City Of Vallejo, CA - Files Bankruptcy
May 24, 2008 10:51 AM
I have mentioned that the problems in the U.S. are fundamental - not cyclical, and that is why I believed the market was dead wrong to rally on the presumption that this economic “downturn” would be short lived. This isn’t a cyclical downturn, it is a fundamental problem of debt to income and real wages going negative. This is the first fundamental - not cyclical - problem the U.S. has faced at least since the 70’s, most likely the 30’s.
This simple fact was reflected in the recent filing for bankruptcy by Vallejo, CA, a suburb of San Francisco. While nobody would contend that anywhere within 100 miles of San Francisco is an epicenter for financial or moral sanity, this is most likely the first of many. In fact, entire states will face financial crisis eventually because of many of the same reasons - ballooning state employee and pension costs. Most states are hiding the fact that they are hundreds of millions in the hole on their state funded pensions because they do not have to use the same accounting standards for disclosing pension liability that public companies do. So get ready for more of the same.
This also underscores the recent myth that employment “growth” has been holding up. The only real growth in jobs in the last year, possibly the last decade, has been the so called “service” sector and government. The service sector includes such glorious jobs as delivering pizzas and Walmart greeters. This is why I have long contended that this nonsense of our evolotion to a service economy is total and complete nonsense. The second area of job growth has been government. This cannot sustain itself and will eventually lead to an economic crisis. We simply cannot continue to grow goverment at 2-3 times the growth rate of the economy and not have serious consequences - and soon. The required tax burden will eventually implode the economy under it’s own weight.
Avoid The Hype On Oil and Oil Stocks - Key Number On Oil: 130.50
May 23, 2008 8:37 PM
As I have mentioned, the hype on oil and energy related stocks has become extreme. Someone will eventually be holding the last card on this nonsense, I just do not know when. WLT is extremely overvalued by any measure. Anyhow, i never have traded oil, but oil needs to clear $130.50 to the downside and we should see a possible severe spike lower if that occurs. That could give the market a “relief bounce” next week.
StockBlade Call To Sell UPS - Plunges Today
May 23, 2008 7:50 PM
Well our call to sell UPS has worked it’s magic - again. Down big today on huge volume. I mentioned that “I expected lower once $69.60 clears and that $68.36 is a MUST hold”. Once it pushed through $68.36 it plunged on big volume.
Never underestimate the power and significance of my numbers…. They allow you to not look like this on day end…
Crazy Day: Oil, Oil, Oil
May 23, 2008 4:20 PM
The market was VERY difficult to trade. It was all about oil. It looked like we put in a very solid low, it rallied 4 plus points off it, i was long near the low…and BAM…oil spikes a dollar and down she went…oil fell…and market came back…etc. etc. etc. You needed 4 eyes to trade, two on the market, and two on oil…
Once oil closed, the market traded like it “should”. We put in a reversal low off 1374 and it rallied to 1381.50. Since we did not have time anymore to close positive, I expected a reversal short…and it came right there. THAT is the normal pattern for a trend day - a failed attempt to rally below the intial high. If the initial low had held, we may have gone positive on short covering as we had plenty of time at that point.
The market is still “ok” here unless we clear 1370.75 next week and cannot reverse. I still believe the monthly close is key - to avoid panic.
I Called Early Low: If that Is Today’s Low, We Are Going Positive…IF
May 23, 2008 12:07 PM
I called the low and said watch out for a reversal attempt here….bingo…. It is a little early to know yet…but I smell an attempt at finishing the day positive…There are two likely possibilities here…either we will take out todays low late and this may get very, very ugly…or we are going positive…
We Have To Finish Positive
May 23, 2008 10:37 AM
We have to finish positive today to turn the trend. If we cannot, then be skeptical of all moves higher today. 1383 was cleared and we spiked lower once that cleared. 1383 only has major significance going forward if we cannot finish the month above it. We have the 1371.50-1370.75 range next to the downside.
Tomorrow: Only News Is Existing Home Sales At 10:00
May 22, 2008 11:09 PM
Tomorrow may be difficult to trade because i normally do not trust advances without a forceful rejection of a new low first. Today was anything but forceful and strength was sold. It looked like were going to push through the high and run to 1408 area, it bounced exactly of the high of 1399.50, sat there, and boom the shorts came once it couldn’t clear in and it made a double top.
Anyhow, I am still very skeptical gains can hold long term to break the selling, but I still believe they are going to try and close May above 1383. They know that is they can’t, the market could be in big trouble so I expect an effort to do so.
I Am Not Convinced
May 22, 2008 10:08 AM
The big picture is I am not convinced on any level that we can hold any gains made today. Normally any gain without making a new low first I consider a bounce and nothing more. Be careful in this 1396 range. We have to hold above that to have any chance of making an attempt at 1400. I am skeptical, at best longer term, but we may try and hold 1383 - for today.
Morning Call: Here We Go: 1383
May 22, 2008 8:19 AM
We need to reverse and hold at the open. We made a low of 1388 Yesterday. The problem is if we do not make a new low and then go up, I will be very skeptical we can hold it going forward. Futures are at 1392 currently. I was correct yesterday that we should go “higher before lower” as it eventually made a high of 1415.75 before the FMOC relaease. It made a reversal there, took out the original low of 1408 post FMOC and the rout was on.
Trading “Indicators”, MACD and Stochastic Debate
May 22, 2008 1:40 AM
I would guess that at least 90%, probably over 95%, of all traders/investors that are not professionals look at a myriad of indicators. The most common are the MACD and Stochastic. There are at least 25 or 30 so called indicators that allegedly assist people in trading and investing.
If you notice, most of my calls have been correct. Even when not correct, I provide an exit number. Do I look at MACD? No. Stoch? No. Bollinger Bands? No. Any other of the zillion so called indicators? No.
Think of it this way. Here is a fundamental question about the market. What causes the MACD or Stochastic to “cross” long or short? The professionals were in the trade LONG before, and these indicators represent what they have been doing far after the fact. Essentially, they allow you to try and piggyback their trades later on.
Today should provide some clarirty to this issue. I said near the pre-fed lows today “1407.25 needs to hold here”….then said ”I am long 1408.50 to see if we are going to hold it” and it rallied 5 points. Was the MACD crossed big time short at 1408.50 on the almost all the charts? Almost no question. Did I care? Not in the least. I didn’t care if it was crossed short, pointed straight up, down, sideways, or in the shape of a flag or continent. We had to clear 1407.25 and I was long above it. Period.
Damn I give away a lot of information for free…. I think I need to set up a donation box…a VERY large donation box….
-
Recent Commentary
- Site Update: It Has Been Fun, But Closing It
- Morning Call: Open Sold
- Market Recap: GM News Was Not Really A Deal, Dow Low Cleared Late and Down She Goes
- Morning Call: Open Sold, Dow 7773
- Market Call Revisited: Sell Asia
- Market Recap: Not Good
- Market Update: Doesn’t Look Good, 818 and 826
- Market Recap: Buyers Above 818
- Morning Call: Open Gap Bought
- Market Recap: Buying On A Big Number, Now What?
- Morning Call: Still Uncertainty
- Market View: GM Holds The Cards
- Stock Charts VS Market Charts
- Market Recap: Somewhat Predictable, Low Came Where I Said Was Likely
- Morning Call: Unclear, Risk Is High
- Huge Rally: Now What
- Market Comment: Does News Even Matter?
- Market Recap: Close Day Craziness
Our Mascot Trading Goal: Ferrari 599
