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Pre Market action is hot and heavy … My time target of a market high on April 27th/28th fits in nicely with the Fed post meeting interview. However when I look at the market action since the mid-February top I get the sense that we are putting in an ascending triangle pattern.
Here is my Gap Data updated for the first part of 2011 …
Good luck today guys and gals
Cheers …. Leaf_West
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Further to my Monday comment on Steve Liesman, Turbo Tim Geithner's interview with Liesman this morning made me shake my head as well. In essence Turbo Tim suggested that the President's plan to reduce the deficit would protect the middle class and social security while reducing over time the fiscal deficits.
I'm a simple man (no jokes please), but to me the government doesn't create anything. It in essence takes resources from some parts of society and redistributes them (less the cost of running the various programs) to other members of society.
The unasked question (thanks to Liesman) if the deficit is going to be reduced and heaven forbid, the national debt paid down, who is going to pay for it? Tim says not the middle class or seniors …. maybe one of the talking heads at CNBC might ask that simple question.
Cheers … in my cave with my loaded gun and cans of beans.
A couple of stocks that came up on my screens today were Toll Brothers (TOL) and Pulte Group (PHM) … I can't figure out why today of all days (Editor's note – this post was written yesterday) these stocks look like they want to break higher.
Cheers … visit my blog
I have CNBC on my tv in my office from where I trade everyday … I tend to 1/2 listen to what the talking heads say except when they break some news. This morning I was again reminded of why I do this … Steve Liesman is an economics reporter not an economist. He made that point very clear this morning when the talking heads were debating the merits of the S&P warning of the US treasury being put on a downgrade watch.
Liesman who is in the back pocket of the US Fed and their virtual talking puppet for running ideas up the proverbial flagpost stated (I am paraphrasing) … the US Treasury issues the debt and also prints the US currency, so there will never be a time when they can't repay their debt. In essence, Steve is arguing that the US Treasury just has to turn on the printing press to pay their bills.
Is Steve really that stupid? Of course you can print all the money you want Steve …. just don't expect the rest of the World to accept it when you try to go and pay for anything you need to import.
Keeping it simple Steve, since I live in Canada, I would suggest that Canadian Companies that export 200 million barrels of oil to the US every year be paid in Canadian $ not US $. Ten years ago today the Cdn/US fx rate was $1.56 Cdn for every $1 US …. today it is $0.964 Cdn for every $1 US.
Keep your printing press working Steve, it cost you 40% more to buy that oil from us today not taking into account the rise in energy prices. Probably even the Russian Lada auto you previously drove in your native USSR where you cut your economist reporter''s teeth probably costs more today in US$. I forgot …. you drive a 700 series BMW …. oh wait that was made in Germany. Face it Steve you're fucked.
Keep whistling past the grave yard Congress …. $14 trillion at a weighted cost of capital of 6% creates $840 Billion in annual interest costs. That is $2710 per person in the US (based on 310 million). You can reduce this amount by the % of government revenue that individuals pay in personal income taxes directly but then you also have to reduce it by the amount of individuals that pay no taxes. All in all, the fat lady is getting warmed up even if Liesman and his Fed buddies don't want us to believe it.
Step back and look at the market action since mid February people …. my believe is that we are still in the process of making an important long-term top. These types of turning points take time with plenty of back and forth.
Here are a few charts to look at …
The SPY has pulled back to that all-important 50% retracement level that typically marks the turning point for pullback/retracements in a health trend. Also note that the lower Bollinger Band is situated just underneath this area as well ($129.38).
The Stochastic indicator is approaching an oversold level … people familiar with this indicator know that it is only good for use during Range trading and not in Trend trading. Therefore, as long as we are not about to take off in a trend move lower, it is flashing a buying area nearby.
The market internals chart above shows that while the volume of selling here today is larger than any seen last week, it is not at levels seen during the down draft in March.
The amount of declining-advancing issues is however at levels seen at the beginning of the March sell-off. My reading of this chart tells me to expect a bounce tomorrow or at the latest on Wednesday. My plan is to not guess when it will occur but to be ready when the market tells me it wants to bounce higher.
This last chart looks closely at the up/down volume … again after the 12:30pm 60-min candle was put in, it showed that today's level of volume for down stocks was not at extreme levels.
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