Mojo’s last alert in the Secure Conference Room came at 10/17/2008 @ 13:39:00 (green vertical line on the charts below) with a SELL-SELL-SELL alert! Current Futures here (DJIA Index -195.00, S&P 500 -7.50, and NASDAQ 100 -12.00) Below are the 3 minute chart views of each chart listed below when the MC rating went under 65 sell or up over 35 for buying the inverse play “BUY-BUY-BUY”.
Dow Jones Industrial (INDU) Members here CHART
DDM Ultra Dow30 ProShares (Sell $38.21 current price $34.80) 8.92% Gain CHART
DXD ProShares UltraShort Dow 30 (ETF) (Inverse Buy $76.23 current price $84.50) 10.85% Gain CHART
NASDAQ Composite (COMPX) CHART
QQQQ PowerShares QQQQ Trust (ETF) (Sell $33.65 current price $32.26) $4.13 Gain CHART
QID ProShares UltraShort QQQ (ETF) (Inverse Buy $64.61 current price $71.18) 10.17% Gain CHART
S&P 500 Index (SPX) Members here CHART
SSO ProShares Ultra S&P500 (ETF) (Sell $33.99 current price $30.80) 9.13% Gain CHART
SDS ProShares UltraShort S&P500 (Inverse Buy $87.01 current price $96.35) 10.73% Gain CHART
NASDAQ Financial 100 Index (IXF) CHART
UYG Ultra Financials ProShares (Sell $11.15 current price $10.10) 9.42% Gain CHART
SKF ProShares UltraShort Financials (Inverse Buy $121.70 current price $136.50) 12.16% Gain CHART
Google (GOOG) (Sell or Short $386.00 current price $370.47 $4.02% Gain CHART
AAPL (AAPL) (Sell or Short $102.04 current price $97.20) $4.74% Gain CHART
Research in Motion (RIMM) (Sell or Short $61.68 current price $58.95) 4.43% Gain CHART
SPDR (SPY) (Sell or Short $98.59 current price $93.50) $5.16 Gain CHART
Visa (V) (Sell or Short $55.07 current price $52.10) $5.39% Gain CHART
Goldman Sachs Group (GS) (Sell or Short $118.38 current price $114.90) 2.94% Gain CHART
General Motors (GM) (Sell or Short $6.75 current price $6.38) $5.48 Gain CHART
Linear Regression Slopes with Standard Deviation Levels (When we bounce off the top of the 2nd deviation…. stocks are going down)
A simple way to visually determine the trend of the market is to view the slope of the linear regression of data from any index or security. It is also helpful to have linear regressions over multiple time frames to determine the short-term trend versus the medium and longer term trend.
When adding standard deviation levels to these linear regressions, it shows the channels which can help determine when prices are extended with respect to the trend you are studying. These standard deviation levels are keys to showing when a change in trend is happening. Once prices extend above or below 2 standard deviations, and prices sustain this move, the probability of a new trend forming is in your favor.
Combining different time frames of linear regressions can help visually establish where a particular index or security is in relation to its long, medium, and short term trends. This is done by looking at the slope of the linear regression and the individual index or security's location with regards to its standard deviations away from this linear regression.
The slopes of these linear regressions combined with other various indicators can help spot some changes in trend to keep you ahead of the competition. The key is to know when to have the math on your side and to fight the temptation of "hoping" prices will go back into the channel. Use stops and trust the math.
“How can it be that mathematics, being after all a product of human thought which is independent of experience, is so admirably appropriate to the objects of reality? Is human reason, then, without experience, merely by taking thought, able to fathom the properties of real things.” --Albert Einstein
Books to read…
Statistics With Stata: Version 8
Regression With Graphics: A Second Course in Applied Statistics
Author: Lawrence C. Hamilton
Send an email to tradewithmojo@gmail.com 1st to see if you quantify to join the Secure Conference Room and to Trade with Mojo LIVE!
Disclaimer:
Talk to a professional before making any investment decisions! Nothing on our YouTube, Spreadsheets, Blog, and Secure Conference Room should be considered advice or a recommendation. Mojo makes no guarantee that his forecasts will be accurate or generate profits. He will not be responsible for any losses that may result from the use of his forecasts. You are responsible for your trades, investments, and decisions.
Hedge Fund Implode Meter
We just need to be patient for the next buy and sell point.
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S&P 500 futures reached limit down in electronic trade on Friday, meaning that they can't fall beyond 60 points until the pits open at 2:30 p.m. Eastern. The contract, however, still can be traded. The limit on Nasdaq 100 futures is 85 points and the limit on Dow Jones Industrial Average futures is 550 points; both contracts were trading just above those thresholds.
NYSE Circuit Breakers
In response to the market breaks in October 1987 and October 1989 the New York Stock Exchange instituted circuit breakers to reduce volatility and promote investor confidence. By implementing a pause in trading, investors are given time to assimilate incoming information and the ability to make informed choices during periods of high market volatility.
Rule 80B
Effective April 15, 1998 the SEC approved amendments to Rule 80B (Trading Halts Due to Extraordinary Market Volatility) which revised the halt provisions and the circuit-breaker levels. The trigger levels for a market-wide trading halt were set at 10%, 20% and 30% of the DJIA, calculated at the beginning of each calendar quarter, using the average closing value of the DJIA for the prior month, thereby establishing specific point values for the quarter. Each trigger value is rounded to the nearest 50 points.
The halt for a 10% decline would be one hour if it occurred before 2 p.m., and for 30 minutes if it occurred between 2 and 2:30, but would not halt trading at all after 2:30. The halt for a 20% decline would be two hours if it occurred before 1 p.m., and between 1 p.m. and 2 p.m. for one hour, and close the market for the rest of the day after 2 p.m. If the market declined by 30%, at any time, trading would be halted for the remainder of the day.
Under the previous Rule 80B trigger points (in effect since October 19, 1988) for a market-wide trading halt, a decline of 350 points in the DJIA would halt trading for 30 minutes and a drop of 550 points one hour. These trigger points were hit only once on October 27, 1997, when the DJIA was down 350 at 2:35 p.m. and 550 at 3:30, shutting the market for the remainder of the day.
After nine months of job losses, declining output, lower sales and falling incomes, the final proof that the nation has tipped into recession will likely arrive in the coming week.
Growth is likely to get much weaker, with economists now expecting three consecutive quarters of negative growth before an anemic recovery in the second half of 2009, assuming that credit markets recover some normal functioning soon. If they don't, growth could contract much more severely.
The GDP report Thursday will the culmination of a very busy week for economic news, including another expected rate cut from the Federal Reserve and more discouraging news from the consumer, housing and business sectors.
Other strategists believe market lows were already made after near-panic selling on Oct. 10, when the Dow plunged to an intraday low of 7,773.
The Philippine Stock Exchange Monday halted trading for 15 minutes after the main stock index tumbled 10% on heavy selling, according to reports. Shares of of Energy Development Corp. tumbled 13.6% and Globe Telecom Inc. lost 12.8%, while Metropolitan Bank & Trust Co. gave up 13.8%
# Bearish factors for stock prices last Friday included (1) the sell-off in Asian and European stock markets on concern the financial crisis is plunging the world's economy into a recession, (2) speculation that last Friday's losses were exacerbated by forced selling from hedge funds facing margin calls and or redemptions, and (3) the surge in the VIX volatility index to a record high as fear and panic have gripped the equity markets aided by unprecedented levels of uncertainty over what will happen next.
# Bullish factors for stock prices last Friday included (1) a rally in insurance companies on speculation that the US Treasury is considering taking stakes in insurers to help shore up the financial system, (2) the larger-than-expected rise in US existing home sales for Sep, (3) and market expectations of a possible 50 bp rate cut in the Fed funds rate at the conclusion of Wednesday's FOMC meeting
Apple (AAPL) "Monday morning started off with a bang for Apple investors, courtesy of FBR's chip analyst Craig Berger making a strange call on Apple and what seemed like a dramatic slowdown in iPhone sales.
Last I checked, short of its acquisition of PA Semi, Apple ain't a chip company.
But I digress. Berger issued a note this morning saying that Apple had slashed iPhone production for the current quarter by as much as 40 percent from last quarter. Berger bases his findings on un-named sources and channel checks, couples it all with the global, macro-economic slowdown that could cripple so many other companies, and then draws his conclusions. Which, I might add, torpedoed Apple's shares since it seems traders spent a nanosecond scanning the headlines, but failed to dig ever-so-slightly deeper.
It's Berger's conclusions that are raising the hackles, well after the story has come and gone. I wasn't going to address this today but after a load of email, I thought I'd take a stab at it, particularly a great note this afternoon from Apple watcher Andy Zaky who has been spot-on these last few months I've been reading him. (This is his what he posted today ...) He asked me to look back at Berger's track record on Apple calls when he drifts from his chip expertise into the realm of smart-phones, computers and all other things Apple.
Indeed, the first time I wrote about Craig Berger and his calls on Apple was last February when a note he released caused yet another Apple panic. It was then that Berger cut Apple production rates for iPod and iPhone by 60 percent, and MacBooks by 50 percent. I questioned then why a chip analyst was making such a call on Apple even though it cut completely against what the company had said on its earnings call just two weeks prior.
So I took a stroll down financial-memory lane today, looking at Apple's earnings covering the first part of the year. Apple sold 1.7 million iPhones in its second fiscal quarter versus the 2.3 million in its first. As for iPods?
Apple sold 22 million in its first quarter, and 10.5 million in its second, a wider than expected slowdown, but certainly not cataclysmic by any stretch. Remember, Apple's first quarter is the calendar's holiday shopping quarter, and business always trails sequentially between its first and second quarter. That said, if you do the math, Apple's iPhone decline was only 26 percent. iPods fell by more than 50 percent (again, expected) and as for MacBooks? Sales actually increased 6.8 percent!
After those second quarter numbers came out, Berger had a chance to revisit and revise. And he did. Up.
So here we are again. More sky-is-falling predictions from an analyst trying to lay his mask of expertise over a stock and company in which he really has no expertise. We've seen this before. And yet FBR publishes it anyway. And traders trade on it. Look, as I've said before, Berger's got his sources and I certainly won't impugn his research. But we should all question it. Just as I would advise investors and traders question everything they read when it comes to taking action in a stock.
Berger says his sources and his findings suggest Apple "may" cut production. "Suggest?" "May?" Are you kidding me? Apple "may" buy Sony. It "may" triple production. It "may" do a lot of things. This is hardly something to panic about. Trouble is, when it comes to Apple, even a hint of panic can instantly become real panic. Analysts know this. They can make a name for themselves precisely because of extended coverage like this. So unfortunate for a company doing so well, and so unfortunate for investors who just can't seem to take advantage of Apple's success because of so much noise and manipulation. So unfortunate indeed." -- Jim Goldman
AAPL is the one to watch on its 10 Day chart. Shown is Wave 1 in green and Wave 2 in Pink, and a possible third wave setup if it takes out 112. A break above 112 could set up an upward W3.
Alerts today all bearish on the market: VIX 10:13AM / DXD 11:38AM / QID 12:14PM / SDS 12:36PM / SKF 9:34AM
The reason for a cut in iPhone production could be that they are going to come out with a new model using their in house (formerly P A Semi) developed chip. That ties in with the guy from IBM who is a chip guy. P A Semi's strength was power management or extreme low power usage chips. One knock on the iPhone has been battery life. A new model with these new chips could have markedly better battery life which could be one of the things SJ was talking about when he said Apple had competitive advantages no other manufacturer can replicate.
GS 85.20 / AAPL 100.24 / GOOG 336.30 morning lows so far.........
"The letters go out at the first of the month for places we think of citadels and fortresses of capital. They read like this: "Our performance is X vs. the S&P, and we see multiple opportunities and we have lots of cash. We have never been in better shape, and we are excited about the great possibilities we see."
The letters go to sophisticated investors, institutions and funds of funds.
The first two pretty much take them in stride. They've made a lot of money with these hedge funds, and they aren't sanguine but they aren't panicked.
And then there are the funds of funds. These people are supposed to be the keepers, the shepherds of the money. They are desperate to try to keep their jobs and demonstrate that they are being fiduciaries. They are basically saying, "Our raison d'etre is on the line." That means they have to pull the money.
They have five days to notify the hedge funds they want their money out unless there is a lockup or if the hedge funds have decided to abrogate their contracts, which is completely on par with the nonsense of this industry.
That means that right now the hedge funds are getting the funds of funds' letters. There was so much marking-up going at the end of the quarter by these citadel/fortresses of brilliance that they might have escaped the worst of performance. And there might be funds of funds people dumb enough to buy the "opportunities abound" logic.
But to me, we are seeing some of that fund-of-funds action today, and I suspect a new round of redemptions is upon us without federal bailouts, although many of these hedge funds have convinced Treasury that they could be Lehman-like if they fail, and that they must be able to make a lot of money not to lose key talent if they are bailed out.
If I have one wish if it comes to the Obama campaign, it is that hedge funds won't be bailed out.
Wishful thinking?
I bet we shall soon see!" -- Cramer
If we brake (bearish pennant) my yellow trend line on my charts....it is a continuation pattern that occurs during a downtrend. The pennant is a pause in the trend, where some consolidation occurs before continuing the downward move. If you were to look at any of the daily charts of the indexes or AAPL, the formation of this pennant would be quite clear. If you were to draw two lines enclosing the pause it would look like a pennant or triangle, preceded by a sharp drop, which is commonly referred to as the flag pole. The theoretical target of a bearish pennant from the point it breaks down to the landing is equal to the distance between the top and bottom of the initial decline. In AAPLs case the target could be as low as 50. Yikes!
Just email me at "tradewithmojo gmail com" for more info!
DryShips said in a filing with the U.S. Securities and Exchange Commision that it planned to sell as many as 25 million new shares, a move it said could significantly dilute existing shareholders.
V is building out a clear triangle pattern that could offer a solid breakout of about 20.00 points. Watch 50.00 and 60.00 for the next big breakout opportunity.
Update.. down 20% today and keep an eye on $8.50!
Note:
DryShips said in a filing with the U.S. Securities and Exchange Commision that it planned to sell as many as 25 million new shares, a move it said could significantly dilute existing shareholders.
Today’s report focuses on a handful of names that are hovering right at welldefined minor lows of the past month. The argument is that one can use these names as a “control mechanism” for the overall market. Watch how they behave in the day/days ahead from yesterday's closing price. Any weakness from here in these names will suggest that the S&P500 lows of Friday, October 10th at 839.80 are likely to give way. If these names do not breakdown in the period immediately ahead, it will suggest that the 850-1000 range of the SPX is taking on more and more authority and that the market is successfully stabilizing and healing from the panicky five session plunge of Oct. 6-10th from 1100 to 839.80 (-260 points 3.6%).
Symbol % Change Last
ALTR -4.73 14.51
AMP -2.9 17.39
AMZN -11.45 41
ANF -9.85 20.96
ANF -9.85 20.96
BAC -9.04 17
BWA -5.58 16.76
BX -4.24 7
C -11.11 9.6
COF -6.27 30.04
COH -5.49 15.31
CSX -5.22 41.54
DRI -4.32 17.5
DSX -22.25 10.83
GOOG -8.1 286.24
INTC -3.16 13.49
JNPR -7.75 15
MOT -10.14 3.9
NTRS -2.52 45.34
NWL -7.55 11.87
PLCM -3.48 17.76
PWR -7.48 12.86
TIF -7.7 19.53
TJX -8.61 21.43
UDR -2.63 14.8
WLT -15.55 24
100% have closed lower from yesterday's price! S&P500 lows of Friday, October 10th at 839.80 will NOT hold!
SPX Today's Low 818.69
Symbol % Change Last
ALTR 8.08 15.92
AMP 13.51 19.74
AMZN 8.28 45
ANF 4.01 21.8
ANF 4.01 21.8
BAC 1.35 17.23
BWA 9.44 18.43
BX 2.43 7.18
C -1.97 9.45
COF 11.55 33.51
COH 11.69 17.1
CSX 1.93 42.34
DRI 5.03 18.38
DSX 4.09 11.45
GOOG 6.87 310.99
INTC 5.7 14.29
JNPR 7.59 16.3
MOT 15.95 4.58
NTRS 7.59 48.78
NWL 7.83 12.95
PLCM 8.24 19.18
PWR 11.04 14.28
TIF 14.9 22.44
TJX 3.95 22.61
UDR 8.86 16.1
WLT 8.42 26.28
I just paid $1.889 for a Gallon of Gas!
G20 tries to get ball rolling on recovery - but leader bracing for a sharp downturn!
"It does make an impression sitting around the room and listening to how scared the other leaders of the other countries are and how grim their prospects are," said Kenneth Rogoff, a professor at Harvard University.
Analysts said it was useful for the G20 leaders to meet, even if there would not be a meaningful dialogue with so many leaders meeting at the same time.
Consumer prices falling at fastest pace in 60 years!
Few observers have ever seen anything like the economic data that will be released in the coming week, with the consumer price index and housing starts each expected to breach records dating back to the late 1940s.
"We expect builders to continue to cut construction through the middle (2009) of next year," wrote economists for Barclays Capital.
Retail gasoline prices fell a record 17% in October as the global price for crude oil collapsed. Prices have continued to fall in November, signaling another big drop in the CPI.
11-14-2008 @ 3:00PM the market started a new sell off and we are still looking down.
Below is data from 11 top hedge funds about where they stacked at the end of the quarter. For the most part, the data is showing a significant decline in equity positions. It can be assumed that this is related to hedge fund redemptions, asset value losses, leverage compression and just a negative view on stocks. However, this data is not a complete picture as hedge funds are not required to disclose their cash positions, short positions and non-equity securities.
SAC Capital:
Steven Cohen's SAC Capital has long been considered one of the world's top hedge fund. Recently, reports surfaced that SAC pulled half their money out of the market and put it into cash. The reports were not too far from the truth as SAC's latest 13F showed the firm cut their long positions from 1,383 to 805 and the value of the long positions fell from $14.4 billion to $7.7 billion (From June 30, 2008 to Sept 30, 2008).
Some notables from SAC for the quarter included a new 3.1M shares stake in Genentech (NYSE: DNA) and a new 1.3M shares stake in Amgen (Nasdaq: AMGN).
Caxton Associates:
Bruce Kovner's Caxton Associates is another top hedge fund, but it too exited stocks in a big way. At June 30, 2008 Caxton held 1,214 positions worth $6.5B and at Sept 30, 2008 held 127 worth $2.24B.
Some notables from Caxton's 13F is 3.7M share raised stake in JPMorgan (NYSE: JPM) and a new 1.37M share stake in Campbell Soup (NYSE: CPB).
Renaissance Technologies:
Jim Simons' Renaissance Technologies, a hedge fund run on computer models, showed a drop in long positions and value. At June 30, the fund had 3289 positions worth $45.4 billion and at Sept 30 the fund had 3254 positions worth $38.1 billion.
Some notables from Renaissance Technologies included a raised stake in Amgen (Nasdaq: AMGN) and Apple (Nasdaq: AAPL).
Third Point LLC:
Daniel Loeb's Third Point LLC, an activist hedge fund, saw its positions fall from 71 to 63 and the value of the positions fall from $3.9B to $1.7B.
Some notables from Third Point included new 1.1M share stake in Lorillard, Inc. (NYSE: LO) and new 1 milion shares stake in CVS Caremark Corporation (NYSE: CVS). Third Point also sold its 6.85M share stake in Microsoft (Nasdaq: MSFT).
JANA Partners:
Barry Rosenstein's JANA Partners, another activist fund, saw its positions fall from 108 to 66 and the value of those holdings fall from $5.9B to $2.15B.
Some notables from JANA for the quarter included a new stake 1.6M share stake in Wells Fargo (NYSE: WFC) and new 2.3M shares stake in Pfizer (NYSE: PFE). The firm cut its stake in Copart (Nasdaq: CPRT) by 1 million shares.
Atticus Capital:
Timothy Barakett's Atticus Capital saw a big drop. The firm held 62 positions worth $8.1B at June 30, 2008. That is now down to 22 positions worth $509M.
Some notables from Atticus for the quarter included selling 13.65 million shares of Union Pacific (NYSE: UNP), bringing their stake to 833K. They also sold 11.3 million shares of Crown Castle International Corp. (NYSE: CCI), 10.6 million shares of NYSE (NYSE: NYX), 8.6 million shares of Burlington Northern Santa Fe Corp. (NYSE: BNI), and 10.2 million shares of ConocoPhillips (NYSE: COP).
Greenlight Capital:
David Einhorn's Greenlight Capital saw its positions drop from 63 to 50 and the value of its positions drop from $2.8 billion to $1.44 billion.
Some notables from Greenlight Capital for the quarter included a new 1.85M share stake in EMC (NYSE: EMC) and new 1.17M share stake in Kinross Gold Corp. (NYSE: KGC). Greenlight also cut its 9.91 million stake in Microsoft (Nasdaq: MSFT).
Viking Global:
Viking Global saw its positions drop from 43 long positions worth $5.1 billion to 50 long positions worth $3.5 billion.
Some notables from Viking Global for the quarter included new stakes in VeriSign (Nasdaq: VRSN) and Visa (NYSE: V).
Harbinger Capital:
Phillip Falcone's Harbinger Capital saw its positions shrink from 38 positions worth $9.4 billion to 34 positions worth $4.8 billion.
Some notables from Harbinger Capital for the quarter included a raised stake in Cablevision Systems Corp. (NYSE: CVC) to 22.7M shares and a new 3.5M share stake in Constellation Energy Group, Inc. (NYSE: CEG). Harbinger also sold 12.2M shares of AK Steel (NYSE: AKS) and 8.5M shares of Yahoo! (Nasdaq: YHOO).
Tremblant Capital:
Brett Barakett's Tremblant Capital saw its positions shrink from 72 to 66 and the value fall from $4.1B to $2.2B.
Some notables from Tremblant Capital includes a raised stake in RIM (Nasdaq: RIMM). Tremblant cut its stake in Qualcomm (Nasdaq: QCOM) nearly in half, and sold all of its 4.7M shares in Cogent Inc. (Nasdaq: COGT).
Pershing Square Capital:
Bill Ackman's Pershing Square actually showed an increase in both positions and value. The positions in the fund rose from 21 to 30 and the value rose from $2.5B to $3.9B.
Some notables from Pershing Square included a new 2.7M share stake in Visa (NYSE: V) and a new 570K share stake in Mastercard (NYSE: MA). Ackman also raised his stake in EMC (NYSE: EMC) from 18.7M to 58.6M.
ARROYO GRANDE, Calif. (MarketWatch) -- By 2011? No recovery? No new bull? "Hey Paul, why do you keep talking about a bigger crash coming by 2011?" Readers ask that often. So here's a sequel to my predictions of 2000 and 2004, with a look three years ahead:
First. Dot-com crash
We pinpointed the dot-com crash at its peak, in a March 20, 2000 column: "Next crash? Sorry, you won't see it coming." Bulls-eye: The dot-com bubble popped. The economy went into a 30-month recession. The stock market lost $8 trillion. And today, over eight years later, the market is still roughly 40% below its 2000 peak. See previous Paul B. Farrell.
Factor in inflation and the average stock has lost well over 50% of its value. Stocks have proven to be a very big loser, a bad investment for Americans, thanks to Wall Street's selfish greed, plus the complicity and naiveté of politicians, press and public.
Second. Subprime meltdown
We reported on warnings of another crash coming as early as 2004, wrote a sequel, also titled "Next crash? Sorry, you won't see it coming." Yes, we were early, but in good company. We wrote many more warning columns. Few listened.
Subsequent events, notably former Fed Chairman Alan Greenspan's admission of his failures in congressional testimony, prove that if he and other Reaganomic ideologues weren't so myopic and intransigent about proving their free-market deregulation theories, they could have acted earlier and prevented today's colossal mess. Instead, their ideology kept the bubble blowing, delayed the pop, making matters worse.
So once again, as history proves over and over, ideology trumps common sense, reality and the facts. Greed drives ideologues to blow bubbles. They pop. Crashes happen. The public is collateral damage.
Third. Megabubble cycles
We also detailed the broader, accelerating macroeconomic sweep of cycles last summer in columns like "20 reasons new megabubble pops in 2011." We summarized a long list of major warnings from financial periodicals -- Forbes, Fortune, the Wall Street Journal, Economist -- and from the voices of Warren Buffett, Bill Gross, a sitting Fed governor and a former Commerce secretary. Multiple warnings "hiding in plain sight," beginning with a Fed governor warning Greenspan in 2000 about subprime risk.
But the big shocker came from the new Treasury secretary two years before the meltdown: Bloomberg News reports that shortly after leaving Wall Street as Goldman Sachs' CEO, Henry Paulson was at Camp David warning the president and his staff of "over-the-counter derivatives as an example of financial innovation that could, under certain circumstances, blow up in Wall Street's face and affect the whole economy."
Yes, they knew. And still both Paulson, a Wall Street insider, and Greenspan's successor, Ben Bernanke, a Princeton scholar of the Great Depression, stayed trapped in denial and kept happy-talking the public for months after the meltdown began in mid-2007. Get it? While they could have put the brakes on this meltdown years ago, our leaders were prisoners of their distorted, inflexible views of conservative Reaganomics ideology.
As a result, once again the "best and the brightest" failed America and now they and their buddies in Washington and Corporate America are setting up the Crash of 2011.
Now it's time for my 2008 update, a look into the future where things will get far worse during the next presidential term. And given human behavior, especially in the deep recesses of Wall Street's "greed is good" DNA, it seems inevitable that no matter how well-intentioned the new president may be Wall Street and Washington's 41,000 special-interest lobbyists will drive America into the Great Depression 2.
30 'leading edge' indicators of the coming Great Depression 2
Every day there is more breaking news, proof Wall Street's greed is already back to "business as usual" and in denial, grabbing more and more from the new "Bailouts-R-Us" bonanza of free taxpayer cash and credits, like two-year-olds in a toy store at Christmas -- anything to boost earnings, profits and stock prices, and keep those bonuses and salaries flowing, anything to blow a new bubble.
Scan these 30 "leading indicators." Each problem has one or more possible solutions, but lacks unified political support. Time's running out. We're already at the edge. Add up the trillions in debt: Any collective solution will only compound our problems, because the cumulative debt will overwhelm us, make matters worse:
1.
America's credit rating may soon be downgraded below AAA
2.
Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"
3.
Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse
4.
King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
5.
Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this year
6.
AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers
7.
American Express joins Goldman, Morgan as bank holding firms, looking for Fed money
8.
Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states
9.
State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt
10.
State, municipal, corporate pensions lost hundreds of billions on derivative swaps
11.
Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
12.
Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
13.
Fed also plans to provide billions to $3.6 trillion money-market fund industry
14.
Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
15.
Washington manipulating data: War not $600 billion but estimates actually $3 trillion
16.
Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs
17.
Commodities down, resource exporters and currencies dropping, triggering a global meltdown
18.
Big three automakers near bankruptcy; unions, workers, retirees will suffer
19.
Corporate bond market, both junk and top-rated, slumps more than 25%
20.
Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall
21.
Unemployment heading toward 8% plus; more 1930's photos of soup lines
22.
Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists
23.
China's sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai
24.
Despite global recession, U.S. trade deficit continues, now at $650 billion
25.
The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities
26.
Now 46 million uninsured as medical, drug costs explode
27.
New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt
28.
Outgoing leaders handicapping new administration with huge liabilities
29.
The "antitaxes" message is a new bubble, a new version of the American
dream offering a free lunch, no sacrifices, exposing us to more false promises
Will the next meltdown, the third of the 21st Century, trigger a second Great Depression? Or will the 2007-08 crisis simply morph into a painful extension of today's mess to 2011 and beyond, with no new bull market, no economic recovery as our new president hopes?
Perhaps some of the first 29 problems may be solved separately, but collectively, after building on a failed ideology, they spell disaster. So listen closely to "leading indicator" No. 30:
At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan's Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America's problems will take years and will burn trillions.
He sees "nothing but large increases in the deficit ... I think it would be worse than the depression. ... Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds." It'll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government."
Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. 'I just want to get people thinking about this, and to realize this is a road to disaster,' said Whitehead. 'I've always been a positive person and optimistic, but I don't see a solution here.'"
We see the Great Depression 2. Why? Wall Street's self-interested greed. They are their own worst enemy ... and America's too.
U.S. consumer prices declined a record 1% in October, seasonally adjusted, as energy prices fell a record 8.6%, the Labor Department reported Wednesday. Data on the overall CPI date back to 1947, and the energy data go back to 1957. Meanwhile, food prices in October rose 0.3%, the smallest gain since May. The core consumer price index - which excludes food and energy prices - fell 0.1%, the first time there's been a decline in the core rate since 1982. Economists surveyed by MarketWatch had expected the overall October CPI to fall 0.9%, and for the core to rise 0.1%
Today’s report focuses on a handful of names that are hovering right at well defined minor lows of the past month. The argument is that one can use these names as a “control mechanism” for the overall market. Watch how they behave in the day/days ahead from yesterday's closing price. Any weakness from here in these names will suggest that the S&P500 lows of Friday, October 10th at 839.80 are likely to give way. If these names do not breakdown in the period immediately ahead, it will suggest that the 850-1000 range of the SPX is taking on more and more authority and that the market is successfully stabilizing and healing from the panicky five session plunge of Oct. 6-10th from 1100 to 839.80 (-260 points 3.6%).
(Current changes 11-19-2008)
Symbol % Change Last
ALTR -5.56 13.6
AMP -10.75 14.28
AMZN -6.48 35.95
ANF -8.95 14.55
ANF -8.95 14.55
BAC -13.76 13.1
BWA -0.89 16.76
BX -8.32 5.95
C -23.09 6.43
COF -9.4 26.5
COH -9.2 13.91
CSX -8.14 33.07
DRI -9.62 14.94
DSX -16.24 8.56
GOOG -6.02 279.52
INTC -4.12 12.57
JNPR -4.02 14.07
MOT -12.05 3.43
NTRS -5.97 40.97
NWL -6.81 10.81
PLCM -10.32 16.77
PWR -11.68 12.7
TIF -10.19 17.71
TJX -8.13 18.42
UDR -12.41 11.43
WLT -19.99 15.17
The "Sell" list is comprised of weak stocks judged likely to break to new lows in the day/days ahead.
Today's prices......
Symbol % Change Last
AAPL -3.87 86.43
ADI -6.51 17.53
ALTR -5.56 13.6
AMP -10.75 14.28
ARBA -14.63 6.36
ASML -8.87 13.26
ATLS -8.1 14.4
ATVI -6.03 9.5
BA -4.83 37.65
BNI -4.8 73.81
CAH -6.23 31.92
CNI -5.45 35.03
CNQ -3.21 36.5
CSX -8.14 33.07
CTSH -5.88 15.68
DCI -8.53 27.02
BRC -8.17 20.57
EQIX -10.01 42.71
EQR -12.42 23.21
FAST -5.02 32.54
FSLR -8.12 101.58
GPN -5.47 33.51
GWW -5.46 59.92
HIBB -7.31 12.35
HRB -6.84 16.61
HST -16.04 5.6
JBHT -8.44 22.14
JBL -14.15 5.28
LSTR -4.71 30.14
MAR -12.35 13.13
MTN -12.14 17.08
MXGL -9.71 11.72
NATI -5.34 20.69
NCR -6.26 14.23
O -10.38 16.24
OFC -11.25 21.38
PSA -11.02 57.47
R -9.47 30.31
SPG -13.04 41.07
SUG -8.89 11.78
UNP -9.3 51.09
VAL -8.5 15.82
VNO -12.91 47.17
WGOV -15.22 20.5
WRE -11.77 21.82
Spreads on (AAA CMBX) indexes that track pools of mortgages made to real estate developers and property owners pushed through new record highs after the pending default of two large commercial mortgages amplified fears of spreading loan losses.
The reaction in the $800 billion-CMBS market reflects investors' growing realization that the economic slowdown is hurting occupancy rates and property values, increasing the risk that property owners will stop paying on their loans.
The steep drop in values of commercial mortgage-backed securities battered shares of life insurers that are big holders of this type of debt, including Hartford Financial Group (HIG), Principal Financial Group (PFG) Metlife (MET) and Prudential Financial (PRU)
Looking for NASDAQ Financial 100 (^IXF) to test the 1534.38 or lower!
First Solar Inc. (FSLR) will test the $74.77 - $54.20 with the rest of the solar stocks close behind % wise. Apple (AAPL) $50.00 and Google (GOOG) $172.57.
We are buying looking for a 38% retracement to the upside!
Sen. Charles Schumer, a New York Democrat who is part of the majority leadership team in the Senate, told ABC's "This Week" that an economic recovery package between $500 billion and $700 billion is needed and could be ready by the time President-elect Barack Obama takes office on Jan. 20.
Butchy S.
"It seems from ur analysis and some of your levels and the way the mkt is trading, swing trades are the way. and you've nailed the upside swing...."-- Secure Conference Room 9:51:00 Wednesday November, 26th 2008
ProShares ETF's Declare Dividend Distributions (52 of its 76 ETF's)
Record Date 12/26/2008 and payable 12/30/2008.
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