I couldn’t figure out why Bank of America’s (Symbol BAC) stock was acting so poorly, with the stock failing each time it rallied into the 50-day average.
It is now becoming clear why the stock has been acting so poorly –
http://www.bloomberg.com/news/2010-09-13/bofa-may-owe-20-billion-in-mortgage-buybacks-insurers-say.html
That’s right, the investors who are stuck with a bunch of the junk mortgages BofA and Countrywide (BofA bought them) originated are now trying to give them back to BofA, claiming that the original mortgages were fraudulently created with bogus numbers for such things like the income of the home buyer.
At this point, the amount of mortgages that BofA may have to eat is $20 billion. I think BofA “earned” $3 billion last quarter, so $20 billion is of material significance.
The key point here, is that stocks price in information long before it is known to the public. That is why I look at charts, because they show me what the big boys are doing with their money. You simply can't hide wide spread selling.
Wednesday, September 15, 2010
Precious Metals at Resistance
I used to look at the world like this, because it used to work –
The Euro was in a narrow trading range for a few weeks and has now broken out.
Buy the breakout was my old mindset…
Now I see this –
The Euro (6E Z0-D) is in a potential two-step rally into significant daily resistance at a key today. There is no way I would buy here, I would wait for a pullback into logical support and look for an entry.
Asset classes are now so closely correlated that the movement of the Euro has a material impact on other assets.
The S&P 500 (ES Z0-D) is now retesting the key Time/Price High of August 5th. This is a potentially bearish setup forming, with prices stuck here at either a double top or a move to 1,146 setting up a reversal pattern. Next Monday and the 25th look like key dates.
Silver (SLV) is now at critical resistance. It was a nice move off the breakout above $18.25
And Gold (YG Z0) has hit its first upside target. It looks like the date is September 29th
Gold Stock ETF (GDX) broke above critical resistance today. Again, I used to be interested in buying the breakout, but you can see how the price was driven higher right as the underlying commodities are running into upside targets. The magnitude of any pullback will dictate my next actions. A weak pullback will be bullish.
The Euro was in a narrow trading range for a few weeks and has now broken out.
Buy the breakout was my old mindset…
Now I see this –
The Euro (6E Z0-D) is in a potential two-step rally into significant daily resistance at a key today. There is no way I would buy here, I would wait for a pullback into logical support and look for an entry.
Asset classes are now so closely correlated that the movement of the Euro has a material impact on other assets.
The S&P 500 (ES Z0-D) is now retesting the key Time/Price High of August 5th. This is a potentially bearish setup forming, with prices stuck here at either a double top or a move to 1,146 setting up a reversal pattern. Next Monday and the 25th look like key dates.
Silver (SLV) is now at critical resistance. It was a nice move off the breakout above $18.25
And Gold (YG Z0) has hit its first upside target. It looks like the date is September 29th
Gold Stock ETF (GDX) broke above critical resistance today. Again, I used to be interested in buying the breakout, but you can see how the price was driven higher right as the underlying commodities are running into upside targets. The magnitude of any pullback will dictate my next actions. A weak pullback will be bullish.
Investors Think The Markets Are Rigged
CNBC released a poll today showing that 86% of investors think the markets are rigged. The average investor feels that the markets are designed to benefit the big bank and are structured to intentionally disadvantage the small investor. Regarding the regulators, the average investor believes something between they are incompetent and they are on the take.
http://www.cnbc.com/id/39154764
I told you this was going to happen. The markets are rigged. The regulators are on the take, choosing to look the other way and hoping to later get employed by big banks. Americans aren’t stupid. And they are voting with their feet, as they flee Stocks for Bonds. I will post on the Bond Bubble later today – buyer beware in your Bond holdings.
High Frequency Trading Fraud (HFT)
FINRA has finally fined somebody over the practices of “Quote Stuffing”, “Flash Trading” and entering incredibly large volumes of orders with the intent of manipulating stock prices. I have been cranky about this for years, because I keep getting Limit Orders filled on the mysterious price spikes right before the markets ramp in the direction of my original position.
People won’t be comfortable with the markets until the criminals are not allowed to profit by messing with price, with the intention of screwing the little guy to their benefit. Now the conversation has to shift from speculation that prices are manipulated by computerized trading to the fact that we now can prove the computers are manipulating prices.
I expect a whole mess of “Whistle Blowers” coming out of the woodwork now that FINRA has issued a $2.26 million fine. How much money do you think a guy could make if he proved that Goldman, or some other bank were manipulating stock prices…
http://www.finra.org/Newsroom/NewsReleases/2010/P121951
http://www.cnbc.com/id/39154764
I told you this was going to happen. The markets are rigged. The regulators are on the take, choosing to look the other way and hoping to later get employed by big banks. Americans aren’t stupid. And they are voting with their feet, as they flee Stocks for Bonds. I will post on the Bond Bubble later today – buyer beware in your Bond holdings.
High Frequency Trading Fraud (HFT)
FINRA has finally fined somebody over the practices of “Quote Stuffing”, “Flash Trading” and entering incredibly large volumes of orders with the intent of manipulating stock prices. I have been cranky about this for years, because I keep getting Limit Orders filled on the mysterious price spikes right before the markets ramp in the direction of my original position.
People won’t be comfortable with the markets until the criminals are not allowed to profit by messing with price, with the intention of screwing the little guy to their benefit. Now the conversation has to shift from speculation that prices are manipulated by computerized trading to the fact that we now can prove the computers are manipulating prices.
I expect a whole mess of “Whistle Blowers” coming out of the woodwork now that FINRA has issued a $2.26 million fine. How much money do you think a guy could make if he proved that Goldman, or some other bank were manipulating stock prices…
http://www.finra.org/Newsroom/NewsReleases/2010/P121951
Friday, September 3, 2010
Anticipation and Preparation
It is all about anticipation and preparation.
This rally was anticipated because of the technicals. It was well documented. It was a trade and nothing more for stocks. I sold 10 minutes into trading this morning.
Now we will see if the big boys want to buy next week or sell. They will most likely be doing whatever they are doing with some serious volume.
Some commentary I received earlier this week tracks what occurred and gives you an idea of how gamed the markets were this week, because again, the moves and the drivers for them were anticipated and defined before they occurred –
8/30
“It is a long Holiday weekend coming up and many professionals will get out of town on Thursday, but it is a week full of economic reports. The liquidity will be thin, so it is a good time for the (Obama) Administration to see that a few of these reports are rigged to the upside. The key reports are obviously the initial jobless claims on Thursday and the jobs report on Friday in addition to the unemployment rate. That is preceded by an ISM report on Wednesday. Any mysterious positive turnaround in these reports this week will be b---s---.”
8/31
“Today we got one of the most “magic mystery moves” I have seen in quite some time, on essentially nonsense news coming out of Europe. The market in Europe was trading on the highs with the old “better than expected” PMI report, although it was the lowest in 7 months, and some “stronger asian growth reports”. This sent the S&P 500 futures higher, the Euro higher and US Dollar lower. The SPX futures were of course up big in Globex (Overnight Trading), and this accelerated the big gap up NYSE opening in the major indexes etc.
Today was probably the most manipulated price action I have seen in some time, and it was forced from Europe as the PPT (the Fed) might have been accelerating the SPX futures in Globex, and then held them all day in the US. What in the hell else could have flatlined the SPX all day at essentially one level, without even a hint of a pullback after the two negative days we had on Mon and Tues.
It is significant to note that the S&P 500 is in a Below-the-Line status, with the 200DEMA>50>20>8, and all the EMA`s are declining, so that is another reason why the highest probability is for the SPX to turn down again after this rally loses steam.
9/1
The jobs report tomorrow should under normal reporting disappoint expectations, but the BLS (Bureau of Labor Statistics) will overstate the Birth/Death rate adjustment to soften the blow, or even surprise to the better, which will be all it needs for the “gang” to take the futures higher. In the benchmark revision for March 2009, and published in 2010, BLS understated actual jobs loss by about 1,000,000 jobs. The BLS is doing the same thing again this year so any positive hype numbers tomorrow is just not true.
I will hang around for the jobs report tomorrow, and the opening period if it is a premium opening accelerated by the futures because of any overstated jobs report, and ready to take a partial SPX short position.”
CNBC this morning was already talking about how the threat of a “Double Dip” was over because of how great the economic numbers were this week. Judging from how on target the commentary I received this week was before each economic data release, I am still on the side that the numbers are actually terrible and that they will be revised lower, just as so many numbers have been revised lower over the last 18 months.
After the Jobs Report was issued this morning, the ECRI Leading Indicator Index was released and it hit the level it normally hits in a recession (below -10% versus today’s -10.1% reading) and the ISM (Institute of Supply Management) Non-Manufacturing Index (thing Services) was released, missing estimates in New Orders, Employment and Business Activity. Employment actually contracted for the first time since January 2010…
Here are some observations from David Rosenberg on Wednesday’s ISM Number that got the rally going –
http://www.zerohedge.com/article/rosenberg-explains-why-yesterdays-ism-was-likely-wrong-and-will-likely-be-revised-lower-soon
“Most of the regional reports were very poor in August. Either they are collectively all wrong or the ISM is.”
“ Looking at five decades worth of data, the share of the time in which we see orders, backlogs and vendor deliveries all decline in tandem, and the headline ISM index rise, is the grand total of 1%. No wonder equities rallied so much — we just witnessed a 1-in-100 event! Bring your camera.”
“Suffice it to say that in the past 30 years, with eleven observations, ISM dropped to 47x in the three months after such a decline in the orders/inventory ratio to such a low level as is the case today. That is the average, the median, and the mode. The highest ISM reading three months hence was 51.9, so if past is prescient, today's data was likely a huge headfake.”
Or more likely, today’s numbers were a flat out lie…
This rally was anticipated because of the technicals. It was well documented. It was a trade and nothing more for stocks. I sold 10 minutes into trading this morning.
Now we will see if the big boys want to buy next week or sell. They will most likely be doing whatever they are doing with some serious volume.
Some commentary I received earlier this week tracks what occurred and gives you an idea of how gamed the markets were this week, because again, the moves and the drivers for them were anticipated and defined before they occurred –
8/30
“It is a long Holiday weekend coming up and many professionals will get out of town on Thursday, but it is a week full of economic reports. The liquidity will be thin, so it is a good time for the (Obama) Administration to see that a few of these reports are rigged to the upside. The key reports are obviously the initial jobless claims on Thursday and the jobs report on Friday in addition to the unemployment rate. That is preceded by an ISM report on Wednesday. Any mysterious positive turnaround in these reports this week will be b---s---.”
8/31
“Today we got one of the most “magic mystery moves” I have seen in quite some time, on essentially nonsense news coming out of Europe. The market in Europe was trading on the highs with the old “better than expected” PMI report, although it was the lowest in 7 months, and some “stronger asian growth reports”. This sent the S&P 500 futures higher, the Euro higher and US Dollar lower. The SPX futures were of course up big in Globex (Overnight Trading), and this accelerated the big gap up NYSE opening in the major indexes etc.
Today was probably the most manipulated price action I have seen in some time, and it was forced from Europe as the PPT (the Fed) might have been accelerating the SPX futures in Globex, and then held them all day in the US. What in the hell else could have flatlined the SPX all day at essentially one level, without even a hint of a pullback after the two negative days we had on Mon and Tues.
It is significant to note that the S&P 500 is in a Below-the-Line status, with the 200DEMA>50>20>8, and all the EMA`s are declining, so that is another reason why the highest probability is for the SPX to turn down again after this rally loses steam.
9/1
The jobs report tomorrow should under normal reporting disappoint expectations, but the BLS (Bureau of Labor Statistics) will overstate the Birth/Death rate adjustment to soften the blow, or even surprise to the better, which will be all it needs for the “gang” to take the futures higher. In the benchmark revision for March 2009, and published in 2010, BLS understated actual jobs loss by about 1,000,000 jobs. The BLS is doing the same thing again this year so any positive hype numbers tomorrow is just not true.
I will hang around for the jobs report tomorrow, and the opening period if it is a premium opening accelerated by the futures because of any overstated jobs report, and ready to take a partial SPX short position.”
CNBC this morning was already talking about how the threat of a “Double Dip” was over because of how great the economic numbers were this week. Judging from how on target the commentary I received this week was before each economic data release, I am still on the side that the numbers are actually terrible and that they will be revised lower, just as so many numbers have been revised lower over the last 18 months.
After the Jobs Report was issued this morning, the ECRI Leading Indicator Index was released and it hit the level it normally hits in a recession (below -10% versus today’s -10.1% reading) and the ISM (Institute of Supply Management) Non-Manufacturing Index (thing Services) was released, missing estimates in New Orders, Employment and Business Activity. Employment actually contracted for the first time since January 2010…
Here are some observations from David Rosenberg on Wednesday’s ISM Number that got the rally going –
http://www.zerohedge.com/article/rosenberg-explains-why-yesterdays-ism-was-likely-wrong-and-will-likely-be-revised-lower-soon
“Most of the regional reports were very poor in August. Either they are collectively all wrong or the ISM is.”
“ Looking at five decades worth of data, the share of the time in which we see orders, backlogs and vendor deliveries all decline in tandem, and the headline ISM index rise, is the grand total of 1%. No wonder equities rallied so much — we just witnessed a 1-in-100 event! Bring your camera.”
“Suffice it to say that in the past 30 years, with eleven observations, ISM dropped to 47x in the three months after such a decline in the orders/inventory ratio to such a low level as is the case today. That is the average, the median, and the mode. The highest ISM reading three months hence was 51.9, so if past is prescient, today's data was likely a huge headfake.”
Or more likely, today’s numbers were a flat out lie…
Sunday, August 29, 2010
Silver Leadership?
Silver (SLV) broke out of a multi-month triangle, after holding support at the uptrend line from the 2008 lows. The Junior Gold Miner Index ($HUI) is either going to break down from here or break out. I expect either move to be violent. So far, so good for the Bulls. I want to see a weak pullback at some point over the next few days that holds support.
We Were Expecting a Potential Bottom
I wrote the following last week as I waited for the markets to try and bottom in the 1,040 or 1029 range –
“I think the computers algos have been set up to cause overshoots in signals like IBD to get people making buy and sell decisions and then the markets are reversed – causing a massive squeeze as the newly entered orders are covered and reversed.”
If you believe in a “Plunge Protection Team”, then Friday was a perfect example of what you think is market manipulation, as Intel preannounced terrible numbers and then reversed up 11% in 4 minutes, just as the S&P 500 broke critical support at 1,040 and then went vertical over the next 10 minutes.
Whatever it was, the reversal was anticipated. I have no doubt that the markets are manipulated, especially with Greenspan saying the other day that a stock market rally would do far more to stimulate the economy than any new Quantitative Easing.
The markets are retesting the key July 2010 low, with timing and now have a potential double bottom at 1,040. Resistance that now must be cleared is in the 1,069 – 1,081 area. 1,029 is support.
Expect a meaningful trend to finally be established after the summer holiday season ends next week. Then we will know if the big boys are willing to commit new funds or if they will simply pull their money off the table at what they consider to be artificially inflated prices.
“I think the computers algos have been set up to cause overshoots in signals like IBD to get people making buy and sell decisions and then the markets are reversed – causing a massive squeeze as the newly entered orders are covered and reversed.”
If you believe in a “Plunge Protection Team”, then Friday was a perfect example of what you think is market manipulation, as Intel preannounced terrible numbers and then reversed up 11% in 4 minutes, just as the S&P 500 broke critical support at 1,040 and then went vertical over the next 10 minutes.
Whatever it was, the reversal was anticipated. I have no doubt that the markets are manipulated, especially with Greenspan saying the other day that a stock market rally would do far more to stimulate the economy than any new Quantitative Easing.
The markets are retesting the key July 2010 low, with timing and now have a potential double bottom at 1,040. Resistance that now must be cleared is in the 1,069 – 1,081 area. 1,029 is support.
Expect a meaningful trend to finally be established after the summer holiday season ends next week. Then we will know if the big boys are willing to commit new funds or if they will simply pull their money off the table at what they consider to be artificially inflated prices.
Wednesday, August 25, 2010
Two-Step Symmetry
Here is how technical the markets have become.
The S&P 500 hit a high of approximately 1,130 and has so far had what is called a “two-step” pullback, where the first leg down equals the second leg down.
Leg 1 from 1130 to 1070 = 60 points
Leg 2 from 1100 to 1040 = 60 points
The first leg down retraced 50% of the rally
The second leg so far has terminated at the 76.4% retracement level
These are all key levels and patterns used by computers to make buy and sell decisions. The computers have clearly taken over the markets. I am also assuming that many of the 20-something hedge fund managers are using these same models. There are a bunch of key decisions here for stocks, Treasuries and the Euro here, so I am looking for a potential reversal.
Investors Business Daily went to “Market in Correction” last night. The old ways of making money are having a rough go lately. I think the computers algos have been set up to cause overshoots in signals like IBD to get people making buy and sell decisions and then the markets are reversed – causing a massive squeeze as the newly entered orders are covered and reversed.
This is why I continue to get incredibly technical in my communications and decision making.
The S&P 500 hit a high of approximately 1,130 and has so far had what is called a “two-step” pullback, where the first leg down equals the second leg down.
Leg 1 from 1130 to 1070 = 60 points
Leg 2 from 1100 to 1040 = 60 points
The first leg down retraced 50% of the rally
The second leg so far has terminated at the 76.4% retracement level
These are all key levels and patterns used by computers to make buy and sell decisions. The computers have clearly taken over the markets. I am also assuming that many of the 20-something hedge fund managers are using these same models. There are a bunch of key decisions here for stocks, Treasuries and the Euro here, so I am looking for a potential reversal.
Investors Business Daily went to “Market in Correction” last night. The old ways of making money are having a rough go lately. I think the computers algos have been set up to cause overshoots in signals like IBD to get people making buy and sell decisions and then the markets are reversed – causing a massive squeeze as the newly entered orders are covered and reversed.
This is why I continue to get incredibly technical in my communications and decision making.
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