Bank Failures

Nearly 100 U.S. banks that got bailout funds from the federal government show signs they are in jeopardy of failing.

The total, based on an analysis of third-quarter financial results by The Wall Street Journal, is up from 86 in the second quarter, reflecting eroding capital levels, a pileup of bad loans and warnings from regulators. The 98 banks in shaky condition got more than $4.2 billion in infusions from the Treasury Department under the Troubled Asset Relief Program.

When TARP was created in the heat of the financial crisis, government officials said it would help only healthy banks. The depth of today's problems for some of the institutions, however, suggests that a number of them were in parlous shape from the beginning.

Seven TARP recipients have already failed, resulting in more than $2.7 billion in lost TARP funds. Most of the troubled TARP recipients are small, plagued by wayward lending programs from which they might not recover. The median size of the 98 banks was $439 million in assets as of Sept. 30. The median TARP infusion for each was $10 million, federal filings show.

[See Banks Face Another Mortgage Crisis]

"We certainly understand and recognize that some of the smaller institutions are experiencing stress," said David Miller, chief investment officer at the Treasury Department's Office of Financial Stability, which runs TARP. He noted that Congress mandated that banks of all sizes be eligible for TARP, adding that the government's TARP investment as a whole is performing well.

Chris Cole, senior regulatory counsel at the Independent Community Bankers of America, a trade group, said small banks are "turning around slowly." Smaller TARP recipients are in worse shape than larger banks because the larger ones got help in addition to TARP, Mr. Cole said. Bank of America Corp. and Citigroup Inc. tapped the Federal Reserve's emergency-liquidity programs frequently during the crisis.

The troubled banks identified by the Journal all have either a Tier 1 capital ratio under the "well-capitalized" 6% level; both a total risk-based capital ratio of under the "well-capitalized" 10% threshold and nonperforming loans of over 10% of their portfolio; or a regulatory order requiring the bank to monitor or boost its capital.

A Federal Deposit Insurance Corp. spokesman declined to comment on the Journal's analysis, which also calculated that 814 of the nation's 7,760 banks and savings institutions are troubled according to these standards, up from 729 at the end of the second quarter. The FDIC's official list of problem banks, which uses different criteria from the Journal's analysis, includes 860 financial institutions. The banks aren't publicly identified.

In October, the Government Accountability Office said 78 banks on the FDIC's troubled-bank list as of June 30 were TARP recipients, up from 47 at the end of 2009. Dozens of TARP banks were "marginal institutions" that were financially weaker than other recipients and should have gotten more scrutiny before receiving taxpayer-funded infusions, the GAO said.

In a response to the GAO report, the Treasury Department said it would consider the GAO's recommendations to improve its funding process if it ever has a program similar to TARP again.

In comparison, the first eight banks and securities firms receiving TARP got a total of $125 billion. All have repaid the funds

Arthur Wilmarth, a George Washington University law professor and expert on banking regulation, said a lot of smaller TARP recipients are burdened with risky commercial-real-estate loans tied up in troubled strip malls and the like, and that makes it hard for them to raise new capital. "A lot of them are in kind of a frozen position," he said.

One example of a TARP recipient in deep trouble: closely held Legacy Bank of Milwaukee. The bank had $205 million in assets as of Sept. 30 and got $5.5 million in TARP funds in January 2009. But more than half of Legacy's loans were in commercial real estate, and its nonperforming loans have escalated to 23% of its portfolio. It has posted eight straight quarterly losses, for a total loss of $11.6 million.

Last month, the Federal Reserve declared Legacy "significantly undercapitalized," giving the bank until mid-January to either sell itself or raise more capital.

José Mantilla, Legacy's president and chief executive, said the bank lends to an underserved, lower-income customer base. During the recession, those customers "have suffered, and they have fallen behind," Mr. Mantilla said.

Legacy is working to raise capital, and "we still feel optimistic" about the bank's chances, he said.

CommunityOne Bank of Asheboro, N.C., got $51.5 million in TARP funds in February 2009 through parent FNB United Corp. (NasdaqGS: FNBN - News) The company has suffered nine straight quarterly losses, sapping its capital. In July, the Office of the Comptroller of the Currency said the bank had engaged in "unsafe or unsound banking practices."

[See Banks Got the Goldmine, Consumers Got the Shaft]

R. Larry Campbell, the bank's interim president and chief executive, said CommunityOne is "fully engaged" in efforts to boost its capital.

How the Journal Compiled Its List

The Journal's list of troubled banks consists of all banks that met at least one of these criteria based on the most recent available data:

• Tier 1 capital—a measure of a bank's most reliable and liquid capital—of less than 6% of risk-weighted assets, the level regulators require for a bank to be considered "well-capitalized."

• Both total risk-based capital of less than 10% of risk-weighted assets—the "well-capitalized" level for that measure—and non-performing loans of at least 10% of total loans. That suggests a bank may have a potential drain on capital without the resources to cope with it.

• An enforcement order from regulators, issued since the 2007 beginning of the financial crisis, requiring the bank to monitor or boost its capital levels—suggesting regulators are already concerned about a bank.

Well over 90% of the banks that have failed since the beginning of the financial crisis met at least one of these three criteria. Banks that trip all the criteria may be at highest risk: Of those that have done so at any time during the past 18 months, more than 60% have since failed.

SNL Financial, a financial-information firm, assisted the Journal with the data screening; the Journal is responsible for the methodology and analysis.

The Journal's methodology differs from bank regulators' method of coming up with their official problem bank list, which is based on banks' low ratings from examiners on the so-called CAMELS scale—capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk.

Hoovering

Note we have been hoovering around the 1.618 area mentioned a week ago. Nothing is going on here and it is the worst I have seen it is a long time. A lot of noise around that funds are barely surviving and traders who in the past were racking up huge bonuses will be lucky if they get any this year.
Most have already taken holiday vacations starting last friday so I really don't expect anything to happen over the next 2-3 weeks when most are back.

Watching

Watching this area still remember 1243 is the bottom range of my target. 1.618 target on the fib is 1260 which I think will happen especially with the usual holiday manipulation.
Volume is light and most traders and funds are done training for the year.

Europe and US similarities

The United States' financial situation is as dire as that of many European countries, yet the US Government's actions contrast sharply with the austerity measures of European governments. In the last few weeks, the Federal Reserve boosted its quantitative easing program by $600 billion and Chairman Bernanke said that he was willing to increase bond purchases even further. In addition, the White House proposed an extension of the Bush tax cuts and unemployment benefits, and a reduction in payroll taxes. Although US politicians continue to ignore the US fiscal situation, the bond market, as seen by the recent declines in bond prices, may be reacting negatively toward the free-spending ways of the Government.

This country's deficit problem is widely known. In fact, during the press conference announcing the bi-partisan agreement for extending the Bush tax cuts, Obama questioned, "...how are we going to pay for all that at a time when we've got both short-term deficit problems, medium-term deficit problems, and long-term deficit problems? Now, that's going to be a big debate." Despite acknowledging the problem, Obama and the GOP decided to move forward with the proposal. This policy decision, made in the face of mounting deficits, is similar to policy mistakes made by many European countries which, prior to their debt crises, chose not to address deficit issues. However, politicians can only ignore deficits for as long as the bond market ignores deficits. Time may be running out.
Chairman Bernanke's objective in pursuing quantitative easing is to keep interest rates low based on his view that low interest rates are necessary for stimulating the economy, especially the housing sector. However, with Treasury bond prices falling, bond vigilantes are proving to be a force greater than the Federal Reserve, exacerbating the very problems that Bernanke is trying to fix.

Although financial markets are penalizing European countries with excessive budget deficits and US politicians are speaking candidly about the US deficit problem, the US continues to take actions that make the deficit worse. Despite the ECB and IMF supporting peripheral European countries' bond prices, interest rates have continued to rise and thus pressure the entire region's economy. Additionally, in order for countries to obtain the required bailout funding they are being forced to slash spending and raise taxes. While the US government still has complete access to market funding, the bond market will ultimately force the US to replace its current stimulative measures with austerity measures similar to those being introduced in Europe.

Areas to watch

I am back but this cold weather has gotten me sick. Rrrggg hate this time of year I am always sick.
Anyways current upside target range in the market is 1243- 1286. I will assume any trade in the upper area of this level will trigger some sizeable selling. Also it should be noted that we have small divergences setting up and these area I would take profits if you are long.

Gold has taken a slight pullback but I think it still goes higher. Anyone seen silver, that's what you call a lagging play!!

Still away but!!! Bingo

Bingo Bingo Bingo on those areas to watch as we bounced hard off them. That's how it goes, you got to use support points and buy and sell at resistance. 9 out of 10 time it will yield a nice play.

Still traveling be back soon

BINGO AGAIN!!

Bingo Again on that call of 1174. Low of the day and it provided a low risk by for over 10 S&P POINTS!!!!
Now that we have tested the two areas the bulls must now prove their worth and take it higher.

1174

Ok note where is today's low so far. The 1174 mentioned last week on the blog. It is not nothing special that I noted the 1179 area where we made a massive bounce last week and next the 1174 area. Now this area is highly significant for the bulls and must hold it on a closing basis.
I will be traveling for the rest of the week so the blog will be dark. Any areas I think are important I will update.

BINGO !!!

Note where we closed yesterday- Just amazing the manipulation

Note

Note the area where we have bounced off in the first hour of trading: 1179.75. What did I say about 1180 in the last post. Bulls have this as their marker and a close below will weaken their cause especially if we make it to the the 1174 area.

We will see soon enough

Action

1182.50 was the overnight lows if we break that during the day time trade look for a quick flush to that 1174 area mentioned yesterday. I think that's the magnet on the downside. 1180 area is also closing number for the bulls to hold onto their bias-

We will see soon enough.

Action

Not much action just up one day down another, tight range! Now I am looking for some downside to the 1174 area where I expect some buying to come in, that's if the bulls have any intention to make a move higher. I think this is the scenario that will play out.

We will see soon enough

Interesting-Housing note

Cleveland's population has been shrinking for 60 years as the city lost manufacturing jobs. Now, after more than 33,000 foreclosures since 2005, it's demolishing hundreds of deserted, derelict homes.

An agency started last year to manage abandoned houses in Cuyahoga County, which includes Cleveland, plans to acquire up to 1,000 properties next year, and tear down as many as 900 of them. The city of Cleveland may raze double that amount, according to Gus Frangos, president of Cuyahoga County Land Reutilization Corp.

"You really have to bury the dead right now," Frangos said in a telephone interview. "You have to remove blight. It's unfortunately on a grand scale."

Cities and counties across the Rust Belt are ending up with abandoned properties under their control as owners stop paying taxes. In Cuyahoga County, a record 2,400 tax foreclosures may occur this year, said Chris Warren, Cleveland's chief of regional development. The governments are choosing to tear down some buildings rather than sell them as residents move to the suburbs and steel, automotive and manufacturing jobs disappear.

Detroit Demolitions

In Detroit, like Cleveland, the population has dropped by more than half since 1950. The city is in the process of demolishing more than 3,000 houses, according to Dan Lijana, a spokesman for Mayor Dave Bing. The mayor, elected last year, has pledged to tear down 10,000 abandoned and dangerous homes in his first term, Lijana said in an e-mail.

Detroit has almost 51,000 properties for sale and may add more through this year's tax foreclosure auction in Wayne County, where the city is located.

"These cities really have to take on the properties," said Alan Mallach, a senior fellow at the Washington-based Brookings Institution. "If they're going to be responsible stewards, they really don't have a choice."

Detroit, which has about 911,000 residents, plans to spend $14 million of $47 million from the first grant it was awarded in the federal Neighborhood Stabilization Program to get rid of vacant properties that breed blight. Detroit razed 12,600 homes in the decade before Bing took office, Lijana said.

Phoenix

Phoenix, which has the eighth-highest U.S. foreclosure rate, also received money from the federal government and plans to spend 3 percent of the first round on "clearance," which includes cleaning up vacant lots and demolishing properties, according to government records.

For Sun Belt cities such as Phoenix, where there likely will be greater growth than in Cleveland and Detroit, the more practical strategy may be to hold on to homes until the real estate market recovers, said Terry Schwarz, director of Kent State University's Cleveland Urban Design Collaborative in Cleveland.

I personally didn't think this was going to happen until 2012 to 2014, but it's finally here. Cities, whether it be shrinking cities or over developed cities, have thousands of homes on the market, and thousands of dilapidated vacant homes. With no demand, these vacant homes have no value. In fact, they have a negative value equal to the cost to demolish these structures.

These demolished homes represent a permanent loss in real estate taxes for these cities, which limits any kind of tax revenue growth without raising taxes and fees on citizens.

Expect this trend to continue. It may broaden to Florida, the Valley of CA, Georgia, and other pockets of over developed cities or shrinking manufacturing towns.

Gold

Nothing matches monetary theory and currency issues as a source of delirium among economists. As the G20 gets underway today in South Korea, name-calling has taken the place of diplomacy. The German Finance Minister called the U.S. Federal Reserve's US$600-billion money-printing operation "clueless," while Bank of Canada governor Mark Carney says he has "absolute confidence" in the program.

Somebody mentioned gold, and the swords are drawn again. Not a chance, said Mr. Carney. A good idea, said Robert Skidelsky, a leading Keynesian who says it's a golden opportunity to reform the world monetary system. Meanwhile, the man who started the gold rush, the World Bank's Robert Zoellick, says he didn't propose a full return to a gold standard. His objective, he said, was to point out that the gold price is sending a message that the policy fundamentals within the G20 are rotten. And that's a message -- with gold at US$1,400 an ounce--that can't be ignored.

All of which is a sure sign that world leaders, under the auspices of the G20, are assembling for another round of confidence-building meetings, at the end of which the return of confidence will seem even more remote than it is today. Surprise agreements on trade and bank regulation, or even climate-change policy, are possible, but expectations are not high.

Certainly there will be no clear outcome on currency reform and global trade imbalances, the main lightning rod for conflict at the G20. However, the sudden appearance of gold as an issue, unwelcome by central bankers, has in some ways helped to galvanize and renew an important ideological battle. Unfortunately, it is not a battle that is likely to clear the air. There will certainly be no reference to gold in any final communique. But as the price of gold soars, it draws attention to the failures and weaknesses of the world's paper-money system and its inherent inflationary risks.

Outside of the global investment community, which has pushed gold to record nominal values, official policy circles would prefer to talk about rebalancing world trade and finding ways to manipulate currencies or new techniques for printing money by the trillions of units. Then along came Mr. Zoellick, former U.S. trade rep and now head of the World Bank, who dropped the gold bomb in an op-ed in the Financial Times.

In a general overview of the state of the world economy and the role of the G20 in failing to be a model of international cooperation, Mr. Zoellick suggested that the world needs more than just currency reform and trade rebalancing. Currency reform is fine, he said, but it's a long-term project that must be accompanied by specific policies aimed at trade liberalization, privatization and fiscal reform.

On currencies, he suggested a new "co-operative monetary system" that would replace the U.S. dollar as the main reserve currency in a new regime that involved the dollar, the euro, the yen, the pound and the yuan, after China moves toward internationalization and an open capital account. Then he said: "The system should also consider employing gold as an international reference point of market expectations about inflation."

In an interview yesterday on CNBC, Mr. Zoellick clarified his position. The objective, he said, is to instill private-sector confidence in the global currency and trade system.

The point on gold, and this is the golden elephant in the room, whether people recognize it or not, it is being used as an alternative monetary asset. So I'm not saying return to the gold standard as a control of money stock. But what I'm saying is the price of gold has been telling people is that there is a lack of confidence in some of the fundamental growth policies. So gold in that sense is a reference point, it's an indicator. Now people might wish it wasn't so. But I'm describing the facts as they see it and saying to policymakers: "You have to recognize what this says about the fundamentals of the policy you are pursuing." [You can't achieve confidence with] exchange rates and rebalancing alone.... You want to get the private sector back engaged. The time of government fiscal expansion and programs has run its course.

Current-account rebalancing and currency reform won't work alone. They might even be secondary. "These currency rebalancings and adjustments will be a lot easier if everybody's growing. That goes back to growth fundamentals. And it will certainly be a lot easier if people are opening markets as opposed to threatening to close them."

All very sensible, although the ideas behind monetary policy and global currency systems are a snake pit of conflict and ideology. The mere mention of gold as part of any system drives most Keynsian economists to distraction, reflecting John Maynard Keynes' claim that gold is a "barbarous relic" and his diligent efforts to keep it out of the world monetary system. Keynes, however, had a contradictory opinion on everything, a point made obvious by Mr. Skidelsky, a Keynes biographer, who wrote yesterday in the Financial Times that Keynes would likely have approved of Mr. Zoellick's use of gold.

As Mr. Skidelsky interprets the idea, the result of Mr. Zoellick's proposal would be a new global currency system built around a "super sovereign reserve currency" with some kind of reference to gold as an anchor. This would fit with Keynes' idea that "gold would be useful as a constitutional monarch, but disastrous as a despot."

All in all, the sudden attention paid to a new gold standard is likely to fade. The prospect for some new gold standard is zero. As a result, the future of the world monetary system -- even under some new super sovereign reserve -- seems destined to ease quantitatively toward a new structure where inflationary paper continues to trump gold.

Buying here????

If you are buying equities here you are plain crazy- I am looking at massive divergences on larger cycles and as we know larger cycles never lie. Shorter cycles can miss but longer ones never-

Be warned

Auditing the Fed - CNBC.com

Auditing the Fed - CNBC.com

Gold

Record highs- $1500 looks like the next big target

What next?

So we are at the 62% Fibonacci retracement of the last major swing to the downside that started over 3 years ago.
Here is what I see. We are overbought, we are at key resistance, and the bulls are overly bullish. That being said, there is no reason to try and fight the tape for now. A nice hard gap up that fades just as hard could signal the start of a decline, but whether that decline is just a pullback (probable) or the start of the next super leg down (not nearly as probable) will have to be measured as it unfolds.

BINGO

So bingo on that call that we would see a full retracement to the highs. From here I am going to sit back and see what happens. Definitely commodities as Gold and Oil are en fuego and looks like it is picking up more average investors.
I warned early this year that this year would not be a low so I was not in the camp to test the lows this year but next year, 2011.

Still Nothing

Well the market is still doing NADA.
We are above the 78.6% Fibonacci retracement on the daily chart which suggests a full retracement to the highs is due, but we are just not getting in gear at all.
Day trading has turned frustrating for the time being with no late follow through as the market decides which way it wants to go next.
Wish I could give more insight but the market is doing nothing to step out and make any decisive move.

More downside to housing - 8%

The robo-signing controversy is just another issue that the already sluggish housing market didn't need -- but most analysts do not think it will have far-reaching impact.
Nevertheless, the housing market still faces many problems: a weak economy, sluggish hiring, tight mortgage underwriting, falling home prices, and slowing sales.
Then there's the potentially disastrous number of foreclosures that may occur over the coming years.
"The market faces much bigger problems than the robo-signing issue," said Mike Larson, a housing market analyst for Weiss Research.
Prime among them are declines in home prices. And while cheaper homes are good for buyers, they also speak to a housing market that won't stabilize.
Fiserv, a market analytics company, has scaled back its home price projections considerably. In February, it forecast national price gains of about 4% through the end of 2011. The company's latest prediction is for a 7.1% drop in prices between June 30, 2010 and June 30, 2011.
In fact, after five months of gains, prices in the 20 largest metro areas fell 0.2% in August, according to the latest S&P/Case-Shiller report.
The good news is, "There'll be no vicious, self-reinforcing spiral down," according to Mark Zandi, chief economist with Moody's Analytics.
But, he added, "more home price declines are coming."
He's forecasting another 8% drop in home prices through the third quarter of 2011, which will put the total peak-to-trough decline at 34%.
Even after that, in 2012, he sees very little price growth.
Home prices continue to fall because sales aren't taking off. Without buyers, the market can't bottom out.
New home sales continue to languish around historic lows, barely exceeding an annual rate of 307,000. Existing home sales did rise to a 4.53 million annualized rate in September, up 10% compared with a month earlier, but are still well below the boom years.
Of course, nobody is buying homes when they can't find jobs. And still more people can't hang on to their homes because they're out of work.
Nearly a million homes are expected to be repossessed this year, and analysts seem to be competing to issue the most dire forecast for future foreclosure numbers.
Morgan Stanley reported that about 3.1 million borrowers are seriously delinquent with many expected to lose their homes.
Zandi said more than 4 million are in trouble with half of those expected to go to foreclosure.
And Laurie Goodman, of Amherst Securities, estimates the number of homes in danger of foreclosure at a whopping 11 million.
Real estate analyst Kyle Lundstedt of LPS Applied Analytics said serious delinquencies will continue to spike and will not return even to the current rates -- which are already at peak levels -- until late 2012 or early 2013.
"The housing market is very fragile," said Goodman.
However, Zandi sees a few factors that are positive.
These include: Low interest rates; FHA, Fannie Mae and Freddie Mac all lending to qualified buyers; and an improving job picture.
Zandi is especially confident that the employment picture is about to brighten. Corporate profits have spiked and, historically, hiring follow profits -- with a lag of eight to 10 months. That means companies should start hiring workers very soon, Zandi said.
And once Americans start returning to work, they'll find home prices are very reasonable. Housing is the most affordable it's been since the pre-boom years. During the boom, Zandi said, prices were overvalued by about 50%; today it's close to zero.
That has attracted many investors, including foreign buyers. They've been scooping up single-family-homes and condos in hard-hit markets like Florida, the Southwest and the Midwest and renting them out.
"The reason they're in these markets is because they see value," said Zandi.
But, he added, "If they see the robo-signing issue continue, they could begin to exit the market. If they do, there could be more price declines. That's one reason why a foreclosure moratorium could be destructive."

Walmart and China

This is one of three ships that Walmart uses to transports it goods from China. They are going to be ordering two additional vessels to make a fleet of five. Each ship can transport 15,000 containers, yes containers. Just imagine how much goods are on these ships. A container (40ft) is what is attached to the 18 wheelers on the highway so this ship can take 15,000 of these at once.
To say the least Walmart is the biggest importer of Chinese goods into the United States but is no different from any other consumer orientated retailer in the US. Over the weekend I actually visited many stores in an attempt to complete some research. I visited over 10 stores and just one didn't have over 90% of goods marked made in China.
I was actually amazed as even simple items that I am sure could be made in any country especially the US, was marked made in China. The question in my mind now is are companies in retail just solely looking to China for their supplies?, if so China may have a greater influence on the US economy that just a major owner of US Treasuries. This will lead only to two possibilities and both I am afraid are bad in my eyes.
I guess we will see soon enough.

Don't believe china is the next superpower?

http://news.yahoo.com/s/afp/20101028/tc_afp/chinatechnologyitworld

Fastest train, fastest computer, biggest highway. US is loosing it competitive edge in every barometer to China. Well they are all the US dollars there to do anything

Next resistance

Next resistance on the S&P IS THE 200ema, which is 1195.5.

Should be the magnet point.
Boring market not much to talk about we are just drifting here day to day

Shiller on Housing

Nothing interesting

The market still moving around that 78.6 retracement. Only two outcomes either we are carving out a top here or we are basing to attack the 100% retracement.

Volume is still a huge issue

Update

Though the Nasdaq is powering higher on GOOG move the general market is still not proving much on the updates chart posted. We still need to get through that Fibonacci number with some volume to see higher prices. Volume was been low for this rally.

Bingo! now Failure???

So bingo on the chart posted about the resistance. Now that we have hit it do we fail especially with all this foreclosure news with banks and the lower value of the Dollar (15 yr low against the Yen). The debt, the corrupt financial system the dollar just can't get any legs to stand on.

Much weakness to come in my opinion, we will see.

My sentiments also. Been saying this since 2008

The financial crisis has left behind a "slow disease" that is eating into financial markets, and this is obvious in stock prices and currencies, but less so in bonds for the moment, Mohamed El-Erian, CEO and co-chief investment officer of Pimco, told CNBC Tuesday.

"The standing of our financial markets is getting eroded every day, volume gets thinner. It's like a slow disease," El-Erian said.

The same thing is obvious in currency markets and in commodities, while "the bond market is pricing in the impact of someone with a printing press being a buyer," he added.

Minutes of the latest Federal Open Market Committee meeting will be released later Tuesday and investors will get a chance to see how close the Federal Reserve is to launching a second round of asset-buying, or quantitative easing.

The minutes will show if the Fed has revised its growth projections lower for the US economy, and by how much, and the minutes will also indicate where the central bank is on its path to more money printing, according to El-Erian.

"I suspect that, on the whole, the FOMC is ready is move on with (more quantitative easing) in November," he said.

But investors should look for the details of quantitative easing as well, such as whether the Fed will extend the class of assets it buys or whether it will proceed in small steps, El-Erian said.

Last week, St. Louis Fed president James Bullard told CNBC that the next FOMC meeting on whether to launch the second round of quantitative easing will be a "tough call."

"I think it's a reflection that people know that QE2 will not be fully effective," El-Erian said, adding that "in a perfect world the Fed wouldn't be doing all the heavy lifting by itself."

The International Monetary Fund meeting at the weekend, which ended without any clear resolution regarding the race to devalue currencies across the world, shows that there is no will to solve the problem, he said.

"What this weekend told us is that the only response is to kick the can down the road," El-Erian said.

"I worry more about the global standing of the dollar ... you can't beat up a reserve currency forever," he added.

A dollar demise could lead to a fragmentation of asset allocation by world investors and "a more fragmented system works less well globally," El-Erian said.

SPY-Feel like a top here soon

$1349

Gold just barely touched the target $1350. I will take it as a hit though

Interesting video

Gold

Will be shorting Gold in a few just watching the chart carefully

BAC

Today's news BAC announced they will no longer we offering loans through third party brokers. I think this is another sign that housing will be stuck in the mud for awhile. More foreclosures, more layoffs, nothing in the near future to help housing not even a $15000 tax break would do much.

Gold

Next stop looks like $1350

Really NOW!

All on tv is talk about best September in years. Lets look at this! the DOW started the year @ 10583 and now we are @10820 have we really gone anywhere??????????? That's just 2% higher. Really the media needs to stop feeding the regular guy CRAP. I am here to tell you GS is buying up the world in short positions through the SPY as they are telling their biggest clients that they are forecasting the S&P to end 2011 around 725!!!!!!

Just don't believe

Well we are off 200 points from the opening frenzy. I will saw this again and it was just spoken about on Rush Limbaugh show that the markets are being propped up by the FED. The volume is low all that saved the markets two days ago was the FED coming in and buying if it was not for that we would have been down huge. YES HUGE. So the powers that be still are just playing around with the regular guy and that's all, don't get caught chasing a shadow!!

Initial Claims

The Department of Lies has released its latest initial claims report: last week we saw 453,000 initial claims, meaning the economy continues to lose about 50-100 jobs a month. This was slightly better than expectations of 460,000. Yet what the market once again misses is that for the nth week in a row the previous week's claim number is revised, as always, higher, but who cares.

R.I.P

R.I.P to my friend- Sad when someone leaves this world without any notice

Don't believe the hype-

Goldman's Investment Strategy Group has just circulated the most bearish 2011 outlook presentation, detailing why the US economy in 2011 will likely stall and post negative growth. As the chart below demonstrates, the current case, where ongoing QE will likely persist through 2011 and even into 2012, and thus make any discussion of raising rates irrelevant (likely forever, as the Fed will not be able to absorb all the excess slack before it is forcefully removed after 2-3 sequential dollar devaluations) lead Goldman to a GDP expectation of well under half of the Fed's greenshooty outlook of 3%.

Here is how Goldman describes the its across the board outlook revision:

* Lower growth: We expect GDP to grow 1.5-2.5% in 2011 (down from 2.5-3.0%). Our view is that the growth baton will be passed successfully from inventories and government spending to consumption and investment so growth should remain positive over the next 12-18 months.
* Higher uncertainty: Our forecast range for GDP is wider (1% instead of 0.5%) at 1.5-2.5%
* Lower rates: We are lowering our long-term rates forecast to 3.0-3.75% by end 2011 (from 3.75-4.25%).

And according to the "Bad Case" which the Fed is about to enact, Goldman sees a fundamental S&P valuation range of 725-800 based on 10-11x multiples

GS is now obviously setting up for a 750 S&P FOR 2011. I have spoken about this before that 2011 is the next real test for the market.

Why having broken systems lead to loss of #1

We won't be the alpha dog in the western hemisphere forever.

Even if the U.S. hadn't crashed into a financial crisis, there are demographic, material, and political forces that have been spreading power around the Americas for decades.

Brazil is first among the BRICs -- four economies that are supposed to overtake the six largest Western economies by 2032.

Mexico is first among the MAVINS (Mexico, Australia, Vietnam, Indonesia, Nigeria, and South Africa) -- six economies we expect to blow away expectations and become leading powers in their regions relatively soon.

Canada and Venezuela are oil powers of the distant future.

Peru and Chile are sitting on a fortune of metals and minerals.

All these countries are cranking up, while America faces plenty of fiscal and demographic problems at home.

Here are Signs the US Is Losing Its Influence In Its Own Backyard:

Our most powerful regional ally--Brazil--refuses to follow our orders on Iran

Hillary Clinton went to Brazil to beg support for sanctions against Iran and came away empty handed. Now the UN is counting on Brazil, which is friendly with America and Iran, to lead nuclear diplomacy.

The World's Richest Man is now a Mexican, not an American.

For the first time in 16 years, the World's Richest Man is not an American. Carlos Slim, worth $54 billion, is the first Latin American to hold that title and one of many emerging market billionaires to eclipse the U.S.

Three years after a US financial crisis, Latin America is again growing rapidly. The U.S.? Not so much...

Compare this to what happened during the Great Depression. Latin America was devastated when US investment dried up and the export market soured in the 30s. A League of Nations report said Chile, Peru, and Bolivia suffered the world's worst depression.

Today is quite different. Brazil, Argentina, and Mexico have led a buoyant recovery from the global recession, according to Reuters. The regional economy is expected by the UN to grow 4.3 percent in 2010. If the American consumer remains weak, Latin American exports will move elsewhere.

Chile produces 300% more copper than America--the former world leader in copper production

America used to lead the world in copper production. We produced 49% of the world's copper in 1929, according to this article from the archives. Today we produced 1.2 million tonnes yearly, compared to 5.4 million tonnes in Chile.

Brazil now produces over four times as much iron ore as the U.S.. We used to lead that industry, too.

America once led the world in iron mining. In 1892 we discovered the world's largest mine at the Great Lakes Mesabi Range. It was a wellspring for America's industrial might and the foundation of the rust belt.

Now we claim reserves at 2,100 mt. Seven countries claim higher reserves, including Brazil at 8,900 mt. We produce only 54 mt yearly, while Brazil produces 250 mt.

Canada and Venezuela will pass the US in oil production in the next decade

America produces around 9 million billion barrels of oil a day. Venezuela and Canada each produce around 3 million. But America's reserves are 21 billion barrels and may last less than a decade. Our oil-rich neighbors claim 99 billion bbl and 178 billion bbl, respectively, and will keep producing oil into the distant future.

Now Brazil exports over twice beef as much as we do

America used to lead the world in beef production. Although we still do, America exports only 800,000 mt of beef per year. Brazil exports 2,200,000 mt. Here's some ironic excerpts from a 1911 NYT article: "American-Canadian syndicate to have world's largest beef plant in Brazil... The chilled beef industry has never been tried before in Brazil and has only recently gotten under way in Argentina."

Brazil is now a critical partner for Russia, India, and China

The acronym coined by Goldman Sachs to describe the four key emerging powers has taken on a life of its own. Brazil, Russia, India, and China have held several summits and even discussed making a supranational currency -- that would pull the rug out from the US dollar.

What's important here is that global emerging powers have good relations and are inclined to work together. For instance, China just signed major contracts to build factories and high-speed rail in Brazil.

Brazil, Canada, and Mexico all invest a greater share of GDP in clean energy

A Pew survey found that Brazil invests 0.37% of its economy in clean energy. Canada invests 0.25% and Mexico invests 0.14%. America is eleventh in the world at 0.13%.

Hugo Chavez is still in power

The CIA has a notorious history of interventions in Latin America, supposedly targeting Jacobo Arbenz Guzmán, Fidel Castro, Manuel Noriega, Rios Montt, Che Guevara, and many others. But they haven't stopped Hugo Chavez from railing against the United States for years. Clearly America has adopted a more passive regional strategy.

Predict

10 years from now we will no longer be using desktop computers not even at work. These smartphones plus ipad like devices will be the new norm. Already in Germany many schools are buying ipads instead of macbooks for their students. That is something we should think about too, why is it that the Germany school system gives every student a macbook or ipad and our students get zero, no wonder the Germans are way ahead of the US in engineering and the high schools are leading in math, english and science.
Our education system is broken much like our financial system but hey it is the American way :) just spend BUT not on the right thing. Teachers barely getting paid and we wonder why the education system is on the decline. Oh well what else is new?

Interesting read

Fixed income desks are going to be subject to severe layoffs, according to a highly placed Wall Street insider with information about the plans of his firm and the plans of rivals.

"It's going to be a blood bath. Volume is down for everything except Treasuries and Munis. These guys aren't making money and soon they'll be out of their jobs," he said.

He is sitting in Grand Central's Oyster bar. It's an annual ritual for him: welcoming in September with a frenzy of shell fish and wine.

Typically he invites along a few friends and treats them to a discourse on the state of Wall Street.

"It's a one-two blow for fixed income. The derivatives are being commoditized and put on exchanges. Swoosh. Now you don't need half the people you employ to trade and track those. And volume on corporates and agency paper is way down."

The numbers from SIFMA bear him out. Year to date, the average daily trading volume in US corporate debt is down 2% compared to last year.

Trading in Fannie Mae and Freddie Mac debt is down 7%. Trading in mortgage-backed securities sponsored by Fannie and Freddie is down 13%. And the year to date numbers only tell part of the story. And the part it leaves out is how thin trading became over the summer.

Trading in corporate debt started the year pretty robustly, with $19.7 billion of bonds trading hands in January. But in June, volume dropped down to $14.6 billion and kept dropping right through the summer. The year before, the average daily volume for June was 19.3, so this decline cannot be attributed to merely a summer slowdown.

"We're easily going to cut a quarter to a half of our traders and back office in fixed income. Everyone else is going to do it too," he says.

Gold

Gold February 2011 just traded over $1301

Silver

Wow Silver really busted a move higher- Two years ago I was talking about Silver reaching new highs on the back of Gold mainly because most who invest in precious metals do so through gold and Silver would be the lagging commodity. 30 year highs!

Gold

New highs for the precious metal. Looks like 1300 in the cards.

For the Gold bugs

Bangladesh bought 10 tonnes of the gold on sale from the I.M.F. last week. This leaves 88.3 tonnes to sell now. The 10 tonnes that Bangladesh bought cost them around $1,260 an ounce. This tells us that price was not a determinant in the matter. This may surprise many, but it does highlight something about why central banks in general are buying gold now.

The potential, not just for currency crises, but serious foreign exchange structural problems is huge. The international level of cooperation between nations is poor [as we are seeing in the U.S. China faceoff over the Yuan exchange rate against the Dollar] leaving us uncertain at the prospect of unstable currency markets. This has vastly increased the attraction of gold as a reserve asset. As such the price paid for gold in foreign exchange reserves is hardly relevant. When that dark and rainy day comes its use in settling pressing foreign obligations will heavily outweigh what the gold cost. It's having the gold to pay these obligations or guarantee foreign currency obligations that will matter then.

Why can't anybody buy anyway?

The I.M.F. has chosen to sell their gold in only two ways;

1. They will sell direct to central banks and announce the sale after the sale is complete.
2. It will sell the remaining gold on the open market through the bullion banks over time in a manner that will not influence the price. This can result in just a couple of tonnes sold right up to 15+ tonnes sold in any month.


China not a Buyer but others would like to

You may be surprised that China has not made a direct bid for the gold on sale from the I.M.F., but there are good reasons why they have not bid. The Chinese central bank, the People's Bank of China does not buy gold for its reserves direct from any market or auction. It uses an agency to do the buying. This agency can hold the gold for 5 years and then pass it to the P. of C. Only at that point does the central bank declare it has bought it. This anonymity is very important to China. If it were known that China had a serious long-term commitment to buying gold there is no doubt that it would precipitate such a jump in the gold price that the market could destabilize and China not be able to access open market gold.

Because of these considerations of a direct and then announced approach by China to the I.M.F. we doubt very much if China will now be a buyer. They will continue to buy in the open market anonymously.

If the I.M.F. had been willing to sell direct to large institutions [such as China's buying Agency if they had been a buyer] the gold would have been sold to it and/or to other private funds and sovereign wealth funds very quickly after the initial announcement to sell gold had been made by the I.M.F. In fact, there are many non-central bank institutions that want to approach the I.M.F. to buy the gold, but the two selling routes are inviolate. This means that, with only 88.3 tonnes left to sell it the opportunity to buy gold in a large amount [only by central banks] is slowly disappearing.

A potential buyer could have been India, who made the largest purchase of I.M.F. gold at 200 tonnes. Just after India bought the 200 tonnes of gold from the I.M.F. it stated that it may be a further buyer of this gold. Will they come in again, or will more Asian central banks come in for the first or second time? Well, both time and supply are running out for all central banks buyers.

As the buying has come from Asian countries who know and love gold, the most likely buyers will be from that part of the world, not from the developed world's central banks. For the West to be buyers, may well be seen as undermining the paper currency world.

At the present rate of selling in the 'open' market the I.M.F. will have completed selling in 6 months time. So the clock is ticking. That's why we expect one or more announcements from the I.M.F. on further sales to central banks soon. These will come anytime from now and over the next 6 months. We would not be surprised is the entire remaining amount goes in one fell swoop, soon. No-one can say who for sure will be buyers.

The IM.F.s' announcement that I.M.F. gold sales are complete will be a trumpet signal to the market that supplies have narrowed. Then what?

FOMC

FOMC meeting today. Day off for me then. Very interested in hearing what the are going to say about the unemployment.

Oil

higher as expected. Got to watch if it make a new swing high on this push.

Wall Street revenues down

Inside the great investment houses on Wall Street, business has taken a surprising turn — downward.

Even after taxpayer bailouts restored bankers’ profits and pay, the great Wall Street money machine is decelerating. Big financial institutions, including commercial banks, are still making a lot of money. But given unease in the financial markets and the economy, brokerages and investment banks are not making nearly as much as their executives, employees and investors had hoped.

After an unusually sharp slowdown in trading this summer, analysts are rethinking their profit forecasts for 2010.

The activities at the heart of what Wall Street does — selling and trading stocks and bonds, and advising on mergers — are running at levels well below where they were at this point last year, said Meredith Whitney, a bank analyst who was among the first to warn of the subprime mortgage disaster and its impact on big banks.

Worldwide, the number of stock offerings is down 15 percent from this time last year, while bond issuance is off 25 percent, according to Capital IQ, a research firm. Based on these trends, Ms. Whitney predicts that annual revenue from Wall Street’s main businesses will drop 25 percent, to around $42 billion in 2010, from $56 billion last year.

While the numbers will not be known until after the third quarter ends and financial companies begin reporting earnings in October, the pace of trading this summer was slow even by normal summer standards. Trading in shares listed on the New York Stock Exchange was down by 11 percent in July from 2009 levels, and August volume was off nearly 30 percent.

“What’s happened in the third quarter is that after a very slow summer, people expected things to come back,” said Ms. Whitney. “But they haven’t, and the inactivity is really squeezing everyone.”

The downward slide on Wall Street parallels a similar shift in the broader economy, which has slowed considerably since showing signs of a nascent recovery this spring. And if banks come under pressure, all but the safest borrowers may struggle to get loans.

With less than two weeks to go in the third quarter, companies will be hard-pressed to fulfill earlier, more optimistic expectations.

“It’s like the marathon: if you’re five miles behind, you can’t make that up in the last 10 minutes of the race,” said David H. Ellison, president of FBR Fund Advisers, a money management firm that specializes in financial companies. Many banks are barely scraping by in traditional Wall Street business.

As a result, executives, portfolio managers and analysts say that even the mighty Goldman Sachs, which posted a profit every day for the first three months of the year, is unlikely to deliver the kind of profit growth that investors have come to expect.

Keith Horowitz, a bank analyst at Citigroup, said he expected Goldman Sachs to earn $7.8 billion in 2010, a 35 percent decline from the $12.1 billion it made last year.

The drop in trading translates into lower commissions for brokerage firms, as well as a weaker environment for underwriting initial public offerings and other stock issues, traditionally a highly lucrative niche.

Banks are also scaling back on making bets with their own money — known as proprietary trading — another huge profit source in recent years that will soon be forbidden under terms of the financial reform legislation passed by Congress this summer.

Indeed, analysts have finally started to bring their forecasts in line with the new reality. On Sept. 12, Mr. Horowitz reduced his estimates for third-quarter profits at Goldman and Morgan Stanley.

Mr. Horowitz had predicted Goldman would make $1.75 billion in the third quarter, or $3 a share; he now expects Goldman’s profit to total $1.34 billion, or $2.30 a share. For Morgan Stanley, his revision was even steeper, with earnings expectations revised downward to $140 million, or 10 cents a share, from $726 million, or 53 cents a share.

Mr. Horowitz’s estimates are considerably lower than the consensus among analysts who track the two companies. If the other analysts revise their estimates closer to his, they would put pressure on the shares.

One of the rare bright spots for Wall Street recently has been the issuance of junk bonds, as ultra-low interest rates encourage investors to seek out riskier debt that carries a higher yield. But that will not be enough to offset the weakness elsewhere, said one top Wall Street executive who insisted on anonymity because he was not authorized to speak publicly for his company, and because final numbers would not be tallied until the end of the month.

To make matters worse, he said, many Wall Street firms increased their work forces in the first half of the year, before the mood shifted and worries of a double-dip recession arose. If activity remains anemic, firms could soon begin cutting jobs again.

“I think the summer was horrible for everyone, and no one expected it to be as bad as it was,” he said. “It’s coming back a little bit in September but nowhere near enough to make up for what happened in July and August.”

The profit picture is brighter for diversified companies like JPMorgan Chase and Bank of America, which have larger commercial and retail banking operations in addition to their Wall Street units, but some analysts say earnings expectations for them could come down as well.

“Estimates still seem a little high, and the revenue story for all the banks is not a good one,” said Ed Najarian, who tracks the banking sector for ISI, a New York research firm.

With interest rates plunging, banks are making less off their interest-earning assets like government bonds and other ultra-safe securities. At the same time, demand for new loans remains weak.

One wild card will be the credit card portfolios at major banks like JPMorgan, Bank of America and Citigroup. As delinquencies ease, Mr. Najarian said, credit losses are likely to decline. That trend helped earnings at JPMorgan in the second quarter, and could be crucial again in the third quarter.

Ms. Whitney says the gloomy short-term predictions foreshadow a series of lean years in the broader financial services industry.

Indeed, she said the Street faced a “resizing” not seen since the cutbacks that followed the bursting of the dot-com bubble a decade ago.

“We expect compensation to be down dramatically this year,” she wrote in a recent report. She predicts the American banking industry will lay off 40,000 to 80,000 employees, or as many as 1 in 10 of its workers.

That may be extreme, but Ms. Whitney argues that the boom years are not coming back anytime soon. As both consumers and companies cut back on debt, and financial reform rules put the brakes on profitable niches like derivatives and proprietary trading, the engines of earnings growth for the last decade will continue to sputter.

Oil

Wow oil position fight it hard but I believe it will definitely play out. Right here we have a possibility to get a retracement back up from the quick sell off last week. Still looking for oil to settle below $72 and drift lower. I will see soon enough.

S&P
As said last week 1029/1030 should be heavy resistance I will be watching that area again this week to see if we break through or hit the wall.

CFOs not confident

Optimism about the U.S. economy has fallen back to recession levels among chief financial officers (CFOs), who foresee minimal increases in expected hiring, weak consumer demand and heightened economic uncertainty.

Credit is still tight for small firms and many firms continue to hoard cash. Without improvement in the economy, CFOs say earnings growth and capital spending will falter within six to 12 months.

These are some of the findings of the most recent Duke University/CFO Magazine Global Business Outlook Survey. The survey, which concluded Sept. 10, asked 937 CFOs from a broad range of global public and private companies about their expectations for the economy. (See end of release for survey methodology.) The research has been conducted for 58 consecutive quarters. Presented results are for U.S. firms unless otherwise noted.

Summary of Findings

-- CFO optimism about the U.S. economy has fallen to 49 on a zero-to-100 scale, well below the rating of 58 from the last quarter. Pessimists outnumber optimists four-to-one. European CFOs' optimism rate is 58; Asian CFOs' rate is 70.

-- Half of CFOs say they will cling tightly to cash due to economic uncertainty and as a liquidity buffer. The other half will spend some cash reserves in the next year, primarily for investment, to pay down debt and to make acquisitions.

-- Earnings are expected to rise 12 percent and capital spending almost 7 percent in the next 12 months. However, nearly half of CFOs say unless the overall economy improves, there is only a six-month window during which they can maintain this level of growth.

Optimism Plunges

Optimism about the overall economy fell at 53 percent of U.S. firms and increased at only 14 percent. The optimism rate of 49 is at a level not seen since the first quarter of 2009, when CFOs rated the economy at 40.

"The CFO optimism index has proven to be an accurate predictor of future economic performance," said Julia Homer, executive vice president for content at CFO Publishing LLC. "Therefore, this dramatic drop in optimism bodes poorly for the economic outlook. Half of CFOs say there is only a six-month window -- and another one-fourth believe it's a 12-month window -- during which they can maintain current levels of business activity without improvement in the overall economy."

Employment Stagnant

U.S. companies expect full-time domestic employment to inch up by 0.7 percent over the next year, while temporary employment will increase 0.8 percent. The labor picture is about the same in Europe, but much stronger in Asia (with expected growth of more than 5 percent).

"This rate of U.S. employment growth will increase payrolls, but not put a dent in the unemployment rate due to growth in labor force participation," Homer said. "Another negative employment trend is the recent surge in hiring contract and temporary employees rather than permanent workers."

U.S. CFOs say nearly one-fourth of recent hiring has been targeted at contract and part-time employees, up from 17 percent prior to the recession.

Credit Conditions

"There has been no progress in fixing the credit problem over the last year," said Campbell R. Harvey, a professor of finance at Duke's Fuqua School of Business and founding director of the survey. "Indeed, half of the small businesses say credit conditions are worse than in 2009.

"The math is simple. A) Banks are sitting on cash because of their poor health and general uncertainty. B) Small and medium-sized firms have employment-generating projects that they cannot get financed because banks will not extend credit. C) In usual circumstances, small and medium-sized businesses account for the majority of employment growth. A+B+C implies we are stuck at 9 or 10 percent unemployment," Harvey said.

When Will Cash Be Unleashed?

"Cash exists in two locations: bank reserves and balance sheets of healthy companies," Harvey said. "Banks show no sign of unfreezing credit. They are lending to the government, not to businesses. However, U.S. firms are sitting on over $1.8 trillion in cash. When will it be unleashed?"

The survey results show 50 percent of respondents have no intention of deploying their cash over the next 12 months. More than half of responders say they will continue to sit on cash for liquidity to protect against another round of credit tightening and general economic uncertainty. Of the 50 percent that will deploy cash, only 56 percent will allocate to capital spending and investment.

"We were especially interested in the type of capital spending that creates jobs," Harvey said. "The survey shows only 22 percent of firms say their new capital spending will lead to hiring. This bodes very poorly for employment in 2011."

If this guy can't get a business how can I

It is amazing how these banks cried for a bail out but they are not doing what is required of them to free up credit for the economy to get on a roll. I hear politicians talk this and that but the basic fact of the matter is banks are the economic cog wheel that turns on hiring. Something needs to happen but all these politicians are just talk and they banks are just trading and keeping their fat check to themselves. What's New??


http://finance.yahoo.com/news/Small-Business-Cant-Get-Loans-bloomberg-1767086225.html?x=0&sec=topStories&pos=6&asset=&ccode=

Gold

Look on Gold rise- Told you move into the commodities here and I don't see equities following the same path for too long. Now it is very important to notice why Gold is on the rise, the treasuries are at a stand still, currencies are stalled and the equity markets are lackluster. Gold is taking the leadership with Oil.

Probability

Probability we get a shake out here. I wont get into all the technicals but 1129 is a good probability short here or at least to start a position. We will see soon enough but with the commodities looking strong I would be careful being long the equities here.

More up

So nice up move today as said would happen. There is a small gap resistance at the 1129 area and I would look for that number to be in play tomorrow if we gap up. Again the market seem to be trading on this air and participation is relatively weak but the tape says higher right now.

Higher

I think the path of least resistance right now is up. Oil is showing a strong anti seasonal move but I will stick to my game plan for now. I will be watching the close of the quarter very closely as I feel we are in some kind of rotation again into commodities especially the metals.

Next week

More than likely I will be posting back everyday starting next week. In the meantime the markets are doing absolutely nothing. The DOW started the year at 10580 and today we are basically flat @ 10410. Tough tough tough to trade without much volatility but we will see how long this tight range remains.
Last year I warned this would happen and here it is, so it is not a surprise to me. Indeed I think the markets are on a dead shot to hit some larger cycle lows in 2011, I can't wait to see if I am correct.

Oil

Still thinking it will fall hard but we will see. Market looks like it wants a bit higher and actually we seem to be in a little uptrend till the cycle high in October. You never know as the last time it totally didn't trade through the previous highs and in turned it reversed. I will be watching carefully today for sure especially the volume which has been light.
All systems up and running as I type.

Fixed

Network is cleared and protected now finally, so I will be installing everything back on the weekend and ready for next week. Hope to get back to regular posting then.
Oil is trying to give a fight but I would double up on shorts up here.

Network problem

So this is the third day of fixing my network. I hope to finish tonight- My emails hacked, network hacked and what else I don't know, just a bummer but these things always seem to happen to me and at the worse times.
Market looks like 1087 resistance but when I have everything up and running perfectly hopefully tuesday I am post my thoughts.

Have a safe holiday weekend

No action

Well first virus on my apple- Oh well too good to be true but it is better than having it everyday. Still trying to get everything up and running. I have no idea if my email was compromised through this whole virus/trojan thing. Man I just hate non working computers

wow

Well I got major computer problems and my email accounts have been hack- why the heck these scumbags don't use their talents for something good- geez-

Bernanke

Wow Bernanke not saying anything good. We said it before it is all smoke screen about recovery

SO

So analysis of yesterday action was dead on. Where do we go from there. Well! My technicals are tell me the market is around 16% overvalued here. So at DOW 10000, that puts real value of the market somewhere around 8400 area. We surely wont die yet till be break down down below 1021 on the S&P is my prediction. We are close but not close enough.

10000

Well we will open below 10k on the Dow, not an important technical number but it is a number the powers that be use in media land. What will happen today? My guess is that they will try and defend that area and close above it but that's just a guess at this point before the market open.
In the mean time AAPL looks like it wants it 200ma and tech land looks weak, actually very weak.

Welcome to the new US economy, I said it two years ago we heading the same way of Japan.

Close

Hope people taking note of where we closed- exactly at that 1051-1054 level. Just amazing. We hanging onto 10k on the Dow but how long.
In the mean time Oil is smacked dead, GOOD. Not ready to cover that one yet, that was a gimme play short in the 76/77 area, just too easy.

BINGO, BINGO, BINGO

Notice where we are this morning, 1051/54 area, folks will be buying here so watch for a minor bounce. If we violate this area on the close the bulls are shot.
BAC finally at my 12.75 area....
AAPL at my 242 area i mentioned yesterday.

Should be a very interesting week

Boring

Boring but where are the bulls? We definitely targeting 1054 here and more than likely there will be buyers around that 1050 level for some type of bounce. This is very disheartening for the bulls because if they can't push us higher off earnings what else will they have. There is no good news out there to hear and with the mid term elections just around the corner I fear the market will be stuck in the range for a extended period.
Notice we didn't even get to that S&P 1150 level.

Stay tuned-

AAPL looks like it wants lower around 242.

Hmmm- Only bad news abounds

All you hear is the bad. There are no jobs to be found, and that's just the start! The country is about to get into real trouble! Maybe A double (or triple, quadruple, whatever it's up to now) recessions are looming around the corner. Iran has just fueled its first Nuke plant, and vows to be mean if there are any actions against them! the market hasn't hit a new high lately, and of course, let's not forget the Hindenburg Omen, which is splattered across the financial publications both online and in print.

I think we are in serious trouble on that front, but I am a short term market timer and try to map out what will happen in the next trading ranges, rather than the next few years. I am pointing out that the negatives are stacked pretty high here, yet the market is not in a rush to crash, at least not yet.

We are SMACK In the middle of the 3-month range. As the chart above shows, the 50% Fibonacci retracement held both at the beginning and end of the week. We now want to see a trade above Friday's highs to put the bounce back in the Bull's step, at least for the short term. If not, and we trade below last week's lows, we open up the case for a push down to the next Fibonacci level.

I still believe we are in a rotating (range bound) rather than extending (directional) market currently, and until proven otherwise that's how I'll be looking to take advantage of it.

Interesting

Update

No support here till 1052 area, minor pause should happen at 1061 on the downside.

OIL just die for me.

1072

Very important level. Bulls have to try and hold it into the close or 1054 here we come

Stanley Druckenmiller Is Retiring

Wow Druckenmiller is retiring. He has never had a losing year since he started 30 years ago. But is is currently down 5% for 2010. He must see something going on. I think the tight range is making it less likely for people to make money in the markets.

Bill Gross

The biggest Bond fund manager in the world is saying that the US economy will need another stimulus in 6 months has the economy is not getting any traction as firms rich in cash are just not spending because their is a complete lack of confidence.
Another stimulus is just not the answer but we will see.


I am short Oil here average $76 area.

Got to be SHORT!!

From WSJ today

Could Wall Street be about to crash again?

This week's bone-rattlers may be making you wonder.

I don't make predictions. That's a sucker's game. And I'm certainly not doing so now.

But way too many people are way too complacent this summer. Here are 10 reasons to watch out.

1. The market is already expensive. Stocks are about 20 times cyclically-adjusted earnings, according to data compiled by Yale University economics professor Robert Shiller. That's well above average, which, historically, has been about 16. This ratio has been a powerful predictor of long-term returns. Valuation is by far the most important issue for investors. If you're getting paid well to take risks, they may make sense. But what if you're not?

2. The Fed is getting nervous. This week it warned that the economy had weakened, and it unveiled its latest weapon in the war against deflation: using the proceeds from the sale of mortgages to buy Treasury bonds. That should drive down long-term interest rates. Great news for mortgage borrowers. But hardly something one wants to hear when the Dow Jones Industrial Average is already north of 10000.

3. Too many people are too bullish. Active money managers are expecting the market to go higher, according to the latest survey by the National Association of Active Investment Managers. So are financial advisers, reports the weekly survey by Investors Intelligence. And that's reason to be cautious. The time to buy is when everyone else is gloomy. The reverse may also be true.

4. Deflation is already here. Consumer prices have fallen for three months in a row. And, most ominously, it's affecting wages too. The Bureau of Labor Statistics reports that, last quarter, workers earned 0.7% less in real terms per hour than they did a year ago. No wonder the Fed is worried. In deflation, wages, company revenues, and the value of your home and your investments may shrink in dollar terms. But your debts stay the same size. That makes deflation a vicious trap, especially if people owe way too much money.

5. People still owe way too much money. Households, corporations, states, local governments and, of course, Uncle Sam. It's the debt, stupid. According to the Federal Reserve, total U.S. debt -- even excluding the financial sector -- is basically twice what it was 10 years ago: $35 trillion compared to $18 trillion. Households have barely made a dent in their debt burden; it's fallen a mere 3% from last year's all-time peak, leaving it twice the level of a decade ago.

6. The jobs picture is much worse than they're telling you. Forget the "official" unemployment rate of 9.5%. Alternative measures? Try this: Just 61% of the adult population, age 20 or over, has any kind of job right now. That's the lowest since the early 1980s -- when many women stayed at home through choice, driving the numbers down. Among men today, it's 66.9%. Back in the '50s, incidentally, that figure was around 85%, though allowances should be made for the higher number of elderly people alive today. And many of those still working right now can only find part-time work, so just 59% of men age 20 or over currently have a full-time job. This is bullish?

(Today's bonus question: If a laid-off contractor with two kids, a mortgage and a car loan is working three night shifts a week at his local gas station, how many iPads can he buy for Christmas?)

7. Housing remains a disaster. Foreclosures rose again last month. Banks took over another 93,000 homes in July, says foreclosure specialist RealtyTrac. That's a rise of 9% from June and just shy of May's record. We're heading for 1 million foreclosures this year, RealtyTrac says. And naturally the ripple effects hurt all those homeowners not in foreclosure, by driving down prices. See deflation (No. 4) above.

8. Labor Day is approaching. Ouch. It always seems to be in September-October when the wheels come off Wall Street. Think 2008. Think 1987. Think 1929. Statistically, there actually is a "September effect." The market, on average, has done worse in that month than any other. No one really knows why. Some have even blamed the psychological effect of shortening days. But it becomes self-reinforcing: People fear it, so they sell.

9. We're looking at gridlock in Washington. Election season has already begun. And the Democrats are expected to lose seats in both houses in November. (Betting at InTrade, a bookmaker in Dublin, Ireland, gives the GOP a 62% chance of taking control of the House.) As our political dialogue seems to have collapsed beyond all possible hope of repair, let's not hope for any "bipartisan" agreements on anything of substance. Do you think this is a good thing? As Davis Rosenberg at investment firm Gluskin Sheff pointed out this week, gridlock is only a good thing for investors "when nothing needs fixing." Today, he notes, we need strong leadership. Not gonna happen.

10. All sorts of other indicators are flashing amber. The Institute for Supply Management's manufacturing index, while still positive, weakened again in July. So did ISM's new-orders indicator. The trade deficit has widened, and second-quarter GDP growth was much lower than first thought. ECRI's Weekly Leading Index has been flashing warning lights for weeks. Europe's industrial production in June turned out considerably worse than expected. Even China's steamroller economy is slowing down. Tech bellwether Cisco Systems (Nasdaq: CSCO - News) has signaled caution ahead. Individually, each of these might mean little. Collectively, they make me wonder. In this environment, I might be happy to buy shares if they were cheap. But not so much if they're expensive. See No. 1 above.

Very important

1072 is very important- When we violate that 10000 on the DOW would be my next signal that a head was formed in the 10600 area. Folk with all the corporate profits the market should have been over 11k but the FED damped the expectations and investors are once again nervous.
I said a couple weeks ago that i believe something is brewing as I often sense these movements about to come. The problems is it is just intuition on my part.

1072

1072 is very important today. A real violation of this number will make it very hard for the bulls to push forward but we will see soon enough. Funny with this market every time we think we set for a trend we reverse, that's the sign of a range bound market. I would stay out till a TRUE trend shows itself.Not much to say till the trend shows itself our, otherwise we will trade between 9800 and 10500.

Today's Action

So a huge day down but in reality no huge damage has been done yet. Notice on the chart we are back to the 50moving average and that was support. The beautiful of technical analysis! One thing is for sure we are in a void and rangebound market indeed.

Let's see if they want to break it lower to the lows of the range of use this 50 MA as some support.

FOMC

FOMC decision today. Nothing doing here today, decision should be out 2:10pm.

Where we stand

Here we are folks the Bulls made a good stand on Friday, after worse than expected Job Numbers sent the market reeling early on. After a nice base setup that originally looked to be a Bear flag, the Bulls stepped in and pushed the market back up into the close. while ti was still negative, the buyers made their point: They were using this weakness to get positioned on the long side.....at least for now.

The close back above the 200 day moving average is bullish and suggests we are ready to move higher. So, do we have the green light for full steam ahead? Well, not so fast.....

As the chart shows, there are key Fibonacci retracements that stand in the way of a full blown rally. For now, I will be watching those levels as backstops to short against IF A REVERSAL PATTERN SETS UP. YES, I AM HEDGING MYSELF! I believe we can see higher if those levels are breached, but I will not get stubborn if they prove to be formidable opponents.

The FOMC meeting is this week, and there has been a historical tendency to trade higher into it. coupled with the stand the Bulls made on Friday, I will be watching for weakness early in the week for a buying opportunity.

Job Numbers

Job numbers worst than expected but the drop in the futures is not much. Just have to see how is plays out. Maybe they want to hit 1150 on the S&P before they really sell- One thing is for sure, unemployment will remain high for an extended period of time.

Job Numbers

Job Numbers in an hour.
I bet we have some excitement today as I will be out, it always happens

POT-

Today, POT traded into the 62% Fibonacci retracement from the big move down that started back in March. If we break this level, the next one up is the 78.6% retracement at around 119.

GOOG Resistance

Watch the 50moving average for some resistance on GOOG. Back over $500 but don't think it will go far

No expansion yet

Longer picture of the rangebound- Expansion soon??

Yesterday

Definitely a choppy session Tuesday which leads us into what I think will be an expansion of yesterday inside day. Please note this melt up is on extremely low volume

Shape of corporations

You may have heard recently that U.S. companies have emerged from the financial crisis in robust health, that they've paid down their debts, rebuilt their balance sheets and are sitting on growing piles of cash they are ready to invest in the economy.

You could hear this great news pretty much anywhere — maybe from Bloomberg, which this spring hailed the "surprising strength" of corporate balance sheets. Or perhaps in the Washington Post, where Fareed Zakaria reported that top companies "have accumulated an astonishing $1.8 trillion of cash," leaving them in the best shape, by some measures, "in almost half a century."

Or you heard it from Dallas Federal Reserve President Richard Fisher, who recently said companies were "hoarding cash" but were afraid to start investing. Or on CNBC, where experts have been debating what these corporations are going to do with all their surplus loot. Will they raise dividends? Buy back shares? Launch a new wave of mergers and acquisitions?

It all sounds wonderful for investors and the U.S. economy. There's just one problem: It's a crock.

American companies are not in robust financial shape. Federal Reserve data show that their debts have been rising, not falling. By some measures, they are now more leveraged than at any time since the Great Depression.

You'd think someone might have noticed something amiss. After all, we were simultaneously being told that companies (a) had more money than they know what to do with; (b) had even more money coming in due to a surge in profits; yet (c) they have been out in the bond market borrowing as fast as they can.

Does that sound a little odd to you?

A look at the facts shows that companies only have "record amounts of cash" in the way that Subprime Suzy was flush with cash after that big refi back in 2005. So long as you don't look at the liabilities, the picture looks great. Hey, why not buy a Jacuzzi?

According to the Federal Reserve, nonfinancial firms borrowed another $289 billion in the first quarter, taking their total domestic debts to $7.2 trillion, the highest level ever. That's up by $1.1 trillion since the first quarter of 2007; it's twice the level seen in the late 1990s.

The debt repayments made during the financial crisis were brief and minimal: tiny amounts, totaling about $100 billion, in the second and fourth quarters of 2009.

Remember that these are the debts for the non financials — the part of the economy that's supposed to be in better shape. The banks? Everybody knows half of them are the walking dead.
Central bank and Commerce Department data reveal that gross domestic debts of nonfinancial corporations now amount to 50% of GDP. That's a postwar record. In 1945, it was just 20%. Even at the credit-bubble peaks in the late 1980s and 2005-06, it was only around 45%.

The Fed data "underline the poor state of the U.S. private sector's balance sheets," reports financial analyst Andrew Smithers, who's also the author of "Wall Street Revalued: Imperfect Markets and Inept Central Bankers," and chairman of Smithers & Co. in London.

"While this is generally recognized for households," he said, "it is often denied with regard to corporations. These denials are without merit and depend on looking at cash assets and ignoring liabilities. Cash assets have risen recently, in response to the fall in inventories, but nonfinancials' corporate debt, whether measured gross or after netting off bank deposits and other interest-bearing assets, is at peak levels."

By Smithers' analysis, net leverage is nearly 50% of corporate net worth, a modern record.

There is one caveat to this, he noted: It focuses on assets and liabilities of companies within the United States. Some U.S. companies are holding net cash overseas. That may brighten the picture a little, but the overall effect is not enormous, and mostly just affects the biggest companies.

That U.S. companies are in worse financial shape than we're being told is clearly bad news for those thinking of investing in U.S. stocks or bonds, as leverage makes investments riskier. Clearly it's bad news for jobs and the economy.

But why is this line being spun about healthy balance sheets? For the same reason we're told other lies, myths and half-truths: Too many people have a vested interest in spinning, and too few have an interest in the actual picture.

Journalists, for example, seek safety in numbers; there's a herd mentality. Once a line starts to get repeated, others just assume it's correct and join in.

Wall Street? It's a hustle. This healthy balance-sheet myth helps sell stocks and bonds. How many bonuses do you think get paid for telling customers the stark facts, and how many get paid for making the sale?

You can also blame our partisan age too. Right now, people on the right have a vested interest in claiming businesses are in healthy shape. That makes the saintly private sector look good, and demonizes President Barack Obama and Big Government for scaring away investment. Vote Republican! Meanwhile, people on the left have an interest in making businesses sound really healthy too: If greedy companies are hoarding cash instead of hiring people, they can cry "Shame on them! Vote Democratic!"

As ever, the truth is someone else's problem and no one's responsibility.

When it comes to the economy, let's just hope the public is too hopped up on painkillers and antidepressants to notice. If they knew what was really going on, there'd be trouble.

UFS =-B-I-N-G-O

Wow this one didn't pause before it move higher- WOW

UFS

Pause then a continuation on this one is what to look out for

AAPL- Move coming soon!!!

Next?

Rangebound

Here is the range bound nature of the markets

Higher

Now way the bulls come so far and don't try to pump higher. I have been wrong before but I am betting that we will be higher into the weekend

Lack luster

As usual we just drift between ranges in the summer. Geezz no excitement at all

BINGO

Achieved, now lets see if the bulls take a rest here and gather the strength to move higher.

Market

Last week was back and forth with the Bulls coming out ahead in the end. It looks very good for the 200 day moving average to be tested early on this week.

Does this mean the Bulls will be back in force? Not quite. In order for the Bulls to resume control, the 200 day moving average needs to be breached.

Best scenario for Monday will be a gap down for a buying opportunity and then be watching closely if that 200 day MA is tested. There may be short term day-trade opportunities off of that bigger time frame moving average, so stay alert.