International
Women's Day which is
celebrated on March 8th each year gives
us a day to appreciate the
accomplishments of pioneering women of
year's past, and to recognize all the
women today, who continue to lead the
way for the generation tomorrow.
Happy Women's day! In Moscow on Friday
and Saturday the number of people seen
on the streets and metro carrying a
bouquet of flowers is amazing.
Maybe one out of 10 both men and women.
There was a late day bounce on Friday
for the market leaving many indices in
the green for the day as shorts did not
want to hold over the weekend after some
excellent profits for the week. I don't
know the number of times President Obama
has talked on TV but it may be a
relieve if he stopped it as each time he
does the market declines more. Seems one
should work on their work not talk about
it so much. It is clear that Wall Street
does not like the economic plans so far
and see him as not business or market
friendly. For him to keep trying
to justify these plans have been of no
help. Later on Butch Cooley talks a bit
about AIG whom the government is
giving an addition $30 billion too.
Federal Reserve Chairman Ben Bernanke
said American International Group Inc.
operated like a hedge fund and having to
rescue the insurer made him “more angry”
than any other episode during the
financial crisis. Yet $30 billion more
on the way. The $61 billion loss this
past quarter for AIG is hard to grasp.
That is $677.7 million a day, about $28
million an hour or $475,000 every
minute. Regardless of how large a
business is, a failed business is not
the end of the world. Letting a business
fail opens the door to new business as
people will always need goods and
services and others will be ready to
provide those. Just how long will the
taxpayer keep having to pay for miss run
private companies? They government may
as well have opened a USA National
Savings an Loan with guaranteed savings
accounts and low interest mortgage loans
only to qualified people with a good
down payment. They could of then in time
sold it to the private sector. Instead
they are buying up failing banks with
taxpayer money.
About the Obama administration Steve
Forbes wrote in the Wall Street Journal,
"Obama is continuing with the worst of
Bush's policies, making the crisis far
worse than it should be."
As mentioned on the ST site, U.S.
House financial services subcommittee
plans a hearing on mark-to-market
accounting rules, which have been blamed
for forcing banks to report billions of
dollars in write-downs. Now it is set
for March 12. On the blog is a PBS radio
show about the economy named Bad Bank
with more explanation of this.
Due to mark-to-market Mr. Forbes also
wrote, "Banks and life insurance
companies that have positive cash flows
now find themselves in a death spiral.
Another horrific Bush policy that Mr.
Obama has left untouched concerns short
selling. Also the U.S. Securities and
Exchange Commission's removal in 2007 of
the so-called uptick rule, which held
that investors could not short a stock
unless it went up in price, was
responsible for an explosion in market
volatility. Obama should suspend
mark-to-market accounting rules, restore
the uptick rule, and enforce the
prohibition against naked
short-selling."
We agree and these could be implemented
now with no delay. How long has the SEC
said they would stop naked short selling
and yet they do nothing?
I was looking at a transcript
of a CNBC show and they had the following:
A lot of people are calling
bottoms, says Guy Adami. But I still don’t
think we’re there, yet. It has to feel like
the end of the world before the market can
bottom.
The data that I’d watch to
signal a bottom is the rate of decline
slowing, adds Karen Finerman. But I don’t
see that, yet.
We won’t be at the bottom
until the financials participate in the
market’s broader moves, adds Pete Najarian.
I don’t think we’ll get a
bottom until we get policy going forward
that doesn’t seem like it’s just attacking
Wall Street, adds Jon Najarian.
---------
I do
not know if they are talking about this
short term bottom we are looking for
sometime this month or a long term bottom
but I would guess the latter. We think the
longer term bottom is not at all close at
hand and we will first have a rally before
the beginning of the final move down.
The broad market is now
down 57% from its 2007 high. We expect a
bounce pretty soon but right now we still
show more short set ups on charts than long
ones.
From the TV show The
West Wing a quote: "If you combine the
populations of Great Britain, France,
Germany, Japan, Switzerland, Sweden, Denmark
and Australia, you'll get a population
roughly the size of the United States. We
had 32,000 gun deaths last year. They had
112. Do you think it's because Americans are
more homicidal by nature? Or do you think
it's because those guys have gun control
laws?" The real figures for the group
of countries is higher that than but the USA
ranks by far number one.
Those figures show that
the USA has very lenient gun regulation and
some think that the new administration will
tighten control so they ran out and bought
guns, a lot of guns.
We do not put cigarette
companies on the watch list, unless by
mistake, but did have gun maker Smith and
Wesson as a buy at $2.92 and it is now up
over 50% after its Friday secondary break
out. Just showing that some
stocks still doing very well even though the
product they make are detrimental to life.
On the other side many of
our shorts continue to rack up gains but
stops should be in place when they fall so
fast. Rock is now down 50% from our entry
and that is a great profit. Bulls though
make more money on the same move. If this
stock were to go back up to the $9.89
short entry price that would be a gain of
98% for he same distance traveled. That is
why you generally make more money in bull
markets.
The non-farm payroll
employment report showed that the U.S.
economy continued to lose jobs in February.
The job losses for the month were 651,000 or
about 15 jobs each minute!. While the goods
producing sector lost 276,000 jobs, the
service producing sectors lost 375,000 jobs.
The unemployment rate based on the household
survey was 8.1%, up from 7.6% in the
previous month. If you add back in the
discouraged workers and worker farced to
part time and the rate goes to over 14.8%
unemployed.
Meanwhile, the average hourly earnings rose
$0.03 to $18.47. 31.8 million have
applied for food stamps - another all time
record.
There are now at least 12.5 million out of
work -the population of Pennsylvania.
Americans unexpectedly increased their debt
in January by $1.76 billion after three
consecutive months of decline. Economists
were expecting credit to fall by $5.0
billion in January, but instead, it rose at
an annual rate of 0.82% to total $2.564
trillion
Non-farm
productivity fell at a 0.4% sequential rate,
while the consensus estimates called for a
1.1% increase in non-farm productivity.
Productivity at the business sector as a
whole fell 0.4%.
The Dow this week was at a new
bear market low. The Dow is currently down
53.4% since peaking in October 2007. To put
the magnitude of the current correction in
perspective, this chart illustrates the
15 worst corrections of the Dow since its
inception in 1896. As this chart
illustrates, the current Dow correction
already ranks as the second worst on record.
Only the correction that began in 1929 was
worse.
We have talked abut the
forward looking PE of the S&P 500
several times to show that historically they
are still high compared to market lows.
There are several ways to figure PEs and
this chart uses one variation which is much
lower than the way we figure but it
still shows that the level now is above
other turn points.
The past week's major indices:
The top and bottom sectors of the week:
The best and worst industry groups last week:
Many of the stocks on the Dow have dropped
so low that their individual price movement
hardly affects the Dow price. IBM is still
relatively high so its movement does
change the Dow. From its late 2008 low it
rallied over 35% almost to its 50%
retracement line and that channel it
made turns out to be like a bear flag and
IBM now trades below this channel. It made a
hammer on Friday. If it later loses the low
line at the mid 80s the Dows downside will pick up.
The multi index shows the Nasdaq 100 is the
clear leader here as it has not even tested
the November lows.
This long term of the Dow has a trend line
from the 1930s and at the moment it is at
about 4000. We have shown this in other
charts and it is possible that after the
completion of what we call wave B up, the
final wave C to complete the bear market may
have the Dow test those levels. Or below.
The Dow monthly chart shows that it hit the
62% retrace from the 1987 lows and the trend
line as well. The chart has not been as
oversold during this time frame and I read
that it has not be so since the 30s. Would
for sure be a nice place for a bounce as all
chartist would appreciate it! The dotted
line shows the 4000 support also and there
is one near 5000.
The utilities weekly index tested its 2008 low and it has held. Oversold
indicators so wait for a buy signal from them.
Transports continued lower and now a
slight turn on the of stochastics.
The Nasdaq monthly tested its November lows but not
1108 - 2002 low at the dotted line.
On the Nasdaq daily we see it closed just less than
2 points under the intra day low of
November. Only stochastics has a slight up
due to the late day rally on Friday.
The ratio chart of the Nasdaq to the S&P 500
gained for the week as the Nasdaq is still
outperforming.
The NASI continued to drop and is not
far from what was a turning point last
March.
The volatility index VIX shows little
change as it seems some acceptance to the
continual downtrend. This seems to say that
there is complacency and maybe there will be
no capitulation bottom for this leg to end.
Nasdaq 100 did not test the November low as
the top 100 on the Nasdaq are the leaders in
the market. Relatively speaking.
The monthly S&P 500 very similar to the Dow
also hit its trend line this week and is a
bit below the 62% retrace. It needs to move
back above it and for wave B up it can rally
to the 50% or 38.2% area. The indicators on
the monthly reflect no positive divergence.
S&P 500 weekly is one to
illustrate a possible major wave B up. Only
RSI has a slight positive divergence at this
time.
The daily S&P 500 in the same way as above
shows a possible wave count. The end of wave
5 (3) (A) has not yet been confirmed.
This is S&P 500 daily where the
broken support at 741 is now resistance.
This Gann Square of Nine
of the S&P 500 has the Friday closing price
in the dark circle. Each 90 degree move is 16
points so possible resistance areas moving
up would fall at 699, 715 and 731. Even
though this is a square you can think of
degrees as in a circle so a full move
(around) is 360 degrees. If you want to talk
about Gann start a nee topic maybe under
Market chat on the
message center.
The NYSE had a gain on
Friday and the chart shows minor positive
divergence. We placed the Fibonacci lines at
the Friday low in case it holds.
The NYSE advance
decline ratio chart made a new low this
week
The percentage of
stocks on the NYSE now trading over
their 50-day average is down to 7.5% so
once again very oversold. The TRIX
has not yet turned up on the lower part of
the chart.
The Mid Caps closed just above their November lows on this weekly chart
And above the 2002-2003 lows.
Daily mid caps above the November lows.
The Russell 2000 this week dropped under the November lows and like the
others turned green at the close on Friday.
Value Line index just above the November lows with a slight positive
divergence.
There are variants of the mechanical trading of the SRS and this one uses the
15-minute chart and the 9 and 39-period EMA. On Thursday this triggered as a buy
on the crossover of the averages as we showed on the blog and video Thursday.
This system calls for an exit at the end of the day so it registered many points
of profit on Thursday. Friday it gave no signals so you were not in this trade
but we wanted to point out how if you were still in it, the last 30 minutes on
Friday wiped out most of the gains from Friday. This ETF ran from 83 on
Wednesday to 111 on Friday so was aching for a pullback. A move like that is how
biotechs behaved - so many years ago.
The London FTSE fell under its 2008 lows and has been basing for 4 days.
Up or down we find out this week.
China's FXI is between two trend lines. I give the broken trend line more
value as it has three touches. We would consider this triangle as broken until
it can get back inside and now over the 50-day EMA also. There has been talk of
a China short term improvement so worth watching is all for now.
Japan's Nikkei is back to where it was in 1982
Russian index monthly added 5.8% so far this month.
Commodities index
CRB weekly would have to get back over
the last broken support line - now
resistance to capture more longer term
interest in general. Or go to test the 2001
lows.
The daily CRB however is at the tend
line so a move over can run the few pints
first to the 50-day EMA.
Oil weekly was flat and
only a 2% move.
US Oil Fund USO though had a good week as it had pulled back then on
Wednesday gapped up and closed at the high of the week on Friday.
Stochastics are a bit into the overbought area but not the RSI. Some are looking
for entries over 28 but you can see 39 and 30 are also areas of interest.
Meaning it has a lot of various overhead. Our blog posting entry was the break of
25 - 8 trading-days ago.
DXO a popular
trade on crude oil shows the 20-day and
50-day EMAs.
Gold weekly was flat for the week but was a bounce play this week as
shown next.
The daily shows the
bounce right at the 50-day EMA.
The
gold cloud chart pointing out to watch for a
possible bearish crossover of
the tenkan-sen (blue)and the kijun-sen (red).
The 60-minute Renko
GDX chart had the short covering and
going long this week locking in several
points in gains again. This top money maker
just keeps giving.
This GDX chart that shows only the 7 and 21-day EMAs however is still in
a longer term bearish mood.
The
gold an silver index XAU gained back
a bit of its losses from the week before but
in general gold stocks are not strong. We
added two stronger ones to the watch list
though in case some larger interest
develops.
Silver, like
gold, bounced right on the 50-day EMA and
stochastics turned back up over 20.
The US dollar made a 2 ½ year high
this week. It could keep moving is deflation continues and RSI is not yet
overbought. Stochastics has dripped under 80 so it also could pull back again.
Eventually the USA will want a weak dollar to help US international companies be
more competitive.
|
Butch Cooley Market Comments
(Butch is founder of
Leg Up House
and the
Butch Cooley Worldwide
Hunting and Fishing . He has
been an active trader for decades.)
Stock Market Comments
"Dandy Don" Meredith, from a few
years back loved to tell it like it was. "Turn out the
lights, the party's over". And it is sure looking that
way for GM, maybe even bell weathers like GE.
Citibank....below a $1 a share this week.... a penny
stock?? Hey, what the heck is going on!!!???
Well, the markets are rapidly loosing faith that
"stimulus" in any form is going to do much in the near
or short term. That's what is going on. No one is a
believer anymore. And we are talking about money!! In
reality, we are talking about a definite lack of money
in the economy and in these banks and corporations. And
we are talking about loosing money, not making money.
And it is showing in all the indices.
It's been all bad news this week. We as taxpayers are
now into AIG about $180 billion and they are loosing
money at what can only be called an alarming rate. $61
billion in one quarter. What is going on here? Tell me
again why we are saving this organization? Because
things would be worse if we didn't. I have a really
hard time with that kind of logic. Gee, I'm broke so I
will write bad checks and figure out how to cover them
later?? That is not really bright either!!
And we have jumped from about an 8% stake in Citibank,
to about 36% this past week. Now from my understanding,
this was preferred stock conversions to common. So I
can't see that it cost us any additional money. But it
raised the taxpayers' risk in Citibank. And I am
assuming that the Obama Administration still feels
Citibank (and BAC) are too big to fail. This logic is
also dangerous. So we are stress testing 19 banks, all
with $100 billion or more in assists. Well, they are
suppose to have $100 billion. I'm sure their books
reflect that they do, but who knows for sure. I'm told
the total assets held by these 19 banks exceeds $5
trillion dollars. And the point to this stress test is
to basically see how much more money we as taxpayers are
going to have to "invest" in banks that caused the mess
we are in to begin with. But I have no way of verifying
any of these figures. And neither does anyone else. Are
we going to see the results of the "stress tests"?? I
somehow doubt that. The only way out I can see right now is
totally nationalizing the banks altogether. I just
don't see any other way.
And unemployment just keeps getting worse and worse.
8.1% by government figures today. You all know I don't
subscribe to those numbers and I think we are probably
closer to 15% right now. I think the question is just
how long can we keep laying people off? And that is
directly proportional to just how low these markets can
go. Sure we are going to see some bounces, we always
do. All the way to the bottom, where ever that ends
up. The Dow ranged in the last 5 days from a high
Wednesday of about 7,000 to a low on Friday of just
below 6,500. Hey, we hit 6,500!! Obviously 6,800 didn't
hold. No one is a believer anymore.
And Gm just can't make it. Period. They have bled
out. So what do we do? Do we force them, along with
Chrysler into bankruptcy? Or do we print them a bushel
of money again? Is bankruptcy such a bad option for
these companies? Or for the banks themselves? I don't
think so, because I believe we will get there
eventually. So let's go now.
There are very few around these days that actually lived
through the Great Depression. My grandfather was one
and so was my father. Both figured out how to excel
during an awful economic down time. But there have been
many I have met over the years, who remembered it all
too vividly, and they did not excel. There was no
work. For about 25% of America there was very little.
And those working were not doing too well either. How
bad can it get? I don't know. I really don't. I guess
it could get as bad as the 30's. It will be different,
that's for sure. We have many more people to worry
about, to feed. wonder what will happen to credit
cards? "Stimulus"?? It's going to take a lot more than
stimulus to fix this mess. How about some old fashioned
honesty? How about some simple math? One + One = Two.
As long as it's business as usual in Washington DC, it's
not going to be very good. But, where ever we are
going, we will get there eventually.
BC
Sunrise at a farm in Kansas -
photograph by bc
|
Weekly economic calendar from briefing.com.
The stock price spiked after the call but ran totally
over the top Bollinger band so as usual pulled back with
short term profit taking.
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