Daily Archives: August 16, 2010

For-Profit Education Scamboozle

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In my large, personal database of personal opinions, there are a couple of rows relevant to this post:

+ Educating and/or retraining people to do different jobs is usually an exercise in trying to fit a square peg into a round hole;

+ Any time the federal government injects itself into free enterprise, it mucks things up, usually bleeding money to the corrupt and losing money for the taxpayers it ostensibly represents.

This weekend, I was reading about how the for-profit institutions (the kind you see advertising constantly on daytime TV to the people in their lounge chairs who are out of work) depend very heavily on federal handouts to cover their exorbitant tuitions. I (naively) never knew that these places actually sucked down federal money, but they actually account for 25% of all the higher education handouts (whereas the other 75% go to students of real institutions of higher learning, like Stanford and Princeton).

It turns out that these very fishy enterprises are starting to wither away quickly, now that a little scrutiny is being applied. Recent investigations showed that 100% (yep, 100%) of all these public for-profit institutions had some level of corruption in their operations, and forthcoming regulations are going to cut off federal handouts to those places whose "graduates" default on their loans (the default rate is currently around 75% at some of these places!)

It's nice to see that, at least in a small way, a tidbit of accountability is starting to see the light of day. Below is recent price action for Corinthian "Colleges" (COCO):

Picture 1

When Will the Analog Terminate?

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One of the very few unpleasant aspects of doing a widely-read blog is that, from time to time, I get a nasty email. Here's one I got yesterday:

from Mark Everett <markeverett00@yahoo.com>

to trader.tim.knight@gmail.com

date Sun, Aug 15, 2010 at 12:10 PM

subject 1937-42 Scenario


You're a naive idiot if you think the market is going to exactly repeat the 1937-42 pattern, and the way you've "counted out" the moves and presented them in your blog says you're basically expecting an exact repeat. This just shows that you're an example of how moronic most traders are nowadays, looking for a pattern on a historical chart and lining it up with today's chart and saying "that's the future." I'm as bearish as anyone and have been for over 10 years, but the "Big Picture" section of your website is idiocy and show that you could use a class in logic.

Mark Everett

I guess I should be flattered that Mark took the time to create a new email address just to send me a nasty note (this is a common practice among trolls), but this does raise a point I've been meaning to make about the analog.

I've been very vocal about the 1937-1942 analog, but some might wonder what happens when "1942" is here (e.g., the bottom, which I imagine is going to be somewhere between 600 and 650 on the S&P).

The short answer is: we'll be in a different market then, and I have no idea what will be next. I consider the analog to be useful for this bear market; after it's done, I'll have to think hard about what to do next.

Because the general outline of the analog has held up so well, I'm keeping my faith in it until it is completely broken (which might never come; we might make it all the way to the terminus of the analog without missing a beat).

I have, along the way, been updating my Big Picture page, and I've kept all the "amendments" in there, which includes plenty of misfires. But The Vision has kept its course beautifully, and I am looking forward to the next big move down.

Chart on Silver (by Mike Paulenoff)

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It is interesting that silver prices and the iShares Silver Trust (SLV) are up nearly 2% this morning, in sympathy with higher gold and a pullback in the dollar, but perhaps most importantly in sympathy with a sharp upmove in the Shanghai Composite Index (+2%), which suggests strongly that China is not slowing down nearly as much as the financial press would like us to believe and could very well become an increasingly supportive factor for industrial (and precious metals).

Let’s notice that the SLV is pushing up against its near-term resistance line at 18.12, which if hurdled and sustained should trigger a run at its more important May-Aug resistance line, now at 18.43. In that all of the action off of the May 13 high at 19.44 has taken the form of a large coil-type congestion pattern, a sustained upside penetration of 18.43 will argue that the price structure is emerging to the upside from the coil and is in the early stages of a new upleg that has measured upside potential into the $20 area next.

Only a failure to climb above key resistance, followed by a downside violation of last week’s low at 17.43, will damage the developing bullish pattern.

Originally published on MPTrader.com