Tuesday, August 31, 2010

Stick Save - v. 1,250

Amazing. Like 1040 has the clap or something. Run away! Run away! Just like in the vid, the cave is the elusive 1040 level, the bunny is Shalom, all the bones at the mouth of the cave represent the short carnage that have dared to try the opening and the wise man with the warnings in the funny hat with the horns is Tyler Durden from ZH. 1040! Run Away! Run Away! What a joke this market is.

ZH bring us Victory For The Fed As 10K Holds; Volume Surges On Unchanged Market  "Calling this robotic farce a shitshow is an insult to shit and to show." and The Last Minute Ramp Job Dissected, those two explain a lot. They can't battle and hold this level for ever, can they?

Mish has a nice post in 26 of Last 88 Trading Days have been 90% Days (Either Up or Down); 7 More Lean Years in Stock Market? another useful post that assist in dissecting the trading patterns."Today, the 1040 level on the S&P held for about the 8th time on "fabulous" news consumer confidence rose to 53. Bear in mind number in the 70's are typical of recession lows." and more information from Art Cashin on his cycle analysis are worth the look. A few more amusing facts from Mish appear in Movie Attendance Drops to 1997 Level; Case-Shiller Home Prices Rise; Last Hurrah for Housing Did we forget Consumer Confidence and Case-Shiller this morning? What you will NOT hear from Liesman CNBS is, "Case-Shiller is a backward looking index. The increasing number of foreclosures, the complete collapse in new home sales, a massive increase in inventory, and the end of tax credits all suggest we are near the end of the line for this bounce in home prices."

Denninger does a better job ripping the Case-Shiller numbers to shreds in Home Prices Respond To Government Cheese. "There's a lesson in here for the government, in that these sorts of "pull forward demand" games are only of "benefit" for as long as they continue, and as soon as that program ends (and all such programs must end, since the "freebie money" isn't infinite either) you create a worse dislocation than you originally had, as the entirety of the distortion you created now has come back out of the market along with whatever the natural progress originally was!" We shall see that in the months to come. We'll also see the lies in the "revisions" and data manipulation come to life as well. you can only revise and beat (like on GDP) so many times before you get caught with your hand in the cookie jar.

Denninger also has his usual hilarious response to the FOMC minutes in FOMC Minutes For August 10th, "Translation: There was no recovery.  Not now, not before, and certainly not on a forward basis." This one hits home more than some in the past. It the fed spoke the truth, this is what you would hear.

I have often told you that you need to have gobs of cash at home ready for the next run on the banks (that don;t actually have any cash). I don't care if it is in a mattress or cans or a safe (I'd store it and your guns and gold in separate places and preferably bury them somewhere). Well, The Death Of Cash? All Over The World Governments Are Banning Large Cash Transactions from The Economic Collapse should drive this point home. "Should we just accept that we have entered a time when the government will watch, track and trace all financial transactions? Is it inevitable that at some point in the near future ALL transactions will go through the banking system in one form or another (check, credit card, debit card, etc.)?" Want to learn what type of transactions you'll get locked up for? Read on.

We all have heard how much money is in the coffers of the banks and big businesses. We have all heard of the potential for M&A activity in the coming months (or currently happening). I am of the opinion that there will have to be consolidation and it will happen at much lower prices (cause the CEO's know how bad it is out there). What does consolidation and M&A activity lead to? Efficiencies, thus reducing redundant jobs is a comin with it. Washington's Blog has a great take on M&A and QEII that you need to look at in Quantitative Easing Won't Help the Economy, But Will Just Create Another Wave of Mergers and Acquisitions. "What's needed has been obvious to independent observers for years: Break up the big banks, prosecute the criminals whose fraud caused the financial crisis, and restore the rule of law and transparency. Until those basic steps are taken, nothing else will work to fix our broken economy."

That is enough for now. As for the market calls, it is getting increasingly difficult to read the charts when you are range bound in a rigged market. I may as well just say support at 1040 and resistance near 70. Eventually the support levels will crack. They are obviously defending the psychological 10k level on the DOW, but how long can they keep this charade up? I believe a crack of that level will be the last straw and you'll begin to see even more MF outflows from the masses. With 16 weeks in the books of cash moving out of the markets, something has to give sooner than later.

GL out there and thanks for your support.