Morning Post

It all depends on the PIIGS and whether some sort of default is being or has been priced into the markets as to how fast we fall from here. Greece appears to be toast and I'm not sure anyone is going to step up to the plate. If they save Greece, then who's next. they can't save them all. Someone will not have a chair when the music stops playing. It is only a matter of time before some massive meltdown of what I think will be the EU first, then over the next year or two we live in denial as regions begin to tumble one by one. I am becoming more afraid that war may be inevitable and the Mayan calendar may be deserving some merit. More on Greece here.

Economic calendar - Not much I see other than auctions will Wednesday

Earnings calendar - KO and PHM tomorrow. Still a full slate out there, but most of the notables have passed.

SPX daily - Where are we? We are somewhere in 3 of 1 I think.  This may possibly be 2 of 3 of 1. That was a nice pop late Friday that got back 38% of the fall from 1105. There is no question the daily chart remains oversold. I warned of the divergence on RSI 5 on Friday. That is the only thing that looks good on this chart right now. I did my best job a placing the bear market top TL on this chart cause I think it should have some bearing on the markets actions. (Looking at the chart it appears that Stockcharts has inconveniently moves the TL -they do that if you are not careful - It is close - I'll move it back later - just one of the many issues I have with them.)

SPX 60m - The last big pop was led by some huge divergences in RSI, MACD and ROC. Not this most recent one. You know I like to trade the daily indicators. The 60m Can be misleading at times. It appears a channel has formed. On this chart I give the possibility of SPX being in 2 of 1, but that is remote.

I'm expecting choppy to up trading for a few days with a high degree of risk for large downside moves. If we are in 3 of 1 then the third wave has not hit and that will be a ripper. Weekly RSI is at the 50 line just under the P2 support line. SPAX50 is about to hit 100 which has been an extreme oversold reversal area. The bear market top TL was pierced, but held. 960 to 940 is my preliminary target for the bottom of 1. The word of caution is that this puppy can reverse at any moment and very hard. What happens with the PIIGS is key. Let's see what the bulls have left in them. they may be at a point where they have to focus on saving just the banks and not the whole market.

Gold - At the 38% retracement and lower LT channel support line with the daily indicators oversold. 1020 is the next support level. I would not be surprised to see a pop from here to 1085. I expect further weakness as it may follow SPX or the inverse to the dollar (which may continue its rise sooner than later).
Dollar - Big gap at 81.27 up to the 50% retracement at 81.90. Might be in a over throw of a rising wedge and it is overbought.
Oil - Cracked the lower channel line on big volume. Daily it is oversold with everything else. Looking for consolidation or a slight pop.
Natgas - About the only thing that is moving up. Might be a bear flag, but the indicators look good. that could all change with supply though. Indicators say it can go higher.
EUR/JPY - Just got hammered last week. Very oversold.
EUR/USD - In the retracement zone and oversold.

GL!

Around The Rim (And Down The Hole)

Busy earnings day and AAPL hits it out of the park. We don't own a mac yet, but we can't get off of iTunes. With the kids getting iTouches for Xmas, maybe the 1,000 songs/apps they have purchased since 12/25 put AAPL over the top (or my account under the bus?) Apple earnings jump on strong iPhone sales. The action of AAPL has been volatile with a surge to 208 and subsequent pullback to 200.


Looking into earnings some disturbing trends are being uncovered. With 20% Of S&P Reporting, YoY Ex-Fin Revenue Growth Is... Negative  - I've been speculating what's going to happen in a revenueless business environment. It will catch up eventually. Beating depressed low bar estimates is great, but when that bar starts getting lowered again (or at least quits getting raised) look out!


Being from Georgia this headline from Mish caught my eye, the rest of the post caught my attention. Hoschton Georgia Dissolves Police Department One would think in a country that is sure to face some serious rebellion within the year, uh, police may be important. How about with 18% unemployment that crime may become an issue? States and cities are desperately trying to balance their budgets and making some dramatic cuts. Just take a peek at what the Governator and Illinois are doing. Tax revenue is waaaay down. Just wait till Big Brother comes down from on high and starts hitting up the taxpayers left and right. the states will really be SOL then and so will we. This will get really ugly. (Hoschton is just north of the ATL - I had to look that one up)

More shenanigans in the reported numbers from Big Brother? ANOTHER revised number you say? No, kidding? It caught Mish's and Denninger's attention (and since you know I am large into manipulation), so I bring it to you. Mish has Charts of the Day: Durable Goods and Goods Employment In General and Denninger has Durable Goods "Mistake" Or FRAUD? You can't make this shit up, but THEY CAN!

Prag Cap brings us DICK BOVE: WE ARE ON THE PRECIPICE OF A POLITICALLY DRIVEN EQUITY CRASH  "Dick Bove, an analyst at Rochdale Research released an alarming report yesterday detailing the dangers of a politically driven market.  In his opinion, we could be on the verge of a market crash driven by the President’s financial reform bill and growing anti-business sentiment:" Combine this with Charles Nenner's interview here and you get a good mix of disaster preparedness. Of course Ritholtz had this to say about the Bove article - Most Irony-Impaired Wall Street Research Title. Ever.

Ritholtz has NY Fed Wanted National Security Exemption for AIG and Zero Hedge has Use of National Security Book Cooking Exception Not Looking So Paranoid After All I'm telling you that this thing is gonna blow up and the people will not be happy. IMO, EVERYTHING is out of control in Washington and it will all come out in the wash sooner or later. The fraud, lies and insider rigging has been rampant. This time it has gotten so big they will not be able to cover up this pile of poo. Someone will get strung up for this eventually.



That is enough for now. Do your homework and be prepared. Screw gold, ammo, water and seeds will rule the day in a year or two. 


GL!

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.