Volume fell another 11% on Friday as stock prices rose 1%… indicating more selling likely

Market forces September 8

Recent high volume market declines and low volume advances have driven our Market Cash Flow Index to the first sell signal position since its March 23 buy signal. That is a significant event as the MACD has also confirmed a bear market is coming. The Re-spiral (special parabolic SAR) is now within three days of confirming a bear market.

On the other hand, if Obama announces this week that he is withdrawing "socialized medicine" and keeping America's current health system and introducing tort reform to reduce costs, then that alone could cause an economic rally. While remote it is possible. After all Obama’s avowed Communist “Green” advisor, Van Jones, just resigned this past weekend. That is a good sign that anything is possible.

But Obama did try to have his Re-education people get the schools to have a day of “Praise our mighty Indonesian leader” chanting this week and the vast majority of Americans seem about ready to stage a major “tea party”. It seems evidence is mounting again that Obama is not a legal (Constitutionally) citizen of the USA. It seems he got into his American university with money from a program for aspiring foreign Indonesian students. But then possibly Obama is American and was only trying to scam the system like Senator Rangel does year to year.

Oil continues to decline contradicting the surge in Gold up to its previous high. That means it is not a weak dollar but rather fear that is driving up gold prices. GE/MSNBC/Pravda seemed to be leading the gold surge Thursday expressing fear about a possible 20% stock market decline but then on Friday completely reversed themselves again and seemingly took the position that the market has reached a permanent plateau from which it will grow and never return. Likewise Barrons said the market will creep upward the rest of this year. Not!! We think not!! And we think it is too early for gold to move much higher since the economic contraction is continuing. So far in 2009, stock prices rose 50% and earnings declined 30%.

Market Outlook

Business pessimism at GE/MSNBC/Pravda reached a new low Thursday and completely reversed on Friday proving once again that GE/MSNBC/Pravda is two faced and can lie and selectively pick their recommendations to claim any performance they wish to claim. It also means the timing and stock advice of MAD or FAST Money are worthless.

Market leadership is wavering. Now Oracle is being sued by the EU WTO and the leadership of the banks and real estate are weak. Also, the mergers in the soft candy industry are hitting the rocks. Buyouts are absolutely necessary for a bull market so that stimulus/TARP funds can further inflate the current stock market bubble and keep the bull market going. The next three days are crucial.

The FDIC announced that five more banks failed last week bringing the total for the year to 89. These five failures will cost the FDIC $401 million there are more than 400 more banks on the FDIC’s troubled-bank watch list at the moment. It is becoming more likely that an FDIC bail out will occur before the end of the year.

Asian markets were up last night, China up 2.1%, Japan up 0.7%, and India up 0.7%.

European markets are currently up in a narrow range from 0.3% to +0.5% this morning about half way through their day.

US market futures are slightly higher by about 0.8% at 7:30 AM EST before the opening today.

The Baltic index of world trade has been declining for over a month indicating that world trade is declining. The stocks of communist China have dropped over 25% in the past month and Jim Cramer and GE/MSNBC/Pravda considered them the leading indicator for the economic recovery in the world. We warned that corruption and fraud could be expected to run rampant with the Communist Chinese socialist experiment unleashing free enterprise. Socialism pays the indolent and incompetent well while heavily taxing the people who create value. A sharp decline is now possible because many leveraged funds are fully invested, have hair-trigger stop sell orders in at about -3%. Our strategy now is to continue to take profits and wait for future buying opportunities. Market volume has increased on declines and decrease 30% over the two day end-of-the-week-rally last week. This stock market is now running on vapors. A feeble market over the next three days would have all our timing indices shouting sell.