Sunday, January 30, 2005

Bloomberg News Jan 30th

IS job growth REALLY picking up? The Gov. will use seasonal adjustments to manipulate the number, so there is no way to tell for sure, IMHO.

With a much weaker GDP number than expected, It is not plain that the economy is on th eroad to sustainable growth.

MSFT dividend payout will also DISTORT data.

Monday will indeed be VERY INTERESTING, I FULLY expected a triple digit rally, anything less or a close in RED will be ominous, IMHO


Long Waves Come Crashing Ashore?

Isn't there a song..."never on a Sunday a Sunday...yada yada dah..."Just like our parents who didn't do this or that when we were put that aside forgive and move on or you never do.

I spoke my mind about Bush,I felt the way I did then.....I now look forward, maybe not liking the deceit, but the ends to those means.As the Iraqi's stared down death and threaths and fear and said YES to a voice and NO to terror of the few over the many.Do we want to pilfer their natural resources? do we have alterior motives? debate that but not the turnout, not the desire of any opressed people to rise above thier tortured past.

Wouldn't the N.Koreans like a voice in their country? to be PART of the global economy? to have individual rights? BUT we won't go in there.Send a few missles in.....or bust down the damn door? I suppose Bush HAD to cover up his real reasons or he would not have been able to do what he has done.A LONG way to go, but much of the world criticism must melt away in the face of the Iraqi voice.WILL the markets see this as a winner? as clear sailing ahead? No one day rally won't answer that....but more chance with wind in pushing the sails, then swirling around directionless.

I don't see how any sane person for at least a day couldn't see what is happening as positive.Country was in LOCK DOWN mode, when that is eased, we may see more violence, and the old guard is many still.IS THIS VOTE a vote for democracy or a vote to allow Iraqi's to vote OUT AMERICA? will we hear from the people as to why they voted and what they want?Is the VOTE actually a victory for the potential of another Fundamentalist state? Wouldn't that be a victory for the wrong reasons as seen by Bush?He has said the US will not allow an Iranian style State, but WHAT IF that is what the "MAJORITY" wants? Isn't Democracy the ability to choose? as well as allowing the individual to retain his or her rights of freedom?We see the beginning today, not the end, with the toughest test ahead to build a concensus which includes everyone....not an easy task with such diverse groups with potentially differing wants.

Papa has always said he would rather be BULLISH any day of the week, I have posted my feelings of not my wishes but of the reality I see.No, I am afraid when the smoke clears, we will have to look hard at ourselves and begin healing our own world, one abound in malinvestments and savings none.Seeing monies that might not be diverted toward war and Iraq would be a positive thing, but $100 Billion PALES in comparison to the unfunded liabilities in the 10's of $trillions.....of which SOMEONE'S will have to eventually pay.

A Government that is now beginning to take some punch away from punch bowl, and a slowdown here is inevitable.....but I am uncertain when the arkets will begin to show us our folly.IF VOLUME and BREADTH increases, and the momentum follows through.....good vibes beget good vibes.....could carry through the end of the good 6 months of markets.IBM INTC MSFT AAPL GE EBAY, the giants have all done what they could, but ALL have led to narry a rally.....this I observe is troublesome.SO as I ponder all the things I do, al we need do is hear the voice of millions voting in the markets.....for a time at least we might forget we are at near an end of an historic expansion in credit and some point the pendulum will swing the other way to contraction....not a damn thing I/we say or do is going to stop the long waves from crashing ashore.




SUrely we went in for alternative purposes, but after HARD, LONG, thought, Bush Middle East MASTER PLAN regardless of the lies to accomplish it, the ends justify the means.When it counted.....the FREE spirit of the IRAQI people, even though voting who politicians they never met nor was the ACT of the vote not who it was for that is compelling.WHO wouldn't choose a CHANCE for freedom over a wicked evil emporer?

WHO cares if minority Suni's withold vote, they have oppressed the majority long enough?This IS a roadmap for EVENTUAL US pullout, in maybe 3-4 years,IMHO.THIS WILL be seen as used as you will see in the SPX and NAZ futures PITS when they open this evening, the extent of such will show how the voe has gone in the minds of the playa's.3.1 GDP a distant memory to the NEW WORLD ORDER has a SEED planted to kill cancer, has the US succeeded in doing just that?

The markets SHOULD rally HARD into next weeks State of the Union, regardless of market history or valuations or anything else, THE VOTE may turn market a big way.SO, I will be watching the action for the STRENGTH and CONVICTION of this momentum should it certainly arrive.......and fighting might just be a fools game.And we will see if fundamentals (slowing economy overburdoned with debt etc) will be trumped by the NEW WORLD ORDER.

EVEN as I say this, the other side of coin is troublesome, new book out shows how the rich has gotten MUCH richer last 20 years as the bottom 90% has gone basically NOWEHRE....very compelling data. ("cheating America?" not sure of title but it is mostly about tax system)ANYTHING LESS than a sustainable rally from this.....will be trouble, but I don't think it likely...we shall soon see.


Friday, January 28, 2005


I can see clear a rally lasting ALL of next week.....if IRAQI elections go "rather" OK and BUSH can deliver an UPBEAT STATE....and people buy into it.It is not going to be easy for him to pass most of his 4 yr initiatives.

4 yr cycle high is probably already here, IMHO market if this holds true again should bottom in 2006.I am concerned, should I be long (not yet)that the market has now snubbed earnings news from INTC IBM EBAY and MSFT, none of which ignited any kind of TECH rally or otherwise, in the case of EBAY it got its head lopped off by $20.

MSFT news, even with "nervousness" about IRAQ elections Sunday, should have been near to the days highs! but it closed little changed from 4PM Thursday close, it was up over .50 THURSDAY A.H. which was really a yawner when you consider "record earnings".
If I was a real grouch I might consider all this a sign of a top in earnings, not the beginning of something good and progressing.And I wonder(dangerous) if the market senses that SOON we should be seeing what earnings look like with STOCK OPTIONS EXPENSED.....even though the comparisons will come without.....but I bet you.....there will be a lot of what if earnings.36 soldiers DIE, the market rose that day.

Iraqi elections go off OK, how does that make things better here? How does that help US economy? deficits? debt? lack of savings etc?WHAT IF...........there is a weak turnout?

ASIAN markets overnight Sunday would be good place to look for how it will be taken.
UNless they ASK US to leave, the election per se does nothing for getting US Out any earlier, IMHO BUT....if the ones playing see blue skies, up she will go.....maybe with a tad of wind in her sails.....I will be open to that potential.
AS no guarantee, and other market fundamentals as I see them....I rather NOT position, and wait and see.


A Few Interesting NANO ARticles

FROM BEA site this AM GDP Data and my comments

"..... The major contributors to the increase in real GDP in the fourth quarter were personalconsumption expenditures (PCE), equipment and software, private inventory investment, andgovernment spending. The contributions of these components were partly offset by a negativecontribution from exports. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the fourth quarter primarily reflected a downturn inexports of goods, an acceleration in imports of goods, and a deceleration in PCE for durable goods thatwere partly offset by an upturn in private inventory investment.

Final sales of computers contributed 0.48 percentage point to the fourth-quarter change in realGDP after contributing 0.18 percentage point to the third-quarter change. Motor vehicle outputcontributed 0.87 percentage point to the fourth-quarter change in real GDP after contributing 0.34percentage point to the third-quarter change.
The price index for gross domestic purchases, which measures prices paid by U.S. residents,increased 2.7 percent in the fourth quarter, compared with an increase of 1.9 percent in the third. Excluding food and energy prices, the price index for gross domestic purchases increased 1.9 percent inthe fourth quarter, compared with an increase of 1.7 percent in the third.

FOOTNOTE.--Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified.*

*ADD IN HEDONIC PRICING and other gov statistical BS manipulation seasonally adjusted shickanery.....THE US IS ONLY country using HEDONIC pricing....they MUST look better than rest of world to attract debt REAL WORLD US growth is anemic and is MOSTLY debt accelerated consumer consuming...we need LESS BEE WATCHER WATCHERS and MORE BEE WATCHER MAKERS!

More of the same, weaker exports even with weaker dollar...and consumers consuming is BULK of our...GDP!

GDP came in WEAKER than expected at 3.1..inflation is HEATING UP


Thursday, January 27, 2005

Be Careful What You Wish For

REFLATION was what THEY were after, and they got it in spades...sort of.

Housing....up substantially.Energy.....from $20 to near $50 a barrel for oil...and natural gas...3 years ago I paid 88 cents per gallon....To FILL my tank it cost under $200! My last bill showed near $3 gas and my bill was over $800 !!! I KNOW I am not alone.Electric companies charging more to run heat pumps too I am sure.

Fueling our vehicles.Putting FOOD on the table.Insurance.Education.The COST of air is going up.....YET, wages are stagnant as consumer spending hardly takes a breather.
DEBT is at all time high along with defficits...yet int rate stay going to going to blow!2+2 no longer equals 4


Market SHOULD have been able to build on last 2 days rally, but alas.

Increasing costs to manufacturers is hurting margins and is main cause of CAT weakness today and maybe a threat to earnings season.


6 YEARS of GOING NoWHERE!$INDU,uu[w,a]wallyiay[pc20!b200!f][vc60][iut!Ua12,26,9!Ub14]&pref=G

I show you this 10 yr Dow chart to help put in perspective how "little" the last 3 years of Fed and Bush policies have effected the economy and markets.

Because you MUST understand the lengths and extremes both have gone to to preserve their places.

Never has so much done for so little. And this is thekind of action you expect in a Bear Market, yes friends, dispell any belief CNBC has ingrained on you that good times are about to roll, IMHO


Tuesday, January 25, 2005

SS in a FIX

SS in a FIX

Bush plan to privatize another good ole boy scheme.Cost of $2 trillion over 10 years of which will come out of thin air? NO, increased need to borrow SHOULD put UPWARD pressure on interest rates.AND private Gov papers leaked that they KNOW they will need to either RAISE taxes or CUT benefits because good old privatization doesn't do a do diddley for current morass and shortfalls.

2nd termer due for rough sledding. I know people STILL buying second this from a financial planner I know...." we are buying a condo in Fla as INVESTMENT, all our other money is in stock market....."As property taxes skyrocket, and first time home buyers are priced out, not a healthy backdrop to economic expansion.

We SCREWED the pooch here, and have borrowed mightily from FUTURE demand, while KILLING our manufacturing, building CHina into world power, and bankrupting our country.

It's a plan.


Deficit War

STimulative landscape is changing, IMHO


Monday, January 24, 2005


As almost EVERY advisor STAYED bullish (and maybe rightly so still) and 100% commited long to stocks coming into 2005, I ask myself what is it that I (some of we) SEE that they do not, or the other way around?I discussed that I was using the 20 EMA for my trend analysis, this almost forgottne simplistic approach keeps in touch with actual movement, not just my opinions...I have used 13 day and 13 week each his own.I had discussed other items that alerted me, SPX/VIX ratio etc, though most disregarded the alert of a top or value of such a ratio....added to other things it need not stand on its own now.SO, though many guru's are VERY good, have gREAT feel....they miss things, they get too complacent....they are just GUESSING like everyone else, but reputation can go a long way...and NO ONE is right all the time.SOme give allocation models which prove over time to be fantastic way to invest.....but any 3 yr or so period could devestate those portfolio' MUST take 10 yr at a time look at that style of investing.As it is, MOST cannot stomach or do the in and out method.....and larger errors can occur.As far as waiting for an undervalued market as a plan.....ONLY time will tell if CASH outperforms LTBH over the 2000 to whenever period....SO FAR any monies IN 2000 in most sectors would be wasted and if not, its their turn soon.Spinning wheels is not what most want to do......we will know substantial change has occured when most go from worrying about missing the next rise to worrying about losing what they've got!IMHO....we are VERY close to calling the re-emergence fo the bear market....and if that actually transpires during SHOULD know what that means.SO, do YOU get a crystal clear vision of tomorrow or today....or are you in the fun house?The DEALER is shuffling the cards.....the game has changed.

The "MIGHTY ARE FALLING" Infineon weakness hurting tech this AM

TZOO TZOO sales force faces scrutiny....stock down $15 and 50% from highs.

TASR zapped....EBAY butchered....TZOO gnawed.....GOOG next? The shadowy speculative excesses getting wrung out....if appetitie for this declines so will broader market IMHO.

Banking sector weak, and the transports leading us down. 2005 getting off to VERY rocky start.

SO far just a correction, but that's how it can start out and then get out of hand. LOTS of complacency to feed off of.


Sunday, January 23, 2005

Is the Kontratief WInter Approaching in 2005?

The market is due a bounce, it must begin so out of the box Monday or more downside is probable. Declining momo is still rather strong.

If any bounce comes it SHOULD be shallow and short, the decline should resume. ALL the money supposedly flowing into market every January and profit taking mostly over, the weakness in markets is even more ominous.

EVEN bellweather EBAY took a $19 shellacking. INTC couldn't rally the SHM ETF (semi holders) IBM "stellar" numbers didn't rally the market either.

We may have reached the ned of road for the cyclical bull, in coming weaks we will look for more signs. ALL major indexes have fallen below their respective Dec 2004 lows. This is NOT good.

Already ALL of 2004's gains have been wiped out in a mere 3 weeks of bear action.

I want to be a buyer of gold, but I am not sure if recent bounce in dollar is over just yet, there "COULD" be one more PLUNGE in gold prices to around $408 or so, there I would have to consider a better area to begin my accumulation. I will report here any action I may take and the technicals as I see them.

Cash is "Prince" as Pimco king touts, if not king 2nd best here is not so bad. Last hosuing report surprised me with its strength after 3 lackluster ones. STILL, key is long term rates and they STILL haven't shown their hand yet.

The key to markets could be held their as well, a substantial RISE in rates not a welcome sight. all IMHO


Friday, January 21, 2005


The Dow declined below its December low of 10,440.58 this afternoon 2 hours before the close. Under Dow Theory this CONFIRMS the weakness of the Transport index which had already done so.....may I add the Dow needs to CLOSE below that number to confirm.

ALL major indexes have fallen BELOW thier December lows, IMHO no matter what transpires here, that is a cry for help. It is telling us SOMETHING IS WRONG.

What is wrong? It might be unknowable at this time. COuld be unfunded liabilities like SS or MEdicare. COuld be IRAQ and the deficits. Could be 5 straight months of declining LEI's last year were telling us economy was slowing.

Could be telling us any number of things, and it is telling us BEFORE it is known. So you can choose to heed the warning, or do nothing.

I also use this site as a record of my comments and any call I might make, to keep record of how accurate or not my comments tend to be.

I think without continued stimulus, our economy cannot stand on its own 2 feet.

SO let's watch the close and see what happens. 10,440.58


Dollar Bond Prop JOB?

Thursday, January 20, 2005

The TREND is WHO'S Friend?

If a trend is "allowed" to take hold just long becomes the trend. And any rally is seen as chance to dump at higher price....and for prior trend to restablish...the longer the opposing will lives on the harder it becomes to undo.
With hedgie goofballs loaded with SPX calls.....this trend is not thier friend.I had posted the 20 EMA which was declining should act as resistance, and following that EMA if that holds a fair bet.
For once I chose to simplify things but from my personal observations, and the 20 EMA supporting entire rise from OCT lows, seemed a reasonable assumption.....when it began to decline I respected that.
IMHO, this market is in deep deep trouble ($19 drop in ONE day for EBAY a darling...another LOUD warning...most will IGNORE)IIAA plurality of bulls record continues unhindered.


Thursday 20th Market Wrap

I am going to keep this brief, I will more indepth to say this weekend.

Todays action brought the Dow very close to breaking its Dec 2004 lows, near 10,440. Should that happen, it would be bearish and also confirm the weakness seen in the Transports (already below their Dec lows).

What does the Dow see that we cannot?

This has been the weakest markets during a recovery in history, considering this weak action has come in the face of the largest stimulus and tax cut plan in history, Fed lowering rates to 45 year lows, this SHOULD be a cause of concern.

EVERY LAST BEAR MARKET has returned the markets to below known values, meaning near single digit PE ratio's and a dividend yield near 6%.

Do the math, a 50% hair cut from current levels would not be out of the question.

Tomorrow is options expiration Friday and it could get wild, with swings in price. Regardless, it certainly seems like the trend has reversed and the decline which began in JAn has farther to go.


Wednesday, January 19, 2005

WHat is the market telling us?

I have posted this before, recently I had mentioned it looked like a H and S was forming from NOV/DEC top...if it broke 1.30...and it has and it tested 1.30 and it is now resistance, IMHO....with also declining 20 EMA.
Now we don't want to hang our mojo on one thang.....but I feel this is somehow important.

D (you can email me

IBM Results a pleasant Surprise?

IBM results a pleasant surprise , 01.19.05, 12:03 PM ET The News and Observer NEW YORK -- IBM topped fourth-quarter expectations by a healthy margin, with strong overseas sales and a weak dollar helping to generate a profit of $3.04 billion. The profit, which amounted to $1.80 per share, was up sharply from a year ago, when IBM posted a net income of $2.71 billion or $1.55 a share for the final three months of 2003. Fourth-quarter revenue rose 7 percent to $27.67 billion compared with the year-ago tally of $25.91 billion. About 4 percentage points of the gain was driven by the rising value of the euro and other currencies against the dollar -- which makes U.S. products less expensive overseas and foreign sales more valuable when converted back to dollars.

**Most of their gain was from currency trade? I read "IBM will SPARK the markets"

IBM down over $1 today. "Good" data today has far.

As I have discussed here, watch the 20 EMA's....I think they will hold the rally...and they are declining.


Foreign Investment in US assets increases

Of growth HERE is higher, because of gov data manipulations incl Hedonic pricing. And in other countries where net investment and savings bring in good cheer, HERE it is mostly JUST CONSUMPTION!!!

The next THING to get CONSUMED will be those heavy in DEBT!


Tuesday, January 18, 2005

Artificial Recovery

SMH Semi Holders Woes,uu[w,a]wallyiay[pc20!c5][vc60][iut!Ub14!Lh14,3]&pref=G 10 yr chart WHAT recovery?

When you factor in that the index is lower even after INTC declared they would raise their capex spending by about $1 Billion, this sector is even more telling. And I think most of tech suffers from overcapacity issues. You can add China as aprime reason with their emergence as a world competitior.

Only a few tech companies make any money. The generals INTC and MSFT look sick and sell at 5 yr lows. They are NO longer a growth story. The SEMI engine is hurling a fur ball.

INTC still trying to destroy AMD by lowering flash memory prices, INTC can outlast any competitor, this was a nice business for AMD. INTC profit margins have also suffered.....and so has its price. INTC hypsters touted their numbers last week, but INTC stock is now lower than after the earnings call, while other cheapie tech's move on.

We have the END to BUSH tax incentives for investment, which ended in 2004, I think has influenced results this QTR (which is always looking back 3 months).

Sooner or later the stock market is going to SNIFF a slowdown in the economy, and it won;t matter what the FED does, what manipulation occurs, this rally is going to get retraced. But the market isn't screaming a warning anyone is heeding, or acknowledging.

I am still watching to see if the indexes break thru the 20 EMA, it is now declining and I think it might repel this rally.

I can't nor can anyone pinpoint exact timing for the return of the Secular Bear Market, but I can assure you it is not over. That being said, I personally choose to sit out this market. And I won't be a buyer until better values show up.

And I am not alone in thinking 2005 can be a challenging year, but you wouldn't know it from the Wall Street chatter.

I will continue to tell it like it is.


Hans Sennholz

January 18, 2005
A New Economic Eliteby Hans F. Sennholz

Washington think tank informs us that the average annual compensation of the top 100 chief executives amounts to an astonishing $37.5 million, which is 1000 times the pay of an average worker. The top one percent of households reportedly earns 20 percent of all incomes and owns 33.4 percent of all net worth. The most astonishing feature of such concentration of wealth in the hands of a tiny elite is the utter lack of concern and comment by the American media. They apparently find nothing wrong with such glaring inequality.
We may readily agree with the media as long as the great chasm of income and wealth stems from great differences in economic productivity. Surely, we cannot fault the great American entrepreneurs who in ages past built famous enterprises employing thousands of workers and serving millions of consumers. They discovered new methods of production, opened new markets, and developed new sources of raw materials throughout the world. They succeeded by serving and pleasing consumers. Their talents of enterprise actually raised American standards of living to one of the highest in the world. And their labors bridged the wide legal, social, and economic gulf that separated the social classes throughout the ages.
The economic order that developed gradually during the 20th century gave life to yet another economic and social elite which does not seek new methods of production and does not give employment to thousands of workers; it shrewdly speculates on the effects of various government policies, such as inflation, credit expansion, and new regulations and controls. An economist who visits the new elite may actually discern three distinct branches that cooperate as readily as they feud with each other.
A large branch does not create new enterprises nor give employment to a single worker. It opens no markets nor develops new products. Its members thrive on boom-and-bust cycles which afford great opportunities to traders who observe and understand the portentous policies of the Federal Reserve and the U.S. Treasury. They may manage investment trusts holding corporate stock worth billions of dollars or merely look after their own accounts. They weigh and appraise political intention and government intervention, always gauging the consequences, acting in anticipation, and profiting immensely from political moves. While many businessmen suffer painful losses during a business cycle, they succeed in increasing their funds throughout it all.
These speculators actually render an important service. The Federal Reserve and the U.S. Treasury frequently intrude on and disrupt the smooth performance of markets, which then must readjust; they actually facilitate the adjustment. They anticipate future price movements, assume market price rick, and add liquidity and capital to the markets. Theirs is a necessary and productive activity.
A remarkable feature of this new elite is its frequent disagreements and altercations with the other branches of the business elite. Its members may find frequent fault with and cast aspersions on the elite that actually manages the production. They prefer to support and consort with the political powers that shape the economic policies, seeking the company of well-known politicians who in turn feel at ease with generous nouveaux riches.
Another branch of the new elite consists of chief executives whose compensation usually comprises a base salary and incentive options. They earn million-dollar lucre whenever the Federal Reserve blows stock market bubbles and corporate share prices soar to lofty price-earnings ratios. During the 1990s-bubble they pocketed hundred-million-dollar profits without any particular efforts of their own. They created no new industries and opened no new markets. The corporations they managed did not grow and corporate profits stagnated or even declined. But stock prices soared and CEOs reaped much lucre at the expense of their own stock holders. For every bubble profit taken is total worth consumed. It waters the stock and diminishes the property of all other stockholders. To remedy the situation, the corporation must henceforth increase its assets without increasing its outstanding shares or reduce outstanding shares without reducing assets. CEOs probably are aware of these implications, but few, if any, have ever returned their bubble lucre to losing stockholders.
The most powerful elite is yet another; it springs from political power that holds authority over the body politic. It is the natural extension of the new economic order known by various labels such as the New Deal, the Great Society, and other Democratic and Republican Deals. They made politics an important vocation and elevated politicians to positions of importance and eminence. Surely, politicians have to be ever mindful of public opinion which is shaped by the elite of education and communication. Many master the art of political communication and thus manage to perpetuate themselves in office. In their footsteps their children are laboring to forge a self-perpetuating political elite.
This country is not about to degenerate into a class-based society led by a ruling elite. Competition is a time-honored practice, a cultural custom followed from generation to generation. But, under the influence of collectivist ideologies, many politicians and journalists are ever eager to strike at successful entrepreneurs who earn much more than they do. It is difficult to ascertain their motives; it can be simple envy which consumes many men, or it can be economic ignorance. After all, market economics is barred from most universities and is unknown to leading politicians and journalists. It may explain why most politicians are ever eager to regulate industrial and commercial activity and strike at the economic elite with confiscatory taxation. Unfortunately, regulation and taxation tend to hamper economic activity, inhibit productivity, and depress levels of living. But they create ever new profit opportunities for the new economic elite.
Hans F.

MARKET ACTION$CYC:$CMR,uu[w,a]daclyiay[pc20!c5!f][vc60][iut!La12,26,9!Lh14,3]&pref=G Weakness here belies market action. Rally should send soon, IMHO

I will be watching the 20 EMA of the indexes to see if it repells, so far ONLY SPX has gotten above, see where it closes, NDX, INDU, and TRANNIES all below 20 EMA which has supported rally from OCT.

Underlying weakness of fundamentals and other factors do not mean instant markt collapse, but it does mean you cannot fall asleep with your longs if you have any, IMHO


Total Credit MArket Debt ETC!

Has now reached near 330% as a % of GDP !!!

I am EXTREMELY alarmed at this recent figure (and of course doesn't incl latest qtr) as it is now near 30% HIGHER than previous 1929-1930's extreme!!
And seeing personal savings rate at ZERO, and wages gains infintesimal.....the NOV $8 Billion decline in Consumer Spending if trend continues will also spell trouble for economy.
Taxes, food...almost everything increasing in cost....OIL now back near $50.....a STICKY WHICKET is what we got.
Some car manufacturers now stooping to desperate measures to sell auto's are giving ONE YEAR INSURANCE for FREE?
Some hybrid's.....but most of DETROIT is expanding HORSE POWER and SIZE of vehicles, with NO mileage mandate from Bush ADM..conserving...considering high gas costs is NOT a the USELESSS HUMMER's sell like hotcakes.
WILL housing data fall flat this AM? I suspect it might, the selling of the market has only begun.....and few are prepared for a less than perky 2005.


Monday, January 17, 2005

Jan 17th Dr Richebacher

January 17, 2005


Despite all the worried talk about the sliding dollar, both the financial markets and economic forecasters are taking it in stride. Conspicuously, nobody speaks of a dollar crisis at present or in the future. High-riding expectations of a strong year-end rally in the stock markets have been somewhat disappointed. Yet there have been two pleasant major surprises. One is the sharp fall of oil prices, and the other is the resilience of the U.S. bond market, defying not only the dollar’s weakness, but also the four rate hikes by the Federal Reserve.
It appears to be a common view that economic growth in the eurozone and Japan is badly faltering again, with both countries flirting with new recessions. In contrast, the forecasts for the U.S. economy remain rather upbeat, hailing the plunges in oil prices and the dollar.
We stick to our diametrically opposite view that the U.S. economy is prone to sharply slower growth. It is the profligate consumer who has kept the economy afloat since 2000. What kept the consumer afloat is also no secret. It was mainly two events: first, inordinate tax cuts; and second, exploding ultra-cheap borrowing facilities, made available through the Fed’s creative bubble strategy and implemented by ultra-low short-term interest rates.
Together, the two have unquestionably contained the fallout from the bursting stock market bubble. They also had respectable effects in terms of U.S. real GDP growth during the second half of 2003 and the first half of 2004. Yet the most important aim of all the monetary and fiscal stimulus — to set in motion a self-sustaining economic recovery — has been flatly missed.
A "self-sustaining" U.S. economic recovery urgently needs accelerating employment and income growth. Just the opposite is happening. During the six months up to last November, real disposable personal income grew just 1%, or 2% annualized. This is down from 3% in the first half of 2004 and 4.8% in the second half of 2003. Taxes and higher inflation rates are taking their toll. Debt-financed spending went to new records. During the third quarter, private households increased their spending by $139.4 billion, while their earnings increased only $81.6 billion.
Employment and income growth are the key fundamentals of household finance. According to the reports of the Bureau of Labor Statistics (BLS), they have significantly improved in 2004. But no less than two-thirds of these gains owe their creation to the ominous "net birth/death" computer model of the BLS, designed to estimate employment
growth by new business formations.
All that is needed to activate this job creation is a unilateral decision by the BLS that the U.S. economy is in a recovery. Implicitly, the Bureau of Economic Analysis translates these computer-generated additions to employment into corresponding additions to wages and salaries. Considering the persistent, unusual weakness in employment, as documented by the actual surveys, it requires a lot of heroism to assume an employment boom from new business formations.
For November, the BLS reported 112,000 new jobs, as against an expected 200,000. As bad as the report appeared, the reality was even worse. No less than 54,000 of the new jobs had come from the net birth/death computer model, compared to 30,000 jobs in November last year.
In the third quarter of 2004, consumer spending accounted for 89.2% of real GDP. It is the familiar ruinous growth pattern. A viable economic recovery would require a strong contribution through sharply higher business investment and hiring. Both remain missing, although the recovery is entering its fourth year.
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Sunday, January 16, 2005

Momentum Monkeys

You only have to look at what stocks are yielding now as compared to other times in history to understand "investor" (I hate using that term) psychology. Stocks now yield about 2.2% on the Dow and less than 1.8% on the SPX. Market TOPS are born of 3% yields!

This market is being sold hook line and sinker as the "beginning" of something. "Stocks are selling at great values" the hucksters scream. And it is apparent the call is being heard.

I noticed this week the money supply didn't budge, the previous week it was up near $57 Billion. The FEd still thinks it is the puppeteer.

Many have signalled alarm at China's holding so much of our debt, but it is Japan that holds the most almost 7 X what China has bought. WHO is going to bhite the hand that feeds?

WHAT would China have to gain by floating their currency? Exactly, they won't do it no matter what. And all Japan needs to is run their printing presses to buy our worthless paper? How long can this charade continue?

I get the feeling that consumers are falling DEEPER and DEEPER into credit card debt, and the ATM which is their house has topped in value. Expenses for everything are going up and there is no slack, room for wiggle room for a financial mistep.

Job growth will NOT materialize here in this country and so FAR into so-called recovery it hasn't, why now or later? The job growth occurred overseas for $3 a day workers.

My own customers when I ask and even explain some of the "fears" of buying Chinese Imports, it doesn't faze them one iota. There is NO outcry to "BUY AMERICAN".

National PRIDE has been replaced by Fed induced CONSUMERISM, and we are all the poorer (well not the privledged and insiders) for it.

Perhaps a consumer version of TASR gun will be sold and we can zap each other senseless or just for fun, it will be the next "new thing" and maybe it's made in America, but I kind of doubt it.

Car sales and housing has slowed, the engine of recovery, and THAT TRUMP CARD has been PLAYED, leaving us with little to attack NEXT Recession. And when it comes it will come with 68% home ownership, and a good bit of those sitting with overpriced overleveredged homes......with large property tax bills due to soaring values of last 3 years, most bills rocketing some 30% or more.....the tax man cometh.

Most bubbles are followed by echo bubbles, and this time as in other echo's the bullishness has exceeded in some ways the previous. Just look at a $200 Google.

Is any of the markets New Year tentativeness due to upcoming Iraqi elections? fear of terrorist attack on BUsh inaugeration? Profit taking from 2 years of gains? Nobody knows.

According to Dow Theory, you buy when stocks are at great values and sell when they reach over valuation....and there is a cycle here and we go back and forth between under and over valuation.

The other cycle that interests me is CREDIT EXPANSION, and we every day it grows make a new record for total credit market debt, FAR surpassing the % of GDP at 1929 top. From expansion when it tops we head for CREDIT CONTRACTION, as described in KOndartief WInter and its cycle.

It happened before, it will happen again. All we can do is stick to the basics, keep debt minimal, and hope that history doesn't have to repeat.

Keep an eye for Next weeks housing data, I will be sure to post when it comes.


"No Fear In Stocks 2" Adam Hamilton

Saturday, January 15, 2005

Fred McCulley of PIMCO

The POT and the KETTLE

What happens when the workers who are supposed to help pay for the latter stage baby boomers now in their 50's divert 2/3 of their SS payments into PRIVATE ACCOUNTS?

Given current budget deficits, adding $2 trillion if Bush has his way in passing this reform, will certainly help to push up interest rates and help push an already imbalanced budget to tilt.

Anyone is lying if they don't fess up that raising the age one can collect SS and or decreasing the payments is a given! Isn't the GOV already doing some of that when it reports the CPI is up a marginal amount?

WE ALL know the truth when it comes to increases in the cost of things. This is going to be one ugly second term for this President, where we will see loyal Republicans revolt against their own party.


Friday, January 14, 2005

CREE Punished, No Beheaded 24%

Cree falls on downgrade, Q2 shortfall Demand slows in key business; Q3 guidance disappoints

By Dan Gallagher, CBS MarketWatchLast Update: 10:23 AM ET Jan. 14, 2005
SAN FRANCISCO (CBS.MW) -- Shares of Cree Inc. took a spill Friday morning after an analyst for Wells Fargo Securities downgraded the chipmaker, citing "soft" results for its second fiscal quarter and a disappointing outlook for the current period.
The Durham, N.C.-based company (CREE: news, chart, profile) saw its shares lose $8.15, or 23 percent, to trade at $26.90 in early Friday trading.
In a note, Wells analyst Chris Montaño said the company's results "may spark investor concerns" regarding near-term growth in the market for light-emitting diodes, or LEDs - the company's main business line.
"While we remain confident that the LED market's long-term prospects are very promising, given the downside surprise and guidance we think it is prudent to take a more cautious view regarding near-term LED growth," wrote Montaño, who now rates the stock "hold."
In a conference call Thursday afternoon, Cree executives said demand for LED products was slowing because of "a variety of factors," including seasonal slowdowns in production of mobile phones that use Cree's technology.
A more positive view came from CIBC analyst Matthew Smith, who predicted that while growth in the mobile phone market is slowing, the company has potential to win business in the growing space for LCD TVs.
"We believe that the first opportunity for Cree to achieve product design-in will occur within the next 6-8 months, most likely in high-end LCD TVs in 37" to 40" segments," Smith wrote. "This could set the stage for product roll-outs early as [the first half of 2006]."
Second-quarter results below expectations
For the quarter ended Dec. 26 the company reported revenue of $97.5 million compared to $72.7 million in the same quarter last year. Analysts were expecting revenue of $100.2 million, according to consensus estimates from Thomson First Call.
Net income for the quarter was $25 million, or 32 cents per share, compared to net income of $13 million, or 17 cents per share, for the same period last year.
The company said earnings for the period got a boost of 5 cents per share from "net non-operating and other tax adjustments." The EPS number was also negatively impacted by a penny because of an increase in the number of fully diluted shares outstanding.
Analysts were expecting earnings of 32 cents per share.
Gross margin for the quarter was 50.4 percent of revenue, compared to 46.6 percent in the same period last year but down from 56 percent in the previous period. The company blamed the sequential decline to increased LED costs associated with the three-inch wafer conversion, product ramp ups and lower-than-expected shipments and sales prices in December.
For the current period, Cree said it expects revenue in the range of $94 million to $98 million -- below analysts' expectations of $103.5 million in revenue. Earnings for the period are expected to come in between 24-27 cents per share compared to 32 cents per share expected by analysts.

Briefing.Com Economic Data Any new readers not familiar with this website should save.

Click on indicator, Like PPI for additional data. PPI decline .7% ! More pressure on Gold perhaps.

Chinese are passing along price INCREASES as they pay more for raw materials.


4th and GOAL

As we approach this Friday, and long 3 day weekend (markets closed Monday) I want to look at the backdrop of market action.

Behind yesterdays late 100 point droop, was the previous days last 15 minute reversal and 60 point jaunt! And you think you're confused? WHO didn't think a rally follow thru was do today? And especially after AAPL tore the cover off, behind the amazing Kreskan..I mean INTC....remember I noted that even a BBBAAABILION $$$ increase in INCT Capex spending mentioned did not revive this pivotal group and who is asking why?

Oil is above $48 again! Tanker group going to catch a bid?

Bond yields slid again near a new low for the move, 30 year near 4.7% !! the bonds have been compressing for months, the weight is for a huge move up in yields but not yesterday and maybe not tomorrow if the flight to safety is seen as bonds.......and isn't that trade getting crowded? isn't that trade and carry trade action compressing the yield curve?

McClellan Oscillator barely budged even with yesterdays large move down, but the move down came with new highs outpacing new lows. SMALL moves in OSCILLATOR are usually followed with large moves within a few days. Not sure which direction, but a negative day going into long weekend I would take as very bearish. WILL traders want to hold onto longs into weekend?

ALL kinds of excuses for selloff given, mostly "traders locking in gains from last year"

Let's let market tell us with action, today IMHO is rather pivotal.


Thursday, January 13, 2005

A Picture is Worth "Failed Policies" Velocity of money has FAILED to catch fire...or damn nor even a cold! WHAT Recovery? Look at this pathetic chart,where IS the BEEF?! WHat's wrong with the consumer?

And finally, thanks to ST louis Fed ADJUSTED MONETARY BASE

AGAIN, I ask what is wrong, why has stimulus policies failed?

Now because of China and commoditiies, itseems on one hand we have INFLATION, but the action of the monetary base and velocity lead me to believe that DEFLATION is what we should FEAR the tells me this is liken to a BLACK HOLE.

I don't give warnings, advise caution, and for me remain on sidelines for no good reason.


Market in a RUT$rut,uu[w,a]daclyiay[de][pb10!b40!f][vc60][iut!La12,26,9!Lb14]&pref=G Small caps have broken down. Transports are below DEC LOWS. Dow has never confirmed move in Transports from 2004! The longest non confirm in Dow Theory history I believe.

Yesterdays orchestrated last 15 minute miracle is rumored to have come from "whispers" AAPL would have blow out numbers.....who whispered and what did they know.....more insider BS.....


Wednesday, January 12, 2005

A sign post? Credit given below to EWT. I LOVE the service, many pooh pooh its calls, like anything if you look there is value, and good calls have been made. Sentiment data offered is best around and I find it extremely helpful guaging market directon....expecially when it reaches extremes. Below is last paragrapg of NAZ section and summary.

"While the market is oversold near term, other pieces of the bearish puzzle continue to drop into place at larger degrees. The above two charts show the NASDAQ Composite plotted above the NASDAQ 10-day advance/decline volume (the concept comes from the venerable Ned Davis and his cohorts). Yesterday a bearish downside thrust “sell” signal was registered when the 10-day a/d volume fell below .65 (for the first time in 65 days). I’ve published two charts to show the bullish and bearish thrust signals since March 2001. These signals are not short term in nature. The NASDAQ typically will move for weeks or months in the direction of the thrust signal once it is recorded. What is interesting is that yesterday’s signal is similar to the one registered right after the January 2004 NASDAQ high. The appearance of these two signals suggests that the index has recorded a double top and the trend for the index has indeed turned down.[Bottom Line]: The market appears to have completed the initial leg down of a larger market selloff. A near term bounce should carry the indexes to our cited targets before leading to another leg down."

*Did anyone see tonights LUDICROUS Q and A presentation by Leesman? the little bald guy and another goof on CNBC explaining whether "deficits" were "good or bad and why should we care"

I nearly vomited in laughter at the infantile fashion this subject was tackled. "Well....deficits are good right? because it shows how STRONG the US economy is"

I wish I could be making this up! With stage fright and crazy glued lips my 9 yr old son could do better! I would debate those clowns any day any the bozo avg Joe on the street.

Where is it good that America doesn't make anything anymore? EVEN JAPAN is now outsourcing to China! Maybe China will outsource to Viet Nam?

SMH (semi holders ETF) hardly budged today....the day after INTC gave such "sterling" numbers and promised a $ billion increase in capex spending on equipment! It SHOULD have been a gapper higher, IMHO.

WHo didn't know the IPOD would bring killer numbers to AAPL? It's already IN stock, it ramped over $7 AH

Don't you love the TASR saga? Andhow little LENF BB stock has gone from pennies to over $12 then back to $8 and who knows? Story goes....woes at TASR should be good for other tasr wannabees? Something wierd going on here?...seems both LENF and another company bought rights to tasr-like patents? 2 companies.....same guy?.....ONE PINK SHEET went to $48!!! "stinger" and the other a Bulletin Board stock!

If the tech was SO good......would THIS be where you think it would surface?

If TASR tech is killing people...HOW FAST would police run to buy a similar device from a little BB or PINK SHEET company?

Go figure.


Transports got slammed WED. UPS Woes?

UPS woes run deeper than weather

By Matt Andrejczak & Padraic CassidyLast Update: 4:48 PM ET Jan. 12, 2005
SAN FRANCISCO (CBS.MW) - When UPS blamed winter storms and sluggish demand for a weaker-than-expected fourth quarter, the package carrier roused suspicions it faces troubles that run far deeper than the weather.
Investors responded to the news by sending UPS (UPS: news, chart, profile) shares tumbling Wednesday. The stock fell $6.18, or 7.4 percent, to $77.18, a move accompanied by two Wall Street downgrades.
Atlanta-based UPS is facing stiffer competition for ground deliveries, higher-than-expected costs to roll out new technology to sort packages and tighter margins as its business mix shifts to the consumer market, analysts suspect.
"There are many things not operating smoothly," Bear Stearns analyst Edward Wolfe said in a research note. He called the UPS earnings shortfall a "big miss."
UPS said it would miss Wall Street's consensus estimate by 12 percent. Excluding a better-than-expected tax rate, it expects a fourth-quarter profit of 75 cents to 76 cents a share, down from its prior expectation of 83 cents to 87 cents a share.
Investors found it hard to buy UPS' rationale for a lower profit. The company's main rival, FedEx (FDX: news, chart, profile), was quick to note it remains on track to meet its quarterly forecast.
Equities analysts at J.P. Morgan and Credit Suisse First Boston both cut UPS to "neutral" on Wednesday.
UPS is losing market share to FedEx and DHL for ground shipments, analysts assume. UPS said domestic package volume growth slowed to 1.6 percent for the quarter, well-below Wall Street's forecast of about 4 percent.
DHL is winning over parcel shippers with deep discounts, J.P. Morgan said. It noted that parcel shippers plan to boost spending with DHL to 18 percent in 2006, up from 13 percent.
"The company's results could be negatively affected by an industry price war, particularly over the long term if DHL looks to take market share," J.P. Morgan analyst Gregory Burns said.
Consumers have turned to UPS as a shipping option after the company acquired Mail Boxes Etc. Consumer package volume makes up 25 percent of UPS' shipments, up from 15 percent in 1999, according to Bear Stearns estimate.
But that has had its consequences on the bottom line: The consumer market is typically less profitable than the business market, Bear Stearns said.
Warning sends ripples
UPS' warning knocked other transportation and logistics stocks down Wednesday, part of a slate of mixed news for the sector, said analyst Jack Waldo of Stephens Inc.
Shipping stocks have come under pressure in the last few weeks over fears of rising inflation, rising oil costs - up since the end of the 2004 - and hints of rising capacity, said Waldo.
But overall, the sector is preparing for a positive fourth-quarter earnings period.
"Investors are waiting around for some good news from our truckload and our [less-than-truckload] carriers, and we're optimistic that that good news will come in the form of fourth-quarter earnings releases at the end of the month and comments on current business conditions, which we still think are pretty strong."
As examples, Waldo said, in the last two weeks, SCS Transport Inc. (SCST: news, chart, profile) said it would meet the midpoint or above their earnings projections, Yellow Roadway (YELL: news, chart, profile) affirmed its outlook and Old Dominion Freight Line (ODFL: news, chart, profile) announced an acquisition that would boost 2005 earnings.
"There are no company-specific comments within my industry, sans UPS, that would warrant this type of sell-off," he added.
Stocks falling included Overnite Corp. (OVNT: news, chart, profile), which fell 2.7 percent to $33.04; logistics firm Pacer International (PACR: news, chart, profile), which dropped 3.9 percent to $20.72; and C.H. Robinson (CHRW: news, chart, profile), which slumped 3.2 percent to $53.42.
Matt Andrejczak is a reporter for in San Francisco.Padraic Cassidy is a reporter for CBS MarketWatch in New York.

A Low in place?

I just have a minute, will try and give more detail later. Tonight's Elliott Wave shows NDX and SPX bouncing off lower trendlines in place from Aug lows. Most likely any near term bounce will be completely retraced.

That and the declining 20 EMA makes me believe any bounce is a relief of oversold condition which never got to extreme oversold.

I will try and post some paremeters tomorrow, a sort of guidpost, but you can use the 20 EMA of any index to see if it offers any resistance.


"Game Over" Stephen Roach and my market wrap

Everyone's favorite pessimist. But should not be ignored.

I appreciate everyone's feedback, feel free to email me and I will do my best to respond promptly.

Last 15 minutes rise fron FLAT today seemed disingenuous, orchestrated. But with 20 EMA (exponential moving average) now falling for most if not all major indexes, we will see if any rise is just working off general oversold levels, with McClellan OSC in deep negative territory.

Richard Russell's NEw Highs VS New low's study has shown a constant deterioration in the health and breadth of the market. It has not YET given a SELL SIGNAL meaning overall lows are now greater than highs in his study, but it is close. We will wait and see what happens.

SInce the Aug/OCT lows I observe the market has been holding above the RISING 20 EMA as I said, that is not the case now. I am not sure how significant this wil be, but it is another piece to consider of the whole technical picture.

BUllishnes continues to roar ahead at historic levels. Gov is cutting military spending, the costs continue to mount in Iraq, the deficits continue to set records as in this AM's $60 Billion number.

The cost of most everything is going up. WHat did your property tax asessment look like when you got it recently? Mine SOARED 30% !! It hadn't gone up a total of 30% the 15 years I have lived there.

Fed is in raising mode, and I feel the back drop to being long this market has deteriorated to the point it nolonger makes sense for me to play it.

A GOOD trader can play the ups and downs, but not the avg speculator.

Insiders selling at record clip!

AMD spanked last night 26%.

The Chinese are taking our dollars and building their military!

Greenspan should have been retired....not knighted. The imbalances continue to pile up, the room for error no longer exists, as consumers are up to their eyeballs in debt.

But, we will survive, we will move on, but it would benice to do so in the best financial shape you can.

Instead of trying to play the game in an over priced market, what is wrong with trying to HOLD ONTO what you got?


Flash! Bullish Leuthold comments

**Well, you know where I stand, but it pays to consider another possibility even if I might disagree, so here it is.

1/12/05'As we've said before, this new bull move has been characterized by intra-day reversals to the upside that have led to higher prices. Our 'bear advisor sentiment indicator' is also approaching a high, as the bears have become overexuberant during this, what has it been, a 2% correction or so -- it doesn't take much to get them going these days. At any rate, it seems very likely that we have seen the bottom of this downmove, perhaps the bottom for 2005. While that may be reaching a bit, and while we don't expect the kind of fireworks that occured after our 'melt-up' forecast, it still appears that the S&P is on track for a 12%+ gain during the next 12 months.'

Thursday, January 06, 2005

EXPOSING THE VIX 10 yr chart
I recently read a piece on the VIX that says to watch it if it rises above 2002 downtrend line near 17. The falling VIX was BULLISH I agree NOT showing complacency to a point.
My disagreement comes on ASSUMING a RISING VIX will lead to lower prices, though it certainly might, as it did during the BEAR MKT. 10 yr Dow. But the VIX STEADILY ROSE between the period of 1996 and 1998.....SAME TIME the DOW began a steep climb.
Only during 1998-1999 did a falling VIX correlate to a correction in DOW.
The VIX the FELL as the DOW made its current all time HIGHS in 2000 ! usefull is the VIX?

IMHO ONLY EXTREME readings ABOVE 40 have show to be useful show EXTREME BUYING OPPS! IMHO 10 yr SPX/VIX RATIO This RATIO IMHO is extremely helpful SMOOTHING out market action and volatility.
When a serious break up or down the 52 WK SMA occurs a SIGNAL is given, IMHO...early in 2003 (a buy) and early in 2000 (A sell)...we must be watching the TREND of the highs and lows to determine which one it is.

In CONCLUSION: A break of 75.46 would be first sign of REAL TROUBLE. A break of 55.01 PREVIOUS BULL LOW would clinch it IMHO.
ONLY a continued downtrend in the SPX and or persistant RISE in the VIX would accomplish this.
At that point anyone calling it a general correction would be dead wrong, IMHO. especially if 52 WK SMA begins to turn down!
Just my observations, certainly I am NO expert.


Wednesday, January 05, 2005

Tuesday, January 04, 2005

MUSICAL CHAIRS If and when the 20 WK SMA turns down, it would be more evidence that a trend change is in I Interpret the chart....even now, it has come down sharply, giving more resemblence to pattern that formed 2000 top and thereafter.

Bearish as I could be, even I will not expose myself any more at this time....I have tried to keep my contrarian positions managable....Should this be the start of something, I VOW not to get carried away and spend MORE time looking for VALUE to appear....and it will.VOLUME on decline is not to be ignored IMHO, highest volume or one of in more than a year? LIGHT volume decline would be ammo for a decline...volume picking up is not.New highs almost dissapeared today, don;t look for help from the interest rate sensitive stuff going forward, IMHO.

ANother guy in Mortgage business as in my store this afternoon, and his impression was things were NOT good! imphatically so.He talked about how if even a 5% decline in housing values occurred many would be under water on their loans. How credit card debt was so high, so so many (and he sees it) stretched so far to get into a house. How so many used 2nd mortgages and house equity loans which if rates go up would be hurt.

When you fuel growth by consumption and debt....insead of investment and get the get trouble, misallocations.

ALso the 8 and 12 year cycles are topping and now turning down into 2005-2006 range, I again feel great caution is warranted.


Peter Eliades' STock Market Cycles DEC 2004

I will be posting my outlook for 2005 very shortly.