Last mentioned in 'Head and Shoulders Top on the Nasdaq ?' Today the Nasdaq looked very weak, even while the other indices were up 1%.  The Nasdaq rolling over here would be the typical start of the next down leg.  Also, the recent structure on the Q's (weekly, not shown) looks like a bear flag  with measured moves to $27.45, $23.75 and *drum roll* $20.  There are alternate projections that come off the daily charts, but paint a similar picture .  $27.45 is important here for a weekly close on the Qs or it could get fun.  Until it can get back above $30 it is guilty until proven innocent.  Most indices are sitting at very key levels going into a Friday.  It goes without saying, the onus is on the bulls here.  Friday  (or Sunday) has been the favorite day of the week to leak news/bailouts/rally inducing events.  This is one reason so many chose not to go short over the weekend right now.  By the time you can react the market opens up eleventy percent.  No guarantees of one of those here, but let's just say if the market closes at new lows tomorrow it's going to make for some interesting conversations at the dinner tables of the remaining 201ks.

In the shorter time frames we are due for a relief rally, but being oversold is not a reason enough to be long the market.  The market is giving us mixed signals and the news continues to be grim.

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Do or Die for the USAThe Silent Protest (update 1)

The Fed has been in a pickle trying to figure out how to entice private capital to come and buy piles of dog crap wrapped in a bow.  Banks do not want to give much less than their "model" pricing even though the market says they are worth much less.  The "plan" is to figure out a way to allow private capital to receive a non-recourse loan from the Fed, allowing 9 to 1 leverage with no margin requirements.  Well, what happens when these securities are actually worth much less than the models say?  Let's pretend 100M gets you 900M piles of dog crap.  Considering the market value of these assets are much lower, we  are already losing from the start.  In the event a 20% loss on the 900M is realized, the private capital loses $100M and the Fed loses $80M.  One could easily make a case these assets are actually worth 20% less right now!  Ultimately these losses will flow through to the Treasury and without a spending bill this is unconstitutional.  Several, including myself, have faxed every single member of congress pointing this out so I imagine now we are seeing the backdoor spending bill to facilitate the scheme TurboTax Timmy and BerTanke are trying for.

Edit: Its possible these two are not directly related, you can bet in order for their plan to work they will have to a) Find a way to hide this from the public. b) Paint a rosey picture about a recovery. c) Say you are going to stress test the banks when you've already declared they have enough capital.  On top of this your model inputs into these stress tests are using positive GDP esitmates. d) Claim to have the solution when you claimed sub-prime should not spill over into the broader economy.  e) Just get your foot in the door.  Once you get some funds all you have to do is claim the economy deteriorated more than your forecast (shocker) that way you can go back to congress asking for more.  At this point you'll say that without this help things will be dire. f) Lie some more.

Bloomberg- Obama’s Budget Proposes Up to $750 Billion More Bank-Rescue Aid 

The official, speaking on condition of anonymity, said the White House hasn’t decided whether the $750 billion in additional aid to the financial industry will be needed. He said it will be put in the budget as “placeholder.”...

The official said the aid would appear in the budget as about $250 billion because the rules require policymakers to record the plan’s net cost to taxpayers. The government anticipates it would eventually recoup some, though not all, of the money expended to help financial companies...

While the federal government has taken over Fannie Mae and Freddie Mac, the Obama administration opted to exclude most of the costs of running the mortgage financiers in its budget plan. The blueprint includes the money the Treasury Department has injected into the companies so far, the official said...

She's good to go short under $39.70 for a quick trip down to $39.00 for anyone looking to flip some stock.  I imagine there will be some temporary support at the rising 50 day moving average (yellow), so a conservative trader would look for a break below there before moving in.  Downside targets are $38 and $36.50.  

Here is the word cloud from the transcript of Obama's Speech last night.

This scam is pretty much Kaiser Soze.  "How can you shoot the devil in the back?" No way in hell tuition will be lowered when the government provides so much in the way of subsidies or loans. 

A push to boost college graduation rates 

When it comes to competing globally, the United States not only needs to get more students into college, but it also needs them to actually earn their diplomas...

Despite improvements since the early 1990s, the US ranks 15th of 29 developed nations in terms of degrees granted: For every 100 students enrolled, countries such as Switzerland, Japan, and Australia award 26 degrees, compared with the 18 in the US. In fact, nearly half of American students at four-year colleges don't finish within six years, according to a report card released Wednesday by a higher-education policy group...

Many students have to take remedial courses before they're ready for college-level work. Only about a third of such students persist beyond the remedial stage, the foundation estimates...

Recent progress in college enrollment and completion could be threatened by the recession, which exacerbates longstanding concerns about affordability. In 2007, the average annual cost of a public four-year college equaled 55 percent of income for the lowest-income families...

Clearly the solution is to increase subsidies and make it easier for drop-outs to rack up mountains of debt.  When the debt is defaulted on, Sallie Mae will pick up the tab (aka the taxpayer).  That's why Bill Gross is in love with SLM bonds.

MIT to Increase Tuition 3.8%, Expands Financial Aid
Bloomberg - Feb 19, 2009

Think of this after you hear Obama's plan to raise taxes tonight.

Are you concerned that next year your State might withhold tax refunds (Like California and Kansas)? Or perhaps you're a responsible taxpayer who has lived within their means and would like to be heard? There are several things off the top of my head that I can think of above and beyond phoning, faxing and/or calling my congressperson:

1. Put cash in mason jars. Another option would be to get it in the form of U.S. Demand Notes. The banks do not deserve to hold my cash.
   
2. Send money abroad.
   
3. W4 - Jack up withholding to a net-even year end balance. Taxpayers are responsible for any underpayment at the end of the year* (See option #5 for a possible solution to this)
   
4. If self-employed see option #5.
   
5. Use TurboTax, Geithner Edition**
6. If you still owe 71 grand for the refinanced (HELOC) 2006 Eddie Bauer Ford Explorer because you were upside down in the previous 2 cars and just couldn't resist the 10yr finance plan on this sweet ride...Not sure what to say. Seek help?

Offer not valid to any non-civil servant

* Please consult with Tim's tax attorney. Oh wait, he makes eleventy-thousand dollars but uses Turbo Tax. Therefore consult tax laws before doing so.

** TurboTax Geithner Edition has all of the features as the Standard Edition except Audit and Error checking. Please see [*].

[edit 21-Jul-09 to add forward looking-link call/phone/fax]

Last updated 17-Feb-2009.  A rally could take us to the two blue lines between 800-820  (formerly red), which would be a 50% retracement of this sell-off (800-820).  In the event we do rally you can bet your bottom dollar CNBC will be the first to declare a bottom.  On the downside we have targets of 725, 700, 680.

A Wordle on CNBC

Same graph and support points as shown on 6-Feb-2009, but with current prices.  Cramer has put the jinx on $GOLD so we should expect a pullback near the two blue lines at 885-905, not far from the intersection of the two trendlines.

See Also: Deflation not bullish for gold?

*RED ALERT*  

If you are long Gold or the miners, better lighten up or protect.  Cramerica is coming to crash the party.  Likely will see a modest sized pullback now.

Counter-trend trade only.  Very short-term.  Target of $15

This image comes from GCN.  Good stuff right there!!!!

Covered @ $10.30 , will watch to see how it reacts at the $11.50 area.  Did someone give Buffett a DVD set of American Chopper or something?  Does he know Vinny left OCC and that was the time to short HOG?

Note: This is the original graph with the short sell line.  Not to be confused as a  current short signal.

Last mentioned: HOG Wild

As if options expiration hasn't brought us crazy action the last several months, today we get to see how expiration AND the lows (intraday) tested at the same time.  In Novemember, when we made the "lows", Geithner rallied the market on expiration.  Is today the day for the First Dog? LOL

Seatbelts.  Keep your hands in the ride at all times until it comes to a complete stop.

Found this over at our Daily Options Report .  If the embedded video doesn't appear, here is the link.  Chalk up two more presidents rolling over in their graves!  

Thanks Adam!  

Here is the video of Bernanke today talking about his toolbox and a two-pronged approach to the fixing the economy.  I realize it all sounds Greek to you and me, but this IS Bernanke speaking in plain english on what tools the Fed plans to deploy:

Too bad Buffett bailed on JNJ.  Must have needed to raise some cash.

If you could Wordle CNBC, it would look something like this.

``Wordle is a toy for generating “word clouds” from text that you provide. The clouds give greater prominence to words that appear more frequently in the source text.''

Today we got to see what everyone has been waiting for.  The grand plan; the end to foreclosures; and at last a bottom in home prices!  Not.  Hell, Cramer will probably turn bullish on the home builders and whirlpool, again.

The plan I'm announcing focuses on rescuing families who have played by the rules and acted responsibly: by refinancing loans for millions of families in traditional mortgages who are underwater or close to it; by modifying loans for families stuck in sub-prime mortgages they can't afford as a result of skyrocketing interest rates or personal misfortune; and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments," President Barack Obama said in prepared remarks.

Seriously? Skyrocketing interest rates sounds misleading, but I'm guessing that was his intent. He means their own mortgage rate has adjusted due to Pick-a-Payment, Option ARMS, etc... So we have 8,000,000 responsible home buyers who just seem to have drawn a bad hand. Oh, in that case you can just have the shirt off my back.

The plan contains two separate programs. One program is aimed at 4 million to 5 million homeowners struggling with loans owned or guaranteed by Fannie Mae or Freddie Mac to help them refinance their mortgages through the two institutions.

Just Fannie and Freddie? Thank goodness they ONLY own or guarantee half of the entire $12T market. This doesn't take into consideration how many more will be swept under the F&F rug at a later date from some defunct institution.

A separate program would potentially help 3 million to 4 million homeowners by allowing them to modify their mortgages to lower monthly interest rates through any participating lender. Under this plan, the lender would voluntarily lower the interest rate, and the government would provide subsidies to the lender.

So your house is worth less than you paid for it? So is your car. This doesn't mean you stop paying for it or in no way does it mean you must get out from under it at the expense of others.  Who said home prices only go up in value?   But I'm glad someone is finally throwing a bone to the mortgage service industry because they must be starving...

There are a lot of people who have fell into unfortunate circumstances and I have no problem helping others.  But claiming these 8 million people were responsible is a downright lie.  I suppose they've already put those 8m under a stress test as well.

Gloomberg (Update2) - Ron Smellyfinger, President of the United Cattle Butchers Union, announced in a statement Wednesday blaming the rapid decline in Live Cattle on the Chick-fil-A advertising campaign.  ``They aren't even open on Sundays'', says Smellyfinger, ``what kind of resteraunt is that?  At least we would continue to pay our workers for Sundays regardless if they are working.''.    Smellyfinger also criticized the government for the incentives that have been given to foreign chicken farmers, primarily to locate their chicken houses all  over Mississippi.  ``It seems strange that we give incentives to our competitors to come here and compete; but at the same time we're willing to walk away from an industry that is the backbone of Nebraska''.  Smellyfinger also hinted that Warren Buffett might have collected several billion dollars in premiums from puts he shorted on Cattle several years ago.  ``Cattle and Omaha are like peas and carrots and I guess he figured the value of cows could only go up'', said SmellyFinger.  ``They poop methane, surely that has to be worth a point or two?"  Calls to the Oracle of Omaha were not immediately returned.  

Bernanke has a toolbox... MPEG at 11

Get 30% off your house if you buy a Hummer, a boat, 2 jetskis and all the Gucci handbags you can carry.  Due to high demand we do not expect supplies to last !

But wait, call within the next 15 minutes and you will also receive your very own Barack Obama Presidential Coin Set endorsed by none other than Montell Williams, absolutely free.

But that's not all...Call now and we will also throw in not one, BUT TWO ShamWOW! towels.

If you are not absolutely bailed out then all you have to do is return the two ShamWOW! towels and the rest is yours to keep as our gift to you.

HURRY NOW!

On 23-Jan-09 in  'My thoughts on Goldman', I gave my opinion of GS.  I also could have sworn I said I was going to leg into the position at $95 when they were trading at $70 but alas it is not included in the post so oh well.  Recently Ben at the Financial Ninja shares his thoughts on this POS as well.

Now I did leg into GS with some longer dated puts when they did hit $95, which was right at the 20 week moving average, which is trying to turn up (another reason to leg in).  Some other points I'd add the 2nd and 3rd legs would be at $105 and $115.  Since I'm "working" the longer dated puts I dont mind.

The subject says 'Cheap shot'.  Basically yesterday I simply opened up a new spread on GS when it was at $85 (not part of the longer dated puts).    Short Feb $95 puts, Long Mar $95 for a Net Debit of $4.20.  This is nothing more than a cheapshot hoping for it to bounce up to $95 in the next two days looking to pocket most of the Feb premium which would leave me with some Mar $95's for about $4.  Of course as a part of this trade I expect the rally to fizzle out rather quickly.   If for some reason the market (and GS) turns down then I suffer no pain in the trade.

Will it work?  No clue.  Is this even a good trade?  Hell if i know..  The way I approach a trade is that I am wrong until the market proves me right.  Most people assume they are right when they put on a trade as if they can control the rest of the market.  Remember, this is a game of PEOPLE played with NUMBERS, just like cards.  Most assume these are games of numbers played with people.

Edit: If GS just rips it to the upside then they just suck and I'll have to figure out how to work the Mar $95 puts, even if that means turning it into a bull put spread (ie. sell the $100's or something)

Here is the counter for the total number of jobs that have been "Saved or Created" since the Stimulus bill was signed into law yesterday.

Now, this counter should already read 16,666 because Nancy Pelosi told us that every day we do not pass this Stimulus we will lose 500,000 jobs per month, so I'm just dividing that by 30.

Feel Oversold?  Not on the weekly charts.  Watch the 3/10 for a possible cross-under.  If the bulls do not defend the lows then, well, you get the point.  I'm not suggesting to run out and go balls-in on the short, but let's just say things are getting REALLY interesting.  We [bears] have one powerful force working against us now and that is I've detected a bearish tone out of Cramer.  Son of a....  But he's already declared the lows in the Dow at 7400'ish and it was silly to  talk about depression (says he) so I'm going to have to defer to the judges on how to react to his recent sentiment.

It's been a few trading days since I've last updated the SPY chart because I've been so focused on the silly Naz.  

I have removed lines above 836 (SPX) for now and have drawn in additional support points below to the recent lows.  Beyond that, 680 would be a point of interest.  MACD has broken down.  Obama might have to play the First Dog card soon.

These are also available in the "Navigational Beacons" post and you can find my silly projections in "The Good, the Bad and the Ugly"   (not an updating projection or else I'd be drawing those endlessly... besides they all go to the same place anyway).

There is an article in the WSJ that talks about just creating "Good" banks.  There is plenty to read in the article, but I only wanted to quote one line:

"Romer suggests using government capital to create new, healthy banks that can essentially compete with the existing banks"

You mean as opposed to just using government capital to compete against existing banks?  The small banks must be chomping at the bits with all this government money propping up the large and insolvent which then goes to compete against them. How/Why do they enter the marketplace when this is going on?  These smaller banks did not abuse leverage, nor loaded with off balance-sheet bombshells because they have stuck to the tried and true methods of 3-6-3 banking.  That would be borrow at 3, lend at 6, be on the golf course at 3.

We've also heard Obama downplay taking the Sweden approach because they only had a handful of banks whereas we have thousands.  Well, only a handful of ours represent 90% of the problem so nationalizing those would go a long way in stopping this malignant cancer from spreading (if that's even possible).

I've seen a few suggest some sort of Reverse Head and Shoulders bottom on the S&P but I'm seeing a Head and Shoulders top on the Nasdaq.  TechTards will need to prove their case real soon.

I'm tired of posting charts, but if this closes below $20 for a couple days some selling pressure will likely ensue.  On the weekly there is some minor support at $19 but it gets ugly after that, down to $17.

But for now most things are reaching oversold (if not already) on a 60-minute timeframe so I'm going to watch how this acts before adding to my long term short of this POS because I really don't feel like getting ran over in an expiration week ObamaRamaLama squeeze.

From an earlier post 'Barclays: REIT Sector upgraded to Positive'

Ok so they got 2 or so handles up on me but I got 6 handles down on them.  Nice cross there on the last candle, probably where they'll be hung from by the end of the year.

It is options expiration week and we have Reverned "O" presenting his Mortgage rescue plan tomorrow.  Seems like an excellent spot for a short squeeze, which is why I'm trying NOT to bet one-sided here.  

The market can certainly rally on this housing plan but after people realize what this plan is about then I'd expect that rally to peter out.  The plan basically says if you were irresponsible as a buyer then we've got your back.  If you were responsible then they need you to donate your money for the good of the country.

Other possible rally inducing events.  TALF provides non-recourse (and unconstitutional) loans to hedge funds to lever up and buy toxic assets.  This rally will peter out once people the price paid for these assets were still too high and the losses incurred on these will be monetized by the Fed.

I just have that feeling...The Put/Calls says the lows will hold, the relative VIX suggests it will hold.  Bullcrap.  If this was the case then why isn't the market 10% higher????  Are you suggesting the money on the sidelines is holding out for a 5% savings for a long term outlook?  Hogwash.  Are we just saying the market can go higher because in the Depression the market rallied 50% from the initial panic selloff?  Nonsense.  This is a once in a 100 years event, throw those indicators in the garbage.  Technicals are a science but should be implemented as an Art (Edit: and I'm trying to learn the Art part of it myself)

I'm just commenting that as of late every time the market signaled one thing it did another.

I'm still mostly neutral but with a bearish tilt.

Interesting article at the Washington Post titled ' Late change in course Hobbled Rollout of Geithner's Bank Plan"

According to several sources involved in the deliberations, Geithner had come to the conclusion that the strategies he and his team had spent weeks working on were too expensive, too complex and too risky for taxpayers...

Though Geithner had been in his job for only two weeks, he had been thinking about the problem of troubled assets since the credit crisis erupted 19 months earlier, first as president of the Federal Reserve Bank of New York and then, since November, as Barack Obama's pick to head the Treasury....

Thurgy: He's been thinking about this for 19 months, spent two weeks devising a plan only to have to plan turn out to be a bad one and back to square one.  

His predecessor atop Treasury, Henry M. Paulson Jr., had drawn political fire after he unveiled the Bush administration's $700 billion bailout program in September, facing accusations that the money had been spent erratically...

Thurgy: We went from Fire! Aim, Ready? with Paulson to Deer-in-the-headlights Geithner.  The expectations have been set very high for this entire Administration.  

At the center of the deliberations with Geithner were Lawrence H. Summers, chief White House economic adviser; Lee Sachs, a Clinton administration official likely to be named undersecretary for domestic finance; and Gene Sperling, another former Clinton aide. The debates among them were long and vigorous as they thrashed countless proposals and variations. Sometimes, Fed Chairman Ben S. Bernanke, Federal Deposit Insurance Corp. Chairman Sheila C. Bair and Comptroller of the Currency John C. Dugan joined in...

Thurgy: I see a couple of problems here.  The most obvious is Volcker not being included.  Apparently his tough-love approach doesn't mesh well with Geithners bank-friendly ideas.  The second is the former Clinton people all over the place.

There are more good tidbits to be found in the entire article.  I'm surprised we didnt have $100M in stimulus to put towards government blackberrys.

Looking to get short the FXI.  If it cant make a new swing high on a daily close above 28.75, which is also near the trendline, then I'd look to take a shot.  Otherwise a break from here below 25.75 would be ideal since there is little in the way to 24.50 and then 23.50.  I'm tempted to go in here though and just might on market weakness but will wait for it otherwise.  It's currently sitting between it's 20 and 50dma's (not shown).  We still do not know if it can't break out to the upside, but I doubt that very seriously.  In the event our own markets start out on a multi-week bulltard run then I have to imagine this goes up right along with it.  In that case I'll look to re-short at $35.

I've blathered several times over the last week or two about watching the Naz because it seems to be the last to rollover when we start the next leg down.  I have started legging into the short QQQQ position and am considering hedging this with some OTM calls in the SPY simply based on past correlations.   In the event the market sustains a rally I feel the QQQQ will still underperform relative to the SPY.  In the more likely event the market breaks down, I also expect the QQQQ to underperform.  I should disclose that I feel there is zero chance of a recovery this year.

I will point out that the Spread-Ratio has been higher on both a Daily and a Weekly close (post-dot.com bust), which is why I've only put on 1/3rd of the position (but without the SPY calls).  

I check into the overnight trading action notice a couple weird things.  The first being that the USD is up 1%+ against both the EURO and the YEN.  On top of this, GOLD IS CATCHING A BID! (under normal circumstances Gold would be down)

This is not natural.  Good luck folks, hope you've been accumulating puts.  You have to wonder about Poland right now (and Greece, and Turkey and Austria).  Lots of rumblings about Ireland lately because their default swaps have started to soar.

European banks have the equivalent of the Financial Bulls 3x etf.  They have 1x US, 1x Europe and 1x Asia exposure all in one nice portfolio.  OUCH

Edit: Karl at Market Ticker also detected malfunction and sounded a red alert.  

Also the wonkiness seems to have subsided for the moment but gold is now +$13 to $956

Seems to me a lot are narrowly focused on a Stimulus, Housing Bailouts and how the VIX "feels too high".  The first two will not bring a lasting rally to the market and the third gives me the creeps.  Ok, so the VIX is roughly half of what it was when the DOW sat at these levels in November which suggests a certain level of complacency in the market.  I don't view this as a bullish signal, but that's me personally.  Chart the VIX and wrap it in Bollinger bands all you want.  Step back a second and unless you can show me positive correlations to a falling VIX during Global Financial Meltdowns, Global Recessions and two or more sovereign nations defaulting, then I'm not a seller of volatility.  

We are only one "surprise event" away from our markets tumbling again, in disorderly fashion.  This surprise will come from across the pond since so many or focused on our own problems.

Not saying the VIX can't peel off another 15% in the short-term but to me this "feels risky" to be a seller of the VIX or naked puts in equities.

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[edit add labels]

YTD Price Performance Chart of Silver and Gold

For a couple of months there have been some referencing the long-term ratio of Silver/Gold and suggesting it was perhaps time to be Long Silver / Short Gold.  Had you did this for the last few weeks you would have did well.  However I think this is overdone.

I don't like this trade at all.  In fact I have opened up a short Silver trade this morning.  Most of the allure to Silver is the industrial uses and if there is an economic recovery then Silver should outperform the yellow metal.  There will be a recovery, but not on your current calendar.

Edit; That would make me Long Gold / Short Silver, btw

Yesterday we saw two of the worst sectors leading the market, Consumer Discretionary and Real Estate?  The two worst were Materials and Transports.  Another bearish setup is happening in Oil and more specifically the Energy names (XLE).  If this sectors rolls-over (along with the transports) then look out below.  

My index related shorts is actually the QQQQ.  I personally feel there is more reward to the downside in the Naz, simply based on past coorelations.  A straight up Short QQQQ / Long SPY is worth further investigation.

The market is clinging to the bottom of the triangle.  Still seeing all sorts of mixed signals with an insanely low CBOE Put/Call.  Upside targets would be 848, downside targets are 818, 800.

The low put/call suggests a level of complacency in the market.  This in and of itself would suggest the market could go higher, but at the same time any bad surprises here would lead to DISORDERLY selling.  I personally don't see the low put/call as a bullish signal.  It got to levels not seen since April 2008.

Microsoft Chief Executive Steve Ballmer likens economy to depressions of 1837, 1873, and 1929 (Hat Tip Mish)

Microsoft Chief Executive Steve Ballmer sketched a dire portrait of the world economy on Friday, likening it to market conditions in 1837, 1873, and 1929, each of which involved bank failures, high unemployment, and a depression.

"This is a once-in-a-lifetime economic crisis," Ballmer told a retreat of House Democrats in Williamsburg, Va. "There is a lot of history around that, and frankly if you stop and think about it, 1837, 1873, 1929, 2008, it's almost exactly a whole lifetime between each of the major economic difficulties that we face."

Ballmer said that economic growth in the last 25 years was fueled by innovation, globalization, and debt--and that the current levels of debt were unsustainable. "In 1929, for example, just before the stock market crash, the private debt-to-GDP ratio was 160 percent," he said. "Last year, private sector debt as a percentage of the GDP: 300 percent, far more leverage."

His warning of a protracted downturn that could become a depression comes amid a stock market that is down by more than 40 percent from its October 2007 peak, and housing prices in many metro areas that have been falling consistently since July 2006--a feat not equalled since the Great Depression.

"In my view, what we now have will be a fundamental economic reset," he said. "The economy is going to have to re-establish itself at a level of spending that reflects the real value of underlying assets before we can all start growing again at a healthy rate."

In the post regarding US Steel:

"If X pulls back to $33'ish an aggressive trader might take a shot on the long side.  Otherwise entering on a break above $36.50 is the more conservative approach."

This needs further explanation.  Why would a conservative trader enter at a higher price?  Simply because a clean break above 36.50 would signal the breakout.  The aggressive trade would enter at a lower price betting it will be a breakout without waiting for confirmation.  If this doesn't make sense it's because it doesn't make sense.

X found support yesterday in the consolidation area outlined in the previous post ($31).  I took a long position in X yesterday near the close for a trade.  I will not hang out very long if the market breaks down and out.

If the shattered confidence of yesterday triggers the next round of Hedge Fund redemptions then look out below.  This would lead to the same forced selling we saw in Oct-Nov.  

For now we are quite oversold, so at least some sort of retracement part of today is in order.

From 'What Did the Banks Do With Your Cash?'

This morning, Rep. Barney Frank, D-Mass., will demand answers from chief executives of eight banks receiving government funds as part of the Troubled Asset Relief Program (TARP)

Thurgy: Rep. Barney Frank needs to be answering of questions before stepping down as the Chair of the House Financial Service Committee. It was Frank that was front and center authoring this bill in record speed. Then there is the conflict of interest below.

In the 2008 election cycle, House Financial Services Committee members received more than $26 million in campaign donations from the finance, insurance, and real estate sector, including $5.3 million from the securities and investment industry and $3.3 million from commercial banking, according to the non-partisan Center for Responsive Politics.

Part of that $26 million is $984,148 that Frank received, including $224,000 from the securities and investment industry and $110,000 from commercial banks. Almost $2 million that the committee members received came from the very eight banks represented at the hearing, the center states.

Thurgy: Shocker

Lawmakers have expressed outrage that the funds are not fulfilling their purpose of increasing the flow of credit to consumers. They point to a report released last month by the New York state comptroller that said Wall Street firms had handed out $18 billion in bonuses last year.

Thurgy: Lawmakers were warned by thousands of calls,faxes and emails. We told you so.

21 NOVEMBER 2008

“It’s a resounding ‘yes’ from Wall Street,” said Peter Kenny, managing director for institutional sales at Knight Equity Markets in Jersey City, New Jersey. “There’s confidence in a person who is up and coming and recognized as an authority on a very complex problem. There’s confidence in what he’s displayed so far, in terms of his leadership and management skill.”

10 FEBRUARY 2009

Wall Street's message to the Obama administration was clear Tuesday, even if the plan to save the banking industry wasn't...Unhappy with a lack of clarity in Treasury Secretary Timothy Geithner's new financial  rescue plan, investors launched a massive stock selloff, raising further questions about when confidence would be restored to the market.

Now that the market (for the time being) has broken above the 850-858, here are further overhead residence.  

Overhead resistance: 865, 875, 890, 905

Of course it's not over until the closing bell and a break below 850 from here wouldn't be a bullish sign for me.

I continue to watch these three names.  Right now things are very interesting indeed as it's suggesting one of two things, but both ultimately end the same way.  It could be that we are seeing the "blow off" in the Naz as it separates from the pack like the previous two markings on the chart.  Either the market catches up (by going down) with the XLF or the Financials would need to have a large rally.  These are just observations as I like to tinker with data.  

The market sits at a very interesting point with stocks above the 50-day MAs and the really low Put/Call ratio that is suggesting we are going into a 4+ week rally or back to the lows.  It seems almost one or the other really soon.  I'd rather buy straddles here over strangles.  

Although a holder of Gold, I recently was looking for a pullback to 860'ish in Gold before possibly moving back up. From the chart you can see it first broke above the trend line and checked back up at the 870 level before launching the next assault on upward resistance. Gold has now broke and closed above this trend line twice which is a medium-term bullish signal. However, I still would not rule out pullbacks at any time but would see these as buying opportunities. Gold takes the stairs up and the elevator down and the more crowded the trade gets the more exacerbated these moves get.

I have a hunch that when you see a complete parabolic move in Gold, similar to oil last year, then we will either be going to War or nearing the end of the "Great Recession". This will be a long ways away.

Video Link Here

In a previous post I mentioned that I like to check in on Live Cattle periodically as I use that as a gauge for the economy.  Recently LC found some support at the $84 level and has now set a move to $88.  At this point I will pay closer attention to the beef as well as commodities in general.

"Real people" don't eat chicken.  At least, that is the conclusion the Beef Industry Council reached in deciding to change marketing strategies and end its "Real food for real people" advertising campaign.   

 

2. Q. How many cowhides does it take to supply the National Football League with enough leather to produce footballs for one season?

A. About three thousand.

Thurgy: I can see it now.  Vegetarian football fans will be petitioning the NFL.  Maybe they'll storm the field at half-time and stage a protest.