The news you had to know was coming just came. The central bank of the United Arab Emirates just announced that it was going to bail out Dubia World.
If you were paying any attention to the stock market last week then you know that the announcment by Dubia World, a state owned holding company with $59 billion in debt that it was looking for creditors to give it a six month free window on paying interest sent shock waves through the world markets and brought bears out everywhere.
Many people saw it as the start of a huge correction. Some CNBC talking heads were calling for a collapse.
But I actually think there is nothing to fear and we should use the Friday morning weakness to increase long positions.
What the bears are missing is that tops don't happen in an instant or on one news event. They are a process that takes time to unfold. And many of the things needed to be able to say we are at a stock market top simply aren't there yet.
Until they come you have to go with the trend of the market - which is up. And will probably accelerate to the upside from now until the end of the year.
Ignore the doubters! Don't get shaken out because of some worry wart on CNBC.
Dave Skarica of Addicted To Profits wrote a great report showing you the things to look for in order to spot a market top. In his report he even goes over the past major tops in the stock market so you can use them as a road map for right now. I recommend you read it by clicking here.
Throughout Thanksgiving weekend, I kept on thinking about what other implication will the Dubai default have on the financial market around the world. Dubai is out of money because they spent their way to prosperity. You know, just like Americans, what a shame too. Dubai is out of cash, and only 29 days left until Christmas. Maybe Goldman Sachs will float them a big fat Christmas loan.
US market was down over 200 pts just on the fear of Dubai going bankrupt over $60 billion. Now that may sound like a lot to most of you, but that number is only 1/3 of what we gave to AIG. If you look at Dubai on a map, they are a dot somewhere on the tip of Saudi Arabia. If a small nation can cause this type of fear in the market, think what will happen when some eastern European nations start defaulting on their debt(Greece...). Instead of seeing the DOW down 200, it will be down 2000 pts. This is the danger we traders are facing during this period of financial uncertainty.
Dubai doesn't want to pay back billions in debt. At least not for a while. Uh oh. Thing is, do they care? Who actually cares about banks? Anyone? Does anyone think, "Oh that nice bank. They need that money. I should pay them since they are so hospitable and so great." No. No one cares about banks. Especially central banks. So, possibly other countries will now follow suit and tell US creditors, "You know what? I don't really want to give you that money, so ummmmm stop calling me, ok?"
It was a very thin trading volume day ahead of Thanksgiving Day Holiday but the real news are the currency wars and the geopolitical battles that are occurring around the globe that most of us only get a glimpse of understanding after things are filtered out through the media.
We have a global war over the US dollar and its relationship with crude oil and it is causing tremendous problems. Trade wars are brewing as a result of what appears to be the US and many of the UN trading partners of the US who have been conspiring to drive the dollar lower.
Apparently unable to get concessions from China regarding its currency relationship with the US dollar, the dollar looks as though it is being used as a trade weapon, causing a huge asset bubble to develop specifically in China, as it happened before in Japan.
I don’t know if out of frustration whether Russia is furious at the US/UN currency wars and what this will do economically in the future, but Russian computer hackers broke into a British/UN global warning center and stole thousands of emails and documents and then made this information public.
What it shows is the global warming data appears to be a massive UN-funded fraud.
This is a huge event and its implications are criminal and far reaching.
“ Russian computer hackers have published emails and source code from the UN-affiliated Climate Research Unit showing profound corruption, fraud, and criminal activity. What's really behind the Copenhagen treaty?
Check out the video interview:
Recently, Russian hackers published over 160mb of scientific emails and source code taken from the primary 'climate research unit' -- the University of East Anglia, which is the center of UN/IPCC-promoted global warming alarmism. What the emails and data prove is shocking, and may represent the greatest scandal in the history of science.
In the emails, these UN-funded scientists talk about deleting data under FOIA request, faking data for journals such as Nature, conspiring to keep opposing science out of peer-reviewed journals (which they controlled the editorial boards), using "tricks" to "hide the [cooling period]" etc.
A picture emerges of big science funded to the tune of billions of dollars for the purposes of an underlying international political agenda. The degree of collusion between big media, the UN, and corrupted scientists involved in frank criminal activity is deeply disturbing. As I have detailed before, the purpose here is a political one. Global warming, or now abstractly identified as 'climate change', has been chosen by international banks and think tanks as the method of induction of vast political and social engineering never before seen in the history of the world.
We see based on the activities of criminals representing themselves as 'climate scientists' that the politics came first, and the science came second. They were more than happy to represent the political interests of the UN and international banks -- as long as their lab was well-funded. But there are politics behind this indeed. Here is a small sample of the underlying political agenda: Billions in new taxes, International regulatory control under the UN, Goldman Sachs/CCX carbon trading, obliteration of national sovereignty, extreme forced austerity and reduction of the standard of living, deindustrialization of the First World countries, and implementation of Orwellian state policies for the purposes of "carbon tracking". The science does not matter -- the politics does.
Let us consider for a moment the cynical political objectives behind 'global warming' before we delve into the mountain of evidence thanks to the leaked emails and source code.
Global Warming and Orwellian State Policy
The Dutch government attempts to introduce GPS tracking units in everyone's cars under the pretext of 'climate change'.
THE HAGUE — The Dutch government said Friday it wants to introduce a "green" road tax by the kilometre from 2012 aimed at cutting carbon dioxide emissions by 10 percent and halving congestion.
"Each vehicle will be equipped with a GPS device that tracks how many kilometres are driven and when and where. This data will be then be sent to a collection agency that will send out the bill," the transport ministry said in a statement.
Global Warming and New Taxes
One of the primary political aspects of the global warming fraud is the imposition of a massive and bewildering array of new taxes. Obviously it is plain to see how this is in the interest of governments and banks, particularly if such taxes are imposed on an individual level.
Carbon Insurance For Your Car May Be Down The Road [Green Gas Taxes at Pumps] by Terry Tamminen (cnbc.com) - Nov. 13, 2009.
" A carbon insurance premium could easily be included in such a gas pump surcharge so drivers pay the true cost of operating their vehicles in terms of all relevant risks, including their fair share of creating both fender benders and climate change collisions."
Queensland’s flailing government has now made it a crime to sell your house without first doing a big green audit:
QUEENSLANDERS selling their homes will soon have to complete a 56-point questionnaire detailing the property’s environmental credentials
Global Warming and Forced Austerity
The UN has advocated funding global birth control initiatives [read: 'population security'] in order to 'reduce CO2 emissions'. Of course now we know the connection between CO2 and temperatures is based on fabricated data . . . So where does that leave such UN population initiatives?
UN says Birth control the most effective way of reducing greenhouse gas emissions [UN Wants More Abortions and Sterilizations to cut Co2] by Ben Webster (timesonline.co.uk) - Nov. 19, 2009.
The population control objectives of the global warming fraud do not end there. Andrew Revkin, an NYT correspondent identified in the leaked CRU emails exhibiting a very cozy relationship with the corrupt scientists, advocates restrictions on the number of children couples are permitted to have via the issuance of 'carbon credits'. This is similar to what was advocated by Obama's chief science advisor John Holdren in his book Ecoscience. There is a political agenda behind global warming.
" Should–probably the single-most concrete and substantive thing an American, young American, could do to lower our carbon footprint is not turning off the lights or driving a Prius, it’s having fewer kids, having fewer children,” said Revkin. “So should there be, eventually you get, should you get credit–If we’re going to become carbon-centric–for having a one-child family when you could have had two or three,” said Revkin.
The above is significant because Revkin is identified in the leaked emails corresponding with the corrupt Climate Research Unit (CRU) and has written many pro-global warming articles for the New York Times.
Global Warming and Systemic Financial Fraud
Where would we be in a Zerohedge article without mention of the fraudsters at Goldman Sachs. No doubt they are present in almost every evil or fraudulent enterprise known to man and global warming is no exception. Certainly these charlatans plan on making billions trading hallucinated carbon credits on Maurice Strong's Chicago Climate Exchange (CCX).
Al Gore's "Carbon Trading" Scam Reeks of Who Else? Goldman
These examples illustrate how the global warming fraud is used to push a far-reaching political agenda -- an agenda born out of the unholy fusion of governments , banks, and corrupt scientists. But let us consider now the content of the leaked emails.
Scientific corruption at the highest levels:
From: Phil Jones To: ray bradley ,mann@xxxxx.xxx, mhughes@xxxx.xxx Subject: Diagram for WMO Statement Date: Tue, 16 Nov 1999 13:31:15 +0000 Cc: k.briffa@xxx.xx.xx,t.osborn@xxxx.xxx
Dear Ray, Mike and Malcolm, Once Tim’s got a diagram here we’ll send that either later today or first thing tomorrow. I’ve just completed Mike’s Nature trick of adding in the real temps to each series for the last 20 years (ie from 1981 onwards) amd from 1961 for Keith’s to hide the decline. Mike’s series got the annual land and marine values while the other two got April-Sept for NH nd N of 20N. The latter two are real for 1999, while the estimate for 1999 for NH combined is +0.44C wrt 61-90. The Global estimate for 1999 with data through Oct is +0.35C cf. 0.57 for 1998.
Thanks for the comments, Ray.
Cheers Phil
Prof. Phil Jones Climatic Research Unit Telephone +44 (0) xxxxx School of Environmental Sciences Fax +44 (0) xxxx University of East Anglia Norwich Email p.jones@xxxx.xxx NR4 7TJ UK
Obviously the above email speaks for itself. Despite the glaringly obvious fraud, Phil Jones and his collaborators across the world would have you believe that "trick" and "hiding the decline" are simply normal procedures in any scientific laboratory. The FORTRAN source code tells a different story.
Climate Research Unit FORTRAN code backs up claims of fraud and corruption
Neal from Climate Audit writes:
"People are talking about the emails being smoking guns but I find the remarks in the code and the code more of a smoking gun. The code is so hacked around to give predetermined results that it shows the bias of the coder. In other words make the code ignore inconvenient data to show what I want it to show. The code after a quick scan is quite a mess. Anyone with any pride would be to ashamed of to let it out public viewing. As examples [of] bias take a look at the following remarks from the MANN code files:"
function mkp2correlation,indts,depts,remts,t,filter=filter,refperiod=refperiod,$ datathresh=datathresh ; ; THIS WORKS WITH REMTS BEING A 2D ARRAY (nseries,ntime) OF MULTIPLE TIMESERIES ; WHOSE INFLUENCE IS TO BE REMOVED. UNFORTUNATELY THE IDL5.4 p_correlate ; FAILS WITH >1 SERIES TO HOLD CONSTANT, SO I HAVE TO REMOVE THEIR INFLUENCE ; FROM BOTH INDTS AND DEPTS USING MULTIPLE LINEAR REGRESSION AND THEN USE THE ; USUAL correlate FUNCTION ON THE RESIDUALS. ; pro maps12,yrstart,doinfill=doinfill ; ; Plots 24 yearly maps of calibrated (PCR-infilled or not) MXD reconstructions ; of growing season temperatures. Uses “corrected” MXD – but shouldn’t usually ; plot past 1960 because these will be artificially adjusted to look closer to ; the real temperatures. ; "Spin that, spin it to the moon if you want. I’ll believe programmer notes over the word of somebody who stands to gain from suggesting there’s nothing “untowards” about it.
Either the data tells the story of nature or it does not. Data that has been “artificially adjusted to look closer to the real temperatures” is false data, yielding a false result." -Anthony Watts, Meteorologist - Source
Discussion
The source code above shows that the scientists involved manipulated their data in order to achieve a predetermined outcome. This is fraud, plain and simple. What is worse is these scientists also deliberately deleted the paper trail showing their research was fraudulent when the FOA requests arrived. This is criminal activity at the highest levels, and these people should be investigated and prosecuted. The massive amounts of funding they were provided with was used to lie to the public , in order to achieve the objectives of the UN and its affiliated think tanks, whether these scientists were aware of the implication of their corruption or not. The point is these entire 'climate change' claims need to be thrown in the trash heap and evaluated by competent scientists without financial or political interests in the outcome of their research.
And above all, the UN's Copenhagen treaty for dramatic forced austerity and international political control should be exposed for the vicious and cynical hoax it actually is. Copenhagen is the culmination of these fraudulent policies. National sovereignty will once again be reduced under a treaty conceived and funded by think tanks and international banks. Massive taxes will be imposed. Goldman Sachs and JP Morgan will make billions trading hallucinated carbon credits. Orwellian state policies for tracking individuals and interfering in personal autonomy will become acceptable under the pretext of 'stopping climate change', despite the entire rationale being fraudulent. Monopolistic international finance capital and the billionaire elitists behind it believe they are about to achieve another victory over the unwashed masses with the Copenhagen treaty.
The true political objective behind global warming was proven beyond a doubt in the Club of Rome publication The First Global Revolution. Keep in mind Al Gore is a member of this elitist group of policymakers, and even chaired a full Club of Rome meeting in Washington DC in 1997.
“ The common enemy of humanity is man. In searching for a new enemy to unite us, we came up with the idea that pollution, the threat of global warming, water shortages, famine and the like would fit the bill. All these dangers are caused by human intervention, and it is only through changed attitudes and behavior that they can be overcome. The real enemy then, is humanity itself."
We should understand that the international political agenda underlying the falsified global warming scandal is, at its core, an ideology of corrupt banks and politicians intent on framing humanity as the enemy, in order to achieve purposes of social control. Thus, it is no surprise that the 'science' behind global warming has been exposed as fraudulent.
For in-depth coverage of this growing scandal, see:
Last week the market pretty much ended the week where it started as the S&P 500 closed on Friday down two points for the week. Gold though continued its torrid rise despite more premature calls by various talking heads and Wall Street experts for a major bottom in the dollar.
Once again the opinions of the majority have been proven wrong.
In fact on this weekend once again I cannot find a single person on the Internet who is saying now is the time to buy stocks. Sure - there are people on message boards that are, but I'm talking about writers and commentators. This has been a trend for about a month now. And the more people that are down on the market the harder it is for most people to buy - even to just hold on to what they already have that is working for them.
The fear from last year still remains. The average American lost about half of their retirement account and that's a painful memory for most to overcome. Yes, I do think eventually next year we'll see the market make an important peak, but there is no sign of that happening now. Yes the number of stocks leading the rally is narrowing, but there are enough going up to make some nice money.
In fact this week tends to historically be one of the best weeks of the year, because the stock market almost always goes up the holiday shortened day before Thanksgiving and continue higher the day after Thanksgiving too.
Going back to 1983 the S&P 500 has tended to rally in the days leading into Thanksgiving and continue higher until eight trading days later. After which it would dip a little in the first part of December and then continue higher until the end of the year.
Even last year during the stock market meltdown the market managed to rally into the Thanksgiving holiday and maintain an upward bias through December.
Now I wouldn't base any decisions solely upon these facts. I always look at the charts as my primary indicator.
Right now the S&P 500 has support in the 1070-1075 area while it is overbought on daily stochastics. Below that level it has support in the 1070 area. I am fairly convinced that we'll see the market go higher on Wednesday and Friday - the days between Thanksgiving.
So if the market is going to go much lower it needs to do it today and tomorrow. It really needs to do it today. It needs to sell this gap up and drop.
Even on a chart you can see this, because if the market is going to fall much more it needs to carry over the downside momentum we saw last Thursday and Friday. If it just holds up then it will be in a position to simply drift sideways. That would cause its daily bollinger bands(they are green in the chart above) to come together and lead to a volatility breakout - one that would most likely be to the upside.
Here is the thing though - if the markets has an upside breakout from here it will most likely spark a huge climatic blow-off top rally - a rally that will last for weeks and send the market up another 10-20% by the middle of January.
I know this might sound crazy to you. So many people are calling for big declines right now and talking about how the valuation of stocks or lack of growth in the economy doesn't justify current stock prices.
However, if the market manages to just hold up here and then break to new highs it will completely devastate the bears who think a major top is happening right now.
They'll be forced to cover.
More importantly though all of the nervous nellies - the mutual fund managers, hedge funds, and individual traders - who have been sitting on the sidelines in fear of market tops will start to rush into to buy. The last thing an institutional manager can do is not be invested in a rising market at the end of the year. They rather LOSE money than miss out on something like that. So they'll be forced to buy despite the lack of growth in the economy..
Upside momentum will grow and lead to what would probably be a climatic rally that would end around the start of January earnings season.
Most people don't think about the stock market this way. When the TV is bullish they get bullish and when the talking heads get scared they get scared. Most investors simply follow the herd.
I have read a lot of information recently about gold being "overbought" and those sorts of things. How people are too bullish on the metal. And, I appreciate some of the articles sent to me.
However, gold is at another record high on Monday before the market opens.
The reason is, a lot of the people who think gold is overbought aren't actually holding gold themselves!
Last week I wrote about how gold mining stocks were underperforming the physical metal and advised traders to sell gold mining stock and instead buy the gold ETFs like GLD or DGP. And that seemed to be the right move as gold stocks continues to trade lower to side ways while the physical gold and its ETFs are trading at new highs.
As the saying goes "There's always a bull market somewhere"
That's not always the case, but it is 90% of the time. And now, it's gold. No stopping it as far as we can see here. There isn't anywhere near the pandemonium of buying. The thing is, if you haven't bought now, then when? If gold drops to $1000? $900? Or if it rallies to $2000 and you don't want to "miss out". All you have to do is determine your risk, and then make the trade!
Today, the dollar rallied and the stock market finished mixed with weakness in the NYSE and the Russell 2000, with a small uptick in the OTC indexes and a fair showing in the DOW. The S&P 500 was up one point.
There is very little volume today so investors aren’t excited about this market and the “huge carry trade” policies of the Fed.
President Obama is getting an ear full from the Chinese who are upset the US Federal Reserve is fueling “speculative investments” by cheapening the dollar, known as the carry trade or inflating its speculative assets through its loose monetary policies, which is forcing countries like China to adjust its monetary policies to hedge against a plunging dollar environment by accumulating commodities such as crude oil futures.
This, the Chinese believe is posing “real and insurmountable risks” to the global economic recovery.
As investors we have to watch closely as to what comes out of these meetings with China and especially whether China is willing to let their currency trade freely and apart from pegging it below the US dollar.
The Fed is playing with fire, perhaps to force the Chinese to trade more fairly with its currency peg relative to the dollar, but with oil prices at $80 a barrel, signs of stress are clearly being manifest.
Today it was announced that mortgage delinquencies hit another record in 3Q and that 6.25 percent of U.S. mortgage loans were 60 or more days past due, according to credit reporting agency TransUnion.
Yet, no one is talking about $80 oil as a contributing factor as to why mortgage delinquencies are hitting new records. But the strain of $3+ gasoline in many parts of the country, especially in California where people have to drive rather long distances to get to work is a killer.
This administration knows perfectly why oil prices are this high and it is because of the dollar carry trade and their policies of continually undercutting the dollar. To campaign on change and then proceed to undercut the dollar and drive up oil prices again may make the Saudis happy but it is going to make renters out of most Americans.
Already 47% of Americans pay no income tax. Imagine that, half of all Americans are essentially in poverty and on welfare.
Yet, at the same time we seem to have found support technically at the middle Bollinger Band line on an intermediate-term basis and appear to be setting up for an intermediate-term end of the year advance. But any intermediate term advance will depend on a big plunge in the dollar to sustain an intermediate term advance in stock into the end of the year. I am not sure the Fed really wants to drive oil prices into the end of the year but it is hard to understand the mind of Bernanke and Geithner.
In any case, a minor pullback is due to allow the short cycles to correct but don’t expect much of a pullback as intermediate term cycles are attempting to advance for a few weeks. Then that should be it for this cyclical bull cycle.
Meanwhile, the long-term cycles are now once again very overbought, with the monthly stochastics back over 92% on %K on the stochastics suggesting we are coming to the end soon for this Fed induced cyclical bull market unsupported by true fundamentals.
wow, it looks like moon is really affecting our emotions at least lately, lol, nice correlation lately. anyway it's not something I follow, thought I would post it for fun.
Market indexes were up 1.33% today while these four stocks are lagging. What caused the rally? Commodities like precious metal and energy were the leaders today. Gold rallied $20s, but gold stocks lagged again. This is hinting inflation is going to pickup, and the market rally is due to cheap money coming in to the market. Market could rally another 10% from 1100 but if the dollar falls 8-9%, you've really only broken even. Therefore, instead of owning stocks, you might want to own ETFs to preserve your gains.
What to buy? GLD(long gold ETF) or DGP (double long gold ETN)
"A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. The traitor is the plague." - Cicero, Rome's Greatest Politician
Gold Reaches Another Record High Gold is money. Currencies of countries are promissory notes. You have have heard that California is issuing IOU's since it's basically bankrupt. Well, that's what money already is, anyway. So, in a way, California is issuing its own money, debt free. When that's that case, overprinting always occurs. But that only speeds up the complete devaluation of a currency rather than a slow process over 100 years like the US dollar down 96%.
In some ways, it should be celebrated. It's the only way an honest money can return to the land. Wall Street will never ever give up its grip on the US dollar. The only way to the return of a gold and silver standard is for the dollar to completely implode. It might not take long. At 3% a year, there is a total of 34% inflation over a 10 year period. At 5% a year, that's 62%. Your $3.50 latte could cost $5.67. Hmmm. That's not gonna be enough. I am going to guess it's gonna be when a latte costs around $19.00 that people will freak out. So, that would mean 12% inflation for 15 years.
It could take a while. That's also a lot of money printing. And, don't dismiss that possibility of "new money" being created. Such that you trade in your "old" money for "new" money and all prices are divided by 10. Then, it's only gonna be $1.90 for a latte! Totally reasonable. Then the banks will say, "Ha! I can't believe the people continue to buy this old scam!"
If you held old US dollars for "savings", then you're sort of out of luck. But if you buy gold today, you're gonna be better off than US dollars. That's my opinion. TONS of countries have had mass inflation and printed new currencies. Except the US. Look at the Brasilian Real, that's only about been around since 1994! http://en.wikipedia.org/wiki/Brazilian_real
How to Win the Game A $300,000 house at 5.5% on a 20 year mortgage is about $2000/month.
In 20 years you own the house.
If you invested $500 per month, at 10% annually, you'd have about $378,000 in 20 years. (If you invested $500 per month, at 3% annually, you'd have about $165,000 in 20 years.)
Now, this is assuming 10% a year.
So, since the goal is to own the house, since it has real value, if you can rent it for $1500, and pay the extra $500 yourself, you win the game. And, in 10 years, inflation could drive up the rent, anyway.
Nowhere I know of in the world can you lock in a mortgage rate for more than 10 years, except in the US.
How Real Estate Millions Were Made
Before the internet, people would go up in small planes, with cameras, and fly around towns. See where they are expanding, take pictures, and look at maps. You see where the town is expanding, and you buy cheap real estate in the outside. People laught at you, and in 10 years you sell it to them for a hefty profit. I would imagine this could really work in Northern California, Idaho, Montana, and other places with "wide open spaces" near mountains and rivers. How many people do you know who do this? None? Ok, so it continues to work then. Good Trading,
As the unemployment rate crossed the double digit barrier for the first time since Michael Jackson learned to moonwalk, President Obama announced that he will convene a “jobs summit” to finally bring the problem under control. Using all the analytic skill that his administration can muster, the President is determined to figure out why so many people are losing their jobs and then formulate a solution. That's a relief; for a while there, I thought we were in real trouble! In fact, the absolute last thing our economy needs is more federal government interference. If Obama really wants to know what's behind entrenched joblessness, he should start by looking at the man in the mirror.
Obama is pursuing, with unprecedented vigor, the same policies that have for decades undermined our industrial base and yoked us to an unsustainable consumer/credit driven economy. This doubling down on Washington's past failures is destroying jobs at an alarming rate. Today we learned that the September trade deficit surged by 18.2%, the largest gain in ten years. Much of the deficit resulted from Americans spending Cash-for-Clunkers stimulus money on imported cars – or “American” cars loaded to the sunroof with imported parts. In exchange for more domestic debt, we have succeeded only in creating foreign jobs.
An article in this week's New York Times by veteran writer Louis Uchitelle confirmed a fact that I have been alleging for years. Uchitelle pointed out that foreign outsourcing of component manufacturing has led to consistent overstatement of U.S. GDP and productivity. The connection goes a long way to explain why we keep losing jobs even as GDP is apparently expanding.
As our economy becomes less competitive due to higher taxes, burdensome and uncertain regulations, and capital flight, more manufacturing and services will be outsourced to foreign firms. However, the flaw in GDP calculation allows the output of those foreign workers to be included in our domestic tally. Since we count the output but not the worker responsible for it, government statisticians attribute the gains to rising labor productivity. To them, it looks like companies are producing more goods with fewer workers.
The reality is that we are producing less with fewer workers. The added “productivity” comes from higher unemployment and larger trade deficits. This is a toxic formula that will have lethal economic consequences.
Don't expect the brain trust at the President's job summit to fret much about these details. That public relations stunt will likely ignore the root cause of the economic imbalances and instead stress the need for government spending on training and education, i.e. more public debt. The unemployed do not need government theatrics, they need actual jobs. But as long as the government props up failed companies, soaks up all available investment capital, discourages savings, punishes employers, and chases capital out of the country, jobs will continue to be lost.
To really fix the unemployment problem, the President must look past his peers in government and academia to understand how jobs are actually created. In the private sector, all individuals have a choice to either work for themselves or someone else. Since labor is far more productive when combined with capital (office equipment, machinery, business models, and intellectual capital), those who lack these assets themselves often choose to work for others who have sacrificed to accumulate them. This increased productivity is shared between the worker and the owner of capital, and both are better off.
However, for one person or company to choose to offer a job to another, there must be an incentive to do so, and they must have the necessary capital. In the first place, employers must commit to paying wages and benefits, comply with government mandates and regulations, and subject themselves to potential lawsuits from disgruntled employees. All of these costs must be measured against the extra profits an employer hopes to earn by hiring an additional worker.
If profit opportunities exist, jobs will be created. Otherwise, they will not. Of course, anything the government does to raise the cost of employment, such as a higher minimum wage, mandated heath care, or greater regulatory burdens, not only prevents new jobs from being created but also causes many that already exist to be destroyed. Anything that diminishes the profit potential of extra hiring will diminish the number of job opportunities that are created. Also, since it is after-tax profits against which employers measure risk, the higher the marginal rate of income tax, the less likely employers will be able to hire.
Finally, in order to hire workers, employers must have access to capital to expand operations. Anything the government does to discourage capital formation automatically diminishes job creation. By running the largest federal deficits in history, Barack Obama is diverting all available capital to the Treasury, and is in effect waging a war against private capital formation.
If the President's summit truly intends to find the root cause of unemployment, his advisers don't need Bureau of Labor statistics or complex modeling software, just the courage to drop their dogmatic belief in central planning and embrace the laws of economics.
The stock market managed to recoup some of what was lost yesterday, as a dip in the dollar helped to ramp up the market again as the direction in the dollar is largely the single largest determinant of what the stock market will do from one day to the next.
I think this is largely a technical slugfest being waged on all financial fronts, but the dollar is still the main show and what it does next week will determine how the market plays out and that’s what makes this a rather tough call.
The largest of all markets is the currency market, so it is here that traders are focused to make decisions for nearly all the markets.
Notice from this chart the US dollar is short term oversold, attempting to construct a double bottom. Notice, too the rising RSI values. This would suggest the dollar should try and advance next week.
Conversely, when we look at the stock market which is trading inversely to the US dollar it appears to be in various stages of topping patterns. The S&P 500 and the Nasdaq Composite Indexes are forming a double top. The Wilshire 5000 looks to be forming a “head and shoulders” formation, suggesting a broad market topping pattern is developing.
As you can see from the above chart, even though the markets put in a positive advance from a weekly perspective the pattern that has developed over the last three days still keeps a head and shoulders correction pattern in play.
The Russell 2000 index, which tracks the small cap stocks, is even in a more advance stage of deterioration, as seen below:
As you can see the small cap index (Russell 2000) has already put in a double top at the last short cycle high and has now produced a lower low and a lower high on the daily cycles, with this latest short cycle advance clearly nowhere near its former high. Even more significant, the Russell 2000 is now struggling below its 50-day moving averages and curling downward.
Right now there aren’t a lot of choices that are attractive. Gold, energy and the commodity driven stock market all look top heavy here.
Ford is coming out with a new car program for 2010 that has everyone excited about. You should know about this.
For those of you holding on to gold related stocks, now would be a good time to sell and take profits. As you can see, the GDX to GLD ratio broke down Wednesday. I would of made this post earlier but I was out sick on that day. So for right now, take profit on gold and gold stocks. Once the ratio crosses back up we can enter long. And also, the US dollar is attempting to make a bottom at the $75 level. If it can successfully hold that level, we'll see another sell off in the market.
The small rebound in the Us dollar sure didn't last. Gold is now at another record high. Spot gold rallied to $1,115.85 an ounce.
A lot of people think you're "investing" in gold. But over the long run, gold maintains its value, and paper money goes to zero. After all the Us dollar has lost 95% of its value since 1913. This isn't a linear process, which is why it looks like you can make gains in gold. You can, but, let's say over the next 20 years or so, your gold will buy you the same amount of coffee or oil.
I think that gold could go to $1500 easily. That's why I think it's prudent to get into gold. Or should I say, what would you rather hold over the next few years? Gold or paper dollars?
If you want the stocks too, you can buy a basket with GDX.
Wednesday's economic calendar: Veterans Day - stock/futures markets open, bond markets closed.
Dumb money has been pouring into international corps that may benefit from lower USD but we knew what came out of IBM , don't we. Why? 'cause cancer is not contained in US anymore. Europe, is now in as bad shape as US, to say the least.
Somethings never change in Wall Street, Suckers are now buying the top as usual, forgetting the fact when the Pandora's box opens, USD may take off like a VIX index during a selling climax, forcing the sheeplie to the exit all together at the same time... sounds like a 4-sigma cause.
S&P
Trend
Support
Resistance
Weekly
Up
876
1200
Daily
Up
1012
1110
Vix
Bullish
20
31
R3
1115
R2
1103
R1
1098
Pivot
1093
S1
1086
S2
1079
S3
1067
NOTE: Nov 11: price on daily is now overbought
Oil
Trend
Support
Resistance
Weekly
Up
65.00
90.00
Daily
down
65.00
90.00
Note:
Euro
Trend
Support
Resistance
Weekly
UP
1.4304
1.5066
Daily
UP
1.4440
1.5006
R3
1.5074
R2
1.4946
R1
1.4835
Pivot
1.4707
S1
1.4596
S2
1.4468
S3
1.4357
S&P500
-Long term trend remains up, and intermediate trend is Up
-Yesterday was a non eventful day with most major indexes closing near unchanged. except for the small cap which closed down 1%. These indexes are now overbought on their daily charts, and yesterday's indecisive price action could be the sign for an intermediate top. But as I look at the dollar chart, it is not showing any signs it wants to bounce higher. Indicating it wants to slide lower. Since dollar moves inversely to the general market, this will allow the market to advance further. - You can take a look at the S&P "fan" chart below(this is a bearish pattern), we are once again forming another top. Markets need to reverse this week in order for this topping pattern to play out. Or else the S&P is likely to probe up to the 1120-1150 level. Traders should hold on to their remaining long positions to see how far this uptrend can go, but do not initiate any new long positions. One could also take a small short position to hedge against their longs at this level. - Another sign of weakness is the financial chart I posted below. It has clearly broken down and lagging in this market advance.
Crude Oil
-Long term trend remain up , intermediate trend turned down.
-Oil continues to fight the $80 level. The Fed wants inflation, which will cause oil price to go up. The Fed also wants economic recovery, which needs oil price to remain relatively low. Ultimately, oil price among with other commodity prices will go up. But as traders, this is not a good environment to be trading oil. Manage your risk.
Gold
-Long trend remains up while intermediate trend is Up
-Gold consolidated yesterday and price was able to hold around 1100. At this point, it all depends on what the dollar can do, but in the mean time, go with the trend, which is up.
US Dollar
- Long term trend remains down, intermediate trend is down - Dollar is oversold on the daily chart and price is trading side ways along the $75 level. Without any noticeable positive divergences, the most likely scenario for price action is down. Which implies the stock market will continue to move higher. We'll see how the market plays itself out today.
Conclusion As the G20 decided to continue to inflate away, are we seeing a repeat of what happened in 1983? Is the gold market telling us of an eminent dollar collapse? We will have to wait and find out. But for now, trade the trend and manage your risk.
-- Michael Chang Technical Analyst Washington Asset Advisors
We are now at a crossroads in the market. As we talked about yesterday, the trend towards blue chips and out of growth-oriented stocks was clearly seen in the market action this day.
The DOW 30 was up 20 points but the Russell 2000 was down almost 1% today.
In the last six-day drop in the dollar, the stock market has advanced, but notice that small caps have not sprung back like the blue chips have, recovering only about half of what the other indexes have. The dollar is now at minor support and is becoming short term oversold again. Take note of that.
The fact that the OTC and Russell 2000 indexes are showing internal weakness is a sign of risk aversion and defensive maneuvering. The health sector and the large cap sector have done the best by far over the last two weeks, suggesting rotation and defensive maneuvers.
Up to this point, the Fed has largely been able to fuel the rally in the stock market because of its quantitative easing policies by buying government bonds and undercutting the dollar.
Some have noted this as a “carry trade”, with the stock market rally largely a result of a plunge in the dollar, i.e., benefiting from commodity driven equities.
However, we are now coming into the holidays. Does the Fed really want to spike oil prices and compete with the retailer – and crush the economic reports in the first quarter? There is something seriously, seriously wrong with our system if they do.
Since October 21st, oil prices have been hovering at $80 a barrel and since that time market breadth has worsened.
Notice, oil prices are now exactly at a key long-term resistance level at the monthly middle Bollinger Band line.
This is a very important chart. The Fed has to make a critical decision here. Do they want oil prices to break above this key long term resistance level and choke off economic growth going forward?
Notice how the media is mute on this issue. Not a word is being said about $80 plus oil prices or what kind of damage this might mean to the economy going forward. Don’t you think this is peculiar? You don’t hear the President talking about the evil oil companies now that he is the President, do you? And you don’t hear the Republicans warning of the dangers of soaring oil prices---nothing.
Yet I promise you that if the Fed elects to push oil prices past $80 a barrel they elect to crush an economy whose populace is already pushing unemployment rates a kin to the Great Depression---why?
Why isn’t the government putting restrictions on commodity speculators? Could it be the largest oil speculator is Goldman Sachs who is highly interconnected with the Fed? Why isn’t the President threatening to release oil from its strategic oil reserves to bring down oil prices to help the economy?
I don’t have an answers to these questions but when it comes to our precious retirement funds and protecting them from risk we can’t be blind to the risks here because of our greed. This is a huge problem. It was a huge problem for the market in 2007 and it will be for the market in 2010 if oil breaks above this resistance level.
State Taxes Plunging
You have to wonder how real any recovery is if both Federal and State income taxes are rapidly deteriorating.
According to the October report from the Nelson A. Rockefeller Institute of Government, which highlights state tax collections, tax revenues are showing record drops.
*State tax collections for the second quarter of 2009 showed a record drop of 16.6 percent, the second consecutive quarter in which revenues fell more sharply than during any previous time on record.
*Forty-nine states saw total tax revenue fall during the quarter, with 36 states reporting double-digit declines.
*For the year ending in June 2009, the period corresponding to most states’ fiscal years, total state tax collections declined by $63 billion or 8.2 percent from the previous year. That loss is also a record, and is roughly twice the amount states gained during the year in fiscal relief from the federal stimulus package.
This report certainly puts into question the false hype about a recovery in consumer spending if people are struggling to pay their taxes.
TECHNICALS
On a short term basis, we are now pushing again into overbought territory again.
Notice we are now back again at overbought territory where pull-back problems can happen any day now.
Notice, the Russell 2000 is now struggling at the daily middle BB line. Notice, the RSI values remain under 50%, yet we are nearly overbought, illustrating clear weakness now.
Over the weekend, the G-20 nations pledged cheap money will continue until a recovery is reassured.
This certainly affected the markets. The US dollar plunged, commodities soared and with it the DOW 30 set a new yearly high, up over 200 points.
So why do we need the G-20 nations making this pledge? Aren’t we in recovery? Isn’t the GDP in positive territory? So why does the G-20 need to reassure the world, unless the world just doesn’t believe the “recovery” mantra.
This isn’t about pledging cheap money until a recovery is reassured. This is about national debts so high that countries can’t afford to pay higher interest rates.
As I have been expecting, the stock market has staged a short cycle advance, but I have to tell you I am not at all impressed with it, especially in the small cap stocks, which are lagging badly.
What we are seeing is a sector rotation out of growth related stocks into the largest companies, into the bluest of the blue chip stocks, the Dow stocks – for liquidity and defense. When you see this kind of market action it is disconcerting as it often a sign of a major market topping pattern.
For example, the RSI value for the Russell 2000 is the weakest of all the market indexes at 50, with the DOW 30 being the strongest at 63.
This is what I saw back in October of 2007. Both the Dow 30 and the S&P 500 index had just made a new high for the year, giving a false sense of security for investors, but market breadth was breaking down and had been deteriorating since August, similar to what we are seeing this year.
As happened in 2007, we are now seeing a huge sector rotation out of small cap stocks towards the largest and the most liquid stocks. And that isn’t what we want to see. It signals the durability of a lasting primary trend is coming to an end.
Clearly, risk takers are growing alarmed on a technical basis. For example, let’s look at advance/decline line make up of the McClellan Oscillator and McClellan Summation Index.
As I pointed out last week, I expected to see another short cycle advance. But this advance is now close to being played out now as reflected in the McClellan Oscillator.
Notice the pattern of lower lows and lower highs on the OTC McClellan Oscillator and that it is now at the top of the range again. While it could go a bit higher, this is a bearish pattern and reveals technical deterioration despite the DOW making a new high for the year. The very fact that the DOW makes a new high while small and mid caps remain far behind in performance just confirms the weakness.
As you can see from the McClellan Summation Index we have no sign of a bottom and with the McClellan Oscillator nearing an overbought condition again, we aren’t likely to see the Summation Index reach a bottom even on the next short cycle correction.
Taken together, this reveals that market risk is very dangerous right now. With the McClellan Summation Index at -337, the OTC is technically breaking down and the technical underpinnings aren’t strong enough to hold the bull market in the OTC, suggesting a bear market is a real potential.
that you remain neutral in your portfolio positions. Market risk has now elevated to a dangerous level.
For those of you who remember in 2007, the new lows vs. new highs indicator against a 10-day moving average.
Notice, this indicator is starting to get into trouble for the month of November, 2009, warning of weakness in the OTC index – just as it did in 2007.
This doesn’t mean the stock market cannot reverse this weakness and strengthen before the end of the year, but what it does signal is that the market is weakening and losing market leadership to the blue chip stocks.
