Closing

Very ugly looking closing here- We have 5 minutes left but it looks like we closing out the quarter at the lows of the month, of the quarter and also of the year 2010. Not a lot of bullish action here. Can't say I didn't warn you.

DOW stocks

All 30 DOW stocks are down for the quarter. I thought we were recovering :)

This Quarter

Did anyone realize the markets are down 12% from its high in this quarter. Not looking great for the cramers of the world.

BINGO

Another Bingo hit the 1042. Actually went to 1041. The beauty of technical analysis called it last thursday. The Adv/Decline line is horrible and I expect us to finish near the lows.

Gap down

Huge gap down- I guess the triangle analysis worked- Man oh Man those who don't believe in technicals are so wrong.

Markets

The gap down this morning looks like a continuation of the triangle break post last yesterday evening. Now if we don't resolver 1/2 of the gap by 2PM today then i am sure we heading towards the lows mentioned last week of 1042 on the S&P which is my target.
We are weak here and folks trying to find good news to push us higher but it is not sticking I am watching the financials carefully as they essentially was the big bouncers from the 2009 lows and I expect them to be the first ones to show weakness before we get a real push on the downside.
Watch as usual BAC $15 level, very important for this stock.

SPY

The triangle has resolved itself to the downside. Should be interesting here

Friday's action

A Doji on the daily chart signals we might be ready for a bounce

Interesting read

Interesting read here. Very rough year for a lot of the best traders and hedge funds. Got to stay light in my opinion.

http://finance.yahoo.com/banking-budgeting/article/109928/commodities-star-absorbs-loss?mod=bb-budgeting&sec=topStories&pos=7&asset=&ccode=

World Cup

World Cup fever has got me as usual so sorry for the light postings. One thing I like here is Oil higher. Most know I am an oil bull and think anywhere in the mind 60s is a sure buy. Near term I am looking at $80

1061 level

How did I get that 1061 level, chart below. Also if we break it on a closing basis it "suggests" we get a test of the lows at 1042.

Video

Points to watch

Though the volume is low there is still a possibility of a bounce if we don't violate the 1061 area. As of now the market is dead! we are just swinging within a small range and it make ZERO sense to play hard here. On the longer time frames it remains the same and if so you play accordingly.

Next level

Important level to watch when we do break 1090 is 1067.

1067 is the next important stop

1090

1090 is the downward target on this push down. Maybe we dont get there before the close but we will hit it overnight

Resistance

So resistance worked like a charm. We hit a huge wall there.

Resistance

Closer look

On a closer look today, great note must be taken of the divergences that appeared at the highs of the day. This tells me directionally on the hourly chart more than any other we are due for some downward movement. Tomorrow is tuesday and we might find a turn around tuesday in effect but personally I was disappointed in the lackluster move today off the news in China.

WYNN

This one looks higher

Greenspan saying US could be next Greece

Former Fed Chair Alan Greenspan has an op-ed in the WSJ arguing that the runaway Federal Deficit threatens to turn the US into the next Greece.

He doesn't actually think that the US debt bears any credit risk, due to our ability to print at will, but that there is a substantial risk that borrowing costs will soar.

Of course, market participants are aware of our towering deficit, and yet yields continue their long march lower, so that's kind of problematic to his world view.

Says Greenspan: "This is regrettable, because it is fostering a sense of complacency that can have dire consequences."

Yet, he argues, not all market signals are so benign:

In the wake of recent massive budget deficits, the difference between the 10-year swap rate and 10-year Treasury note yield (the swap spread) declined to an unprecedented negative 13 basis points this March from a positive 77 basis points in September 2008. This indicated that investors were requiring the U.S. Treasury to pay an interest rate higher than rates that prevailed on comparable maturity private swaps.

The negative swap rate garnered a fair amount of attention back during March, which was actually when the markets were hottest. At the time, just as many folks seemed to think that it had more to do with aggressive risk appetite on the part of investors, than it did some lack of confidence in the US system.

Greenspan could actually be correct in his interpretation, but it's by no means definitive, and on its face it seems absurd that if folks were seriously concerned about inflation or US credit risk, that private swaps would somehow be more preferable.

It may serve us well to listen to the deficit Cassandras, but for now the "regrettable" markets show that investors rush into the debt and currency of the world's two gigantic debtor nations -- the US and Japan -- at the first signs of trouble.

Options Expiration today

Remember today is options expiration and it is the one day of every month I don't watch the markets. Too much pin action and false readings.

UNG Update

Prechter says it won't be nice!

Everyone knows I am a huge Prechter fan because he is also a student of cycles.
This was posted today by Market watch::

Elliot Wave Predicts Triple-Digit Dow in 2016:
An investment letter that called the Crash of 2008 said that this would be a bad year — and it now says it will get worse.
A whole generation of investors think that Robert Prechter and his Elliott Wave Theory letters, Elliott Wave Financial Forecasts and Elliott Wave Theorist, are permabears. And they've certainly seemed that way for the last decade -- although it should be noted that the stock market is now roughly back where it started.

But Prechter was very bullish after the 1974 low and, briefly, after being one of the very few services to make money in 2008. Then he announced that "2010 is the year when the bear market in stocks returns in full force."

Elliott Wave Financial Forecasts (EWFF) makes recommendations specific enough to be tracked by the Hulbert Financial Digest. (The Elliott Wave Theorist is too, well, theoretical.)

Over the year to date, EWFF is up just 0.4% by Hulbert Financial Digest count through May vs. negative 0.3% for the dividend-reinvested Wilshire 5000 Total Stock Market Index.
Over the past 12 months, its bearishness did cause it to gain just 4.75% compared to 22.89% for the total return Wilshire 5000. But over the past three years, the letter's bearishness paid off handsomely. It's up an annualized 5.25% against negative 8.12% annualized for the total return Wilshire 5000.

And even over the past 10 years, so badly damaged have stocks been that the letter was up an annualized 1.05%, outperforming a mere 0.22% annualized gain for the Wilshire 5000.

The EWFF issue published in early May said flatly: "The topping process is over for the countertrend rally that started in the first quarter of 2009. The next leg lower that commenced in April should now deliver a decline that will ultimately be bigger than the 2007-2009 sell-off. ... Gold poked to a new high, but in doing so, likely completed a pattern in mid-May that will lead to a multi-month selloff. ... The U.S. dollar index (NYBOT: DX-Y.NYB - News) is fulfilling EWFF's forecast for a strong advance."

All of which fits right into Prechter's repeated predictions of a massive coming deflation.

In a rare comment on individual stocks, EWFF says: "Google Inc. (NYSE: GOOG - News) made its countertrend rally on Jan. 4, four months before the DJIA and Nasdaq, and appears to be locked in a decline the EWFF also forecast last August. Its early reversal is a bearish development for the broad market, as Google is an icon of the last great stock craze. The failure of its stock price to reignite is a clear sign that the animal spirits of the old bull market are all but gone."

How bad? The clearest statement comes from the Elliott Wave Theorist, discussing a numerological technical theory with which it supplements the Wave Theory's complex patterns: "The only way for the developing configuration to satisfy a perfect set of Fibonacci time relationships is for the stock market to fall over the next six years and bottom in 2016."

"Stock market bulls and most economists think that a new bull market and economic recovery are underway. Most bears are looking for either a long sideways bear market à la 1966-1982, or a hyperinflationary run to infinity. Our Elliott Wave outlook opposes both of these scenarios. The most likely profile is a stock market crash of historic proportions."

Elliott Wave Theorist offers several reasons, including: "This bear market is of Supercycle degree, the biggest since 1720-1784. It should therefore include a decline deeper that the 89% decline of 1929-1932. A decline of 91.5% or more would carry it below 1,000."

There will be a short-term rally at some point, thinks Prechter, but it will be a trap: "The 7.25-year and 20-year cycles are both scheduled to top in 2012, suggesting that 2012 will mark the last vestiges of self-destructive hope. Then the final years of decline will usher in capitulation and finally despair."

UNG Update

Remember to look back on the UNG chart. Level to watch on the upside is 9.22. I would take off that long around 9.13

Higher

As reiterated this morning Market should move higher. Last week I made note of this and the pivotal area where it should find support where it did. UNG is a monster, UNG was a special chart here a few weeks ago and it played out well with the technical pattern indeed. Where do we go from here? Well the volume is not exciting and this was the most noticeable thing the last time we hit a top but this time it is less clear so we have to play larger time frames and cycle or you will just be playing a chopfest.

Posts will be minimal this week as I have to leave mid-day each day for the rest of week.

ES

Market looks like it is setting up a bullish gartley but it might be premature to say so. If we don't break 1038.75 on the downside I will be looking for a target of 1149.25/1150 on the upside as the target of the gartley pattern. Remember if we break 1039 the gartley has failed.
As usual I am not a bull but just looking at a developing pattern to play

Bounce

Bounce still going on as analyzed. I think we will more likely work off the oversold conditions and move higher here but this has been one skiddish market for the last year. I still like natural gas higher and I believe Oil will do the same.

Next week

I will be out till next week.
Have a great weekend

New Rules

Federal regulators on Thursday put in place new rules aimed at preventing a repeat of last month's harrowing "flash crash" in the stock market.

Members of the Securities and Exchange Commission approved the rules, which call for U.S. stock exchanges to briefly halt trading of some stocks that make big swings. The exchanges will start putting the trading breaks into effect as early as Friday for six months.

The plan for the "circuit breakers" was worked out by the SEC and the major exchanges following the May 6 market plunge that saw the Dow Jones industrials lose nearly 1,000 points in less than a half-hour.

Under the new rules, trading of any Standard & Poor's 500 stock that rises or falls 10 percent or more in a five-minute period will be halted for five minutes. The "circuit breakers" would be applied if the price swing occurs between 9:45 a.m. and 3:35 p.m. Eastern time -- almost the entire trading day.

The idea is for the trading pause to draw attention to an affected stock, establish a reasonable market price and resume trading "in a fair and orderly fashion," the SEC said.

On May 6, about 30 stocks listed in the S&P 500 index fell at least 10 percent within five minutes. The drop briefly wiped out $1 trillion in market value as some stocks traded as low as a penny.

The disruption "illustrated a sudden, but temporary, breakdown in the market's price-setting function when a number of stocks and (exchange-traded funds) were executed at clearly irrational prices," SEC Chairman Mary Schapiro said in a statement. "By establishing a set of circuit breakers that uniformly pauses trading in a given security across all venues, these new rules will ensure that all markets pause simultaneously and provide time for buyers and sellers to trade at rational prices."

Exchange-traded funds are increasingly popular investments that often track a market index such as the S&P 500 and can be traded throughout the day, unlike mutual funds. ETFs as a group were affected by the May 6 plunge more than any other category of securities.

The markets will use the six-month pilot period, ending on Dec. 10, to make needed adjustments based on how the new rules work, the SEC said. The scope of the rules could be expanded to securities beyond the S&P 500, including ETFs.

Schapiro said she wanted to see the program expanded quickly to cover thousands of public companies beyond the S&P 500.

The new rules are taking effect following the agreement by the SEC and the big exchanges, and a 10-day public comment period. They will apply to all U.S. exchanges. Currently most of the 50 or so U.S. exchanges regulate themselves and design their own tools for slowing or halting trading.

During the epic May swoon, the New York Stock Exchange slowed trading according to its rules but the orders that couldn't be executed migrated in a torrent to electronic exchanges, industry officials have said.

Regulators still don't know exactly what caused the "flash crash," but they wanted to move ahead with remedies. A preliminary picture emerged in a recent report by staffs of the SEC and the Commodity Futures Trading Commission. Investigators have focused on, among other things, a possible link between the steep decline in prices of stock indexes and simultaneous and subsequent waves of selling in individual stocks.

Also being looked at is a severe "mismatch" of liquidity in the market that may have been worsened by the withdrawal of electronic traders and the use of so-called "stop-loss" market orders. Stop-loss orders set the price at which a stock is automatically sold when it declines to a specified level.

Nearly 21,000 trades were canceled because the exchanges deemed them erroneous after the plunge. The SEC is examining whether decisions to cancel trades were made fairly and may propose new rules for cancellation.

During the pilot period, the SEC staff will consider ways to address the risks of "stop-loss" and other market orders, and whether so-called "stub quotes" should be curbed or banned. Market makers use stub quotes as placeholders and they are often far above or below actual stock values. The SEC-CFTC report said their presence at the top and bottom of order books on May 6 may have accounted for many of the canceled trades.

The SEC already has rules requiring market-wide halts in trading if the Dow falls 10 percent, 20 percent or 30 percent. None of them were triggered on May 6. In light of the plunge, the SEC staff and the exchanges are considering changes to those rules, also known as circuit breakers.

Bounce

So we did bounce off that 1052/54 area some 20 points but from here I am sitting on my hands. I have to do some chart work to see what we might do next

UNG Updated

Hedge funds

News on the street is that May was a terrible month for hedge funds.

Note

Take notice we hit 1054 in the overnight session which I had as the line in the sand. I expected a bounce there which we are now having before we really break it. I might take a number of times (usually 3) before we break through. 1054 is strong support note we went to 1052 which is negative. So lets see what the market has for us early on- I will be out at 11 for dentist and doctor appointment, so next update will be tonight.

Preview of the week

Friday was an ugly day with a gap down and continuation, but we managed to hold support by way of the right shoulder of the 60 minute inverted head and shoulders we pointed out on this blog. We wound up forming a 60 minute hammer into the close.

Friday's lows are now key. While the pattern may still be valid if the right shoulder is broken, the right shoulder holding makes the pattern more authentic and will pick up more interest.

I'm going to be watching for a gap down Monday for a buying op for a trade. From there, I'll watch to see how the Bulls react before making my next decision. If they show some initiative, I think we could get a move to the neckline pretty quickly. If the bulls are absent, then watch for a retest of the May lows and a possible double bottom to setup

DOW 3 month TARGET

DOW 3 month target is down @ 9130 by my current analysis. While heavy support comes in on the S&P around 975.
I think we see these numbers soon very soon, in less than a quarter.

Warren Buffet dumping bonds- Sign of trouble

Warren Buffett, whose Berkshire Hathaway Inc. has been trimming its investment in municipal debt, predicted a “terrible problem” for the bonds in coming years.

“There will be a terrible problem and then the question becomes will the federal government help,” Buffett, 79, said today at a hearing of the U.S. Financial Crisis Inquiry Commission in New York. “I don’t know how I would rate them myself. It’s a bet on how the federal government will act over time.”

Berkshire’s investment portfolio included municipal bonds valued at less than $3.9 billion as of March 31, down from more than $4.7 billion at the end of 2008. The company had a maximum of $16 billion at risk in derivatives tied to such debt, according to the company’s annual report for 2009.

Buffett, Berkshire’s chairman and chief executive, has previously warned about the risks of insuring municipal bonds. In his annual letter to shareholders in 2009, he said public officials may be tempted to default on bonds whose payments are guaranteed by insurance companies rather than push through needed tax increases. He said guaranteeing municipal bonds against default “has the look today of a dangerous business.”

Local governments rely on the $2.8 trillion municipal bond market to raise money for construction projects and fund other budget items. The financial crisis and recession battered governments across the U.S. by cutting into tax collections and causing pension-fund losses. Some governments failed to set aside enough money to cover retirement benefits promised to employees, which may place increasing strain on public finance.

Rescue for Governments?

Buffett said last month that the U.S. may feel compelled to rescue a state facing default after the government committed $700 billion to bail out financial firms and automakers.

“It would be hard in the end for the federal government to turn away a state having extreme financial difficulty when they’ve gone to General Motors and other entities and saved them,” Buffett told shareholders in Omaha, Nebraska, at Berkshire’s May 1 annual meeting. “I don’t know how you would tell a state you’re going to stiff-arm them with all the bailouts of corporations.”

A report by the Pew Center on the States in February estimated that by the end of the 2008 budget years, states had $1 trillion less than needed to pay for future pensions and medical benefits, a gap the center said was likely compounded by losses suffered in the second half of 2008.

Defaults

About $14.5 billion of municipal bonds defaulted in 2008 and 2009, according to Income Securities Advisor Inc., a Miami Lakes, Florida-based company that publishes a newsletter tracking distressed debt. Many those were securities backed by revenue from nursing homes, property developments and other projects without claim to government tax revenue.

Defaults by local governments with the power to raise taxes are less common. Jefferson County, Alabama, defaulted on more than $3 billion of bonds backed by sewer fees after the deals grew more costly in the wake of the credit crisis in 2008. Vallejo, California, filed for bankruptcy in 2008 after its tax revenue tumbled.

Buffett set up a municipal bond insurance company in December 2007 as competitors, including Ambac Financial Group Inc. and MBIA Inc., struggled to maintain top ratings. Berkshire has scaled back sales as Buffett said the rates that bondholders are willing to pay don’t match the risk.

1054

That is the line in the sand for the bulls if there are any real ones left. A break of 1054 will target 983.

Job Numbers

Wow these numbers are TERRIBLE. I have no idea why people think we are recovering, as i heard someone say yesterday even if we are creating jobs they are paid much less. Folks we are going into a time where high unemployment IS full employment.
Let's see what the big boys want to do today. This gap down will provide a buying opportunity for a bounce for the day but longer term I think we are sinking for sure.

Update on chart-UNG

Final it broke

Initial chart:
http://marketjedi.blogspot.com/2010/05/commodity-chart.html

Updated chart

SPY fading

Shorting candidate

Still a little higher till full resistance

Next level higher-

Next level higher 20EMA

Cautious

Time to be very cautious here. I think something is brewing and as such I would tell all to stay light. I am writing a paper and I will put some of the major thoughts on the blog why I think we are not coming out of the woods but just entering it.

Watch that CSCO out of the bear flag.

Stay tuned

The bulls today

I THOUGHT ALL WAS WELL IN CORPORATE AMERICA

NEW YORK – Hewlett-Packard Co. said Tuesday it will lay off about 9,000 workers in the unit that provides technology services to other businesses as the company consolidates and automates its commercial data centers.

The cuts will be made over about three years and amount to some 3 percent of HP's global work force of 304,000 employees as of October 2009, the most recent figure available. The company said it plans to replace two-thirds of those jobs, hiring 6,000 people to boost its global sales and delivery staff.

The job cuts will result from productivity gains and automation, HP said. Once it completes the restructuring, HP said it will see savings of about $500 million to $700 million a year.

HP, which is based in Palo Alto, Calif., said it will take $1 billion in charges, about half of it in the current quarter and the rest by October 2013, the end of its fiscal year. The charges, which are largely for severance expenses, will be excluded from the company's adjusted earnings results.

HP, the world's biggest maker of PCs and printers and the top technology company by revenue, has been working to expand its business in other areas as PC profit margins are usually thin. To boost its services business, the company bought Electronic Data Systems, a rival of IBM Corp., in 2008, cutting 24,600 jobs as part of that acquisition.

HP said the commercial data centers will help its corporate clients run their businesses faster and more efficiently. Ann Livermore, executive vice president for HP Enterprise Business, said the company is confident its actions will "provide a foundation for growth for the next 10 years."

"We believe that these sets of actions will enable HP to grow better than the market," she said in a conference call with analysts.

Standard & Poor's equity analyst Tom Smith applauded HP's latest actions, calling them the "next step toward efficiency gains" after the initial integration of EDS.

In addition to business services, HP is also pushing into the mobile market with its planned acquisition of struggling smart phone maker Palm Inc., announced in April.

HP's shares slid 1 cent to $46 in morning trading Tuesday.

CSCO

Csco definitely looks lower out of this flag