SPX Short-Term Update

• Daily - Neutral

• Weekly - Bullish

• Monthly - Bullish

Note: More upside is to be expected in the short term, watch for breakout over April 2010 highs for a push towards 1300 SPX

SPX Daily

Daily and Weekly S&P 500 Charts

• The S&P is bullish on the weekly chart all the way to 1200, a break of that resistance zone would signal a lot of upside to come.

• The daily chart is a little extended with numerous negative divergences. So, a small pullback is due, at minimum. We will watch key support levels for buying opportunities.
  

Weekly S&P 500

Daily S&P 500

More bearish signs over last two week...

I've been on vacation for the last 10 days so my analysis has been limited but it's safe to say the tides are starting to turn bearish. What will be the event that will be the turning point? Will it be a US-BP scandal? (NOAA scientist lied) (toxic dispersant) (dead fish) European bankrupt countries not named Greece? (Spain, Portugal, Ireland, etc. ) Maybe something closer to home (California) Or simply an acceptance that ponzi finance isn't the answer and a de-leveraging of the system is inevitable and will push assets lower. Who know, but here's a very short bearish/bullish list.



Bullish
USD ticker UUP - Best long
Bonds
Cash
Corn
Wheat
Health Care


Bearish
Equities
Euro
High Yields
Coal
Crude Oil
Steel

S&P EWT Update: Target 1150

I still have my price target around 1150 on S&P. As you can see there is heavy resistance between 1145 and 1155. Exact timing is the hardest to do with EWT as you can see from my last S&P EWT post where the estimated end of the rally was July 29th at 1150. That timing was based on 100% time extension of wave a of C for wave c of C. This timing was rather unreasonable given the nature of wave a of C. So here's the next notable times: 161.8% of Wave A close 8/12; 261.8% of Wave a of C close 8/11; 161.8% of wave 1 close 8/18.

Keep an eye on the price with the timing as an afterthought.

Is Steel Leading the Market?

Double zig-zag correction ending soon for US equity.

EUR/USD rally looking over

Oil Update

Oil, like gold, is also a recommended sell...

Daily Chart:

Weekly Chart:

Gold Update

Daily Gold Chart

Gold looking very bearish...

Intermediate Gold Top

It looks like gold has topped for a few years before it continues its bull market rally....

Textbook Example of Double Three

Could be a triangle or zigzag that ends Y... looks like a triangle as of now

Fiat Falure Cycle

Daily S&P EWT

Market is literally on the edge of the abyss....

Nasdaq Composite Index

Good movement....

We should know direction soon....

Current Elliott Wave Count S&P 500

• It looks to me as if there is a strong possibility in this rally continuing....however, don't be suprised if it falls off a cliff.

• Everyone is watching the SPX 1040 level for a breakdown. If it breaks watch for some fireworks.

• Nevertheless, it looks like Ben could keep the music going a little longer. There is some heavy buying going on, some not seen since the March 2009 lows. Dollar bulls are at record highs (bad for market) and market participants are just as pessimistic now as they were near the March 09' lows.

• What the verdict? .......it smells like a rally a coming

S&P 500 Index - 60 minute chart

At some point Intel (INTC) will be a major buy....

INTC - Weekly Candlesticks: "

via StockCharts.com

"

Time to go shopping in Greece?

• I'm not real sure, but I believe it could be time to go shopping for some value in Greece.

• The world is scared to death of Greece and like Buffet says, "be fearful when others are greedy and greedy when others our fearful."

• I'm buying some National Bank of Greece (NBG) right here.

National Bank of Greece (NBG)

What am I reading today?

Finance & Economics

On The Descent Into A Weimar Reality - More and more pundits claim that the true historical analog to our current tumultuous times are not the days after 1929, but the period between 1919 and 1923 in post WW I Germany, also known as th Weimar Republic.

With Everyone Expressing Their Fake Support For The Euro, Iran Is Now Openly Dumping €45 Billion - Iran's central bank will sell 45 billion euros from its reserves to buy dollars and gold ingots, a report on the website of state-owned Press TV said on Wednesday.

How Much Economic Growth Is “Artificial”? - Add it up and only one quarter of the last seven (Q4 2009) has been able to show real growth in excess of government stimulus.


Trading and Investments

The Ultimate Hedge in Economic Crisis - Consider health care the ultimate hedge in times of economic crisis. Not only is it the last area that people cut back, it doesn't lose value in good times, as gold does. As a percentage of our economy, health care overshadows sectors that are far more subject to economic fluctuations, such as energy.


Politics

US Attorney General Launches Criminal, Civil Investigation Into BP Oil Spill - It's about that time for someone to ask a few questions of BP former Chairman Peter Denis Sutherland (until January 2010), who just happens to be a non-executive director of Goldman Sachs, which incidentally sold just under 5 million shares, or nearly 40% of their BP stake, in the quarter ended March 31?

Libertarian Warren Redlich blasts Republican opponents for supporting Democrats in the past - Libertarian Party nominee for Governor of New York Warren Redlich took some shots at his Republican opponents for having supported Democrats in past elections.

"There Are too Many Bureaucrats, and They Are Paid too Much" - The Center for Freedom and Prosperity's latest video looks at how a large part of the soaring federal and state government debt is due to a massive, overpaid bureaucracy.

Will history continue rhyming?

• Sometimes history seems to repeat itself.

• 2007 saw the collapse of the largest housing bubble in U.S. history, the lead up to this collapse is shown in chart #1.

• The U.S. reflation trade of 2009 and early 2010 also was fueled by a massive amount of liquidity, creating another bubble in the U.S. equity markets. This can be seen in chart #2. Notice the similarities in the rise of 2006/2007 to 2009/2010.

• What if the collapse of this bubble mirrors the collapse of 2007/2008? Check out chart #3, we could be in for another bumpy couple of years.

2006/2007 Market Rally

2009/2010 Market Rally

What could happen from here

Timings not right for gold

• If you're looking for an investment in the gold market the timing probably isn't the greatest at the moment.

• I can see gold pulling back to $900 in the intermediate term, that's when I'll become a buyer.

"I would recommend you panic"

Internals suggest short term rebound likely...

• Stock market internals are suggesting at least a short term rebound is upon us.

• This bounce could last anywhere from a few days to a couple of weeks, who knows.

• Once the buying stops the downtrend should resume in full force, so be careful playing the long side of the market.

• As of right now our portfolio remains in cash. Check it out by clicking the "model portfolio" link located on the right hand side of the page.

S&P 500 Index - 60 minute chart

• Looks like the U.S. banking index is losing a major support level.

• Support, when broken, turns into resistance. This isn't a good sign for the markets.

U.S. Banking Index

S&P 500 breaking down.....NYSE having "trouble"

• The NYSE is breaking as the global carry trade unwinds.....liquidity crunch anyone?

• The S&P is breaking down below a major pivot point as we speak, this could get interesting very fast.
  

Regulators don't know why but they will (try to) fix it anyway....

Some logical people might say that you need to know why a problem occurred to fix it. Well this isn't the case with the government (again). 'Fixing' (pun intended) the stock market is another blatant attack on the free market. The stock market isn't a sandbox where everyone is a winner and no one can hurt anyone's feelings. The stock market (and all markets) have to be free in order to allocate resources efficiently. There's really no need to explain, read some economic 101 level material if you want an explanation.


Link to article

Here's the highlights of the article:

"Regulators say it makes sense to reach for remedies now, even though they have yet to determine the exact cause of the May 6 market dive."

"The rules would take effect in mid-June under a six-month pilot program agreed to by major U.S. exchanges and the Securities and Exchange Commission."

"Under the plan, trading of any Standard & Poor's 500 stock that rises or falls 10 percent or more within a five-minute span would be halted for five minutes. These rules, known as "circuit breakers," would be applied if the price swing occurs between 9:45 a.m. and 3:35 p.m. Eastern time. That's almost the entire trading day."

"Importantly, the new circuit breakers would apply to all U.S. exchanges. Most of the 50 or so U.S. exchanges regulate themselves and design their own tools for slowing or halting trading."

So you want me to believe the Euro is the best currency?....

Risk assets losing favor...

• This is a measure of the amount of risk investors are willing to assume.

• As you can see it is breaking down out of its trend channel. This indicator usually leads the market; therefore, it could be warning of further downside to come before a decent bounce.
  

High Yield Corporates/Investment Grade Corporates

Possible bounce in this area....

• We could have a possible bounce right around this area....

• Make sure to check out the Model Portfolio (link on right side of the page) to see what moves we're making with our portfolio.

S&P 500 Index

Fire Bomb Hit Greece Police During May Day Protest

Greece is in an all out collapse....

$Athens General Shares (Short-term view)

$Athens General Shares (Long-term view)

Could this be at least an intermediate top?

• I'm sure the market should fall right now. I just don't know if it will or not.

• Yesterday I positioned myself net short, but will buy pullbacks strongly when I think the time is right.

• My favorites are China and the energy sector.

• You can check out my portfolio with a 20 minute delay in the link at the top right hand side of the page or right here anytime 24/7.
  

S&P 500 Index

China setting up for long-term rally?

• I noticed a huge head & shoulders pattern today when looking at a long-term weekly chart of the China ETF FXI.

• This could be huge, with a price target north of the highs in 2008.

• Maybe we haven't even seen the beginning of the China bubble?

• There could be some money to be made if this happens to breakout. Keep it on your watch list.

China ETF (FXI)

Home / Gold Ratio

Below is the median single-family home price divided by the price of one ounce of gold. This results in the home / gold ratio or the cost of the median single-family home in ounces of gold. For example, it currently takes 153 ounces of gold to buy the median single-family home. This is considerably less that the 601 ounces it took back in 2001. When priced in gold, the median single-family home is down 75% from its 2001 peak.

“It is a [disputed] question, whether the circulation of paper, rather than of specie [gold and silver coin], is a good or an evil… I believe it to be one of those cases where mercantile clamor will bear down reason, until it is corrected by ruin.”
- Thomas Jefferson

“Paper is poverty,… it is only the ghost of money, and not money itself.”
- Thomas Jefferson

Hourly EWT

This is my count right now from the recent rally from mid Feburary....

Has the market finally stalled?

• The S&P 500 is beginning to run into a sheer wall of resistance.
• If you've banked some profits on the way up but are still reluctant to sell your long holdings I would suggest buying some put protection at this point in the game.
• I'm not saying the market is going to tank back into oblivion, but it truly is time for a pause in the rally.

S&P 500 Index

Is the all mighty China poised for a substantial pullback?

• I believe China's days could be numbered. It's just a matter of time before their enourmous property bubble pops. The market knows this and I think it's about to get a head start on the way down.

Shanghai Stock Exchange

Goldman Sachs charged with fraud!

SEC charged the company and one of its vice presidents with defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages.

The SEC said Goldman Sachs (GS) structured and marketed a synthetic collateralized debt obligation, or CDO, that hinged on the performance of subprime residential mortgage-backed securities. According to the SEC, Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

So what GS was doing was selling a package of subprime residential mortgage backed securities to its customers knowing that they were overpriced and in a bubble while at the same time they were in a short position profiting at their client's expense.

So about the fine. GS was fined 1 billion dollars which sounds like a lot of money but when you look into the fine it's a slap on the wrist. The clients lost 30, 40, 50 percent of their assets because of this fraud that GS profited on. What percent of GS's assets was this 1 billion dollar fine? 0.09% of their 2007 assets. When you were losing 50.00% of you assets because GS lied to you they were losing 0.09% of their assets. This is around 1.1% of their 2007 revenue and 8.6% of their net income. So Goldman Sachs lost most people's life savings when they knew they were toxic investments and they get fined around a month of 2007's income (31.5 days)sounds reallllly fair to me.

How is money created?

George Soros: "50% Chance The Eurozone Disintegrates"

Things are not looking great for the Eurozone. Debt is knocking on the back door and it's not leaving till it gets in.

From Clusterstock:

“It is 50-50 whether the eurozone breaks up. The damage that break up would cause is so great, that I think that as people realise it, they will pull back from the brink,” Soros told the Financial Times in an interview. “But we are at the brink now...a solution has to be found in a matter of days.”

Greece is on the brink and I dare to say that the recent bailout won't be enough to save the mother of western civilization. The bailout rate is now rumored as being 6%. Greece simply can't afford this. Up next....Spain, Ireland, Italy, Latvia, Britain....

Euro Update

Sad day to be an American....

As a student to Austrian economic theory this is one of the worst days of my life (second only to the passing of PATRIOT act). I don't have anything else to say, if you want our argument against health care read this post:

http://absolute-investments.blogspot.com/2009/11/rebuttal-to-mr-anonymous-previous.html

“One of the consequences of such notions as "entitlements" is that people who have contributed nothing to society feel that society owes them something, apparently just for being nice enough to grace us with their presence.” - Thomas Sowell

“Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.” -Frederic Bastiat, French Economist (1801-1850)

“I don’t make jokes… I just watch the government and report the facts.” -Will Rogers

“If you think health care is expensive now, wait until you see what it costs when it’s free!” -P.J. O’Rourke

“Suppose you were an idiot. And suppose you were a member of Congress….But then I repeat myself.” -Mark Twain

“I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” -Winston Churchill

“The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery.” -Winston Churchill

“Socialism is workable only in heaven where it isn't needed, and in hell where they've got it” - Cecil Palmer

“Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it” -Thomas Sowell

“Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.” - Winston Churchill

“Socialism: nothing more than the theory that the slave is always more virtuous than his master” - Henry Louis Mencken

“Socialism values equality more than liberty.” - Dennis Prager

.......and this time isn't different?

Excess Reserves of Depository Institutions

The video that could put Tim Geithner on trial....Ratigan nails it

Lessons from accounting fraud (Lehman debacle)

Barry Ritholtz of The Big Picture Blog wrote a great article today. He explains once again that we don't seem to, learn much from history (Enron, WorldCom). People are greedy. They will do almost anything, including accounting fraud, to make money. This is how it has always been and it always will be. See the full article here, Accounting Fraud, Short Sellers & the SEC.

The bankruptcy report on Lehman is both revealing and damning. Once again, the investing public learns — after the fact — the basic truisms of modern markets:

• Major accounting firms are worthless to investors. They were either unable or unwilling to detect fraud amounting to 50 billion dollars. The incompetents at Ernst & Young deserve the same fiery death as Arthur Anderson; Whether they are hired guns or paid whores, they — like the rating agencies — are worthless to investors.

• The Shortsellers turn out to be the good guys. Consider the absurdity fraud of “protecting” the bankster frauds — from the truth, as revealed by Einhorn et. al.

• The ban on short selling is an indictment of the inability of the SEC to understand WTF is going on, and a reward to the criminal corporate management teams.
  

This is where it gets interesting. The SEC is limiting short selling (see here, and here), seen as a "devil" practice by some, in its efforts to "strengthen" the financial markets. What people don't seem to understand is that without short sellers we have no way to expose the truly fraudulent companies and rid our economy of excess fat. Short sellers don't be on a company to go bankrupt if it has truly efficient and profitable operations. They short because of some weakness in a companies fundamentals. Driving the bad companies out of business moves capital towards the stronger, more efficient businesses that can better utilize resources for society.

Basically....without short selling we don't have efficient markets and without efficient markets society will not operate to its true potential.

What are we reading?

Financial News

The genesis of Repo 105 (Financial Times)

The "Repo 105" Scam: How Lehman Fooled Everyone (Including Allegedly Dick Fuld) And How Other Banks Are Likely Doing This Right Now (Zerohedge)

Renminbi rumours (Financial Times)

CDS Speculators May Or May Not Be Cause For Riots In Greece To Turn Violent (Zerohedge)


Economics

The Gold Standard (Mises)

Kansas City School District Faces Bankruptcy, Closes 29 of 61 schools; Every Child Left Behind For Decades (Mish)

The Stimulus Scam (Mises)

All Money In The United States Comes Into Existence As Debt – So What Will Happen Now That Bank Lending In The U.S. Is Contracting At The Fastest Rate In History? (The Economic Collapse)


Technicals & Trading=-

Potash (POT) Raises Guidance (Fund My Mutual Fund)

March 11, 2010 Looking at the TIPS Yield Curve (Crossing Wall Street)

Digital River (NASDAQ:DRIV): Checks Indicate McAfee Is Running Tests With DRIV; Raising Price Target to $34 - JMP Securities (Notable Calls)

Gartman: Here's Why Europe Is About To Dump Lots Of Gold Onto The Market (Temo1051)

Market Recap: The next important date is 03/12 (Cobra)


Elliott Wave Theory

Elliott Wave Update ~ 11 March (Daneric)


From My Favorite Blogs

NY Fed Implicated in the Accounting Fraud at Lehman (Jesse's Café Américain)

EXPLOSIVE: Lehman - Where Are The Cops? (Market Ticker)

New Fed Z1: Market Move Is NOT Sustainable (Market Ticker)


Political Commentary

Jim DeMint's bid to embrace tea party irks Senate GOP colleagues (Politico)

What Biden told Netanyahu behind closed doors: "This is starting to get dangerous for us"Politico)

(U.S. Government Confirms Sanctions Don't Work (Campaign for Liberty)

Is GOP Better Served If Health Care Passes Or Fails? (Real Clear Politics)


Other Analysis & Commentary

The Health Care Reform Bill: Welcome To The Biggest Tax Increase In U.S. History (Clusterstock)

Lehman Fraudulently Cooked Its Books, Accounting Giant Ernst & Young Helped, Geithner and Bernanke Winked and Slapped Them on the Back (Washington's Blog)