Weather On Wall Street

Poster Child For Health Care Reform....

2009-08-21T12:14:00.000-07:00

Here is a video of Rick Scott (formerly of Columbia/HCA.....a for profit, hospital company).

If there is anyone NOT to believe about healthcare.....it is Rick Scott. Columbia got fined by Medicare for various grievances ("upcoding" among them) to the tune of $1.7 billion dollars. He is, in my estimation, in the league of Richard Scrushi (HealthSouth founder).

I have heard some of the stories about Columbia hospitals second hand, since I was a CFO in the healthcare industry. Entrusting Rick Scott with healthcare reform would be like entrusting OJ Simpson to take your daughter out on a date.

Interesting Chart...

2009-08-04T04:24:00.000-07:00

Here's a chart that goes back to 1950 and charts both "household assets" and "household liabilities."

As you can see...it's a little intimidating. We all know how parabolic charts usually end....and it is not pretty. As the US continues to wind through its long process of de-leveraging, I think we can expect the asset line to continue to drop as the liability line also drops.

The Apple Doesn't Fall Too Far From The Tree....

2009-08-03T06:00:00.001-07:00

I just have to laugh at this one. Remember Enron? Remember the accounting firm that was the auditor of Enron? Arthur Anderson was Enron's Auditor....and it was subsequently sued and they eventually went out of business.

Well, some of the staff/partners at Anderson Consulting started a new firm after the collapse of Arthur Anderson. The firm was "Huron Consulting."

Last Friday, after the close, Huron disclosed that they would have to restate earnings for the last 3 years. Apparently the company hasn't lost its touch from the Anderson Consulting days. Once a crook........always a crook.

Huron (HURN) is down 66% in pre-market trading this morning.

BIG Drop In Bullishness...Investor Sentiment

2009-07-15T09:39:00.000-07:00

Last Friday......apparently many of the bulls left town. The "bull to bear ratio" dropped to 1.0 to 1.0.......from 1.41 to 1.0. That is a BIG one week drop in bullishness.

I expect the move to continue toward more bearishness over the next few/several weeks until we get down to the .4 - .7 area of "Bulls" (from the current 1.0 reading). If the market comes back in a little more.......from the early June highs.....that could set us up for a strong move up. If we get some more BEARISHNESS over the next 2 - 3 weeks....I would be getting pretty BULLISH in the short/intermediate term.

DELUSIONAL.......

2009-07-12T08:31:00.000-07:00

Boy......Dykstra MUST have been hit one too many times by one of Tom Seaver's fast ball's. WOW.

Here's a CNBC interview of Dykstra with Jane Wells. Dykstra should be a sales person........not a business owner.

I do like one of his quotes in this interview however: "I can't even find a bodyguard...nobody wants to walk by me."

Boy.....I wonder why?

Nice Diggs......

2009-07-12T04:39:00.000-07:00

Here's a short article from 2006 about 3 expensive homes (2 of them owned by former pro athletes) that were selling their homes back in October of 2006 at the height of the housing bubble.

Wayne Gretzky (aka "The Great One") dropped the price of his 12,500 sq foot pad outside of LA, from $25 million down to $18.5 million (and Jim Cramer's buddy Lenny Dykstra bought it....before it was foreclosed on over the past week).

But what really caught my eye was Don Meredith's sale of his pad in Santa Fe (BEAUTIFUL city by the way). Here is key paragraph from that sale:

The three-acre property has a four-bedroom main house of just over 5,000 square feet, a two-bedroom apartment above the garage and a detached office that could be used as a one-bedroom guest house. There's also a greenhouse, tennis court and three roof decks. Ms. Meredith said she and her husband bought the property as a small adobe house 26 years ago, renovated and expanded it and have used it as their primary residence ever since. She said they're downsizing but will stay in Santa Fe.

We are in changing times. We have come out of the "age of opulence".....that was driven by many things: (1) baby boomers, (2) credit bubble, (3) housing bubble, (4) bigger is better mantra, (5) a sring of "good economic times" that were fueled by the above 4 items.

But now....on the other side of that mountain.....we are facing things that work in just the opposite direction: (1) ageing baby boomers that are downsizing, (2) baby boomers that are getting rid of their 2nd or 3rd homes, (3) de-leveraging....instead of growing credit, (4) the age of "saving the planet".....instead of the age of opulence.

So the high end of real estate.......I believe.....will be getting roundly trashed over the coming years. If you think the sub-prime market was a disaster........just wait for another year or two of sinking home prices at the high end of the market. It's going to be brutal.

Maybe SEC Should Look Into Gabby Abby...

2009-07-11T15:59:00.000-07:00

Maybe the SEC should look into Gabby Abby and her cronies at Goldman Suchs. Pump up the market in public.....and short the hell out of it on your trading floor.

Let's see.....her snake oil target in October of 2007 was 1600 for 2008. NICE CALL ABBY. And her target for 2009 at the beginning of this year was 1,000. It won't be even close to that.

Maybe the SEC should take a little "looksie" into the trading positions of Goldman right now. I can tell you they will be VERY NET SHORT.

Of course.....many people at the SEC end up at Goldman.....so they aren't going to touch them. Just let them keep on spouting off.....leading the lemmings into the sea.

Just keep shinning the light on Goldman......and eventually the rats will be caught.

Maybe Cramer will say something bad about Goldman? Just kidding....what do you expect from someone who thinks that Lenny Dykstra is a financial genius. With all the mud on his face.....maybe Cramer should change the name of his show to "Mud Money".

S&P 500: 1960 To Present...

2009-07-11T15:49:00.000-07:00

Take a gander at this long term chart of the S&P 500 from 1960. The other side of the mountain could get really steep.

And here is a chart of job losses from the various recessions since 1948. Not a particularly cheery chart.

Couple Things To Watch....

2009-07-10T04:54:00.001-07:00

Short term:

1) Watch the Baltic Dry Index. It is "rolling over".....in conjunction with the roll over in commodities.
2) The British FTSE and German DAX indexes are rolling over as the US markets roll over as well.
3) Commodities continue to get whacked as all that hedge fund money comes out of commodity markets.......AND....as the dollar refuses to roll over.

Long term:

1) The recent Treasury auctions show that there is a strong appetite for SHORT TERM Treasuries........but the appetite is not nearly as strong for LONG TERM Treasuries (30 years). I have read reports that indicate that China is moving more of their US obligations to the SHORT END (5 - 10 year obligations.....from 20 & 30 year obligations). They don't appear to be lowering their TOTAL value of US Treasuries......but they ARE shortening up on their average maturity.

2) The commercial real estate market is heading towards hell over the next two years as their borrowings come due........and banks aren't lending nearly as much. NOT GOOD. Also, the upper end of the housing market will continue to get ravaged as jumbo resets take hold this year and next.

With all the talk of the Fed expanding their balance sheet by over 1 - 2 trillion dollars...........it is often overlooked that as that balance sheet expansion has taken place, housing has lost 10 trillion dollars....and the stock market has lost ANOTHER 10 trillion dollars. There is......unfortunately......no stopping the de-leveraging that continues to take place. It is a matter of price.....and time..........and NATURAL supply/demand.

3) As financial markets CONTINUE TO DE-LEVERAGE.....all asset groups will be hurt. The only real "safe haven" will be VERY SHORT TERM Treasuries or cash.

From The Horse's Ass......er.....Mouth

2009-07-09T17:28:00.000-07:00

Here's a clip from Cramer......describing Lenny Dykstra as "a genius."

Good ole' Cramer. He's got his coming.........it's just a matter of time.

Sept 2003 Housing Call...

2009-07-08T11:13:00.000-07:00

Here's a clip on "Morning Joe" with guest Ron Paul. Go to about 1:40 into the clip (if you want to ignore the BS about Nancy Pelosi).....and go straight into the discussion about housing and the economy.

In September 2003....Ron Paul predicted the collapse of the housing market because it was propped up by Fannie and Freddie. Boy.....was he right........and in spades.

YIKKKEEES: Bad News On Sentiment....

2009-07-08T09:28:00.000-07:00

Sentiment ROSE last week up to 1.41 to 1.0 on the Investors Intelligence Sentiment Survey (reported this morning......survey done this PAST Friday). Sentiment rose from 1.38 the prior week.

That.....is not good. People too bullish. Punishment is going to continue be handed out in spades over the coming weeks/months.

Will be looking for weakness in the market until we got a lot more bears coming out of hibernation.

As well, hedge funds have piled into commodities of all types as reported by Deutche Bank.......over the last four months. Too many people on one side of boat........always tips the boat over.

Housing......I don't mean to sound like a broken record.....but the upper end of the housing market is going to get killed over the next year. Jumbo loans have dryed up........upper end housing inventory is continuing to grow.

There is one GOOD piece of news.....and I am NOT ignoring it: The ECRI's (Economic Cycle Research Institute) long term leading indicators are BULLISH and they (ECRI) are calling for an end to the recession this summer. Their indicators have only failed them in one scenario.......in the 1930's.

But on the INTERMEDIATE TERM......investors are too bullish right now. We need to get down to a range of .4ish to .7ish in the bulls-to-bears ratio. We're at least twice that right now. Which means a lot of investors are going to get "wrong footed".....to use a tennis analogy. To use a basketball analogy......they are going to get "back doored" (looking one way.....and the guy going the other way).

To use a Dennis Kneale analogy.......he put his foot in his mouth again (surprise....surprise).

Goldman's $85 Dollar Oil Call.....

2009-07-07T18:12:00.000-07:00

Remember when Goldman issued a call for oil at $85 a barrel a few weeks ago?

Maybe the New York Attorney General's office should do a "looksie" into the oil trading positions of Goldman "Suchs" before and after that call.

I think they would likely find the rationale for Goldman making their $85 call: Their trading floor was about to short oil.

GE Heading South.....

2009-07-07T17:33:00.000-07:00

Here's an article where GE is trying to get out of one of its commitments. Here is a paragraph from the article:

Greenbrier also said it believes that General Electric (GE.N) is in breach of its obligations under a contract between the companies. Through Sept. 30, GE is accepting 414 rail cars lesser than agreed.

As well, Boone Pickens has a boatload of wind turbines on order FROM GE.....but he currently doesn't have the land to install them.

GE is down after hours........and likely heading south.

Starting Short Position On Goldman...

2009-07-07T01:25:00.000-07:00

Will be looking to start a short position on Goldman this week. Here's the chart. The position is likely to run a while....

It's funny that, now that they have repaid the TARP funds.....they will be rolling over.........and eventually have to be backstopped by the Feds AGAIN.

I don't know who's busier these days.........Iran's "Revolutionary Guard"........or Goldmans lawyers?

I don't think Goldman "gets it." They will eventually.......the genie is out of the bottle, and no amount of intimidation by Goldman can put it back in the bottle.

Good Robert Schiller Clip...

2009-07-06T17:24:00.000-07:00

Here's a clip of Robert Schiller from 4 weeks ago, discussing the housing market. Schiller thinks the housing market may not bottom for some time (2010 - 2011). The few people who have been RIGHT about the housing market think that a bottom will not start to form until 2011.

Or.....you could listen to that "funny bald guy" that has a comedy show on CNBC called "Mad Money".........and he said the housing market has already bottomed. Hmmmmmmmmmm.....should I listen to the funny bald guy who was bullish on the stock market in November of 2007.........or Robert Schiller who called both the 2000 tech bubble AND the housing bubble?

Tough choice.....

Important Article: Nouriel Rabini

2009-07-05T18:03:00.000-07:00

Here's a very telling, and important, article from Noureil Rabini.

The article is not that long.......but VERY comprehensive....and it covers the housing market and the unemployment picture in concise detail. One of the most important paragraphs from the article is as follows:

Home prices have already fallen from their peak by about 27 percent. Based on our analysis, they are going to fall by at least another 40 percent, and more likely 45 percent, before they bottom out. They are still falling at an annualized rate of over 18 percent. That fall of at least 40-45% percent of home prices from their peak is going to imply that about half of all households that have a mortgage – about 25 million of the 51 million that have mortgages – are going to be underwater with negative equity in their homes, and therefore will have a significant incentive to just walk away from their homes.

Keep in mind that this article was done 2 days ago....July 2nd.

More Sunlight On Goldman Sachs...

2009-07-04T04:50:00.000-07:00

The sunlight seems to be chasing the roaches these days. Here's a good article in Rolling Sone that many of you have either read or heard about. It discusses Goldman's role (along with other investment banks) in causing bubbles and profiting from them. Suprise.....suprise.

Keep the sunlight coming.........

Updated Housing Chart....

2009-07-02T15:28:00.001-07:00

Here's a link to an updated chart by Robert Schiller on housing going back to 1890. As you can see from the chart.....the swoon south is not over. What's another 20% - 30% among friends?

I think most people except Kudlow, Cramer and Kneale (kind of sounds like a crooked law firm doesn't it?) know that the housing market has further to go on the downside. Most people understand that the upper end of the market is the next sunami that is coming ashore this year THROUGH early 2011.

I know......Cramer called a bottom to the housing market a couple months ago. That should be enough for ANYONE to know that we certainly haven't reached the bottom. Most people who have a clue about housing......don't see a stabalization until 2011 at the earliest. California is trying ANOTHER 3 month ban on foreclosures........which will only delay the ongoing decline.

And longer term........there are some REAL issues with the demographic makeup of the housing market.........and it isn't pretty (baby boomers unloading multiple homes........homes becomming smaller........people moving from the burbs to the city........etc). Could be a very rough decade for McMansions.

So far interest rates haven't spiked up too high yet. But if people start shying away from US treasury bonds.........rates will be going up. Then we would really be frocked.

US Dollar.....

2009-07-02T11:21:00.000-07:00

One thing to watch CLOSELY over the coming weeks and months is this: There is a move underway, spearheaded by China, to move away from the US Dollar as THEE foreign exchange trading vehicle. This shouldn't be "news" to anyone. A week or so ago, it was announced that China and Brazil would be working on a mechanism to use their regional currencies for trade RATHER than the US Dollar.

The significance of this potential change is as follows: If the US Dollar is not used as the trading medium (or at least not as much).......then demand for dollars is significantly less. No brain surgery needed to figure that out. As well......if the dollar drops in the future because of less demand.....then commodities won't rise to the same extent that they would IF trade was conducted in US Dollars....AND....the dollar were to fall.

In summary......if the dollar is used LESS over the coming months/years......a drop in the dollar won't pressure commodities to the upside. This is something to keep a close eye on.

Fast forward 3 months - 12 months.........in a world economy where the US Dollar is falling.........AND.......some countries have moved AWAY from doing their trade in US Dollars........a drop in the value of the dollar will NOT push up commodity prices. Supply and demand for those commodities will be the driving force.....not foreign exchange rates. The equity and commodity markets will sniff this out BEFORE it happens.

There is a HUGE bet on the commodity sector by many hedge funds and others (to the long side). I think they are going to be wrong......and in a big way.

Way......way.......WAY....too much money pushed into commodities over the past 6 months. It is going to be ugly coming out of the theatre if they are wrong.

Goldman wielding their power (again)...

2009-07-02T11:06:00.001-07:00

Here's a must read article. Once again, the people running the casino are making the calls.

I think we have about three and a half years to try and reign in Goldman.

Two Things To Call Out...

2009-07-02T05:52:00.000-07:00

1) First, Goldman Sack's call of $85 a barrel oil. I suspect.....this is the same "type" of call as Abby Joseph Cohen's call of S&P 1,600 in October of 2007: A "call" to "help" their traders go short the market. You see.....Goldman's profits are mostly from trading. Any advantage they can get........they will take. Goldman has the ethics of a Martha Stewart, Richard Scruchi, and Henry Blodget rolled into one. If you're waiting for ANYONE on CNBC to hold Abby or ANYONE ELSE accountable for any of their "calls".....you have a VERY LONG WAIT ahead of you.

You just have to understand that Goldman's goal is to make money. If they have to mislead the public.....so be it. Too bad. They will continue to do so.

2) Dennis Kneale: What a frigging idiot. Sorry about the language....but if the shoe fits......Dennis will put it in his mouth.

Here's a recent clip from the Huffington Post with Dennis puting his foot in his mouth (again). I rarely watch CNBC for anything other than a good laugh. Bloomberg is a much more objective news channel. Let's face it.....any TV station that would continue to employ Larry Kudlow and Dennis Kneale really doesn't care about accountability or accuracy.

I only post this to prove that ONCE AGAIN......Kneale will be wrong. He was wrong in late 2007........all of 2008......and will be wrong again. He and Kudlow are perma-bulls. What good is that on a supposed "news" station? If they want to be cheerleaders......maybe they (and Maria) should move to Dallas.

Precious Metals Will Get KILLED....

2009-07-02T05:40:00.000-07:00

Precious metals are going to get HAMMERED over the coming weeks. There has been a LOT of money flowing into commodities over the past several months (like me). But the time to be IN commodities has passed......and that doorway is going to get VERY SMALL as everyone heads to the door at the same time.

Again.....watch the dollar. If the dollar shows ANY strength at all (relative to other currencies remember)......then the combination of poor fundamentals....AND....too much money into commodities......will crush them on the way down.

Commodities Heading South.....

2009-07-02T04:28:00.000-07:00

The early June to late June activity has put in an "intermediate top" in the equity market.

As well, commodities are heading south. Silver is in a bearish wedge built over the last year. Tons of money has been pumped into the commodity markets over the past 6 months. That will be coming back out in the normal heard mentality.

Oil has also topped out and has started to roll over as well.

Watch the dollar closely. Everyone and their cat seems to think the dollar is heading south. The crowd is usually wrong when they are all on the same side of the ship. The dollar has a long term "complex (multiple) head and shoulders" that has formed over the last year.....but it also has a shorter term (4 months) bearish wedge. Keep in mind that the head and shoulders is NOT a particularly "accurate". So just because there IS a "head and shoulders" present........doesn't mean that the dollar will implode south. So watch BOTH the bullish wedge formation AND the head and shoulders......so see how this resolves itself.

One final word......remember that this week has been "fueled" by both month end "window dressing"........as well as the first two trading days of the month (July). The first two trading days of the month have more significant inflows coming in for 401(k)'s and pension funds.

Deflation Hits The Links...

2009-06-20T03:55:00.000-07:00

Last year in one of my blogs, I said that "next year the PGA tour would see decreased purses and likely decreased events."

Here's a link that discusses what has started to happen with the tours.

Deflation is a sinister chap. As credit remains tight.......the "velocity of money" remains low (it doesn't change hands as often).

Charles Biderman On The Economy...

2009-06-18T15:50:00.000-07:00

Here's a clip from Charles Biderman on the economy. He is the head of "trimtabs.com" which is a firm that offers advisory services on the stock market, and who closely watch the "flow of funds"....both into AND out of......the stock market. He has now turned fully bearish.

As you will notice on the front page of my blog....sentiment looks to be "rolling over" as well.......as it topped out last week, and became slightly more bearish this week.

Housing Market Update....

2009-06-18T05:02:00.000-07:00

Boy.....I'm sure glad that Cramer has called a "bottom" to the housing market. Of course, he also called a bottom to the market at 11,000 on the Dow last year. Oooooppps.

Here is the forecast from Housing Predictor......one who predicted the housing dowturn, and the severity of the downturn.

Of the 25 WORST housing areas forecast for 2009.....the metro area that is number 25 on the worst list has a decline of over 25%.

Number 1 on the list.........drumroll please.......is New York City. The housing market in NYC is expected to drop over 32% in 2009. This should be no shocker if you think about the lost jobs in the finance area. And for those who think the areas that were hit earliest and hardest by the housing bust........well.......I have some bad news:

#2 Las Vegas: Expected to drop 27% MORE
#3 Miami: Expected to drop 27% MORE
#4 Stockton, CA: Expected to drop 26% MORE
#5 Phoenix: Expected to drop 26% MORE
#10 Los Angeles: Expected to drop 20% MORE

Here is a quote from their website:

"The epidemic of foreclosures is hurting markets especially hard in California, which placed more markets on the list than any other state. Nearly two years ago, Housing Predictor forecast that home values would average total deflation from 50% - 70% depending on the market. Now it appears that some areas will suffer total deflation in excess of 75% on average home values from the market peak."

Here's the link.

Short Term/Intermediate Term Top.....

2009-05-21T04:10:00.000-07:00

Couple things:

1) Dollar looks poised for a COUNTER TREND short term rally. As noted on the chart, it has broken DOWN from its bearish wedge. I expect to see the dollar test its $71ish level over the intermediate/long term.

2) CHK and TIE look to have set short term/intermediate term tops along with the major markets.

3) S&P and NASDAQ look to have topped out in the intermediate term. Nice bearish candle on the S&P yesterday as it tried to get back up to its top of a couple weeks ago. Nice double top on the NASDAQ as well.

4) Sentiment is at a point (1.40 bulls to bears) where I would expect the market to head down.

LONG TERM.......watch the US Dollar to head south........and watch silver to head NORTH (over the long term).

Four Things To Note....

2009-05-08T09:57:00.001-07:00

1) Commodities continue to "rock": CHK, TIE, CPSL. Growth in Asia and Latin America should continue to push up commodities. As well......the US Dollar is weakening slightly over the past several weeks as the dollar continues to move DOWN out of its bearish wedge.

2) Treasury: Money continues to move OUT of treasuries....and find a home in stocks.

3) Interest Rates: They have been pushed UP recently.....and I expect them to move higher over time. Higher interest rates is BEARISH for bond funds......so money should move OUT of bond funds as well.

4) Asia: As noted this past November....Asia is the FIRST to recover. Korea, India, China...etc.

SOHU continues its move upwards. As noted earlier in the week.....resistance came in around $60....which pushed the stock down until it reached some support at $53 - $54. I expect it to move UP out of a BULLISH WEDGE in the short term (next week).

In Memory Of Dom Deluise....

2009-05-06T19:21:00.000-07:00

Here are the outtakes of Cannonball Run with Dom Deluise and Burt Reynolds.......enjoy.

US Dollar......various timeframes...

2009-05-04T04:18:00.000-07:00

1) Daily Candles: Here's the dollar on the daily charts, breaking down from a bearish wedge.

2) Weekly Candles: And here is the dollar........again breaking down from a bearish wedge.

A continuation of the US Dollar breaking down should be good for commodities. For the US equity market outside of commodities.....this won't be perceived as a good thing if it heads too low.

Remember..... we (the US) have to finance our deficits with treasury borrowings. If the dollar falls too far......it will push interest rates UP......and either cutoff the recovery.....or stoke the flames of inflation (or both).

Here's a nice little "feel good story".....

2009-04-27T11:32:00.000-07:00

Commodities continue their "chugging higher".......two steps up......one step back. SOHU pushed up through resistance yesterday, and now is backtesting that move up as it carves its way up in a long term "bowl". CHKP is also appears to be forming the same long term formation.

But if you want to take a look at a two clips......outside of investments........here's a couple that are worth your while. They will DEFINITELY give you that "feel good" feeling.

The first is from a ten year old from the series "Britain's Got Talent." Apparently they do! The ten year old, "Hollie".........sounds just like Julie Andrews as she sings a song from "My Fair Lady".........and BLOWS the crowd and judges (and myself) away.

This second video is also from the "Britain's Got Talent" show as well. It is of Paul Potts......a mobile phone salesman by day...........a "closet" opera singer by night (singing Nessun Dorma). His performance almost moved the female judge to tears. And just a note....."Hollie".....will be signing the same song that Paul sings in this video, when she sings in the next round. I can't WAIT to see her next performance.

It really is a GREAT thing to see modest.......hard working people succeed. These two clips......are two great examples of that.

Manhattan Real Estate - "The Thrill Is Gone"...

2009-04-21T19:06:00.000-07:00

Here's a recent article (April 9th) about residential real estate in Manhattan. The downturn is really starting to take its toll in New York. This was almost the last place to get hit (with the exception of Montana, North Dakota, South Dakota, and Wyoming). But the downturn is really starting to get tracktion. Combined with the COMMERCIAL real estate downturn.......and things will likely get kind of ugly in New York City.

Here's a single paragraph from the article:

"The stress is most severe at the high end of the market. There are 350 apartments and town houses for sale in Manhattan with asking prices of more than $10 million, and inventory has been growing. It would take about six years at the current sales rate to absorb all those listings."

That last sentance is a killer. Now......granted......sales WILL pick up EVENTUALLY. But this is likely going to be a "long slog" because much of the financial district in New York is NOT coming back.

Here's another good article, this one about commercial real esate. The author of the article (Jeff Bernstein) is right:

"Stalling tactics! Everywhere I look I see them. The Fed accepting shakier and shakier assets as loan collateral, mortgage forbearance programs and, increasingly, bank loan extensions. In fact, the whole TARP/TALF/PPIP monstrosity embodies it.

The supposition behind all of this activity is that asset values are, somehow, temporarily depressed, true fundamentals are much better than what markets are giving them credit for and ......if we just give everyone a little time, things will work themselves out. Unfortunately, we continue to see evidence that the markets have things more right than wrong."

We'll see how this bear market rally ends up. I think there are two likely scenarios: (1) It started it's roll over Monday....and will continue on to set lower lows this leg down, or (2) it pushes down to the 700 - 760 area......and everybody jumps on the "bull train" because it has "successfully tested" its prior lows (in which case the market wouldn't start to roll over until this summer some time). Either way, it is going to roll over. Right now, we are sitting at a PE of 29 times GAAP earnings for the twelve months ending 12/31/2009.

I just looked at the Standard And Poor's 500 earnings estimates (GAAP) again today, they have dropped to $28.50 for all of 2009, and $35 for all of 2010. Two weeks ago, they were $35 for 2009, and $41.50 for 2010 as reported on this blog. So they have dropped 20% over the past 2 weeks for 2009, and dropped 15% for 2010.

The direction of sentiment AND cash flow push the market.......but eventually earnings will weigh on sentiment.

Cramer Caught Lieing........AGAIN.

2009-04-20T10:42:00.000-07:00

Here's a video clip from Don Harrold on Youtube. I don't think I had seen this one before. This was from August of 2008 when Cramer "recreated history" from 2006. In August of 2008 he was saying on this clip, that he had been BEARISH on the housing market in 2005 and 2006 until August of 2008.

Much like the Daily Show, apparently Cramer FORGOT that he actually was BULLISH in October of 2006 on the housing market. And what he REALLY forgot.....was that he was bullish ON TV!!!! Uh oh........... Damn.......there goes that "accountability thing" again. Cramer caught in ANOTHER LIE. It is a great video......and makes Cramer look like the bozo that he is. Of course.....in this case.....a bozo that lies.

CNBC.......the Cheerleading National Broadcasting Company. Information you can count on? Hmmmmmmmm

What Does Aston Kutcher Have To Do With Wall Street?

2009-04-20T07:51:00.000-07:00

I thought you would never ask:) Last week......something VERY IMPORTANT in journalism happened......and not many people noticed. For those of you that watch "Larry King Live"......you may know that Ashton Kutcher was in a friendly "competition" with CNN and Larry King to see who would be the first to get to 1,000,000 viewers on their "Twitter" account: Ashton Kutcher.....or CNBC. Kutcher won. And Kutcher is no dummy.......I think he understands the importance of his "victory" over Larry King.

Here is a video clip of Larry King interviewing Kutcher this past weekend. If you go to 4:00 into the clip, you will come to the most important statement in that clip where Kutcher says: "I thought it to be quite significant that we now live in an age for media, that a single voice can have as much power and relevance on the web as an entire media network" (like CNN).

So...........what does Kutcher and Twitter have to do with the stock market anyway? Journalism is changing.........QUICKLY.......right before our eyes. And that applies to financial journalism as well...........even if you have to stretch the meaning of journalism to include CNBC........which really ISN'T journalism (it's allowing yourself to be used by Wall Street and cheerleading).

What CNBC doesn't apparently realize..........is what many of the Republicans also didn't realize during the last presidential election: PEOPLE ARE GOING TO HOLD YOU ACCOUNTABLE FOR WHAT YOU SAY.......ESPECIALLY ON TV. Cramer........STILL doesn't get it. He was made an absolute ass out of by Jon Stewart......but Stewart used CRAMER's OWN WORDS and video clips to do it. Cramer and CNBC are trying to "restate history" when in fact history is VERY CLEAR........and is viewed by many on Youtube and elsewhere: Cramer was wrong MANY.....MANY....times, and he is NO "expert." And CNBC is NOT a network to get "actionable financial news" from. PERIOD.

And the effect on media is going to be ASTOUNDING as we move forward in time in coming months and years. As we go forward.........."media"......won't be about the "strength" or "power" of major networks. Media will become more "efficient"......and it will be about the following:

1) If you're "entertainment".........then you'll have to be funny and entertaining.

2) If you're "educational"........then you'll have to provide a good educational experience.

3) If you're "financial" in nature.........THEN YOU'LL HAVE TO EITHER BE CORRECT OR HAVE THE PEOPLE ON AIR WHO ARE CORRECT. And THAT......is where CNBC is getting beat up. Because they HAVEN'T been right............and in fact.......they have belittled the analysts who were bearish early on (and the bearish analysts were right).........and the Cramer's and Kudlow's and Neil's of the world WERE WRONG.

I imagine financial media will become much more "dispersed" (smaller).........and like Ashton Kutcher......word will spread by "word of mouth" (or word of email:) in many cases, and by Internet advertising. Those financial sites that provide good......actionable content or add value from an educational experience........will prosper. Those.....like CNBC, will not. Bandwidths and speed over the internet will allow more and more SMALL OPERATIONS to start up. You'll have to be GOOD.......ACCURATE........TRUSTWORTHY...........and not "beholden" to Wall Street.

The "brave new world" will also not be as kind to the likes of Goldman Sachs as well. You can already see that Goldman is trying to play the part of "playground bully" and trying to quiet the likes of GoldmanSachs666.com. What they (Goldman) doesn't know......is that there are sites lining up to either help sites like GoldmanSachs666 or take their place. Information WILL get out. People like Henry Blodgett can be silenced with a little payola........but there are actually people with ethics in some of the Wall Street firms.........just not many of them........and they don't stay around.

The last thing in the world that Goldman or any other hedge fund or investment bank wants.....is an efficient market where truth gets out. Abby Joseph is a big help to the trading floor at Goldman. A big player like Goldman or any other large hedge fund, can be helped by a little "misdirection" (as they call it in football). In the fall of 2007 she was bullish as all get out.......as Goldman was shorting the banks and housing industry. She is doing the same thing now with her call of S&P 900.

Some Items Of Note....

2009-04-19T18:32:00.001-07:00

1) Investor sentiment is getting a little on the "too bullish side". Note that the Investors Sentiment Survey jumped up to 1.27 to 1.0 bull-to-bear ratio last week (for the survey done Friday, April 10th and given out on Wednesday, April 15th). The new survey done this PAST Friday (two days ago) won't be out till this coming Wednesday......and I suspect that the ratio will jump slightly again and is likely up around 1.5 to 1.0. We may have put in a short term top. I will "blaken" the current 1.27 reading, but I expect the reading coming out in two days to be higher than that.....perhaps as high as 1.5ish and that will be the top. Remember, the reading coming out Wednesday will be from this past Fridays survey.

2) China: Shanghai Index has a short OR intermediate term BEARISH WEDGE that it has formed. It may have put in a short OR intermediate term top. Also, negative divergence has crept into the daily charts as well.

3) US Dollar: Still within its intermediate term bearish wedge. If the US government continues to "print" more money over the short/intermediate term, the dollar will break DOWN from its bearish wedge. Watch silver. Silver may.......and I repeat MAY, be forming a BULLISH wedge. You need to be careful on this one in the short term. The IMF has said that it is selling some of its gold reserve, which.......if it continues in the short/intermediate term......would likely promote more short term weakness in the precious metals INCLUDING silver. But watch the dollar AND silver/gold over the coming few weeks for a possible reversal.

4) Finally, anyone who was wondering WHY Dylan Ratigan left CNBC, need only to listen to the audio clip that is enclosed within THIS article. The audio clip is an interview of Dylan in February of this year, only a few weeks BEFORE he left CNBC. In the clip, Ratigan lays out the deceit of many of Wall Streets investment bankers in no uncertain terms, a story that Ratigan wanted to emphasize MORE than his producer at CNBC on Fast Money. Ratigan will land SOMEWHERE and tell the story that CNBC didn't WANT to tell.....and still doesn't want to tell.

Just don't forget that CNBC is owned by GE, and GE is certainly NOT immune from the shenanigans of Wall Street. For instance, they overstated earnings during the tech bubble and when they sold their insurance business they had to take a huge "non-recuring" loss because they had under-reserved their loss allowances. They also "spun off" Genworth Financial back in late 2003 at $20 a share........and it is now $2 a share. Cheerleading pays off.

It's crystal clear to anyone with eyes, that CNBC was WAY......WAY.....behind the ball during the financial crisis and was.......as they were during the tech bubble......cheerleading all the way (with notable exceptions being David Faber and Rick Santelli). They are apparently trying to "recreate history". I've seen a couple of clips on other sites where Cramer is STILL bitching about "being made to look like a fool by Jon Stewart". I only have to say this: Cramer....if you looked like a fool on the Daily show.....it's because of the all the clips of you making YOURSELF look like a fool.

Between Cramer, Kudlow, and Neil..........they likely have three of the worst financial "journalists" in the business (and I use the word journalists very loosely). I honestly don't know which one of them is worse.

Never Judge A Book By It's Cover....

2009-04-16T16:00:00.000-07:00

If you haven't seen this video clip yet from "Britain's Got Talent", then this is a must. It shows that you must NEVER judge a book by its cover.

Whether it is a CEO, a date, or an adversary........NEVER judge a book by its cover.

New ECRI Video Clip....

2009-04-15T05:05:00.000-07:00

Here's a new ECRI video clip. Again, for those of you that don't know, ECRI is an economic forecasting group. While their work is utilized by many groups involved in the stock market, their expertise is NOT forecasting the stock market.......but forecasting economic turns on Main Street.

I say that because of the fact that sometimes the stock market doesn't "bottom out" before the economy bottoms out. The most recent occurance of this is the last recession, where the stock market didn't bottom out until AFTER the economy bottomed out.

I know all the "talking heads" always say the "market is forward looking".....blah....blah....blah. But the fact is.......the market just moves from intermediate term bottom.........to intermediate term top..........back to intermediate term bottom.....etc. Why? Because not eveyone is a "long term investor". Hedge funds, including some of the largest hedge funds which are INSIDE of investment banks, are short term.....to intermediate term......traders. They monitor sentiment and are very aware of shifts in investor sentiment.

The two important variables RIGHT NOW.......are the US Dollar, and investor sentiment. Will be interesting to see where the investor sentiment is this Wednesday.

As far as the Dollar is concerned, it is still working its way up in a bearish wedge, but watch support. At some point over the coming weeks.....I expect the dollar to break down from its wedge. That should be bullish for commodities. Remember, the US is going to be raising a LOT of money over the coming months. The appetite for our debt will be key. If appetite for our debt weakens a little bit......the dollar is likely to come under pressure.

Goldman Earnings Article....

2009-04-15T04:29:00.000-07:00

Here's a good article on Goldman Sach's quarterly "earnings" that was announced yesterday. There are a couple things to note in the article:

1) First, Goldman is changing their fiscal year end to coincide with the calendar year end (this is not a big deal in and of itself......and wouldn't be a big deal AT ALL if Goldman would also have detailed out what their "mysterious" December P&L looked like). In order to do this, they reported on the quarter from 01/01/09 - 03/31/09. Note that the "orphan month" of December 2008 was NOT included in their quarterly earnings. THAT...is how Goldman reported a "profit". It is yet one more example of how CEO's try to "bury" any bad news. In this case.....they dumped all the "bad stuff" into the orphan month that they didn't report on (but could also have reported on if they had chose to).

2) The analyst in the article points out what is often overlooked by many: The balance sheet and the cash flow statements are king.........NOT the income statement. In this case.....the analyst "backed into" some important metrics on the balance sheet (because Goldman did NOT include a complete balance sheet in their earnings announcement).

The bottom line on the banks is this: Many of them are STILL in the dog house. While I am NOT looking for Armageddon......I do expect that many of the banks are trying their very best to "forestall" the reporting of losses that are sitting on their balance sheet right now.........and the banks "loss reserves" (for loans that have already gone bad.......or will soon be going bad) are under-reserved. As housing continues to drop (the next wave of foreclosures will be hitting this year from Alt A and prime mortgages), commercial real estate continues to drop, and consumer credit losses grow........banks will be forced to take some of those losses.

Do you remember when all the "talking heads" back in March of 2008 were saying "the bottom has been hit and banks will report GAINS from their toxic assets"? Well.......here we are......1 year later......and the proverbial "gains" are nowhere to be seen.

The bottom of the housing market is still at least a year away if you read what the analysts that have been RIGHT on the housing market say (as opposed to the bozo's like Kudlow who has been WRONG ALL THE WAY DOWN).

Commodities Keep Trucking.....

2009-04-14T05:18:00.000-07:00

Commodity plays continue to work. CHK and TIE among them. Chesapeak is moving up past strong resistance at $20ish. I REALLY like this for a longer term play, both technically AND fundamentally. I believe a movement will CONTINUE into natural gas because it is a cleaner fuel than oil. As well, I believe the US Dollar will start to weaken and bread down from its BEARISH WEDGE. A drop in the dollar should be bullish for commodities.

SOHU is moving up through its intermediate term resistance at $50ish.....and continues to work on the right side of the "bowl." This continues to look great as well.

CPSL is an interesting play.....although this one is a microcap speculative play (less than $100 million in market cap). It recently broke up through a bullish wedge and continues to move higher. It is a "cold rolled steel" company with plenty of cash in a growing market.

I continue to keep my eyes on the US Dollar. I believe, both from a technical standpoint AND a fundamental standpoint, that it is only a matter of time until the US dollar pulls back and tests its LONG TERM support. The only unanswered question in my mind, is HOW FAR the dollar pulls back, and IF support holds. Right now support is at the $84ish range which is support in the bearish wedge the dollar has formed over the past 6 months or so.

Investor sentiment is still moving up.....and as I stated a week or two ago, could move up to the 1.25 - 1.5ish range before this rally runs into trouble

Goldman Sachs Link.....

2009-04-12T20:37:00.000-07:00

Here's a GREAT website that I came across this weekend. It is a website that reports on the nefarious ways of my "buddies" over at Goldman Sachs. Apprently Goldman didn't like the "publicity" it was getting from this website (I guess the truth hurts), and Goldman is sueing to shut it down. The website is Goldmansachs666.com. Some GREAT articles as to how the tentacles of Goldman reach up and down Wall Street, and into the wallet of Main Street.

The least I can do is point out the site so that you might visit it. In fact......I'll post the site on my blog......and perhaps you can do the same on yours. I'm sure Goldman will love the attention.

We have one of the most INEFFICIENT markets in the world, although our friends at the investment banks would have you think otherwise. The way to make them MORE efficient is to keep shining the light on them.

New Jon Stewart Video Clip....

2009-04-08T08:22:00.000-07:00

If you want a good chuckle from a non-investment video clip, here is a 6 minute Jon Stewart clip on "Baracknophobia". Anything that makes fun of Sein Hannity, Michelle Bachmann, or Dick Morris is good in my book.

The Daily Show With Jon Stewart

M - Th 11p / 10c

Baracknophobia - Obey

comedycentral.com

Daily Show
Full Episodes

Economic Crisis

Political Humor

Roubini Is Right: Cramer IS A Bafoon....

2009-04-08T02:15:00.000-07:00

Apparently word is getting out: Jim Cramer is a bafoon. I know........I know........this isn't exactly "news" to anyone that has ever listened to, or watched........Cramer. But it is good to know that people are airing their opinions and holding him accountable.

Nouriel Rabini is just another in a growing list that are calling Cramer and CNBC out. Maybe some day, CNBC will hold Cramer accountable. Nawwwwwwwwww.........what am I thinking. CNBC is all about ratings. They don't care what they say......as long as it produces ratings.

Put This Woman Away......

2009-04-07T11:27:00.001-07:00

I thought that Cynthia McKinney was a nut job. She was a Democrat that served in the US House of Representatives from Atlanta. She was.....and is still......embarrassing. If I were a Democrat....I would have worked AGAINST her when she was running for office. Fortunately....she shot herself in the foot one too many times, and was eventually defeated.

But I think the Republicans have come up with their own wack job.....US Representative Michelle Bachmann of Minnesota. Boy....she is "out there". And "out there" is light years to the right of ANYONE. I thought Kudlow was conservative. Sheessssssshhhhhhh. She makes him look like Ted Kennedy.

The launching point of Bachmann's remarks is apparently the bipartisan Edward M. Kennedy Serve America Act. That act would expand national community service programs from 75,000 positions to 250,000.

This is a quote from Ms. Bachmann as she describes the "Serve America Act":

"It's under the guise of -- quote -- volunteerism. But it's not volunteers at all. It's paying people to do work on behalf of government. I believe that there is a very strong chance that we will see that young people will be put into mandatory service. And the real concerns is that there are provisions for what I would call re-education camps for young people, where young people have to go and get trained in a philosophy that the government puts forward and then they have to go to work in some of these politically correct forums."

So I guess she is claiming that the volunteerism is a "guise" in order to brainwash the youth of this country into believing and supporting a "liberal" philosophy and agenda. Boy......those damn "commy" Democrats. How DARE they do THAT to our country!! How DARE we volunteer and help people who need assistance. That is TERRIBLE:) We should CONTINUE to lower the tax rate on only the wealthiest tax payers in the country. What is this country coming to?

I would like to think that I can vote Republican again at some point in my life. But....Republicans like Michelle Bachmann certainly do NOT help their cause.

Here is the video.....you may have to see it to believe it:

Merideth Whitney Interview....

2009-04-07T05:33:00.000-07:00

Here is a Merideth Whitney interview clip from yesterday (courtesy of "Kaboom") that discusses the banks. As most of you know, she has been "spot on" regarding the banks, and she sees more pain to come.

That really shouldn't be a surprise given that housing has NOT hit its bottom. Keep in mind that housing won't hit its bottom until 6 - 9 months AFTER forclosures hit their bottom. And foreclosures haven't bottomed yet. In fact, keep in mind that Fannie and Freddie just did away with their "foreclosure foregiveness perioed" as of March 31st......so foreclosures will be picking up. Also keep in mind that many 2008 FHA loans were done WITHOUT A DOWN PAYMENT....and many of those will be headed for the foreclosure bin.

S&P 2009 and 2010 Earnings Estimates...

2009-04-07T05:05:00.000-07:00

Down again. The estimates for all of 2009 are now $35 for the S&P 500. For 2010, they are now $41.50. Keep in mind that these estimates are GAAP........"as is reported earnings." They include ALL income (both operating and nonoperating) and ALL losses (again....operating and NON-operating losses). The estimates continue to drop. These estimates were as of 03/31/09 by Standard and Poors.

I believe that in time, the market is heading to "home".......and "home" is a PE multiple of LESS than 10 times ACTUAL GAAP EARNINGS on a 12 month trailing basis. It may not get to home until next year.....but I believe it will get there. That portends an S&P of less than 400.

Here is a link to "Bespoke" which is an investment blog. Click on the word "link" in the first paragraph.....and it will take you to the actual excel worksheet at Standard and Poor's.

Study On Toxic Assets By Two Professors....

2009-04-07T03:53:00.000-07:00

A study just done by two professors from Harvard and Princeton come up with the following conclusion of the toxic assets issue. The following is the closing paragraph from that study:

"This paper has investigated the pricing of investment grade credit risk during the financial crisis. Many analysts appear to be looking at large recent price changes and concluding that we must be witnessing distressed pricing and widespread market failure. This conclusion is based on intuition that fails to appreciate the extreme nonlinearity in the risks of credit securities, especially those manufactured by securitization (ie CDO traunches). Our analysis suggests that the dramatic recent widening of credit spreads is highly consistent with the decline in the equity market, the increase in its volatility, and an improved investor appreciation of the risks embedded in these securities. From this perspective, policies that attempt to prevent a widespread mark-down in the value of credit sensitive assets are likely to only delay - and perhaps only worsen - the day of reckoning."

ECRI Interview.....

2009-04-03T12:57:00.000-07:00

Here's a clip from ECRI's website. I follow them closely.....because they have been RIGHT over the decades. This is an important clip to note.....as they have "called" a "cycle low" in the economy. What does that mean? It means that their longer term indicators in the ECONOMY that go out about 6 months have bottomed. And their weekly indicators that go out a few months look to have troughed as well. It doesn't mean that the stock market can't go down. If you recall......the stock market actually didn't bottom until about 9 months AFTER the last recession ended.

A Few Things To Watch.......

2009-04-03T05:47:00.000-07:00

1) Banks: Watch the banking index (BKX) and XLF short term to see if they break up.....or if they break down. They are getting to the end of their triangle.

2) US Dollar: Keep an eye on this one. Eventually, I expect it to break DOWN from its longer term bearish wedge. This may not be bad for the US market in the short term. But as I have said before.........if it gets down towards LONG TERM SUPPORT in the low $7x's.......Mr. Market may not like that so much. And then if it were to eventually break DOWN....that would NOT be good. If the dollar does break down and heads toward long term support, this would be bullish for commodities.

At some point.....perhaps in another 3 - 4 weeks.......the rally will "wear thin." Right now, the bull-to-bear ratio is at .82.....so it could move up to the 1.25 - 1.5ish area before the market heads south.

Housing foreclosures and pricing will continue to drop. I saw Dennis Gartman on Bloomberg a week or two ago, and he said that with only 400,000 houses being made in a year now, that we will soon be in a position to have a significant uptick in housing.

I think that ignores several important points:

1) We had overbuilt to such a large extent in 2002 - 2006. We brought millions of people INTO the housing market, that never should have qualified. NEVER. Now......those houses are going back onto the market. Some of those houses have been gobbled up by investors. Unfortunately.......they have been gobbled up too early. Some of those early investors are now walking away from homes. It is no different than when a stock plummets. Some of the early "knife catchers" ALWAYS get their arms cut off before the bottom.

2) A large amount of people borrowed too much against their homes near the peak in the market. Now.....they are under water on their mortgage. What happens if they now want to sell their home either (1) because they are retiring, (2) because they are moving, or (3) they need to sell a second home because they need the money. What are THOSE "prime" mortgage holders/sellers going to do? Are they going to come up with $50,000 to over a million dollars that they are under water? Or....are they going to mail in the keys?

3) There is STILL a large amount of "shadow inventory" that has NOT been listed on the MLS by banks. These banks have 600,000 - 700,000 homes on their balance sheets that have not yet been listed for sale. THAT.....is going to put pressure on home prices.

4) And there is also the overhead "drage" of homeowners who WANT to sell.......but don't HAVE to sell.......but they don't want to sell in THIS HOUSING MARKET. That....will be significant "overhead resistance" for the foreseeable future.

Ratigan Gone At CNBC....

2009-04-03T04:19:00.000-07:00

Since I rarely watch CNBC any more (I watch Bloomberg)......I guess it's logical that I was the last to learn that Dylan Ratigan has not renewed his contract with CNBC. This is not very surprising......since CNBC likes to play to Wall Street, instead of reporting on it.

Dylan, along with Rick Santelli and David Faber, were the only three that worked at CNBC that I had respect for. The rest of them........are pretty much a group of worthless cheerleaders. I saw in an article the other day that Becky Quick married a producer at CNBC a short time ago. Apparently she started dating the producer......who, by the way, was married and had two kids at the time. He left his wife for Becky. Apparently CNBC wants people to work for them that are either dumb as a stump like Kudlow......or have no ethics like Becky Quick. With Dylan Ratigan's departure......they have one less ethical person on their set. In Kudlow.....I guess CNBC gets the best of all worlds: (1) An incompetent idiot on economics, (2) a cheerleader for Wall Street, and (3) someone to the right of Atillah The Hun.

I would expect Santelli to be the next out the door. I read in another article this morning where his contract expires this year. I enjoyed it when Santelli "outed" Cramer for being too bullish on live TV (in the fall of 2007 and still too bullish in the spring of 2008). I bet the suits at CNBC loved that one (not). Santelli will end up on Bloomberg (which I now watch) or Fox after his contract ends.

It will be interesting to see where Radigan will land. When Eric Bolling left CNBC.....he had a clause where he couldn't "jump" directly to a competing channel for a period of several months. I would assume that Ratigan likely has a similar clause.

I found Ratigan to be one of the very few talking heads to REALY attack Wall Street for its blunders and unethical behavior. CNBC took a big "hit" with the Cramer fiasco interview on Jon Stewart's show several weeks ago......and it will likely suffer more now that Ratigan is gone. CNBC has been "outed" for what it really is: Just a running promotional video for Wall Street. I'm waiting for the day that I hear of Abby Joseph Cohen is going to work for them. For all I know, she's already on their payroll!!

SOHU, CHK, TIE.....

2009-04-02T07:41:00.000-07:00

They continue to work their way up. SOHU.....continues to carve out the right side of a BIG BOWL. As it meanders its way back up to $50 again.....this will be the real test. It is likely ready to break up through $50 this time. Remember......the Asian markets are MUCH stronger than the US equity market. And they should be. Their banks are much better capitalized......and their citizens are LOADED in savings which can spur economic growth.

CHK....I noted a few days ago it was due for a pullback from $20ish resistance. It did pull back to $16.50ish. I really thought it would pull back further......but $16.50 was the first support area. We'll see if the gap formed today will hold. If it does......then it's back up to $20 resistance. Will this be the time it pushes through $20? It just may be. By the time it is knocking on the door of $20, the US dollar may be falling through its bearish wedge, which would help the commodities move up (like CHK and TIE). Fundamentally AND technically, I continue to like CHK in the intermediate AND long term. Same for TIE below. In fact, I like most "fungible" commodities because of growth in Asia and Latin America (oil, grains, most metals).

TIE....continues to work its way up. Again....if the dollar will fall some, this will help it even more.

Bull/Bear ratio is at .82 so again......this rally (which HAS turned out to be an intermediate term rally).....has additional fuel to go before it runs out.

Have we seen "thee bottom". I doubt it. Unless a trailing 12 month PE of 50 is normal at the end of a severe recession. Which it isn't (at least it HASN'T been over the last 100 years).

Standard And Poor's Earnings Estimates...

2009-04-01T11:42:00.000-07:00

S&P's own earnings estimates for 2009 on a GAAP basis are now down to $35 for the S&P 500. For 2010, the forecast is $42.

These have continued to come down over the prior weeks. A month ago, the estimate was $40 for 2009.

CEO Obama?

2009-03-31T04:03:00.000-07:00

GM's CEO was fired this past weekend by CEO Barack Obama. Is it "horrible" that the president of the United States (via input by his auto team) fired the head of GM?

Can you fault the government (who is now the largest shareholder) to step in and take steps that the board of directors should have taken LONG AGO?

Think about some of the things that have happened over the past 10 - 20 years at GM (note: Wagoner was CFO back in 1990.....and promoted to President of North America in 1992....and CEO in 2000):

1) Saturn has not earned a dime over its history, and so far GM has not found a buyer, and I sincerely doubt a buyer will be found.....so it will be "folded up" and dissolved.
2) Saab was an acquisition that has not earned a dime.
3) Hummer.....a brand that COULD HAVE BEEN SOLD a few years ago, now can't find a buyer, so it will be folded up and "go away".
4) They made money from FINANCING cars....but not making them.
5) They have fought (as has the whole US car industry) raising the mileage performance of their fleets, while Asian and European car makers continue to raise their mileage performance.
6) They refused to deal with the healthcare cost issue and the pension issue, with the unions early on. Instead, GM has watched their market share continue to slip.
7) GM refused to realize that they had too many brands. I never did understand GM's multi-brand strategy. If you look at someone like Honda or Toyota, their strategy is fairly simple: Brands don't overlap economic boundaries. The Acura brand doesn't compete with their Honda brand. In fact, the Honda brand serves as a "step up" to the Acura brand. The same is true with Scion and Toyota brands (of the Toyota company).

Henry Ford II saw the "coming onslaught" of Asian cars back in 1971, but apparently he didn't see the solution.

"I frankly don't see how we're going to meet the foreign competition," said Henry Ford II, then chairman and CEO of Ford Motor, on May 13, 1971, right after the annual shareholders' meeting. "We've only seen the beginning," he predicted. Regarding Americans' increasing preference for small cars, he declared: "Mini car, mini profits."

It is probably best summed up by the following:

“It’s a pretty unceremonious ending,” said John Casesa, an industry analyst and managing partner of the Casesa Shapiro Group. “G.M. lost its way in the ‘70s, but the company didn’t know it until 20 years later. The hole was much deeper than he realized when he became C.E.O.”

In capital intensive industry's like autos and aviation, bad decisions can be company killers. In GM's case, they have made a string of bad decisions.......and "non-decisions."

US Dollar UP......Commodities & Market Down...

2009-03-30T19:21:00.000-07:00

Here's a look at the US Dollar through March 30th. The dollars rise over the past few days has fueled a drop in commodities and the market overall.

US Doctors Must LOVE this.....

2009-03-29T18:53:00.000-07:00

Here's an article from CNN that describes what is called "medical tourism." What it is.....is travel to a foreign country to get healthcare/procedures/operations that aren't affordable in the US. Many of the people may be uninsured here.........or perhaps their procedures aren't covered by their US insurer/managed care company.

Pretty interesting. I would be interested if some of the US managed care companies and insurance companies may be pursuing this in the future in order to help reign in costs.

The US doctors would LOVE this (heavy sarcasm). Just want they want is competition from surgeons in India that get paid 1/5th of what US surgeons get.

Here's a link to Max Healthcare, which is a publicly held company in India with 8 hospitals.

US Dollar...& Gold....

2009-03-27T05:19:00.000-07:00

Again....keep your eyes on the US Dollar. It is in a longer term BEARISH wedge. The only question in my mind is whether it breaks UP for a final "leg 5"......or it pushes down THROUGH support now, rather than AFTER a leg 5 up.

Here's the daily candlestick chart of the US Dollar.

Here's the daily candlestick chart of gold. Right now....it is forming a triangle. Watch gold WITH the action in the US Dollar.

Fun Fact Regarding Gold...

2009-03-26T10:47:00.000-07:00

Here's a good "fun fact" for you next time you are at a cocktail party and you are looking into your "Cliff Clavin" bag of useless information:

All the gold EVER MINED THROUGHOUT HISTORY would fit into a cube that is 72 feet high X 72 feet wide X 72 feet long. In other words, 72 cubic feet. Hell, I shoveled 25 cubic feet of soil into my yard last summer (and no......there wasn't any gold in it).

Ok....it actually ISN'T such "useless" information. The point is, gold is fairly "scarce". And rumor has it.....it isn't being made any more. Of course, that also doesn't mean it can't go down in price either!

Here's the source of the info. I've heard it described using the dimensions of a tennis court and a certain "depth" as well. It is pretty interesting to know that there really hasn't been that much gold mined all throughout history. I actually thought my ex-wife had MOST of it:)

DON'T take this as advice to buy gold. It is ONLY meant to provide you with a good line at your next cocktail party!

Couple Things To Note....

2009-03-26T03:42:00.000-07:00

A) First, yesterday was an interesting day wasn't it? It certainly looks like there are "buyers" underneath the market yesterday to catch it. That is important to note. So yesterday was a telling day.

B) Second, sentiment was up to .67 bulls-to-bears ratio. That is important to note in concert with A above. If buyers are going to continue to come in, as it now appears.....then there WAS an intermediate term bottom on March 9th....and bulls will push the market higher.

With the ratio only at .67 to 1.0......there is the potential for a much bigger push UP over the intermediate term.

C) Earnings are going to be interesting. I'm negative on MSFT, GOOG, and RIMM. Will be interesting to see how those make it through earnings season.

D) Long term....I'm still bearish. But markets move in intermediate term legs. If buyers are going to push the market up....then I'll ride that boat.

E) The one "wild card" remains the US Dollar. You need to keep an eye on that....

F) Since it is quarter end....I would expect the market to have "upward bias" through the 2nd trading day of April. Quarter end.....and the first 2 trading days of any month have an upward bias.

CHK....

2009-03-24T09:42:00.001-07:00

Chesapeake may be getting a little over-extended in the short term. Negative divergences on RSI and MACD. SHORT TERM bearish wedge forming........and intermediate term resistance around $20ish.

This doesn't mean it can't go higher in the short term.......just that the odds of it going higher aren't nearly as good now (short term).

Marc Faber Clip.......

2009-03-24T05:23:00.000-07:00

Marc Faber........aka Dr. Doom.......is someone to listen to. He is not just some "blow hard" that doesn't have a good track record. He DOES have a good track record.

But here is the clip. He's looking for the rally to possibly continue into April.......but eventually "roll over."

Here Is A KEY Housing Question...

2009-03-24T03:53:00.000-07:00

Remember that on a couple of occasions I have mentioned that there are an estimated 700,000 homes of "shadow housing inventory" that are NOT yet for sale. There might be a couple of answers for that.......

* The banks might be "running behind" because they have been SWAMPED with foreclosures.

A more sinister eye might come up with another couple of possibilities:

* The banks don't want to compete with other foreclosures they, or other banks, have out in the market.

* If the banks offered the homes for sale.......they may be forced to take significant write downs at a time they can't afford to do so.

Here is a recent brief blog about a home in Orange County, California. Here is one paragraph from the blog:

Assuming the property can be sold for the current asking price, and we subtract 6% for sales costs, the loss would be more than $900,000. The owner will lose his downpayment and WaMu (Chase) is on the hook for the rest. Not including sales costs, it would mean this less-than-10-year-old property, in its current condition, could have lost half its value.

I don't pretend to have the answer.......because I DON'T have it. But having seen what some of the companies have done in the mortgage and banking sector over the past 5 years.....I have to wonder.

We don't know yet what write-downs the banks have taken......but we should learn more about the health of the larger banks in April when we hopefully get some of the results of "stress tests" of the banks.

A Look At The US Dollar Chart.....

2009-03-24T03:44:00.001-07:00

Here's a peek at the US Dollar, and you can see that we are at a "tipping point" for the intermediate term.

Is it going to head back UP within the wedge.....or is it ready to break DOWN through the wedge and towards long term support?

A push UP in the wedge, and commodities AND most other equities may drop. A push DOWN through the wedge in the short term....and commodities and the market likely rises.

Commodities Continue To Rock....

2009-03-23T11:27:00.001-07:00

The commodities bull (Part II...:) continues to snort. Oil, natural gas, copper, platinum.....etc. TIE, CHK, and other commodity plays.....are working well, and over the intermediate term should continue to work.

S&P Weekly Chart...

2009-03-22T13:16:00.001-07:00

Here's a look at the S&P weekly chart. A nice bullish wedge is forming, and another visit to the depths of the wedge will likely set us up for a more significant rally into the June/July timeframe.......before the market rolls over AGAIN and heads to a LOWER LOW.

I expect the next rally to have a little more "juice" to it. But we'll have to see. One step at a time. Looks like we're "still on" for an early-to-mid April "intermediate term" bottom.

Good ECRI Brief Video Clip..

2009-03-22T08:59:00.000-07:00

Here's a good clip from ECRI that describes two VERY IMPORTANT issues:

1) The issue of the US not having enough science and math students/employees.
2) The psychological effect of the current recession.

Two unrelated issues........but two very IMPORTANT issues. The mat/science student issue is something that we have known for a VERY LONG TIME.....and have continued to do NOTHING about. THAT....is why Obama continues to promote that issue.

The psychological effect of the recession is important for equity investors of course. Good clip.

A Look At Some Commodities...

2009-03-22T06:46:00.000-07:00

You can see that copper continues its move up. Remember....commodities are driven by world wide demand. As well, I suspect there are two other things at play in commodities:

1) Early stage speculation money flow moving into commodities.
2) Expected fall in the dollar.

Below, you can see that naural gas popped up through a small bullish wedge as expected. I like natural gas as a LONG TERM play. There will continue to be a move from oil to natural gas where it is possible. The two biggest demand sources over the coming months/years:

A) Heavy trucks will move from gasoline to natural gas (cheaper.....cleaner)
B) Heating oil (especially in the northeast). Again....cheaper....cleaner than oil.

I like the natural gas stocks over the intermediate AND long term. Chesapeake (CHK) is one example. We may get a pull back in the near term if natural gas "backtests" its BIG breakout on Friday. But intermediate term and long term.........I like it.

The oil chart isn't here, but it also continues to break up.

Robert Prechter: Presentation To Georgia Legislature

2009-03-21T06:22:00.000-07:00

Here is the link for Robert Prechter's presentation to the Georgia legislature in December 2008. It is a 30 minute presentation......that has a few additional graphs of interest. I suggest that you get a nice cup of coffee....and listen to the presentation. It will be well worth your time.

New Terminology On Wall Street

2009-03-21T03:07:00.000-07:00

I came across this yesterday. Apparently there has been a change in the meaning of some of the terminology on Wall Street:

CEO — Chief Embezzlement Officer.
CFO — Corporate Fraud Officer.
BULL MARKET — A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET — A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.
VALUE INVESTING — The art of buying low and selling lower.
P/E RATIO — The percentage of investors wetting their pants as the market keeps crashing.
BROKER — What my broker has made me.
STANDARD & POOR — Your life in a nutshell.
STOCK ANALYST — Idiot who just down-graded your stock.
STOCK SPLIT — When your ex-wife and her lawyer split your assets equally between themselves.
FINANCIAL PLANNER — A guy whose phone has been disconnected.
MARKET CORRECTION — The day after you buy stocks.
CASH FLOW– The movement your money makes as it disappears down the toilet.
YAHOO — What you yell after selling it to some poor sucker for $240 per share.
WINDOWS — What you jump out of when you’re the sucker who bought Yahoo @ $240 per share.
INSTITUTIONAL INVESTOR — Past year investor who’s now locked up in a nuthouse.
PROFIT — An archaic word no longer in use.

Good Article....

2009-03-20T15:05:00.000-07:00

Here's a great article by Robert Prechter. It gives us a "40,000 foot view" of valuation of the stock market. As you know, I am LONG TERM bearish.....and have a long term target of 360 or less on the S&P. It's going to take some time to get down to a long term low.....maybe years.

But this article by Prechter may give you a view of the "playing field" that is market valuation.

Couple Things To Note...

2009-03-20T10:34:00.000-07:00

1) First, you can see from my blog this morning, that the S&P has now dropped through its first support at 780. I expect the NASDAQ to head to "lower lows" in April.

2) Secondly, the "dividend yield" of the S&P 500 as of the opening this am was down to 2.7%. When this downturn in the market is ultimately done, I expect the dividend yield to be TWICE that. A good portion of that will be due to the market falling more........and a smaller part will be due to companies raising dividends (like Oracle did last night). At the same time companies are upping dividends, keep in mind there will be others that reduce or do away with their dividends. But however you look at it........the dividend yield will be going UP.....as the market goes DOWN.

Copper, Platinum, Natural Gas...

2009-03-20T08:48:00.000-07:00

Copper and Platinum continue to work well in the commodity sector. I've added a Platinum chart in addition to the Copper chart already there on the right side under "charts". You can see that platinum has popped up through another bullish flag.

I would expect commodities to continue to work well over the intermediate term. As noted in a blog yesterday, China exports look to have found at least some short or intermediate term support. That should bode well for commodities if it holds.

I am still looking for a "pullback" in the US EQUITY'S into April. Again...I would not be surprised if the Dow low is "already in".....but I expect the NASDAQ to set a "fresh low". Could that change? Sure it could. But right now....that is what I "see".

S&P 500.....

2009-03-20T08:11:00.000-07:00

Here's the 60 minute chart. The 804 - 808 area is resistance....and 780 is support.

Housing Affordability Index....Very Good News..

2009-03-20T06:22:00.000-07:00

One of the only bright spots of the effect of the housing decline, is the AFFORDABILITY of housing. There is ALWAYS a silver lining......sometimes you have to look hard to find it.

Here is an article in Economix that shows that the housing affordability index is at its highest (meaning housing is MOST AFFORDABLE) since the index was started in 1971. Here is the article, and please note the graph.

As noted in the article: "The Housing Affordability Index composite level for December was 158.8. A composite H.A.I. value of 158.8 means that a family earning the median income has 158.8 percent of the income needed to qualify for a mortgage on a median-priced home."

Note on the chart, that housing affordability BOTTOMED in the early 1980's. At first.....this didn't seem "right" to me....because of the recession in the early 1980's. But interest rates in the early 1980's were EXTREMELY high......which of course would push payments up beyond the reach of many families back then. Now.....interest rates are at or near 50 year lows.....and housing prices have been falling for a couple years now.

This DOESN'T mean that housing can't become even MORE affordable......which I believe WILL HAPPEN.......but it does mean that the housing market is moving TOWARDS a bottom.

Some Housing Stuff...

2009-03-20T05:30:00.000-07:00

I was browsing through some housing articles and I came across this one that described how the average San Francisco bay area home has dropped below $300,000 for the first time since 1999 (note...prices also dropped 1.7% from January of 2009 to February 2009 as well).

Of resales sold last month, 52 percent had previously been foreclosed on in the past 12 months, up from 51.9 percent in January and 22.3 percent a year ago.

Then.....I looked at another article from July of 2008 which took my breath away. Here is a paragraph from that article:

The median price paid for a Bay Area home slipped below $500,000 for the first time in more than four years as potential buyers waited on the sidelines for prices to drop even lower.
The median price fell to $485,000 last month, down 6.2 percent from May’s $517,000, and 27.1 percent below the $665,000 median price in June 2007, according to a new report from DataQuick.

The drop in the bay area median housing price from June of 2007.....till February of 2009........was 56%. Can you say OUCH. Down 56% in 21 months. And.....still dropping.

You have to wonder how many homeowners are severely underwater.......and will NEVER be above water. And how many of those homeowners are not going to, or be ABLE to, swallow significant losses when they have to sell their house because they move? Apparently, as noted in the current months article, more than 50% have decided to send in the keys.

US Dollar....

2009-03-20T04:41:00.001-07:00

Once again.....keep your eye on the DOLLAR.

You can see that during this rally....the smaller bearish wedge broke down, and the dollar has come down right to "support" of the larger bearish wedge (in blue).

You can also see where LONGER TERM support is in the low $70's from last year.

So here are the questions I have:

(a) What happens if the dollar breaks down through the larger bearish wedge?

(b) What happens if the dollar breaks down through longer term support in the low $70's?

China Exports

2009-03-19T18:58:00.000-07:00

Excerpt from a recent article regarding Chinese copper imports:

EMERGING FROM DOWNTURN?

China copper imports hit new record in February and may rise further
Chinese imports of copper surged 96,610 tonnes in February vs January to a new to record with SRB stocking seen as supportive, and fabricator demand firmer. Aluminium imports also rose.Author: Polly YamPosted: Wednesday , 11 Mar 2009

HONG KONG (Reuters) -
China's total copper imports surged 41.5 percent to a record last month, data showed, topping expectations on state-backed strategic buying and after stronger Chinese prices had spurred merchants to raise spot imports.

The data follows other signals -- both macro-economic and in the metals market -- that the Chinese economy and its demand for raw materials is emerging from the steep downturn seen late last year, a supportive sign for beaten-down global commodity prices.

Boycott CNBC.......

2009-03-19T16:16:00.000-07:00

Deny.....deny.....deny. Here's a quick clip from Cramer the day after Jon Stewart roasted him, denying that CNBC was "cheerleading" during the run up in the stock market and they were "out front" of the economic crisis. Man....talk about altering history. They were the cheerleaders in BOTH bubbles.

Zucker doesn't get it. Cramer doesn't get it. And we certainly know that Kudlow has absolutely no clue......so he doesn't get it.

So......the simple and effective way to handle the issue.....is to vote with my "eyes". I'll be watching Bloomberg from now on for the most part. I would encourage anyone else to do the same. Their ratings have already dropped off 10% "post Stewart". I'll do my little part in seeing if another 10% could be cut out of their pie.

Watch The Peso.....er....I Mean Dollar..

2009-03-19T08:32:00.001-07:00

Watch the Dollar closely. After breaking down from a short term bearish wedge.....it is in the middle of a MORE BEARISH LONGER TERM WEDGE.

The impacts of a lower dollar are good for our export business in the short term. But if (when?) the dollar breaks down through the longer term bearish wedge.......that may create some more serious problems.

SOHU....TIE.....

2009-03-19T06:05:00.000-07:00

SOHU: Again...nice LONGER TERM PATTERN. Today could be a nice opportunity in the low 4x's, but make SURE you use a reasonably tight STOP. Also note that they have an IPO of their gaming division coming up, which SOHU will be a 70% owner of (after the IPO). Many times there is a "shakeout" when this happens (like today)......but ALWAYS use a protective stop (even if it is a "mental one" and not an actual "physical stop" that can be "used" by the market maker).

TIE: Again....strong longer term pattern. The "reflation trade" lives for the time being. Nice bullish wedge forming.

Peter Lynch quote....

2009-03-19T04:38:00.000-07:00

Here is one of my favorite quotes. It is from Peter Lynch:

"Go for a business that any idiot can run - because sooner or later, any idiot probably is going to run it."

Jeff Zucker Doesn't Get It....

2009-03-19T02:10:00.000-07:00

In a recent interview by Businessweek, Jeff Zucker said that while "everyone wants to find a scapegoat," to suggest that the business media or CNBC was responsible for the economic meltdown is "absurd."

What he doesn't "get" is this: Jon Stewart in NO WAY said that CNBC was "responsible" for the economic meltdown. What Stewart DID SAY was that CNBC is responsible for REPORTING ACCURATELY......which they have continually failed to do over the years.

If all that CNBC is going to be is a mouthpiece for CEO's........then they provide the unsuspecting public absolutely no good.....and in fact.......do them harm.

Here's a paragraph from the Huffingtonpost article:

"Stewart has had strong words for CNBC on his Comedy Central show, arguing that journalists who cover Wall Street should have done more to warn of the financial meltdown through critical reporting, instead of acting like market cheerleaders."

Pina' Colada....

2009-03-18T09:37:00.001-07:00

Mark Hulbert: On Current Investor Sentiment....

2009-03-18T05:57:00.000-07:00

There was a short piece from Mark Hulbert on CNBC this morning, with Mr. Hulbert explaining that sentiment is likely NOT bearish enough for us to be near a bear market bottom. Hulbert runs the "Hulbert Financial Digest", which looks at market sentiment from many different angles and measurements.

Joe Kernan: "...are people getting less bearish quickly, or not?"

Hulbert: "They are, and not only that, they never were really all the bearish, at least according to our sentiment measures at the low on March 9th. For both reasons, contrarians worry about this rally. Bear market rallies, almost by their nature, always look impressive. Their function, from the psychological point of view, might be said to draw the unsuspecting and gullible investors back in the market, and from that point of view we need to worry about this rally. Everyone has been looking at it almost with breathless excitement from day 1 thinking.....'it must be the bottom'.....'happy days are here again'. Rarely, if you look back at the major market bottoms of the past, were people so quick to declare there was a bottom, at the bottom."

This agrees with my look at sentiment measures as well. Not nearly enough bearishness.......not even for a significant intermediate term bottom. I believe the current rally is running on fumes......and its days are numbered......in hours or days.

Here's Something For Earnings Season...

2009-03-17T18:33:00.000-07:00

NASAQ daily chart: WATCH VOLUME...

2009-03-17T11:05:00.000-07:00

I believe this rally will die due to lack of volume. Here's a chart of NASDAQ. On the bright side, when this rally fails (imho)....then it will take us down to where we can get an intermediate term rally with a little more juice to it, than these short term rallies noted on the chart. But we need to get rid of some more of the "perma bulls" in order to do so.

WATCH VOLUME CLOSELY.

Article Regarding Bank Of England

2009-03-17T09:15:00.000-07:00

Here's an article about the Bank Of England. The European banks have a lot of issues on their hands right now. They are going through the same deflationary pressures in their housing markets as we are here in the US. In fact, London is one of the most affected cities in the world by the housing downturn (caused by the credit bubble).

They also have the issue of the Eastern European countries that are going through severe stress. Many of them have significant loans on their books made to countries that are in "very troubled waters."

Here are three paragraphs from the article:

The report lays bare the fears investors currently have about the creditworthiness of Britain's biggest banks. It reveals that a key measure of interbank health - the spread between the London Interbank Offered Rate (Libor) and expected interest rate levels had "started to widen again" while "contacts reported some increased reluctance to lend to banks beyond very short maturities."

The main worry haunting investors is the threat that banks could be nationalised and that financial institutions are harbouring "ongoing balance sheet constraints".

However, most worryingly, it warns that the credit default swap spread rates on large banks - a key measure of concerns about their possibly insolvency - picked up to their highest level since just before the collapse of Lehman.

As We Approach Buying Opportunities....

2009-03-17T06:29:00.000-07:00

...you should be getting MORE BULLISH......as more people get BEARISH. THAT....is what forms an "intermediate term" bottom. There is ALWAYS risk in the market.....but there is much LESS risk when everyone is bearish (we're NOT there yet....but we're moving towards it). Let's face it......it is much less painful to fall off a balance beam from 2 feet off the ground......rather than 10 feet off the ground.

I will posting some charts over the coming days and weeks as more stocks move into potential bullish chart patterns.

For instance.....I already mentioned the Nikkei (Japan). That is certainly one that has already started to move. It will likely pull back as the US market weakens....but it is certainly one to watch for a strong intermediate term play in a couple weeks.

TIE is a stock that may be poised to move given a little MORE time. It is forming a nice bullish wedge......has a nice cash balance with NO DEBT. It has suffered from the delay in the Boeing 777 and the downturn in the economy. I will watching this as it pulls back from yesterdays short term high.....down towards support over coming days/weeks. I would watch for what should likely be decreased volume as it pulls back.

I will post more of these "watch list" stocks/etfs as we move towards what I believe will be a good INTERMEDIATE TERM buying opportunity (may be LONG TERM for foreign stocks/etfs).

Couple Things To Note...

2009-03-17T05:37:00.000-07:00

1) First, by looking at the Nikkei.....I hope you realize that not all world markets will move in the same direction.....even over the LONG TERM. The Nikkei is certainly one example of that. It is very possible that the US market heads lower over the long term......as other world markets head higher. I know "our" ego doesn't like to think that is possible........but it is.

2) Long term......I think we have substantial real problems that will cause the US market to go much lower than expected by most. Housing is one of the core problems, our debt load is the other major problem. These WILL come home to roost. They always do. But that doesn't mean that we can't have some very good intermediate term rallies along the way.

3) Asia: I said it several months ago. Asia will come out of this EARLIER than the US because of the high debt load that Americans have......and the low debt load that Asian's have.

WATCH ASIA. It has some very good things going for it:

A) Low debt load of its consumers
B) Rising percentage of "new consumsers" (move up the ladder from low income to middle income)
C) Overall numbers. Let's be frank.....the law of big numbers will work AGAINST the US, and will work FOR Asia. They have a bigger percentage of people who will be "future" consumers. We don't have that. All of us already ARE consumers.

Looking For April Buy Opportunity.....

2009-03-17T04:44:00.000-07:00

As noted before.....I am looking for an INTERMEDIATE TERM BOTTOM coming up sometime in April. It may be above the 500 - 525 level I currently have as an intermediate term target (600ish). But STILL.....an "intermediate term bottom".......NOT......a long term bottom. I have moved up my intermediate term range to 550 - 610. The long term target does NOT change.

The NASDAQ has the most to lose as we move towards an intermediate term bottom. The Dow....potentially....may have already put in its intermediate term bottom. But I expect the NASDAQ to undercut its recent lows.

I would think that the Investor Sentiment Survey will continue to weaken over the coming weeks as I have noted previously. I would expect the bottom to come sometime between early and mid April.......but obviously I don't have a crystal ball.

Here is a weekly candlestick chart of the transports. They haved formed a bullish wedge. I would like to see it pull in some more over the coming weeks....but stay within its "wedge." The 2,000ish on the Transports may be the intermediate term bottom for the transports.

Here is a long term chart of the transports using monthly candlesticks. You can see that the 1,900 - 2,000 level on the chart is key support.

A Look At Some Nikkei Charts....

2009-03-17T04:12:00.001-07:00

Here is a look at Japan going back to the early 1980's. This looks like it has potential to be a long term turning point. Keep in mind that Japan has gone through a 19 year "round trip". If they aren't frustrated by now.....they never will be!! There have been several "inside candles" over the last 4 or 5 months.

Here is a look at a shorter, but still long term look over 5 years using weekly candlesticks. You can see the BULLISH indicators clearly on this look at the chart. Nice bullish wedge......very strong positive divergences. This is setting up very nicely. Japan rallied strong last night....on pullbacks....this looks very bullish.

Here is the daily chart of the Nikkei. Again....nice positive divergences. It moved up through its resistance trend line yesterday....and continued that move UP today. Looking VERY BULLISH.

Two Notes: Lower Dividends.....Lower Earnings...

2009-03-16T15:55:00.000-07:00

The dividend yield has plummeted over the past week as three things have happened simultaneously:

1) The market rallied
2) Dividends got cut at several companies
3) Earnings continue to come down

The dividend yield is now down to 2.9% as of last night............and falling. And more earnings estimates continue to fall.

The latest casualties:

a) Alcoa reduced their dividend tonight after the close by 82%, and if that wasn't bad enough.....they are doing a secondary stock offering for $850 million to REALLY trash the stock.

b) Energy Conversion Devises (ENER) slashed its revenue expectation down to $70 million......from its prior guidance of $95 - $110 million.

Great Housing Article...

2009-03-16T12:57:00.000-07:00

Here's a GREAT housing article you NEED TO READ. I have mentioned some of the 14 reasons that housing is NOT a good buy right now.

If anyone knows Becky Quick.....you may want to point her toward the article at Implode-O-Meter that I linked to above. That way she won't continue to lead the band of lemmings over the cliff and into the abyss. I thought that was Larry Kudlow's job anyway? And he was doing so well at it.

I have enclosed a couple of charts that show why there is a lot more room to go on the downside, both in the housing market, and in the stock market. Sorry Becky.

CNBC.......More Of The Same....

2009-03-16T04:33:00.000-07:00

I got a chuckle this morning when Becky Quick in essence....."called the bottom"....in the market. She made two statements that are particularly eye opening......and once again reflects CNBC's "cheerleader" status.

The crew and guests were talking about the possibility of a bottom in the market, and one of the guests pointed out that there are OTHER asset classes such as bonds and cash that people can hold. I guess that was Becky's cue to insert her foot in her mouth:

"What return on cash......I mean at this point.....if you're in cash..." Fortunately one of the guests pointed out that cash has been one of the best performing asset classes in the world. Anyone who was in cash for the last 10 years is MILES ahead of anyone who has been holding stocks on the long side.

Apparently not feeling that her foot was far enough down her throat.......she went on:

"I guess I feel particularly bad for people.....that are not in the market, that I know are at home watching their investments, that maybe panicked two weeks ago when we saw those lows and thought.....forget it.....I can't take this anymore.....and sold out and they missed 900 points last week."

So let me get this straight:

(a) She is sorry for people who missed out on 900 points of upside in the Dow last week.......but she doesn't say a word about the lemmings who followed CNBC's cheerleading and TOOK PART IN 7,000 POINTS ON THE DOWNSIDE? Really? That takes kahones.

(b) She apparently doesn't think there is any risk to the downside from here (to be continued later).

Wheewwwwwwwww. I feel much better now that I know that Becky Quick.....who wasn't able to call any type of top in October 2007..........May 2008........or January 2009......now is able to clearly see that the bottom is in. Incredible.

She makes me feel so much better about the market;)

A Wider Net For Jon Stewart.....

2009-03-15T09:51:00.000-07:00

First of all, Jon Stewart did a FABULOUS job of exposing some of the absurdity regarding CNBC and "financial news networks" at large. As most of you have known for some time, CNBC is all about its ratings. PERIOD. To hold themselves out as "financial experts" was misleading at best, and outright criminal at worst.

Jon Stewart touched a nerve in his viewing audience, and certainly many more people now understand that they can't really get "sound advice" from a network.......nor should they expect to (as I don't expect things to change much). At least they are exposed to the layperson on a national level.

But Jon Stewart's appropriate roasting of Jim Cramer just touched the surface of what is wrong with Wall Street.......and didn't yet wade into the waters of other areas such as (a) the real estate market, (b) our legal system, or (c) our healthcare system, or (d) our political system.

You see......the Pandora's box that Jon Stewart may have opened.......has to do with a very simple concept: Accountability.

We have a legal system that doesn't strive to "find the truth". We have a legal system that (a) try's to find the defendant guilty if you are a prosecutor, and (b) trys to find the defendant innocent if you are his defense attorney. It has far too little to do with the ACTUAL guilt or innocence.

In real estate, we have realtor's that hold themselves out to represent BOTH the buyer and the seller......when in fact, for the most part.....they represent the interest of the real estate agent: Make a damn sale!

So I hope that Jon Stewart's skewering of CNBC not only gets us interested in holding the financial news channels accountable........I hope that it struck a nerve with others that we should be holding EVERYONE accountable. That should start with OURSELVES.......but certainly that net needs to be cast wide and far. Perhaps THEN......we can move TOWARDS the goal of (a) more efficient capital markets, (b) more efficient healthcare markets, (c) more efficient real estate markets, (d) more efficient and accurate legal systems, (e) a more effective and accountable political system, etc....etc.....etc.

It all starts with ACCOUNTABILITY. When you shine sunlight on issues.........good things happen. Or at least fewer bad things DO happen.

Excellent Clip Worth Watching....

2009-03-15T07:51:00.000-07:00

Here is a clip from PBS with Ken Rogoff as guest, the former chief economist of the International Monetary Fund, and current professor at Harvard.

He describes a view which I agree with: Housing bottom in a couple years (maybe), market bottom in a year or two, and a financial system that still needs a HUGE amount of help currently, unemployment heading over 10 - 12% next year.

It's a 21 minute clip.....but is one full of EXCELLENT CONTENT.....and is easy to watch (both content wise and is an excellent HD type clip). Note, the actual clip is 24 minutes...but the last 3 minutes are "PBS" promo stuff......so there is no need to watch the last 3 minutes.

He also describes what we (Americans) have been "led" to do over the past 25 years: Bigger house, faster car, better this, better that.....etc. The transition will be painful, but needed.

Here's the clip.

10 Month NASDAQ Chart Looking At Volume....

2009-03-13T11:58:00.000-07:00

Here's a 10 month view of the NASDAQ. You can see how prior rallies ended........in dying volume. I actually DON'T expect this one to last nearly as long. It could be very short indeed....

Watch the market for volume......or lack of volume.

Graphic Graph.......

2009-03-13T10:40:00.000-07:00

I've show this once before.....but this graph is updated, and one to certainly keep in mind as we go through our "financial journey."

The sources I watch, expect housing to drop off about 20% this year........and still drop off a little bit in 2010.

Take a look at this graph.....and you can see why housing likely has at least a few more years to "cool off." Remember.....historically, housing goes up 1/2 of 1% above the cost of living over the last 100 years. Also, housing.....before the early 1980's (and the beginning of the credit bubble).....grew at slightly less than the growth of GDP.

It DOESN'T mean that we have to go through a "depression".......it just means that we have some de-leveraging to go through, and it's going to take time.

The Black Knight......Does This Rally Have Legs?

2009-03-13T09:10:00.000-07:00

I thought I would show CNBC if this "rally has legs." Note....I didn't go short today....but I AM looking to short this rally IF it turns out as I expect......to fail, and fall into April. I'll be looking to see if we get some LIGHT VOLUME up days. That kind of move will tell me that the rally is likely to fade soon. We also get a more substantial rally........and I'll be watching for that as well........and of course, investor sentiment.

Here is a clip from "Monty Python And The Holy Grail" that best shows the kind of "legs" this rally has:

The Black Knight

Here's My Only Question....

2009-03-13T07:54:00.000-07:00

Is it a 4 - 6 day rally? Or a 2 - 6 week rally? NASDAQ chart.

I am of the belief........SO FAR......that it is likely a "shorter term" rally. I DO believe that we can get down to a level that could launch a longer term (although STILL only an "intermediate term") rally in April after more bad news gets "priced in."

Foreclosures........increased unemployment........reductions in earnings outlooks, etc. I believe that will create more "investor uncertainty" which will lead to more bearish readings in the "Investor Sentiment Survey" that may get into the .3x's in the bullish camp of "bulls to bears" readings. I believe that is the level of uncertainty that is needed in this type of market to get a SIGNIFICANT INTERMEDIATE TERM BOUNCE (of 30% - 40%).

That is what I "see" in market activity.......and in sentiment readings. Not what I "feel". Also, the fact that almost everybody on TV is calling a bottom is somewhat troubling from an INTERMEDIATE TERM CONTRARIAN point of view.

The ultimate arbiter is the market......let's see how they vote, and how volume plays out over coming days. It is ALWAYS how the "group votes".......NOT.....what you or I vote.

Stewart vs Cramer....

2009-03-13T06:24:00.000-07:00

I hope most of you saw the Jon Stewart show last night with Jim Cramer as guest. Cramer proved to be a nice snack for Stewart.

I certainly could not have delivered a better message than Stewart did. His message for CNBC was basically this: "Look....if you're actually going to BE a financial news network, then don't just be a mouthpiece for the investment banks and the companies."

Right now.....that is all they are....with the exception of David Faber and Rick Scantelli. Get rid of Kudlow, he is worthless. Get rid of Dennis Neil......he is worthless times two. Have their people do ACTUAL interviews. Instead of having Maria Bartoromo just put the ball on the tee for Abby to hit......actually ask her pointed questions. Hold her accountable.

In the fall of 2007 they should have been pointing out the following:

1) Investment banks are pushing IPO's on the market like drunken sailors. Why?
2) Credit spreads are incredibly narrow, historically narrow, and that happens at market tops.
3) Housing prices are not sustainable and are heading much lower according to history.

CNBC instead is just this: Cheerleading National Broadcasting Company. That is all they are, and the invstment banks know it......and use them. As long as the ratings of CNBC are strong.....nothing will change.

The only person I ever saw question ethics of Wall Street was Ted David (I think he used to live in the tanning beds with Anthony Mazillo). He was fired and I believe he was fired because the only one to question the ethics of Wall Street.

I sincerely doubt that CNBC will change until they get more "real" analysts.....not cheerleaders.