Obama administration’s first response was “the system worked really smoothly.”

World Outlook


Janet Napolitano, the secretary of homeland security defended her comments that passengers who risked their lives to extinguished the fire in the Nigerian’s explosive under pants during his attempt to blow up a Detroit-bound airliner on Christmas Day showed that Obama's security “system worked really smoothly.”

President Barack Obama's top counterterrorism adviser Brennan said Sunday "There was no single piece of intelligence that said, 'this guy is going to get on a plane." It is not fair to single out African Islamic Arabs trained in Yemen just because their relatives turn them in. That is not due process and we must give terrorists our American rights. Obama believes there are no terrorists any more, just underprivileged people who still hate Bush. He inherited the problem so it is not his fault! Blame Bush. Obama then closed embassy in Yemen where the African Islamic Arab came from. This weekend his spokesman said we shouldn't focus on Islamic Arab terrorists because who knows… they could hold grandchildren hostage to force white American grandma to carry explosives on board. Obama's security advisers are obviously simple minded to think white American grandma is more dangerous than Islamic Arabs from Africa and the Middle East.


Iranian socialist Islamic terrorist state continues to gun down student protestors and Obama administration continues to watch and offer no support to the victims of Iranian Islamic terrorism. American hikers in disputed Iraq-Iran border continue to be held hostage in Iran. Iran steps up their nuclear weapon's program for world nuclear terrorism.

Market Outlook:
One of the most basic technical rules says that sustainable stock market rallies are accompanied by high volume on advances and declining volume on declines. By contrast, bear market rallies are characterized by low and falling activity on advances. Our market cash flow index says this rally is no longer sound. The problem got more pronounced during December. In 2009 the market rose roughly 50 percent from its March low. In 1930, the market rose roughly 50 percent from its 1929 crash low. This current monster rally led many economists, politicians and financial market experts to declare that the worst was over and the recovery had begun. The 1930 rally caused many in universities to claim that communism works better than socialism and that capitalism was a failure.

This current stock market rise off the March 2009 low has the look of a bear market rally comparable it to the frightening bear market rally and subsequent collapse of 1930. The recovery did not come in 1930, in fact the Great Depression had barely started, and the stock market suffered losses of another 85 percent measured from the interim bear rally high of 1930 (where we are by analogy today).

The final numbers are in. The Obama ‘cash for clunkers’ program last summer resulted in the sale of 320,000 Japanese vehicles in the U.S.

This Weeks business reports:
Monday, Jan. 4:
ISM Mfg Index
Construction Spending

Tuesday, Jan.5:
Factory Orders
Pending Home Sales

Wednesday, Jan. 6:
ADP Jobs Report
FOMC minutes

Thursday, Jan. 7:
Unemployment Claims

Friday, Jan.8:
December unemployment report


Market forces January 4, 2010

We estimate the NYSE must rise 3.5% from last Thursday's close to be interpreted as a real rally not a declining head and shoulder sell signal. That reflects both the price change and volume of shares being traded. The Spiral (Parabolic SAR) indicator just joined the technical sell signals. At this point it appears the rally is over. The next sell confirmation will be if the neck resistance level (of the head and shoulders formation) breaks down on the volume adjusted NYSE market cash flow index. The MACD indicator is also poised to give a sell signal.

Asian markets were up slightly over night; China holiday, Hong Kong down -0.2%, India up 0.5%, and Japan up 1%.

European markets are up with the average in a range from 0.7% to 1% this morning about half way through their day.

US pre-market futures flat at about 0.5% today at 7:00 AM EST.

There is a similarity between the 1930 rally and 2009's rally. From the March low the S&P 500 has soared 69 percent in nine months. In doing so it recovered a bit more than 50 percent of its former losses. But it's still 27 percent below its all time high of October 2007. Yes, the market rallied strongly in 2009. But it did the same thing in 1930. History then tells us that the current stock market rally is not sufficient enough to reason that the worst is over. We have inefficient nationalized medicine on the plate with 50 million entitlements for indigents who do not share the American work ethic, and $trillions of debt burden to give Acorn and other indigent socialist supporters pretend jobs that pay them with real taxpayer's money.

We are now preparing for a possible market decline in early 2010 that could take prices down to at least the old high where stocks were at the end of May seven months ago. The last two Januarys have been quite ugly although in 2009 the market surged more than 2% on the first January market day.