Great Depression Averted

Friend of mine, Bob Schulties, emailed me today asking my thoughts of this article:

http://www.nytimes.com/2010/07/28/business/economy/28bailout.html

I read the headline, thats it. Why? Here was my response.

The bottom will be in when this happens:

Banks must use international accounting practices as we did for the last 80 years. Mark to market valuation of assets, no "off balance sheet" debt, etc.

Simple math Assets one column, debts other column, valuation is what the capitalist market place will pay. (Example, if I try to sell my house, what $$$ will I get).

Until the above happens, we haven't hit bottom. We are not recognizing our debts, not paying our debts, not COUNTING debts when evaluating our solvency.

Thats where I stand. If you believe fixing means changing the rules to evaluate fiscal health, by all means, buy every share of the top 10 banks. Don't invest anywhere else. On paper, they are rock solid according to new rules.

Back in 2000 there where dot.coms that where rich, back then profits didn't matter, wealth was measured in market share. If you believed that, you lost a fortune.

Tim Geithner

I have no idea why the US Treasury Secretary is being asked about expiring tax cuts, and the economy. I'm not sure why his opinion matters at all.

But according to him, allowing tax cuts to expire on top 2% of Americans will not hurt the economy. I probably agree with that statement. But I am surprised to hear anyone who is an "economic expert" that can say with a straight face that increase taxing doesn't hurt economic spending.

Harry Dent Pontifications

One of the market pontificators I pay for is Harry Dent, who puts out the HSDent report. Out of all the people I pay for, I am most skeptical of Mr. Dent. His history is littered with what seems like shots that 1/2 time work out, and 1/2 time are disastrously wrong. I by nature distrust anyone who's seemingly primary goal is to monetize market pontification at a public scale.

To his credit, over a year ago, he predicted the market top would be near the 2010 summer, and it would be time to sell the market. And over the weekend, he issued a warning that now is the time to sell and brace for a significant leg lower.

I am not sold (yet) this is what is in store, but it is quite possible.
His target is DOW down to 8000-8500 before a bounce of a yet to be determined target. His subscription is available here.
My primary recommendation for market prognosticator is Blogger Gary of Smart Money Tracker .

This Week in Charts

Pretty nice uptrend this week, to buck those pending chart "death crosses". Lets see how long this bull can run.

I am at this point almost a complete ditto head to "gary" of the smart money tracker for investing. I'm in gold, gold miners, and some non-Gary stuff such as food.

In any case to the charts.

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Chris Christie defends budget

I almost liked this interview of NJ Governor Chris Christie on the show "This week".

He completely dodged him NOT putting money into public pensions.

I agree that the public pensions are completely out of control. But that hardly justifies dodging 3.1 billion dollar payment to pension fund. The pension fund is ridiculously underfunded, and needs to build more capital.

If your a NJ resident, well worth the watch. There are casualties due to Christies actions that will affect all of us.

Ben Bernanke Speaks

The market fall today was connected to Ben Bernanke speaking.

At the bottom if a 10 day graph of the S&P 500 to put todays drop into context.

Video is of NJ Senator talking to Ben Bernanke. What GAULS me is Ben Bernanke says raising debt is a negative. Amazing, where was Ben the last 7 years? Now is the time to get fiscally responsible? How about 2002-2007? The Brass ones Ben has.

So Ben has cheap borrowing allowing banks to earn money with next to zero risk through the fed discount window, and has the GAUL to say he is supporting banks lending?

Summarize: Debt bad, "free earnings through discount window" ben doesn't like but enables it, and wants more lending. Lend to who? People who are bankrupt? I highly doubt solid businesses or people can't find loans. I'd like some examples please, instead of the problem is banks won't lend.

From WebSufinMurfs FinancialBlog2

This Week in Charts

I am very eager to see what things are looking like Tuesday AM. I expect more games on Monday, as a carry over from options expiration on Saturday.

Anyway, here are the charts

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Sunday Video

I was browsing youtube, found this video. I have been avoiding posting Videos from Max Kaiser, mainly it seems to be over the top to me. I would imagine anyone I know reading this blog would find it as outright unwatchable.

But this video has Karl of the Market Ticker, one of my favorite bloggers. So here is the video.

May I recommend you skip/jump to 12 minutes in.

US dollar, Gold, and Market Pontifications

Between now and Monday, I will not be buying any more stock. This Saturday is stock expiration, and I may even sell a little of my long positions if we run up into Friday's close.

Although my long term market outlook still hasn't changed, the near term is looking not that bad.

I wouldn't be surprised at all of the market will bounce between SPX 1,000 and 1250 for 6+ months.

And I wouldn't be surprised if the market went much lower. I would be surprised to see the S&P500 reach 1,300.

I am back into gold/gold miners for over a week or so now, and I hope to stay put.

One of the drama's that is playing out recently is the US dollar, without any fanfare.

the US dollar broke a long standing trend line the last week, and no one seems to care. Although things are not dire yet, if the dollar breaks below the horizontal blue line in the chart below, I'm concerned.

The powers that be may have kicked the can hard enough into 2012 at this point.

Nothing will end well, it just remains to be seen how long it takes to get there. :)

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Market Death Cross

On the right hand side of this blog is a link of when to buy and sell stocks. That indicator uses the 20/50 simple weekly moving averages.

There are other indicators people use to try to remove themselves from the emotion of the market and trade by other trend indicators. Once is the 200 and 50 Simple Daily Moving Averages.

As you can see, from this guide, its looking pretty grim for the market, another big leg down perhaps is underway.

Like I said before, will be interesting to see where the market is this Monday EOD.

From WebSufinMurfs FinancialBlog2

This Week in Charts

I am long various precious metals. The market is still very much in a danger zone. It will be interesting to see what the market looks like at the close of the 19th. Stock market options expire this Saturday. So games will be played.

Good luck, cash is safest.

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Gold and Gold miners

Since back in the fall of 2008 I have been hot and sometimes luke warm on gold and gold miners. (really any precious metals, silver, etc).

This week I believe we will see by Friday a "tell" of the market, if the market will fail to rally or break out and reach some charting critical levels. I have covered almost all my shorts as a week ago, and converted into GLD, SLV, GDX, GDJX, SIV, and related stocks. The world economy is bleak, pensions are insolvent, states are insolvent, and countries are insolvent.

The next leg down in the market will be a really bad one, breaking the backs of so many. All levels of politicians and money managers know this. Now, I do not believe the economy can be fixed by printing money, covering debts with more debt, nor by inflating the stock market.

So playing in the market, long or short has extreme risk. But I am looking to be "in" the precious metal arena for the next leg up. If markets can hold their ground and rise by Friday, I suspect we may see a significant rally in precious metals.

Why? As hot money needs to find a home, and everything out there looks grim (retail sales, bond yields, corporate profits), the hot money will need to find a home. I am banking the next bubble will be the final bubble, precious metals.

If you think so too, I cannot strongly recommend enough to subscribe to The Smart Money Tracker, a blog and market analysis provided by Gary Savage. In his last email, he said, that bear and bull markets are created by sentiment. I completely agree. Most of the world finance is a confidence game, and it solely valued by perception.

I cannot do any justice to the topic of precious metals, but Gary does. And as always, seek a registered financial advisor.

Good luck. For history sake, the value of these securities as of close of Friday:

GLD - 118.36

SLV - 17.70

GDX - 50.48

GDXJ - 26.82

SIV - 14.83

Some other indicators

SPX - 1077 (A break below 1,000 I now view as very catastrophic sign)

RJA (food, not metals) - 7.28

TYX - 40.40 (US 30 year treasury yields)

Market Rally time

Well, my shot on Friday paid off. yea. I covered most of my remaining shorts, bought long miners.

A word of caution, the overall trend is still DOWN. I marked how during each "leg" we have more down days than up. These types of pump days are of a bear market, not a bull.

For now I am barely in short, so now would be a great time for a market collapse.

Long miners, GDX, GDXJ, SIL, SLV, and a bunch of others.

S&P 500 below 1,000 will be truly a level to watch, both for the symbolism (1,000) and the charts.

Also the USD is in trouble (hence my miners also). If it breaks below the current line, I'll post a chart.

S&P 500 chart below.

From WebSufinMurfs FinancialBlog2

This Week in Charts

Its Monday AM, and the futures are up. Therefore it is possible the market bottom happened on Friday for the near future. So here is "this week in charts".

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

This Week in Charts Delayed

I want to do the charts this week after Tuesday's close.

The charts look like we are about to have an all out stock market plunge, possibly the start of a run for the exit doors.

Gold is going higher tonight, with futures going down.

At this point, if the market is going to collapse, it can do it without me. Well played market, get me to finally cover my shorts the DAY of the very top, and here we are about to crash and I am content on sitting out.

Assuming the market doesn't spiral down, this next leg up I'll ride the gold miners, and consider reshorting in the future. Good luck.

Time to take a shot

The market is still looking very weak, who knows when it will reverse higher. Friday 8:30 AM is a big jobs number, much will come of that. At about 8:45 am, worth looking at the futures.

I have witnessed exceptional strength in the gold miners in this downturn from the market highs. So I am going to take a guess that the market will rally once again, and not start the ugly collapse the charters are looking for at this time.

So I am setting stop losses on all my shorts, and getting ready to buy gold, silver, and miners. (GLD, SLV, GDX, GDXJ, SIV) Probably some tomorrow.

My hunch, which could be completely wrong, is that the powers that be who have backed every dirty trick, every reckless action, threw away trillions of dollars, have not learned their lesson.

The USD is also breaking down now. I also think this is a tell. The USD is devaluating ahead of the announcement by insiders.

Obviously, this is a gut-educated guess. Seek financial advise from a paid advisor.