Replies to post #3879 on Your Economy (No Politics) (YE1)

[FinancialAdvisor]

Keep it coming boss, if I had a financial publication, you'd be my first hire ;)

[FinancialAdvisor]

Bullwinkle, speaking of illegals, I been doing some side-work at a restaurant recently and I believe that nearly everyone that works there is an illegal including the "boss." It's an indian restaurant, the boss is Indian, and I think all in the back come from El Salvador. I don't think any of them have a license and it just seems fishy... I hear that the boss pays for an apartment and they all live in it together... and I was talking to a lady tonight at a restaurant my girlfriend serves at and she said she heard about the same type of stuff elsewhere...

All in all, there are more "illegal" immigrants in this country than even I realized in the past...

[Koikaze]

Bullwinkle,

First, I want to thank Mariner* for putting this post on the TOPPOSTS board. I'd have not had the privilege of reading it otherwise (but I have you person- and board-marked, now).

I particularly appreciated your comments on the timeliness of the new Bankruptcy bill. They tie in with your later citation (in post #3928) of Axel Merk's article, which included:

"... inflation is building up, but he cannot aggressively raise rates without sending an overly leveraged, and thus interest-rate sensitive economy into a downward spiral."

Alan Abelson, in the April 11th issue of Barron's, said:

"Another reason (James Melcher)'s uneasy is the inordinate growth of the financial sector. Earnings of financial companies now account for some 40% of all corporate earnings, up from a mere 4% two decades ago, and they represent 25% of total stock market capitalization versus 5% back in the 'Seventies."

I lack the knowledge of financial matters to know whether such a statement is accurate, or not. Do Mr. Melcher's estimates seem reasonable to you? If so, I agree, "The wealth of a nation has been stolen and the final act is soon to begin."

Fred

[Bullwinkle]

~:~:~Market Trend Update for the Week Ahead~:~:~



Overview:
If it looks like a bear, walks like a bear and smells like a bear, it is probably a bear. A downtrend has been undoubtedly established, but is this enough evidence to clearly say we are back in a bear market? While I am not willing to make that call, I will let you decide for yourself. In the preceding major declines we saw exuberance and asset bubbles followed by rising rates. Today we are seeing poor internals and poor market breadth followed by violent price swings, inflationary pressures, record twin deficits and slowing growth. These times are reminiscent of the makings for a continuing bear market and if we are not there yet, we are most likely teetering on the edge of one. While I would much rather see just the opposite taking place, I have a hard time justifying bullishness in today’s climate. As mentioned in the previous update with which this post replies; We plunged through the COMP 1919 area which I thought may provide support for a bounce, we now look to the 1900 area for that support. It is quite possible that we continue down to this area and then make a move back towards the 1919 area, which now has become resistance. Depending on how we negotiate this area will give us an idea if that gap down is to be filled before resuming the primary trend. We did retest the lower part of the range reaching COMP 1904. This current downtrend is somewhat reminiscent of that in early 2004 although selling seems to be more extreme after the Dec’04 top than we saw after the Jan’04 top. A little visual to help see that what is going on today compared to that of the early 2004 decline, I posted this chart on the Your Economy board last week. As they say “a picture is worth a thousand words”;

Not only do divergences exist, but take notice of the money flow, it is extreme in comparison yet the duration of time to get to 1900 is very telling. There appears to be a ton of positions being unwound and at a much slower rate as to not create panic selling. This market decline is being played like a fine Stradivarius. The low spots for the SPX reached 1136 and the DJIA broke 10000 twice, but were intraday moves that closed above this key level. Other troubling events that are taking place is news, any news, near and far being used as an excuse for the markets behavior. The way I see it, any rally has been used to unload and any day traders that have shorted these “one day” wonder rises has done very well as of late. Beside other troubling signs such as high insider sales, low fund inflows, huge cash outflows, low open interest and deteriorating internals ... we have earnings. Earnings news has given little support to the markets so far. Not because numbers have been that bad as much as the outlook going forward has been far less than certain. It has been stated that CEO’s are now becoming a little concerned about the environment ahead. With all of the market woes and sour technicals & fundamentals, events outside the arena of Wall St. are precarious at best. I tend to believe we are teetering on the edge and whether real or manufactured, we are one distasteful event away from that tipping point. As for Oil we have moved back up to $55bbl and the next run may get us to $60bbl. The U$D has backed off of 85 and sits around 83.5 and Gold which has been basing in the $425 area is now pressing $435

Economic #’s:
The same old mixed bag of signals although the majority of indicators are showing disappointing results.

Building Permits & Housing Starts for privately-owned housing starts declined 4.0% to 2.023 Mln and below the previously reported 2.107 Mln and short of forecasts for 2.094 Mln. Single-family permits declined by 5.4%. The bigger story though was Housing Starts which declined 17.6% to 1.837 Mln and was the largest monthly drop since January 1991. Previously reported numbers had been revised to 2.229 Mln and forecasts were for 2.090 Mln. Single-family housing starts fell 14.4%. Starts on structures of 5 or more units also fell by 31.6% and marking the biggest decline since March 2000.

MBA Mortgage Applications to buy homes and to refinance homes both fell 1.6%. Applications for ARMs fell to 35.4% from 35.8% of total applications a week earlier. Refi’s accounted for 38.0% of total applications, down from 38.1% in the prior week. The fixed 30- and 15-year mortgages fell last week to 5.83% and 5.40%, respectively, from 5.95% and 5.51% a week earlier. The rate on one-year ARMs averaged 4.22% last week, off from 4.28% in the first week of April.

ICSC-UBS Weekly Chain Store Sales rose 1.0% compared to 0.3% in the previous week. Compared with the same week a year ago, sales held steady at a 3.9% after a 3.9% rise the week before. Johnson Redbook Retail Sales rose 1.0% after falling 3.8% in the prior week.

PPI/Core PPI was up by 0.7% compared to 0.4% previously reported and higher than expectations of 0.6%, but core prices, which exclude food and energy, increased 0.1% or the same as previously reported. Expectations had been for a rise of 0.2%. The PPI is now up 4.9% in the past 12 months. The core rate has risen 2.6% year-over-year. Inflation was also seen further back in the production cycle. Prices of intermediate goods destined for further processing increased 1.0% and crude goods prices increased 4.3%.

CPI/Core CPI was up 0.6% compared to 0.4% previously reported and higher than expectations 0.5% with core prices increasing 0.4% compared to previously reported 0.3% and higher than expectations of 0.2%. The consumer price index has risen 3.1% in the past 12 months, compared with 3.0% last month. Core prices, which exclude food and energy prices, have risen 2.3% in the past 12 months.

Fed Beige Book the bottom line here is soft growth and higher prices. A formula for stagflation…

Initial Jobless Claims plunged 36K to 296K or the largest 1-week drop since December 2001. The previous weeks report was 332K with a forecast of 329K. The 4-week moving average fell to 330.3K last week from 338.8K. Continued claims fell for the 2nd straight week, dropping 17K to 2.64 Mln.

LEI (Leading Economic Indicators) fell 0.4% to 115.1 and well below the previous months 0.1% and below expectations of –0.3%. WLI (Weekly Leading Index)edged up slightly to 135.3 in the week ended April 15 compared with a downwardly revised 135.2 in the prior week. The index's annualized growth rate, which smoothes out weekly fluctuations is flat at 3.4% compared to the prior week.

Philly Fed rose to 25.3 from a reading of 11.4 in the previously month. It's the strongest reading in 4-months. Expectations had been for a reading of 10.0. The Philly Fed new orders index rose to a 4-month high of 20.3 from 13.2, while the shipments index rose to an 8-month high of 29.4 from 14.7. Prices paid and prices received both accelerated with 56% of firms stating they were paying more for inputs this month, up from 36% last month while 33% said they were receiving more for their final goods compared with 23% last month

Oil Inventories as reported by the DoE (Dept of Energy) and API (American Petroleum Institute). Crude according to DoE fell 1.8 Mln bbls, but according to API fell 5.4 Mln bbls. Gasoline according to DoE fell 1.5 Mln bbls, but according to API fell 1.4 Mln bbls. Distillates according to DoE remained the same, but according to API rose 1.1 Mln bbls.

Next week we will get New & Existing Home Sales, Consumer Confidence, Durable Orders, GDP, Chain Deflator, Initial Jobless Claims, Help Wanted & Employment Cost Index, Personal Income & Spending, Michigan Sentiment and Chicago PMI.


Let’s start by talking about everyone’s favorite uncle, Alan Greenspan. This guy is a chameleon. He goes before Congress and all is well, no bubbles, no taxation, no inflation, sustainable growth, etc, etc ... total denial. Then in FOMC minutes the story changes slightly. There may be signs of the aforementioned, but nothing to worry about as it will all take care of itself… Then the Beige Book comes out, and the aforementioned are real, very real and are of a concern as they begin to come to a theater near you… Another meeting with Congress this past week and now tax hikes are being advised by the good chairman. Imagine that, tax hikes are now being advised. At one time this would have been a good idea, like 4 years ago! Well, too little too late as we have already been taxed to death by the reform policies that protect the interests of the very well to do. I say yes to taking back the tax breaks, but to raise taxes on middle America at this juncture, you must be kidding me. If they want to avert a crisis, then this is not the way to do it. Obviously the Fed is using a rear view mirror for guidance. Here we have conceivably the most powerful and influential man in the world who essentially has led the cavalry in a circle to the attack of their own campsite. It’s mind-boggling… When tough language was needed followed by absolute actions, he took no sensible action and did not tell the world or the powers that be what they needed to hear. Sound familiar? Instead he told everyone what they wanted to hear and cranked up the printing presses. This is leadership? Foresight? If any of us ran our businesses or households the way these guys run the country, we would all be living on the streets under an overpass. Here we are, the average American citizen with little in comparison to the tools and resources that these world-class thinkers have at their every disposal and they are just now realizing what many of us have known all along? To add insult to injury, we pay these guys for this.

I guess it is finally sinking in that “trickle down” economics does not trickle, it is nothing more than a scam to leverage a shift in wealth, period! You would think that Greenspan & Co. would have learned this lesson in the 1980’s. While corporate America is doing well and B2B is alive and well, all the while we continue to see stock buy backs being initiated, M&A activity followed by unbelievable pay raises and bonuses for those who are doing nothing more than their job. Do they create jobs? Do they put gas in the tank? Do they raise your children? Do they put food on the table or a roof over your head? One thing is for sure, these people who claim to be compassionate and promote family values are the very ones tearing holes in the fabric of society. They have done nothing by way of promoting a healthy economic environment. I suppose people will say, look to the stock markets, great earnings and the markets are relatively strong. To that extent, let me ask them this… Can they live on the stock markets? Are they an efficient trader for profit that can support them self by trading the markets? If so, then they are in the minority. It takes a lot more than a strong market to sustain a nations livelihood. Most Americans go to the workplace to make their money to pay there bills and invest for their families’ future. This has become a difficult task in today’s society for an average American. That alone should tell you something is amiss, but I think the credit bubble is clear evidence of this. Do you think the majority of people borrow because they want to or because they have to? Much unlike what some might have you believe, the majority is not out having a good time on borrowed cash, looking to go bankrupt and stick it to their lenders. Most Americans depend on the powers that be to do what is right for the people. A healthy economy, which provides opportunities, jobs and wage growth is a small thing to ask from those who are suppose to have our best interests at heart.

When executed in a simple honest and forthright way, people can plan, invest and have no need to borrow excessively or live beyond their means. In turn not only are they stronger, but so is the country. Our greatest asset and natural resource is being wasted at an extraordinary rate. The pool of talented people who are out of work or having to take minimum wage jobs they are overly qualified for (in some cases 2 or 3 low wage jobs in order to make ends meet) is a sad epidemic in this country and couldn’t be less conducive to a strong and healthy society. The technical and manufacturing jobs are becoming fewer while being replaced by banking and services. It is not uncommon for one job opening in the high tech industry to have 200 or more people applying for that single opening. We have gone from a manufacturing, technology driven, leading edge powerhouse to that of one which surrounds services. Services are not going to win any wars, whether they be economic or otherwise. The already very well to do, corporate America and the powers that be are the only ones prospering in today’s society. That leaves behind 70-80% of the nation. I am sure there are plenty of you holding your own, but if it could be better for you as well as your family, friends or neighbors would not that be desirable? When is the last time Capital Hill held back pay increases let alone took a pay cut? These people get their raises with no delays and at far more than the 1-3% an average individual might see if they are lucky and working. A shift of wealth is occurring, way too much for way too few. We have moved from a Capitalist nation to that of a Socialist one, this is the bottom line here folks. If it’s not enough that we are being misled and screwed every which way but loose, but we are also paying them for this too! If that does not put a burr in your butt then I am not sure what will…

What can we expect now?:
I expect this week to be much like the last, range bound volatile activity. Earlier in the week I posted the following chart on the Your Economy board with a range that I expected for the COMP to trade between followed by a break to the downside with which I am looking for some time in the near future;

As you know we tested the lower part of the range to COMP 1904 with a bounce and gap fill to COMP 1962. While this was a little higher than the range described, it makes perfect sense to completely fill the gap and overshoot a bit. We then dropped back down to finish out the week at COMP 1932. The major indices in general all followed the same script, moving up to attempt a test of previous support now turned resistance, but not quite reaching those levels of COMP 1970, SPX 1163 and DJIA 10350. The range bound levels I am looking at going into next week +/-10 pts are COMP 1900-1970, SPX 1125-1160 and DJIA 10000-10350. A bigger picture view calls into play some key support areas on the COMP. An annotated chart of what we are looking at is presented below. In the shorter term, it will be interesting to see if we remain trapped between the zones mentioned and for how long. As you will notice on another annotated chart below, we have a slew of bear flags on the COMP with the most recent flag taking on a steeper rising angle than previous bear flags. This formation may change with time, but for now noteworthy nonetheless as a quicker decline than the previous range of 1970-2020 took some time to play out before the break to lower levels finally occurred. Some other things to watch will be Oil, the U$D and Gold. As mentioned a little earlier, Oil and Gold are up, the U$D is faltering. Oil looks poised to test all-time highs at $58bbl, with Gold bumping resistance at $435 and the U$D testing support at 83.5. Over the next couple of weeks I believe the current trends will prevail, but until then some telling battles will be waged at these levels…

On a technical note, Bullish Advisors are at 48.4% with Bearish Advisors at 26.9%, which is hardly the type of sentiment that signals capitulation. The VIX/VXN trends are still moving together with both putting up what looks to be the beginning of bullish flag like chart patterns. Still too early to tell, but should be interesting to see what if any effect they will have. CBOE Equity P/C Ratio is at .668 with a 21DMA of .658. Considering the intensity of Friday’s movement, this ratio still seems a little low. Generally we get high .7’s or .8’s after a day like that. The RSI 5-Days are Neutral across the board and the RSI 5-Wks are still slightly Oversold on the COMP and DJIA, but Neutral on SPX. The $NASI Daily (Summation), The $NAMO Daily (McClellan), The $NAHL Daily (Highs/Lows), The $NAAD Daily (Advance/Decline) are all in downward trends where the 50DMA has clearly crossed under the 200DMA for all the indicators with the exception of the BP%’s, although NASD BP’s are getting close.

Charts for these indicators are posted below for your viewing pleasure plus an annotated ST & LT chart of the COMP


















NOTE:
I continue to hold a USPIX position which I will flip long when the time is right.

CORE:
Funds; HSGFX, PCRDX, PRPFX, QRAAX, RSNRX ,TAVIX. Individual Stocks; ANO, BHP, SWWC

SWING: GSS, NXG

Disclaimer:
This disclosure is not a recommendation to buy or sell or to do as I do. It is only to give my thoughts on current market conditions and share the positions that I am holding for tracking purposes only. I am not a day trader and only attempt to identify up/down trends and play the swings.

[Bullwinkle]

A review of one of many pieces I wrote under the category "Spin of the Day"...

This particular rant is from Mar'05 #msg-6069947

What we are witnessing is the forthright and calculated demise of the lower and middle classes in America. The people have been pandered to and are now being entrapped by what I would define as monetary enslavement. Although it has not yet taken effect, the new Bankruptcy bill which was passed this week on Capitol Hill is one of the many pieces of this puzzle recently put into place. It all started with our rights being invaded by the Patriot Act. Then good paying jobs and technology outsourced to foreign lands. Next border security dropped so that illegals can infiltrate our society and pick up the slack by filling in the minimum wage positions created in place of good paying jobs. Wages and hours worked are falling, pensions are being robbed, Social Security is on the chopping block and medical expenses are out of control. Then the agenda was pushed further along by the lure of easy money and then the so-called dream of an ownership society. The people have fallen for it hook, line and sinker (again). The only thing that has changed is that the echo bubble has taken on a new form and will be far more devastating. You think terrorism is a problem? We ain't seen nothing yet. We are looking into the eye of a storm which will bring prosperity to a very few at the expense of so many. Orwellian in nature and only imagined that it could be perpetrated by an enemy, yet it is happening before our very eyes. The wealth of a nation has been stolen and the final act is soon to begin. There is no time line for such events to unfold, but the writing is on the wall if one bothers to remove the rose colored shades. A wealth effect has been created where the lower to middle income have begun to prosper, although deeply in debted. You can take it to the bank that it will not be permitted to last for long. So many were devastated when the Tech bubble burst, I don’t think many (including myself) have any idea what the landscape will truly look like once the housing and derivative bubbles burst. The magnitude of pain that has been built into this equation does not even register on the meter. I can tell you this, that time is approaching. Why is it do you think that the Bankruptcy laws have been abruptly changed? It is a take no prisoners policy. There are two sets of rules, one for the “haves” and one for the “have nots”. Guess which category the majority of America falls under? These new Bankruptcy laws do NOT apply to companies or corporations as they do to the people. The house of cards has been stacked in such a way that when it falls many will be enslaved to the establishment. It is not just a coincidence that this law was changed after the huge reflation of bubbles. I guess too many fish must have got away after the first calamity called Y2K and this will not be tolerated this time around. If one is to believe that what has been happening is just a coincidence then many naïve individuals are in for a very rude awakening. I know this has the ambiance of gloom and doom and I am not telling you anything that you have not already heard infinitum, but most of the pieces of this puzzle are now in place. Rising rates and a threat of inflation will be used, yes that's right, used as a means to an end. Whether they exist or not does not really matter, only the bait and hook for a desired outcome is what matters. It would not surprise me if sometime in the near future interest rates on long and short term loans spike overnight. Step back for a moment and take it all in. It does not take a brilliant mind to see that this is not just some conspiracy theory. All you have to do is pay attention and connect the dots…

For those of you who recollect some of my rants, this one hits home (literally)...

[nlightn]

so BW,...are you considering reincarnating a MTUftWA ? that would be way c-o-o-l.

so many times you were right in the zone of the markets,..almost having a psychic tap in,...i commented about that many times to you.

i know its a lot of work. it's different than doing the "Pundits Table'. the collection of data and review of it and then constructing Spin of the Day and Where Can We Expect Now takes your time. but,...if you can manage it would advantageous to just read your 'Spin' and 'What Can We Expect' side of the market.

go, go, go, go,....