Tuesday, October 14, 2014

Late Oct 17 Today volume dropped on a relatively small bounce indicating there was no capitulation. For a capitulation we would have expected volume to almost double. We expect a better rally on or after the November election if indications are that this incompetent clueless leftist administration is going to be given the boot by the American people. But quite frankly we believe too much damage has already been done, and secondly interest rates were low for far too long and many high risk bets have been made. Those bets on a bull market will unravel not because interest rates will go higher but because prices will decline and high leverage will wipe out speculators who have borrowed and have too much margin.

For instance Morgan Stanley and many brokerage firms have wealth advisors that have been leveraging IRA’s and other retirement money with low interest bank loans that upon collapse will wipe out the wealth of many people who profited from Quantitative Easing as well as many others who are being mislead by “Wealth Advisors” who live on the commissions.   We have covered most of our shorts (bearish ETFs) but a few goals have not been hit yet.  We expect the decline in stock prices will resume with occasional small bounces until the November election.  Then we expect a sizable rally when it will likely be good to be bullish again for more than a full month.  But the high risk bets could begin to unravel because losses will pile up.  Margin requirements could rise which means high risk wealth gimmicks will fold and negative cash flows will increase causing panic with bullish 3X ETF’s which will decline about 3X the rate of decline of the market.


Oct 17  Today the WSJ reported that demand for gold rebounded amid the global rout in equities.  The metal climbed to a one-month high and the surge in volatility reached the highest level since November 2013. The futures in New York climbed for three straight days, the longest rally in two months.  More than $960 million has been added to the value of global exchange-traded products backed by bullion this month. Federal Reserve policy makers say weaker foreign expansion posed a risk to the U.S. outlook.  Gold prices are rebounding after a slump driven by concern that U.S. borrowing costs would rise.  Russia, China, and India are the biggest buyers of gold as opposed to dollars. 


The 2007 corporate and then state and city credit market freeze was what panicked Congress to give the $700,000,000,000 stimulation package.  The markets came close to freezing up again this past week.  The cost of National debt soared to 9% for some countries with poor credit history.   Many margin leveraged hedge funds took a big hit and the funds will have to bail out to break even in this next mini rally.  This is not the real year end rally we anticipate after the November election throws the leftists out of Congress.  Yesterday in Obama’s Ebola news conference, you could see that even his far left gave him the message that his stupidity and hubris has destroyed the chances of the left winning in November.  Most don’t plan to show up and vote once, much less vote twice this time.
 
Falsification of American statistics is delegated to the lower levels of the Obama government so when caught the Obama administration can blame the previous administration and Republicans not his appointees, even though the leftists are the source of all the misinformation. In China they blame the individual regions.  Likewise Obama can blame the states.  It is common knowledge that virtually every human failure and deadbeat is a habitual liar who blames everyone else for their failures.
 
Oct 15  The stock market dropped 5% on high volume before recovering most of the price loss on 2/3 less volume.  The cash flow out is already estimated to be over $1Trillion.  Today the second shoe of our Market Cash Flow Analysis dropped as the first of several capitulations was registered.   When that happened on 9-17-2001 we had another 4 weeks of selloff and then a buy signal.   When it happened on 7-26-2007 we had another 1.7 years of selloff and then a buy signal.  When it happened on 4-27-2010 we had 3 weeks more selloff and then a buy signal.  When it happened on 8-4-2011 we had 2 more high volume drops over 3 weeks and a buy signal until today for that particular Market Cash Flow indicator.  From that we believe the short rally we predict is probably 3 to 4 weeks away.  But we think the shock is already severe enough to have triggered a bear market which will become clearer next year.  The cause will clearly be identified as leftist incompetence and political correctness. 
This administration thinks if you do not put the security of Africans ahead of Americans then you are a racist.  The level of stupidity of American lefts is laughed at around the world.  For the dunces on the left, history is a mystery.   The WSJ says Brown University and Wesleyan University “A” students are actually  “F” students when compared to other students.  Obama is a dunce with a 3rd World anti-American education and a free pass for being a leftist at Harvard.  Obama is America's first president to have his scholastic records sealed.
http://online.wsj.com/articles/study-finds-many-colleges-dont-require-core-subjects-like-history-government-1413345842
 
Oct 14  The S and P 200 day trend line was broken yesterday giving major investors a new sell signal.  Our Market Cash Flow Index gave its trend line sell signal Thursday October 9, 2014.  Based on how far the market has already fallen we estimate it could fall anywhere from 5% to 20% more before any significant rally.  If it falls a full 20% it actually has a better chance of stabilizing as it did in 2011.  However, in any event the pattern is more like the beginning of the full blown bear market that occurred just after Obama was first nominated and then resumed when he was elected.  That is hard to believe but check for yourself how it began when he was nominated at the Convention and fell rapidly when he won the election in 2008.   It was at its worst when he was sworn into office.  Perhaps there is a good reason why the stock market is known to be a good predictor of the economy.
The whole world has suffered under leftist Obama Czars.  But Obama has yet to appoint an Ebola Czar even as he has opened the American borders to Ebola and the leftists said the Ebola liar who brought it to Texas died because he was black and Americans are racist.  Liberalism is a mental delusion carried by naïve Americans.   The most ridiculous leftist belief is that women are oppressed in the Western nations.  Apparently the leftists have never travelled to the Mid East or the former Soviet Union.  How many North Korean women have they seen marching behind their dictator?  International socialism destroys free enterprise and the free democracies.  Slave states like ISIS win 100% democratic support because they actively kill or imprison everyone else.   Liberals are deluded and actually think Russia, Iran, China, and Cuba are real democracies because they hold elections.
We expect many on the left will lose this November election and there probably will be a market rally before the end of this year.  But the leftists are still actively destroying the economic and social fabric of America with corruption, lies and hate commercials against all their political rivals.  Such being the case the recession will continue to worsen and the stock market could be down another 50% six months from now.  There are many Democrats who are not leftists who would make good candidates for President but so far not one is getting any support… and now it is almost too late.
Some say Obama blames former Sec. of State Hilary Clinton for the administration’s disastrous foreign policy.   Hillary thought withdrawing support of Israel would bring peace.  To fight Assad Hilary supported Obama’s arming of Jihadists.  The Jihadists morphed into ISIS.  Now Turkey is asked to fight the jihadists they were first asked to arm.  Perhaps Obama will have to take the blame for Hilary as her Mid East policies further destroy the democratic processes everywhere she went.  Now Lybya has become a terrorist state. 
This last one hints that under Obama/Clinton, that Benghazi Libya was used for gun running to arm the Jihadists (ISIS) against Syria’s Assad.
 
World Economy
Oct 17  OPEC is now letting oil prices slide to see if North American oil fracking production can withstand lower prices. So far fracking has shown no signs of cracking with the U.S. government forecasting record shale output helping boost the nation’s crude supply to the highest level since 1986.
 
American Economy
Oct 15
Retail Sales Sep -0.3% sharply lower 0.6% ---
Retail Sales ex-auto Sep -0.2% sharply lower from 0.3% --
Core PPI Sep 0.0% deflationary drop from 0.1% --
Empire Manufacturing Oct 6.2 down sharply from 27.5 ---
Business Inventories Aug 0.2% production down from 0.4% --
Treasury Budget Sep $105.8B sharply higher from $75.1B 
 
Oct 16
Initial Claims 10/11 264K down from 287K
Continuing Claims 10/04 2389K increased from 2381K
Industrial Production Sep 1.0% increased from 0.4% expected
Capacity Utilization Sep 79.3% up from 78.8%
Philadelphia Fed Oct 20.7 down from 22.5 -
NAHB New housing Market Index Oct 54 down from 59 means so-so.
Crude Inventories 10/11 8.923M up from 5.015M 
Oct 17
Housing Starts Sep 1017K up from 1013K expected
Building Permits Sep 1018K down from 1030K expected--
 
The Markets
Oct 17  All the major stock market indices have given sell signals as of Oct 15.  Numerous Pollyanna scenarios have put forth and we do expect a real rally if the leftists are trounced in November and people like the governor of Wisconsin are re-elected.  It is essential that state and federal employees not have the right to strike because they are the greatest source of corruption and patronage.  Leftists gave public employees that right but President Regan fired all the Air Traffic Controllers when they went on strike and put American safety at risk.   The unions have a long history of corruption and crime as do entrenched politicians.   The socialists discovered that Americans not unions and corrupt politicians were the ruling class in America.  Read what the socialists said.
 
We need people who will vote to have term limits because the corrupt get reelected and then because they have senior ranking they run all the government Congressional committees.  Obama has spent more taxpayer money than any previous president raising money for political advertizing to lie about and smear opponents of corruption.  Socialist George Soros is Obama’s biggest fan.  We need to vote out all the socialists and institute a sane corporate tax system that actually raises revenue instead of driving corporations out of the USA.
 
Oct 15  In 2007 when Obama  won the Democrat nomination the bear market was already gaining momentum as it started today.  It was not until the November election in 2008 when Obama won, that the banks with their Dodd-Frank-Obama housing Liar-Loan derivatives froze up and money flow almost stopped.   And the stock market bottomed out the week Obama took office.   Hopefully the opposite will now happen.  First there will be a rally when the leftists are thrown out of both houses of Congress this November.   But Obama divisiveness, corruption, and stupidity will likely impede American attempts to reform corporate taxes and the economy will not likely recover until Americans remove all the politically correct stupid leftists from office.   If that is the scenario then the bear market will resume in January 2015 and end with the election in November of 2016.  At that time the food stamps and many forms of welfare will be cut and workers will begin again to be rewarded by the prosperity of free enterprise.
 
Oct 14  Our Market Cash Flow Index (MCF) gave a head and lower second shoulder sell indication last month and a trend line breakdown sell signal Oct 9.  The only other sell signals not given are high volume spikes on downward movements.   We have a very thinly traded stock market now because the velocity of money is very low.  The high should precede the first rally.  However, 
.The broadest market index is the NYSE and it had a trend breakdown and a head-and-shoulder neckline breakdown.  The NASDAQ and the S&P both have had trend line breakdowns now.
 
ETF’s will be an economic junk bombshell of the coming Obama world economic crisis.  Almost every ETF was started after Obama took office with URE an exception.  To see what happens to a bullish ETF that went through a bear market just plot URE to 2007 back 1938 days to when it was started.  That is what will happen in a bear market to all the investors in new bullish ETF's after Obama was elected.   In the next Obama recession Americans who continue to hold bullish ETF’s will have the same consequences as URE holders had during the last Obama recession.
 
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)