Morning Post 01/12/12 (SPX)

Well, the minis got a higher high last night and as discussed here over the past two weeks the trend up into the FOMC meeting (as markets tend to do) remains intact for now. Stopping 2.5 points shy of the 1300 round level, the minis pulled back on the data this morning. Jobless claims get back to 399k (which will be revised over 400k as is the standard). Gee is that a surprise to any of you reading this? EU rates remain unchanged and they did not ease but will most likely begin printing again in February (thus the pop in the futures).

So, The jobless claims increase 25k and the markets pull back all of 7 handles? Really? That should have been a 20 point thrashing as the "recovery" takes another body blow. I'm sure our president did not like hearing that news. This also makes me think that whoever controls this number would like a new leader for this country after this next election (you have to connect all the dots).

My morning post yesterday was really the most comprehensive market position chart you will find on the web for this time. Everything in it will remain in play for at least another week if not thru the FOMC meeting and OPEX as these markets churn out this top. My Is Gold About to Collapse? post yesterday drew quite a crowd. You may want to see that one as well. It ties nicely to a potential coming collapse in equity markets.

Whutz In The Newz? (And A Bright Idea)

OK - INTC beats handily as markets set new highs. Intel posts sharply higher profit, tops views from Marketwatch. Looks like the earnings bar may be set low enough to allow the Fed and PPT to take a break for a week or two, let their fat fingered interns take a much needed break to heal the blisters on their thumbs and finally let some much needed irrational investors enter the market. Just wait till the banks knock the cover off of the ball as I expect a zero interest arbitrage, cash rich, non lending, equity pumped institutions should do.

The games our government plays to show a recovery when there is not one just don't seem to stop. Mish has Measuring the effect of stimulus: If you don't like the results, change the yardstick - "It would have been a lot easier on Obama if he simply made up numbers of jobs created without disclosing the methodology. Someone might have believed him. This Mickey Mouse manipulation in plain sight of inquiring minds just makes the administration look foolish." We are playing kick the can down the road and pull demand forward (with a sprinkling of Monopoly money and some BLS manipulation), you can't win at either game. You'll have to pay the band eventually. Sadly the band is not the Blues Brothers and we can't just fork over a case of PBR. Caught between a rock and a hard place they are, praying on their knees that if the good Lord will just let this bubble reflate one more time and make all of this bad mess go away they swear they will never let it happen again.

This one may seem a little off base but indulge me. naked capitalism has - Monsanto GM Corn Linked to Organ Damage in Animals. I am a pretty big believer that GM foods will be the "next big thing" once all this mess is over in about 10 years. You see, they are fucking with mother nature and might just put the royal fucking on our food supply. First, screwing with the genetic code of stuff and feeding it to us is not a good thing. You should check to see if what you are eating is GMO or not. Second, MON is one of the companies that I will be buying at the next low, because it is quite possible they will own a patent and get royalties on every food source grown on the planet. I'm not kidding. If you grow soybeans and the farmer next to you grows MON soybeans and they cross pollinate then the soybeans you plant  next year from the seeds have MON genetic code in them, you lose. You just stole their product and will pay royalties. Uh, yes, this is a real and not fictional problem. They own the code. Hell, they tried to corner and get the genetic code patent on pigs not to long ago - if they had won and you owned a pig - any pig anywhere - you were SOL. Their patent, thatnks for taking care of their pig. Not kidding again. Some great youtube vids on this stuff. MON is a bad, bad, bad company IMO.

THE RECESSION ON MAIN STREET CONTINUES from The Pragmatic capitalist hits a home run. "Unfortunately, the frustrations are likely to grow on Main Street for Wall Street isn’t a place that lives in the same reality as the rest of us.  Wall Street is a world based on expectations and as long as investors remain depressed and corporations continue to outperform these low estimates the likelihood is for a continued rise in stock prices.  Unfortunately, a recovery that doesn’t involve Main Street is destined to fail sooner or later." I could not have said it better myself. Mish also has Small Business Trends Suggest No Recovery On Horizon. You see, this manufactured rally is taking the SPX to the top and everyone else is getting the shaft. For this reason I will begin to track the $WLSH to see if the trickle up failure theory works from here. The market should start to rot at the bottom first. so $WLSH and then $RUT should begin to lag and not recover to the highs set by the big boys. Let's test that theory, shall we (that may have been a moment of sheer enlightenment).

Washington's Blog has If Government Won't Break Up the Giant Banks, Let's Do It Ourselves friggin brilliant! I aspire to be the news hound and avid reader that WB is. His here, here, and here links just blow me away. We all know that we are going to eventually have to take the bull by the horns if we want any control over our destiny, otherwise we become further entrenched in the bought and paid for, corrupt, manipulated, over lobbied, special interest driven, socialist state we have become. Give this one a read, take a few action items away with you and figure out your plan for doing your part to get our nation back. 

Zero Hedge has Amherst Securities Estimates Nearly Half A Trillion Cumulative Losses At Fannie And Freddie which is not really all that surprising is it. The lender of last resort that has played hoover sucking up every overvalued RE asset on the planet has a small $500B problem and its growing. "If Laurie is correct, not only will numerous additional episodes of housing-focused Quantitative Easing be needed, but such a deterioration, once it is acknowledged by the auditors who obviously have no interest in indicating how bad the situation is, would have significant political repercussions which would reverberate from the FHA all the way to the White House. Another implication is that the shadow inventory is likely to continue remaining unsold so as not to blow the bottom out of the supply side in the market, likely confirming that banks will continue to pretend the vast majority of real estate assets on their balance sheets are unimpaired when in actuality they deserve a haircut of 20%,30% or more." Marked to market is the great ghost haunting the government and they will do whatever it takes to keep it in the closet for as long as possible. 

From The Big Picture - How bankers think - 

Have a great evening.

My Call - P3 The Update

Thursday June 18th I did my State Of The Charts Post where I gave it my best shot at predicting what I thought P2 would look like and how it might play out with three scenarios. So far I look pretty fucking smart, but I'm not counting my chickens just yet. I got my doube top (or at least close) to set some divergences. Now can I get the fall to 847 for what I think is the B in this ABC corrective of the great fall from the top in '07. This move up must have a deeper retrace (at least 38%) IMO before moving higher.

Below is an updated chart where I appear to be on track as far as form (and pretty close on time - pure luck). I have not changed anything in the chart except for narrowing a few lines in the period that has occurred, deleting a few annotations (sc is lacking there in what it allows) in the indicators and adding two vertical target lines for my Option 1 scenario. The previous chart from the last post is there for prosperity as is this one. Look, I'm not Csaey or Nostradamus. I called the last month or so pretty darn good in the face of all the permabears telling me I was fing nuts, so I get to keep going.

The permabears won't like the near term call for the end of this year, but that is how I still see it. Manipulation and earnings surprises galore will lead us to higher highs before lower lows IMHO. Now is the time for the fall to 847. Sometime soon I think we plummet but this will not be "the" fall.

One main source for power for the bulls will be "earnings comparisons". Remember the fall and the earnings comparisons over the first year were sensational. Now the comprables are "post crash". They are going to be comparing shit vs. shit from now on with the analysts from GS and the other banks giving it their best shot at making their buy calls and other fantasies come true. Ya think CNBS will have a field day forgetting about any '07 numbers and touting the BS vs. BS numbers.

The three options still exist. We turn soon, but IMO this is not the fall. If I am wrong, option two is still out there. P3 is coming when is the only question. The only way we'll know is the form of the fall. Don't get me wrong, we're gonna crash, just not yet.

Look, it is a balsy upopular call with the crowd I run with. I hope they are right and we get this bullshit over with sooner than later. It is just how I see it playing out.

I'm still struggling with the new computer, java and stockcharts. Obviously I am screwing around with the layout. Thanks for the emails and feedback. Just trying to make things better.

Thanks for the feedback and visting. GL trading.