Red alert for the planet and markets is on - must read

With the Full Moon and Saturn Uranus opposition markets topped one day later at the 27th so far but the things to come are much more dangerous than most may dream in their wildest dreams.

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http://seekingalpha.com/instablog/234091-hewitt-heiserman/61457-rare-cardinal-climax-planetary-alignment-this-summer-puts-stocks-at-risk-says-veteran-sky-watcher

Rare “Cardinal Climax” Planetary Alignment This Summer Puts Stocks at Risk, says Veteran Sky Watcher

This summer the planets form a rare “Cardinal Climax” alignment, which puts financial markets at risk, says Arch Crawford. Publisher of Crawford Perspectives since 1977, the veteran sky watcher uses a mix of technical analysis and astrology to gauge which way equities and other asset classes are headed. To learn more about this unorthodox investment process, I recently spoke to Mr. Crawford about some of his best calls, what day the Cardinal Climax strikes, and how to prepare for the turmoil he expects. Here is an edited version of our conversation.

We want to talk about the upcoming Cardinal Climax, which you say puts stocks—and perhaps humanity—in jeopardy. But first, explain to Seeking Alpha readers how you invest?

Certain planetary alignments put people under extra stress. And one way this stress manifests itself is in financial markets. After all, financial markets are a mix of fundamentals and emotion. Since astrologic events affect our emotions, I find it profitable to study the planets.

Tell me more.

It is common knowledge that when there is a full moon, there are more car accidents and other forms of aggressive behavior. Since financial markets partly reflect our hopes and fears, these markets are prone to mood swings. If you can anticipate these mood swings, you gain an edge over investors who focus solely on interest rates, growth forecasts, debt loads, and other traditional yardsticks.

I have examined every substantial move in the Dow Jones Industrial Average since 1896, and I find that when planets are at difficult angles, then owning stocks and commodities is riskier.

What is a “difficult” angle?

When two planets form a 45-, 90-, 135-, or 180-degree angle, with earth as the midpoint between the two planets.

Why do difficult angles cause difficult markets?

The reasons are partially understood. In the 1940’s, radio propagation specialist John Nelson studied planetary alignments to time sunspot activity and solar flares, and thereby help his employer, RCA, reroute shortwave radio transmissions efficiently. Years later, when I got interested in alignments and became friendly with John, he would tell me when a flare was in progress. I would then call a broker and find that, typically, stocks were dropping and gold was rising. In concert with new and full moons, where the tidal forces brought the atmospheric disturbances closer to the earth, extreme volatility would ensue in markets where a significant emotional component was already in progress.

For instance, the highest sustained period of ionospheric electrons measured by geosynchronous satellite took place the week before and during the October 1987 crash, and then dropped back on the day of the stock market low.

Recent studies by physicists, biologists and cosmologists show gravitational and electromagnetic activity affects the growth patterns of many species here on earth. Much of this data was collected and correlated by the Foundation for the Study of Cycles, in Albuquerque, NM.

I once did a study of the worst days in the stock market. Two-thirds of those days occurred in one-third of the calendar year, centered on the Fall Equinox, around Sept. 22-23. Maybe there is a symmetry that governs the universe that we haven’t yet figured out.

How did a physics and math major from the University of North Carolina get interested in planets?

I read about it on the front page of the Wall Street Journal in 1963, while a technical market analyst at Merrill Lynch. I was the first assistant to the legendary Robert Farrell, who was repeatedly voted best on the Street by his peers in the annual Institutional Investormagazine poll. My curiosity piqued, I looked into this subject and found that difficult alignments correlated with difficult markets. The correlation was too well-defined to be chance.

Give us examples when difficult alignments correlated with difficult markets. Let’s start with the Great Depression.

During 1929-1932 there were several difficult planetary alignments.

What about the October 1987 crash?

On Aug. 24, planets were in the tightest five-body “conjunction,” or same ecliptic longitude, in at least 800 years. “It doesn't get any better than this,” I reasoned. Therefore, “A severe decline will follow,” I told subscribers. Turns out, Aug. 24 was the top. From that alignment high to the Oct. 20 low, the Dow fell 33%. A difficult planetary alignment preceded a difficult stock market.

What about the 2008 Crash?

Our research showed a Mars-Uranus “crash cycle” beginning Aug. 6, 2008 and ending in late-Mar. 2009. So beginning several months before Aug. 6, we repeatedly told subscribers, “Neither Wall Street nor our Government will be able to hold markets up against the 'deluge'!"

Further, on Sept. 2 we told subscribers that the worst part of the crash would occur on Oct. 10, plus or minus three trading days. We repeated this forecast on Oct. 2. Our headline was: “Market Crash – Dead Ahead.” Turns out, Oct. 10 had the largest number of new lows on the NYSE ever, at 1203.

Why did you choose Oct. 10?

There was a full moon after the market closed on Oct. 9. Also, there was a “Grand Cross” alignment at this time, with the sun opposite the moon, and squaring Uranus opposite Neptune.

So this is another example of when a difficult planetary alignment preceded a difficult stock market.

Did the planets or your technical analysis forecast the rebound in stocks which began March 9, 2009?

Our March 2 headline was: "Best Bet - Nearby Low!"

Then on March 12 we told subscribers: "We believe this rally confirms a strong buy.”

Does energy from difficult alignments reveal itself in ways that go beyond financial markets?

In April 1986 we had a Lunar Eclipse conjunct Pluto. The close proximity with Pluto is rare. So we told subscribers, "If you don't feel this one, you're not alive!" We were prophetic, as the April 26^th Chernobyl accident raised radiation levels worldwide.

By the way, we have another Lunar Eclipse conjunct with Plato on June 26. Pluto “rules” nuclear power, debt, interest rates, and the use of force, say the astrologers. Maybe June 26 is the de facto start of the Cardinal Climax.

In November 1989, we observed a Saturn conjunct with Neptune, both opposite Jupiter to the day. This alignment happens every hundreds of years; i.e., it is extremely rare. Several days later the Berlin Wall fell.

In our July 1990 we told subscribers, “This will be one of the worst days of the century. There will be coercion, the use of force, a large explosion and heartlessness or cruelty August 2-7." On Aug. 2, Saddam Hussein unexpectedly attacked Kuwait. What alarmed me was the Lunar Eclipse forming another Grand Cross, this time with Mars opposite Pluto.

What about September 11, 2001?

In our letter mailed Sept. 4 we wrote that when Mars hits the solar eclipse point on Sep. 7^th or Sep. 8^th, then the U.S. will be at war.

Do the planets ever fool you?

We are still in the 'covered wagon days' of this as a science. Much of the time is without major significance. Also, the “big alignments” can be tricky to interpret. But some alignments—this summer’s Cardinal Climax, for instance—are unambiguous.

Let’s talk about the Cardinal Climax.

On August 1, give or take a week, we’ll have the most five-planet alignments in perhaps thousands of years. Known as the “Cardinal Climax,” this is the meanest, nastiest, most challenging and most transformational of any planetary phenomena in all of written history!

We’re giving readers a link to a chart showing the Cardinal Climax. What do you see?

This is the view of the planets from New York City on Aug. 1, at 6am. We have the most planets in the tightest alignments and at the supposedly 'sensitive' Zero degrees of Cardinal signs. It makes the hair on the back of my neck stand up.

I looked at records going back to the 1800’s, and this is the most difficult alignment I found. When I was at a conference in Boston last month, someone said this was the most difficult alignment they have seen in the last "1,000 years." Another person told me this is the worst alignment in "10,000 years."

What are possible consequences?

Worst cases include a nuclear accident. Nuclear war. Massive societal collapse. Maybe a pole flip, which can wipe out nearly everything.

Cardinal Climax is especially intimidating because of the proximity to the widely touted Mayan Calendar End Date. Plus, the Christians are looking for the Return of Jesus and/or the Rapture, the Muslims await the return of the umteenth Imam, the White Buffalo has been born, and Jews are fighting over the right to rebuild Solomon's Temple on the 'temple mount' in Jerusalem. These are all signs of “end times” by many different cultures.

The one thing most convincing to me is that there are more people alive on the planet today than all who have ever lived in recorded history. So it may be that every soul is on board for this event!

At a recent 1180, did the S&P 500 already peak for 2010?

The top may be this month or in May, based on normal seasonal and astrologic patterns.

Will Cardinal Climax cause just U.S. stocks to fall? Or is this a global meltdown?

Definitely global.

If I sell my stocks, as you advise, where do I put my money?

The best money will be made on the downside in shorts, stock index futures, negative ETF’s, and put options. However, we do not recommend that subscribers buy options—especially if they are not seasoned traders. With options, you can get the direction right but then maybe not get paid in usable currency before the whole system melts down.

Inflationists advise buying commodities, to protect against the 21% year-over-year increase in Federal Reserve assets, and the 15% year-over-year increase in U.S. public debt.

We are probably seeing a peak in general optimism about the economy and commodity prices. When suspicion arises that a double dip or worse is about to return, we will see the commodity averages slip into the tank. Even assets in the ground will not hold against a worldwide depression that is well on its way.

Deflationists say buy long-term U.S. Treasuries, because it will take years to reduce a 375% debt-GDP ratio, and because the M1 money multiplier is barely pulsing, at 0.8x.

We’d rather be long German, Swiss or Australian bonds, although U.S. bonds will probably do well on the initial declines. Do not overstay as the U.S. Dollar will come down hard. The United States will come apart in this Depression!

Besides selling stocks, what other precautions do you advise?

Our markets may be the least of our worries, given this powerful and chaotic frame. The Mormon mandate of keeping two years worth of food and water in your home is common sense.

How do we know when it is safe to own stocks again?

"When CNBC becomes a sports station!,” to quote my friend Jim Grant.

You have 55 years of investing experience. What have you learned?

Nearly all of our frustrations in the market result from our unfulfilled expectations about what we thought a market ‘should’ do. No one knows the future.

Also, investing is probabilistic. So if you think knowing how to ‘read’ planetary alignments increases your probability of success, then get planetary literate.

Thank you, Mr. Crawford.

weekly dow update - red alert for swing traders

Next week my vacation ends and updates will be more frequent again. So far the DOW is about to complete wave C up as we also are challenging the channel resistance. we also are on the last bit of astro support which will turn markets any day latest should be the 30th as Mars reaches the trouble zone. Two possible scenarios one is a retreat t0 9800 - less likely, more likely is a test of 94-500 in the first leg before collapsing to 8800. problem ı have with the more aggressive version for now are the sentiment factors who are slightly bearish which limits the downside - though in 2008 we had a similar situation but we also had also Lehman and AIG. Astro says though some extreme external shocks are possible for the next weeks. we have to follow closely as the turn and drop unfolds. In any case this are levels to go short again within 48h.

Brainstorming Tuesday

1. Lets start with a serious warning as the astro pattern confirms that within the next 2 weeks very outstanding negative things can happen.

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Heads up please. In working through the longer term data, i had to go through some of the last of the immediacy stuff due to cross links. Within the immediacy data sets there are clear indications
of a major [damaging] earthquake on west coast of america (MOST likely
north america due to angular momentum issues of planetary alignment) and
more probably than not, in the PNW perhaps down to mid CA. This quake
shows as being completed with problems, *such as yet more [wedding
interruptions] by August 3, however the data accretion patterns point to the
last two days of July as the point of impact and largest number of after
shocks. Damages are indicated to include [roadways] and [bridges] such that [transportation/movement] is [restricted (in some places)] for months afterward. Water flows are also to be affected and even altered for long time (months/years) which is how i found it. By noting the odd number of longer term indicators for [water pathways change] in the data accretion patterns for November and onward in 2010. A significant majority of these traced back to something in the immediacy data that turned out to be this pending earthquake in very late July.

Probably i am wrong though. In any case thought to let y'all know. Will try to speak to George Noory about it tonight (7/26/2010) on Coast to Coast AM. Probably just because i do this, it wont happen. Here's hoping pies bake without interruption.
clif (posted 7/26/2010)

2. The Japan effect from the 80ies is perfectly repeated by China's major bubble only that the stock market bubble has already burst.

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More On China's Trillions In Unrepayable Project Loans

Submitted by Tyler Durden on 07/27/2010 12:38 -0500

• CDO
• Collateralized Debt Obligations
• Vacant Homes
• Yuan

Last Friday we reported that the most important (and most underreported) story of the week was Bloomberg's disclosure that Chinese banks may struggle to recoup about 23 percent of the 7.7 trillion yuan ($1.1 trillion) they’ve lent to finance local government infrastructure projects, and that only 27 percent of the loans to the financing vehicles can be repaid in full by cash generated by the projects they funded. As this is a topic that deserves much more attention, we present the views of Goldman's Ning Ma on this critical issue, which when combined with Fitch's recent disclosure that the CDO market is ramping up in full force halfway across the world, and that China has 66 million vacant homes, should all come together in a nice and tidy confluent package of a combustible real estate-cum-credit explosion. Of course, this being Goldman, guess which way the spin is pointed: "We continue to believe systemic risks associated with such loans are limited. Key to watch: The results of restructuring and NPL recognition in 2H10 (mainly from unrecognized social projects and misused loans, but likely far less than 23% NPL ratios), and credit cost allocation among banks and local gov’ts." In other words, ignore the biased conclusion, but certainly focus on this most recent unravelling of the Chinese bubble.

SPX weekly update

The SPX rally made it to the 2 crossing lines and never exceeded the death cross which is a deadly sign for the bulls. bulls might want to put on double pampers and fasten their seat belts pattern deploying. the 50 ma proves to be a resilent resistance for all phony rallies while we prepare for the big one the drop below the big 1000 handle. that should trigger a mini capitulation down to 925-50. We might likely see a bit more zigzag til the 26th - even 30th less likely - followed by a steep decline lasting another 3-4 weeks. Thereafter a sharp rally to max. 1200 as the final chance to get out before disaster hits the world and spx declines to new lows beyond the evil 666.

NDX weekly update

NDX joins today all US indices by making a death cross as well. THe rally exactly to the 50 and 200 day MA is a classic as is the turnaround which leads to a sell off thereafter. So far we have produced a lower low and a lower high which confirms the overall bearish picture. The slightly disturbing fact is rather the ISE MA's are all in the lower 90ies which limits current losses going forward together with other sentiment indicators. I expect another decline to the 1700 level and likely even 1650 before a bigger rally should occur for a few weeks back to 1900 probably preparing the market for a crash like move. Around this WE very bearish astro patterns will deploy triggering a fast and steep sell off.

EURO update

As usually when all pundits declare the death of the EUR it will not happen. As we now have even taken out the 1.2750 level we are in for a bigger treat as the 38% level at 1.3140 is the next target. We might see a little consolidation for the next days but buying weakness is still the right thing to do for now. America can anyway not afford a strong Dollar over a long period and as we go towards the November elections we can rather expect punishment of the Dollar as Republicans will gather at least on house putting America in ultimate turmoil as an opportunistic and propagandistic president will be turned into a lame duck. Last quarter of 2010 will have a weak Dollar trend as I stated many times the economic situation of America is actually worse than Europe by all parameters it has only a political strength component which will be diminished by the election outcome.

Brainstorming Wednesday - part 1

1. Rarely told truth

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Shadowstats' John Williams Exposes The Media's Propaganda Spin, Or Why Watching CNBC Can Be Hazardous To Your Wealth

Submitted by Tyler Durden on 07/14/2010 12:58 -0500

• Double Dip
• John Williams
• M3
• Recession

In his latest letter to subscribers, Shadowstats' John Williams dissects recent economic data, and after providing yet more evidence that after the recent period of "bottom-bouncing at a low-level plateau of business activity" the economy has once again entered a double dip. Overall, it has cost the US taxpayers several trillion in debt (which will never be repaid), and a major hit to the value of the paper in their wallets, just to play the game of extend and pretend for a just under 18 months. The positive effects of the sugar high are now gone, leaving just the negative, one of which is the propaganda spin engulfing the entire legacy media complex whose survival depends on the ongoing perpetuation of the Ponzi lie that all is well. And courtesy of Mr. Williams we have prima facie evidence of precisely why formerly reputable channels such as CNBC are in the process destroying their credibility and causing an exodus of viewers, with the few remaining viewers remaining primarily for the opportunity to heckle the openly lying talking heads. To wit from Shadowstats: "Let me recount two personal experiences. Back in late-1989, I contended that the U.S. economy was in or headed into a deep recession. CNBC had me in to discuss my views along with a senior economist for a large New York bank, who was looking for continued economic growth. Before the show, the bank economist and I shared our views in the Green Room. I outlined my case for a major recession, and, to my shock, his response was, "I think that pretty much is the consensus." We got on the air, I gave my recession pitch, and he proclaimed a booming economy for the year ahead. He was a good economist and knew what was happening, but he had to put out the story mandated by his employer, or he would not have had a job. More recently, following an interview on a major cable news network (not CNBC), I was advised off-air by the producer that they were operating under a corporate mandate to give the economic news a positive spin, irrespective of how bad it was." And now you know that watching stations like CNBC for anything more than just comedic value is hazardous to your health and wealth.

John Williams criticism is even harsher:

Further complicating the outlook is a more traditional issue: pronouncements by some economists on Wall Street and financial reporters in the popular media, who act as shills for the needs of Wall Street and political Washington. While there are a number of fine and honest economists and financial reporters in their respective fields, there also are those — often very heavily publicized — who spew Pollyannaish nonsense aimed at affecting public sentiment and/or the financial markets during troubled economic times.

I know from other personal experiences that these circumstances are commonplace. A simple example of recent distortion was yesterday’s positive hype over an unexpectedly-low weekly jobless claims number. Widely known — at least I have discussed the matter frequently — is that the Department of Labor cannot adjust the weekly claims numbers meaningfully for regular seasonal variations. Accordingly, reporting around holidays invariably results in unusually large and unexpected swings in the weekly numbers. Yesterday’s data covered the onset of the Fourth of July weekend. It would not be at all unusual to see a similarly-meaningless reverse-gyration in next week’s release.

At least we can now drop any pretense that America and the Evil Empire of the 1980's are in any way different - central planning: check; complete media subjugation: check; power to the (unionized) workers: check; "free" healthcare for all - check; the only difference is that the hegemonic kleptocrats in the US, i.e., the banking elite, are sophisticated enough to keep the plebs distracted and while enjoying their last years of power in a collapsing regime, are rapidly transferring whatever remaining pockets of wealth in US (and global) society are left to their own private safes in undisclosed locations. We know how things ended for the once great USSR - it should provide a great roadmap for what is coming to the US.

And while we are on the topic of John Williams, who remains the only accurate tracker of M3 now that the Fed deems this monetary aggregate irrelevant, here is his latest commentary on the inflation-adjusted M3. It's ugly:

Plotted below is the year-to-year change in real (inflation-adjusted) M3 (updated for the Fed’s revisions) versus U.S. recessions, as recognized by the National Bureau of Economic Research. Whenever annual real change in M3 has turned negative, the economy always has fallen into recession, or if already in recession, the economy has entered a period of intensified downturn, usually within six to nine months of the initial M3 downturn. The signal for economic trouble ahead is the annual real M3 growth first turning negative, as happened in December 2009.

2. Some more truth

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Jim Grant Is Confident QE 2.0 Is Just Around The Corner

Submitted by Tyler Durden on 07/14/2010 15:24 -0500

• Alan Greenspan
• Ben Bernanke
• CPI
• Evans-Pritchard
• Federal Reserve
• Janet Yellen
• Jim Grant
• Monetary Policy
• Newspaper
• Quantitative Easing
• San Francisco Fed

Jim Grant, one of the most respected voices in the financial industry, joins Zero Hedge and others, who see that the only choice the Federal Reserve has now that the temporary and shallow reprieve from the clutches of the deflationary depression is over, is to print more money in the form of another iteration of QE. Whether this will be another $2.5 trillion, like last time, which was the price of an 18 month delay of the inevitable, or a $5 trillion concerted global effort, as Ambrose Evans-Pritchard believes, is irrelevant: the only option the central printers, pardon, bankers, have left is to flood the market with yet more worthless paper (keep an eye out on the doubling in the price of gold the second QE2 is publicly announced, which will also double as the obituary for all fiat paper). In an interview with Bloomberg TV, Grant says that the first order of business tomorrow when the Fed's new additions officially join their new groupthink perpetuating employer will be "to try once more to print enough dollars to make something happen in the U.S. economy.” The ever-sarcastic Grant manages to completely skewer Janet Yellen, Steve Diamond and Sarah Bloom Raskin, to ridicule the Fed's 100% track record of not only focusing on the wrong thing time after time, but getting the response consistently wrong with 100% precision, and also manages to makes fun of the Fed's credentialed WSJ lackeys, who courtesy of the Fed's "editorial" control over the reporting process, get a direct line into leakable Fed strategy.

DOW weekly update

The bankster and PPT cabal who drive this artificial rally with no buyers have reached an extreme point as you can see in the chart - trend-channel resistance identical with 200 day MA. Probability is at 80percent we will turn around from the 10400 level and make a downmove giving back most of the rally
to 10000 before we see another last attempt up.

Brainstorming Monday

1. Must read - very carefully - around 28th July it will be activated

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http://www.crawfordperspectives.com/documents/Mars-Uranus.pdf

2. Wave A up has been reached today and we can expect wave B down now to 1040 SPX before final wave C up might test 1100.

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Sprott On Wither Green Shoots

Submitted by Tyler Durden on 07/12/2010 13:13 -0500

By Eric Sprott And David Franklin, Sprott Asset Management

Wither Green Shoots

With the summer now upon us, the "Sell in May and Go Away" adage has proven itself true once again. The major market indexes are all turning downward, and while they haven’t dropped enough yet to warrant panic, we certainly want to be positioned properly if this trend continues into the fall. The market tea leaves are no longer sending mixed signals either – most of the new data is decidedly bearish. So what happened to all the ‘green shoots’? What happened to the strong recovery the market rally was promising?

Economic data released over the past two weeks have decimated any remaining belief in a lasting economic recovery. Slowdowns are appearing in the US, Europe, Japan and even China. Auto sales, housing starts, employment, consumer confidence, factory orders, consumer purchase intentions - just about every aspect of the economy that can be measured, is showing decided weakness.

Of particular interest to us over the past year has been the GDP forecasts released by The Consumer Metrics Institute in Colorado ("CMI"). CMI caught our attention with their real time tracking of consumer retail sales data. Consumer spending represents 70% of GDP, and that spending can provide great insight into the workings of the underlying economy. CMI’s retail sales data has indentified a long, negative contraction in the economy based on their data set for the last 180 days. This was confirmed most notably in Walmart’s poor first quarter sales results when CFO Tom Schoewe stated, "More than ever, our customers are living paycheck to paycheck."¹ If that sentiment applies to other large retailers, it doesn’t bode well for 2010 GDP.

CMI also predicted 2010 Q1 GDP growth at 2.62% all the way back in November 2009. It took nearly seven months for the actual US GDP data to eventually be released, but when it finally did (after three revisions, no less) it turned out that CMI’s prediction was bang on. Interestingly, when the real data came out, CMI founder Rick Davis noted that the inventory component underlying the 2.7% Q1 GDP growth figure had moved from 1.65% up to 1.88% – meaning that the bulk of GDP growth, almost 66%, actually came from inventory swings rather than consumer demand. No wonder factory orders fell out of bed this past week! With the re-stocking complete, there aren’t enough new orders to clear the fresh inventory. And if two thirds of Q1 growth came from inventory swings (or just plain re-stocking etc.), it makes us wonder what we can realistically expect from the next two GDP announcements. CMI provided the following guidance for the balance of the year, stating that "We expect GDP growth to be flat for the second quarter, but with inventory adjustment reversals absolutely killing the reported ‘growth’ number just four days before the U.S. mid-term elections." If that turns out to be correct, it will be unfortunate timing for the elections.

An important question to ask is whether the March ’09 rally was really justified at all. Were the green shoots real? Or was the market just looking for a way to justify the effects of government-induced ‘easy money’? The stock market is supposed to be an efficient, forward-looking indicator after all – and the rally that began in March ’09 was supposed to signal a robust recovery. So where’s the recovery? From the time the term ‘green shoots’ was first uttered by Ben Bernanke on March 15, 2009, the S&P 500 rallied 36% to June 30, 2010 and by as much as 60% to April 26, 2010. If the green shoots were really just the early indications of weeds, was the market wrong to appreciate so dramatically?

There is little doubt that much of the stock market action during the past 12 months has defied traditional market rules. Nowhere is this more evident to us than in the banking stocks. We’re still scratching our heads on the whole sector. Readers may remember an article we wrote in November 2009 entitled "Don’t Bank on the Banks" in which we discussed the hazard of leverage in the banking system. If you gauge our conclusions by what actually transpired in the banking sector as a whole, we were essentially correct. Of the 986 bank holding companies in the US last year, a total of 980 of them LOST MONEY.² And that’s even after all the government bailouts the sector received. Hmmmm. Robust banking recovery? Not a chance. However, the remaining six banks, all of which are "too big to fail", did manage to earn a combined $51 billion in 2009, sending their stocks soaring as a result. So despite 980 out of 986 bank holding companies returning nothing but red, the sector actually fared pretty well from a market perspective. Does this make any sense to you? Here we have an entire sector that is essentially broken; where a mere handful have maintained profitability not from their own strength but thanks to the taxpayers’ bailouts; and where the government is now aiming the most powerful of their regulatory reforms – and the market decides to pile into their respective equities?

The banking sector isn’t the only equity space that confounds us – the housing stocks are as equally absurd. Despite what you may have heard from your local real estate agent, the fundamentals for US housing are looking dismal. Ever since the tax credits have rolled off, new home sales are now running at 300,000 on a seasonally-adjusted annual rate ("SAAR"), representing a new all time low this past May. For comparison, this is down from an all time high of 1,389,000 new home sales made in July of 2004.³ Reading this, you may expect the home builder stocks to have performed poorly. But no, not in this market! As you can see in Chart A, from the day that Bernanke first saw his ‘green shoots’, the home builders index appreciated by 47% to June 30, 2010, peaking at 104% on April 23rd – all while new home sales were down 14% over the same time period on a SAAR basis.⁴ ‘The Market is Always Right’, as they say, but it simply can’t be with regard to these stocks. The housing ‘green shoots’ were the product of government initiative, rather than true fundamental improvement, and were thus short term in nature. Now that the government program has ended, the whole sector looks poised to fall apart.

At the end of the day, nobody should be surprised by the recent economic data. The stock market rally that began in March ’09 was driven by monetary phenomena rather than anything fundamental, and based on data from CMI for 2010 it appears that we have already entered an economic contraction phase. The market is now beginning to reflect the fact that the green shoots were actually just the early signs of weeds, and it would suffice to say that virtually all the major world governments have some serious gardening to do. The recent contractions don’t necessarily mean that we’ll experience a repeat of 2008’s stock market performance in 2010, but it does suggest that investors should question the real fundamentals underlying their investments, lest the market begins to trade on them again.
________________________________________

1 Bustillo, Miguel (May 19, 2010) "Wal-Mart Same-Store Sales Fall" The Wall Street Journal. Retrieved on July 8, 2010 from: http://online.wsj.com/article/SB10001424052748703957904575252092724864622.html?KEYWORDS=wal-mart+struggles+to+to+keep+shoppers

2 Lenzner, Robert (June 3, 2010) "Six Giant Banks Made $51 Billion Last Year; The Other 980 Lost Money" Forbes. Retrieved on July 8, 2010 from: http://www.forbes.com/2010/06/03/goldman-sachs-citigroup-markets-lenzner-morgan-stanley_print.html

3 US New One Family Houses Sold Annual Total SAAR (Bloomberg: NHSLTOT)

4 As measured by the Dow Jones U.S. Select Home Construction Index (Bloomberg: DJSHMB)

SPX weekly update - the death cross pattern

Almost everybody calling for a bull campaign is rather deliberately ignoring some essentials or has a hidden deception agenda. After having reached my first big target area 1000-25 we have a regular upside correction or consolidation phase currently. As we have recently activated the death crosses for SPX and DOW one regular pattern is that markets rally right after for a short while before resuming the prime trend - which is down. PPT changed the strategy it seems as they let the people get short into the long weekend to squeeze them right after but in any case it was overdue. The question rather is will it run its full magnitude. At 1070 we have run a 50% retracement and had a 3 day run which should be reversed today as it should deploy in an ABC wave pattern and currently A might have been reached yesterday and today should confirm by a down day. Last time in 2007 as the death cross occurred we also had a sharp 4 day rally right thereafter even up to the MA's before the market started to collapse.

Brainstorming Wednesday - I am on vacation currently hence the blog writing will be less than usual

1. After 10 downdays we had 2 updays produced by PPT together with some pathetic propaganda research - Byron Wien's denial is rather ignorance or more likely as an ex top MS man he is part of the cabal anyway - anyone who has watched the tape the last 3 years with an IQ above 80 could clearly see the pathetic work of PPT - which was run for most of last years by Goldman's as they ran the market division of the NY FED.

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CNBC Guest Says Absent Plunge Protection Team Stepping In, Market Would Fall; Wien, Kernan Disgusted

A highly amusing exchange occurred earlier on CNBC when guest Damon Vickers of Nine Points Capital had an unexpected moment of truthiness and turned some heads when he said that "unless the plunge protection team comes in over the next couple of days, the markets are looking very dicey here." When a disgusted Joe Kernan asks if Vickers was making a joke about the PPT, the response is "absolutely not - it's common knowledge that the government steps in and does things to step on the gas and buy stock here and there." To which Byron Wien has a strong retort: "I don't believe it." All that and much more in the clip below. In the meantime, the market is sure having a field day with stocks as once again bad news are discarded and the smallest glimmer of positivity serves as a springboard for yet another ramping short covering spree.

The market is cheap propaganda ? - must read

The market is cheap propaganda - is rather a matter for FBI investigation as those claiming that are even insane and be put in an institution and the more likely scenario the tricksters and banksters want to hype the market to unload their stocks on Mainstreet.

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Guest Post: "So Much For The Market Being Cheap" Charting A 50-75% Downside Case In The S&P

Submitted by Tyler Durden on 07/06/2010 23:08 -0500

Submitted by Brandon Ferro, Managing Member of Hevea Partners

Some Market Thoughts worth Sharing

Historical market data that suggest our current situation resembles very scary periods in times past (i.e., the 1929 crash to be specific) is beginning to pile up.

Let's look at the set up from the perspective of charts.

Here are historical bear markets, indexed to 100% (100% = bull market peak).

It's quite easy to see that the current bear market that began in late April has been more ferocious than the average bear market through history at this juncture of its development.

In fact, this bear market looks an awful lot like the way the 1929 crash shaped up. While other individual bear markets have fallen faster and by a greater amount, they were all short-term crashes, such as the 1987 crash and the 1998 Asian Financial crisis crash.

As such, they ended very quickly. The current one, however, seems to be more drawn out, again looking very similar to the 1929 crash represented by the red line.

What is worth noting is that despite the fact that we witnessed a mini-crash in May and a $1T support package for Europe thereafter, the current tape action is still as weak as it is and is leading to the set up in these charts I'm discussing.

Despite the latter events, one of which was supposed to be cathartic to an over-bought market and the other supportive to global economic stability, we're still hanging on the edge of a cliff it seems.

Now, let's specifically compare the 1929-1942 bear market, which began with the 1929 crash and largely ended with US engagement in WW2, to the 2000-2010 period, which has seen two massive bear markets with two major rallies of 100% and 85% in between.

It is amazing how closely these charts resemble themselves in terms of price action and the timing of each cycle’s respective moves. It seems to me that the only major difference is the order in which events seem to be playing out.

For instance, they had their crash quickly while we have avoided ours for 10 years with profligate monetary policy and government spending.

It seems to me that the market is now recognizing that the game is up; no amount of additional money, bailouts or otherwise can prevent the system from collapsing under the weight of all the debt that has been allowed to build. That's why it seems as if the far end of the black line is on the cusp of doing what the red line did on the left side of this chart in 1929.

Again, the same events, just reversed - politicians unwittingly took austerity measures in 1929-1930 that caused a depression and they're doing the same thing now, just 10 years later than expected.

If you look at the dotted black line, it represents the absolute low of the 1929-1932 depression, a roughly 85% decline in all on a monthly basis. For context, this correlates to roughly 230 on the S&P500.

Question is, their bear market ended when we entered WW2; is Iran and Israel the catalyst for a similar situation in 2012 when this analytical work suggests our bear market could end? They could theoretically pull the world into their mess given the resources at stake and the emergence of a resource rich country in China.

Which brings me to the S&P500 / Gold ratio chart.

Historically, the value of the S&P500 relative to the price of gold reaches a bottom at roughly 28% (all-time low = 19%). The ratio is currently 94%.

Assuming a gold price of $1,500 or $2,000 (reasonable given fundamental backdrop) suggests an S&P500 value of 375-500.

Isn't it crazy to see how the market cycles vs. the price of gold through history? This is the third major secular bear market for stocks relative to gold over the past 110 years and it shows up decisively in the chart.

If you believe that everything reverts back to its mean and even overshoots (i.e., when you stretch the rubber band too hard in one direction it has to snap back even harder in the other), then the unprecedented explosion in the market vs. the value of gold in 2000 (almost 6.0 on the chart) relative to other historical peaks at the top of secular bull markets (1929 and 1966) suggests greater upside than $1,500-$2,000 for gold and more downside than 375-500 for the S&P500.

Further, the SPX / Gold ratio chart is where we form our timing thesis of 2012 being a potential bottom for this secular bear.

Notice how troughs in the S&P500 relative to the price of gold have typically taken 12-13 years to play out. The S&P500 put its peak in relative to gold 10 long years ago in 2000. We sure are close.

Let's also look at the valuation on the market (Price-to-Earnings ratio or P/E) when it has typically reached major, major bottoms which have led to new periods of prosperity and huge, secular bull markets.

Typically, the P/E on the S&P500 has reached b/t 6x-8x earnings per share (rolling Shiller 10 year average), well below the current ~19x.

Notice how the “generational low” in February 2009 (dark black), which preceded the 85% rally over the past year, was probably not the generational low everybody thought it was - the P/E on the market never went below 14x. Also note the P/E at the 2003 lows (white).

If we assume $70 in S&P500 earnings per share in 2011 (mild recession in 2H10 and 2011) and use a 6x multiple you get an S&P500 value of 420.

To really nail the overall thesis for you here is a comparison of the P/E ratio on the market during major, long-lasting, secular bear markets.

I’ve indexed the P/E to 100%, the point at which it peaks during the end of a secular bull market. As the lines move right and lower it represents the amount by which the S&P500’s 10 year P/E has contracted relative to its peak in the past secular bull move.

The black line represents the bear market we've been in since 2000. The marker represents today's data point.

As it stands, P/E ratios have contracted by roughly 50% from their level in 2000 (45x, vs. only 35x at the peak in 1929).

Notice how much further valuations have to contract to reach the level of contraction they have reached in other secular bear markets.

The chart indicates valuations bottom when they have declined about 80%-90% from their high. Using the 2000 P/E of 45x this yields ~5x-9x, in-line with my chart above which says market bottoms are reached at P/Es in that range.

Let’s play devil’s advocate and assume that S&P500 earnings estimate of $95 (LOL) in 2011 is correct…

Even if it happens, this chart suggests it could be more than offset by material P/E contraction that has yet to take place. A 6x-8x P/E on that $95 number next year would yield 570-760 on the S&P500, well below the current 1,030.

Therefore, even if you want to make the bull case for earnings, the latter chart suggests you’ve only figured out half the story; you also have to make an entirely unlikely bet that the black line will diverge and we will start to witness massive P/E expansion unlike any we have ever seen before at this stage of a secular bear market.

I’m not saying it’s impossible, but it sure does seem implausible given the way history looks in the chart hah?

So much for the market being cheap.

Friday brainstorming - part 1

1. Depression 3.0 about to enter official trigger level soon unfortunetly as politics has used all its bullets to bail out banksters choosing the inflating strategy over austerity.

ECRI Weekly Leading Indicator Ever Closer To The -10% Threshold, Drops To -7.7; Leads To Another Leg Lower In Stocks

Submitted by Tyler Durden on 07/02/2010 10:07 -0500

We are just 2.3 points away from that critical -10 threshold on the ECRI WLI which at least historically, has guaranteed a recession. Just the freefall itself is vertigo inducing, and the number's release at 10:30 Eastern is what pushed the market even further lower as bullish indicator after indicator collapse.

2.Iran vs Israel/America is on a save path to war as the escalation of events is mandatory after the new imposed sanctions. With the new frictions between USA and Russia we can be sure that they will semi secretly support Iran and deliver even weapons as they have a lot to win starting with a substantially higher oil price to big weapon deals. The situation is rather poised to go very quickly to an attack as time is from now on the enemy of Israel. They tried to win over one former ally by having a secret meeting with Turkey but that did not work out at all it seems.

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Iran threatens oil routes as Obama signs tough new energy sanctions
DEBKAfile Special Report July 2, 2010, 10:24 AM (GMT+02:00)

Tags: Iranian Gen. Vahidi Obama US sanctions for Iran

Obama signs first sanctions with bite

A US-Iran showdown loomed closer early Friday, July 2, when president Barack Obama signed into law a series of energy sanctions, the toughest yet, for arresting Iran's nuclear weapons program. Iran's defense minister Gen. Ahmad Vahidi warned that searches of its ships or planes would have "dire consequences" for world security and the Middle East in particular.

The law drafted by Congress shuts US markets to firms that provide Iran with refined petroleum products, such as gasoline and jet fuel, invest in its energy sector, or provide financing, insurance or shipping services. Non-US banks doing business with blacklisted Iranian entities, primarily Islamic Revolutionary Guard Corps organizations, will be banned from US markets.
These measures complement and strengthen the new UN Security Council sanctions and European measures and will hit every Iranian. The oil-rich country Islamic Republic imports 40 percent of its refined oil needs because of its own inadequate refining capacity. Any investors in projects for developing this sector would be punishable under the new US law.
Earlier, Gen. Vahidi warned world powers against implementing certain UN sanctions: "As regards inspection of (Iranian) ships, there are one or two countries which pursue the issue and have made some comments about it and this indicates that these people don't pay any attention to security issues in the region and the world," said.
Tuesday, June 26, debkafile's military sources reported the arrival of the USS Nassau-LHA-4 at the head of a strike group of amphibian craft to the Gulf of Aden-Red Sea sector with 4,000 Marines aboard, including special units trained in operations behind enemy lines. Our sources disclosed that their presence caused Tehran to hold back the ships destined for breaking Israel's sea blockade of the Gaza Strip for fear they would be intercepted and searched as UN sanctions permits. To read article click here.
The Speaker of the Iranian parliament (Majlis) Ali Larijani and the Revolutionary Guards commander Gen. Ali Fadavi have both threatened harsh reprisals against all vessels, including American warships and oil tankers sailing through the Persian Gulf and Straits of Hormuz, for any attempts to search ships or planes carrying cargoes to Iran.

The new US law will make shipping and insurance costs for Iran's gasoline imports prohibitive. They are the first sanctions to bite really deep into Iran's economy and hit the Guards' commercial empire. Their control of refined oil imports is a major source of revenue and those profits provide funding for their operations, the foremost of which is the development and manufacture of nuclear weapons.
debkafile's Iranian sources have no doubt that Iran will not take the new penalties lying down and will strike back - possibly, in the first instance, by impeding Persian Gulf shipping carrying Saudi and Gulf oil out to the United States, Europe and the Far East, with immediate effect on world oil prices.
Interception of an Iranian ship suspected of carrying contraband energy products could well spin into a showdown.
President Obama indicated that this time the United States is determined to follow through on its punitive measures against Iran. As he signed the new sanctions, he said: "There should be no doubt, the US and the international community are determined to prevent Iran from acquiring nuclear weapons. The new sanctions would strike at its capacity to finance its nuclear program." He went on to say, "If Tehran persists in its course, the pressure will continue to mount and its isolation continue to deepen."

Thursday Brainstorming - part 1

1. we have reached the first old targets for the spx 1000-25 and ndx 1700 which are also the weekly bolls for now but we have to test the 950-75 and 1600-30 levels before a significant bounce will likely happen around the solar eclipse 11th juli. the current low is the 38 percent fibonacci level at 1010 spx hence a little struggle around this level is natural but no exhaustion has been reached yet.

2. coming to the timing of anu iran attack some very intriguing clues from halfpasthuman

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Tick...tick...tick - Israeli Mistake, Confusion, and a chart

After speaking with George Ure about the current events as of today, and having run into a wall of confusion, and misunderstanding between us over certain forecasts and the language and the tension values, i thought it wise to post this small article and a chart in aid of the confusion, either to increase, or decrease.

The issue is the July 11th break into 18 and a half hours of release language. George, and apparently others, are under the impression that some big 'thing' would happen on that date. This may well be the case, however, note that the release language (all the downward slanting lines in the charts below) continues all summer as punctuations to building tension. So the pattern from July 11th through to November 8th is one of building tension and then release of tension, almost on a daily basis. Note that this is the USUAL state of our charts for the planet. What is unusual is that we have been in a very long period of building tension for these past few months. What is also unusual is the 'tipping point' that is forecast to occur over 4 days in November from the 8th through the 11th inclusive. Then what is even more unusual is that the release language continues unabated, without deviation for over 2 months, from November 11th through to January 23rd. Please note some slight distortion in the charting software related to fonts alters the dates placement visually. The above dates are from the raw data, not from charting.

So, knowing that the September 11th attacks on the money center of the planet by TPTB (we call this the 9/11 event), had a tipping point that lasted about 4 hours, followed by 12 hours of release language, before returning to building tension language as the planet tried to sort things out the next day, we can base our speculations on what may occur given the values that we have forecast for release and building tension language trends. .

Now, on July 11th, the 'crocodile teeth pattern' of daily building tension, followed by release tension, returns. This lasts in a general way until the tipping point on November 8th forms. The daily release of tension does not purge from the total build up of tension completely so the general trend is one of a building tension continuum through to November 8th.

In addition to the chart below, note that the collector programs that we run that collect daily language and compare it to forecasts, has a sudden jump from .9% fulfillment to over 9.8 % in the 'israeli mistake' language. So it appears as though the Israelis are going to attack Iran within a short period of time, perhaps within the next 30 days. This would fit with the release language on the 11th of July, or any of the subsequent release language episodes for the rest of that month. One can also allow monkey mind to speculate that the 12 days of torment for the Obama administration minions over the first 12 days of August *could* be provoked by the israeli mistake having been initiated in the weeks prior.

I had a failure of imagination in that i could not conceive of the Israeli mistake (attack on Iran) as taking *months* to lead to the overwhelming response, i.e. global thermonuclear war. This was a failure on my part. In speaking with George, we were able to noodle up a scenario whereby it does take several months following the Israeli mistake launch before the multinational thermonuclear response could/would/does occur. This then does fit the current chart (from a speculative, monkey mind perspective), in that a July attack on Iran produces a November global thermonuclear war as the Allies take on the TPTB and their stooges, the Israelis and the American Military Empire.

Being a human, this idea that TPTB trick the populace of the planet into yet another useless war over religion by the religious in servile slavish worship of the irreligious does not sit well with me. I had repeatedly thought that the Terra entity involvment within the November tipping point could well be the clue that it was to NOT be horrific, species ending war, but rather would be some giant earth changes such as the Pacific tectonic plate cracking that we are also expecting. Or even, giant radiation from the sun.

However, the recent and very large jump in magntitude of the language forecast for the 'israeli miske', sub set 'active war launch', is too much to ignore. So without regard as to how long it may take, or the many other ramifications, the data streaming in now suggests that the [israeli mistake] that leads to so much planetary misery is on, and likely soon.

Please note that the temporal markers along the way to the [active attack phase (of israeli mistake)] have all been met, and the largest, and closest to the actual manifestation of the [israeli mistake] was the [ranking general faux pas (mal mots)] that we have just seen fulfilled in these most recent news stories about Obama and his General McCrystal.

So my position has altered in that it is seeming more likely by the day that the [israeli mistake] is 'on' and soon. Many of the critical elements now in place are not able, from a military logistics view point, to be maintained for too long in place before their usefulness degrades below acceptable levels.....therefore, certain conclusions need to be drawn appropriately.

As you may note from the chart below, the period from July 11th through to the tipping point of November 8th through the 11th is both very short, and extremely 'toothy'....as may be expected of the time between the skirmish (the israeli mistaken attack on Iran), and the resultant global thermonuclear war.

Also note, we could be wrong about the 'whats' and 'whys' of the building tension and release tension points....there is always consistent hope for that as we get the details wrong repeatedly. However, the temporal marker of the ranking general in deep shit came from the same data set that produced the israeli mistake forecast. So......take it all as speculative, until it is not.

Now it is up to you to decide what will occur, and how. After all, it is the mass of humans who run this planet, though they may not rule it, they can shut down and stop anything they choose when they choose, by simply *not* cooperating with stupid bullshit from the 'system'...aka, TPTB.

Chart is annotated.

EURTRY update

After our strong support was broken at 2.05 market dropped to 1.89 and build a base mainly due to the EURUSD moves. Since the EURUSD has found a solid base for now as the focus returns to USA as anticipated. We might see another dip to the 1.20 level in July though as stock markets will continue to drop sharply.
Still the EURTRY will close within the next 2 weeks above the 1.9650 level and trigger a retest of the 2.05 level which should be parallel to a retest of the 1.27 EURUSD which will be the crucial level for both going forward to break in order to change the trend - that remains to be seen. We will have a high volatile market in the next 2-3 months with sharp swings but the overall trend for the Turkisk Lira is down as markets will go down - the recent 11.7 GDP is rather a math miracle not a real event as mostly it represents inflation which is artificially low by aprox. 10 points below real inflation. Another cliff hanger for Turkey is the looming Iran attack which is not priced in at all as Turkey's new foreign policy and direct and indirect colleteral damage from such an event will be substantial.