Market Oversold, But Breaking Down From Major Top Means More To Come
by ilene - May 17th, 2012 8:40 am
Courtesy of Lee Adler of the Wall Street Examiner
Several technical indicators have reached levels consistent with intermediate lows, but key support levels have been broken, and despite some signs of being oversold, the market remains vulnerable to further declines, both over the short run and the longer term as well. The market averages have broken down from an important top, and some long term indicators are on the verge of confirming a major downturn. This report reviews the charts and data as well as new downside projections.
Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE’s Professional Edition risk free for 30 days!
Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the Wall Street Examiner.
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DiggMy Exchange With “Tyler Durden”
by ilene - May 16th, 2012 11:46 pm
Courtesy of Lee Adler of the Wall Street Examiner
Tyler Durden is a “person” (or persons), who doesn’t want to reveal his true identity in public, instead cloaking himself behind a mythical cinema persona. That persona is who “Tyler” wishes he was, not who he is.
You all know “Tyler.” He’s the guy who started and runs Zerohedge, which is a truly great website, in spite of any personality issues the proprietor may or may not have about revealing who he is. It’s a daily must-read for everybody in this business.
An acquaintance of mine has on occasion reposted some of my work there. I was happy to allow that. I felt that it was an honor. ZH gets huge traffic and the exposure helped me a lot. I felt it was a win win. But those posts did generate some controversy over there. Commenters attacked them, and me personally, with volume and vehemence.
On occasion Zerohedge promoted those posts to their front page for lengthy periods, which I appreciated. However, of the last few posts of mine that my acquaintance submitted, a couple were withheld from the front page, or if they were posted there, not for long. I saw other contributor posts that had come both before and after mine that got front page placement while my posts did not. This happened on two occasions that I recall.
There’s nothing wrong with that. It’s the editor’s discretion to do so. I felt that the reason for the lack of placement was because they did not agree with my analysis. But again, that’s their right. I concluded that they probably weren’t too happy with my posts. That was my impression. I didn’t like it, but that’s the way it was. So be it.
Recently I got a message through my acquaintance that “Tyler” wished to communicate with me about an issue between us. It wasn’t on the top of my list to respond, but tonight I had written a post that I thought they would like and I wanted them to see it. I sent this informal, I thought pleasant, email to “Tyler.”
Lee Adler, a real person
From: “Wall Street Examiner” <admin@wallstreetexaminer.com>
To: <tyler@zerohedge.com>
Subject: What’s up?
Date: Wed, 16 May 2012 21:44:52 -0400
[My acquaintance] said that you wanted me to get in touch with you, but didn’t say why. I thought maybe you wanted
…
The Conomy Game- The Legend of Bennie The Beard, Henry the Hitman, and the Gangbankster Dealers
by ilene - May 16th, 2012 8:57 pm
Courtesy of Lee Adler of the Wall Street Examiner
The Industrial Production news today reminds me of a story. It’s a story that shows just how the Fed’s manipulation drives both the stock market and the conomy. It’s also a story of the twisted personalities behind the facades of institutional power. This is not something that you will read in the mainstream financial media. But, unbelievable as it may seem to you, each and every word of it is true– strange and chilling, but true to the last detail. Grab a glass of sherry, a cigar, and a comfortable chair. I shall lay out for you the outlines of this real drama of power, crime, and intrigue.
The Fed pumps up the conomy by funneling the money that it creates through the conduit of the financial markets. It does that by buying securities from the Primary Dealers. Those securities go into the Fed’s so called System Open Market Account (SOMA). Historically, the Fed has typically purchased Treasury securities, but it has deviated from that policy and bought other securities from time to time. In the modern era of the past 50 years or so, it has typically only purchased Treasuries, and only from the Primary Dealers. That all changed in 2007.
In 2004 and 2005 the Fed needed to buy about $600 million of Treasuries from the Primary Dealers to move the SPX up by one point. As the bubble began to expand too fast in 2006 and 2007 the SPX began moving up a point per each $550 million or so of Fed purchases. So the Fed slammed the brakes on the SOMA in the middle of 2007. That’s when all the financial shenanigans that Fed policy had enabled suddenly came to a head, and the visible evidence of the underlying infection began to spew all over the front pages of the mainstream media.
As the splatter on the mirror grew that summer, young Ben Bernankenstein, Fed Chairman for just two years when everything seemed to be going right, was caught with his pants down. He somehow had missed all the signs that the internet message board Cassandras had been wailing about for years. He panicked.
With no real world experience, the academic Chairman reflected the term paper he had written had written as a schoolboy. In it, he blamed the Fed for causing…
Carve this market in butter
by ilene - May 15th, 2012 11:11 pm
Courtesy of Lee Adler of the Wall Street Examiner
Drip, drip, drip goes the market. This can go on for a while, as few indicators have reached any kind of extreme. Cycle projections have been hit on the 13 week and 6 month cycles, but short term projections still point a little lower. This report presents the targets, carved in butter.
Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE’s Professional Edition risk free for 30 days!
Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the Wall Street Examiner.
Real Deal on Retail- Even Worse Than They Said
by ilene - May 15th, 2012 7:33 pm
Courtesy of Lee Adler of the Wall Street Examiner
The headline number for retail sales today was an increase of 0.1% month to month, seasonally adjusted, which exactly met the conomic consensual sextimate of 0.1%. Here’s how Bloomberg put it.
U.S. Retail Sales Cool After Warm-Weather Spree: Economy
Retail sales rose in April at the slowest pace of the year as Americans took a break from a shopping spree induced by unseasonably warm weather in prior months and an earlier Easter holiday.
The 0.1 percent gain followed a 0.7 percent increase in March, Commerce Department figures showed today in Washington. The April advance matched the median forecast in a Bloomberg News survey.
via U.S. Retail Sales Cool After Warm-Weather Spree: Economy – Bloomberg.
The market was focused on other bad things today and that news certainly didn’t help. The Greek situation and the questions swirling around JPM were the focus of the malaise.
An underlying “situation,” which no one was talking about, was that the market had to settle $35 billion in net new Treasury paper today. That sucked cash out of the accounts of Primary Dealers and others who had bought that paper. The Fed was probably quickly funding that, if it hadn’t already greased the skids to counter the Greece skid. The Fed normally settles all of its monthly forward MBS purchases, usually around $30 billion worth, with the Primary Dealers around mid month. It may have sent the cash out on Monday for this round, as suggested by Monday’s big drop in Treasury yields. (I cover these issues in depth in the weekly Professional Edition Treasury updates).
But back to retail sales, we should be interested in actual volume of sales, not the inflation skewed dollar total. To get to the kernel of that, I like to look at the real, not seasonally adjusted retail sales, adjusted by top line CPI inflation (not core which normally understates the actual). Then I back out gasoline sales, which are a substantial portion of total retail sales. Gasoline sales distort total retail sales higher when gas prices are rising, when they actually act like a tax on disposable income and reduce non-gasoline sales. To get the real picture of the strength of the consumer sector or lack thereof, we must back that out. Therefore the number that I track is real, inflation adjusted sales, ex gasoline.…
Gold Still Can’t Find Footing
by ilene - May 15th, 2012 9:31 am
Courtesy of Lee Adler of the Wall Street Examiner
Here are today’s gold stock screens and data, along with cycle conditions and projections for gold and HUI index, and Chart of the Day picks for swing trades. Indispensable daily information for gold and precious metals stocks traders.
Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE’s Professional Edition risk free for 30 days!
Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the Wall Street Examiner.
Market Peeks Over The Cliff’s Edge
by ilene - May 15th, 2012 8:42 am
Courtesy of Lee Adler of the Wall Street Examiner
The market broke key support yesterday, but not by much. This morning it is attempting to regain that level. If successful, a 4 week cycle upturn could be under way, but the market would need to clear the 1355 area to have any room to run on the upside. If the market fails to recover today, most projections are in the 1335-40 area, but a new 4 week cycle projection points to 1295.
Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE’s Professional Edition risk free for 30 days!
Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the Wall Street Examiner.
Market’s Liquidity Indicators Begin To Tilt Bearish – With Free Excerpt
by ilene - May 14th, 2012 10:22 pm
Courtesy of Lee Adler of the Wall Street Examiner
The composite liquidity indicator downticked last week on small declines in most of its components. We know that the downtick in the Fed’s pumping to Primary Dealers is temporary, but the weakening in other indicators may not be. Over the course of this latest surge, most of the cash has been targeted at the Treasury market, with stocks getting only an occasional bid. As Treasury supply goes through its seasonal increase, the pace of the advance in Treasuries should materially slow. If the indicator stalls, then both stocks and bonds could be weak. As long as the indicator remains in an uptrend however, Treasuries should continue to rally, and stocks should at least get an intermittent bid.
The following is an extended excerpt from the Primary Dealers section of the report. Subscribers click here to download complete report in pdf format.
Primary dealers’ fixed income holdings dropped sharply in the week ended 5/2/12 (reported with a one week lag), after a big increase the week before. When they start reducing those positions that should signal a more persistent rise in yields. They continue to reduce their positions in corporates, a downtrend that has been under way since October 2007 (chart, page 52).
Primary Dealer Holdings- Click to view
Primary Dealer Holdings of Corporate Bonds – Click to view
Primary Dealers sold some of their big Treasury long position in the week ended May 2, (reported with a one week lag). Based on the long term chart of the 10 year yield (next page), Treasuries remain at an extreme level of extension from the trend. This looks like a distribution pattern, similar to the one in early 2003.
Primary Dealer Holdings- Click to view
The dealers are still getting a lot of help from European capital flight and heavy public buying so as long as they maintain their positions at this level, yields should stay low and bond prices high. When this pattern breaks (chart below) is when yields are likely to start trending higher.
Commercial bank (including foreign based US branches) trading accounts grew by $1.0 billion in the week ended May 2 (after revisions). The short term and intermediate trends of this indicator are…
Professional Edition Schedule Note
by ilene - May 14th, 2012 10:17 pm
Courtesy of Lee Adler of the Wall Street Examiner
The market update will be posted Tuesday morning at approximately 8:30 AM NY time.
Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE’s Professional Edition risk free for 30 days!
Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the Wall Street Examiner.
The Mother of All Hooks
by ilene - May 9th, 2012 8:03 am
Courtesy of Russ Winter of Winter Watch at Wall Street Examiner
Over the course of my thirty five year investing life I have noticed that markets often trade on hooks. A hook is when most participants develop a preconceived notion about “how things work”. Then trading follows a pattern, drawing more in. In the past, hooks were relatively harmless and when they came undone, they had little lasting overall economic impact. However, in today’s brave new world, undone hooks will severely and I think critically damage the system. At present the hook is a doozy. It is that central banks have given speculators a put that will somehow not only save both the system and their bets, but make them profitable, even in the face of too big to save insolvencies. I hold that this hook is at peak absurdity.
In developing a further understanding of how hooks work today, I would highly recommend a reading of “Boomerang” by Michael Lewis. Lewis describes the crazy wild-man betting that goes hand in hand with so called, and dubious, central bank puts, leverage, and financialization. ZIRP all but guarantees this. This goes far beyond infecting and wrecking capital markets. This infects whole countries, and in his opening chapter Lewis gives the recent financial history of Iceland as an example. Iceland was sold the bill of goods that being a hedge fund was much more satisfying than actually producing useful goods and services. Like all crazy-ass betting parlors, the Iceland story ended in disaster. Iceland was a microcosm of a much larger “sistema” (Portuguese) in place today. It also shouldn’t be ignored that, just like in 2007-2009, some large hedge funds are also making “big short” bets against the current hook.
A thinking person (I would imagine many of my readers) going through the revealing Lewis book would easily come to the conclusion that in bubble financial systems, gamblers learn no lessons, and given the opportunity will return to the tables for more crazy bets. The aspect that should be apparent is that the players take no heed of clear and present danger. As such, they distort markets severely and wreck the price signals of markets. This is not capitalism, not in the slightest. Even terms like “moral hazard” don’t do this justice. It doesn’t help matters that central banks have joined in on the wild-ass betting. ”Providing liquidity” is Ministry of Truth…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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