We are preparing for a market decline to a level seven months ago.

We are preparing for a market decline that could take prices down to where they were at the end of May, seven months ago.

Obama leftist radicals said, "No opportunity to damage free enterprise should be left unexploited."

There was no economic collapse until after a year of leftist campaign rhetoric saying that the economy was in shambles. That caused a collapse in confidence. No responsible people ever publicly claimed America was headed for a depression during the fifty years before Obama because every intelligent and responsible person knows that such stupid irresponsible remarks damage the confidence and trust needed for a free economic system to function.

America's economic system was built on honesty and earned the trust that true liberty thrives on. The Obama leftists deliberately shattered all of that to create the crises they needed to get a veto proof majority to eventually change the American Constitution and create another totalitarian socialist state where dishonest and unethical politicians band together with the necessary votes to expropriate wealth from the producers of national wealth who are the "true" minority in human society. Obama even had the "Soros" greed money flooding his campaign with cash. Boy, those greedy Wall Street folks sure wish they had not made that mistake now! Tyranny always comes clothed in promises of great things to come. But once they take power they try to silence dissidents who want to keep liberty alive. The dictators reward the thugs they attract to their government. That is what the stimulation package and the health care bill are all about. They are to redistribute wealth from hard working, liberty loving people to the thugs, the lazy, the illegal aliens who want amnesty, and all the other elements who could comprise a permanent voting block for the leftist radicals. Then with a super-majority they change the constitution to give themselves lifetime dictatorial power. If they survive long enough their psychotic children even succeed them like they have in North Korea.

ACORN and the Panthers still have faced no threat of court action for voter registration fraud and intimidation of election officials and voters at polling places, or for the terrorizing of AIG employees with bussed in leftist demonstrators earlier this year. The Obama administration is giving the 911 terrorists every opportunity to stack the jury and subvert American justice by trying war criminals in civilian court. The Obama leftist administration is doing everything possible to try to disgrace the previous administrations that fought for American liberty. The claim that Washington "had slaves", Jefferson had children with slaves, they were all militaristic killers, they slaughter indigenous peoples, they are Jew lovers, they created AIDS to kill Blacks and Homosexuals, they torture Moslems… etc, ets. All this socialist rhetoric is the tyrant's "Big Lie" wrapped in a small element of truth but mostly in self-loathing, envy, and hatred of enterprising people who love their work and American liberty.


World Outlook
The dollar suddenly looks good again as the socialist "PIIGS" promise more raises for government workers and drive their countries toward bankruptcy. This will damage the EU because the PIIGS think Germany and France can bail them out. But the socialist PIIGS are no different than states like California and New York that are being driven towards bankruptcy by unionized state employees. Only Ireland said they would cut the wages of their government workers to help balance their budget. If they follow through then the PIIGS will lose one of their eyes and everyone will then know those socialist EU states as just PIGS.

According to EPFR Global, emerging-market equity fund inflows slowed in the week to Dec. 16, with 2010 poised to be a more “testing year” amid waning stimulus measures worldwide.

CNN-Money this morning has the headline, "Global warming's biggest jerks." The article says they are all in Copenhagen this week.


Market Outlook:
This Week
Demand for the weekly 3- and 6-month bill auctions continues to be very strong. Despite very large auction sizes, coverage for both auctions was over 3.60. Low bid for the 3-month bill was once again zero. The average rate was at the low rate of 0.4%. The dollar regained strength causing commodity prices to decline and stock averages to decline around the world.

The Producer Price Index for Finished Goods rose 1.8 percent in November, seasonally adjusted. This increase followed a 0.6-percent decrease in September and a 0.3-percent advance in October. That is a rapid acceleration in wholesale inflation.

The Empire State Manufacturing Survey, conducted by the New York Federal Reserve, indicates that conditions for New York manufacturers leveled off in December, following four months of improvement. The general business conditions index plunged 21 points, from 23.6 to 2.6. The indexes for new orders and shipments also fell close to zero.

Industrial production rose 0.8 percent in November, a sign of recovery taking root in some parts of the economy. The gain shows that businesses and consumers are spending more, clearing inventories and spurring factories to produce more goods.

The homebuilder's housing market index fell 1 point in December to 16, now 3 points below September which, though very weak, was the highest reading so far in the2009 housing recovery. The report says credit conditions remain very tight and that questions over job security are keeping potential buyers from taking advantage of government incentives. Today's results point to a decline in existing home sales which, had begun to recover. Existing home sales for November will be posted Tuesday next week.

Federal Reserve officials met and just declared financial markets healthy enough to remove most emergency aid without going as far on their support for the U.S. economy.

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in November or at a 4.8% annual rate up from the 1.8 percent rate over the previous 12 months, the U.S. Bureau of Labor Statistics reported. It is the first time wholesale and now consumer prices show evidence together that inflation is beginning to kick in.

Construction of new homes rose to an annual rate of 574,000 during November-- a figure that is 8.9 percent higher than the October revised rate of 527,000. However, this rate still falls 12.4 percent below the rate reaching during November 2008. The Northeast saw the biggest increase in new construction, having experienced a 16.4 percent rise in the period examined. Meanwhile, housing starts rose 12.3 percent in the South, 3 percent in the Midwest and 1.9 percent in the West.

Yesterday:
The Labor Department said that the number of Americans filing for initial unemployment insurance unexpectedly rose last week to 480,000 initial job claims filed in the week ended Dec. 12, up 7,000 from the previous week's upward revised 473,000.

The New York-based Conference Board’s index of U.S. leading indicators rose for an eighth consecutive month in November, a sign economic growth will extend into the first half of 2010. It rose 0.9 percent after climbing 0.3 percent in October.

The Philadelphia-area manufacturing index grew in December at the fastest pace since April 2005. Manufacturing in the Philadelphia region expanded for a fifth month as sales and employment grew. The general economic index rose to 20.4 this month, from 16.7 in November. Readings greater than zero indicate growth.

Today, Dec. 18:
Quadruple-witching expirations.

Market forces December 18

Volume rose almost 60% yesterday precisely when we indicated a convergence of sell signals a week ago. The MACD and cash flow indices say sell and a spiral (parabolic SAR) signal is close in coming. This year through November, investors pulled an estimated $118 billion from hedge funds as investors have run to the false safety of bonds.

We estimate the NYSE must still rise 4.7% from yesterday's close to be interpreted as a continuing rally not a declining head and shoulder sell signal. That reflects both the price change and volume of shares being traded. The market still looks like it is topping out. In any event after a possible year end rally a normal -3% to -5% downward correction would be due anyway… so it is still wise to take profits were possible. If the head and shoulders sell signal occurs the correction could be closer to -10% to -25%.

Asian markets were down over night; China down -2%, Hong Kong down -0.8%, India down -1%, and Japan down -0.2%.

European markets are up with the average in a range from 0.2% to 0.6% this morning about half way through their day.

US pre-market futures up by about 0.3% today at 8:00 AM EST after a high volume decline yesterday.

We are preparing for a market decline that could take prices down to where they were at the end of May seven months ago.