Wall Street is betting on Obama failing

The crisis is not the economy it is the socialist administration in office. But Wall Street is now counting on Obama failing.

Yesterday started with fraudulently spun reporting to all investors saying housing prices rose for the first time this year and the recession bottom was past history. Later the false information was corrected and in fact home prices dropped again on a month to month as well as a year to year basis. Indeed an international bank calculated that more than 25% of American mortgages were now underwater and it would rise to 40% underwater before the recession ended. Later all the news outlets issued corrections similar to the following.

U.S. Foreclosure Filings Set Third Record-High in Five Months

By Dan Levy, Aug. 13 (Bloomberg) -- Foreclosure filings in the U.S. climbed to a record for the third time in five months in July as falling home prices and the recession left more homeowners unable to keep up payments or refinance. A total of 360,149 properties received a default or auction notice or were seized last month, according to data seller RealtyTrac Inc. One in 355 households got a filing, the highest monthly rate in RealtyTrac records dating to January 2005, the Irvine, California-based company said in a statement.

“We’re in a deep hole,” Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc., said in an interview. “There is a whole new wave of foreclosures tied to the cyclical dynamics of the economy.”

The median price of an existing single-family house to $174,100 in the second quarter, the most in records dating to 1979, the National Association of Realtors said yesterday. Almost one-quarter of U.S. mortgage holders are underwater, property data firm Zillow.com said Aug. 11.

“There are a slew of factors showing fundamental weakness on the demand side: tighter underwriting, job loss, investors who’ve been badly burned,” said Stuart Gabriel, director of the UCLA Ziman Center for Real Estate in Los Angeles. “We have not seen the bottom of the housing market.”


Market forces August 13

The Wall Street euphoria has been based on their assumption that the socialist destruction of the worlds best medical system will fail. Health care stocks have surged including the insurance companies that ultimately will be forced out of business when the bill passes. Stocks like insolvent profitless Hartford Insurance have tripled in price as investors wish and bet on an Obama failure. Recent public protests against the new entitlements and redistribution of wealth to the indigent have encouraged investors as well, but the socialists have majorities in both houses and the weak Republicans in congress want to compromise again. The socialists cannot lose until the 2010 election.

Sales continue to be flat except for the temporary car clunker $2Billion stimulus program. And that is flat even though the stimulus package is projected to put us at a $13Trillion dollar national debt. People on welfare are the primary recipients of the stimulus program as of reports yesterday. The new socialist system will cut checks to the "don't worry be-happy life" life stile voting block as working Americans pay higher taxes. Isn't that the definition of slavery? Yes, but in past slavery the slave owners were producers not of the "don't worry be-happy" folks. It seems like this administration is creating a new kind of Banana Republic.

Market Outlook

Yesterday was somewhat inconclusive so we will have to see what today brings us. Yesterday had all the indications of the market topping out. Volume was lackluster on early positive misinformation and then lost 30% of its gains in the last hour on high volume. The spiral or parabolic SAR said sell on August 11 and the MACD dropped to zero yesterday; not quite negative territory yet. It looked like a failed attempt to panic more investors into the market. That being said we concluded it was a failed retest of the market high. We definitely see bubble psychology under way. We would not buy at these elevated prices but instead seek alternative investments such as corporate bonds except when individual stocks correct and offer buying opportunities.

The recent rally has the market in a highly overbought position again. We expect U.S. stock buying opportunities and then wild optimistic appreciation (as we have now) that are times to take profits. This may very well be a positive consolidation period not a negative distribution period. But it would be unusual not to have a sharp sell off panic from time to time. Summer and early fall are usually times when markets decline.

If you have been buying stocks when they were low you are finding you have some large profits now. You need to consider selling them (or enough to capture just their costs) if you do not want to lose capital when the next market panic occurs.

Last night Asian markets were rebounded slightly from sharp losses the previous day: Communist China up 2.1%, socialist Japan up 0.8%, oligarchy Hong Kong up 2.1%, and socialist India up 3.3$%.

Today most of the socialist European markets are up in a range of 1.2% to 1.9% half way through their session.

US futures indicate a higher USA market opening again this morning. The financial sector is particularly overbought with commercial debt about to crash through the roofs.

We anticipate a panic spike down any time now as a buying opportunity. We must be capturing profits on the rallies and then finding better buys on the declines. That is called cherry picking the best buys. We will continue cherry picking mostly into and now also out of the market rotating before or when the funds rotate through the sectors. We expect the decline will be a typical rotation with sharp drops in some individual stocks/sectors while other stocks/sectors bottom out or rise and then decline so the change in the market indices will be much smaller. The advances will be similar but opposite.

Investing time is now compressed and hence investing requires more trading skill. We watch the sectors carefully because hedge funds seem to deflate one sector at a time and then let investors pump them back into overbought territory. They can do that best during the kind of rallies we see in this sideways market. Buy after they deflate a sector when there are bargains. The hedge funds move quickly in and out so after they move in it is usually too late.

US stocks are up 47% and emerging markets are up 80% in just five months so be careful.