The Stock markets are at or near their support level which is the level of the February 2010 low.

The Stock markets are at or near their support level which is the level of the February 2010 low.

If you recall, at the low we hit in February, Jim Cramer and all of GE/MSNBC/Pravda fools were bullish down to the very bottom capitulation and then turned bearish at the low point just like they are now. They are experts when it comes to money losing advice.

You do not want to be in inverse ETFs in this time period because you may have to hold on and inverse ETFs fall over time. So you would lose over time as well as lose big in the coming market bounce.

Talking heads are panicking today just like we saw on Feb 8 the day before the market began advancing again.

Buy when the blood is running in the streets and oil is in the water.

Jim Cramer has a good informative show. Just don't follow his advice until you do your own study. For instance you should have bought inverse ETFs for gold and silver four hours before he recommended gold. You should buy the regular ETFs about a month after he recommends them so that they have a chance to bottom out.

World Markets:
We believe the worst of the current market decline is just about spent. Volume spiked up in the capitulation yesterday. Yesterday the market hit the recent lows of February. But the data still looks like the next three-month bullish cycle has already begun. Jim Cramer did not claim we had a double bottom instead he is panicking. Since he recommended buying gold this week it has dropped close to 20%. We think it is up from here but only for about two months.

China is in a state of confusion. Since they started buying Euro's and selling dollars the dollar has grown stronger and the EURO has grown weaker. Since they recommended developing countries establish a basket of currencies the basket has gone up in flames. Is Jim Cramer is no longer claiming China will lead us to recovery. We have pointed out the problems in the developing world some time ago. Now we see small cap and developing countries in a good buying range again.


Economic Calendar

This Week

US Net Long-term Treasury International Capital (TIC) Flows rise to $140.5B in Mar vs. $47.1B in Feb. The 90.7 Billion increase is an impressive rebound from the last two months which showed a combined decline of -8 billion. The increase was the highest since April 2008. It seems in June the flow of funds back into the dollar resumed after some moves out in prior months.

The NY Empire State Manufacturing Index recorded a figure of 19.11 in May compared to a reading of 31.86 the month prior. Any positive value is still goodness but the decline in the number was more than expected.

Building Permits Apr: Down from 680K last month to 606K. But housing Starts Apr rose from 626K to 672K. This implies that the oversupply rate is declining over time.

The main producer price index (PPI) fell 0.1%, seasonally adjusted. The core rate, which excludes volatile energy and food prices, rose 0.2%, the Labor Department reported. That is at a 2.4% annual rate that is not inflationary.

Core CPI Apr remained at 0% for the second month in a row. The CPI dropped from +0.1% to -0.1% due to lower food prices. The dollar is becoming stronger and that will damage the balance of trade and result in more imports and more American unemployment that will be deflationary.

Crude Inventories dropped significantly from 1.95M down to 1.62M and that should cause energy prices to continue rising.

Yesterday:
Continuing Claims were reported at 4625K that is the same as reported the last time. But they revised the last figure up to 4665K so that the new level would appear better by 40K. However idiots on Wall Street forecast a level of 4600K because they shorted the market and want the market to drop further. Those idiots are Jim Cramer's friends and that is why he panics just when it is time to buy.

Initial Claims 05/15 were at 471K compared to 444K the last time or 27K higher. They had revised the last number up by 2K so that people would only think it was 25K higher. However idiots on Wall Street forecast a level of 440K because they shorted the market and want the market to drop further. The idiots therefore se a 31K increase in unemployment. We have the Obama administration that continuously lies to make things better and the idiots on Wall Street who want Jim Cramer and the public to buy high and sell low so Wall Street can fleece them.

Leading Indicators Apr was an Obama screw-up. Last month it was up 1.3% but this time the corrected it up another 0.1% instead of down 0.1% and therefore they turned a 0.1% improvement into a -0.1% loss this time, the first decline since the recovery began. Remember there is an incestuous self-fulfilling prophecy between the stock market and the leading indicators. When the market is going up the LI is increased and therefore bulls get more bullish. The stock market went down 10% so most of the LI drop was due to the stock market decline not because the economy is worse. The liars on WS love the incest because they want you to sell everything right now because they are secretly buying at the low.

Philadelphia Fed: The expansion of the region's manufacturing sector is continuing, according to firms polled for April's Business Outlook Survey. The general activity index increased to 20.2 this month from 18.9 in March.



Market Outlook May 21, 2010
The final capitulation yesterday was greater than the 3-9-09 capitulation, and more comparable to 9-17-08 or 10-9-08. There could be six months of going horizontal with big swings. Think about the 1970's for a comparison or perhaps 2004 that started with a selloff and went horizontal for six months. We just had a 14% decline. Had the decline stopped two days ago we would have expected the market to rise now to just about the last high. But with the capitulation we saw, we probably will only recover perhaps 10% of the 15% decline in most markets.

The markets yesterday tested investor risk tolerance to shake out the weak hands. The buying opportunity was extended another day.


World Markets

Asian markets settled down last night, Shanghai up 1.1%, Hong Kong down -0.2%, India down -0.4%, and Japan down -2.4%.

European markets are down again today in the range from -2% to -2.2% this morning about half way through their day. Obama wants America to be more like the communists and socialists in Europe and pay people for not working because he believes indigents have a valid life style and should be fed, clothed, and housed because they are humans and entitled to it. There is no incentive to work unless you call rioting and protesting cuts a legitimate form of work.

US pre-market futures are down this morning by about -0.7% just like yesterday. As with yesterday and most days U.S. Futures are a snapshot of the moment and do not correlate with what happens by the end of the day. Yesterday it was another buying opportunity and today it says this morning there is still an opportunity to buy relatively low.