European Union, the 20th Deadline to resolve is Wednesday

Wednesday's deadline for the Eurpean union to resolve their sovereign debt, after a string of deadlines for over a year to resolve, is now in focus this week for the markets.

I haven't commented much since I was so confident zero would get done, and I was right.
But this week, there may be a peep, I doubt final answer on the European crisis.   But we may actually get some foothold of the new reality out of Europe this week.

We could hear it Wednesday, but I suspect just one more kick the can into Friday for an announcement.
In any event, this is a crucial decision of Europe that will shape all of western countries next couple of years.   I just don't believe the right thing will be done.  Instead I expect more paper games to cover the crisis, until the crisis gets so big, no European country can avoid the vortex created.

It just boils down to take your medicine now, or wait until Europe is on the hospital operating room with a massive near fatal heart attack to see the outcome.

Market Commentary

If I exclude the possibility of the US Dollar hyper-inflating (which in the next year or two seems highly unlikely), I am now very pessimistic for the market.

I can't stress hard enough that cash is king.
See yesterday's post, and combine that with Gary of the Smart Money Tracker private pay advice (I won't republish, join to read) I am more bearish than ever.

I may be tempted to buy double inverse funds.......to catch the down swoop in a "positive" way.

Good luck.

The US Market Charts in the BIG picture

Today, I have two grand market valuations to look at over the century.  One is S&P 500 in terms of it's valuation RELATIVE to gold valuation. (in essence, if we used gold as money)   The second is the S&P 500 since 1870 to today.
Regular readers know I do not believe gold is money.  But it does serve as a relative valuation to judge how fiat currencies are valued relative to non-fiat valuation.  I would rather have chart of the US market in relative terms to all commodities (averaged).  In absence of that, the gold chart will do.

The charts deliver one message to me.  In relative or non-relative terms, from a charting perspective, the markets are headed don to 700 range....AGAIN.  This is using historical trends projected into the future.  I DO NOT think this is a required outcome.  Man can change laws, and change "Relative valuations" but doing things such as breaking currencies.  Then the charts are meaningless.

To the charts!

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Greece, Spain, Portugal, Italy, Ireland

Greece, Spain, Portugal, Italy, Ireland are at risk of outright failure, unless Germany backs all their debt.  Time will tell.  Some nice video debate.  Nigel Farage is my European Parliament hero.

A step closer to Americas Financial end game

Question, what is the designation of the Federal Deposit Insurance Corporation?
Lets take a look at Wikipedia:

The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. As of November 18, 2010, the FDIC insures deposits at 7,723 institutions.[2] The FDIC also examines and supervises certain financial institutions for safety and soundness, performs certain consumer-protection functions, and manages banks in receiverships (failed banks).


More is available on Wikipedia, but the gist is, it insures people cash deposits. (savings, checking, etc).
It is not for insuring corporate trading or risky assets.

But what if a bank, that exists due to suspending accounting practices since the Great Depression, and is solvent due to new legal accounting tricks, wants FDIC insurance?
What if that same bank has over 1 Trillion dollars in deposits AND has dodgy derivatives from a previous purchase, should the bank be allowed to transfer those dodgy debts from it's high risk trading group to the bank holding company, thereby shifting risk to the FDIC?

Apparently the answer is, yes.  No matter how much risk assets have, and even though those assets have ZERO to do with normal banking, the assets (debts) can be shifted from the higher risk trading group into the bank holding company, and thereby force the FDIC to insure something that no corporation in their right mind would ensure.

This may be great for the depositors of that bank, but it won't be good for the other savings depositors from more stable banks.  If an event is triggered, this will become a tax on all savers in banks NOT insolvent to pay off the debts to the insolvent bank.

If BOA ever triggers a FDIC event, FDIC will be insolvent for years to come just from BOA.
Good luck on the banks to follow.  From article:

Bank of America is the only U.S. lender that lacks a rating of A3 or higher among the five firms listed by the Office of the Comptroller of the Currency as having the biggest derivatives books.

From FDIC
The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.


This entry has earned the recognition in the Financial Ground Zero event series.

Most disturbing video I have seen in years

As I have repeated, China is not the world economic savior of the world in the near future.  I  think there will be a revolution of sorts in China, and the rebirth may be a rival for world leader.  Apparently a Mish reader hopes so.

Mish posted this video, and has other chinese readers who vouch for what it represents.

The first driver in the video didn't come down, but tried to kill the little girl instead, because he knew that killing someone in an accident would probably involve a lump sum and maybe sometime in the prison, whereas being responsible for her medical bills would mean bankrupting his family. The legal system, which is enacted by and for the governing elites, is inefficient (at best) and corrupted, especially any level of governments are involved (and they are involved in almost everything). From their own observations, many people lose hope; many turn cynical; and even more just become numb. Avoiding uncertainty at all cost is not a bad strategy to protect oneself.

A media friend of ours who lives in Shanghai calls the current time in China "The Carnival before the Judgement Day". And indeed tension if built up inside and I won't be surprised it hits a wall soon. Unlike many more patriotic Chinese, I do not want China to become a new world power soon - at least not in the current form. The still growing economy is the only legitimacy left for this system to maintain in power, and I am actually hoping for an economic hard landing in China if that's what takes to wake people up to challenge the status quo for the better.

Click the link above for the full Mish article, and video.  It's moments like this that remind me how quickly and low people will sink once the conditions for self preservation surmount moral decency.

This Week in Chart

The USD may start to resume it's climb, after a nice pull back for two weeks.
I think it all depends on USD move where the market goes from here.
A never-ending-decline of USD with never-end-rise in the market isn't possible, nor desirable.
So something will shift.

From a charting perspective, we are in our range created after the multi-year trend breakdown.
So for now, its watch and see.  I am still very nervous that the market breaks down from here.....but when am I not?   :)

To the chart

From WebSufinMurfs FinancialBlog2

China is imploding

As I have posted before, China's near term over-extension of credit makes them NOT the saviour of the world economy.  Building cities that no one lives in does not lead to a solid foundation for an economy.

I have featured Jim Chanos before.  He is back in the news, some good clips to watch.

At the end, Jim throws down the true issue, are we a fair, capitalist system or a broken financial system that rewards the money risk takers and punishes the average person.  Jim, its the latter.

Time for Markets to end the Rally?

Back on October 5th, I posted "Time for markets to Rally".
Back then, I said I doubt this lasts more than 2 weeks.

Here we are, October 12th, and two weeks from the 5th will be the 19th.
We are in the home stretch for the rally to potentially end.

The next leg down should be not very nice if your long the markets.
Today I am going to consider adding to my exit of stocks.  Each day is really playing chicken with the market.  There is now law that the rally can't run for 2 months more.  But with the observations of China, Europe, USA, and other issues bubbling to the top, I have my doubts.

On October 5th, pre-open, the S&P 500 was at 1,120.  Today pre-open markets at 1,195.
On October 4th, markets stretched down to 1075.  So from 1075 to 1,200 (I expect a up cross today) is +125, or +11.6%.
In a world where US government bonds for a YEAR make under 1%, an up gain in +8 days of 11.6% is impressive.  Don't be greedy, for the next down swing should go below 1075, more than 12% lower from here.  See the bear at the top of this blog, he is still in control until proven otherwise.

Good luck

End of day: S&P 500 hit 1220 on 10-12-2011.  That is a 13.5% in eight days.  The gains count only if you keep them.

Federal 1 year bonds at 150 percent interest rate returns

Well, not US federal bonds.....

Here in America, a US bond gets near zero percent for a 1 year bond.  In Greece, you can buy a Greece 1 year debt bond and get 150% interest rate!

Imagine that, give Greece 1,000 bucks, and in a year, you will get 2,500 bucks back in euros!
So why invest anywhere else but Greece?

For one thing, you must have faith that the European Union will save Greece by paying for their debts.  And so far, Germany is having cold feet to pay for Greeks heavy debt load.  Next up of course will be Spain, Italy, and  eventually Ireland....again.

So if your the optimistic sort, it's a great time to buy Greek government bonds.
For those like myself, I'll take good old US bonds under 1% for now.

BTW, Greece offers us all a glimpse of a potential future for all western countries, if we don't start changing our behavior.....NOW.

Western Financial Collapse and the East

Nice quick summary of the world economics, and I agree with this man 100%.

Global Financial Meltdown In Two To Three Weeks

Not sure if the title of this post has any merit.  An adviser to the International Monetary Fund said it.  Does that give it more weight?  Remember, his focus is Europe, and I do agree Europe is in a old-school Great Depression, deflationary collapse.  And I do agree the next crisis is waaaaaay worse than 2008, and its going to happen in the next 12 months.    You decide if the video makes a compelling argument the next "3 weeks".

The video references Credit Default Swaps, which was the underpinning to a possible global collapse in 2008.  Here we are in 2011, with no transparency, and no significant improvement on unregulated CDS, which exceed total global GDP in liability.  Apparently there is only one way to fix this mess, and that is after a collapse.  We had 3 years to reform CDS, and we didn't.  WE will, when its forced.

My greatest short-coming in all of this is lack of understanding how people when faced with apparent obvious issues refuse to address them.  The European union I recognized over a year ago starting to fall apart, and no significant progress to address was done.  Same with CDS, this was an obvious issue back in 2008.

I hesitate to put timelines on such historic events, but I did quote it was time for this to begin in June 15th post "Three strikes, time for global economic implosion".

Time for markets to rally

The market is in overall down mode, but yesterdays extreme mid-day down action would have shaken all nervous stock holders out. Now there are more buyers than sellers. Plus the usd has risen at breakneck speed. It too must now move lower. Combination is a market rally. I doubt this lasts past 2 weeks. The bear is still in control. Good luck

Wall Street Protests

Although I may be very critical of financial situation of US government and law enforcement, I haven't been commenting on the Wall Street Protesters.

The reason is I am unsure of who is pulling the strings of the protesters.

One of my favorite bloggers, Karl Denninger.  He appeared on CNBC on this topic, watch below

Visit msnbc.com for breaking news, world news, and news about the economy

Time for market bloodbath

Well, that was quick, and we now have our answers.

From WebSufinMurfs FinancialBlog2

This Week in Charts

As of week of September 11th, this market is in a down trend, that should last for a full year or more.
Expected top to bottom losses of 35% (or more).  I'll re-evaluate when S&P 500 hits 780 OR the long term indicator flips into bull mode.

This blog will be pretty freaking boring for months to come, until I can see some glimmer of hope for natural resources or the market.
Cash is better than putting it anywhere else.

To the chart that matters, the market range.

From WebSufinMurfs FinancialBlog2

European Stock Market is Toast

I am not so sure about the title of this post actually happening, but it's what this trader says about Europe.
What I do agree is Europe will in the next two years will be forced to breakup the Euro.
If German law is observed, then it becomes quite likely that the Euro will fail much sooner.

Once Europe implodes, then the world will follow.  Notice what this man says about Goldman Sachs....
What I can safely say is Prediction #2 of my 2011 prediction list is fulfilled, whatever happens.

In the end, all markets will implode without a severe intervention by world banks, which to date, seem to be taking a defensive stance for once.  Fun times.

This Week In Charts

Nothing much to add, market in overall downtrend as described at top of this blog. (click)
Natural Resources getting CRUSHED for the last few weeks, however a near term (long term?) bottom probably happened today.  Expect a bounce
The stock market is trading in a range, that I expect overall breaks downward eventually, for the next 6 months to a year.

The S&P 500 chart.

From WebSufinMurfs FinancialBlog2

Ok, what now?

We now have our answer, the Federal Reserve Banks announcement was not received well, as the market dropped like a rock as it announced.  The deflationary collapse is continuing today, and since Europe is in a deflationary collapse that cannot be controled, the rabbit hole may go deep.

If S&P 500 breaks below 1,100, gloves are off, next target support is 1,000 then possibly to 780-666 range.
I am holding some longs, but refuse to buy any longs until this indicator crosses upwards (click).
At some point, gold may stop losses and be the one to buck the trend if people start running to it as a safe haven. Over the looong haul (10 years) of course, this can't work either, but it may be a trade I jump into if I see support.

All resource stocks should fail with the market, the next couple of days wont be fun for anyone.
Good luck.

Two day Federal Reserve Meeting

Back on September first, with post titled "Know when to hold em, when to walk away", I stated I didn't like the market setup, between then and the Federal Reserve meeting late September. The market is slightly lower since then, and dropped quite a bit lower earlier in the month.

Today marks the second of a two day meeting for the Federal Reserve Bank.  They will of course announce today.

The question is, what can they announce to change anything?  Assuming they don't announce something extreme that immediately tanks the US dollar, there isn't anything they can do to "save" the global economy.  They cannot provide political and global leadership to stimulate economic prosperity.
The function of the Federal Reserve Bank is to set banking and monetary policies.  Although extreme banking and monetary policies helped put us into the global economic imbalance situation, it isn't purely caused by the banking actions.

Overall we have a deflationary situation with western countries not producing enough to cover their expenses, with Asian countries providing the production of goods and increasingly services at much lower cost.  The US does not have a new innovation driver that will pull the economy out of this funk, nor does Europe.   There is a fundamental economic imbalance between countries that must eventually correct.  Having the federal reserve bank lower rates, or do some other trickery does not provide a cure to the western economies, it can only provide pain killers to give short temporary relief.

I'll leave the door open it is possible the Federal Reserve announces something so extreme, that the markets move. Generally speaking the Federal Reserve Bank is near out of any significant options.  I expect in the years ahead their announcements will become increasingly marginalized as the wizard behind the curtain is exposed.

For me, this is very disturbing, back in 2008 and since then I have marginalized the Federal Reserve Banks ability to make any sort of dent in the fundamental economic driver of the USA and western countries.  Here I am now facing that very reality becoming more obvious to the world, and now that it's here, the precipice is presenting itself.   Now I hope that the fed proves me wrong!

David Hornick, venture capitalist interview

Interesting, brought to us by Slope of Hope.

The Bear is Back

From WebSurfinMurf's Financial Blog

The Bear is back, he has been violated and abused for over two years.
Out of ALL Long stocks, and even resource stocks should get somewhat routed. The next upswing I think will be an explosion for resource based stocks on the upswing.
My target for market turn around is around presidential election 2012. The deflationary collapse of Europe can make all of this much worse.
See post "Downturn ahead in stocks" for more detailed information. The lines have crossed, click here for latest charts.
A 1% gap or more between crossings is a more firm confirmation, I'll post once I see such a gap. For me, this is good enough to listen to. Those who think the USD is dead are in for a rude awakening, if they haven't gotten one already. The USD crisis isn't until after the next upswing and the next cycle of down pressure. I still think 2013-2014, possibly as late as 2018, depending on how events unfold.
S&P 500 sit at 1216, GLD at 173, TNX at 20.76, TYX at 33.41, OIH at 130, APPL at 400.5, USO at 33.4, AVL at 3.96, REE at 7.99, GDX at 64, RJA at 10.10, US dollar index at 77

Gold break trendlines

It is looking VERY grim for gold prices in the near term, broke trend line onto the downside. Considering how far and how fast gold went up, there could be a bit of a pullback in gold akin to what happened to silver. Keep in mind that China and other speculative countries likely are margined to the max on gold and silver. The price deceleration may accelerate, or quite possibly right here and now is the near term low and the price rise will resume, but I doubt it. I will likely just exit gold and sit this out, like I should have in the first place. Good luck

From WebSufinMurfs FinancialBlog2

Europe heading for all out implosion, 2008 style

America led the world into the first major wave of what I think will be a decade long crisis, back in 2008.
In 2011/2012, it is looking like Europe leading the world down rabbit hole number two.

The European banking system looks much worse than America's.
The major advantage the US has, is the US printing press for new currency has not hit any significant limitation.

Europe however doesn't have the same luxury. The Euro is basically a currency PEG among all member nations.
The Euro can't just print trillions of dollars and drop it from helicopters like Ben Bernanke.

This difference will result in a very harsh, and nasty deflationary collapse in the European union.
I suspect with Europe going down, the world will follow just like the world did with America.

Unfortunately, all of this will continue to add to the strain to the global system.

Two American banks with 4.3T dollars are at a stunning 22x leverage to capital, a recipe for disaster.
Four European banks with 4.8T Euros are at 69x leverage, and without unlimited currency printing, a sure fire collapse is fast approaching.
I had thought this would be kicked into much later 2012, but the posts I keep reading is starting to sway me that we may not make it out of 2011 without fireworks.

High Frequency Trading explained

You may hear the term High Frequency Trading quite a bit.
Here is a video series that explains HFT, how profit is made, and implications.

Brought to you by ZeroHedge, click here

Down Market Ahead in Charts

This week, I am refocusing on the one market indicator that has been accurate in the last 20+ years indicator for market rising and declines.  Even when wrong, it is wrong for very short period of time, and does not result in significant market earnings miss.  As video explains, you can wait for a 1% gap in the line cross to help rule out false positives.  The line decline is so steep however, I think when they do cross, we will likely cross a 1-2% difference quite quickly.  As I posted on July 17th, I expect this to happen in September.

If you haven't done so, I strongly encourage you to watch the video at the end of this post, and reflect on the chart below.   This market indicator should be respected as an emotional-less, fact driven indicator.  You can see my own mistake of disregarding this old indicator, and it did hurt my own accounts.

If we experience a year long bear market, chances are, everything will do poorly, including natural resource related investments.  At the tail end of this however, I suspect resource stocks will bounce back with a viscous vengeance.   I will keep my core position in gold miners purchased back in 2008, as well as AVL and other ETF's like REE, as longer term plays.   GLD (Gold) or Silver prices may do well, but could have a severe correction at any moment and carries significant risk.

Using the last two major 20/50 SMA line crossing, we can see the market declined about 35-37%.  Assuming a 35% decline from the current market value, it would target S&P 500 of 780.   Once the lines do cross, I'll re-adjust for a final target for market bottom in the years ahead.

I am of the belief that this next decline may actually be the final leg down in the years ahead, it will depend on the government reactions and currency war progression.  A related read I highly recommend is An Imminent Downturn: Whom Will Our Leaders Defend? 

As always, seek a professional investor, I am not one, just an arm chair observer.
NOTE: The indicator hasn't yet crossed, but a cross does look imminent, I will post when it does cross.
UPDATE: For latest chart, click here

Good luck!

From WebSufinMurfs FinancialBlog2

An Imminent Downturn: Whom Will Our Leaders Defend?

John P. Hussman, Ph.D. of Hussman funds posted a well thought out description of the choices that face us ahead.  I am not going to do it injustice by creating a couple sentence summary.

It's a good read, I highly recommend it, click here An Imminent Downturn: Whom Will Our Leaders Defend? 

US dollar on the move

Just fyi, USD exploding up, breaking out of trading range.
Unsure what if anything effect on stock market.

One effect should be cheaper imports.
Gold is taking a hit.

From WebSufinMurfs FinancialBlog2

Past fear, time to rally?

First, Obama's speech was more forceful than I thought.  But overall its more of the same, spend now, save later.  Notice how its 3 YEARS after the 2008 crisis, and the country knows we are STILL in a crisis.  Notice how root cause of the crisis is never addressed, what is addressed is pandering to the people most affected, the under and unemployed.  In general I liked his speech, but I'll wait to see what is actually done to render a final verdict.  (Full text here)

Anyway, to the markets, Gary of the smart money tracker pointed how how extreme the market is oversold.  The futures seem neutral, so I will follow his lead an rebuy my longs.

Yea, I panicked  Monday, but the indexes are only slightly higher than they where on Monday.
Back to buying gold miners, AVL, and natural resources.  A break below S&P 500 of 1,100 will still freak me out.  (News Alert, that affect AVL here)

The most extreme wild card out there is europe.  If European union breaks up, who knows what the market reaction will be.

Good luck

Obama's speech.

Obama speaks Thursday, will market be disappointed?

In my post last week titled "Know when to hold them, when to walk away", I pontificated that Obama's job speech may disappoint this week.
Obama has not yet delivered his speech, and he still may give a huge surprise resulting in a market upswing as optimism returns to the USA economy.

However, early leaks are saying the jobs bill will be 300 billion out of an annual 3.5 trillion dollar government budget.   The 300 billion will be comprised of tax cuts, as well as jobs programs.

Considering the US GDP is marked at about 14 trillion, US government annual budget is at 3.5 trillion, and less than 50 billion will be in direct jobs programs, I'll make a call on the market reaction Friday after Obama's speech.

It will be a non-event, and may even disappoint.

Greece bonds, a great buy at 88% ROI for 1 year?

The US 1 year US treasury bonds pay 0.005%, yes, you read that correctly, essentially zero.

For baby boomers in search of fan-tastic rates of return, one has to look no further than Greece.  Greece 1 year bonds are now offering OVER 88% interest rates.

Basically a 1 year investment in a Greece 1 year bond, your ROI will far exceed any other investment offered in the world.  The currency, the Euro, is currently relatively strong compared to US dollars.  Germany and France keep throwing billions at Greece, Italy, Spain, Portugal, and any other country in the European union facing challenges in the bond market.

So if you have faith that the European union will NOT be dissolved in the next year, and the Euro value will be maintained, look no further buy Greek 1 year bonds.

I for one, do believe the European union is headed for a cataclysmic disruption, that will result in either a Euro fractional-zation or economic implosion by all its members.  I have no idea about timeline or depth that the debt defaults will come.

But quite obviously, people living IN Greece and Europe do not have faith that Greece will be around in a year as part of the euro.  For if they did, they would be buying 1 year Greek bonds and driving rates below 88%.

Now imagine, if you are a retiree in Greece, and you purchased long term fixed income assets, like US retirees are doing in droves right now, a year or two ago.

What would those long term fixed assets be worth, when the 1 year rate is 88%?  Answer is simple, a complete routing of your retirement savings locked in at a much lower lower rate.  Those retirees would be dumping longer term debt notes at huge losses just to "get out" of their lower rate lock in.

Greece serves as an example of what retirees are facing in the USA.  High risk investments for mediocre returns, or near zero rates (US 30 year at 3.75%).  For those locking in a great 3.75% rate for 30 years, the warning of unseen dangers can be illustrated by Greek bonds.

In honor of this post, I added a US Government bond rate link on the right, reflecting current bond rates for future reference.

NOTE: I don't believe US debt will have significant rate issues probably until 2013-2020?  (I suspect 2014).

This week in charts - All hands on deck

Due to various reasons, I am not very well positioned to capture the market plunge that was experienced Friday and likely this week.
I am positioned to avoid the pain that should come to those long the market, as I posted Thursday night to GET OUT OF THE MARKET!
A market plunge below S&P 500 of 1,100 is very ominous, next stop is likely on the express train down to 2009 lows of 666.  For those that read this blog regularly, you will remember on market plunge day back on August 8th, I did not panic...well, now I am. :)

I give you this week in charts, and lets just say it may not be a very Merry Christmas this year.
Good luck, and Obama, prove me wrong and give the country some juice, even if it is BS, and lets kick the can yet again, in hopes tomorrow someone fixes this mess.......which of course, there is no Santa.....

Short call outs!
DXD - 19.61  - double inverse short, should go higher! HIGH risk
FAZ - 60.62    - Triple inverse short banks, should go higher! HIGHEST risk
NFLX - 213 - should go much...much...MUCH lower. (dropped from 235 on Thursday to 213 already)
                     - lost access to many movies, the bandwidth issue will get them eventually, raised prices, and
                     - my guess is many ordinary people bought this stock, so pro's will crush them
PCLN - 528 - good company model, hard to bet against....but I still think lower
DECK - 85.90 - eh, probably lower, really a coin toss, but its an old short I can't let go.
ODP - 2.29 - Shorted on 7/1 @ 4.24, probably going to zero...Office Depot.
DGP - 71.76 - DOUBLE Gold ETF - if you like gold, you'll love this ETF, with 2x daily moves than gold.
                      - Crazy high risk!

In first chart, I reference the long term trading indicator, read more here.
I STRONGLY reading latest news this week at Mish's blog, click here.

From Mish's blog, I can't believe this guy said this publicly. Geesh:
Deutsche Bank CEO says "It's Obvious Many Banks Will Not Survive if Forced to Value Sovereign Debt at Market Prices"

To the charts!

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

James LeGrand, Author of Evolve

James Legrand is a former coworker at my previous company, Navisys.

James is one of the most positive individuals I have had the pleasure to work with. James is also author of a book called Evolve!

James is also concerned about the Economic shift ahead. I have already stated I favor natural resource investments, preparing personal resources, and yes, own a gun. While I am not ready for calling mad max, but being prepared is a good thing.

James favors gold/silver for reasons slightly different than mine. I am not concerned of USD collapse in the next few years. But I do like gold/silver increasing as China and India rise with wealth, and the 2.5 billion people in that country buy more precious metals.

Other than that one point, everything else James talks about I completely agree with, be prepared.

Very scary news items released

Last night I posted "Know when to hold them, when to walk away". When I did that post, I had NOT looked at the blog Zero Hedge yet. I wish I had.

This morning, while checking my RSS feed, to my surprise is very disturbing news, making FAZ and other inverse funds look great, and me wishing I had posted "when to walk away" on Wednesday night instead.

Item 1, Regulators going after High Frequency Trading firms, reviewing code to understand their scalping logic. This is a milestone step for the government to change trading rules to reduce or eliminate HFT. While I support the idea, I also recognize that about 70% of the trading volume of stocks is now computers. Any disruption in the perverted trading arena will likely be a negative one.

Item 2, US Government filing suite against a dozen banks, including BAC for fraudulent practices on mortgages. Filing may happen TODAY (Friday 9/2). Obviously a massive pile on lawsuit from 50 states and now federal regulators can't be good for banks in the near term. Granted once the dust settles, and accounting practices returned to pre-2009 era rules, I'll be optimistic once again about banking. But that means quite a bit of volatility between these two events.

Item 3, Wikileaks releases 65 GB of email archive stolen from Bank of America, uncensored. I am pretty sure executives in BAC did not envision their private communications years later being placed on a global bit torrent. I am also pretty sure at a minimum one damning email will emerge to support the federal and state lawsuits. It isn't unreasonable to think BAC may become the fall guy in this next wave of state and federal lawsuites.

Well there ya have it, quite a bit of significant news. This post has achieves the status of entering Financial Ground Zero series. Good luck.

Know when to hold them, when to walk away

For those who may have not heard, President Obama is giving a speech that includes a job plan next week.

Considering all I have written in this blog over the years - since GW Bush was in office - I am not one that is optimistic of quick fix schemes.

So while it is possible Mr. Obama surprises me with his speech, it is more likely to disappoint.

What will likely follow is a market swoon, which may eventually reach a climax with the Federal Reserve Board making an announcement late September about QE3, or some other action, to pump the system, yet again.

Given where the market is, the questions I have over Obama speech next week, and the Federal Reserve Board's 2 day special meeting at end of September, I just don't like the setup.

When your gambling at a poker table, and the participants make your skin crawl, sometimes it just best to not play.

The market hasn't yet hit S & P 500 at 1250 like I had hoped, but its close enough. Today's high was 1,229. Reflecting back, today was probably the best day to sell.

So I will be a day late, but it is better to act than to be a deer in headlights.

Bottom line:

Selling longs

Keeping core gold miner positions

Keeping AVL

** Update 2013 ** Below looks simply insane to me, the 3x funds are a horror show and PCLN hit 1000

I may add some to DXD or other inverse funds. For those of a true gambling nature, FAZ right here may be interesting. Take a look at this chart, looking good. FAZ at 55 is a true gambler's play, a 3x inverse banking fund, that can explode or implode on any given day.

Oh and the short of the year? Probably PCLN, look at the last 10 days...up 20%!!

The counter argument is bad global economy will drive people who will vacation to PCLN.

DISCLOSURE: I am short PCLN at about the current price, 529.

Good luck.

A small glimmer of hope appears

I have very mild optimism that maybe the politicians are starting to get it. I read an article from England, and I quote:

The Liberal Democrat minister said: "It is disingenuous in the extreme to use the current context to argue against reform."

"Banks are in a way trying to create a panic around something which they know has got to happen."

"The governor of the Bank of England and many other people have been arguing that we have to deal with the too-big-to-fail problem."

"We can't have big global banks with balance sheets bigger than British GDP underwritten by the taxpayer; this can't go on and it has got to be dealt with."

Sir, you do and America does, when you include the CDS liabilities that can trigger a cascade failure. That is what you get when you allow such agreements with zero transparency and minimal guidelines from the public.

I have minimal hope since a chorus of people are needed, not just a couple of politicians to bring the underlying problems to a head.

I'll eagerly await other bloggers to dissect if the changes in Britain are real, or another toothless paper tiger.

Market Rally Ahead, then I fear the worst

Back on the US debt downgrade, I called for calm, to NOT dump out of equities that day, in post "Panic Day us downgrade"

The next day I posted looking for the S&P 500 to hit 1250. Hopefully we can finally move to that level now. On Monday the markets broke up higher from the range it was trading in.

Make no mistake, I am in complete fear of the two indicators of a market decline, one I pointed out yesterday, the other from back on August 10th, "Fortune telling charts".

For now its hopefully a rise above S&P 500. I don't think I can stomach another overnight drop in stocks, so if/when we cross 1250, I am going to start lightening up positions across the board except my core gold miners.

I'll post when I finally think it's time to hit it out, for if I am right, thats the last chance we will get for quite a while, maybe 8 months.

good luck!

This Week in Chart

Today I have only one chart for you, the S&P 500.

Gold is up, but I am still very jittery and remain out of GLD & SLV.

I am still in precious metal miners, not sure of what is in store.

US dollar waffles but remains above all time lows.

The story for me is the US indexes, and I'll use S&P 500 to illustrate.

If you haven't yet, I urge you to read and watch the video this blog post "When to Buy Stocks or get out of the market".

Stock charts, I think are becoming much less dependable, as the massive computer trading machine uses them to manipulate the people in the market. I can't dismiss them entirely. But if I see this chart indicator, so do many people with bigger interests than I.

I am hoping that the market makes a little higher pop this week. Some parts of me think maybe the worst is behind us and the market will waffle around here.

But there is the part of seeing political global unraveling that makes me pessimistic.

The 10 year US treasury notes are at the LOWS of 2008!

And there is my quandary. if the US Treasury rates are ALREADY at a low equal to the market crash of 2008....what is next? Is the worst already here, ready for yet another market move?

It seems strange to even think such a thing when I look around with all the statistics. The baby boomers may soon have no choice but to put their money in the markets as fixed income rates get CRUSHED?.

Something much larger maybe afoot, and in some terms, maybe we are AT the 2008 lows, without the S&P crashing to 666. I can speculate about 2000 possibilities. Best I can say is, watch and see. For some reason I am not NEARLY as panicked when I started this blog in August 2008. I am from the aspect of the global condition, but not as much from market conditions.

To the chart!

From WebSufinMurfs FinancialBlog2

Friday Ben Bernanke talks, does it matter?

I am very concerned of market reaction Friday and next week after Ben Bernanke speaks. Last year, he talked he announced QE2. Those watching some are predicting QE3 and market rally, others think market will resume fall disappointed in announcement.

I am thinking we will have a muted reaction. Quite likely some decent volatility, but in a week markets will actually be reasonably stabilized. In a nut shell, The Federal Reserve Bank has taken extreme measures and will perpetually do so to avoid an all out market collapse like 2008.

So where does that leave investing? Well, you can simply walk away and not watch resource stocks and in two years or so I still think it works out well as an investment. For those trying to play market timing games, Gold/Silver should fall nicely, and look for buying with a 200 dollar fall or so in gold. Asia today has raised margins, as the world banks gang up on gold.

I am dismayed in their actions, for they give credence to the thought that gold is somehow something to fear against fiat currencies. The world banks should simply treat gold as a non-entity and ignore gold. But politics around Gold continue from the human race's history.

Bottom line: I will likely lighten up positions between now and Friday, and try to sit on my hands for a week or a month until things become less volatile.

Marc Faber calls for market high in May 2011

Marc Faber calls for trading range 1050-1370 of S&P 500. You can view text excerpts by clicking here.

This Week in Charts

Markets are looking very shaky, like I posted on Thursday, no shame in hitting the bids.

I am considering holding for next leg up, and sell.

To the charts!

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Selling positions

There is no shame in hitting the bids at this point.
I may today, I'll see how the day goes.

The market is turning much weaker, we could be in for another leg down.

Fundamental Global Currency Sickness

Jim Grant does a great job of explaining the crux of the global currency sickness, and that is the US government has sole control of money creation, as the world reserve currency. There is no check and balance in the system. The video is a great view of the currency problems, and debt problems, with ONE exception. I completely disagree with a gold standard.

I am starting to get concerned that these gold bugs will be heard in the global fiat crisis ahead. A gold standard will produce worse economic issues than the current system over time.

I'll create a post directly attacking the gold standard later. You can get a glimpse by reading my series starting with "What is money".

Jim Grant Interview was mid July, notice he was right about pushing out dealing with the US debt crisis.

What is 17 trillion between friends?

I have posted some video's from Bill Still before. I am in agreement with him that Gold based money is a horrific money system that will enslave the populous. Every transaction will require a miner tax to quantify work owed (IOU = money). You can read my thread of thinking by starting "what is money".

Bill Still made a very good documentary about the history of money, and how that gold makes a horrible money system. Also how the current debt money system is very bad for the people. In my ideal world the government needs a check and balance to create unlimited funds without requiring bonds. In reality, the government currently creates unlimited funds now, but is tied to debt.

I have come to realize with this post that it is possible that the future isn't as grim as I keep fearing. If the current monetary system just made one simple change, to create money government borrows WITHOUT requiring interest, it may unleash for a while a new prosperity. It is the very debt system the government is bound to that is causing much of the issues. For without the government paying an bankers tax on every dollar it creates, the system would be much better off.

I am concerned however with zero constraint by governments to create money, that the currency could hyper-inflate. But if you think about it, deficit spending over 1.5 trillion interest free vs with interest, how does interest to pay to the banking system make the currency more valid?

What Bill Covers in this report is 17 trillion was loaned into existence during the crisis by the Federal Reserve bank, as reported in a US GAO government report recently released. These loans were at no interest (or near zero) to support world wide the entire banking system. Bill's main point is how come the Federal Reserve bank can create 17 trillion dollars with near no interest, lend it out, and get paid back, but the US federal government - aka - the tax payer - cannot.

The source of Bill's information for 17 trillion can be found on pages 205 and 216, on this report by the US Government Accountability Office.

Lets think about this for a minute.

• USA total GDP is about 14 trillion dollars.
• Total US debt load is about 14 trillion dollars.
• Over 17 trillion dollars created by the Federal Reserve Bank - in secret - to prop up the banking system.

Above makes no sense, hence, I don't believe the 17 trillion dollar figure. It is likely to be blown up using the money multiplier quoted with regards to fractional reserve lending. I suspect the original number was the TARP, 700 Billion dollars.

For those who believe the system will collapse, in a classic deflation scenario, with the markets going to all time lows, I ask you, read above.

I agree that there are massive deflationary forces keeping the markets volatile and on the downswing. But the next time it looks like 2008, like it did Monday, I have faith in the banking system to do what it takes to ensure they remain solvent. The banking system is now on the ready to avoid 2008 or worse again, ready to create money out of thin air, to deploy to banks and leverage up 10 to 33 times the money given by the Federal Reserve Bank.

For this game will have a significant shift in the year ahead. The world is looking behind the curtain to see the Wizard of Oz is not as magical as one thought. And it is the aspect of trust and confidence, that will become the issue as the government debt load becomes unsustainable in the year ahead.

Bill Still's video report #24

Bill explains his position on changing debt money system

This Week in Charts

I said enough on Thursday's post titled "Market thoughts month to years ahead".

One thing I realized since then is the view is too USA centric. This time around the problems will come from Europe and other western countries. This will make the events and effects much different than 2008 since America won't be leader of problems.

And as such, the shape, form, and timeframe makes me very unprepared to make any good thoughts on when this starts. Tomorrow? Really who could know with such limited information.

Anyway, for this week, not panicking Monday was good, buying Rare earths was great. Selling my GLD, the jury is still out.

To the charts!

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Market thoughts month to year ahead.

Back in June 24th, I posted that there maybe a Major Rally ahead. That did come true. But the markets rallied WAY to far to fast, as I posted on July 1st. I had hoped for a nice upswing in July, until the bear market return mid August, that's when I started to post much less on this blog.

Once August came, a freaking crazy downswing ensued, SPX 1350 down to about 1100 in a couple of weeks. Woosh, all gains for the year and beyond gone, taking the markets to levels back to 1998. How's that for a nice loss 13 years of profits...AGAIN.

I do have some hope for the next 1 month into possibly next year. For example, Europe is banning short selling of some banks in France, Spain, Italy, and Belgium. I am quite positive the Federal reserve bank is up to illegal (either explicitly or Bill Clinton level splitting hairs of what does the word "is" mean.) Plus, the market has not been this oversold since 9-11-01! These items are sowing a market to firm up, but also setting the stage for the final market swan dive. How these governments get away interfering with private business on a whim is frankly outrageous, and stupid.

People may look at the recent market fall as a possible 2008 repeat. I seriously doubt it. Back then pretty much the world sat on their tuckus and just followed America without serious questioning. When the stuff hit the fan in Sept 2008, the rest of the world plunged with America, completely blindsides by the wall street games.

This time around, the governments are fully and painfully aware of the house of cards they have built. Instead of facing the core problems the financial world faces and fixing them, the governments decided to do more pretending. First and foremost abolishing Great Depression era accounting practices of valuing assets using "mark to market" accounting. To date, the fantasy accounting is still used to value companies. If things were normal, accounting would be too. It is not.

Then we have good old man of the year 2009, Ben Bernanke, who has made it his life's mission to work in the exact seat he is in now, and to play out his doctorate paper, that he, a single man, can prevent the Great Depression from happening. That he alone, has the secret sauce, and the rest of the world is idiots. His belief system is Keynesian ecomonics, and I for one, believe it is dead wrong.

What he is doing is adding to extend and pretend. All that is truly being done between government debt, Bernanke Quantitative Easing (raw money printing), and fictional accounting is to double down on the problems of 2008 making them exponentially worse.

What Mr. Bernanke is missing is, this is not 1929-1939. Technology will expose the fraudulent system he supports. The banking system is very sick at it's core, and it doesn't know it. See my post on how technology will undo the existing system.

For now, the reality is, the governments will do one last , heroic feat to thwart the market implosion. The only question is when. Will the markets hit much lower lows THEN the heroics begin? Or has the markets seen a bottom to build from for months or possibly a year to come?

I am betting on bottom is in, or near in for months, and re-evaluate if I think we may make it into February 2012 or so.

Whatever the timeline, this is the final act that I have been concerned over since August 2006. For general investing, I still maintain a mixture of cash and resource investments, as posted will be most prudent.

I post this now, to allow me to refer back to these thoughts in a few months, or maybe 9 months from now. In the near term, I still own natural resources, sold all GLD, DGP, but I kept my gold miners as a gamble.

I await Gary of the smart money tracker to inform me of when it is safe to enter GLD and the next play. The stocks I have now are my "long" from here, I have completely different stocks than Gary, but in general, a rising market rises all stocks, and from that perspective its the same play.

If we break the lows set on Monday, when I posted DONT PANIC!, It may be then time to panic. Lets hope the market forms a bottom here and now, until the next swan dive, hopefully in 2012.

This market may be in for serious trouble

Text below from article on Bloomberg.

The Federal Reserve said D. Nathan Sheets quit as the central bank’s chief international economic adviser after almost four years in the position and a day before policy makers meet.

The Fed, in a statement today in Washington, didn’t say why Sheets, 46, is leaving the institution.

.....

Sheets is using annual-leave days between now and his official departure date of Sept. 9

.....

The departure means all three of Bernanke’s top staff advisers have left their positions or announced their departures in the last 13 months.

Obviously, I have no inside information. But on the surface, this looks REALLY bad. Sheets wanted out immediately on Monday, August 8th. So much so, he basically walked away.

There are many theories that come to my head, first and foremost actions are being taken that we are not aware of that he wants no part of.

I am adding this to my "Financial Ground Zero" series, as I believe in the year ahead, it will become clear why Bernanke's team are leaving.

The markets may be worse off than I thought....

Tis Just a Flesh Wound

From WebSufinMurfs FinancialBlog2

Fortune telling charts, revisited

Historically, for those reading this blog over the years, it is obvious that I have an opinion that the stock market and financial markets are not stable, and will not be stable until several things come to pass. Among them, return to accounting practices in place from the great depression through 2008, diligently enforce existing laws, and gain control over US debt issues.

Unfortunately, these items get harder to face the more America and the world avoids core problems.

With that backdrop of a negative view, it isn't a far leap for me to dig back into this blog to find some post to foretell a market decline is to ensue.

However, there is one post that very much sticks out to me, using charting to "indicate market turning points". Back on June 6th, 2011, I posted an entry using charts foretelling of the return of a down market. The post was titled "This week in fortunetelling charts".

What makes this post different than other negative posts is it focused on using chart trend lines to indicate a turning point to watch. On that date, the markets crossed this threshold. I suggest you read the post. This indicator seems to be one of the earliest of all the indicators I have looked at. The biggest indicator to me is documented on the post "When to buy stocks or get out of the market". That indicator to me is the ultimate indicator, one that I believe may cross in the next four weeks.

Below is an update of the Fortune telling chart I posted on June 6th, in hindsight, as dead on as could be asked. Look at the full post for historical comparisons.

At this point I am looking for a market bounce to lighten up on some stocks, one which I can only hope that comes. S&P 500 @ 1250 at this point would be a welcome gift.

From WebSufinMurfs FinancialBlog2

Panic Day - USA Downgrade

The market cover story for the panic today is a downgrade of US treasuries by Standard and Poors to AA+, a major milestone along the road the US is on. While this is a significant event, one that I have feared since 2006, it isn't unexpected.

Spending at the deficit rate the US has is hardly surprising that the US debt machine is going to be questioned. With that said, who cares the US enjoys being best of the worst, and there is nothing else big enough to turn to. This IS a step today that deserves entry into my series of "Financial Ground Zero" events. But I don't think it is time to panic.

The day the news tells you to panic, and buy gold, should be the day to NOT panic and NOT buy gold. The day to PANIC was the last 6 months or so of me hemming and hawing that this entire market rise is bullshit. Now is too late to panic.

DO NOT RUN INTO THE LIGHT! It is a trap. :)

I am not stating sell all gold holdings, but the day that gold spikes is hardly the day to buy, it is a day to sell. I am selling portions of my GLD, SLV, and other holdings TODAY. I am keeping my gold miner stocks, AVL, in hopes they recover nicely if the market does too. Matter of fact, I am buying a bit of AVL today, but that isn't for the nervous types. AVL is below 4 bucks today, much lower than it's high near 12. Update: Also covering many shorts, 50% or more.

My two cent advice is lighten up on gold TODAY, buy stocks you have loved to have had purchased before, but now are cheap, and keep a decent portion in cash for the rest of the week.

All actions today may be wrong. Buying gold, selling gold, buying or selling stocks. But the smart player does not run with the masses, it runs against it. Balance that thought with resisting going full steam in front of the train, more prudent to edge out there, get a toe hold.

This actually could be the beginning of the worst fear I have had since 2006, an assault on US economic basis and loss of faith. But I can't bring myself to believe it has started already.

With that said, the market could easily go down a bit more. Just I am not sure what "worse" news is out there after the US Treasury has been downgraded. My assumption is an avalanche of following downgrades by others are to come this week, so I can't see the market doing a stellar rally into it.

In the end, trade what you think is best, look around, my opinion is my own, and should not be seen as advice for what you should do, see the link on the right for disclaimer.

Good luck!

Market Crash?

Today's market decline seemed anti-climatic to me. Frankly, I didn't even care. It is amazing to see how watching the market as close as I have since 2006 has abused me so much, I view today just an anomaly.

The market may have bottomed today, positioned for a snap back rally. The S&P 500 may hit 1300, maybe even a little bit higher. But you only have to look at three historical records to have your own answer for what is in store over the years to come in the markets.

1) Watch my GUIDE about timing the market for long term traders. I myself foolishly ignored this indicator back in 2009. I respect it. I advise you do too. History has shown it to be best market indicator to follow. It is positioned for a market sell signal. Also look at Monday's warning shot.

2) Look at Japan's market history. Their markets have not advanced in 20 years. If you put money in the market in Japan 20 years ago, your still waiting to get back all your money. Japan followed "Keynesian Economists" to use paper and political games to fix their economy. America's demographics and problems are following Japan, and as such, Japan is a good indicator of our future success.

3) The market WILL NOT BOTTOM until the US government follows the steps I have quoted many times before. This includes returning the accounting standards to 1941-2008 standards. Fictional accounting does not work, it may make it legal for insolvent companies to remain operating, but it fixes nothing with the sickness within. Also government must enforce the law and get it's own fiscal house in order. NONE of this will happen without a crisis that will make 2008 seem like fun, unfortunately.

I still maintain the best long term investment is a mixture of fixed income (US debt) and key resources (gold, energy, rare earth metals, food). This will protect your savings from a deflationary collapse OR a currency crisis. Read here for a full reasoning of mixed investments.

I will be quick to lighten up on Gold with weakness, which may have started today. Once a panic passes, Gold will correct before resuming it's multi-year climb.

NOTE: Shorting the market will be a fools game, the final end game may be beginning. There will only be house rules. In 2008 there was bans on shorting, changing of accounting rules, government taking over companies, all sorts of games. This time around, the gloves will come off and the free capital markets will no longer be capitalism based by the time this is done.

If you have not done so, visit my new reader page and read.

This Week in Charts

Day late dollar short. I am still very busy with work, but will try to keep up the chart thing.

Big changes recently. Congress agreed to not increase spending. They call it cuts. I call it BS. Granted, it may be a step in the right direction. But I suspect this agreement won't have teeth and washington will revert to it's old ways.

Time will tell.

The republicans want to stop spending NOT because it's wasteful. Far from it! The republicans have run up more government debt than democrats hands down until Obama came along.

They want to choke the economy - just enough - to do a nice pile on Obama next year.
While I do think cutting spending in military and other areas of waste. I fear, and expect the FIRST thing to get cut is the poorest of the poor, weakest of the weak programs.

That is very unfortunate, for thats probably the ONLY services the government should have aside from minimal defense spending!

Oh well, back to the charts. I don't like what I see, and I am getting nervous. I think I'll be hitting out of positions tomorrow, atleast lighten up. I am torn on Gold, maybe parabolic rally time.

Surprisingly, Bond rates are going down, not up. And I do expect the dollar to firm up, possibly for the next year! My friend John Chinnock has been saying that forever.....I think we may finally be there.

Good luck, to the charts!

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2