Can we have a “Cash 4 Clunkers” program for our economy…
Posted by MC on Aug 30, 2009
Can we have a “Cash 4 Clunkers” program for our economy…since they are trashing our future?? I mean clearly our economy is a clunker at this stage…fundamentally speaking. HRMMM.
“Cash 4 Clunkers” has done what the government intended it to do…stimulate and prop the markets/hurting industries/economy up. Especially the auto makers and lenders they now have ownership stakes in. Gotta love that they can overstep their bounds and pick who is “too big to fail”. So much for “free markets”. Long term is all this smart…not at all. As loans continue to be written, and for higher amounts, the bubblish need for higher wages grows. They are advancing the debt slavery exponentially. They are further removing peoples ability to save or think ahead. 
The more loans that are written, the more the money supply expands. The more the money supply expands the less our USD stretches. So yay for reduced spending power. A dollar is not a dollar, even though it looks the same in your wallet. Don’t believe me, think of just maybe 5 years ago. $1 would buy you 1 gallon of gas, where now you need 3-4 of those same bills to get the same 1 gallon. It’s just not a realistic or sustianable scenario! If you don’t let an economy (especially one with garbage fiat currency) both expand AND contract to the full extent you limit the lifespan of the currency. So they force things to expand and expand and expand, while only letting minor (in relation to expansion) contraction occur. Things were a lot more sustainable until 1995 and the tech bubble…see the below chart.
What ATR or Average True Range shows (more less) is the number of points traveled for the noted period. This is a yearly chart so every bar represents 1 year of price movement. So this shows through an equasion…basically every year the price flucuated xxx number of points. The calcs are not important, the important part is prior to 1995 things were crusing along at a pretty reasonable and non exponential rate. Then it got a wee bit insane [/sarcasm] and has never looked back.
Some may argue or debate about this not being a “log scale” chart. I say why when you’re trying to compare 1 point to 1 point or value to value why do you need to have exponential skewing??? Is a point not a point? Do we need to skew the picture to make things look less insane? Draw fibs on a non log, or look at ATR on a non log chart. They give the same numbers/readings whether log or arithmetic. Why? Because a point is a frickin point! Now I will say…for trendlines log scale is a must. But for vertical to vertical comparison log is not a valid view IMO.
Some interesting numbers are as follows…
Great Depression: High of 386 points before putting in a low of 40. YES…a loss of almost 90%!
2009 “recession/depression”: High of 14,198 points before putting in a current low of 6,470. A 54% loss. So we gave back a whopping 7,728 points and still had 46% left in the tank. If we gave back a matching 90% to that of the Great Depression we’d still have a DOW of about 1,420. Nearly 4x the peak of the Roaring 20’s. The irony is back then our country was a PRODUCING nation that saved. Now we are a CONSUMER nation with piss poor GDP and deep red negative debt to savings ratios. Giving 90% back would leave us with a bargain technically…fundamentally speaking. LOL
Compare the Y2K bear to the 2009 bear:
Y2k high of 11,750 and low of 7,198 (39% loss). This bear took nearly 3 years to bottom, and had several semi-controlled waves/corrections. Again, only a 39% loss though it must have been painful as it just ground lower, then bounced, then lower…seemingly forever.
Again this current bear we lost 54% assuming we have bottomed…in about 1.5 years! So substantially more loss in half the time. (Insert Tom Petty’s “Free Fallin” song here).
Just seems at some point…somethings gotta give on a bigger scale…no?
The anatomy of a market bottom…
Posted by MC on Aug 20, 2009
I usually hate peoples “similarity” charts. “Look at what happened back then…it’s so similar to the cycle today.” “History repeats itself”…BLAH. I discount most those charts because they rely on wave counts, indicator levels etc… and not the absorption of the float by strong hands. Indicators don’t make a bear market turn bull…the majority of shares being in strong hands which limits supply does.
Here we can see how a bottom is created. ABSORPTION of the majority of the float. Shown quite well when the lows are tested or break and there are not very many shares being sold. Then when resistance becomes support without a big volume glitch it further solidifies that supply has been all but removed from the market. I’ve heard rambling about…”the markets rising on low volume and there is no demand.” I read this as no supply myself. I digress, I’m a contrarian and some have suggested I begin to wear a tin foil hat. Maybe I’ll fit one up should I be proven incorrect here. 
I must say this…this current bear market had an absolute fall out and didn’t oscillate or cycle real cleanly. Also there is some lingering resistance over the line I drew, albeit fairly weak in comparison to the chop I illustrated as resistance. Given the volume traits shown I must say I’m pretty comfortable with the bulls here. Remember, volume should be low here because supply was drastically reduced in the market and prices will auction higher as long as demand outweighs supply.
GL my fellow tin foilers! 
DEFLATIONary RECESSION
Posted by MC on Nov 18, 2008
The way all commods are tanking with the paper markets and USD is strong points to no fear of inflation in the market and backs my thought that we are in a deflationary period. They could “print” tons more money/debt and still not cause real inflation because so much of our perceived money supply has been lost on housing values and investments unwinding.
This tank job was catastrophic for those near retirement but for the younger folks like myself this is what will likely secure my not needing to eat dog food in my later years. 
Deep thoughts…but I’m not Jack Handy
Posted by MC on Oct 12, 2008
I want to take this discussion to a WHOLE NEW LEVEL. It’s just sad that TB is withering and wilting. HELP me out here folks!
As a preface, derivatives are one of the biggest components of this exponential bubble…in fact they will probably be at the root of the demise of trading as we know it. The speed at which they have grown the money supply and shifted “wealth” is staggering. The extreme greed involved is likely to collapse this economy one day.
Anyhow, the topic at hand was where did that wealth go???
The big money cashed out on top which guaranteed the money supply from that vehicle would shrink. They took their profits and hold it in cash it would seem. Don’t believe for 1 second that their profit was lost…the big boys are too smart and controlling for that to happen. The game is rigged…flat out. That’s why everything is sinking…liquidation and removal of investments + profits, now leaving the rest of us with reduced profit, no profit or even losses putting us in the red. Anyone with a 401k can attest to the damages taking place.
There was a true reduction of money supply…but it wasn’t damaging to the real big players because they got out with massive profits. The damage as always is felt by the middle class and other working class citizens. We carry the load on our shoulders and suffer the losses so the fat cats can live lavish.
So I guess what I’m saying is “money supply” and profit are 2 different things. The markets money supply was greatly diminished but there was absolute profit taken and booked…in massive amounts. OIL, GOLD, SILVER, DOW…all had biiiiig profits at stake and all were liquidated. Big volume up high shows the profit was taken in droves. Think of a chart…big volume starting a bull and big volume ending it…what goes on in between is mostly retail and insignificant in relation to the big boys profit (though they do flip and keep the ball rolling). Ask yourself if you created the 2003 bottom and sold at the end of last year in MASSIVE amounts of volume…what would your profits be?
In fact I’ll go a step further…the bear market though driven by fundamental damage was triggered by liquidation popping the bull bubble. The selling of holdings for EXTREME profits is what essentially caused the bear. Bull markets start when massive amounts of money come into the market, and the bear market begins when that money is removed. The reason for removal with profit though is always a fundamental one if you think about it. They cause the markets to soar knocking things all out of wack valuation wise…THEY CREATE THE FUNDAMENTAL ISSUES. This ensures a constant cycle of boom and bust. They continue the cycle causing an exponential bubble as they re-invest base capital along with their big profits each time. Look at a lifetime DJI chart below. I prefer NON LOG because it really illustrates the exponential aspect to a greater degree.
It’s tough to grasp overall, especially because people in general don’t like to think about the markets as a ponzi scheme…but they essentially are, and a VERY lopsided one. One that we are told to count on to retire…and to invest in all throughout our careers. All along with the expectation it will continue to appreciate and make us rich by the time we retire. It’s up to people to learn about this stuff themselves and then trade/invest WITH the pros to ensure they don’t fall into the trap. Do NOT just dump into the 401k blindly and expect everything to work out allowing you retire worry free! After all it’s YOUR retirement not anybody elses…manage your nest egg accordingly.
…Random thought…
Deflation in relation to housing value is another can of worms. That artificially inflated portion of the money supply WAS lost. Still somehow the lending execs cashed out with handsome rewards…bastards. 
…Back to the scheduled program…
Now the fact is they usually shift profit into hard assets after they liquidate in the paper markets. Here they seem to be liquidating EVERYTHING at the same time…which makes me wonder how big of an event this is going to be when all is said and done. 
My main question is where is that profit going as the money doesn’t just evaporate. Did they raise the cash to pay their credit swap defaults (one thought as to why they need cash so badly). Who benefits by that exchange if it is in fact where the cash is going. And again were is that money going in the end, and when? When and where they put that money will be the next boom. Look for signs of their re-investing and follow their lead. This is a GREAT time to be looking for a new turning point in the markets, if you know what to look for.
From:
Please feel free to sign up and discuss this further with me. 
Updated thoughts on the scope of this crisis…
Posted by MC on Oct 10, 2008
This is all crashing due to institutional liquidation so they can raise cash as Timmy and I talked about last night. Cash to cover their a$$es, not to buy back in…like he said to me.
It’s going to end up more about who is NO LONGER in the market more than the shorts or what retail thinks. Suck enough liquidity out of the market and this is what you get…a hard and paper asset drain. Now imagine what will happen if/when the early and late majority of baby boomers pull their funds for retirement. 
Now the unknown with the graphic above is how this removal of money supply will effect the paradigm. The above represents a more less fixed axis, but when something like fictional money supply is changing this dramatically the above is somewhat flawed. 2 things are moving at once essentially, the bellcurve is no longer on a fixed axis. What WAS is NO LONGER, as this is a fundamental shift. This drain is going to remove much of the “money supply” in this country and in turn globally. There will be more damage to come from companies closing or tightening up, job loss etc… I’m praying for a bounce so I can short and ride the wave. This has been a life lesson and this indeed will be in history books in the future. This is a BIG deal!
IMO they simply cannot hyper inflate to offset the amounts damage we have seen and have yet to see. I’d like them to slow down and trickle help in rather than fuel panic and use all their lifelines at once. This should be a slow recovery…VERY slow.
Stay safe and with the trend IMO. 
Other than tonights Silver post…here’s my bias on the DOW!
Posted by MC on Oct 5, 2008
This is uncharted territory/circumstance. Nobody has a crystal ball so all I can do is give my 2 cents. 
Now that said I can begin to make a bull case but I’ll let the chart speak for itself because there more bear$hit on the chart than bull$hit.
Of course the last candle is 1 week in and hasn’t printed so we can sort of rule that out, although it HAS made a new low so don’t totally discard it. Macd histo has NO divergence in this monthly timeframe. In fact it’s just straight down with no flinching. Also there is room to move down to fully test support. I’d put absolute make or break support in the mid-high 9700’s myself. That’s all the bear case, added to the current trend you have a strong case for continuation down.
As for the bullish side it’s mainly the fact that there was buying pressure on both the last tests of the channel lows. BUT buying pressure does not equal a reversal 9/10 times. If we slide to lows at/or above that support on dried up volume with histo divergence that would show me the selling pressure has dried up. The fact that there was heavy buying pressure doesn’t discount the fact that for every buyer there was a seller. The selling pressure though somewhat offset was undeniable and panic like that won’t likely turn on a dime.
Big volume is a warning sign of a possible flush though most often there is more price action left where the market probes further for buying/selling pressure (unfinished business). I have yet to see a convincing case of bottoming action. I’m pretty fond of this setup…If we were in a bull trend and I saw the reverse action I just described I’d say look out below…in fact this was how I picked the 14k top on the Dow a year ago. 
People are on edge…based on my Volume Based Price chart put yourself in the auction along with the majority of the volume in this range. What would you feel if you just had 4 years of profits turn even or slightly red?
Still a bear bias for me, won’t effect my daytrades though thank god. 
OK…now you guys are gonna hate me
Posted by MC on Oct 1, 2008
It’s a disturbing lopsided image to me how we rose so exponentially with no retrace. From the breakout in the early 80’s there has been no real looking back which is not healthy. We had Y2K which was a slight balance period and was treated like the end of the world when it was just a minor blip in the big picture. I almost drew a mid channel line in but it really would blur the reality of this market. And the longer they prop us up here the further and harder the fall will eventually be IMO.
Def keep in mind that this years candle isn’t said and done with. So a yearly chart now is a tad premature. But at some point the market has to come down and probe the channel, it can’t go up exponentially forever fellas. If they prop it up and continue the bubble look to Y2K levels for support and if those fail we will have a Hinderburg type of market bursting.
Not doom n’ gloom, well maybe it is…sort of. If we see coiling or rejection candles at the top of this channel or a break of Y2K lows we know we are in for deep $hit. There will be a massive bear cycle, some estimate it to be 10-12 years long. So we won’t just drop to the base of the channel overnight but at some point I do imagine price action will drive it there.
Good luck boys n’ girls. 
So this is what they mean by “A NY Minute”?
Posted by MC on Sep 15, 2008
Well I think I see why they give the “NY minute” such a stigma. Just WOW!!!
Dow looks to be gapping down big on news that Lehman is filing chapter 11 and now the government is looking to print 70 billion more of their monopoly money. Should be interesting and creative in the ways that all these Failouts get dumped on the US taxpayers shoulders, I can hardly wait. In the mean time they continue the bickering over the Freddie Mac and Fannie Mae CEO’s alleged 24 million dollar combined severance package. Cause yeah…they deserve a reward for their HUGE role in collapse of their fcuking companies, US stock and financial markets, US property values and a large portion of Americans credit scores, driving the US into the ground. The only bone I think they should get is the affected peoples armbones up their asses! And on top of that they should pay the US 24 Million, or a $hitload more as restitution!
But WTF do I know
More UVOL/DVOL at work.
Posted by MC on Sep 4, 2008
OK…I realize today was a big down day…but given 7 to .5 ratio of DVOL there had to be hidden buying of some sort in there. That many sellers would have had more impact than we had today IMO. Instead the dow has flattened out and traded relatively sideways.
Plus watch the TRIN…it’s very hyper extended and at these levels there is a good chance for a big push down which should in turn boost the dow.
JMHO.
The bull marches on
Posted by Cire2222 on Jul 23, 2008
Mark another one in the books for the bulls today. We may not of had another monster rally or monster reversal but one thing that did catch my eye was the lack of selling. Looking at intra-day charts of the indicies I see that as we came down off the days highs there we no big volume on top of that the market tested the lows of the day multiple times without any selling pressure to move it lower. One more bullish sign is the lack of confidence in this rally. Every trader on TV and every trader in the forums I browse seems to think that this market just MUST have some selling to end this week, this is the type of thinking that causes the intense bear market up thrusts. Right now I do not see any resistance until around 11800 on the dow and 1300 on the S&P. I don’t think it will be a smooth ride there but I do think we should test those levels. Also notice another dollar rally day, I have been telling you to watch this day after day this is a significant move for the dollar. Grains, metals and oil have all come down in a big way, tides are starting to turn.
