Leaders of President Obama’s Deficit Commission Propose Cuts in Social Security Benefits/Elimination of Tax Deduction for Mortgage Interest
Today, Erskine Bowles and Alan Simpson, the bipartisan leaders of President Obama's Deficit Commission released a draft proposal containing many controversial deficit reduction proposals including cuts in Social Security benefits, reductions in federal spending and higher taxes for millions of Americans. Bowles is a Democrat and former Chief of Staff in the Clinton White House and Republican Simpson is the former U.S. Senator from Wyoming.
Proposals by Bowles and Simpson include:
* A gradual increase of the retirement age for Social Security benefits to age 69 by 2075. * Smaller than anticipated annual increases for current Social Security beneficiaries. * Elimination of the current tax deduction homeowners receive for interest paid on their mortgages. * Cut in the Pentagon Budget and foreign aid. * Cuts in farm subsidies. * An increase in the gasoline tax by 15 cents a gallon to finance transportation programs. * A three-year freeze in the pay of most federal employees and a 10 percent cut in the federal work force. * Eliminating all congressional pet projects through the ‘earmark’ process. * Eliminating many tax credits and deductions, including the child tax credit and the mortgage interest deduction. * Eliminating the deduction that companies take for providing health insurance to their employees.
White House spokesperson Bill Burton said this afternoon that, "The President will wait until the bipartisan fiscal commission finishes its work before commenting." He called the proposals "only a step in the process."
Just a short follow-up note on $UUP development and related market technical observations. On last discussion, I mentioned that UUP was nearing a rally event on the basis that the chart was calling for some unwinding.
Since that time, the unwinding has been well on its way.
However, now the question to ask is whether this is a relaxation of the related currency or a reversal towards a new trend.
FUNDAMENTAL SYNOPSIS: Underlying fundamental principals are at play behind the greenback, namely a risk aversion trend is afoot, along with fiscal concerns looming in Europe, and the perception that China may have climbed a steep inflationary curve, thus echoing across world markets that further positive market development will be met with significant resistance for a variety of fundamental reasons. Consequently, I believe that over the next few weeks, the FOREX market will take the time to digest the post-QE2 events, the recent G-20 meeting, along with the resurfacing of economic woes from Greece, Ireland and Spain among other European peripheral economic drains.
While the S&P500 has climbed consistently with little retracement over the past several weeks, the recent high that has formed is likely to stall and reflect the "digestive effects" of the new or renewed concerns alluded above.
TECHNICAL SYNOPSIS:
S&P 500 In the WEEKLY chart below, technically, the S&P 500 has reached a complex resistance level that combines the following: 1 - 2008 collapse level of the index 2 - 2009 resistance that caused a sharp reaction 3 - Upper border of the bearish channel 4 - Re-testing of Fib's 61.8% from the 2007-2009 range
In the second S&P 500 chart, the MONTHLY events are pointing to a likely topping of the market based on the following technical facts: 1 - RSI nears a double top in synch with price @ $1,222,22. 2 - RSI's resistance line continues to cap action down into a negative divergence slope 3 - Price's double-top event corresponds to Fib's 61.8% reactive swing from the 2007-2009 range 4 - Secondary indicators are re-forming into a "pre-Decline Pattern"
Overall - S&P 500 is signaling serious internal weakness that should make recent high a serious point of consolidation or trend reversal. Taking the fundamental development into the equation, the picture favors unwinding rather than actual reversal. Look for support near the $1,010.00 level.
UUP I believe that the recent fundamental events alluded above will continue to fuel the US Dollar.
The greenback is thus likely to regain its safe-heaven status, as seen in recent stalling of GOLD's amazing ascent (see chart below).
The UUP WEEKLY and MONTHLY charts below are both clearly indicating that a channel low was reached and supported the recent reactive rally.
HOWEVER, I am expecting that as the underlying US Dollar is leveraging against bearish world economic development (e..g: Europe, China), the bullish economic data that have surfaced in the US are likely to cap any serious rally in the UUP.
Technically speaking, the WEEKLY RSI formed a bearish spread on its EMA's at the 50-level back AUG 2010, suggesting a very strong bearish bias. Therefore, UUP's line is expected to rally against this resistance, thus hit its head against the @23.20 level over the next few weeks.
UUP's DAILY chart itself remains BEARISH when considering the big picture, again to suggest that the current rally should be characterized as reactive, rather than reversal.
Have a great week-end.
- Dalcindo
$GOLD - 20-Yr., MONTLY Chart:
S$P 500 - 10-Yr., WEEKLY Chart:
UUP WEEKLY Chart:
UUP DAILY Chart:
- Dalcindo
--------------------------------- Message in reply to: reply<UUP> please see chart post by dalcindo on Options Wonderland board, and follow thread...
SPX GANNALYSIS: A Gann Fan starting at the Mar 2009 low was constructed to fit the stringent requirements of this figure, where the 1x1 time/price line has m =1 (i.e. a slope of 45 degrees). Interestingly, the price bounced after hitting this line at the end of Aug 2010. Since 1x2 and 2x1 are too far apart, intermediate lines were generated for the sector defined by 1x1and 1x2: H(i), where increments i=n/16, and n=1,2,3...16. Although artificial, some of these lines appear to be well integrated in the price evolution landscape.
had some PCLN Jan calls under water until today. PCLN up $18 currently with a buy rec. from Canaccord and an upgraded price target to $530 by ThinkEquity.
In continuation with our prior bearish outlook (see technical analysis of message "in reply"), I thought it timely to provide a quick technical note of the recent structural development, especially as classic patterns have emerged, and the overall picture remains in line with our prior bearish view - All this on a monthly chart, although more sensitive trend reversals (albeit less specific) may have emerged on weekly charts as well.
23 JUN 11 - TECH-NOTE: Significant changes have occured at this point, namely: 1 - RSI completed a bearish confirmation in the month of MAY 2 - Price completed a (classic) BEARISH Gartley pattern at significant Fib levels 3 - Secondary indicators are lining-up into a bearish signal OVERALL - BEARISH outlook
BULLISH PERCENT CHART:
RISK FLOW MAP
$SPX - 10-Year, WEEKLY Chart:
$SML - 3-Yr., WEEKLY Chart:
$SML - 10-Yr, MONTHLY Chart:
$MID - 3-Yr, WEEKLY Chart:
$MID - 10_Yr, MONTHLY Chart:
90+ other charts publicly listed on StockCharts.com here: http://bit.ly/mF3lhy Your vote is always appreciated. Thank you. - Dalcindo
As a quick recall, last Jun 23, we called a bearish signal on the SPX - In the interim, we also printed a bearish Gartley pattern.
Now, look for "scaffolding breakdown" as the benchmark continues to take out softening support levels. The crowd turned against the SPX, and the crowd sentiment reciprocates is likely to find a self-fulfilling prophetic event. So, watch out. Or, "Timber!" like they say up north.
... See Post# on my "Stock Incubator" for more telling bearish indicators: Post # 2130 - Check out my public charts on Stockcharts for greater details on this and other indices, stocks, forex. Votes are always appreciated. Thank you.
- Dalcindo
------------------------------------------------------------------- IN REPLY TO: dalcindo Member Profile dalcindo Member Level Share Thursday, June 23, 2011 2:55:49 PM Re: dalcindo post# 2064 Post # of 2131
SPX - BEARISH:
I thought it timely to provide a quick technical note of the recent structural development, especially as classic patterns have emerged, and the overall picture remains in line with our prior bearish view - All this on a monthly chart, although more sensitive trend reversals (albeit less specific) may have emerged on weekly charts as well.
23 JUN 11 - TECH-NOTE: Significant changes have occured at this point, namely: 1 - RSI completed a bearish confirmation in the month of MAY 2 - Price completed a (classic) BEARISH Gartley pattern at significant Fib levels 3 - Secondary indicators are lining-up into a bearish signal OVERALL - BEARISH outlook
- Persistent BEARISH Gartley Pattern on MONTHLY Chart #2 - NEW (albeit premature) formation of a BEARISH Crab pattern (Validation of XA extension at B = 50.0% AND B extension at C = 38.2% - Dotted line speculates a XA extension at D = 88.6%
Resistance expected at the confluence of prior consolidation levels combined with structures at $1,320.
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