Market update Dec 24th,09

Finally we got above 1125 resistance, it's very positive to see S&P500 could come such a long way. Don't pay attention to the next couple days actions. Big institutions won't be active until January.

Real GDP

Real GDP dropped from 2.8% to 2.2%

Levels to watch in last days of 2009

I expect violent moves to the upside if S&P500 breakers 1120-1125 and stay above 1125 by mid-january. On the other hand if S&P violates 1085-1086 support, we should see a very violent move to downside. Let see what is going to play out.

LIBOR OIS 3M (USD SWAP)

LIBOR OIS 3M (USD SWAP) Chart:
Value: 0.15

S&P500 short term supports and resistances (12/07/09)

S&P500 in short term: extremely bought.
S&P500 in intermediate term: extremely overbought.
S&P500 in long term: neutral to partial overbought.

Short Term Supports:
S1:1097
S2:1086
S3:1078
S4:1066

Short Term Resistances:
R1:1114-1116
R2:1125
R3:1152
R4:1166

Weekly Jobles (11/3/09)

Initial jobless claims fell 5,000 to 457,000.Please note despite the Wall Street argument decline in jobless claims is due to shrinkage of job pole; not improving the employment.

S&P500 Weekly Forecast (Nov,10th,09)

We finished the last week in red as I expected, but it was not what I'd like to see. We moved up all week and we got the reversal on Friday.

Anyway we could move higher on Monday but S&P500 should finish the week in red. On the other hand if S&P500 moves above 1106 it will shoot for 1120-1125.
Lets see what is going to play out.

Real GDP Chart

Real GDP is 2.8 %
Year-on-year, real GDP stood at minus 2.4% compared to minus 3.8% in the second quarter.

Market update 11/22/09

Ok! We got the side way action last week as I anticipated. S&P500 finished where it started.
This week we should go down. We are very overbought.
Pay attention to 1073 it could act as support. If S&P500 moves below 1066 bulls are in trouble. On the other hand if we shoot higher the next pull back will be bigger.

The Importance Of 1100 For S&P500

S&P500 Technical Analysis chart:

We are at the critical levels. 1100 coincides with October high and the upper side the channel-1. If bears want to push the market lower this is the time to do it, but this week is Option expiration week therefore bulls should have the upper hand. It means we should move side way or slightly higher, but market is not rational so anything is possible. I would be in cash and wait to see what is going to play out.
On the other hand we are right above the diagonal support (see the chart in purple). S&P500 violated it 2 weeks ago but bulls managed to squeezed the short and by trapping bears caused a big short squeeze, so far they did it 5 times (see the chart blue cycles) , this game is getting too obvious. I don't know how long bulls could play this game, but Wall Street is famous in surprising investors. Since March market never staid over sold more than a couple days, this is one of characteristics of bull markets.

We got the consumer confidence data on Friday , it that was much lower than forecasted but big institutions managed to ignore the bad news and pushed the market higher. Recently we witness market rallies in face of bad news; this is not anything except market manipulation by big institutions. They had tough year in 2008 and they lost many clients therefore many did not participate in the rally until late May and they must play catch up therefore they try to finish 4th quarter positive to show to their clients that they did not fall behind, otherwise they must look for a new jobs.
Cheap dollar acts as carry trade it means investors can borrow in dollar very cheap and invest in other assets like commodities or stocks which pushes the price higher but when you look deep you see this is nothing more than asset inflation not the recovery that Wall Street is talking about.

The other week, we got the unemployment report. If you are one of my frequent readers you must seen the unemployment table that I posted the other week.
Here is the link:http://the-us-microeconomics.blogspot.com/2009/11/real-unemployment-is-175.html
It shows the real unemployment at 17.5% Wall Street crooks may fool average investors by talking about "jobless recovery", but there is no such a thing exist in real world. This is the creation of wishful minds of Wall Street that's all. Let’s see when this house of cards is going to fall apart.

S&P500 Short Term Supports/Resistances Nov/10/09

S&P500 in short term: extremely bought.
S&P500 in intermediate term: extremely overbought.
S&P500 in long term: neutral.

Short Term Supports:
S1:1071
S2:1066
S3:1051
S4:1030

Short Term Resistances:
R1:1100-1111
R2:1125
R3:1152
R4:1166

Related topics:
S&P500 Monthly Forecast Nov,2009

The Real Unemployment Is 17.5%

The real unemployment hit the 26 years high. Table above speaks for its self.

S&P500 Possible Moves In November 2009

S&P500 technical analysis:
Here is my monthly forecast. Last month I did very will lets see how does this month is going to play out.
I give 20% chance to rally up to 1090 then S&P500 should roll over, and just 5% chance of possibility of breaking out 1100.If we break 1100 S&P500 should runs out steam at 1125-1150.
If S&P500 moves lower to 1015 there is 45% chance of short squeeze, but if 1015 could not hold there is 30% chance we head as low as 1000 or even more.

Iranian anti-government protesters demonstrated

Some thought on market Nov/2009

There is so much damage has been done to market in a very short time that I don't think it's wise to jump back before S&P500 gets above 1066-1070. the support line that I mentioned in my previous post (1034) has held but I think we are going to finish this week in red. On the other hand due to over sold condition big short squeeze is not out of picture.

Volcker on the economy

Volcker interview with CNBC
http://cosmos.bcst.yahoo.com/up/player/popup/index.php?cl=16430655

Ted Spread as of (10/30/09)

Value: 23.60

S&P500 Short Term Supports (10/31/09)

We got the "dead cat bounce" that I mentioned in my previous post.
S&P500 volume was 50% higher than its average in down day, this is called institutional selling.
We are at a support (~1035) if it won't hold the next stop will be 1020 then 990-1000 which is 10% drops from high.
We could easily go down 10%; so far we dropped 5.8% we have 4.2% to go. Then we should wait to see if big guys are going to press buy button or not?

Don't be stupid and start to buy just because a support line held, wait for big institutions to start the buying frenzy then there is plenty of time for you to buy.

Some thought on Market

S&P500 has reached my October target 1100, and pulled back exactly at level that I forecasted a couple months ago. We violated many support lines, but technically we are due for a "Dead cat bounce" by end of this week, but it's too early to say if we are going to get it anything more than a bounce or not. Here is the link to October article: http://the-us-microeconomics.blogspot.com/2009/10/s-possible-moves-in-october-09.html
As you know consensus for 3Q GDP is 2.5 to 4 . It will be market mover on Thursday. Please note we must get above 1054-1066 very soon otherwise picture is going to become uglier. If big institutions want to move market higher they must push the S&P above 1050 on Thursday.

Related Topics:
S&P500 Possible Moves In August

Natural Gas Technical Analysis, (Part 5)

Natural Gas Chart:
Natural gas broke the down trend channel last month. It was very oversold and a technical rally was needed to normalize the price. On the other hand it found some problem to get above 5.20 seller were very active at $5.20 .
4.20 is the level to watch if natural gas moves below 4.20 it will damage the integrity of rally. If bulls push the gas above 5.5 it would be very positive. Note that fundamentals do not support natural gas price above $5.

UNG(United States Natural Gas) dropped below $11 if it fails to move above 11 with in next couple days bulls are in trouble. You are taking too much risk if you are a buyer at these levels. I would Wait for a pull back. Pay attention to 11.90 to 12.70 range, you should expect to see many sellers there.

Why weak dollar is not good for U.S. economy?

U.S. Dollar Chart:

Many economists argue that weak dollar is what we need, but I believe they are absolutely wrong . Consumer spending makes 70.9% of the U.S. GDP.

Where these merchandises come from? Obviously overseas.

What currency do American consumers pay with? Dollar.

What has happened to dollar? It fell significantly.

As you see lower dollar means more expensive merchandises for consumers, therefore their buying power decrease as dollar falls, on the other hand low dollar is not good for overseas manufactures their end cost increase due to increase in commodity prices and higher local currency make their production too expensive to export. If you would follow the economic data you knew that the U.S trade deficit decrease due to decreasing imports and some improvement in export due to cheap dollar. Changes in the level of imports and exports, along with the difference between the trade balance are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the dollar in the foreign exchange market.

The overall U.S. trade gap narrowed to $30.7 billion. In the latest month, exports improved by 0.2% while imports declined 0.6% . The shrinking of the trade deficit was due to a narrower petroleum shortfall which came in at $16.5 billion compared to $17.8 billion the previous month.

Foreign Central banks won't sit on their hands for ever and hope Fed to take action they manipulates their currencies as Chinese have been doing for long but problem is decline in dollar value is so steep that they can't catch up with it.

Manufacturing sector makes 12% of U.S. GDP therefore cheap dollar would not do that much for GDP. Actually it does more harm than help. Weak dollar has many negative aspects that is not the main focus of this article ,but it's good to point some. When the buying power reduce it means less production and less buying, Less buying result less tax for government. less government earring means bigger gap in deficits, Thus a vicious cycle could develop in which large deficits lead to rapid growth in debt and interest payments, which in turn adds to subsequent deficits and this vicious cycle will continue. Unfortunately Ben Bernanke does not see the danger down the road he bailout Zombie banks and printed big sum of dollar. He thinks he is smart enough to pull the trigger on time before things getting out of control, but if he was that smart, he should of seen the danger in 2006 and do something to stop the financial crisis; right?

Bernanke stuck in the mud he can’t raise the interest rate because it will kill the weak housing market, and if he keeps the rate low dollar will loose its value more and put the Treasuries in danger, because if foreign countries start to dumping our debt we are going to be in big trouble. I don't think they are going to do so ,but that is a possibility. He should of think about it before he started to bail out insolvent financial institutions like AIG, City group, and Wells Fargo… I hate to say that but we are heading the same path that Japan did in 90’s, they call it lost decade I’m afraid we end up to call next decade lost decade too.

This week, earnings would give some outlook on job

This week, earnings from several companies with deep ties to corporate payrolls, consumer demand and the labor market will show whether employers are hiring, firing or holding off on filling vacancies.

This recession has already seen more than 7 million lost jobs. That's because shoppers slowed their spending, bank lending froze and businesses cut back on capital investments. So cash-strapped companies slashed payrolls -- and benefits -- in order to curb expenses as sales dropped.

With lending and spending still weak, companies may not be ready to start hiring again anytime soon.

The unemployment rate in September was 9.8 percent, a 26-year high. Layoffs are slowing, but joblessness is expected to peak above 10 percent early next year.

"You're looking at really sluggish growth," said Joel Naroff of Naroff Economic Advisors. Economic activity could grow 3 percent or less for years to come, he said, and productivity gains mean companies won't need to hire many people.

Private economists predict that the unemployment rate won't drop to a more normal 5 or 6 percent until 2013 or 2014.

In order for them to fill vacancies now, employers need to see increasing demand -- higher sales -- for their goods and services from U.S. shoppers and businesses.

"There's a few positive signs, but there's still a shortfall in (corporate) profits from where they were a year ago or two years ago especially," said Jeff Bergstrand, an economist at the University of Notre Dame's Mendoza College of Business. "There's still a lot of cost cutting going on."

Here's a closer look at the companies reporting and what their results can tell us about the job market:

Monster Worldwide Inc.

-- Why it's important: Monster Worldwide Inc. is a popular help-wanted Web site. Because it's used by job hunters and companies looking to hire, Monster provides a broad view of the employment market.

-- When it will report: Thursday, Oct. 29.

-- What the experts say: Monster will break even in the third quarter on revenue of $216.7 million, according to analysts surveyed by Thomson Reuters. Those results would be down from profit of 35 cents per share on revenue of $332.2 million a year earlier.

-- You'll know the economy is improving if: Monster's revenue and earnings show that more companies are contracting with Monster to post jobs and gain access to job seekers' resumes.

"I think what we're going to see from a number of employment companies, including Monster, is that the worst is behind us," said Jim Janesky, an analyst for Stifel Nicolaus.

-- You'll know the economy is not improving if: Monster's results show that staffing remains stagnant as employers continue to balk at hiring. Employment typically lags economic recoveries as employers refuse to hire until they are confident an economic upswing is sustained.

-- The quote: "There has been a ... shift going on for 10 years, of movement from print to online. That movement has not overcome the headwinds that Monster and other employment companies faced when the economy declined and unemployment rose," said Stifel Nicolaus analyst James Janesky.

WellPoint Inc. and Aetna Inc.

-- Why they're important: WellPoint has more members than any other U.S. health insurer with more than 34 million people enrolled. It operates Blue Cross and Blue Shield plans in 14 states, including California, New York, and Ohio. Aetna is the third-largest insurer based on enrollment.

Health insurers have been hurt during the recession by employer layoffs, which reduce the number of people covered by employer-sponsored group health insurance. Some companies have cut benefits entirely.

-- When they will report: WellPoint reports Wednesday, Oct. 28. Aetna reports Thursday Oct. 29.

-- What the experts say: On average, analysts polled by Thomson Reuters expect WellPoint to post a profit of $1.37 per share on revenue of $15.15 billion for the third quarter. They expect Aetna to post a profit of 66 cents per share on $8.68 billion in revenue.

-- You'll know the economy is improving if: The number of people covered by their employer-sponsored insurance grows or falls less than expected. In the second quarter, WellPoint's commercial enrollment fell 2 percent. BMO Capital Markets analyst Dave Shove said he thinks it will fall another 3.5 percent in the third quarter. Aetna's commercial enrollment, which also includes individual policies, grew 8 percent in the second quarter.

-- You'll know the economy is not improving if: Enrollment in employer-sponsored plans falls more than expected. This could mean employers are still cutting jobs. UnitedHealth Group Inc., the second-largest health insurer based on enrollment, said last week that its commercial enrollment fell 6 percent in the third quarter.

However, insurance enrollment can be what economists call a "lagging indicator" because companies sometimes wait to cut jobs until they absolutely have to. In other words, long after their business started to tank. Now, employers may be waiting to make sure the economy has recovered, or that their business is improving, before they resume hiring.

-- The quote: "You're talking about the largest health insurer in the United States, and we've always felt this about WellPoint, it really is a proxy for what's going on in health insurance" said BMO Capital Markets analyst Dave Shove.

Apollo Group Inc. and DeVry Inc.

-- Why they're important: Apollo, which operates the University of Phoenix, and DeVry are two of the largest for-profit education providers. Both have had big jumps in enrollment throughout the recession as job seekers look to bolster their resumes. The for-profit sector has been able to open new campuses and offer more online courses to meet demand for career training.

-- When they will report: Tuesday, Oct. 27.

-- What the experts say: On average, analysts polled by Thomson Reuters expect Apollo to post a profit of $1.04 per share on revenue of $1.03 billion for the fiscal fourth quarter. Analysts expect DeVry to have a fiscal first-quarter profit of 65 cents per share on revenue of $417.1 million.

-- You'll know the economy is improving if: Enrollment growth slows. These career-oriented schools often attract the unemployed and underemployed, and they saw enrollment grow by about 20 percent this year as people lost jobs. A slowdown in new student growth could signal that companies are hiring again.

-- You'll know the economy is not improving if: Enrollment rises. If Apollo and DeVry report more increases in new students, and corresponding gains in profit, that's a sign the job market is still in bad shape. Also, if bad-debt expenses rise it's an indication that students may be unable to pay their tuition.

-- The quote: "While we may be near the end of this (enrollment) run, we do not expect the party to end so soon given continued sluggish employment trends." Jeffrey Silber, BMO Capital Markets

International Paper Co.

-- Why it's important: International Paper Co. is the world's largest maker of cardboard box materials and other writing and packaging materials. The recession chopped demand for these products as companies scaled back. IP has been closing and idling plants since 2008 and it will continue into next year. Last week the company said it will eliminate 1,600 positions -- nearly 3 percent of its current payroll -- as it brings capacity in line with demand.

-- When it will report: Wednesday, Oct. 28.

-- What the experts say: Analysts polled by Thomson Reuters expect International Paper to post a profit of 24 cents per share on revenue of $5.90 billion, down from 35 cents a year earlier on revenue of $6.8 billion.

-- You'll know the economy is improving if: International Paper says stockpiles of containerboard, the material that cardboard boxes are made of, are falling -- an indication that box makers think demand for containers that hold everything from tiny porcelain dolls to big refrigerators will increase.

-- You'll know the economy is not improving if: IP reports worse-than-expected demand or bulging inventories, which could indicate companies don't think consumer demand has strengthened enough for businesses to increase orders of goods.

-- The quote: "When we look at global economic conditions today, it appears the worst is behind us," CEO John Faraci said in late July. "We have not seen any signs of sustainable progress in North America, but it appears demand has stabilized at lower levels."

Amazon Real Rally Or Short Squeeze?

Amazon Technical Chart:

Amazon third-quarter earnings surged 68% on strong sales, led by strong North American media sales and the Kindle, which the online retailer called its "No. 1 bestselling item."
The blowout results surprised Wall Street and sent shares surging to their highest level this decade.

Amazon reported earnings of $199 million, or 45 cents a share, above year-ago earnings of $118 million, or 27 cents a share, and the average analyst estimate of 33 cents a share.
Net sales climbed 28% to $5.45 billion, above the estimate on Thomson Reuters of $5.03 billion. Currency translation shaved only a point from growth. In July, Amazon projected sales of $4.75 billion to $5.25 billion.
Electronics and other general merchandise posted a 44% sales gain, while worldwide media rose 17%. It caused a huge rally on very high volume, it's too early to say if it was a short squeeze or real rally, but I can't convince my self big institutions just start buying AMZN after 11 months rally with a 69.5X P/E, it simply does not make sense. 27.69% rally in one day is a humongous short squeeze and nothing else.

I try to look at AMZN as contrarian prospective there is some need to be concern.

1) Extremely high P/E (TTM) 69.5x, no matter how good is their earning it is unjustifiable.

2) Expanding triangle (in pink) on monthly base which is bearish formation.

3) Third completion of fifth wave, as you see in the chart AMZN is getting close to complete the wave "V" (Elliot Wave Theory) , it should get completed around $120-130. If it does that would mark the end of rally for AMZN.

On the other hand it broke 113 resistance therefore bulls could argue that it is a big deal, I agree but until AMZN retest it we can't say for sure that AMZN is going to hold it or not. If AMZN breaks the upper side the triangle but it fails to hold and drops back to triangle it would be very ugly for bulls, but if AMZN pulls back to 113 then bulls push Amazon higher it would be a new opening for Amazon.

AMZN is over valued and I would not be a buyer at these level . Many big institutions are in this trade and they can easily shoot the stock higher, just look at the Friday volume 58,305,777 it was 13.50% of total out standing Amazon shares, obviously big guys were very active and many caught short who had to cover their shorts. I don't feel comfortable to swim with big sharks, but I would go short Amazon if I see some weakness in near future.

U.S. Dollar Index Technical Analysis (Part-10)

U.S. Dollar Index Chart:
Dollar is bouncing around the last line of defence 75.25, it has formed the falling wedge that is very bullish, note fundamentals do not support stronger dollar ,but contrary to average investors bearish sentiment we could get short-squeeze. If dollar breaks support there is no major support until 73.97 . Note if dollar breaks 71.70 it would be very ugly.

LIBOR-OIS 3M Chart (10/19/09)

I post the LIBOR chart every fridays. Just type Libor in search box (it is located on top left corner). You will see all Libor charts.

Human right

S&P500 Short Term Resistances/Supports (Oct/18th)

S&P500 in short term: extremely bought.
S&P500 in intermediate term: extremely overbought.
S&P500 in long term: neutral.

Short Term Supports:
S1:1071
S2:1066
S3:1038
S4:1020

Short Term Resistances:
R1:1100
R2:1125
R3:1152
R4:1166

U.S. Dollar Index Technical Analysis (Part-9)

U.S. Dollar Index Chart:

Dollar could held to last line of defence 75.33-75.25, if dollar breaks it there is no support until 73.97 . Note if dollar breaks 71.70 it would be very ugly.

DOW JONES 10000!

DOW JONES hit the 10000, doctors recommended if Dow has erection and stays above 10000 for 4 hours or more please call 911 or see your doctor urgently, HA-HA ;-)

OK! lets get serious. Dow Jones 10000 does not mean anything from technical stand point. If Dow gets above 10300-10400 it would be very positive. In my opinion major level would be 1200 in S&P500, If we get above 1200 bears have to hibernate for very long time.

Here is two scenarios you decide which one makes more sense, I personally go with Elliot wave.

Elliott Wave Analysis, Bearish Outlook (Part-3) originally posted in August 28, 2009:

DOW JONES Inverted head and shoulders, originally posted (July 25, 2009):
Bullish scenario, Inverted Head & Shoulders Pattern

Banks Earnings: Just a Mirage?

Ken Kam CEO of Marketocracy on why laxed accounting laws are falsely propping up banks' balance sheets.




This is what I have been saying since April. FASB relaxed the mark-to-market accounting rules that allowed banks to not report their losses and come with these fictitious earnings. Please see my April 4th article "The End of Mark-to-market Accounting Rules End of Transparency Era"
http://the-us-microeconomics.blogspot.com/2009/04/mark-to-market-accounting-rolls-end-of.html

S&P500 short-term support/resistance (oct 14th)

S&P500 in short term: extremely bought.
S&P500 in intermediate term: extremely overbought.
S&P500 in long term: neutral.

Short Term Supports:
S1:1058
S2:1033
S3:1020
S4:990

Short Term Resistances:
R1:1100
R2:1125
R3:1152
R4:1166

TED Spread Chart

Interview with Jospeh Stiglitz on recovery

Interview with Jospeh Stiglitz a professor at Columbia University. He is a recipient of the Nobel Prize in Economic(2001) and the John Bates Clark Medal (1979).

August Trade Data Show A Modest Improvement

The U.S. international trade deficit shrank in August due to lower oil and consumer goods imports. Petroleum import was $16.5 billion compared to $17.8 billion the previous month. on the other hand the non petroleum gap expanded to $24.3 billion from $23.6 billion in July. Overall, the August trade data show modest improvement in real terms. To me drop in imports reflects the U.S. economy stuck in the mud and there is a long way to go before we could say we are out of recession. Exports however, did rise due to weak dollar, largely on industrial supplies, services, and auto shipments to Canada. The U.S. trade gap narrowed to $30.7 billion from a revised $31.9 billion in July. Exports improved by 0.2% while imports fall by -0.6% ,please note drops in import shows a very weak consumer consumption.

Exports were up 0.2% .
Goods exports -1.6% .
Imports improved to -28.6% from -30.3% the prior month.
Price of imported oil rose to $64.75 per barrel from $62.48 in July.
Year-on-year, overall exports rose by 6.75% to -20.7% from -22.2% in July while imports improved to -28.6% from -30.3% the prior month.

Technicals look perfect to continuation of rally, to me +60% rally look bubbly ,market priced for perfection and fundamentals could not justify the rally ,but as you know market is irrational, therefore enjoy the rally while it lasts.

Fed Quantitative Easing

S&P500 Possible Moves in October 09

S&P500 Monthly Perdiction Chart:
Pay attention to 1066, if S&P500 moves above 1066 it could shoot to 1100-1120, on the other hand if S&P500 drops bellow 1015 it would heads for 960 or lower.

S&P100 Possible Moves in October

S&P100 Technical Chart:
October would be hard to predict due to earning season, but here is my monthly forecast for S&P100. Note S&P100 reached my July 23rd articel's target (500)and pulled back. If it moves above 500 level it would be very positive my bullish target for S&P100 would be 517 on the other hand if S&P100 drops bellow 475 it should move at least as low as 450.

U.S. Dollar Index Technical Analysis (Part-8)

U.S. Dollar Index Chart:
I make it short and right to the point, chart speaks for itself. The U.S Dollar held to 76.15 support, failure to hold to ~76.15 for a day or two means dollar will head lower. Next level to watch is 75.33 support.If dollar breaks 76.15 support equity market will move higher.

Shanghai Composite Index Technical Analysis

Shanghai Composite Index Chart:
Pay attention to diagonal support line (in purple), if Shanghai index violates it, Chinese stock market will be in a big trouble. Shanghai index would be the canary in a coal mine for the U.S. equity market.

Robot war

TED Spread hit 5 years low

TED Spread Chart:
You might know the Ted Spread definition, but just in case I explain it to you. The Ted Spread is the difference between the risk-free 3-month T-bill interest rate and 3-month LIBOR, and is considered to be a indicator of the overall amount of perceived credit risk in the economy.

Recently TED Spread made a new low. It was the lowest level in 5 years. Many analysts interpret it as a positive signal, but to me it's the signal of bubbly market and too much optimism and investors wishful thinking that it does not reflect the reality. Considering Option ARM tsunami in 2010-2011, commercial real estate, credit card delinquencies and many other bumps in the road it's naive to think everything is fine and good days are back. In general Ted Spread is not a very reliable indicator when there is too much Fed intervention in market.

S&P500 short-term support/resistance:

S&P500 in short term: over sold.
S&P500 in intermediate term: extremely overbought.
S&P500 in long term: neutral.

Short Term Supports:
S1:1017
S2:990
S3:972
S4:950

Short Term Resistances:
R1:1040
R2:1152
R3:1166

LIBOR-OIS 3M (USD) Oct 2nd

I post the LIBOR chart every fridays. Just type Libor in search box (it is located on top left corner). You will see all Libor charts.
LIBOR-OIS 3M (USD) Chart:

Jobless Recovery!!! HA-HA

I make it short and right to the point. There is nothing like "jobless recovery" exist in real world, this is the creation of wishful sick minds of wall street crooks. When 70.9% of the U.S. GDP is consumer consumption you can not recover in a couple months while real unemployment is above 17%. Recovery will be sluggish not "V" shape. It's laughable when talking heads in CNBC talk about "jobless recovery" and new bull market.

Pay Attention To 1066

S&P500 technical analysis chart:

S&P500 could not close above 1066. We had fake out for a couple minutes then S&P500 pulled back. If bulls push the market higher than 1066 you could jump back. If S&P500 fails to take out 1066 you should go to cash, for natural bulls readers I recommend to get out if S&P500 drops below 1040. I'm short, but I will get out if S&P500 closes above 1080.

NASDAQ Forecast End-month Updare (Sep)

NASDAQ Technical Analysis:
Nasdaq reached my September target and pulled back at levels(2155-2160) that I mentioned in my monthly forecast. As you see in the chart 2155 acted as support in March and July 2008 and became strong resistance in September 2009. Pay attention to 2016 if Nasdaq break the up-trend (see the chart in dart blue)then drops below 2016 bulls should be very concern.

Related Topics:
NASDAQ Forecast End-month Update (Aug)

U.S. Dollar Technical Analysis (Part-7)

Dollar could find the bottom, about 76.15 . A couple minutes ago dollar broke through the short term resistance (77.08-77.11) , it would be very positive if dollar could stay above it. Pay attention to 77.11 it's the level to watch.

Some Thoughts On Recent Market Move

In the last two days we witnessed profit taking and institutional selling, Please pay attention to 1050-1040 if S&P500 breaks these levels you should be very concern, and go to cash.
If this rally wants to continue S&P500 must move above 1066 . As you know NASDAQ is the leader in this rally it has failed to stay above 2155. If you take a look at NASDAQ chart you will see 2155 acted as major support back in July and March of 2008. As I anticipated 2155 should be the top. It becomes major resistance " NASDAQ Forecast End-month Update (Aug) ".You should keep an eye on 2155 if bulls have any steam left they must push the NASDAQ above 2155.

Please note My forecast in regard of the U.S. dollar hitting the bottom seems to become reality " U.S. Dollar Technical Analysis (Part 5) ". If dollar start to move higher we should see a huge short-squeeze in dollar, and sharp drop in equity market. Pay attention to 77.11-77.20 as possible resistance for dollar.

Retails At Major Resistance

XRT technical analysis:
Retail ETF failed to break the major resistance. It is extremely over bought but it would be very positive if bulls win the war and push the "XRT" above ~35.
Please note due to weak job market and consumer deleveraging, retail sales would be weak for a while, therefore fundamentals could not justify the retail sector rally.

U.S. Dollar Made A New Low After Hours

U.S. Dollar Index:
U.S. dolllar made a new low. it broke the 76.15 resistance and then in after hours made a new one year low. Dollar moves lower is the only explanation of equity rally in last couple days. If dollar won't get above the 76-76.15 soon we are in a big trouble.

S&P500 Short Term Supports/Resistances (09/22/09)

S&P500 in short term: extremely overbought.
S&P500 in intermediate term: extremely overbought.
S&P500 in long term: neutral.

Short Term Supports:
Mjor support:1066
S1:1057
S2:1040
S3:1015
S4:990

Short Term Resistances:
R1:1074
R2:1120~1130
R3:1160

LIBOR OIS 3M (USD) 09/21

LIBOR OIS 3M (USD) Chart:

The U.S. Futures Market

Futures North & Latin America:

Marco Dion on the U.S. rally

Marco Dion, quantitative analyst at J.P. Morgan, says the most debt-ridden firms have led the rally in European and global stock markets, while momentum strategies have struggled.

Hundreds of thousands of iranian protesters came to streets

Its first big anti-government demonstration in two months, despite strenuous efforts by the regime to thwart it.

The opposition turned Quds Day, Iran’s annual show of solidarity with Palestinians, into a protest against President Ahmadinejad’s re-election in June and the suppression of dissent that followed. Many wore green bands to indicate support for Mr Mousavi the opposition leader. Protesters chanted dead to dictator,they shouted slogans in support of Mousavi, Ahmadinejad's main challenger in the June 12 election, they gathered in major squares around the capital before heading to the university.

Tehran




Isfahan Sep,18th


Tehran

Avoiding the Traps

People's emotions lead them to make bad financial moves in chaotic times. Here's what to look out for.
In a chaotic bear market like this one, it's easy for investors to fall into traps.
They might scramble to make trades based on the latest news reports. They might search for a miracle stock that will pay off big and let them recoup all their losses. Or they might go in the other direction -- and get so scared of the market that they don't make any moves at all.

"I believe that the frequency of irrational investor behavior goes up along with market volatility," says Chris Blum, head of the U.S. behavioral-finance group for JP Morgan Funds in New York, which studies how people's emotions affect their financial decisions.
Fortunately, a bit of logic and common sense will keep you clear of these pitfalls. Here's a look at some common missteps -- and how to avoid them.

The Value Trap: A chaotic market makes it easier for investors to convince themselves that because a stock -- or a sector or a market -- is cheap, it's a great value. Sometimes, though, there's a good reason that a stock or sector is cheap: It's in trouble. You need to look past the share price or valuation and examine the fundamentals of the company, the industry and the economy before you decide that something is a bargain.
"Within industries, not all companies are created equal; some will fare better than others," says Mr. Blum. It's through research, not instinct or stock price, that investors discover the real values, he adds.

The Risk Trap: One reason investors are so vulnerable to the value trap is that another force is at work -- the urge to recoup losses. Investors who are desperate to make back some of what they have lost and return to "normal" are more willing to take outsize bets on individual stocks or narrowly focused exchange-traded funds.
But that approach is even more unlikely to work in this market environment; the combination of the credit crunch and the recession have made the stock market dangerously volatile. A concentrated portfolio is especially risky, advisers argue.
Investors can't accept that individual stocks, or stocks overall, aren't likely to deliver a reliable stream of double-digit profits each year as in the past, says Bill Schultheis, a partner at Soundmark Wealth Management LLC, a financial-planning firm in Kirkland, Washington.
To combat the risk trap, Mr. Schultheis spends a lot of time preaching the virtues of investment basics like diversification and building returns steadily through compound interest and dividends.

The Scapegoat Trap: Like the children in humorist Garrison Keillor's Lake Wobegon, people believe they are all above average -- at investing. Overconfidence makes it easy to blame your financial adviser for your outsize losses last year, and to think you'd be better off making the big decisions yourself.
But that attitude ignores a basic fact: In this market, nearly everyone is in the same boat, more or less, regardless of who's managing their money. Ditching your professional help and going it alone is a bad idea.
"There are certainly some financial advisers out there who weren't good at what they did, but the worst mistake someone can make is to fire that individual and decide to do it all themselves instead of finding someone better," says Mr. Blum.
The reality, he says, is that few investors have the time, patience or expertise needed to develop asset-allocation plans and manage diversified portfolios. "Firing a specific adviser may be rational; deciding to be your own financial adviser probably isn't," he says.

The Paralysis Trap: The market debacle has left many investors too terrified to act at all, whether to sell portfolio holdings to limit losses or take advantage of what may be appealing long-term investment opportunities. Some advisers report clients in their 30s and early 40s shunning stocks altogether, when the real risk that they face is likely to be inflation -- which may eat up their money if they keep it out of riskier investments that are likely to trounce rising inflation rates over the next decade or two.
"The chance of suffering more pain is so intense that they can't imagine a world that will be better," says Joe Sheehan, a partner at Moneta Group, a wealth-management firm in St. Louis. "Two years ago, they would have jumped at the chance to buy more of stocks they already owned at these low prices; now they are frozen in place and won't respond."
Mr. Sheehan tries to persuade clients of a simple fact: The world hasn't changed dramatically enough to justify paralysis. "About 90% of Americans are still employed; the S&P 500 is not going to zero," he says.
Mr. Sheehan finds himself pointing to psychological studies showing that people tend to rely too heavily on what has happened in the recent past when it comes to predicting the future. "That's one reason we're in this mess in the first place," he says.
Among other things, he notes, investors and homeowners believed that housing prices could only go up -- leading to the bubble that got millions of homeowners in horrible financial trouble.

The Comfort Trap: "When people are fearful, Wall Street comes out with a product that tries to make you feel good by promising you safety," says Andrew Mehalko, chief investment officer of GenSpring Family Offices LLC in Palm Beach Gardens, Florida.
For instance, Mr. Mehalko expects one of the hottest-selling products this year to be principal-protected notes, just as they were after the bear market of 2001-02. While these vehicles -- which promise to preserve your principal investment -- may provide reassurance, they often also come with hefty fees and can sharply limit your upside potential.
As a general rule, a low-risk strategy will produce minimal returns. So, while you may feel the urge to lock up all your capital in ultrasafe strategies, you need to be prepared to invest some of it in riskier products.
Meanwhile, Mr. Sheehan reports that some of his clients have even developed an aversion to mortgages. That may be rational for people with no nest egg or a job that's at risk, but it's not something that everyone should be worrying about.
"It's not logical at all," he says, because some have relatively little mortgage debt relative to home value, hold long-term fixed mortgages at the relatively low rate of 5% or so and gain from the tax deduction for mortgage interest.
Yet "all they want to do is pay off that mortgage," to get rid of "this toxic thing -- a mortgage," he says.

The Chasing-the-News Trap: If you're a financial-news junkie, it's tempting to try to react to each twist and turn of the market. But the best thing you can do is turn off the news, put the remote control down on the coffee table and step away from your television set.
In times like these -- an almost unbelievably volatile stock market, a distorted bond market and an economic meltdown -- newshounds can do tremendous damage to their portfolios. Trying to judge exactly the right moment to get into the market -- and then jump out again a day or two later -- is likely to leave you with big headaches and outsize trading expenses.
An "atmosphere of constant, breathless hysteria" isn't conducive to making smart investing moves, says Carol Clark, an investment principal at Lowry Hill, a wealth-management firm in Minneapolis. "That's not what long-term investing is all about.
"Many of those [300-point] interday moves simply don't make a lot of sense in the first place, so how can it be sensible to try and respond to them?" she asks.
Instead of acting on every new development, it's better to look past the noise and invest small amounts regularly, an approach known as dollar-cost averaging. A strategy based on a solid asset-allocation plan and dollar-cost averaging is more likely to lead to sustainable gains over the longer haul.
Ms. Clark offers one final observation. Usually, investors find themselves in traps "because your emotions have run away with your logical thinking," she says. "You need to find ways to start thinking logically again."
Sometimes it helps to do something as simple as making a list of your investment goals and putting it on the refrigerator. Whenever you're tempted to act impulsively in response to something you see on television or hear from a friend at a dinner party, you can go back to that list and remind yourself that yanking money out of the market may not be the best strategy.
"Then, when you feel an urge to turn on CNBC, you train yourself to look at the list instead," she says.

Weekly New Jobless Claims (Sep,17th)

The current level is 545,000. Bulls might argue that this is a fantastic number,but they are confused because they don't pay attention that jobs pole shrinked significantly due to heavy layoff in last couple months and comppanies fired employees on a unpresented rate. unless the retails sales won't be as good as economist anticipating we should not see expolntinal growth in unemployment. but if retail sales faille to satizfy the expectations we should see the second round of layoffs. Continuing claims increased 129,000. this very bad news, because it shows people have tough time to finding job.

U.S. Dollar Technical Analysis (Part 5)

U.S. Dollar Chart: The U.S. dollar is bouncing around ~76 for a last couple days. If dollar stays above the 76.15 it could move higher. I believe dollar is at the intermediate bottom, yes you heard it right I said it. On the other hand failure to hold to ~76 means dollar will head lower. Next level to watch is 75.33 support. As you see in the chart dollar has been moving lower in last couple days, I believe this the only logical explanation for recent rally in equity markets. Please note that if I read the tape incorrectly and 76 fails to hold dollar will drop to 73-72 level.

1066 Key Level For S&P500

Pay attention to 1066. As I mentioned in my previous posts it's the key resistance, if S&P500 could stay above it by next week, bulls have a good chance to push the S&P to 1125

Retail Sales

Retail store sales chart:

Real retail sales excluding motor vehicles and gasoline was 0.6%:

We got the retail store sales on Tuesday.
It jumped 2.7% in August, following a revised 0.2% drop the previous month. The gain in August was above economists expectation for a 2.0% surge. Thanks to 3 billion dollars government subsidies auto sales jumped a huge 10.6% for the latest month, but here is the catch excluding motor vehicles, retail sales rebounded 1.1%, following a revised 0.5% fall in July. The market was looking for a 0.4% gain for August.Please note gasoline sales spiked 5.1% on higher prices otherwise the retails sales data would be much lower, excluding motor vehicles and gasoline, retail sales posted a 0.6% advance, following a 0.4% decrease the previous month.

Overall retail sales on a year-ago basis in August were down 5.3 percent, improving from down 8.5 percent in July. Excluding motor vehicles, the year-on-year rate rose to down 6.2 percent in August from down 8.6% the month before. Please note that August is the month that people go to shop for school and we should see a jump in retail sale, but it was 8.6% down year to year.
As long as S&P stays above 1007-1015 we are technically in the bull market, but fundamentals is very weak and can't justify the rally. As you see in the chart above Year to year retail sales is badly lower, I need to remind my readers last year at this time we were in the edge of collapse, but despite the +50% rally the retails sales does not show a strong improvement. Actually year to year we were 6.2% lower. If I want to base my analogy on fundamentals this rally would be a humongous bear market rally not a new bull market.

If you believe we are in bull market you should know you are trading base on pure technical, but I would go with fundamentals.

CNBC Interview With Roubini

I highly recommend my readers to watch the CNBC interview with Roubini on financial crisis. He thinks we are going to get "U" shape or "W" shape recovery..

http://cosmos.bcst.yahoo.com/up/player/popup/index.php?cl=15550007

Green Shoots Of Economic Revival!

S&P500 Resistances & Supports (Sep 14nd)

S&P500 in short term: extremely overbought.
S&P500 in intermediate term: extremely overbought.
S&P500 in long term: neutral.

Short Term Supports:
S1:1029
S2:1026
S3:1015
S4:980

Short Term Resistances:
R1:1048
R2:1050
R3:1066

Copper Technical Analysis

Copper Chart:
What could determine long copper price?

1)Incremental cost of supplies.
2)Supply and demand.
3)Price dynamics – impact on supply and demand.
4)Adverse effects of Dollar value on commodities prices.
5)Availability of money to finance projects.
6)Demand response to price.

Copper is tight to global growth, but in recent weeks it failed to stay above the major resistance (40.60) . If copper heads lower in coming days, it would be a warning signal for bulls. To me copper is the canary in a coal mine, if speculation of strong recovery begins to faint, it should reflect in copper price first.

There are 3 resistances that you should pay attention to:
S1: 37.80
S2: 33.44
S3: 28

Please note that copper is the consolidation phase as long as it moves in 38 to 41 range. On the other hand if copper could move above 41.16 it has potential to shoot higher. Note that dollar value is declining that should cause the commodities to move higher but copper did not follow the normal trend, it follows the recovery story. If the recovery becomes a mirage you should witness big drop in copper price.

4 Major Resistances In S&P500

We have 4 major resistances:

1: 1050 October,08 rally.

2: 1066, if S&P get above it would be very positive and we could easily shoot for 1120.

3: 1120-1125 it should act as strong résistance, if we move above it next stop will be 1225.

4: if S&P break through the 1225 we will not go down for couple years.

The U.S. trade deficit

The U.S. trade deficit in July worsened significantly and oil had only a little to do with it. Businesses appear to be gambling on recovery actually happening as nonoil imports spiked. The overall U.S. trade gap worsened to $32.0 billion from a revised $27.5 billion gap in June. The latest deficit was notably more negative than the consensus estimate for $28.0 billion in red ink. The good news is that exports posted a gain of 2.2 percent after a 2.1 percent increase in June. However, imports jumped 4.7 percent after a 2.5 percent rise in June. The worsening in the trade deficit was due to a wider nonpetroleum goods deficit which grew to $23.5 billion from $19.8 billion the previous month. Import gains were widespread but led by autos and consumer goods. The jump in auto imports likely was related to the cash-for-clunkers program. Imports of capital equipment also rose sharply, indicating that businesses are starting to look ahead for upgrading production facilities as the economy rebounds. Meanwhile, the petroleum gap grew to $17.9 billion from $17.3 billion the previous month. The wider petroleum deficit was due to both higher oil prices and more barrels imported. Crude oil prices jumped to $62.48 per barrel from $59.17 in June. The number of barrels that was imported in July rose 5.7 percent. Nonetheless, the widening in the oil deficit was far less than that for the nonoil gap.Year-on-year, overall exports improved to minus 22.4 percent from minus 22.7 percent in June while imports edged up to down 30.4 percent from minus 31.3 percent the previous month.Today's trade report showed a spike in the trade deficit partly due to cash-for-clunkers but businesses still anticipate demand to be up for consumer goods excluding autos and for capital equipment. And manufacturing is getting a boost from exports. Overall, global trade is warming up a bit and that is good news.
Market Consensus Before AnnouncementThe U.S. international trade gap had both good news and bad news for June. The overall U.S. trade gap widened to $27.0 billion from a revised $26.0 billion deficit the previous month. Exports advanced 2.0 percent while imports rebounded 2.3 percent. Part of the bad news was that consumers were paying more for oil products. The widening in the trade shortfall was due to a wider petroleum deficit which expanded to $17.2 billion from $13.3 billion in May. In contrast, the goods excluding petroleum gap shrank significantly to $20.0 billion from $22.6 billion in May. Behind the boost in the petroleum gap were both higher oil prices and more barrels imported. But the good news in June was the 2.0 percent gain in exports. This was good news for U.S. manufacturers.

New Weekly Jobless Claims (Sep,10th,2009)

New Weekly Jobless Claims Chart:

Why Can't Federal Reserve Bank Stop Deflation ?

It's no surprise that this opinion is so popular. Well-written articles by qualified experts appear all the time, arguing that the Federal Reserve Bank has already "stopped the bleeding" and "saved the day."

First of all, between October 2007 and March 2009, the DJIA lost 58%, high to low. If 58% of your house burned to the ground, would the same experts be saying that the fire crews "saved the day"?

More importantly, in our opinion everyone who says that the Fed is in control overlooks one key point: social mood.

Conventional economists look at deflation in a very cause-and-effect way: stocks fall, the economy follows, investors and consumers lose confidence, and so on. Now that the Fed has "restored the confidence," the process gets reversed. I have long argued that this is not how it works.

Bob Prechter, EWI's founder, takes five chapters in his prescient Conquer the Crash -- which predicted deflation long before it became mainstream news -- to explain social mood's primacy. Here's an excerpt from Chapter 13, "Can the Fed Stop Deflation?":

In contrast to the assumptions of conventional macroeconomic models, people are not machines. They get emotional. People become depressed, fearful, cautious and angry during depressions; that’s essentially what causes them. A change in the population’s mental state from a desire to expand to a desire to conserve is key to understanding why central bank machinations cannot avert deflation.

When ebullience makes people expansive, they often act on impulse, without full regard to reason. That’s why, for example, consumers, corporations and governments can allow themselves to take on huge masses of debt, which they later regret. It is why creditors can be comfortable lending to weak borrowers, which they later regret. It is also why stocks can reach unprecedented valuations.

Conversely, when fear makes people defensive, they again often act on impulse, without full regard to reason. When lending officers become afraid, they call in loans and slow or stop their lending no matter how good their clients’ credit may be in actuality. Instead of seeing opportunity, they see only danger. Ironically, much of the actual danger appears as a consequence of the reckless, impulsive decisions that they made in the preceding uptrend. ...Corporations likewise reduce borrowing for expansion and acquisition, fearing the burden more than they believe in the opportunity. Consumers adopt a defensive strategy at such times by opting to save and conserve rather than to borrow, invest and spend.

Anything the Fed does in such a climate will be seen through the lens of cynicism and fear. In such a mental state, people will interpret Fed actions differently from the way that they did when they were inclined toward confidence and hope.

If people and corporations are unwilling to borrow or unable to finance debt, and if banks and investors are disinclined to lend, central banks cannot force them to do so. During deflation, they cannot even induce them to do so with a zero interest rate. That’s what has been happening in Japan for over a decade, where rates have fallen effectively to zero but the volume of credit is still contracting.

Thus, regardless of assertions to the contrary, the Fed’s purported “control” of borrowing, lending and interest rates ultimately depends upon an accommodating market psychology and cannot be set by decree.

In other words, you can lead the horse to water, but you can't make him…err, borrow. Which is the exact environment we've been in for the past two years: Banks won't lend and consumers won't spend. This will not change until social mood really improves.

S&P500 Possible Moves In September 2009

S&P500 Monthly Forecast:

Broadening top pattern still intact as long as S&P500 would not violate 1050-1066. I'm looking for consolidation in weeks to come, not a huge move in neither directions. Note drops below 950 is the game changer. So far bulls have the upper hand Unfortunately I don't have a crystal ball, but I think this bear market rally is overdone and soon we should see a nice pull back. Despite the all nosies in TV about new bull market I don't see S&P has enough steam left to take out the 1130-1200 this year.
I wend short when S&P500 was at 1035; I covered most of my short positions on Sep 1st, and I moved to the side line. I'm looking for a good entry to go short again.


Related Topics:
S&P500 Broadening Top Pattern

Home Builders Technical Analysis

Home-builders got close to upside the main channel. It tried to breakout 3 times and every single time it failed and pull back hard,it would be very interesting to see if bulls could push it higher, please note that fundamentals do not support higher price. I already went over fundamentals therefore I'm not going to repeat myself. Keep an eye on $16 if XHB could move above it; there would be some hopes for bulls to the move the XHB higher.

Employed and unemployed persons by occupation, not seasonally adjusted

Employed and unemployed Table:

I don't need to add anything it speaks for itself.

LIBOR USD 3M

Ted Spread Chart (Sep 2nd)

Value: 20.22

S&P500 Resistances & Supports (Sep 2nd)

S&P500 in short term: overbought.
S&P500 in intermediate term: extremely overbought.
S&P500 in long term: neutral.

Short Term Supports:
S1:965
S2:950
S3:890
S4:880

Short Term Resistances:
R1:1007
R2:1015
R3:1039

NASDAQ Forecast End-month Update (Aug)

Here is the update of my monthly forecast. It worked very well. I should tap myself on shoulder :)

We are above the main channel, it would be interesting to see if bulls can push the market higher or not? If NASDAQ drops into the main channel bulls are in big trouble. On the other hand if NASDAQ stays above the main channel it could move higher in the uptrend channel(see the chart in dark blue). My bullish target will be 2160-2155. I need to remind my readers that I'm not bullish, but tape look very good as long as we stay above the main channel . Please note this forecast is based on technical with no fundamentals to support, I'm looking for some difficulty at 2160, we should see bears get very active soon.