http://stockmarketchartanalyst.blogspot.com/
This article agrees with everything I've been saying about the rally that started in September...That it's totally BOGUS, rallying on mostly bad news, and is nothing more than manipulation by the government's economic reports so that the Fed must intervene again with another round of Quantitative Easing (QE2), because they claim that the economy remains to be weak, and the recovery needs another jump start...It didn't work last time...What makes them think it will this time?...
We all know that this recent stock market rally that began on August 25th, 2010 has been manufactured by the Federal Reserve Bank and the prospect of QE2 (quantitative easing). Since that time the stock market has rallied higher by nearly 13 percent. However, the U.S. Dollar Index has declined by nearly 13.0 percent since its June 7th, 2010 high. This tell us that quantitative easing has already been going on.Due to all of the negative news about Mortgages and Foreclosures, the banks were much weaker than the overall market this week...And things could go from bad to worse very quickly, since all fifty states are investigating improper handling of mortgages and foreclosures...
If the U.S. Dollar has lost 13 percent and the stock indexes have rallied 13.0 percent what have investors really gained as stocks are denominated in dollar terms? It has really been a zero sum game, and many people are hopefully realizing that.
Read more of this article here: http://www.inthemoneystocks.com/n_rant_and_rave_blog_single.php?id=10192
The proposed fine in one state for each robo-signed mortgage is $25,000. and there are MILLIONS of them nationwide!...
After watching this interview titled "$45 TRILLION LOSS", even the non-believers will have a hard time arguing that the massively corrupt banking system can avoid the crash...
http://www.roadtoroota.com/public/410.cfm
And since the banks have been underperforming the overall market lately like this article shows, what do you think will happen when the $hit starts hitting the fan over the real estate debacles of Sub-Prime lending, attempting to figure out who really owns Mortgages, Robo-Signing of Mortgages, and Foreclosure-Gate?...The Financial Sector will take a HUGE hit, and drag the rest of the market down with it...
http://blogs.stockcharts.com/chartwatchers/2010/10/a-look-at-the-financials.html
This article also explains the risks to stocks in the Financial Sector:
Bank stocks keep falling as mortgage fears mount...Fears about depth of mortgage losses ripple through markets; no one knows what loans are worth...
http://finance.yahoo.com/news/Bank-stocks-keep-falling
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Here is a look at the daily and weekly charts of the S&P 500 at the end of the week:
The daily chart appears strong, with neither one of my Sell Signals given yet, but there is still a Bearish divergence on the MACD and it's Histogram...The CCI is starting to look a bit toppy too...Volume this week was way above average, and may be a sign that a top is near since tops and bottoms are usually set on above average Volume...If a pullback happens, Support Levels are at the 15 Moving Average at 1157. and then a big one at 1130. IF it pulls back past 1120. there is no major level of Support all the way down to a minor one at 1090. and then NONE below that to where the market bottomed in late August...
The weekly chart is still very Bullish, but a near-term top may be coming soon, since I expect a huge amount of resistance at the 200 day moving average, that currently sits at 1196.52 Stochastics reading 95 for both the fast and slow line shows that the market is very Overbought at this time, and the fast line has just crossed down through the slow line for the first time in many months...Look what follows when this has occured in the past...It has historically been at the beginning of a major pullback...
I mentioned a while ago that the weekly chart is looking a lot like it did just before the big crash that started in late April of this year...It's moved up "too far - too fast", without any pullbacks to setup any levels of Support...And look what happens when this type of thing occurs...The market can take back ALL of it's gains TWICE as fast as it gave them...
Third Quarter earnings season is in full force next week, with too many S&P 500 companies reporting to name them all...The Economic Calendar for next week is fairly light, with the important reports of: Industrial Production at 9:15am ET on Monday...Housing Starts at 8:30am on Tuesday...And Weekly Jobless Claims at 8:30am, plus the Philadelphia Fed Survey at 10am on Thursday...Seven Fed Presidents also speak throughout next week...
If I were Long the SPY or SSO at the end of last week, I would've been locking in profits because of the huge amount of uncertainty about the Mortgage and Foreclosure issues that are just now becoming a leading area of concern...And all hell could break loose at any moment as these investigations move forward, taking the Financial Sector down fast and furious...
IF that happens, my favorite trading vehicle will be the Inverse ETF for the Financial Sector - (FAZ)...The Inverse ETF for the S&P 500 - (SDS) - will also be in play...
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Here are what I consider to be the most important news articles put out this week:
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Many of them try to answer the question - will Quantitative Easing 2 be successful this time, or not?...The consensus appears to be that QE2 will not be effective this time around...The market has been rallying on bad economic news the past few weeks, because that increased the likelihood the Fed will have to implement QE2, or in other words, manipulate the market again...
The other major topic of discussion this week has been about the Attorney Generals of all fifty states starting investigations into the way mortgages were handled SINCE THE 1980's!...This may end up affecting all of the major banks and a lot of other types of companies in a negative way if widespread wrongdoing can be proved...
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Fed Minutes show support builds for Treasury bond purchases and higher target for inflation
The Federal Reserve is leaning toward taking two steps to boost the economy: Buying more Treasury bonds to drive down loan rates, and signaling an openness to higher prices later to encourage more spending now.
http://finance.yahoo.com/news/Fed-leans-toward-twostep-plan-apf-18814925.html?x=0
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Fed President Hoenig - More Fed easing likely won't help economy:
Kansas City Federal Reserve President Thomas Hoenig, who all year has steadfastly opposed the Fed's super-easy monetary policy, fleshed out his stance against further easing on Tuesday, saying it would do little to aid recovery and could spark inflation.
http://finance.yahoo.com/news/More-Fed-easing-likely-wont-rb-1191732964.html?x=0
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Time Loves A Hero:
Markets are praying that time will tell us … that Ben Bernanke was a monetary legend from heaven, and a hero to the masses who are starving for a macro-reflation, specifically as it relates to the housing and labor markets. But, if the ‘cost’ of creating jobs is a price-inflation spiral … then there could be ‘hell-to-pay’ in the markets, particularly in the fixed-income arena, and Boom-Boom’s legacy could be one of the ‘anti-hero’. Of course, there is a decent chance that even the most heroic of efforts by the Federal Reserve could FAIL to generate the ‘desired’ outcome, leading to an increasingly ‘devilish’ debt-deflation.
http://www.ritholtz.com/blog/2010/10/time-loves-a-hero/
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The Fed's New Plan To Save The Economy Could Lead To "Titanic Trouble", Says Westwood's Alpert
The stock and bond markets have soared in recent weeks on the expectation that the Federal Reserve will soon embark on "QE2"--a new "quantitative easing" plan in which the Fed buys debts like Treasury bonds and mortgage bonds in an attempt to inject more cash into the banking system and restart the economy. But this QE2 voyage could "set a course towards Titanic trouble," says Daniel Alpert, managing partner at Westwood Capital.
http://finance.yahoo.com/tech-ticker/the-feds-new-plan-to-save-the-economy-could-lead-to-titanic-trouble
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Bernanke's QE2 Heading for the Shoals
Quantitative Easing 2 will fail, for the economy has been desensitized to liquidity and cheap credit.
http://www.oftwominds.com/blogoct10/Bernanke-QE210-10.html
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Don't Expect Miracles from QE2: Minton Beddoes Sees "Years of Very Slow Growth"
"I don't expect the quantitative easing to work miracles," says Zanny Minton Beddoes, economics editor at The Economist, which recently issued a special report, How to Grow. "If you look ahead, you see years of very slow growth, possibly stagnation, in a lot of the rich world."
http://finance.yahoo.com/tech-ticker/dont-expect-miracles-from-qe2-minton-beddoes
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Would QE2 Have a Significant Effect on Economic Growth, Employment, or Inflation?
Recent speculation that the Federal Open Market Committee (FOMC) may purchase an additional large quantity of government debt to stimulate economic growth, increase employment, and prevent deflation has prompted considerable debate over the effectiveness of additional quantitative easing (QE2). This synopsis analyzes some of the central issues in this debate.
http://research.stlouisfed.org/publications/es/10/ES1029.pdf
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The Futility of QE2: What Bernanke SHOULD Do -- Daniel Gross
Federal Reserve Chairman Ben Bernanke, speaking at a conference on Friday morning, says that the high unemployment rate and low inflation signal a need for further easing, but the Fed is still weighing just how aggressive that easing should be. The most likely scenario is that the Fed would purchase hundreds of billions of dollars worth of government bonds.
http://finance.yahoo.com/banking-budgeting/article/111037/the-futility-of-qe2
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Krugman: The Reason Government Spending Hasn't Saved The Economy Is That There Hasn't Been Any Government Spending
Paul Krugman goes back on the attack, arguing that the reason the economy is sputtering despite the stimulus is that the stimulus didn't actually include a big surge in government spending.
http://finance.yahoo.com/tech-ticker/krugman-the-reason-government-spending-hasnt-saved-the-economy-is-that-there-hasnt-been-any-government-spending
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Here are some articles about the Mortgage Mess and ForeclosureGate...
The MERS Edifice Quavers....
In the mid-1990s mortgage bankers decided they did not want to pay recording fees for assigning mortgages anymore. This decision was driven by securitization—a process of pooling many mortgages into a trust and selling income from the trust to investors on Wall Street. Securitization, also sometimes called structured finance, usually required several successive mortgage assignments to different companies. To avoid paying county recording fees, mortgage bankers formed a plan to create one shell company that would pretend to own all the mortgages in the country—that way, the mortgage bankers would never have to record assignments since the same company would always “own” all the mortgages.
http://market-ticker.org/akcs-www?post=168845
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Bank Shot
The banking authorities were shocked - shocked - to discover last week that an awful lot of mortgage paper in this country is not quite in order... appears to contain, er, irregularities... seems less than kosher... frankly, exudes an odor like unto dead carp or, shall we say, a heap of dead carp the size of the building at 3900 Wisconsin Avenue, N.W., Washington, D.C. Any day now we will hear that... mistakes... were... made.
http://www.zerohedge.com/article/guest-post-bank-shot
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Freeze on questionable foreclosures could undermine fragile recovery in housing market
Allegations of possible mortgage fraud against financial giants GMAC, JPMorgan Chase and Bank of America read like a corporate thriller: forged documents, faked Social Security numbers, phantom titles, disappearing paper trails, "robo-signers" and mortgages sliced and diced so many times that nobody really knows who owns them.
http://finance.yahoo.com/news/Foreclosure-freeze-could-apf-3924319053.html?x=0
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The Great Mortgage Mystery
The big question from the mortgage meltdown isn't why so many distressed homeowners are defaulting on their loans. It's why any of them are still making payments.
http://finance.yahoo.com/news/The-Great-Mortgage-wallstreet-3947452112.html?x=0
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CLOUDED TITLES … IT IS AS OMINOUS AS IT SOUNDS!
“Over the course of 12+ years, Mortgage Electronic Registration Systems, Inc. (MERS) has thoroughly unleashed a confusing mess of concealed electronic data, supplied by virtually all of the major players in the American financial arena…coupled with an intricate network of document preparers, it has virtually caused clouds on over 62,000,000 titles to property in every state in the United States.”
http://cloudedtitles.com/
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And here is an assortment of interesting news items that came out this week:
On The Coming Middle-Class Anarchy (Caution!...Contains very colorful language...)
Brian and Ilsa—the nice upper-middle-class retired couple, who always follow the rules, and never ever break the law—who don’t even cheat on their golf scores—even when they’re playing alone (“Because if you cheat at golf, you’re only cheating yourself”)—have decided to give their bank the middle finger.
http://www.zerohedge.com/article/guest-post-coming-middle-class-anarchy
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Poll: Economists lower expectations for growth through 2011, saying economy still 'sensitive'
Top forecasters say the economy will grow this year and next at a slower pace than previously thought, weakened by governments and consumers spending less so they can pay down debt.
http://finance.yahoo.com/news/Poll-Weak-economic-growth-apf-126103023.html?x=0
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Government Prepares To Seize Private Pensions
The government is preparing to seize the private 401(k) pensions of millions of Americans while enforcing an additional 5 per cent payroll tax as part of a new bailout program that will empower the Social Security Administration to redistribute pension funds in a frightening example of big government gone wild.
http://www.infowars.com/government-prepares-to-seize-private-pensions/
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How to Prepare for the Bond Market Bust
The biggest thing this past decade should have taught retail investors is to beware when everybody piles into any one asset class. When this happens, the chances are pretty good that a bubble has developed, and recent history shows that sooner or later, bubbles burst.
http://finance.yahoo.com/news/How-to-Prepare-for-the-Bond-usnews-3480704538.html?x=0
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Chris Whalen Predicts Death Of The Fed - And The Banks
As we have said before and we'll say again, the FOMC's zero rate policies imply that the dollar and all assets denominated in dollars have no value. Stocks, bonds and other financial assets depend upon income to make these obligations money good. Without a positive return, there is no reason to hold dollar assets.
http://market-ticker.org/post=168962
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Is The Stock Market Rigged?
A video featuring Dylan Ratigan of MSNBC...One of my favorite financial news reporters...
http://revolutionarypolitics.tv/video/viewVideo.php?video_id=12859&title=is-the-stock-market-rigged
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Consumer Deleveraging = Commercial Real Estate Collapse:
There is a Part 2 to the story of Consumer Deleveraging that will play out over the next decade. Consumers will deleverage because they must. They have no choice. Boomers have come to the shocking realization that you can’t get wealthy or retire by borrowing and spending. As consumers buy $500 billion less stuff per year, retailers across the land will suffer. To give some perspective on our consumer society, here are a few facts:
http://www.financialsense.com/contributors/james-quinn/consumer-deleveraging-commercial-real-estate-collapse
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Soros: Global Economic Downturn Coming in 2011
George Soros, one of the few investment gurus who actually predicted the credit crisis, now believes the global economy is at substantial risk of a downturn in 2011. Soros believes the stagnant economy will result in continued low employment, but an increase in corporate M&A. Soros also discusses the China FX situation as well as the euro crisis.
http://seekingalpha.com/article/229511-soros-global-economic-downturn-coming-in-2011?source=email
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How Hank Paulson's inaction helped Goldman Sachs
Henry Paulson has received widespread acclaim for his bare-knuckled decision-making as the treasury secretary at the peak of the 2008 financial crisis, but former federal regulators say he missed multiple chances to contain the disaster.
http://www.mcclatchydc.com/2010/10/10/101753/inaction-by-treasurys-paulson
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US Debt on the Shoulders of 90 Million People
Now that the federal government’s fiscal year ended on September 30 and they had to “square up” their accounting, we find some very interesting thing...
http://dailyreckoning.com/us-debt-on-the-shoulders-of-90-million-people/
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Global Currency Meltdown
As the recession and resultant stimulus packages add to higher unemployment and increasing public-sector deficits, the government is seeking to boost the value of overseas earnings that are accrued by US corporations. To aid in this effort, the Fed is being pressured to erode the value of the US dollar, thereby making foreign sales more lucrative in nominal terms. But this form of stealth protectionism will fail just as surely as more overt trade barriers.
http://seekingalpha.com/article/230180-global-currency-meltdown?source=email
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Another Perfect Storm Brewing for Markets and the Economy
It's been a textbook case of "bad news is good news" in the past few weeks, entirely driven by QE2 expectations. The expectations are so high that inflation is finally being priced in (see 30-yr bonds, commodities, and gold), and Bernanke would have to do it even if he had a change of religion tonight, or else.
http://seekingalpha.com/article/230278-another-perfect-storm-brewing-for-markets-and-the-economy
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Concrete Market-Based Evidence That the US’ AAA-Debt Rating is Unraveling
Traders in the credit default swaps market are no longer showing the same faith in the USA that major credit rating agencies show. This past quarter, the price paid to insure against a US sovereign debt default recently jumped up nearly 30 percent. That spike in cost made the US the third worst performing nation in the derivatives market, after only Ireland and Portugal. Not exactly good company to be in.
http://dailyreckoning.com/concrete-market-based-evidence-that-the-us-aaa-debt-rating-is-unraveling/
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Biggest bank failure of year closes Premier Bank
Regulators shutter 3 banks in Kansas, Missouri to bring US bank failures this year to 132...Missouri’s largest bank failure of the year brings the closure of Premier Bank, a billion-dollar bank headquartered in Jefferson City with branches in Osage Beach, Chesterfield, Lake St. Louis, St. Charles and St. Peters as well as in Grapevine, Tx.
http://www.missourinet.com/2010/10/15/biggest-bank-failure-of-year-closes-premier-bank/
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And now for some GOOD News!...
Solar-Power Breakthrough
Researchers have made a major advance in inorganic chemistry that could lead to a cheap way to store energy from the sun. In so doing, they have solved one of the key problems in making solar energy a dominant source of electricity.
http://www.technologyreview.com/energy/21155/
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Have a great weekend everyone!...
zigzagman
Tom
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