Friday, December 20, 2013

Screw Lew: Treasury Secretary Jack Lew's Signature

Screw Lew! (To the censors, NO, that is NOT mature content!)

What an amazing resemblance. Can you distinguish between them?

Or is it screw LOOSE? Why would he do that? Is he trying to make a mockery of our fiat currency, which will be worthless any day now?

Thursday, December 19, 2013

Stocks Close Higher By a Hair

...and all this, despite weaker data today! Just bubbly!

So despite the quadruple whammy today of bad economic news (housing starts DOWN, claims for new unemployment benefits UP, Caterpillar sales collapse, Philly Fed survey DOWN), Wall St traders want us to believe that stocks are worth MORE today than yesterday. They want us to believe that we are more prosperous than ever before in history! Are we living in an alternate universe now? Because I sure don't see it!

Quadruple Whammy of Bad Economic News...

...even as stocks closed at new all-time record highs yesterday. Something is wrong with this picture! A great reset is coming! Stocks are barely in the red.
Here are the headlines this morning.

Wednesday, December 18, 2013

It's The Taper... That Isn't!

It's a "non-taper" taper! 

Fed reveals that it will ease off it's debt monetization by $10 billion/month, but will continue low interest rates indefinitely. In some ways, this is even more dovish that previous statements were. Wall St is thrilled! The bubble builds!


Tuesday, December 17, 2013

Market Snapshot -- In Holding Pattern for Fed Decision

This image from Yahoo Finance provides a good summary of today's market action on the eve of another Fed monetary policy statement tomorrow.

Here's the same perspective from Fox Business:

Best Political Cartoon In a Long Time

Monday, December 16, 2013

Nat Gas Futures Plunge On Better Weather

Nat gas is today's big mover.

from Business Recorder:
"NEW YORK: U.S. natural gas futures slid more than 2 percent in early trading on Monday on forecasts for reduced heating demand this week and on profit-taking after prices reached seven-month highs last week.
"'Natural gas futures are receding this morning on a combination of a round of profit-taking selling motivated by what looks like a moderating weather pattern working its way across the country over the next week or so,' Energy Management Institute partner Dominick Chirichella said in a report."

Technical Bounce, China Worrisome, Europe Hopeful!

China is causing worry!
Seeking Alpha explains today's strange market behavior:

"...the sell-off in S&P futures came on the heels of disappointing China Manufacturing data. Almost in lock step, whether it was a nervous trader or a more concerted effort, and in conjunction with the tensions on the Street about the FOMC meeting, they reacted harshly to that China data.
"Conversely, Europe had positive news on the same front, and that is what allowed futures to recover, but the same major concern still exists. The FOMC is clearly front and center, concerns about tapering are on everyone's mind, and analysis al have an opinion. Some think turmoil could lie ahead before the year's end, but I prefer to pay attention to one simple thing, the technicals.
"The near and midterm technicals told me to expect the bounce we are getting today, but the longer term technicals tell me that the major markets, the S&P 500 (SPY), Dow Jones Industrial Average (DIA), NASDAQ (QQQ), and Russell 2000 (IWM), have not yet tested longer term support."

And their assessment going forward:
"Therefore, even with this nice bounce, our combined analysis warns us that it can be short lived, and the market can turn lower and officially test longer term support levels. Our rules tell us to short near resistance levels and buy near support levels. That is therefore what we intend to do as this year comes to an end."

Where Are Stocks "Beaten Down"?

This shows the stock market today, with a tiny little red "candlestick" showing the month of December at the top right. I have highlighted it with a yellow arrow. It would be hard to see it at all if I didn't. Does that look "beaten down" to you? That tiny little red mark, if I had left all the technical indicators on the chart (I removed them so that this "beaten down" red mark could be seen more easily), would be close to the upper Bollinger Band, which indicates two statistical standard deviations outside of normal market activity.

I'm still struggling to find that "beaten down" part on this chart.
 So when the media tell you that stocks were "beaten down", show them this chart and ask them WHERE the "beaten down" part is.

It IS true that until today, stocks had closed lower 9 of the past 12 days. But the losses were relatively small, as evidenced by this chart, while the few days in the green showed much higher gains. One of those 3 "up" days had a gain of 200 points. That is another sign of the bubbly overbullishness of this market.

Interestingly, in his very arcane book (I had to borrow it from a university library, where only 3 other people had checked it out in 10 years), "Why Stock Markets Crash" by Swiss academic Didier Sornette, he mentions that one characteristic of a bubble is that the news media become cheerleaders for the bubble, buying into and promoting all the hype! They become tools in ramping the bubble even higher.

But ask yourself this: If the economy is doing so well, why has the Fed been using "unprecedented measures" (Bernanke's own term for all this QE) for FIVE YEARS? Why are we still on life support if the market is so strong? Does that make sense to you?

If these "unprecedented measures" are so effective, why are they still using them five years later? Does that really suggest that they have been INeffective instead? (In which case, if they DON'T work, it would be logical to eliminate them instead.)
How much further will this bubble rise? I DON'T KNOW!

But we would be wise to be wary, because the classic pin prick of a bubble usually comes in the form of some news event that typically wouldn't be all that significant, but that causes an abrupt and precipitous loss of confidence that sends markets literally crashing.

If you look at market crashes, they tend to collapse much more rapidly than they rose. If they were rising at a 30 or 45 degree angle, then they tend to crash at a much sharper 75 degree angle.

All it takes is one small event that causes an abrupt awakening, and everyone runs for the exit doors at once. That is, in the words of Sornette, "why stock markets crash".

And by the way, the attitude held by investors that they will be the first ones to find an "exit" chair when the music stops playing, is another classic characteristic of a bubble. All the players on Wall St believe that THEY will be one of the fortunate few that gets out the emergency exit door when the trigger event occurs. That is what causes the mad and hysterical rush for the doors -- that one seat in the game of musical chairs -- when the music stops and the insane clamor for safety begins. And that is also why it is Main St investors (on Wall St they call them "retail investors) that get slaughtered and suffer the greatest losses when bubbles pop. Main St investors tend to hang on in the hopes that the market will turn around and redeem them, so they don't throw in the towel until well after their losses have produced staggering losses. And Wall St counts on continued buying by Main St to allow them (Wall St insiders) to get OUT the exit doors first. They depend on Main St continuing to hang on while they literally "take their money and run" for the exit doors.

Note also that in this poor little "beaten down" stock market chart, stocks have barely looked backward since mid-2012. There hasn't been a single month of downward market correction since May 2012. Even the few months that closed in the red were still part of a trend higher. So in the face of economic weakness, stocks have continued an unabated rally without looking back since then. Isn't that a classic description of a bubble?

Empire Fed Misses Expectations, But Stocks Leap Still Higher

This is a classic characteristic of a Fed-induced bubble. The Fed's own Empire State Index fell short of expectations, but stocks leaped higher on the news. Stocks left bad news in Asian markets in their tracks, and used some good news in Europe to leap higher still. Now, this news is sending stocks into the rafters in expectation that the Fed is less likely to reduce its debt monetization scheme on Wednesday. When all news is perceived as good news, and no news introduces thoughts of risk, then all news leads to higher prices. When all thought of proper pricing is discarded, and even the slightest dip sends investors scrambling to buy more, this is textbook bubble mentality! The Dow is up more than 130 points in just the first hour of trading!

Note the disparity divergence between this headline (above) and this one (below):
And here is the market reaction in the charts. Last night's sharp losses are already forgotten:

Bizarre: Stock Futures Erase All Losses, Leap Higher

Strange phenomenon, suggests how fragile and overbullish these market really are!

Sunday, December 15, 2013

Stock Futures Plunge In Asian Trading

This occurred without much news. Someone wanted to exit in a hurry!