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The Fed believes that the only alternative to a U.S. economic recovery is the complete collapse of the global financial system. Pretty high stakes... The Fed also believes that the key to a U.S. economic recovery is a rising stock market.
Put two and two together. The Powers That Be absolutely will lie, cheat, steal and bomb -if necessary- to achieve their goal of a U.S. economic recovery. In their minds, they have to, they think they're saving the world.
Manipulating the stock market, inventing bogus numbers, feeding talking points to a compliant financial media... a small price to pay, considering the alternative. When the time comes for POMO and QE to end, Ben and TPTB will have a new trick up their sleeve to keep the markets happy.
That said, I still - perhaps foolishly - believe there will be tradeable short term moves in the market. I sold out of my longs a few days ago, expecting a pullback to 1260 or so. We'll see..
Bernanke went out of his way today to say that the punchbowl has to be pulled much sooner than the data may suggest.
I think the Fed is ready to start talking about taking its foot off the accelerator. That means no mo POMO and no QE3. Look out below...
RSI(21) Weekly over 70 for the NDX could at least be rationalized as a sector phenomenon - Tech, Multinationals, etc...
But when TMW - the Wilshire TOTAL MARKET ETF - has an RSI(21) Weekly value of 72, you know we're in a loony mania.
Today is the last POMO of the current schedule. Tomorrow, the new monthly POMO schedule will be released at 2:00pm.
Since TA and FA have become somewhat unreliable in the modern era of endless Fed pumps, the new POMO schedule - and what it says about the Fed's future pump intentions - are key to predicting market direction.
I agree with Canny about the RSI(21) weekly hitting 70; it's very ominous. But remember, the Fed has said that it deems a rising stock market to be the key to an economic recovery. End of story...
I think you may be on to something. I've noticed that your flashed quotes become reality quite often...
<<< TQQQ 120.66 flashed on my screen >>>
I'm curious as to what that means. Are you watching E-turd or a chart service or some other data feed? And what constitutes a flash? Is there any way I can what see you see?
"Insider Selling Hits All Time Record Of $4.5 Billion In Prior Week As Everyone Is Getting Out Of Market".
http://www.zerohedge.com/article/insider-selling-hits-all-time-record-45-billion-prior-week-everyone-getting-out-market
Up 113% and down 60% is actually fairly close to the correct math.
Example; start with $10. If it loses 50% of its value, it becomes $5. It then has to increase by 100% to get back to that same starting $10. Up 100% and down 50% are the same distance away from a given starting point.
Some baby boomers are in a position to benefit from higher stock prices, but many are not. Older boomers - along with all the many Americans in their 70's and 80's - who adhered to the financial dictate of moving their assets into safer, income-producing instruments, are getting slaughtered.
Thanks to Bernanke's push to lower interest rates, their retirement incomes are a pittance. This forces them to sell what few "risk assets" they own - like mutual funds - to pay their bills. Just look at the data showing 26 consecutive weeks of outflows from domestic equity mutual funds.
Meanwhile, the dollar debasement raises the price of commodities, causing an escalation in the cost of their primary living expenses - food and energy. Plus, health care reform has resulted in higher medical insurance costs. Plus, in my home state of Florida anyway, property taxes and insurance costs have skyrocketed.
Older Americans are not going to tolerate this. They comprise the largest voting block in the country, and I think their anger may have contributed in large part to the anti-incumbant wave of Tuesday.
At some point, one of the political parties is going to realize they can capture this huge voting block by "coming to their rescue" by stopping Ben Bernanke's war on their savings.
Ok, rant over...
This morning, Art Cashin commented that the market has figured out that the true purpose of QE2 and POMO is to raise stock prices, and that the Fed is intent on achieving this goal.
Zero Hedge has come to the same conclusion. Here are quotes from our fearless Fed leaders that disclose their beliefs;
Greenspan; "if the stock market continues higher it will do more to stimulate the economy than any other measure we have discussed here."
Bernanke; "higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion"
http://www.zerohedge.com/article/bernanke-confirms-key-goal-fed-and-qe2-boost-stock-prices-create-wealth-delusion
$110 includes existing purchase program - "QE Lite"
http://www.zerohedge.com/article/fomc-announcement-600-billion-75-billionmonth-110-billion-including-qe-lite
QE2 will be $600b between now and the end of Q2 2011 (an 8 month period) that's $75b per month, below expectation...
CNBS; Kudlow says he's "sniffing out" hints that Ben and Timmy are coordinating a "much smaller than expected" QE2 plan, coupled with some kind of "intervention" by Treasury to support the dollar.
Whoa. If this is true, or even if the rumor gains traction, the ensuing dollar short squeeze - and QE2 reversal - could trigger a serious stock sell-off...
The Recklessness of Quantitative Easing
by John P. Hussman, Ph.D.
This is brilliant stuff...
http://www.hussmanfunds.com/wmc/wmc101018.htm
3 POMO's in 4 days starting Friday. Total of 32b scheduled on this round - the biggest yet. Couple this with QE2 and you're talking about a serious beat down for the dollar. Can you say, melt UP time for stocks, commodities and PM's?
Unless.... this huge POMO is the alternative to QE2. Hmmm.
Janet Yellen - the "doviest" Fed member - just gave a speech talking about the dangers of too much liquidity. Odd that she would be the one to address this concern, unless the Fed was setting up a surprise "No QE2 in November" move. Can you say, melt DOWN time for stocks, commodities and PM's?
Daily RSI on IWM just tagged 70. This is the first day NYA, SPY & IWM all have their RSI's at 70 or higher since April. NDX/QQQQ have outperformed, their RSI's have been over 70 several times recently.
So, do we get a pullback here? Or does the bull mania continue unabated?
Bulls have the ongoing promise of QE2 salvation, and dollar-weakening rumors of currency wars (risk trade ON!), and the expectation of a Repub win (= Wall Street win) in November.
Plunge in the VIX says bulls have ZERO fear.
Bears remain steadfast. Short interest continues at stratospheric levels. Zero Hedge says insider selling versus buying is over 1000 to 1.
Shenanigans with the futures again on CNBS.
The Dow closed yesterday at 11020.40. Dow futes are now quoted at 11028, a gain of 7.60.
But, CNBS shows that 11028 number as being up 71 points from yesterday's close...
Interesting analysis of POMO here; Also, today is last POMO until the next schedule of operations is released on Oct. 13th. We're about to go the longest period of consecutive non-POMO days in a long time...
http://www.zerohedge.com/article/deconstructing-pomo-fed-becomes-second-largest-holder-us-treasurys-world
<<< Bernanke's War on Your Cash... >>>
by fabian Friday, March 27, 2009 2:22:58 AM
Kudos on a great call. Ben is warming up the helicopters and loading them with QE2 for another round of his war on cash.
What strikes me as unusual is that we small retail traders are being told outright by the powers-that-be that the market is going to celebrate big over QE2. That's not usually how Da Boyz operate. We never get the inside scoop on an impending market move. Rather, we are kept in the dark until the move is almost over, and then, when the Da Boyz are ready to unload and reverse, they get us in at the top.
Back during the big run that started in March of '09, very few retail traders truly understood why the market was rallying. We were kept in the dark by the Da Boyz... as per the usual strategy.
So, I'm a little distrustful of all this "helpful guidance" by the likes of hedge fund guru David Tepper, coming out and assuring us retail traders that an up move in the market is virtually guaranteed.
That's the kind of thing that happens at tops....
What's your opinion?
Insider selling to buying ratio; 2341 to 1
http://www.zerohedge.com/article/insider-selling-buying-2341-1
Interesting exchange on CNBS this morning.
Lawrence Lindsey and Steve Liesman were discussing a Fed survey that showed support for its "accomodative" policy. Rick Santelli pointed out that the respondants of the Fed survey were the Primary Dealers - the very entities that stand to benefit most by the Fed's accomodative policy, so of course the PD's are going to support the Fed's actions. Duh!
Lindsey agreed that Santelli's point was correct - the PD's and the Fed are working in each other's best interest.
And then Lindsey confirmed something many have suspected all along;
"Yes, the Fed and the Primary Dealers are working together to get asset prices up".
Can you say, POMO?
<<< beat expectations >>> Multi-Nationals will have great earnings due to strong demand from the BRIC's and the weak dollar (currency translation effect). It'll be a mixed, but mostly weak quarter for everyone else - especially top line numbers. The exception will be financials, which Meredith Whitney says will post astoundingly horrible revenues.
Funny how pullbacks tend to materialize just when nobody thinks it's possible.
POMO starting right now - bullish!
EOM/EOQ window dressing today - bullish!
New Month Mutual Fund buying tomorrow and Monday - bullish!
More POMO on Tuesday and Wednesday - bullish!
T/A indicator; Breakout above 1150 SPX - bullish!
Retail Investor Sentiment; bullish!
Ah yes, the perfect setup for Da Boyz to yank the rug....
Bad news is good news. Every data point that suggests economic weakness emboldens the bulls because it increases the probability of QE2.
It's not the Fed, it's the banksters using POMO funds to "provide liquidity" to stocks. Zero Hedge has done several articles on this. Here's a couple...
http://www.zerohedge.com/article/fed-ramp-stocks-september-thanks-front-loaded-pomo-schedule
http://www.zerohedge.com/article/fed-puts-135-billion-new-liquidity-briefly-spike-stocks-morgan-stanley-predicts-6-out-8-boug
SEC probing "spikey" U.S. quote traffic in markets.
How long until at the SEC figures out that two of the three suspicious days were POMO operation days....?
http://www.reuters.com/article/idUSTRE68D4LX20100914
CNBS is showing the Dow futures up 75-ish to 10470-ish, yet the Dow closed Friday at 10463. SPX and NDX futures are screwy, too.
According to Zero Hedge, the Initial Claims numbers are very suspect. 9 states provided "estimated" data...
http://www.zerohedge.com/article/nine-states-did-not-file-initial-claims-data-due-labor-day-hundreds-thousands-estimates-data
All of which begs the question...
Are Zeev's methods still welcome on Zeev's thread? Zeev used the Lifo, "multiple serving" trading style. Many traders here followed his lead. He offered patient guidance to all, never lecturing or criticizing or bragging about his wealth.
Alternative trading styles were welcomed, and Zeev helped everyone with his market bottom and top (run for the hills!) calls, as well as his intraday opinions (EPC under .50!)
ChartReader appears to emulate the Zeev style of trading. He appears to enjoy what he does and appears to make money. He - and every other long time follower of this thread - didn't come here to be pushed to convert to a conservative buy-and-hold strategy.
So, is this still the "Zeev" thread for those who decided to stick around and continue the theme? Or is it now the "Anti-Zeev" thread where his methods are to be scorned?
Really, it's a valid question.
Did Zeev use Fifo or Lifo? The way I remember it, he would buy a "first serving", and then a second, third - sometimes up to five servings - as the price continued down.
Then he would sell them in reverse order as the price rose. He would often enter and exit a fourth or third serving several times before the price rose enough for him to focus on his second and then first servings.
So his "last in" buy was his "first out" sell. That's Lifo.
Does anyone else remember it that way?
<<< They remind me of just another Enron >>>
The Enron business model; lose money on core operations, but make a bundle with a too-complicated-to-understand trading system.
Now look at the recent earnings reports of all the big financials. They lost money on core operations, but made a bundle with their too-complicated-to-understand proprietary trading systems.
Calling Alan Greenspan! Please have AG comment on the Goldman/Paulson scam. Remember, he said that nobody saw the sub-prime mortgage debacle coming – "Everyone missed it, academia, the Federal Reserve, all regulators".
....except Goldman and Paulson, who DID see it coming and committed fraud to profit from it.
Well... the last time I talked to my bank, they said I should consider myself lucky that they weren't reducing or even revoking my line of credit.
<<< why not take full advantage of the Small Business loans being offered at ridiculous low rates...>>>
That's a great idea, but who exactly is making those loans? If I'm a struggling small business, low on cash and tapped out on standard terms/credit availabity, no bank will touch me right now. Suggestions?
Bot 2nd serving TZA @ 15.70 em
NYA, SPY, IWM & NDX are all up against the upper Bollanger Band on their WEEKLY charts. I'm betting we pull back from here. It's only money...
The NDX closed yesterday with the Daily RSI(14) at 76.45 - at or near the highest number in 5 years. The Daily Ultimate Oscillator (7,14,28) closed at 85 - the highest number in at least 5 years. The Daily Money Flow Index(14) closed at 100 - yes, 100, a number that's simply obscene.
This market is insanely overbought.
I wonder if a positive data point or news item got leaked today? We'll find out in due time...
In the meanwhile, this does look a lot like Oct. '07. Daily RSI and Oscillator numbers are similarly stratospheric. The one concern for me is that the Vix bottomed at 16ish in '07. Still at 24ish now...
Getting ready to add another serving of TZA
In TZA @ 19.75 em
<< NDX rsi(14) weekly is @63-64 >>>
That's the highest reading since Oct, 2007. The NDX Ultimate Oscillator Daily is @75ish, also the highest reading since Oct, 2007. A top is very close, if not here now.