Tracking bailout $700 billion?!

12/31/08

The following is written by AP:

Federal officials acknowledge difficulties in tracking bailout money

• Jeannine Aversa, AP Economics Writer
• Wednesday December 31, 2008
  

WASHINGTON (AP) -- Government officials overseeing a $700 billion bailout have acknowledged difficulties tracking the money and assessing the program's effectiveness.

The information was contained in a document, released Wednesday, of a Dec. 10 meeting of the Financial Stability Oversight Board. The panel, headed by Federal Reserve Chairman Ben Bernanke, includes Treasury Secretary Henry Paulson and Securities and Exchange Commission chief Christopher Cox.

The officials discussed "the difficulty of isolating the effects" of the bailout program "given the variety of policy actions taken by the U.S. government to support financial stability and promote economic growth."

The officials also noted the "difficulties associated with monitoring the use of specific funds" provided to individual financial institutions, according to the document.

The bailout program, created Oct. 3, is designed to break through a debilitating credit clog and spur financial markets to operate more normally again. Credit and financial woes -- along with a severe housing crisis -- have plunged the economy into a painful recession.

Earlier this month, the Government Accountability Office said the government must toughen its monitoring of the bailout program to better keep track of how the money is used.

The government has pledged to provide $250 billion to banks in return for partial ownership. The goal is for banks to use the money to boost lending. However, a recent review by The Associated Press found that after receiving billions in aid from U.S. taxpayers, the nation's largest banks can't say exactly how they're spending the money. Some wouldn't even talk about it.

Money from the bailout pot also has been used for other things, including throwing a financial lifeline to ailing auto companies Chrysler and General Motors Corp., and teetering insurance giant American International Group. Money also was used to back a rescue for Citigroup Inc.

My comment: Folks, this is it. Our taxpayers money is gone to richer people's hand and no way to track. What a waste!! Am I right again?! If people keep saying the Ponzi Scheme $50 billion by Bernard Madroff, how about Paulson, Bush, and whole congress are already running the largest Scheme in human-kind history: $700 billion scheme. Until now, we all know $350 is gone to nowhere. Yes, it seems those money has injected into some banks. However, none of those wanna loan it back to us, tighten lending for commercials, restricted mortgage for home buyers, cutting credit line of your all credit card....etc. Credit market is still frozen, Housing prices are still dropping, unemployment is rising,... I do not want to list them all. I guess everyone now knowing what was happening and what will it be for the year 2009. Recovery is in question for second half of 2009?!

Hilarious 2008 Investment Guides

12/31/08

The following was investment guides posted by so called professionals at the end of year 2007. However, they all need to go back school to re-educate themselves.

• Jon Birger, senior writer, Fortune Investors Guide 2008
Smart investors should buy [Merrill Lynch] stock before everyone else comes to their senses.”
Merrill’s shares plummeted 77 percent.

• Elaine Garzarelli, president of Garzarelli Capital, Business Week’s Investment Outlook 2008
Buy some of the most beaten-down stocks, including those of giant financial institutions such as Lehman Brothers, Bear Stearns, and Merrill Lynch.
As of January 1, none of these firms will still exist.

• Sarah Ketterer, CEO of Causeway Capital Management, Fortune Investors Guide 2008
“Fannie Mae and Freddie Mac have been pummeled. Our stress-test analysis indicates those stocks are at bargain basement prices.”
Fannie and Freddie had lost 90 percent of their value.

• Jon Birger, senior writer, in Fortune Investors Guide 2008
Our bet is that in a stormy market investors will gravitate toward, GE, the ultimate blue chip.
GE’s stock price tumbled 55%, and it’s on the verge of losing its triple-A credit rating.

• Archie MacAllaster, chairman of MacAllaster Pitfield MacKay in Barron’s 2008 Roundtable
“Bank of America will [not cut its dividend], I think they’ll raise it this year. My target price for the stock is $55.”
BofA share price now hovers around $14, and it has slashed its dividend in half.

• James J. Cramer, “Future of Business” New York Magazine
“Goldman Sachs… finishes the year at $300 a share. Not a prediction — an inevitability.”
Goldman Sachs’ share price was $78, and the firm announced its first quarterly loss — $2.2 billion.

If anyone recall that I have been saying to avoid financial and banking stocks since the beginning of the year. Gee, I am the one who do not have finance degree or higher education compare to them and I still could make much better advice than anyone of above. Why?! How can I do that?! READ the stock CHART. Technical give me the profound prediction. What would the market will be for year 2009. I will post my view later soon.

The Worst Predictions About 2008

12/29/2008

Here are some of the worst predictions that were made about 2008. Savor them -- a crop like this doesn't come along every year.

1. "A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!" -- Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008

At the time of the prediction, the Dow Jones industrial average was at 12,300. By late December it was at 8,500.

2. AIG (NYSE:AIG - News) "could have huge gains in the second quarter." -- Bijan Moazami, analyst, Friedman, Billings, Ramsey, May 9, 2008

AIG wound up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $150 billion to keep it afloat.

3. "I think this is a case where Freddie Mac (NYSE:FRE - News) and Fannie Mae (NYSE:FNM - News) are fundamentally sound. They're not in danger of going under I think they are in good shape going forward." -- Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008

Two months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each.

4. "The market is in the process of correcting itself." -- President George W. Bush, in a Mar. 14, 2008 speech

For the rest of the year, the market kept correcting and correcting and correcting.

5. "No! No! No! Bear Stearns is not in trouble." -- Jim Cramer, CNBC commentator, Mar. 11, 2008

Five days later, JPMorgan Chase (NYSE:JPM - News) took over Bear Stearns with government help, nearly wiping out shareholders.

6. "Existing-Home Sales to Trend Up in 2008" -- Headline of a National Association of Realtors press release, Dec. 9, 2007

On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million -- down 11% from a year earlier -- in the worst housing slump since the Depression.

7. "I think you'll see (oil prices at) $150 a barrel by the end of the year" -- T. Boone Pickens, June 20, 2008

Oil was then around $135 a barrel. By late December it was below $40.

8. "I expect there will be some failures. I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system." -- Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008

In September, Washington Mutual became the largest financial institution in U.S. history to fail. Citigroup (NYSE:C - News) needed an even bigger rescue in November.

9. "In today's regulatory environment, it's virtually impossible to violate rules." -- Bernard Madoff, money manager, Oct. 20, 2007

About a year later, Madoff -- who once headed the Nasdaq Stock Market -- told investigators he had cost his investors $50 billion in an alleged Ponzi scheme.

10. A Bound Man: Why We Are Excited About Obama and Why He Can't Win, the title of a book by conservative commentator Shelby Steele, published on Dec. 4, 2007.

Mr. Steele, meet President-elect Barack Obama.

This is all written by Peter Coy from Business Week.

The reason I repost it here is simple. Folks, you all need to educate yourself well in financial sense. I do not blame all those people called those prediction has no credit at all. However, as you can see, none of those have predict anything correct. And, if anyone of you can retrieve my blog since 12/2007. You all can find how I use my studies and analysis to interpret the US stock markets as well as economy. More importantly, my ability to pinpoint the change of market trend has been amazing, do you agree?

SPX 10 days chart

12/29/08

Stock markets are trading in neutral bound since the beginning week of 12/22/08.

All Bear Markets View in Charts after World War II

12/25/08

Merry Christmas to everyone. However, not quite so for US stock market, no Santa Clause Rally yet. In the matter of fact, I repost some very great charts about historical Bear Market after World War II here. Enjoy and Relax if you can. Ho Ho Ho......
However again, I have not posted the worst case yet the Bear Market of 1930-32. I have no chart to show that. The worst Bear Market Ever happened during year 1930-32. It lasted about 27 months. The percentage drop of S&P index from 294 to 41, an amazing 86% drop. For example, if you have $1000 invested in the 1930, your $1000 was worth about $108 at 1932 the market bottom. And how long to take your $1000 to re-gain back? Folks, it took you 25 years from 1932 to 1954. Yes, this is real data. Moreover, I have not accounted for the inflation adjustment. Sorry, I am no Santa Clause. I am real to be your friend and honest adviser of your retirement planning. Will this mess repeat like the worst case in 1930-1932? I have no idea. But I am still remain very very bearish. I will post my view of 2009 at New Year Eve. Happy holiday to all.

Another indecision trading day!

12/15/08

It is simply chart to tell recent days market condition. It seems still bearish. However, tomorrow the rate cut news will give push for market go high?! We will see.

Tomorrow down?!

12/9/08

The chart should tell the story tomorrow.

It is one year since I start write my blog

12/9/08

Time goes fast. Today is the 1st anniversary of my blog. However, so as our 3rd worst Bear market ever in US history. As shown, the bear market that ran from 10/9/07 to 11/20/08 is the third worst ever with a decline of 51.93%. The bears that ended in June of 1932 (-61.81%) and March of 1938 (-54.47%) are the only two that had bigger declines without a rally of 20%.

On 12/10/07, SPX was closed at 1516. Today SPX is closed at 889. It lost about 41%. Again, I noticed the Bear Trend about one year ago.

How far this 4th elliott wave go?!

12/8/08

“How far might the counter-rally (or Elliott Wave 4) go?” Most obvious zones of Fibonacci confluence lie at the 1,185 and 1,162 areas. However, this is valid based on if the low of 74o hold for S&P.

New rally?!

12/8/08

SPX is breaking upward instead of falling the important pivot point around 820. Now, the market is also breaking the trendline which started from Sept. It is building new uptrend rally. However, this is just another Bear market rally.

Trianglar pattern now

12/4/08

Now S&P is forming triangle pattern, it means about time to see if it breakup or breakdown from here big time. Volatility is about getting crazy again. Worst than expected non-farm payroll may cause another big selloff day tomorrow or retest low on 11/21/08 ( 740-750 ). Good luck!

Inside day, dangerous?! or bounce?!

12/2/08

Well, the technical chart is showing all the key point. Let's see how the market react tomorrow. By the way, my today's intra-day analysis is not fail yet. But, I am wrong about today reaction that it is not another down day.

8th Bear Market Rally since October 2007

12/2/08

Last week is the 8th Bear Market Rally since October 2007. They ranged in strength between 8% to 24%. Every rally bounce like the bottom has been made. But, each one saw subsequent lower low. Also, what is happening is that the bear market rallies are getting shorter. In my opinion, and as always, investors should using this kind of bear market rally as an opportunity to sell into. Or for more aggressive type, it should sell short into each bear market rallies. I just want to put emphasis here again, last week is just another sucker rally. Good trading to all.

Intraday analysis for today in 15mins timeframe

12/2/08

Left side chart shows the wedge broke down. Now SPY is at 50% Fib retracement. 50% retracement normally is a cross road.

In theory, at 50% retrace level mkt can go either way. But in this case, we have major pivot 840 now becomes major resistance, and we have a gap right down below.

With US$ keep strong tonight and OIL future is trading below $48. We all know the financial sector now is under great pressure after Meredith Whitney's comments yesterday.

We have Big-3 on congress today, and also remember we have payroll number this Friday.

The next line is 0.618 Fib retracement, 800 line on SPX. This is the last defence line for bulls.

IF SPX comes down to 800 without retest 840 from here (816), then we wil have a chance to bounce from 800 to up upside (reflective bounce)

IF SPX starts bounce tomorrow to 840, if next time coming down to 800, then the 800 will not hold.

Now,at this current time I write this, market is trying testing 840. I am more into the second case. Resistance hit on 840,market will make new intra-day lows from here and break the 800 today. Good luck to all.

Hard Evidence Bush Administration responable for this sub-prime aftermath

12/2/08

The following I repost from AP(The Big Picture Blog).

A brutally damning article about the warnings the Bush administration received and ignored was published this morning by the Associated Press. The AP summed up the philosophy of the Bush White House, writing: “The administration’s blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.”

Excerpt:

The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.

“Expect fallout, expect foreclosures, expect horror stories,” California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.

Bowing to aggressive lobbying — along with assurances from banks that the troubled mortgages were OK — regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.

“These mortgages have been considered more safe and sound for portfolio lenders than many fixed rate mortgages,” David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.

Bank regulators had proposed new guidelines for writing risky loans in 2005, but were rebuffed by the White House. The proposed regulations might have avoided the worst fo the housing and credit crisis, had they been enacted.

What was so especially damning was these proposals were all stripped from the final Administrative rules by the Bush White House. None required congressional approval or even the president’s signature:

• Before banks could purchase mortgages from brokers, they should verify the process to ensure buyers could afford their homes.

• Regulators told bankers exotic mortgages were often inappropriate for buyers with bad credit.

• Banks would have been required to increase efforts to verify that buyers actually had jobs and could afford houses.

• Regulators proposed a cap on risky mortgages so a string of defaults wouldn’t be crippling.

• Banks that bundled and sold mortgages were told to be sure investors knew exactly what they were buying.

• Regulators urged banks to help buyers make responsible decisions and clearly advise them that interest rates might skyrocket and huge payments might be due sooner than expected.

The banks that lobbied most aggressively against the rules reads like a who’s who of bankruptcy and FDIC conservatorship: IndyMac, Countrywide Financial, Washington Mutual, Lehman Brothers, and Downey Savings.

Up to date on bailout cost total

12/2/08

Total cost on Bailout so far up to date.
$8.5 Trillion tap already after one year time frame. Note that this amount does not include the $5.2 Trillion of FRE/FNM's portfolios.
Also, I found out interesting fact about yesterday's ISM production component. The only growth was "Paper Products". Geez, of course, we need more trees to print out Trillion of dollars from now. What a joke for US Economy.

Bears' claw in 2008

12/1/08

Today is the second worst percentage drop for S&P stock indexe so far in 2008. Notice those biggest declines were happening within last few months as the market has gotten into death spiral. This December still has about 21 trading days to go (downs/ups)?!

I have just found out that the day 1/8/08,I officially called Bear market begun which the post title as "Recession Fear". Go check and you see I made my call very earlier. If any of you has been listened to me, you will all very happy by now. The S&P was close at 1390(Dow was 12589) on 1/8/08. The all time high is 1576(Dow was 14198)). Look at today it closed at 816(Dow was 8149). My call was 186(1609 for Dow) points below from all time high. However, it has been down 574(4440 for Dow) points away far from the day I made my words until today. Wow, what an amazing early call of all time!? Yes, I feel very honored that I am good at reading the chart and make such great observation. I have successfully building my reputation thru continuing my time and effort to contribute my knowledge in writing this blog so far. The 12/9/09 will be one year celebration of my works here and I am looking forward to have more readers enjoying my insight. Good to all.

Starting December with assualt bloody selloff?!

12/1/08

Officially Recession has been announced by NBER that start the seasoned rally year end month with bloody selloff of 680 points on Dow. As the chart on the left say, (also I pointed out here last week 2) That how my studies payoff and work out. That's why I said last week:"Do not get trap by the rally" Now, all of you know the reason. If the Dow 8000 got broken(very likely), it will retest the 7500-7600. Remember the market does not have to touch the same lows on 11/20/08 in order to form double bottom. However, if it does, it would means good double bottom ( general, valid double bottom usually form in between at least 2 weeks to 6 weeks timeframe) But, let's watch out below if 7500 get broken.

Bears attack

12/1/08

Here I post a very interesting comparison chart for all of you. It is just for visual. It does not mean or suggest US is following the same route. However, if any of you has keep reading my blog for long, it is very likely I would intend to believe what I see above.

NBER has finally determined US in recession since 12/2008

12/1/08

Well. That is very late call anyway that NBER has said US has been in recession since December, 2008. Folks, if any of you has kept reading my blog, the 12/2008 is exactly I started to write this blog and I already made my statement "I am Bearish about stock market and US economy". Do I foresee this mess, the answer is "no". But I know from the long term stock charts. That is the power of technical analysis. Great call for me and time has proved that I am correct again!

Are we bottom yet?! Again this question?!

12/1/08

The above charts have shown us the S&P has experienced with two major downward movement since all time high on 10/11/07. Are we bottom yet?!
There has two group of theories to answer this question.
The bearish tone is.. the sub-prime aftermath has effected and spilled over whole world economies. With rising unemployment rate, tightening credit market, and sky-rocket national debt; US will surely going to have very "hard landing". It means the stock market will going down more from here. Or, a "soft landing" that it spreads longer period of time to build the bottom from here.
The bullish tone is..the stock market has already priced in the so-far most worst news and expectation. The bottom S&P had on 11/20/08 is the bottom of this bear market. It is because the whole world governments are corporate rescuing our world economy.

Well, I hope this does answer your folks' questions. My point of view is Bearish one. We still have lots of uncertainties, no-one knows when the housing bottom will be. Most importantly, the stock market (the whole world stock markets too) is in very bearish mode. I do not see 1-2-3 basic bottom formation in any time frame. (1-2-3 is a technical term for chartists). And here I would predict the market would break 7000 on Dow soon. Next support would be 6000. But my final bottom would be 4000 points for Dow in year 2009.

Do not get trap by this holiday Bear Market Rally

11/28/08

As usual, holiday rally is in effect for this Thanksgiving Bear Market Rally. Yes, it is just another good Bear Market bounce. Do not get trap on this sucker rally, folks! The most important is 840 for S&P. If this get broken, retest lows is very likely. Do not chase on Citigroup stock "C", government is going to be the biggest stock shareholder. It loses two important reason to own this "C" for long term. Yes, it is rally very good. This is just the MM (Big Players) games. They all fully loaded between $3-$4, sell all to you (small investors) on the way up til $8-$10. I will bet "C" is on going to become $1-$3 stock within weeks. Good Luck. Again, this is my opinion and do not consider this is a recommendation. You should consult your financial advisor.

Another round of wasting our taxpayer money

11/25/08

I am very very very very very very very disappointed about Fed and Treasury have done to us the Americans. Another round of fail program again?! and again?! to inject(steals) taxpayers money away to their piggy bank. Fxxxing Paulson & Bernanke,.... Folks, they are keep pulling yours and mine future credit at risk. America whole country is in very dangerous level of risk. Our government is on going non-stop printing US dollar bills every seconds. The so far rescue package risk amount pile up to 8.8 Trillion and our current national debt is 10 Trillions. By the end of Bush Adminstration, our national debt will way over 20 to 25 Trillions. I cannot think of our future. Government keep bailing out finanicals , then who bail out US government?! New program means new piggy bank for top government personals to take whatever however they wants. Good luck to America and Americans.

Long term look at Dow index

11/24/08
The level last week that Dow has met is very important technically. By looking above chart, you should realize that year 98' and last bear market 02' bottom it retested several times around 7100-7400 levels. Next fib support if 7000 level is broken would be 6000. Are we getting good bounce from here?! I do not know. What if it breaks this 7100 level?! Trading is not just foresee the future. However, trading with technical view will sure increase our chance to win over long run. It helps to manage risk relative to potential reward. And to find the "entry area" of opportunity to min. risk while achieve good reward. Again, I do not say it had hit the bottom yet. However, read the technical charts do help clear people mind on how to read the current market.

Too big to fail?! Again?

11/24/08

With government help package, Citigroup is rescued by wasting our taxpayers money again. Yes, our disqualified government actions have so far failed to contain every problems that we have since year 2007 to present which shaking the financial industry. Not just financial now, it is widespreading to whole entire world economy. This is Sad. Why nobody said and make our Fxxx government stop stealing our hard-earn taxpayers money to put into wall street. When can they stop doing do?! It is wasting every penny with no productivity at all. Do we get any more job out of those silly rescue effort?! None. Citigroup will surely become another AIG, equity shareholders are become worthless on their investments by government injection. Oh, Man! Folks, wake up. None of our current government officials know how to solve these mess at all. Maybe they know, they are just taking our taxpayers money into their piggy bank(share with Wall streets and those officials). What do you think next month that Citigroup would ask for next round of rescue? Another 20 billions?! Geez, I have already said that 700 billions is not going to help at all and the amount it needs is at least 10 or 100 times more to solve these mess. All I wanna to tell is we will see next AIG, Citigroup rescue for sure. Or, the new government start realizing this is silly and non-sense waste of taxpayer money. The tap is higher and higher.

Market keep going down

11/18/08

It has been awhile I last posted stuff here since I have been busy with my insurance business. Well, I am still remain very bearish. Period. See the above chart and you find yourself the answer. Whenever if the market up 2 days in a row, please get out or it should be great chance to sell short. No question ask. It is just plain simple. Market is heading south. No matter what government does, no matter who do that or what. BEAR Market rules!!

Trend change?!

10/31/08

The above chart do showing some sign of good news for bulls. However, it needs to see the 1-2-3 pattern( higher highs and higher lows ) to build solid rally that lasting period of weeks. So, need few more days to determine if we have that or not. Do not forget, even if we have the rally which is a BEAR market rally only. We have long way to coming out of the wood yet. US Corporations has just starting lay off huge amount of workers so far this month. Anyway, have a good Halloween (Indeed, it is good halloween for market since we just have 2 up days in a row that it has not been seen for last 5 weeks ).

Descending Triangle pattern

10/28/08

S&P and other major indices are having great rally today. However, the daily chart is telling us it is forming a desending triangle pattern which is bearish. If the support line got broken, you all know what it will happen. Every major rallies are for BEAR to sell off hard each time so far this year. Do not believe this is true rally if tomorrow close in negative note. Will tomorrow people is selling the rate cute news?! Who's know?! Let wait and see. Good Luck. It is because once the support got broken, next level for DOW would be 1000 points down( 7000-7200). We have not see any 2 up days in a row so far for this month.

Another Bloodbath sell off week

10/24/08

Nothing much to say this week. The reason I did not post much these week because I am still very bearish. Again, no matter what government do. The market is still in very very bad shape. We are making historical bloodbath sell off October ever. Good luck folks.

Credit Crunch Jokes

10/17/08

1) I went to the ATM this morning and it said "insufficient funds"..

I'm wondering is it them or me?

2)I went to fill up my gas tank and I couldn't decide between leveraged and un-leveraged.

It is just for fun only.

Technical Analysis why lows of 10/10/08 is very important

10/16/08

This is only my observation:

1. Dow all time high 10/11/2007 and recent low 10/10/2008 and is exactly one year span time
2. The date 10/10/2008 is falling in 144 calender days after recent rally high from 5/19/08
144=12*12, also 144=55+89 ( Fibonacci series number )
3. Also, 10/10/2008 is also exactly 2 months span time from highs at 8/11/2008

By study point wise drop from S&P index:

1.Since 10/11/07 high 1576 to 10/10/2008, it keep going down 365 days, so 1576-365*2=846
2.Since 5/19/08 high 1440 to 10/10/2008, going down 144 days, so 1440-144*4=864 ( real drop 600 points)
3. Compare with 10/11/2007 high, 7/15/2008 low (1200), so 1200-(1576-1200)=824
4. Compare with 5/19/2008 high (1440), 9/18/08 low (1133.5),so 1133.5-(1440-1133.5)=827

By compare point 845 to 840 lows
5.Compare 5/19/2008 high (1440), 7/15/2008 low (1200), so 1200-(1440-1200)*1.5=840

Somehow, S&P 840 area is very important level to act as midterm support.

Now, here is important date to see:

1. 10/28/08-11/7/08, more important before 11/3/08
2.11/21/08
3.12/4/08-12/10/08
4. 1/2/09-1/7/09

Bull & Bear Markets for DOW since 1900

10/14/08

Here I repost a chart to show that there are 55% time market is in bullish state as well as 45% time market is in bearish state since 1900. Therefore, to know when the market is in bull or bear that would make you a better investor/trader.

Out of stream yet?!

10/14/08

Technically, 9800 mark of DOW is strong resistance level to break, but once we past it, it will be very bullish. However, it seems market need to retest those fib levels and reverse. The last friday low should be bottom for this scary selloff and for the rest of this year. However, all major indices are still in bad pattern and it has long time to go to break the downtrend line.

Technical view of today rally

10/13/08

As the chart showed, market built a bullish morning star candlestick pattern start counted from 10/9/08-10/13/08 three days pattern. My opinion is the most the DOW could go in 10000 to 10500. That it! Jumping around 2000 to 2500 points from last friday bottom. I did not disclose the longer time frame here that suggest the next wave down will break below last friday lows of 7842. I only disclose to that chart to my client only. Do not be so happy even we have big big rally today. It is just BEAR market rally only. It is still part of the big correction ongoing. And this just solve the banking and credit crisis. The whole world economy is entering into pro-long recession. Good luck trading folks!

Historic rebound after worst week drop ever

10/13/08

What a holiday rally!! Finally, US Treasury is deciding to directly invest into equities of top banks in US. This is the bold move I have mentioned. It is much much better make sense to use $700 billions to buy garbage. Although we do not know if this plan would work or not, at least the bloodbath selloff of global stock markets has ended. We need to see how bonds market trading tomorrow in US in order to call the last friday is bottom. It seems the plan that British brings on is more welcome than others. Which raises the question, why did that clear view have to come from London rather than Washington?! It is very simple. Paulson's original plan is going to get our money into Bush, his, and others banking senior executives. Since no one knows what is the current market price of those "Garbage". The Bank could just request blank check written $100 billions and both parties can get some $billions split to share. Even I notice this sucker plan is not going to work, why not other Americans. Now, Paulson need to bend down his keen and need to follow the concept that British propose with some degree of variations. What British plan make sense is they attack the problem directly. Inject cash to whoever banks need ( buying their equities), fully support interbank lending in between, and totally backup each depositor asset. Does it seem common sense at first place?! Why our so proud of US Government is not the one who stand up and saying loud to solve our crisis few weeks ago. They are just keep playing around their naive experiment rather than really to rescue our national. They seems not care at all. Maybe they know how to do it, they are just want our $$. "WT?" our US government is shi?. I have no confidence to our nation current economic plan at all. I hope Paulson follow work is going to work. No matter what, US is 100% surely getting into economic hardship. I will post more later on with technical perspective. Good day!

Talking the fix that finally works

10/9/08

What will that fix be?! This is the question being asked by everyone over the world now. The US government plan said that they will be injecting capital directly into banks by taking an equity stake this morning has failed to impress the markets again. The theory sounds good and somehow I feel this is a smart option announced by the US government to date so far. Unfortunately, timing continues to be the major debacle of the Bush Administration. The Bailout plan would not start running until the end of the month at earliest. The market wants a fix NOW. However, there are few answers to this. Some economists are calling for another round of coordinated rate cuts while others are calling for stimulus checks and direct loans to small business. CNBC ( the worst sucker in media ) is even talking about the Fed possibly buying equity futures, but ultimately none of these solutions solve the crisis of confidence in the banking sector. All in all, Banks are in the business of taking risk and it is THE TIME that they take on some risk and do unfreezing the credit markets. Also, as I posted before, G7 meeting is next hope. Now, the fool master Treasury Secretary Paulson is asking for an emergency G20 meeting this weekend to discuss the financial crisis. This will be the most significant G7/G20 meeting since the 1985 Plaza Accord which marked a major turning point for the US dollar. At that time there few nations attending the event agreed to intervene in the currency markets and to sell US dollars to reduce the US current account deficit and to pull the US economy out of a serious recession. Would this time could save our ( US ) mess?! It is best to see if they would intervene our currency and enough to surprise the stock markets as well. It is a possibility and let us wish it would work.

Fear still in play with the 7th straight down day

10/9/08

It is another sad day today. Fear is still growing bigger. Dow closed at 8579 and has already below the Fib 76.4% level. On a biggest scale, it has chance that Dow will drop down to the 7200. In fact, this chance is getting higher. As I write this, Japan Nikki has already open down 11%. Sell-off tsunami is playing on. It is irrational and no one has any confidence at all. I noticed market keep behave opposite as Libor rate. If libor rate get stable or revise down, the market would hold and may have recovery rally. If libor rate keep going higher, market will tank. There is no meaning to give any support level technically since the market is breaking each support that I see so far. But, as a chartist/technical analysis/market strategist, next support is 8500, 8300, 8000, and 7200 ( bottom of 02 lows). However, do not rule out it could drop below 7200. Let wish the G7 nations meeting will come up some form of rescue the whole world.

Global Rate Cut is no help to market either

10/8/08

Dow closed down 189 points and it is the sixth down day in a row. I remembered the longest losing days for major indices are 9 days during the bear market run from year 2000-2002. Now, the investors has totally lost confidence at all to whatever our US government, Federal Bank, and Treasury do. Nothing could stop the market free fall. All support below current levels are just guesswork. We have to see one big gain day to stop this mud(mad) slide. Needless to say, let the market itself find its equilibrium. Even, all technical data suggest the market is deeply oversold but it does not make a buy suggestion. This is far worse drop ever since the market crash 1987 & Great depression 1929. Now, bear market is built in fear. As fear growth unstoppable, there is no bottom you could see. Well, it will stop somewhere when there is no more sellers. Tomorrow, the short-sell rule ban has ended and let see how market react then.

Nightmare is just beginning

10/7/08

Why I not post anything yesterday?! Today's market action has showed the evidence. There has never been follow through day after each possible reversal day. Anyway, the chart above will guide you we are really really close to bottom. Market will bounce any moment. We are already nine years into the first decade of the 21st century, and those first nine years are on pace to be the worst start to a decade since 1930s. Unless we get a major rally to close out the year ( 15%+)
However, I have other data to suggest the Nightmare is just started. The powerful correlation between margin debt usage by member firms of the NYSE and the trend of major indexes suggest further selling ahead in the main indices. The super large leverage accumulated during the last bull market is now forcefully being undone by a powerful combination of margin calls and acceleration market losses. Also, combine with credit crunch and decreasing house prices. We are soon surely into phase two of recession or depression. Now, it is very certain 100% US is getting into a very pro-long recession ( At least years to two ). I have been saying this and predict this months ago and give caution to my blog readers. Unlike Fed Chief now he finally accept that US is into recession. Do anyone notice the main stock indices are diving hard each time our Fed/Treasury did some sort of bold action/plan?! Big players are not buying it each time and so are we/me. We gonna fire Fed Chief, Treasury Chief, Bush....etc. They do not know how to fix our problem at all. They all have no clues. The market has showed us the $700 billion plan is not gonna help at all as I said before. Next support for Dow is 9000. Below that level is 7800-8000. Remember the last post I said " Fasten your seat belt ". That's my bold statement before Monday and today action. Now, I guess you all know why I have keep my extreme bearish from start of this year. It has proved me no wrong at all. Good luck!

What's next?!

10/5/08

Are we bottomed yet?! Technically, the stock markets are in very oversold and the market breadth is very very close to extreme bottom. Just keep watch the price reaction. It surely will rebound very soon. Beside to describe it from technical point of view, market may keep going down more. Why?! The big players are watching the credit market, they need to see if the condition has improved. Therefore, it may takes two to three days to confirm if there has any improvement. Well, will market crash from here?! Let see! Fasten your seatbelt. Really, I cannot precisely pinpoint if the bottom is in sight as lots of traders in Wall Street. But I surely know the market will sure have very nice bounce and will keep going down again afterward.

Dow is on the way to touch 10,000 mark

10/02/08

Although the Senate has approved the newly revived bailout plan for the financial system, stock traders are not convinced that the plan will be good enough to rescue the US economy. The US economy remains very weak and the crisis of confidence that has frozen the credit markets may not be solved by a plan that focuses on recapitalizing banks and not creating jobs. However, tomorrow we have very important economic number which is Non-farm payroll. The market is looking to fall by more than 100k. This would mark the ninth consecutive month of job losses. I believe that non-farm payrolls could fall as much as 120 to 150k. Now, I guess despite the House of Representative will approve or not, the market will not going anywhere bullishly. We surely are getting close to the most scary part of our economy. Let see how market react on the approval of the House tomorrow mixed with the Non-farm payroll number.

Major Accumulation Day

9/30/08

It is very great and surprise that we have a major accumulation day today followed a major distribution day yesterday. Technically, it is very oversold to have a bounce. So, we need to see follow through strong up day to confirm the bottom was yesterday. Look like Senate is going to vote the newly revised rescue plan tomorrow. Ayes would create another surge. But what if nope happen again?! Market would sell off right away more than 800 points? I am still seeing this as 50-50. I still against the current plan's form. At least, the credit market is still in dead water. I will try to post the update tomorrow once we know the answer from senate voting. Good luck.

Very useful info I repost here

9/29/08

Again, I repost this from my resource. I have no credit to write this.

The Warning from New Lows, and Institutional Selling ...

Monday, September 29th. Charts and Analysis are below the Quick Summary

• This Institutional Buying/Selling pattern is becoming like last January's pattern (see the circled areas on Chart A). On Friday, the Buying dropped further while Institutional Selling had a slight up tick on a sideways move. If Institutional Buying/Selling continues to replicate the pattern, Institutional investors will put us in a volatile trading range like last February. The key will be the SPREAD distance between the two ... an expanding negative spread like June and July's would give us another leg down in the market ... see chart B.
• The combined mix could give us extraordinary VOLATILITY again today.
• Remain in cash on the short side ... this is a now a speculator's market.
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• Currently, at 8:15 AM this morning: the Dollar's RSI bounced back up and is moving in positive territory. That now tips the odds for the Dollar to retest the new resistance at 80. The Hybrid Accelerator is in a mixed condition with the medium trend down, and the short term green indicator about to go positive. If the Accelerator red/blue trend lines do not turn up, then we would expect the RSI to make a lower/high with the Dollar stalling after reaching the resistance.
• 10 Year Bond Yield. The 10 year yields have a triangular pattern that was definitely broken to the downside two weeks ago. The triangular pattern breakdown suggested a retest of the March lows which occurred on September 16th. ... after which it jumped back up from its spike down. Friday, the 10 year yields were testing the triangle's upper resistance level. It is a mixed set of conditions as to where we go from here. Many are expecting the Fed to cut interest rates which would drive down the yields. At the same time, I expect that the Treasury will have to offer higher yields for foreigners to buy our Gov. Bonds. I am really not sure how this will play out in the short term.
• 30 Year Yield: The positive divergence we have been pointing out took hold on September 19th., with a very large up move on the 30 year yields. We thought that the sharp down move was the washout last week and that was the case. We should get a lot of volatility right about here, with the yields ending up with a test of the upper resistance line slightly higher than 45.5 later. *** I expect some downside movement now which would then end with a higher bottom.
• The Shanghai will be closed all week for a Chinese Holiday.
  

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A: "Institutional Buying and Selling":

(Note that Institutional Buying has been up trending while selling has been up trending at the same time. Also note that the two have remained close to equal amounts relative to each other. It means that Institutions have been "holding a controlled neutral-" market position ... the SPREAD RELATIONSHIP between how much Buying and Selling Institutions do on a given day is the "control factor" they have in what happens in the market AND on the VIX.)

Monday's comments: This is the Institutional Buying Selling Spread chart for last Friday. Note that the pattern is becoming like last January's pattern (see the circled areas). On Friday, the Buying dropped further while Institutional Selling had a slight up tick on a sideways move. See the circled areas. If Institutional Buying/Selling continues to replicate the pattern, Institutional investors will put us in a volatile trading range like last February. The key will be the SPREAD distance between the two ... an expanding negative spread like June and July's would give us another leg down in the market ... see chart B.

B: "Inflowing/Outflowing Liquidity":

Note that Liquidity had hit its lowest possible level in Contraction territory in the past few weeks ... hence the crisis that the gov. and Fed has to deal with.

On Friday, liquidity remained in Contraction with a small down tick. For the market to have the ability to have an upside rally, the liquidity will need to rise higher and start making higher/highs and higher/lows. If liquidity contracts back down to below the triangle's bottom, money will be flowing out of stocks causing another drop.

C: Our Multi-Indicator Model ...

Our Multi-Indicator Model is below. It is comprised of Institutional Selling, a MACD, a movement Accelerator, and a 9/30 RSI (Relative Strength). This model doesn't take risk factors into account.

*** Current Update ***: Our Multi-Indicator Model, which doesn't take risk factors into account, showed the following yesterday:
a. The Accelerator closed neutral, with the trend lines in negative territory and moving higher.
b. The Inverted NYSE Declining Volume is negative and trending higher. See the Green Arrow.
c. The RSI 9 is negative, and the RSI 30 remains negative.
d. The Inverse Institutional Selling graph is showing a selling trend could confirm a trend reversal of less day-over-day Institutional Selling if confirmed today.
e. The MACD-C has its indicators merged. This is an inflection point where it could move more positive or reverse back down. Market Pressure conditions remain Down with some improvement.

_______________ End of Special Studies _______________

Chart 1: This chart is worth a thousand words. Note the huge triangular formation on the NDX.

Comments during the past weeks: The big story is that the NDX is coming to the APEX and end of 9 year triangle. There will be a breakout before the apex and it will have HUGE consequences. If it is to the downside, we could see a melt down in the markets. If it is to the upside, there would be a very strong rally to the upside that no one expected. This apex breakout could occur anytime between now and the end of December the latest.

NOTE: The NASDAQ 100 has breached its 9 year triangular support.

See the next chart ...

Chart 2: This is a close up of the above NASDAQ chart.
NASDAQ Alert: The NASDAQ 100 is now -5.56% below the critical support level of a 9 year triangular formation. An approved and half-way sensible Bail Out Plan could give us an up move that tests the upper resistances. Longer term, that would not change the Institutional expectation that the economy will move to a zero or negative GDP in the next 12 months.

(Prior comments: The NASDAQ is approaching the apex of this 9 year formation where volatility will accelerate and could become extreme. The apex culminates on January 22nd. 2009. However, these patterns always break out prior to the apex. On a technical basis, the breakout occurred on September 5th. with the first end of day close below the support on September 9th. (Note that the resistance and support levels have been updated due to the convergence of the two over time movement.)

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Section 1. - Daily Index Charts

Chart 1-1: The Institutional Index of "core holdings"...

Overview: The Institutional Index of core holdings is one of the first charts we look at everyday because Institutions represent over half of the market's volume and they have a predominant influence on the market. As an index, Institutional movements track better technically than any of the other indexes. For instance, on October 11th. 2007, the Institutional "core holdings" index hit an EXACT 61.8% Fibonacci retracement while the other indexes did not. That day marked the EXACT top of the market. Note the previous up channel and the clear down channel that we are currently in.

Current commentary: The Institutional Index hit an exact 23.6% Fibonacci support Level on September 18th. The Index actually held on three support levels at that time, and Institutions continued selling while they increased buying.

Friday, the Institutional Index was above the April 2005 support. A retest of the August 13, 2004 low is very possible unless Congress acts fast and comes up with a plan that makes sense. A 700 billion dollar plan is only the beginning because it is an insufficient amount cover CDO/CDS/CMOs that will go into default in the next 12 to 18 months. ... see the next chart.

SEE THE NEXT CHART ...

Chart 2. The Banking Index ...

At the close, the Banking Index was at 73.86. The Banking Index remains in a major down trend and in a short term up trend.

There is still an unresolved 1996 gap that has not been closed at 44.09 on the downside.

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Section 2. - The Super Accelerator Market Trend Model ... Super Accelerator CHARTS are only posted on the Standard Website when they have an Up or Buying condition. After a Sell Signal, the chart then is available on the Advanced Website subscription where we post it and discuss the risk levels and appropriateness for whether we should take a Short Position or not.

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The Super Accelerator for the SPY is now in a Mixed Trending condition with the S.T. Accelerator negative and the Super Accelerator slightly up. This is a mixed condition not conducive to shorting the SPY. No shorting is safe at this time.

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** The NASDAQ 100 Super Accelerator ...

The Super Accelerator for the NASDAQ 100 is in a Down Trending condition with the S.T. Accelerator trying to tick to the upside. This is now in a Mixed Trending condition with the S.T. Accelerator having made two higher highs. This mixed condition not conducive to shorting. No shorting is safe at this time.

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*** The Russell 2000 Super Accelerator ...

*** The Super Accelerator for the Russell is moving slightly down and the S.T. Accelerator is negative and volatile with a small up tick on Friday. This kind of whipsawing turmoil can be expected until we see an approved bail-out plan. This is a high risk/whipsawing condition, and this mixed condition not conducive to shorting.

Chart 2: Multi-Indicator Model...

Our Multi-Indicator Model is below. It is comprised of Institutional Selling, a MACD, a movement Accelerator, and a 9/30 RSI (Relative Strength). This model doesn't take risk factors into account.

*** Current Update ***: Our Multi-Indicator Model, which doesn't take risk factors into account, showed the following yesterday:
a. The Accelerator closed neutral, with the trend lines in negative territory and moving higher.
b. The Inverted NYSE Declining Volume is negative and trending higher. See the Green Arrow.
c. The RSI 9 is negative, and the RSI 30 remains negative.
d. The Inverse Institutional Selling graph is showing a selling trend could confirm a trend reversal of less day-over-day Institutional Selling if confirmed today.
e. The MACD-C has its indicators merged. This is an inflection point where it could move more positive or reverse back down. Market Pressure conditions remain Down with some improvement.

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Section 3. - The following charts can be found below:
The U.S. Dollar, 10 Year Bond Yields, and 30 Year Bond Yields.

The U.S. Dollar ... Daily Chart

(2 months ago: As expected, the Dollar did bounce up from its extremely oversold Relative Strength indicator reading 2 months ago. At that time ... Our Hybrid Accelerator confirmed an up move from its oversold condition. The Relative Strength finally broke out of its consolidation and shot up.)

*** Currently, at 8:15 AM this morning: the Dollar's RSI bounced back up and is moving in positive territory. That now tips the odds for the Dollar to retest the new resistance at 80. The Hybrid Accelerator is in a mixed condition with the medium trend down, and the short term green indicator about to go positive. If the Accelerator red/blue trend lines do not turn up, then we would expect the RSI to make a lower/high with the Dollar stalling after reaching the resistance.

See the next chart ...

The U.S. Dollar ... Longer Term ...

This is the Dollar's longer term chart. You can see the declining channel for the Dollar going back to 2005.

The weekly Dollar chart shows the 3 year down trend of the Dollar that broke to the upside on August 14th. Note the 79.84 resistance was penetrated and the descending channel's support is still in play.

The 10 Year TNX Yields ...

On July 15th., before the open we said, "The 10 year yields are in consolidation ... we expect it to move higher after consolidation. With the Fed opening up the lending window to Freddie and Fannie, that will increase mortgage costs which should translate in the yields moving higher on the 10 year yields as well."

Today: 10 Year Yields: The 10 year yields have a triangular pattern that was definitely broken to the downside two weeks ago. The triangular pattern breakdown suggested a retest of the March lows which occurred on September 16th. ... after which it jumped back up from its spike down.

Friday, the 10 year yields were testing the triangle's upper resistance level. It is a mixed set of conditions as to where we go from here. Many are expecting the Fed to cut interest rates which would drive down the yields. At the same time, I expect that the Treasury will have to offer higher yields for foreigners to buy our Gov. Bonds. I am really not sure how this will play out in the short term.

This is a longer term daily chart of the TYX 30 year yields.

The 30 year yields had been in a down channel since last June. In April, the TYX established its inverted Head and Shoulder pattern with an upside target of 53.

30 Year Yield Alert: Previous comments:. NOTE the similar divergences at Label 1 and Label 2: We now have a positive Divergence condition again ... similar to the Nov. 07 to January 08 divergence that resulted in a sharp rise. The 30 year yields may have to fall lower to set up enough divergence to trigger this pattern to the upside. Note how it ended in January ... with a washout spike down in a climax move before the trend change to the upside on positive divergence ... it is very likely that we will get a similar down spike before the divergence can have an affect for an upside move. We still have an inverted Head & Shoulder formation that has a target of 53 for completion.

Friday: The positive divergence we have been pointing out took hold on September 19th., with a very large up move on the 30 year yields. We thought that the sharp down move was the washout last week and that was the case. We should get a lot of volatility right about here, with the yields ending up with a test of the upper resistance line slightly higher than 45.5 later. *** I expect some downside movement now which would then end with a higher bottom.

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Section 4. - The Shanghai Index ...

China's Shanghai Composite:

Last night, Shanghai moved down 0.16%. The Shanghai down movement is probably over with with the huge positive divergence now coming into play. The Shanghai up movement will be under duress pending what Congress does and how fast they act. Just a note ... China's stock market will be closed next week for their holiday period.

Just to keep the Shanghai Bubble's drop in perspective, this is the 10 year WEEKLY chart of the Shanghai Composite.

The Shanghai Holiday Schedule for 2008 is below.

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Section 5. - Longer Term Stock Market Charts ...

Longer term charts in this section will now be updated only once per week on Monday morning.

Chart 1 as of **Monday, September 22nd. : The Long Term Bull/Bear picture for the S&P 500 ...

This is a monthly chart for S&P 500. The final reading for January was negative longer term. At the end of January we had the red/blue trend lines crossing over which says we have started a bear market condition.

*** Note the black bars and the red trend line during the 2001/2003 bear market period. You will see that there were 4 times that the S&P monthly bars went above the red trend line. These were pausing periods in the down trend. Each occurrence was essentially a sideways movement that failed and moved lower in the next wave.

**Monday, September 22nd. The S&P has its monthly bar below the red trend line and trending lower. The last bear market saw one period where the monthly bar prices tested the blue moving average and then pulled back. The pattern appears the same as previous bear market down moves. From this model, we have said that we started a bear market condition at the end of January. This Bear Market still has months to go before the possibility of giving us an upside reversal to a Bull Market.

.