubble soon as people might rather believe in miracles against all common sense as they cannot let go of the phony world of ever more .. which is not possible and history proved that over and over but we still want to believe that such a pathetic system is what we want - being the slaves of our banks.

Why More US Banks Aren't Being Allowed to Fail

The government is in denial as are some bankers in deep trouble makes people pray for the wonder to happen and some may even start to believe. To have faith is good but delusion and denial is deadly and exactly what wipes every trader out. To face the truth is the most crucial skill to solve things.
When I hear this stupid mark to market talks these days of some lobbyists to make a legal attempt to cook books again. One of the shrewdest investors sold his toxic assets for 10 cents - we are talking Goldman and they have evil minds too so if they thought they have any chance to make money on those assets they would have tried too. A purely academic man who has made nothing but bad calls - now I speak of Bernanke is not the man to get wisdom from how to deal with this assets as he has no clue at all and he is not fit to run the position in a public good way. For someone who made his PhD. on the topic depression he has proved to be the wrong man to be in charge, although he is not the man who brought this disaster upon us that is clearly one man Greenspan, who was ironically a lobbyist for the banks to deregulate the rules before he was made the FEDs captain.
President Obama has no economic training at all and is hooked up with a team of ad visors who fabricated this tragedy in the first instance under Clinton hence again the complete wrong people to deal with the issue. Obama is an excellent salesman and would have made a hell of an career on Wallstreet by the way and is no the cheerleader of the boys who jump up and down on the Titanic and should we can stop the sinking ship.
Recently a very good analyst - yeah we have some - made the call I would suggest as well - take all deposit and regular accounts away into the subsidiary of the FED and they even can make plain vanilla loans so all basic functions an economy needs are warranted and running, hence using all the TARP and other funds to finance cash flow. Further let the smart risk takers from Harvard play out the rest beyond themselves if they fail they fail. Third prosecute all abuse and malpractice which was done in running banks and get the bonus money back from the guys that's a business the IRS is well trained to do anyway so why make an exception on all the morons who payed themselves bonus on fictive profits ( I call that robbery). That would be fair and square capitalism but just playing the bets one way is not American at all that's like after a football game the loosing team wants the rules to be changed - COMMON THAT EVEN KIDS IN THE KINDERGARTEN DO NOT DO.

Excerpt

With all the doom and gloom surrounding the banking industry from the toxic assets to the nasty recession, you’d think banks would be failing at a furious pace.

Think again. Since the recession began in January 2008, the FDIC has closed just 39 banks—25 in 2008 and 14 thus far in 2009.

By contrast, more than 1000 institutions were closed during 1988 and 1989 when the savings and loan crisis was at its peak. Another 850-plus failed in the ensuing three years when the S&L crisis intersected with the fairly mild recession of 1990-1991.

In 1933, the government closed all 17,000 of the nation’s banks for a long, bank holiday weekend and some 5,000 never reopened.

If all this doesn’t hold up to logic, then try politics.

“It’s worse than the statistics indicate,” says veteran bank analyst Bert Ely. “One of the problems is how slowly regulators move in dealing with this problem.”

Sure, there more banks in the 1930s and 20 years ago then than the roughly 8,400 of today, but analysts say that still doesn’t explain the huge difference.

“The regulators are behind the curve,” adds Gerald O’Driscoll, a former Federal Reserve official and Citigroup VP, now with the Cato Institute. “The regulators are kind of where they were in the late 1980s. Regulators procrastinated, then acted. Regulators become tough when the politicians decide to bite the bullet.”

Banking experts say there are striking similarities between the current period and that of the late 1980s and early 1990s when the federal government went from insufficient stopgap solutions to the savings and loan crisis to a radical overhaul.

“It took a new administration to say we're not responsible, to say we have a bunch of insolvent savings and loans," says Lawrence White, a saving and loan regulator and former White House economist. “It made it easy for the regulators.”

White points out that it also took a new law, called Firrea, which created sweeping regulatory reform as well as a government entity, a bad bank, the Resolution Trust Corporation, to assume control of the institution’s assets and then sell them back into the private sector.

“In those days we weren’t as lenient,” says George Kaufman, a professor of banking and banking regulation at Loyola University, who consults for the Federal Reserve Bank of Chicago, “I think banks have been well under-capitalized.”

And the longer the government waits to close down troubled banks, the longer it will take to restructure the system, goes the thinking, which will also wind up costing taxpayers more money.

Crisis At The Crossroads

A year and a half into this crisis, analysts say there are signs the government is still in denial about the magnitude of the problem as well as the sweeping, draconian actions needed to attack it. At the same time, they say some officials may be on the verge of a turning point in dealing with the issue.

“Bank restructuring should start with some diagnostic phase, where you triage the winners and losers, put them in buckets, some are worth saving others are not,” says Luc Laeven, a World Bank economist who co-authored a study on banking crises of the last 40 years and the policy responses to them. “The government shouldn't be in the business of trying to save all institutions.”

The Treasury Department’s decision to start using stress tests on the top 20 banks may be a key development in that diagnostic phase.

“The scope of how to do a proper banking resolution is quite well known,” says Johnson. “The knowledge base, the data base is there.”

AP

Though Fed Chairman Ben Bernanke told Congress Tuesday that outcome of the tests is “not going to pass or fail”, analysts say if done properly it will help address the problem of how to price the toxic assets and reassess bank capital capitalization beyond the somewhat un-useful existing metrics. In doing so, it will provide the government with more impeachable results in deciding winners and losers.

“They’re going to establish an analytical basis to determine how much capital to commit to banks and at one point to be able to say, 'enough is enough' and we’re going to take this bank over,'” says Ely, who adds the stress test will “essentially move toward [determining] a liquidation value.”

“There’s this kind of pretense of doing scientific analysis and being impersonal and masking that this is very political," says former Senate Banking Committee chief economist Robert Johnson of the stress tests. ”Shutting them [banks] down is hard to do."

The government used the equivalent of a stress test during in the Great Depression. Those that passed were given the necessary capital in the form of a loan in exchange for preferred stock, which is what the Bush administration decided to do at the urging of Congress.

“If you run it properly, you find out how big the hole is,” says Walker Todd, a former Fed official, lawyer and economic historian.

FDIC Chairman Shelia Bair Tuesday the stress tests needed to be done “before we determine what type of additional capital investments the government may need to make."

Where There's Smoke...

There are signs Congress, at least, is running out of patience with the current approach and is looking for more drastic measures.

Members of the Senate Banking Committee Tuesday peppered Bernanke with questions about the government support, suggesting the government was delaying the inevitable.

Wouldn’t it be better to close some of those banks rather than continue propping them up?” asked Alabama Sen. Richard Shelby, the ranking Republican on the panel. “Aren’t you sending a message that we’re going keep propping the up?”

Senator Richard Shelby
Senator Richard Shelby

Bernanke responded by implicitly referring to the stress tests, saying the “first step is to get clarity, the transparency, “ what he called “the assessment”. The next [step] is the capital.”

The biggest banks “are never going to get to the point where that [insolvency] occurs because you keep injecting capital, “ said Sen. Robert Corker (R-Tenn.).

"There is no commitment by any means to never shut down a big bank, absolutely not, but I do believe that the major banks we have now can be stabilized,” Bernanke added.

Similar thinking got the government into trouble with the S&L debacle, say analysts, when capital injections and regulatory forbearance deepened the crisis.

“We believe the quickest and lowest cost solution to the government is to close down troubled financial institutions, regardless of size, extract the toxic assets and sell the good parts of these financial institutions to private investors as quickly as possible,” the bank analysts team at Friedman Billings & Ramsey’s wrote in a Feb. 23 research note.

Another criminal disgusting still legal mispractice Obam does not 'change' yet

People can make big money out of bankruptcy that is a perverse part of this whole system as the greedy thieves can legally clean up what is left and leave nothing for the stockholders and bondholders. That alone is an unbearable systematic flaw which needs to be eliminated right away

GM Bankruptcy Advisers’ Fees Might Be ‘Bonanza’ $1.2 Billion

Feb. 25 (Bloomberg) -- A General Motors Corp. bankruptcy might yield a $1.2 billion “bonanza” for bankers, accountants and lawyers, surpassing record fees being made by advisers on the collapse of Lehman Brothers Holdings Inc.

GM, trying to lower debt and wages out of court, said Dec. 2 it must slash $62 billion in liabilities by almost half, excluding government loans. Otherwise it may wind up like Lehman, which will pay an estimated $906 million in judge-approved charges for professional services, said Lynn LoPucki, who teaches bankruptcy law at the University of California, Los Angeles.

“The bonanza has already begun and will continue through the bankruptcy,” said LoPucki, who keeps a database of bankruptcy statistics. “GM is in serious financial difficulty and can’t make the cuts they need outside of bankruptcy because they can’t force creditors to go along with them.”

Law firms including Dewey & LeBoeuf LLP and Weil, Gotshal & Manges LLP, already advising the automaker, would be among those reaping millions in fees in a GM bankruptcy.

Investment bankers and restructuring experts at Morgan Stanley, Blackstone Group LP and Evercore Partners Inc. also have been counseling GM, and the UAW autoworkers union consults Lazard Ltd., according to people familiar with the matter.

Another candidate for the wall of ....

Well Lewis is right BAC is superior to all rivals as they have the smartest CEO in the industry who has the unique capability not only to catch falling knives , he even can pay 3-4 times more what it might be worth thereby destroying 10s of billions of stockowner and taxpayers money. Hard to find such smart bankers these days even his Harvard trained MBA's have a hard time to compete with such competence and shrewd business skills.
The only thing which disturbs is all the TARP money and the extra aid he got recently but I am sure this morons from DC forced him to take all the money to make him look vulnerable and they might have been afraid he runs for President next term - America needs strong leaders.

Bank of America Stronger Than Rivals, CEO Lewis

Feb. 24 (Bloomberg) -- Bank of America Corp. Chief Executive Officer Kenneth Lewis, decrying “rumor, innuendo and falsehoods,” told employees that the bank’s prospects are “far superior to those of most of our competitors.”

Lewis, in his second internal memo in five days, reiterated today that Bank of America doesn’t need further assistance now and doesn’t anticipate seeking more aid. The Wall Street Journal said yesterday that the U.S. government may boost its stake in Citigroup Inc. to 40 percent.

“Bank of America’s overwhelmingly large deposit base, our consumer and commercial customer base, and earnings power give us a great advantage over banks that have been more badly damaged in the current crisis,” Lewis, 61, wrote in the memo. Bank spokesman Scott Silvestri confirmed its authenticity.

Tuesday, February 24, 2009

SPX tech update

The SPX hourly chart made a classic pattern as we count day 9 setup and made a hourly 13 at the double bottom point an overdue technical bounce started as some shorts might cover as we can see by financials rising the most (clear indication of short covering). Well we still need to dip below 740 but today's NEW Moon supports a little bounce for 1-3 days before downtrend finishes the leg. Even the DOW stands at daily 12 counts and both are in week 12. Expect some follow through tomorrow to the upside. Month end is special as we head for end of quarter for Banks and they might get involved in some window dressing action this week - lets see how that plays out but next week is rather a downweek again.

This might be a joke but its still closer to the truth than most think

Hidden Cameras in DTV Converters? YouTube Hoax Fans Conspiracy Fears

By Kevin Poulsen EmailFebruary 23, 2009 | 3:42:24 PMCategories: Surveillance

Dtv_cam_hoax_2

Ever wonder what the government is really up to paying for all those digital TV converter boxes? Last week a Spokane, Washington man claimed he'd discovered the horrifying truth, and he produced a YouTube video to prove it.

In a 90-second video that's popping up on tin-foil-hat sites everywhere, 28-year-old software engineer Adam Chronister is seen cracking open his government-subsidized Magnavox converter, and revealing to the world the tiny video camera and microphone hidden inside.

"I had a friend who was trying to tell me that they put cameras in these things," Chronister narrates in a deadly-serious monotone. "So what I did was open it up to prove them wrong, and lo and behold ... this thing does in fact have both a camera and a microphone. " His finger points at a small lens attached to a transformer in the guts of the unit.

The video instantly went viral, tapping into a current of DTV conspiracy theory that's been building online since the government started issuing $40 converter box coupons last summer.

So far, the U.S. has spent $1.3 billion subsidizing the boxes that will keep TV lovers watching CSI when the last broadcasters shut off their analog transmissions in June. The huge government effort to put a -- mysterious, to many -- piece of technology in millions of American homes has spurred conspiracy theories ranging from a mind control experiments to mass telescreen surveillance.

Yellow alert for shorts as we arae heading for the trough

For today we might see a 740 has hold bounce but that will not be it.
Left hand the BKX which is about to hit the temp. lows we were looking for. In case of the BKX we need another dive below 20 to get closure. More importantly is the weekly count on the SPX and DOW which are in week 12 which is one week away from the red alert 13 count but we are testing for the SPX the 740 support of Nov and as the DOW we need to wipe out some stops below to get a rally thereafter as some people will short markets if we drop below. That will be only briefly as we are about to finish wave 5 soon. we have to drop around 5% from current levels on average to get the trough and time frame remains at 3 weeks. We are heading for an ugly Full Moon in 14 days exactly on the Saturn/Uranus opposition which has triggered a 20% sell off each time (4th Nov and 5th Feb about to finish). That should mark the climax of the current decline wave and trigger a sharp rebound thereafter which will likely last 2-3 months.

Monday, February 23, 2009

Dear president you got to walk the talk - just writing cheques does not do the trick

Thain needs to be imprisoned for a week than answers might come quickly but that is true for some wall street executives - no excuse for there behaviour wasting bil. of taxpayer money but Lewis ain't no better.
Why is Fuld still outside after clear fraud, which is also true for some other bankrupt companies like Countrywide and Bear Stearns. Paulson and Bernanke said a year ago the situation was contained and with losses of 50-100 bil under control - why does no one hold them responsible even Geithner was involved as he as New York FED was responsible for screening the Investment banks.
The whole system is rotten and I do not see any 'change' and what I just mentioned were the US names the same is true allover the world almost.
I think the world needs a special prison for financial terrorists they have done much more damage than any religious ever could.

Thain Refuses to Answer Cuomo's Bonus Questions

New York State Attorney General Andrew Cuomo filed a motion Monday asking former Merrill Lynch Chief Executive John Thain to provide more information about bonuses paid out on the eve of the bank's merger with Bank of America last year.

Cuomo's office alleges that Thain is not answering the questions under instructions from Bank of America [BAC 4.12 0.33 (+8.71%) ], and as a result, the bank is interfering with its investigation of the bonus payments.

In a deposition last week, Thain refused to answer questions about how the bonuses were determined for certain individuals, citing instructions from Bank of America attorneys.

The filing in New York State Supreme Court follows a deposition of Thain on Feb. 19. Cuomo last week subpoenaed Bank of America Chairman and Chief Executive Kenneth Lewis.

Two weeks ago, Cuomo accused Merrill Lynch of "secretly" accelerating bonus payments last year and giving at least $1 million to each of nearly 700 employees, even as the brokerage was
amassing billions of dollars in losses.

The bonuses stirred controversy because Merrill's bigger than expected loss prompted Bank of America to seek more government bailout money to complete the acquisition. The government agreed to give Bank of America an additional $20 billion in January to absorb Merrill, which Bank of America agreed to buy last September amid the credit crisis.

NDX and market tech update

The NDX testing the 1135/40 support which might hold briefly but has confirmed the breakout of the wedge formation. We are heading for 1000 for the big trough of the 1st half of 2009, which should happen within 3 weeks even 4 might be possible. NDX will relatively outperform and as the rally starts be the front runner with financials. This financial rescue operation has to be finalised for now as too many rumours keep cruising that needs to be solved and will take another 2-3 weeks very likely.
As we have day 9 tomorrow and New Moon markets might go sideways for a few days even snap a bit higher before resuming the downtrend later this week and next week. The Dow has entered week 12 count as does the SPX depending on price performance though but we are getting closer to the trough which has still a potential of up to 10% down from here. We will determine the exact lows the next days for the DOW I have 6800 as the low point target.

Mr Bloomberg should start to fire some of his pathetic talking heads

Its disgusting to hear some of this stupid smalltalk some of their stuff dare to speak out publicly thereby even misleading some regular watchers. One unnamed stuff member just made the really stupid math that if the government turns their 45 bil. into 20% stocks of Citi that would value Citibank at 5 times 45 bil.
That lady should be fired but the whole Bloomberg operation should really double-check the bull.... they announce - even if the Obama admin would be so stupid to do that ( which would make an impeachment necessary for abusing taxpayer money) that does not mean that a bunch of lobbyists knows where the value of any asset is. Rather the opposite as they misjudged the warning signs for years and allowed banks to pile up more bad assets which caused the biggest financial disaster in history ( at the end of the day the 29 depression will look pathetic besides what we will see now unfortunately).
Media should make more prudent and diligent reporting and stop this every bull... is a breaking news hype. what we need is what Obama promised but does not deliver 'change' to sincere and ethical values of reporting. Finish this propaganda hype screwing people disinformation attitude.

Geithner should be fired right away - his latest plan to leverage HFs with cheap money is outrages

Finally it happens Citi asks for more money as I pointed out a few times months ago Citi was rather my first candidate to go bust as they own this huge 700 bil worth of toxic assets so they needed the whole TARP amount for themselves. Pandit who could not even run a Hedge fund which went bust within a year after Citi had bought it is now running the bank give me a brake. This guy is totally overrated as most executives on Wallstreet are.
Now Obama joins their ranks by giving phony assumptions over the budget in 4 years. First of all he might have more chances to win a lottery if he played every day than reaching that budget - no way rather stick another zero to it and you might be closer to reality. He came to DC with the hype he would do things different but that proves to be rather a nice try to put it in a positive spin. What can be different if we see the old Clinton team back who helped to create this mess with allowing bank regulations to loosen up as Mr Clinton admitted. That's another topic though and the problem of the Obama administration will be to stop the hyperinflation it is triggering now which will be visible in a year from here probably. They always say the taxpayers money and its rue to some degree but even the taxpayer 10 generations ahead can not pay those debts. Japan was lucky as they did those measures as all others were relatively sound but all at once printing money will cause a global disaster at some point which inevitably will lead even to war as that is the outcome of such stupid measures. Now the governments are doing what the banks did leveraging up and there is no one to bail them out. That is the irresponsible part to say that banks should run themselves and throw good money after bad - the model of greed has collapsed and you can not let the same guys who ran us all into this disaster try to heal the system that's insane. Investment banks have to be shut down - period -- as the latest results proof the latest huge losses came from new bad judgement at MER and Deutsche. No one can afford to let them play around no new risk at all should have been the parameter to receiving TARP funds. Basically investment bankers are not as smart as people assume they are basically smart in screwing their clients. Lets look at the facts more than 50% of all Mergers do not work out, the so called traders do not make money because they are smart (a few exceptions thouıgh) because they have a information advantage and most of the time that works only on upside markets as we can see clearly. What is left is commission business and asset management and at the later one the managers are not fit for their jobs so what is left after all almost nothing which can produce results - so this discussion about them loosing talent is pathetic.
Finally lets come to this absolutely incapable Geithner but that's kind of true for most of the Obama administration or most of DC which party ever. They are ase useless as most bankers are when it comes to the hard times. Geithner idea that Hedge Funds need cheap financing to buy all those toxic stuff is a manifest of his incapability. He wants to leverage Hedge Funds up with cheap money to buy the toxic stuff - give me a freaking brake. I thought they had learned something but they suggest to do what brought all this mess upon us leverage them up with taxpayers money. Just for that suggestion he needs to fired but not only him since he must have backing from his boss for such a bull..... idea.

Excerpt

Feb. 23 (Bloomberg) -- Treasury Secretary Timothy Geithner’s financial-rescue plan may be doomed if he doesn’t offer low-cost loans to hedge funds and other investors to help them buy toxic assets weighing down bank balance sheets.

Creating a “bad bank” or “aggregator bank” that would use federal funds to acquire and warehouse the assets, as some have proposed, would be costly for taxpayers and require too much government interference, say two experts on distressed securities who have pitched an alternative plan to officials.

John Ryding, chief economist at RDQ Economics LLC in New York, and Matt Chasin, chief operating officer of Sorin Capital Management LLC, a Stamford, Connecticut-based hedge fund that manages about $1 billion, say the Treasury Department should provide loans at commercial rates to investors for up to 50 percent of the purchase price of securities. The financing would be for as long as the maturities of the assets being acquired.

Excerpt 2

Citigroup is in talks that could result in the U.S. government increasing its stake in what was the country's most valuable bank, a source said, and the Wall Street Journal said taxpayers could own as much as 40 percent of the ailing lender's common stock.

Citigroup shares in Frankfurt rose 26 percent following the reports, while U.S. stock index futures pointed to a strong open for Wall Street.

The Financial Times also reported that Citi is pressing the U.S. government to agree on a new capital injection that would increase the authorities’ stake in the troubled bank, but stops short of an outright nationalization.

The Journal reported on its website that Citigroup executives were hoping the talks with federal officials will result in a stake closer to 25 percent.


Sunday, February 22, 2009

Some sentiment indicators message - gettin near a trading bottom

Market Sentiment

INVESTOR SENTIMENT READINGS
High bullish readings in the Consensus stock index or in the Market Vane stock index usually are signs of Market tops; low ones, market bottoms.

Last Week2 Weeks Ago3 Weeks Ago
Consensus Index

Consensus Bullish Sentiment23%24%23%
Source: Consensus Inc., P.O. Box 520526,Independence, Mo.
Historical data available at (800) 383-1441. editor@consensus-inc.com
AAII Index

Bullish21.6%32.9%24.6%

Bearish56.739.244.0

Neutral21.627.931.3
Source: American Association of Individual Investors,
625 N. Michigan Ave., Chicago, Ill. 60611 (312) 280-0170.
Market Vane

Bullish Consensus37%39%39%
Source: Market Vane, P.O. Box 90490,
Pasadena, CA 91109 (626) 395-7436.


Investor Intelligence is also close to the lows with 31.1% bulls and 41.1 % bears around Nov those numbers were a bit more extreme and we will get to those levels again like above 50% bears.

The Rydex Nova/Ursa is also getting close as we dropped below .70 levels but the real deal is around.60 ideally below .60 but that is in the making as we have to drop another 5-10% from current levels to make the bottoms for DOW and SPX. If you are short remain short and its to early to get long in a broader sense ( single stock ideas might work already).

The smart part of the Obama admin.is to give away the tax presents in small portions not one big check which might be more consumption prone but the smarter people will use it anyway to reduce debts as time will get tougher and overspending is not an option. Its good though for people who need every Dollar for regular living as their spending budget grows hence Walmart may be the lucky one here.

Saturday, February 21, 2009

Soros ,Volcker and Roubini see no bottom for world financial "collapse"

The magnitude of the crises is so deep and obvious as it has caused a global ' zero ' interest ' world plus unprecedented money printing with no end in sight. Plus on a daily basis new implosions for the balance sheets fractions happen and erode the capital 'soundness ' - not of the banks who are basically broke but of the governments who guarantee for them. As money needs to be printed and the economy contracts even more alone the 6-70 tril CDS market will cause huge problems as more companies will be goıng bust. The most dangerous part is still to come then the collapse of the bond bubble is about to start in 6-9 months and interest rates will be rising due to money printing and lack of trust in the value of government guarantee's. Banks as always in distress to make back money on behalf of their clients as they do not forward the lower financing the central banks provided they even raise interest rates for credit cards and all other rates they offer for consumers. That's the exact opposite of the TARP program and some senators even claimed this abuse but the administration does not take the appropriate action and allows the banks to screw the mainstreeet after they financed their survival. Geithner is not doing what he is supposed to do and Obama is not really serious about his speeches where he claims to bring back moral hazard.

This pathetic lobbyists who claim these days that talent will run away from wall street as bonus is limited is pure bu..... as there is no place to go anyway. To have a job will be the bonus and even more so not to be in an uniform soon to be thrown into a disastrous war might even be the real deal. Things should be seen in a real perspective as the things go right now pure survival might be the issue soon not to earn a Porsche.

Soros sees no bottom for world financial "collapse"

NEW YORK (Reuters) - Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.

"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."

His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama.

Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker said.

Excerpt 2

Nowhere Near End of Crisis: Dr. Doom

Nouriel Roubini, one of the few economists who foretold much of the current financial turmoil, Friday said the United States is nowhere near the end of the banking and credit crisis.

"We are still in the third and fourth innings," Roubini told Reuters in an interview, using a baseball analogy to drive home his view that the current cycle is only nearing its midpoint.

"And it's getting worse," said Roubini, a professor at New York University's Stern School of Business and chairman of RGE Monitor, an independent economic research firm.

On Feb. 10, Treasury Secretary Timothy Geithner unveiled his newest bailout plan for banks, including the government's so-called "stress tests" involving all banks with more than $100 billion in capital. Regulators will analyze the banks' books far more closely than previously to see if they have the capital to endure worsening conditions.

"It is the step to form an objective way to decide which banks are illiquid and which ones are insolvent and to take over the insolvent bank," Roubini said. "We have to take over some banks."

Bank of America [BAC 3.79 -0.14 (-3.56%) ] and Citigroup [C 1.95 -0.56 (-22.31%) ] shares plummeted for a sixth straight day Friday, hammered by fears that the U.S. government could nationalize the banks, wiping out shareholders.

Nationalization or receivership of a bank need not be a permanent issue, Roubini added.


Friday, February 20, 2009

Gone in 60 Days: Citi and Bank of America Won't Live to See May?

The following article claims that both banks will vanish until May from the stock screens since as banks they need to carry on their business. The point is that something might trigger a sellout but the ongoing momentum does the necessary by itself. The real driver is as I stated a few times that the valuation of the market needs to be adjusted to a sustainable level which is around 500 for real value and 600 for fair value. The real value came always at the ultimate low as things have tp play out still and the real low may be in 1-2 years and rather around 200 SPX as earnings will drop much further the next years. All we get now is a temporary low of the current wave as we entered another capitulation wave and the voices who were bullish in November have been shut down and as a real bottom (even temporary) as we make new lows soon we might hear almost no bullish calls at all. We have 3 things playing out here first of all is the disappointment about the Obama admin. as they made phony promises but did not deliver as they made people believe they would. the 800 bil stimulus package is far from being anything like that its rather more an aid package for the underprivileged ones - that's good for them but does not create jobs (4 mil. jobs as Obama promised is ticked off by the market). Second of all we have calls for the big banks to be wiped out ( rather the stockholders) as the banks are against the calls of the CEO's bankrupt - on top are some calls from Roubini that a sovereign will go bust soon (he claims Ireland or Greece) - over time many sovereigns will go bust. Finally Hedge Funds got their withdrawal deadline last week and need to liquidate further as we can clearly observe. We got the mix for a little panic and here we go but we are not done yet as another 10% are likely within 3 weeks..

Excerpt

Citigroup (C) and Bank of America (BAC) won't live to see May. The government will take them over within the next 60 days. The announcement may come as soon as tomorrow evening.

If there's one thing our readers know, it's that ChartingStocks.net has made some bold calls in the past which seemed controversial and highly unlikely at the time. Our January 2007 post warned of the coming stock market crash at a time when the market was making new all time highs. In February 2007 we warned about the breakdown of the brokerage stocks and singled out Bear Stearns (Trading at $160), Merrill Lynch (Trading at $87), and Morgan Stanley (Trading at 78). In September 2007, we warned of a selloff in the coming weeks. The market peak and decline began 4 weeks later.

We're going to make another bold prediction. Bank of America and Citigroup won't live to see May. The two banks will be nationalized in the coming weeks, and we think that the announcement can come as soon as tomorrow evening (Friday evenings are when major bank announcements and failures occur).

The US government has already committed half a trillion dollars to these two firms which is more than 10 times the amount it would cost to buy and control both companies. The market doesn't believe that $500 billion is enough to save these companies.
All the kings horses and all the kings men can't put humpty dumpty back together again.

Today both banks made fresh new lows with Citi closing at $2.51 and Bank of America closing at $3.93. The 1 year charts below show the short term price movements. You should understand that when a bank stock's chart looks like this, even a HEALTHY bank would be in trouble. Nobody wants their deposits tied up in a company that trades at $2. The outflows of deposits from Bank of America and Citi must be catastrophic.

The stock charts and potential run on these banks are not the only basis for our opinion. The media can be an excellent investing tool if you know how to decipher the news. We don't watch the news for the information, we watch if for THE LIE.

We play close attention to air time given to so-called "Experts" and the way the media spins the information. If you know that our mainstream media is simply a licensed PR firm for the US government, you can get vital information which you can use in trading. Always ask yourself - What opinion are they trying to insert? What are they selling? What's the underlying agenda?

The government uses the media to float policy before the public so it can digest it. By the time the government takes the action, most people not only anticipate it but are even asking for it.

In the past two weeks there have been countless debates, op-ed's, and even opinion polls regarding bank nationalization. The popular opinion among the establishments "Experts" is that nationalizing the banks may be the only way. Even Alan Greenspan, a LIBERTARIAN, recently said that it would be a good idea. It's coming folks! It's what the establishment wants. (Sidenote: They may not actually use the word nationalization, even if thats exactly what they do)

Below is the long term view of BAC and C. These stocks have made multi decade lows. Other stock charts which looked similar to these were Fannie Mae, Freddie Mac, Lehman, Bear Stearns.

Excerpt 2

Dodd Says Short-Term Bank Takeovers May Be Necessary

Feb. 20 (Bloomberg) -- Senate Banking Committee Chairman Christopher Dodd said banks may have to be nationalized for “a short time” to help lenders including Citigroup Inc. and Bank of America Corp. survive the worst economic slump in 75 years.

“I don’t welcome that at all, but I could see how it’s possible it may happen,” Dodd said on Bloomberg Television’s “Political Capital with Al Hunt” to be broadcast later today. “I’m concerned that we may end up having to do that, at least for a short time.”

Thursday, February 19, 2009

Capitulation part 2 is on

The capitulation is on even the NDX has confirmed the sell out. SPX will test the 750 within a week but as I said earlier we need to make new lows here to make a real trough we should test even the 700 area - I will try to figure out on the WE how low we can eventually go but in capitulations you always have exaggerations.Between 650 and 700 should be the exhaustion. The DOW is in week 11 hence the time window for the low is around the early March. We might get an small bounce at some point especially from the 750 level very likely as some will try to trade the double bottom and we are in wave 3 of bigger 5 down hence a small wave 4 up is due next week as we are also quite a bit under weekly Bollingers. The Dow points to the Tuesday and the New Moon effect might support that. We look into that next week and before we should test the 750 area anyway.

Wednesday, February 18, 2009

The next financial nuke is about to implode

Things are getting worse by the minute as we never heard the true implications and magnitude of the US mortgage problems you may have noticed that the latest round of humongous write downs in banks had almost nothing to do with mortgage related assets in case of Deutsche and Merrill they lost billions with plain bets on spreads between corporate bonds and the CDS on them. This weeks pull down of markets is very much linked to further withdrawals from Hedge Funds as we can easily see by the carry trade currencies. We are getting close to the trough though but another 10% in a second capitulation looks like the mandatory price to finalise it. That will only be a interim troıgh though as the money wave flooding into the system will save the day for a few weeks but the erosion has passed the point of no return. The Bush administration had a little chance until they let Lehman collapse which locked in unrepairable damage. Actually I think they could have just delayed the process not stopped it for good though. As Eastern Europe will default soon (rather Q4 2009) as you can gather by the following article the financial meltdown will enter a new stage as the international finance will come to an end and local or regional finance will be run by governments and the regular industry is on the same track. The EU will be at the brink of breaking apart as the strong countries population will not be fond of bailing out the weaker and new members problems as they have enough of their own. Social tensions and unrest will be on the rise as people recognize that there is no quick fix as they were used to have. Those fixes were anyway just swapped away problems which grew bigger to the point that they are not manageable anymore - actually the Madoff case is symptomatic as the rest of the world did almost the same thing they pretended to make profits and used future money to pay out present bonus to the point it was not bearable anymore.

Excerpt

Failure to save East Europe will lead to worldwide meltdown

The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.

By Ambrose Evans-Pritchard
Last Updated: 2:05AM GMT 15 Feb 2009

Comments 90 | Comment on this article

If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.

Austria's finance minister Josef Pröll made frantic efforts last week to put together a 150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent 230bn to the region, equal to 70pc of Austria's GDP.

"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.

Mr Pröll tried to drum up support for his rescue package from EU finance ministers in Brussels last week. The idea was scotched by Germany's Peer Steinbrück. Not our problem, he said. We'll see about that.

Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay or roll over $400bn this year, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.

Not even Russia can easily cover the $500bn dollar debts of its oligarchs while oil remains near $33 a barrel. The budget is based on Urals crude at $95. Russia has bled 36pc of its foreign reserves since August defending the rouble.

"This is the largest run on a currency in history," said Mr Jen.

In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly by lenders and borrowers it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.

Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.

They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data).

Spain is up to its neck in Latin America, which has belatedly joined the slump (Mexico's car output fell 51pc in January, and Brazil lost 650,000 jobs in one month). Britain and Switzerland are up to their necks in Asia.

Whether it takes months, or just weeks, the world is going to discover that Europe's financial system is sunk, and that there is no EU Federal Reserve yet ready to act as a lender of last resort or to flood the markets with emergency stimulus.

Under a "Taylor Rule" analysis, the European Central Bank already needs to cut rates to zero and then purchase bonds and Pfandbriefe on a huge scale. It is constrained by geopolitics a German-Dutch veto and the Maastricht Treaty.

But I digress. It is East Europe that is blowing up right now. Erik Berglof, EBRD's chief economist, told me the region may need 400bn in help to cover loans and prop up the credit system.

Europe's governments are making matters worse. Some are pressuring their banks to pull back, undercutting subsidiaries in East Europe. Athens has ordered Greek banks to pull out of the Balkans.

The sums needed are beyond the limits of the IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan and Turkey next and is fast exhausting its own $200bn ( 155bn) reserve. We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights.

Its $16bn rescue of Ukraine has unravelled. The country facing a 12pc contraction in GDP after the collapse of steel prices is hurtling towards default, leaving Unicredit, Raffeisen and ING in the lurch. Pakistan wants another $7.6bn. Latvia's central bank governor has declared his economy "clinically dead" after it shrank 10.5pc in the fourth quarter. Protesters have smashed the treasury and stormed parliament.

"This is much worse than the East Asia crisis in the 1990s," said Lars Christensen, at Danske Bank.

"There are accidents waiting to happen across the region, but the EU institutions don't have any framework for dealing with this. The day they decide not to save one of these one countries will be the trigger for a massive crisis with contagion spreading into the EU."

Europe is already in deeper trouble than the ECB or EU leaders ever expected. Germany contracted at an annual rate of 8.4pc in the fourth quarter.

If Deutsche Bank is correct, the economy will have shrunk by nearly 9pc before the end of this year. This is the sort of level that stokes popular revolt.

The implications are obvious. Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU "union bonds" should the debt markets take fright at the rocketing trajectory of Italy's public debt (hitting 112pc of GDP next year, just revised up from 101pc big change), or rescue Austria from its Habsburg adventurism.

So we watch and wait as the lethal brush fires move closer.

If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?

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