Market Breakdown

Well, the S & P 500 (SPX) closed at 1030.xx today, a clean break of the key 1040 level.

Next stop is 950-900. Unfortunately I shorted and covered at the market top, then lost my footing short. I refuse to chase, if we continue to spiral down, I won't make back my losses.

I have one main concern, the US 30 treasury rate is collapsing. This is giving the US government some breathing room to get cocky and interfere with this market decline. Elliot Wave and chart analysis is common enough that the powers that be see what the market is facing, an all out 2008 collapse. Perhaps a slow roll down.

What I am EXTREMELY impressed with is gold miners are holding VERY strong. If the market reverses or US government announces some games, I would expect the miners to rally hard. As it is, the miners although holding up, they could break down and follow the market quickly. So if your not the armegeddon is here type, gold miners look GREAT. Tickers to consider is GDX (gold miners), GDXJ (baby gold miners), and SIL (Silver miners).

Remember, my belief is, and has been, since 2006 that the market is headed for all time lows. This collapse will be one that breaks the great depression records. So any trading is pretty insane. Cash is king....for now.

Good luck, really there is nothing to say more. If you believe the market will reverse, not a bad spot to buy a little. If you think this is the start of a complete breakdown, there are tons of shorts everywhere you look. Check out SlopeOfHope for trading ideas.

Good Luck.

Market Crash trade on deck....again

The market is on a precarious level today, closing at 1041, a hair above the 1040 mark I previously blogged as critical level. Due to the violent nature of the market decline, a crash trade is on deck. Could market crash from here, sure!. But I am not betting on it, YET, But this could be the start. Target is S&P 500 down to 500-600.

I have some shorts, and some longs on gold/gold miners. Thats pretty much my positioning.

I noticed something very interesting, while the market has declined 14.5% since the high back in April, gold miners are up 6.6% during the same period.

That is a little odd since gold miners are also stock, not a pure gold commodity trade play. Also keep in mind 30 year treasury rates are dropping, fast. That indicates market crash also is on deck. But that also gives the US government to do crazy financial games, and use up the last of America's credit card. If they do, this will be the last push up before the swan dive, and it won't last a year like the last time. maybe 3-4 months. maybe.

Keep true to your stops if your long this market!

So cash is king, as always. Below is a chart comparison of S&P 500 and GDX during the same period. interesting.

From WebSufinMurfs FinancialBlog2

This Week in Charts

Well, its a really hard read about the market right here and now.

Overall, still think the market goes MUCH lower, but when? Still magic numbers are S&P 500 at 1150/1040 for clearer direction. Enjoy the charts to put some longer term perspective.

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Housing will continue to decline in value

A debt deathspiral has been in the works, and housing is looking to continue to get worse, not better. Sure we may have a month or two of upside, but the overall trend isn't going to change for 5 years or more.

I keep on having conversations on why is not a good time to buy a house with many people.

People don't get it, with spiraling unemployment and baby boomers selling, there is no demand to drive prices up. The rates at a low of 4.69 average 30 year mortgage is not a reason to buy.

Below I plagiarized reasons why directly from Mish's blog.
Please see his article for full explanation.

• Boomers looking to downsize will add to housing supply.
• Foreclosures will continue to add to supply for several more years.
• Shadow housing inventory is massive.
• Global growth is slowing. This will affect exports and jobs.
• Bank balance sheets are tremendously weak. Don't expect lending to pick up or businesses to go on hiring sprees anytime soon.
• Unemployment is 10% and going to stay high for a decade.
• The economy is poised for a double-dip recession, assuming you believe the economy exited the last recession.
• Kids are graduating college hundreds of thousands of dollars in debt with no way to pay it back. They cannot afford houses and are delaying family formation.
• Nearly anyone who wants a house and can afford a house already has a house.
• Debt deflation will be in play for a decade.
• Attitudes towards housing have changed. A few years ago people thought of housing as an ATM as well as a retirement plan. Most people now realize a house is a place to live and a mortgage is a liability not an asset.
• Attitudes toward debt have changed. Kids have seen their parents argue and worry about mortgage payments, credit card payments, and jobs. They will not want to get in trouble like their parents did.
• 15 million homeowners are underwater on their mortgage according to Moody's Economy.com. Those 15 million homeowners are literally trapped in their home unable to sell and unable to move.

Japans Economic Outlook

I have posted on this blog before, that Japan's economy has had severe issues for 20 years. There are two parts to root cause in my opinion. First and foremost is demographics. Japan's demographics turned sooner than America's, and could be used as a lesson. As Japan doesn't have significant immigration, combined with couples having only one or two children, has produced an economic death spiral.

This is quite a fluffy video with no indepth coverage, but it does highlight the general outlook

Danger Will Robinson

There is a very real danger to the market having a significant drawdown. Please keep in mind my overall believe is the market will go significantly lower, as much as 50% lower from here at some point.

The question is, do we go up 25% more from here, or have seen seen the third failed push up and the market is now exhausted and about to fail?

A break below S&P 500 of 1040 is a HUGE warning sign. I expect when we break it, it will happen overnight, trapping everyone. The longs will be panicked, the shorts won't have been well positioned.

Hard to tell, but cash is still best. Good luck.

Federal Reserve News Wednesday

Well, the market is showing more weakness on Tuesday, bringing the S and P 500 below the 1,105 level I was watching.

There is a solid zone between 1040 and 1150 for market being confirmed bull or bear market. Also the long term trend indicator documented on left of this blog is narrowing, but not crossed.

With US long term interest rates down, the market looking weak, the Federal reserve could throw it a bone, and re-announce QE, or some other insane fiscal disaster.

Gold held up exceptionally well. If the fed takes a hard line Wednesday, we could see a flush of the entire market. Gold and stocks.

So keep an eye at 2:15pm eastern, let the fireworks begin!

From WebSufinMurfs FinancialBlog2

This Week in Charts

Well, what can I say? I am into gold miners once again. As my previous S&P 500 graph showed, a close above SPX 1105, it is time to buy gold miners.

I must warn, there is always risk. One of my greatest concerns with gold miners is what Australia did a month or so back. They added heavy taxes on precious metal miners there. so even if gold goes way up, the government burden will keep those stock prices lower. I expect at some point the rest of the world to follow.

Governments hate gold going up, as it is a sign of the "no confidence vote" for fiat currencies. I do NOT subscribe to the mantra "gold is money". No, gold is gold, and money is money. Governments state what is money in legally binding contracts honored by court systems. Gold is money the same as oil is money. Its a commodity that has value and has regard in society.

Anyway, for now, I am in, and may cover more shorts to go more "in" to gold/miners.
Of special note is recent weakness in USD. I am not concerned until it breaks below 82, and I may start to panic below 74.


Now, for the charts:

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

China Three Gorges Dam

China's Three Gorges Dam is one of the largest (if not the largest) Engineering mega projects.

Over 1.4 million people where forced to move, and large area of land put under water, covering many historical sites. This Mega project is one of the symbols of China's progress as a world leader. But this, like many other news items I have posted on China, have some fundamental issues. The issues are not being able to be kept quiet by the Great Firewall of China.

For stock markets, this isn't on it's own significant, but as a collective impression as China as the next great society. If it fails, it will turn many opinions around and could trigger some bank failures around the world that invested in the project.

To me, this smacks on why communism can't work, and neither can "command and control" government like Obama administration is promoting. When economic decisions are made for political reasons, the result is never good.

Article can be read here, below video.

Bank Closure Visualized

This isn't a video per-se, by click this link to watch an EXCELLENT representation of the market closure rate from 2000 to today.

Shutting the Doors: A Decade of Bank Failures


Thanks to Paul Lomba for the link. (aka firemanjersey)

Gold and Gold Miners a good buy

Market held above SPX 1105, check.
Gold near all time highs, check.

Close Wednesday
GLD at 120.33, 52 week high at 122.45
GDX at 51.66, 52 week high at 55.40

Safest is US Treasuries/fixed and not play in this volatile market.
BMO capital markets says, Go cash in plain English

Time for Government to double down

The deflationary forces are appearing everywhere. Reality is setting back in after burning through over 1 trillion dollars in drunken spending (stimulus?) after this past year. My hope WAS after government saw that taking such actions are fruitless, and we need to get some fiscal discipline. To lead the country into new industry development. To DEAL with China's trade imbalances (waaay too late), to stop the games and get to work.

The charts, the deflationary forces re-appearing such as retail sales down 1.2% in a month, unemployment about to rocket higher due to the temporary census jobs expiring, European financial destabilization, these event you would think trigger someone to say "we can't keep doing the same thing, we must change course".

In addition, Money supply, classically known as M3, which has been discontinued by the government tracking since 2006, has taken a nose dive not seen since the Great Depression. The web site ShadowStats still tracks M3, as shown below. This is also Deflationary.

I am starting to think, there is no way the government will do the right thing. The government in the next few months WILL announce some crazy scheme of drunken spending to top the last year's efforts.

But as a stock trader, the question is when. I have to assume its not "tomorrow", and trade without the benefit of insider information. If the US does do something drastic, to "double down" on making the US insolvent, I fear that will be the jump the shark moment for the US.

US bond rates are down, US dollar valuation is up, world looks "bad", US, not as "bad" relatively speaking. That edge give the politicians room to double down, to in effect "use up" the good credit available to the US. Then to throw that good credit down into the debt monster in a fruitless effort to stimulate demand.

The point of this entry is to call out that if the market cracks lower, the decline is at the mercy of those who can change the game in the near term. And the US government now has the breathing space to do so. But once the credit of the US is "used up" and rates move towards 5% for 30 year bonds, the government may finally get what is seems so hell bent to accomplish, and that is cause a US solvency crisis.

Picture Perfect Kiss, now what?

The market today made a picture perfect kiss off of the SPX 1105 upper line today. As of blog post depicting the 4/10/10 stock charts, stated market in for a bull run up to 1105 as first major resistance level. Well today we hit it and bounced down. Does that mean its down from here? Hardly, it just means we are still in a significant no-mans-land for market direction.

Keep in mind Saturday is options expiration, so I expect some severe market moves into Friday and Monday. I wouldn't be surprised if we close higher Thursday and/or Friday and then tank lower on Monday.

Such an extreme volatility can't be good, but I guess time will tell. Also note Deck hit almost the old high. if Deck manages to cross over to 170, a real decent place to short with a tight stop. To the charts:

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

This Week in Charts and a possible short

A must read by my readers, slope of hope has excellent article on stock timing indicators.

The short idea - DECK- is really pretty dangerous, the stock is on a tear. But with set stop-losses, can mitigate the losses if it continues to roar higher.

Anyway, to the charts!

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Insolvency is America's Destiny

All along I have been looking at the future of a deflationary collapse beyond anyone's imagination is hitting the world and the US, as a result of the world's greatest inflationary fraud-ridden credit bubble.

If you look through history, these types of credit bubbles cause immense implosions, that lay waste to the countries involved for a few years. What I thought how this was going to play out, has not. Specifically I thought when government officials saw the real "math" that was occurring, they would buckle up and do the right thing. Instead, like everything humans do, the wrong thing is pursued to avoid pain today.

An article I found on Mish was one of the most perverted actions one could dream up. The New York Pension fund is going broke, and townships cannot afford to make payments to keep the pension fund obligations met. (excludes NYC)

Now, the "right" thing would be to start immediate negotiations to curb benefits and cut expenses to meet the benefits. Basically, to ensure the pension fund wasn't set on a course of utter complete fiscal disaster.

Instead, the path chosen was what will amount to in the future is pension funds owed will not be paid out in the years to come. What the NY governor proposing and will likely pass was to borrow FROM the pension fund, to lend the money to the towns, to PAY their obligations to the pension funds until 2013 when principal payments to begin.

Read that again, please. Because the towns can't make their debt payments, they borrowed from the pension fund, to pay the pension fund for debt payments through 2013.

It is really complete insanity. It is basically a "double down" in poker by borrowing from the house after you lost all your money. Yea, it is theoretically possible this will work, but by any sane judgement, its the wrong course. But because the politicians can describe a scenario, no matter how unlikely, that it could work out, it gains support.

My god. The fiscal decimation this country will face after every single avenue of credit is used up, and when nothing can be borrowed anywhere is reached, the DEFLATIONARY collapse that will come will be massive. Beyond my own worst fears.

There is still time to stop this insanity, but from the looks of things, the goal is to create the largest bubble implosion the world has seen. Got to love America, nothing is done "small". If the media crucifies NY politicians for this action, I will have hope that we will avoid fiscal destruction in the US. Without a vocal critic to energize the people, the worst road will be taken to avoid the pain today, and kick the can further down the road.

Chris Christie speaks against Teachers Unions

There is no way Mr. Christie will be re-elected, he is assaulting Public unions on all fronts, teachers, firefighters, police, and local townships. Unfortunately, with the economy of today, it is required. If you live in NJ, a must watch, for or against Mr. Christie. I am reluctantly for Mr. Christie, I say reluctantly because the economics require Mr. Christie's action. The ideal is the American dream of the middle class has been permanently injured since the late 90's.

Good time to go long or go short

The market is between two areas that would likely see a significant pile-on if S&P 500 pushes either above 1105 or breaks below 1040. So if you don't think US markets are going to break lower, buy some longs and put stops to restrict losses. If the S&P 500 ever closes below 1040, consider to sell.

If we break higher than 1,105, I REALLY start to like gold miners as a stock play once again.

I am not getting long term optimistic, just looking at the chart index to indicate levels that will be important.

Good luck, and US bonds is always good. (for near future.....)

From WebSufinMurfs FinancialBlog2

Solid Long Term trading indicator

Positioned prominently on my blog on the right, and on my Welcome new Reader, is an old post I had on a long term trading signal. If you haven't read it, click here and read it or just watch the video on the page.

Unfortunately, I did not follow the indicator back in 2009 to indicate a market upswing.

But now it is looking like this indicator will form a cross for another swing down. And if it does, it will be AFTER the downward move has begun. It isn't and indicator for catching a top or bottom. So while we are still in an upward market according to this indicator, the change in the 20/50 lines is worth watching closely.

Remember, the market issued NEW RULES that force the market closed if it drops beyond a certain amount. There will be no buying or selling in the market. I'm not stating that this will happen, but if it does, your price may be further away from stops than you think.

For now its really your own comfort level. Good luck

From WebSufinMurfs FinancialBlog2

Tuesday D-Fence

Great job for the market to hold above the critical 1040 level. Now we'll see how far we can bounce before resuming the pullback. 1040 will be seen again. For now, put stops on longs and see where it goes.

From WebSufinMurfs FinancialBlog2

Time to buy Stocks?

The market bounce the bloggers was looking for looks like fizzled. Now its a matter of the market closing ABOVE S&P 500 level of 1040 and staying above there. A close below really should get people's attention that the downward movement will continue.

But gold is on a tear, so are the gold miners. While the market falls, they rally.
I am into gold, gold miners, and some shorts. Its nice for a change when everything is going your way. So I assume that I will soon have everything go against me. :(

Anyway, if gold closes much higher, it is really worth the risk to get in and hold tight. Gold miners possibly also (check out GDX, GDXJ)

The best blogger for buying precious metals is Gary at the Smart Money tracker. Buy into his service today!

Keep in mind, an all out deflationary collapse where the market goes 50% lower from here is real. Those who discount this possibility are counting on the US government to print even more money and give it away. They can right now, US bond rates are moving lower. But those in power must realize if they do, they are loading a gun for a possible currency collapse. Really no body knows which poison pill they will choose. Either deflationary collapse and rebuild, or US dollar collapse and US government possibly insolvent. I am still in the deflationary camp, but quick to change to the US dollar collapse route.

Good luck.

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

This Week in Charts

Once again I am pulling back the charts to a much longer view. I have also marked the significant valuation swings of S&P 500, Gold, and the US treasury 10 year yield.

Purpose? Try to gain perspective of what has been a safe bet since 2006 to today, and volatility of each. Notice the S&P 500 went up 83% from the market low in March 2009 in just 13 months, while gold game in close second with +85% in 19 months.

What does all this tell you? Well it says to me that gold has been safest in the scheme of things, and the S&P 500 has been very volatile. And US rates are still suppressed. This continues to re-enforce we are in a deflationary collapse, not inflationary.

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Sunday Funny Video, Western countries are broke

I should laugh, but since its true that the world ponzi scheme is finally hitting the termination phase, its disturbing.

Market Pontifications Friday

Most of the bloggers I read expect a push higher before the market resumes downward trend. I get nervous when everyone is in agreement. That usually means that is the one thing that wont' happen. The bloggers I read are all pessimistic on the economic outlook, I consider them critics. The positive bloggers are always positive, except at the very bottom of a market fall.

Anyway, chart for today. I have been travelling, hence the low posting this week. I'll be around next week, hopefully ill make up for the lack of postings.

From WebSufinMurfs FinancialBlog2