Doug Noland A Must Read

This excerpt is the heart of our current predicament, so you understand better what environment we are currently in.
Duratek

http://www.prudentbear.com/archive_comm_article.asp?category=Credit+Bubble+Bulletin&content_idx=57477

To get started, where’s the heightened risk aversion one would expect late in a tightening cycle? Where are the tightened “financial conditions” after 17 Fed rate increases? Where are the chastened borrowers, lenders, financiers, and speculators? Well, the leveraged speculating community flourishes and hasn’t missed a beat, and with this growth comes a thus far insatiable appetite for risky assets. Combining the powerful Wall Street firms, the global money center securities/insurance/”banks,” and thousands of hedge funds and you’ve got one almighty juggernaut “speculator community” that controls $10’s of Trillions of U.S. and global assets. To be sure, players today operate with an incentive structure unrecognizable to the traditional bank loan officer. Hedge funds typically take 20% of (realized and unrealized) fund gains at year-end, while Wall Street traders, investment bankers, derivative specialists and the like enjoy a share of booked profits with the arrival of their generous year-end bonuses. Such incentive structures nurture an all-consuming institutional inflationary bias.

It is, apparently, going to take a more intimidating housing slowdown to alarm speculators enticed by higher-yielding mortgage securities. The conspicuous excess that has of late beset corporate finance is anything but dissuading speculation in risky PIK (payment in kind) debt and other high-yielding corporate securities – especially not with the convenient embracement of “mark-to-model” pricing. And the incentive to write insurance (and immediately book much of the premium as “profit”) is simply too enticing to pass up, whether it is catastrophic weather reinsurance, Credit default derivatives, market hedges, or the myriad types of financial insurance/guarantees that have taken the U.S. and global Credit systems by storm. It is also clear that the perception of ongoing Federal Reserve accommodation has emerging market securities again in hot demand.

The current Financial Structure, dominated by Wall Street securitizations, leveraging, derivatives, and asset/securities speculation, inherently incites and then feeds runaway Credit, asset and speculative Bubbles. Under present conditions, the nature of this energized financing mechanism is not going to change, but rather only the sectors and asset classes where over-financing ensures spectacular boom and bust cycles.


“It appears that the current housing slowdown, which we first saw in September ‘05, is somewhat unique: It is the first downturn in forty years – in the forty years since we entered the business that was not precipitated by high interest rates, a weak economy, job losses or other macroeconomic factors. Instead, it seems to be the result of an oversupply of inventory and a decline in confidence. Speculative buyers who spurred demand in ‘04 and ‘05 are now sellers; builders who built speculative homes must now move their specs; and nervous buyers are canceling contracts for homes already under construction.” Robert Toll, Chairman & CEO Toll Brothers

In a predictable replay of the Technology Bubble, the U.S. homebuilding industry now faces the inevitable consequences from a period of spectacular over-finance and over-speculation (including massive industry overcapacity, collapsing profit margins and acute price uncertainty and instability). Industry executives have not previously experienced similar dynamics to this downturn specifically because there has never been a Financial Structure so capable of completely inundating the entire housing and mortgage arenas with cheap finance for such an extended period – never. As we witnessed with tech, destabilizing speculative flows appear seductively miraculous until they don’t.

Ultra-easy finance incited and then fed a speculative Bubble in home buying. At the same time, the nature of the Financial Structure saw to it that the homebuilders were also overwhelmed with finance, ensuring an enormous, destabilizing and self-reinforcing building boom. And the higher homebuilder stock prices ran and the cheaper their debt financings became, the greater the incentive to ignore the warning signs and race to develop more properties – to keep the dream alive and the liquidity spigot wide open. Moreover, the greater the boom the more the various segments of the ballooning U.S. Financial Sphere that wanted their piece of the action. And the resulting creative financing arrangements and instruments – and greater Credit Availability generally – the easier it became to finance ballooning transactions at higher prices (yet with lower individual mortgage payments!). Households inevitably succumbed to panic buying.

Many analysts these days hone in on the housing slowdown and the likelihood that the Fed has already raised rates too much to sustain the economic boom. My focus and concerns are instead directed at the precarious nature of a prevailing Financial Structure that ensures Serial Bubbles and Cumulative Economic Impairment and Financial Fragility. With acute vulnerability pervading some key housing markets - as well as the general risk to the Mortgage Finance Bubble - in the spotlight, the Fed is poised to accommodate the ongoing profligate financing environment. I find it astounding that our policymakers have absolutely no inclination – or demonstrate any sensitivity to their responsibility - to discipline or subdue “Wall Street finance.” Instead, they are determined to safeguard a highly improvident and destabilizing financial backdrop and incentive structure. This may very well perpetuate the current aged boom somewhat, but their will be no avoiding the painful aftermath. Today’s Menacing Financial Structure has decisively sealed such a fate.

DREAMING

'I'M JUST A DREAMER, I DREAM MY LIFE AWAY (OH YEAH)

I'M JUST A DREAMER WHO DREAMS OF BETTER DAYS"

IF ONLY WE COULD ALL FIND SERENITY

IT WOULD BE NICE IF WE COULD LIVE AS ONE

WHEN WILL ALL THIS HATE AND BIGOTRY BE GONE

I'M JUST A DREAMER SEARCHING FOR THE WAY, TODAY

I'M JUST A DREAMER DREAMING OF BETTER DAYS"

THANKS OZZIE

D

LISTENING IN WITH DURATEK

And just when I am really on to a “system” I get overloaded with data, I use to never use any TA, but I feel it is a MUST to understand now. I wish I was where I am now 6 years ago, but reading Jim Puplava saved my ass, as that began my quest for knowledge and truth, I did not however heed his advise for gold and oil, didn’t know better then. SO I steered clear of bear ravage, but sat out most of recovery….but I do try not to look back much, I cannot complain where I sit now.



I believe in Trend Trading, yet I am not sure I can stomach STEEP draw downs to keep on trend.



I am in more agreement with you and KJ, that if they want to pay me 4% plus to sit there and do nothing so be it. I have 401K and get matching funds so that’s a cant lose deal, but you have sweet situation.



I cant seem to trust anyone with my money, so I continue the quest to get it right myself, sometimes the STRESS gets to me but I see no other way. I’m in TOO Deep, invested too much time and energy to leave a job yet unfinished.

I feel BEST method would be to avg that in each month into balanced portfolio, I would probably adapt the Brinker model, a proven winner in good markets.

But I don’t want to put my sidelined cash into this market, when we get to a identifiable bottom, then I will begin to slide it in. WONT do it at current levels.



ALL I know is what RR had pointed out, at OCT or March bottom 2002/2003 we had SPX at 30X and div yields ABOVE other known TOPS!! I see earnings rise and SPXPE come way down….but DIV yields show NO improvement.



We have one of longest periods of no 10% SPX correction, we have HISTORIC Dow Theory non confirmation.



I cannot believe the smartass FED and Bush skate free (though people suffer) with their plan to enrich those who don’t need it and enslave the others. And what PLAN that drives debt to historic levels ends well?



NAZ has had death cross of MA’S I follow, gold and energy seem to be correcting, so I cannot do much yet there, but I will.



Housing reports next week, I have been tempted to position in bond market, something holding me back, like safe MM yields, but they will begin to fall.



Master plan drove money out of MM’s in 2003 forcing investors to take on risk, it has worked well til now. Now MM’s fight for cash with market.



Recent rally has me on edge of my seat, scratching my head, but 9 of 10 years past mkt bottom IN OCT, so I cannot chase this move. I would however take some risks come selloff into OCT, bet your ass I will. And leave in DEC.



Income funds selloff into DEC so I would look there maybe.



Agree of course with being liquid, one reason Bonds not my bag.



I will check out your link today later, the same old game is played by yes these crooks…..fox in the henhouse again. Heck out situation on XNL, a BB stock (many have) found it easy to catch on AMEX, but seems something fishy going on there, many lemmings trapped.



Same old game… enjoy the conversation James

CONTRACTION

http://research.stlouisfed.org/publications/usfd/page3.pdf

We are at ZERO growth here, nowhere close to even the slowing growth seen only partially here in 2005. Am I alone that find this troubling for the economy?

PS also steep DROP in Consumer Confidence this AM

D

PENSION REFORM

http://money.cnn.com/2006/08/17/pf/retirement/pension_signing/index.htm Important changes you should be aware of.

Today is options expiration day, 3rd Friday of every month. It could be a volatile day, but I am not expecting a big move either way. Consumer confidence numbers come out 10 AM

DELL numbers last night were horrid! 50% decline in earnings and income. Not sure in current environment if it will sink the NAZ today, might hold it down perhaps.

Commodities have been falling like a stone, like interest rates could be signalling an economic slowdown which at some point I believe will beome the MAIN focus of the stock market.

I missed the top in the 10 yr, as most of us have been focused by the FED and inflation near 5.25%, it is now about 4.87%

I see potential for rates to drop all the way back to 4.2% area, bottom of a channel I have drawn.....and I wonder if they will even challenge 5% again anytime soon.

I have been considering a few income stocks and funds for a part of my portfolio.

I am still expecting stocks to bottom in OCT timeframe, though recent runup has challenged my views, the recent Leading Inidcators have signalled trouble and I am steadfast that will become center stage when the NO MORE FED RAISE HYPE dies down.

I also get feeling most of easy money has been made on this move.

Duratek

PPT

http://www.nypost.com/business/come_clean__ben__business_john_crudele.htm

CSCO CHIEF SELLING ALL HE CAN

http://www.thestreet.com/_yahoo/newsanalysis/technetworking/10304330.html

Hey, it's American to talk up your company forecasts as you are selling out the back door, say it aint so John I crown the' hypster king

D

"IS BUSH AN IDIOT"

http://www.huffingtonpost.com/joe-scarborough/is-bush-an-idiot_b_27408.html

hEY, I DONT MAKE IT UP, THIS FROM USUALLY PRAISING JOE SCARBOROUGH

d

RED TIDE

Holy crap markets on a tear! NAZ leading way, but DOW has had 2 back to back 80% upside volume days, this is strong move.

Dow has broken free of 11,250 zone ending today at 11,327. Isn't an ALL TIME high so close you can taste it? WOuld NAZ need to play catch up and really catch fire?

It doesn't pay to be STUBBORN when the market moves against your positions or beliefs. Housing bubble, falling prices, terrorism etc etc, high oil.....markets taken it all in and spit it back out.

Transports now need to play catch up, what then was their plummet from the 5,000 area all time high double top about? DO trasnports like falling oil? Does the markets?

Only the NAZ has given me a BEAR signal from my TA work. This signal has only been given 2 other times in last 6 years.

Market likes and believes FED is done raising interest rates, as they were in 2000 right before the top! but it likes it. It likes the manipulated PPI and CPI, says it doesnt have to worry about inflation.

Q's MAX PAIN # is $37. not sure how accurate it is, but that is where most pain would be felt by otpions buyers.....it makes sense mkt would gravitate near there, but it doesnt always.

SO we have weaker oil, truce in Middle East, same old shit in Iraq, falling long term interest rates, well THEY say it is because it isnt buying inflation story, but it could be saying economy is weaker than you think.

The nature of any retrace will tell us bundles.

Duratek

RANDOM THOUGHTS BEFORE AM DATA

Investors More Concerned About Spending at Medifast Than Record Earnings

NEW YORK (AP) -- Investors in Medifast Inc., which makes weight-loss products, on Tuesday will have to determine whether they think the company is shrewdly increasing dollars spent on advertising to grow sales, or is merely throwing money away. (PLUNGING by $5 !!!! who saw that coming??)


TUES data was a WEAK pHILA FED number, and a ZOOMING NEt Foreign PUrchases $75B !!!! WTF is saying foreignors are sick of our debt???

WASHINGTON (AP) -- Economists are predicting a 0.4 percent rise in consumer prices in July when the numbers are released this morning by the Labor Department.

Yesterday, it was announced that prices at the wholesale level edged up by the smallest amount in five months in July as falling food prices helped offset another rise in energy costs. (are you bleep bleep kidding me!??? there was a " seasonal adj to data !!!!!" this is pure BS!!! and what rally is based on, WHY I am not excited)

Consumer inflation slowed in June, helped by a temporary drop in energy prices. (again WTF???? WHAT DROP in energy pals what what???)The CPI rose by just 0.2 percent in June, the smallest increase in four months and just half of the 0.4 percent May rise.

contrast:
For July, energy prices were up 1.3 percent, the biggest increase since a 4 percent jump in April. Gasoline prices were up 0.7 percent, natural gas for home use was up 0.9 percent and residential electricity costs jumped 1.8 percent, the biggest increase since January.

Those higher energy costs were expected to show up quickly in higher consumer energy bills
***(I was getting my beloved some Kalamata Olives from Safeway last night, a meager looking fellow was counting loose change to pay for his $5 plus few items.....some reason had to be scanned again, maybe he gave something back he couldn't pay for. He quipped " Sorry about that, all this change, I paid my $2,800 mortgage !!!??? I'll be lucky to eat dogfood rest of month..." Checkout gal says "at least you paid it...." WOWEEEEEEE

Analysts are worried that rising inflation pressures may force the Fed off hold and result in further interest rate increases in coming months.

The 0.3 percent drop in food costs reflected a retreat in a variety of food costs which had surged in June. Egg prices fell by 26.1 percent, the biggest one-month drop in six years while fish prices were down 9.1 percent and soft drink prices dropped by 1.4 percent.

Outside of food and energy, prices were mostly lower with some notable exceptions. Tire prices jumped 3.5 percent, the biggest one-month gain in 27 years.

Offsetting that increase, the price of newspapers dropped by 1.2 percent, the biggest decline in 13 years, while the cost of light trucks was down 3.1 percent and the price of passenger cars fell by 0.8 percent.



http://biz.yahoo.com/ap/060810/analyst_note_ethanol_sector.html?.v=1 ethanol
Rousseau said VeraSun "is ahead of its peers in terms of capacity expansion plans." Aventine, meanwhile, is one of the lowest-cost producers of ethanol due to its particular milling technology and use of coal as a power source. The analyst called Pacific Ethanol's plan to build plants on the West Coast and ship corn from the Midwest "a unique but unproven business model."
Rousseau's outlook, however rosy, couldn't counteract the dampening effect of lower crude prices Thursday, and ethanol stocks moved lower in line with falling oil prices.
On Tuesday, VeraSun Energy shares got a boost after the company posted solid second-quarter profit, reversing a year-ago loss and coming in ahead of Wall Street's expectations.

MORNING DATA LEADS TO BULL SNORTING

Key Factors briefing.com

Expected growth leaves lower annual growth of 4.4% yoy and 1.7% yoy for the core.
Annual growth peaked at a 15 year high of 6.9% (Sept 2005) and a decade high of 2.8% (July 2005) for the core.
Energy prices leave a 5th consecutive lift as seasonal adjustment lessens the July pain.
Pipeline pressure is rebuilding in core crude goods prices which reached a multi-decade high of 33% yoy in June.
Core intermediate goods prices at 7.3% yoy from a 23 year high of 8.5% in Jan 2005.

YES, futures are raging green, and an opening AM POP of 100 points or more looks likely and NAZ to 20 plus.....BUT this euphoria in this volatile and manipulated data is UNFOUNDED.

ENERGY prices remain at HIGHEST LEVELS of the year, I see NO refrain for consumer.

How did "they" do it? Energy prices leave a 5th consecutive lift as seasonal adjustment lessens the July pain. WHAT "seasonal adj"????

I am getting ACROSS THE BOARD 6% HIKES and more from ALL my suppliers, and this is AM passing on! Highest price hikes in 10 years!

I REMAIN cautious per seasonality as AUG nears a close, I CHOOSE not to jump on board, plus as GAP UP Likely, opening will hold near HOD. IMHO (a REVERSAL LIKE YESTERDAY WOULD DESTROY BULL CAUSE)

While they have you looking one way, here from CNN is reason for hooplah and 2 news blurbs you won't read:

Futures rally on inflation report Aug 15: 8:43a
Markets set for surge at open as tame report heightens hopes of further Fed pause.(here we freakin go again!) (more)
Wholesale inflation on the wane
Home Depot warns on full-year results and WALMART warns!!! (earnings have PEAKED IMHO)

AND MORE: (yhoo finance)
Analysts are worried that rising inflation pressures may force the Fed off hold and result in further interest rate increases in coming months.
The 0.3 percent drop in food costs reflected a retreat in a variety of food costs which had surged in June. Egg prices fell by 26.1 percent, the biggest one-month drop in six years while fish prices were down 9.1 percent and soft drink prices dropped by 1.4 percent.
Outside of food and energy, prices were mostly lower with some notable exceptions. Tire prices jumped 3.5 percent, the biggest one-month gain in 27 years.
Offsetting that increase, the price of newspapers dropped by 1.2 percent, the biggest decline in 13 years, while the cost of light trucks was down 3.1 percent and the price of passenger cars fell by 0.8 percent.



D

FIZZLE? AUGUST STEPHEN ROACH

There is nothing like the seduction of a boom. The recent vigour of global economic growth is a siren song. By International Monetary Fund metrics, world gross domestic product growth probably averaged 4.8 percent over 2003-06, the strongest four years since the early 1970s.

As tempting as it is to extrapolate this into the future, that may be a serious mistake. There is a much better chance that global growth has peaked and the boom is about to fizzle.

The world’s main growth engine, the US, is slowing. That is the verdict from the labour market, with job growth in the past four months running 35 percent below average since early 2004. It is the verdict from the housing market, where an emerging downturn in residential construction activity is knocking at least 1 percentage point off the GDP growth trend of the past three years. And notwithstanding July’s temporary bounce-back in retail sales, it is a message from the consumer, whose inflation-adjusted spending growth fell to 2.5 percent in the spring period – one percentage point below the heady trend of the past decade.

America’s slowdown represents an important transition in the sources of economic growth, away from the vigorous wealth creation of asset bubbles – first equities, then housing – and back towards more subdued labour income generation. The delayed impact of higher interest rates is also taking a toll. Even though the Federal Reserve has put its two-year monetary tightening campaign on hold, there is a risk it has already gone too far. The confluence of higher energy prices, rising debt-servicing burdens, and negative personal saving rates reinforces the possibility of a pullback in discretionary US consumption and GDP growth.

This is an equally critical transition for the global economy. The world is about to lose significant support from the key driving force on the demand side of the equation – the American consumer. In a post-bubble climate, US households will be unable to save through asset appreciation, prompting America to increase income-based saving and reduce its claim on the pool of global saving. That points to a long-awaited reduction in the big US current account deficit – initially painful for export-dependent economies elsewhere in the world but ultimately a welcome resolution for global imbalances.

But who ill fill the void as the US consumer pulls back? The simple answer is; maybe no one. Europe, the world’s second largest consumer, is an unlikely candidate. Surprising economic growth on the Continent this year may be borrowing from gains that might have otherwise occurred in 2007. The European economy is about to be hit with a “triple whammy”: a big tightening in fiscal policy, the delayed impact of monetary tightening, and the drag of a stronger euro. Growth in the eurozone may exceed 2.5 percent this year, marking the strongest gain since 2000. Next year, it could slip back below 1.5 percent.

Do not count on a rejuvenated Japanese economy to fill the gap either. In dollar terms, Japanese personal consumption is only 30 percent of that in America; that means every 1 percentage point of slower consumption growth in the US would have to be replaced by about 3 percentage points of acceleration from Japan. As a weak second quarter GDP report indicates, such a surge is unlikely, especially as Japan copes with a stronger yen and higher energy prices. While growth in Japanese GDP should exceed 2.5 percent this year, in 2007 it could slow to less than 2 percent.

Nor are the two dynamos of developing Asia – China and India – likely to counter the slowing trend in the developed world. China has a seriously overheated economy. With real GDP surging at an 11.3 percent annual rate in the spring period and industrial output growing at a record 19.5 percent year on year in June, Beijing has little choice but to introduce tightening initiatives. A failure to do so could see trade protectionism squeezing exports and a deflationary overhang of excess capacity leading to an investment bust. China must shift its economy towards private consumption, a sector that sagged to just 38 percent of GDP in 2005. (A healthy rate would be at least 50 percent.)

All this points to a moderation of China’s growth beginning in 2007, with attendant reductions in its voracious appetite for commodities. That should spawn additional ripple effects in commodity producers such as Australia, Canada, Brazil and Africa. The world’s big oil producers would also feel repercussions from a Chinese slowdown. As would China’s Asian suppliers, such as Japan, Korea and Taiwan.

India is far too small to pick up the slack – less than half the size of China on a purchasing power parity basis. After more than 15 years of reforms, its growth has broken out to the upside – averaging 8 percent in fiscal years 2004-5. There was hope that a rebalancing from services to manufacturing would provide new impetus to growth, and the government seemed willing to tackle deficiencies of infrastructure, foreign direct investment, and saving. Unfortunately, the reformers have been stymied by the politics of coalition management. Imperatives of fiscal consolidation, with the delayed effects of recent monetary tightening, could also tip growth risks to the downside.

There is a deeper meaning to the coming slowdown. The global boom of the past four years was never sustainable. It was supported by the excesses of the liquidity cycle, which arose from emergency anti-deflationary actions of the world’s big central banks. The ensuing vigour of global growth was dominated by the US consumer, but America’s binge came at the cost of a record drawdown of domestic saving funded by the capital inflows of a record US current account deficit. The boom was balanced precariously on unprecedented global imbalances.

Excess liquidity bought time for a precarious world. As central banks move to normalise monetary policy, that time has run out. Without the unsustainable support of asset bubbles, it is back to basics – with aggregate demand supported by more modest labour income generation rather than the excesses of wealth creation. So much for the artificial boom of an unbalanced world. It could be about to fizzle out.

Note: This appeared as an editorial feature in the 14 August 2006 edition of the Financial Times.

MASSEY COAL UNDERPERFORMS

http://biz.yahoo.com/bizwk/060804/pi20060804205851.html?.v=1

Is the NAZ ready to rally?

http://stockcharts.com/h-sc/ui?s=$NDX&p=W&yr=2&mn=0&dy=0&id=p01607842149 (After PLEASE look at my weekly chart, you tell me why I should be looking to go long? On the weekly even more convincing we have JUST BEGUN)

http://stockcharts.com/h-sc/ui?s=$NDX&p=M&yr=10&mn=0&dy=0&id=p58304240138 (Then this monthly, look after over a decade of seperation, these Monthly MA'S have all converged JUST above current prices, and MACD is below zero for first time SINCE 2000!!)

Even my daily chart will show you what I see, and is a downtrend until it isnt, IMHO
http://stockcharts.com/h-sc/ui?s=$NDX&p=D&yr=0&mn=6&dy=0&id=p34930657201&a=82314172

D

ANTI-TRUST CASE AGAINST INTEL and MORNING COMMENTARY

http://money.cnn.com/magazines/fortune/fortune_archive/2006/08/21/8383598/index.htm

AMD suing over monopolistic practices at INTC, mainly in JAPAN.

The GENERALS, DELL; INTC;YHOO;EBAY;AMZN;GOOG;AMD; and a SLEW of others have been captured and hanged. You dont win military action without any generals, NAZ off 15% this year already.

General market leadership? Beaten down recent leaders.....CAT;MMM;DD;.......how many of the DOW 30 are near their 52 week highs?

Transports: Off nearly 20% from its "double top" all time highs. It is never good to have ONE INDEX going one way with the other/s going another way.

I believe the Transports are blowing a TUBA sized alarm, that ALL IS NOT WELL.

How is Housing doing? Largest UNSOLD inventory in at least 40 years? with prices still TOO HIGH?? DO you think weakness here will affect the employment scene? hasnt shown up yet has it?

Now the FED is pausing, watch LONGER term rates, will they defy logic and rise??????

Rest of world is TIGHTENING!!! OIL prices refuse to come down. Inflationary prices are now being PASSED ON and will filter into economy, FED sees this but can do nothing?

I am getting 6% price increases from most companies, got a 20% increase from one Canadian company.

REFI activity has EVAPORATED, this money WAS consumer spending backbone.

EMPLOYER employeee costs are RISING just as PRODUCTIVITY is FALLING!!!

I believe we have PASSED the PEAK in earnings........stock prices will fall IMHO.

Many indexes made their highs in typical fashion last MArch, it is my opinion and I am going to wait for a tradable bottom to appear in its traditional time frame SEPT/OCT and run with it thru DEC and cash out!

The FED pushed the envelope TOO HARD in housing to get us out of our deflationary bubble bursting spiral, but now it appears the HOUSING BUBBLE has been pierced.....and my friends, that can't be good.

Yesterdays reversal after a hoot n ninny open based on LOL CSCO!!!! WOOOOOOOOO was incinerated, cant be leaving bullsih traders with a warm fuzzy.

Duratek.....who you going to come to for the REAL STORY??

"OVERSUPPLY SLUMP WORST IN 40 YEARS!"

http://money.cnn.com/2006/08/09/news/companies/aig.reut/index.htm (also AIG earnings PLUNGE 29%)
Builder: Oversupply slump worst in 40 years

Toll Brothers slashes outlook on new homes as orders plunge and revenue misses forecasts.
August 9 2006: 4:15 PM EDT

NEW YORK (CNNMoney.com) -- Homebuilder Toll Brothers said the current slump in residential construction is unlike any it has seen in 40 years as it became the latest to warn of a glut in new homes for sale and a slowdown in the closely watched real estate market.
The builder of luxury homes also reported weaker than expected preliminary results for the just completed quarter and cut its outlook for the homes it will sell in the current period. Toll Brothers (Charts) shares fell 4 percent in premarket trading.
The housing and homebuilding markets have helped drive the national economy during the past few years. Any downturns in these critical sectors could add to the problems of an already unsteady situation.
In a statement, company chairman Robert Toll warned there is a glut of supply of homes for sale in the market, as the building boom of recent years seems to be turning into a bust.
The slowdown "is the first downturn in the forty years since we entered the business that was not precipitated by high interest rates, a weak economy, job losses or other macroeconomic factors," Toll said in his statement.
"Instead, it seems to be the result of an oversupply of inventory and a decline in confidence," he added. "Speculative buyers who spurred demand in 2004 and 2005 are now sellers; builders that built speculative homes must now move their specs; and nervous buyers are canceling contracts for homes already under construction."
Markets where the company recorded big increases in cancellation rates included Orlando, Northern California, Palm Springs, Las Vegas and Phoenix.
The company's reported homebuilding revenues were approximately $1.53 billion in the quarter ending July 31, compared to the record of $1.54 billion a year earlier. Analysts surveyed by earnings tracker First Call had been forecasting a 7 percent increase in overall revenue at the company.
The Pennsylvania-based builder said it expects to deliver 2,500 to 2,800 homes in the current quarter, a cut of at least 14 percent from its previous guidance of 2,900 to 3,300. And the company announced signed contracts in the just completed quarter plunged 45 percent to $1.05 billion from a record of $1.92 billion a year earlier.
The company said it is not under as much pressure as many builders to cut prices because it builds relatively few homes on spec. But Toll said that much of the supply of finished and near-finished product is being marketed using advertised price reductions and increased sales incentives, which in turn is leading many potential buyers to delay their purchase decisions as they wonder about the direction of home prices.
But Toll said the company believes that, as there is a cutback in supply by builders, the housing market should be able get back on the growth track of recent years.
"With many potential buyers on the sidelines right now, we believe there is growing pent-up demand that will come into the market once buyer sentiment improves."
Toll said on a conference call Wednesday afternoon that he expects the slump to last at least through the end of the year, however, adding it could drag on for another two.
"But the market isn't dead," Toll said. "It's concerned with the direction of home prices and if it has reached the bottom. You might argue that this is the best time to buy a home, with comparatively low mortgage rates and incentives. It's very hard to pick a bottom and anyone who tries will probably have a problem."
Toll named some once previously hot markets as underperformers lately.
Florida has been fair or poor, for the most part, not an unexpected assessment during the summertime. Other down markets were Las Vegas and Reno, Chicago, Minnesota and the Maryland shore.
Stronger markets he named were Hoboken, Delaware, Colorado and Phoenix.

MARKET ACTION ALERT

http://stockcharts.com/h-sc/ui?s=$TRAN&p=D&yr=1&mn=0&dy=0&id=p82466192234 CHART OF TRANSPORTS DAILY.

Just made a new LOW for move and is RED for the day, non confirmations can be deadly,

D

HISTORY OF STOCK MARKET PERFORMANCE WHEN THE FED IS DONE?

http://answers.google.com/answers/threadview?id=740006

**In my searching this is best info I could gather, and I bet it isnt what you expected.

Duratek



Subject: Re: stock market Answered By: wonko-ga on 27 Jun 2006 14:15 PDT

Despite experts recommending large cap stocks as good investments at
the end of a Fed rate tightening cycle, recent studies suggest that
both the S&P 500 and the Dow Jones Industrials have tended to trend
lower for the following 6 and 12 month periods. History does not
appear to support the popular thesis that the end of a tightening
cycle is uniformly good for stocks in general. However, financials,
health care, real estate, technology, and utilities have historically
performed well at the conclusion of a Fed rate tightening cycle.
Sincerely,
Wonko
Sources:
"Ironically enough, even in the unlikely event that the Fed is
finished raising rates, history has shown that alone is not enough to
boost stock prices. In fact, according to statistics gathered by Jason
Goepfert of SentimentTrader.com, since 1950, the average return in the
Dow Jones Industrials in the six months that follow the end of a rate
hike cycle is –2.7%. Basically, stocks generally move lower when the
Fed stops raising rates. Not the other way around. The idea that the
end of a rate hike cycle is bullish for stocks is not supported by the
market’s historical performance."
"INDEX INTELLIGENCE: Don’t Bet on the Fed" By Frederic Ruffy,
Optionetics.com (5/9/2006)
http://www.optionetics.com/articles/article_full.asp?idNo=14816
"But what the bulls see as an all-clear signal is far from a sure
thing. "There's quite a bit of talk about the market doing better once
the Fed (stops)," says Ed Clissold, senior global analyst at Ned Davis
Research (NDR). "However, more often than not the market has struggled
after the last rate hike."
Going back to 1929, the Standard & Poor's 500 was actually lower six
months after the last rate increase 71% of the time and down 64% of
the time 12 months later, according to data that NDR compiled for USA
TODAY."
"Odds are that stocks will drop once rate-rising stops" By Adam Shell,
USA TODAY (January 29, 2006)
http://www.usatoday.com/money/markets/us/2006-01-29-fed-stops-usat_x.htm
"Stock investors typically welcome the end of Fed tightening with open
arms, although the picture can be mixed for equities. The S&P 500 has
posted an average advance of about 8% in the year after the end of Fed
tightening, even as the economy loses serious momentum. This is
despite the fact that stocks have posted double-digit declines in two
of the cycles (after 2000 and 1981)—both times because the economy
slipped into outright recession. However, the good news is that
equities have normally posted even stronger gains (averaging almost
20%) in the second year after the Fed finishes tightening. The only
exception was the 2000 episode, when stocks were still melting from
extremely overvalued levels. Just as that cycle appears to be an
outlier, so too does the huge rally after the end of the 1995
tightening cycle, when stocks jumped 35% in the first year. Overall,
it seems that stocks are less beholden to the Fed rate cycle in recent
years (Chart 1)."
"When the Fed Stops" by Douglas Porter, Focus (June 9, 2006)
http://www.bmonesbittburns.com/economics/focus/20060609/
Experts are favoring large-cap stocks. Financial stocks are mentioned
by multiple experts, and five sectors have been shown to typically
perform better at the end of a rate tightening cycle.
"The financial sector historically benefits after the Fed stops raising rates."
"Capital Market Outlook" by Lynn Reaser, Harvey B. Hirschhorn, and
Joseph P. Quinlan, Banc of America Investment Advisers (June 12, 2006)
http://institutional.columbiamanagement.com/NR/rdonlyres/B1200E17-A2E0-4C93-B398-14DD747182BA/0/CMO_061206.pdf
"Q: How would an end to the Fed’s tightening cycle affect large-caps and the Fund?
A: First, we have to consider why the Fed would stop raising
interest rates. The consensus is that we’re going to see one or two
more Fed hikes in this cycle. However, we expect a very strong GDP
(gross domestic product) number for the first quarter of 2006, which
could persuade the Fed to continue to raise rates until they see some
compelling reason to stop. Reasons could include a major economic
slowdown, evidence that the inflation environment has become benign,
or a financial or geopolitical catastrophe like we’ve seen in the
past—though I’d put a low probability on the last example. Once they
feel enough inflation has been wrung out of the system and enough of a
slowdown has occurred, they may move to the sideline. Quality
large-cap growth names have historically done well in those
environments, and we believe we have built a portfolio that could
benefit in such a scenario.
Despite the slowing we are seeing, the U.S. consumer has remained
remarkably resilient. That has a lot to do with employment, which is
another important factor to consider. In our view, as long as
unemployment remains low, consumers are going to feel confident about
spending. Should there be a significant drop in the level of
employment, or should the consumer begin to really feel the effects of
higher energy costs and higher rates, that confidence and the
resulting economic activity could slow. Once again, in such an
environment, we would expect large-cap growth to outperform."
"Poised for a Rotation Back to Large-Cap Growth" A Conversation with
RCM’s Raphael Edelman, Allianz Global Investors (March 30, 2006)
http://www.allianzinvestors.com/commentary/mkt_insight_ts03302006.jsp
"Though were coming off of a low base in this example, stock markets
have still performed well in anticipation of the end of a
rate-tightening cycle, according to Sam Stovall, chief investment
strategist at Standard & Poor's. Stovall says that since the early
1970s, the S&P 500 advanced an average of 3% in the three-month period
preceding the last rate increase of a tightening period."
"Size may also play a role in stock selection during periods of rising
rates. "When interest rates move up, economic growth slows down," says
Rosanne Pane, mutual fund strategist at Standard & Poor's. "Investors
are attracted to companies with high-quality and consistent growth. We
believe this tends to favor the large-cap companies. On the other
hand, small-cap stocks, which usually exhibit higher growth rates,
tend to perform better when the economy is rebounding, as we saw in
2003."
Historical data show that after a period of credit-tightening ceases,
certain key sectors have performed very well over the next 12-month
period. For example, on Feb. 1, 1995, the Fed completed a year-long
tightening campaign that saw interest rates double, to 6.00% from
3.00%. For the one-year period ending Feb. 1, 1996, the average sector
fund in five key sectors -- financials, health care, real estate,
technology, and utilities -- delivered powerful gains."
"What Rising Rates Mean for Stocks" by Palash R. Ghosh, Business Week
(December 2, 2005) http://www.businessweek.com/investor/content/dec2005/pi2005121_5966_pi015.htm?campaign_id=search

Search terms: fed stock rate cycle sector large small cap; fed stock
rate cycle sector; fed stock rate cycle; History stock performance
Federal Reserve stops raising rates

A SOCIALISTS'S VIEW OF THE WTO TALKS BREAKDOWN

http://www.pslweb.org/site/News2?JServSessionIdr005=2lctbx1qv1.app1b&page=NewsArticle&id=5465&news_iv_ctrl=1261

Does it makes for the US to subsidize ETHANOL by 50 cents a gallon while putting a huge TARRIF on any IMPORTS? The US taxpayers, you and me FOOT that subsidy bill!

WE could near import ALL our ETHANOL needs at a MUCH LOWER cost with this action.

D

SEND A MESSAGE COME NOVEMBER!

(page 47 from book) Scowcroft, then Nat'l security advisor to 1st Bush. taken from interview in 2002 with Russert on Face The Nation

Scowcroft warned that A U.S. invasion of Iraq..."could turn the whole region into a cauldron, and thus destroy the war on terriorism." He went on to say in WSJ piece " If we reject a comprhensive perspective, however, we put at risk our campaign against terrorism as well as stability and security in a vital region of the world." (you are seeing proof of that now, Middle East violence,civil war in Iraq, protests in Iraq FOR Hezbola, against US)


How great is our Foreign Policy when we refuse to talk DIRECTLY to IRAN, N.Korea, etc etc.

WE can see "ticks on a dog" from our satelites in space, but all those shots shown to us supposedly PROOF we knew "exactly" where the WMD were, all turned out to be duds?

The American people sit quiet, while their rights are being stolen (Patriot Act) and while the Constitution is reinterpreted to fit the needs of our worst American President in history. And he isnt even that bright to begin with, he is a puppet.

Our policies are helping to build China as not only a world power in manufacturing, but as a world military super power. Their military buildup is in super nova high gear.

Friends? Russia and CHina both supply IRAN with military hardware.

Iran, Russia, Venezuala control world energy. And now CHina is on the move to secure its needs.

WE have NO energy policy. Bush is bought and paid for by the energy consortium.

Last 2 elections have been STOLEN from the people and the Democrats. Electronic voting machines can be easily tampered with.

I believe a LOUD and CLEAR drum will be beat come November, and even if you can't stand them, the Democratic candidates will win by landslides.....paving way for Democratic victory come 2008. I only pray it's not Hilary.

Other than Gore, I don't see now who else would be worthy of consideration, and am not sure he can win.

D

WILL THIS "PAUSE" REFRESH?

In my opinion, the relative calm created by the long, slow, and utterly predictable series of ¼ point rate hikes over the past two year has lent primary support for the U.S. dollar and the bond market. Once this prop is removed by a Fed pause, despite a knee-jerk bond rally, I expect both bonds and the dollar to be sold. But what the Fed giveth on the short end, the market will likely taketh away on the long end. Ironically, when the Fed finally stops notching up short-term rates, the market will likely start pushing up long-term rates. This will frustrate the Fed and Wall Street bulls who had hoped that a pause would breathe life into the stagnating economy.

http://safehaven.com/article-5658.htm

IN A NUTSHELL WHAT IS BEFORE THE FED

Central Bank Watch: http://safehaven.com/article-5662.htm
August 4 - Financial Times (Chris Giles & Gerrit Wiesmann): "Interest rates rose across Europe on Thursday as the European Central Bank increased rates by an expected quarter point to 3 per cent, while the Bank of England surprised markets with an equivalent rise of its main interest rate to 4.75 per cent. The world's leading central bankers are now as one in tightening monetary policy. Thursday's European rate rises followed swiftly on the Bank of Japan's move to end its long-standing zero interest rate policy and the Federal Reserve's quarter-point rate rise to 5.25 per cent late last month. Australia this week also raised its key rate by 25 basis points to 6 per cent. Central bankers believe that four years of rapid global economic growth, high energy prices and historically low interest rates have led to mounting inflationary pressure worldwide."

WHO WILL PROTECT US?

t r u t h o u t 08.04
Go directly to our issues page: http://www.truthout.org/issues.shtml
John Conyers The Constitution in Crisis http://www.truthout.org/docs_2006/080406R.shtml
Congressman John Conyers released the final version of his report today, the "Constitution in Crisis." The report, which is some 350 pages in length and is supported by more than 1,400 footnotes, compiles the accumulated evidence that the Bush administration has thumbed its nose at our nation's laws, and the Constitution itself.

TNX CHART UPDATED, UP CHANNEL INTACT SO FAR

Click to enlarge, click 4 arrow image in right lower corner to enlarge again.

THE LANDING PAD

http://www.contraryinvestor.com/mo.htm MORE ON HOUSING, MUST READ.

I have done my research, and the market consistantly bottoms in OCT, 2003 it was AUG because of end of bear. AUG-OCT historically have been the WORST times to be IN the market.

LOTS of EMPHASIS is being placed on FRI employment report (a STRONG report will roil markets IMHO) as being THE data point the FED will make their decision on rates next week.

MANY are calling for the end of rate hikes then, and that it will PROPEL mkt into stratosphere.

I think we go sideways until that day 2:15 you know what they know. The report tomorrow could set the tone, tune in 8:30 AM briefing.com

D

GOING NOWHERE SLOW

Generals raise fears of Iraq civil war AP - 1 hour, 49 minutes ago
WASHINGTON - The top U.S. military commander in the Middle East told Congress on Thursday that " Iraq could move toward civil war" if the raging sectarian violence in Baghdad is not stopped. "I believe that the sectarian violence is probably as bad as I have seen it," Gen. John Abizaid, the commander of U.S. Central Command, told the Senate Armed Services Committee.

**NOT enought boots on the ground, Iraqi's not ready to take over for US Troops, didn't start with a sound plan and we have made an unstable region more so, not what was intended in the "Master Plan".

Nope, it was WORLD PEACE, place another Democracy in Middle East and watch it spread (but terrorism spread), watch OIL prices decline as US gains control of 2nd richest KNOWN reserves and pumps like mad (OIL has TRIPLED!)

Best laid plans go astray, bad plans go bust!

D

REASONS TO IMPEACH?

http://www.talkingpointsmemo.com/docs/conyers-report/?resultpage=1&

Is there a Congressman in office that is awake?

Read FIASCO, pretty scarey if someone like WOlfowitz could influence a President to go to war.

D

WHAT ARE 2 PICTURES WORTH?

GET INFORMED BEFORE NEXT ELECTION

BuzzFlash.com's Review (excerpt)
From Penguin Books, the Publisher, About "Fiasco":"Many officers have shared their anger with renowned military reporter Thomas E. Ricks, and in Fiasco, Ricks combines these astonishing on-the-record military accounts with his own extraordinary on-the-ground reportage to create a spellbinding account of an epic disaster.

As many in the military publicly acknowledge here for the first time, the guerrilla insurgency that exploded several months after Saddam's fall was not foreordained. In fact, to a shocking degree, it was created by the folly of the war's architects. But the officers who did raise their voices against the miscalculations, shortsightedness, and general failure of the war effort were generally crushed, their careers often ended.

A willful blindness gripped political and military leaders, and dissent was not tolerated.There are a number of heroes in Fiasco—inspiring leaders from the highest levels of the Army and Marine hierarchies to the men and women whose skill and bravery led to battlefield success in towns from Fallujah to Tall Afar—but again and again, strategic incoherence rendered tactical success meaningless.

There was never any question that the U.S. military would topple Saddam Hussein, but as Fiasco shows there was also never any real thought about what would come next. This blindness has ensured the Iraq war a place in history as nothing less than a fiasco. Fair, vivid, and devastating, Fiasco is a book whose tragic verdict feels definitive."

TECHS TO BOTTOM EARLY?

http://news.goldseek.com/ClifDroke/1154286531.php Droke is good guy IMHO, worth a read.

D

FRI AM DATA ALERT

GDP CAME IN AT 2.5, EMPLOYEE COST INDEX UP .9% AND HAS BEEN RISING STEADILY.
SO WE HAVE A SLOWING ECONOMY, COSTS OF KEEPING EMPLOYEES RISING SHARPLY, AND INFLATION IS IN THE AIR!
WHAT IS MORE IMPORTANT THAN THE DATA, IS TRADER REACTION. WITH THE TRANSPORT INDEX BREAKING DOWN BADLY, CAUTION IS ADVISED

TRANSPORTS NOT CONFIRMING RALLY, FDX THRU SUPPORT

ON THE WINGS OF A BUTTERFLY

ON THE WINGS OF A BUTTERFLY, I AM FREE
I AM FREE OF THE WORLD’S TROUBLES
I AM FREE TO FLY ABOVE ALL THE WORRIES
I AM FREE TO LEAVE THIS WORLD AND ENTER
A NEW ONE

A NEW WOLRD FREE OF STRIFE AND TURMOIL
FREE OF HATE AND INJUSTICE
FREE OF CRIME AND INPATIENCE
FREE OF THE HANDS OF TIME

ON THE WINGS OF A BUTTERFLY, I AM FREE
I AM FREE TO GO WHERE I WANT
I AM FREE OF ALL PAIN
I AM LIGHT AS A FEATHER AND HAVE NO WORRIES
ON THE WINGS OF A BUTTERFLY

I HAVE ONLY ONE REGRET IN LEAVING THIS WORLD
AND THAT IS THAT I CANNOT BE WITH YOU ANYMORE
YOU HAVE BROUGHT ME SO MUCH JOY IN MY LIFE
I HOPE YOU KNOW HOW MUCH I LOVED YOU

ON THE WINGS OF A BUTTERFLY I AM FREE,
BUT I CANNOT HAVE YOU
BUT WHAT I DO HAVE, AS DO YOU IS A LIFETIME OF MEMORIES
OF HAPPY TIMES AND OF LOVE AND JOY

I KNOW WHAT WE MEANT TO EACH OTHER
THE SADNESS AND EMPTYNESS WILL LIFT
ON THE WINGS OF A BUTTERFLY I AM LIFTED FROM MY SORROW
AND AM UPLIFTED WHEN I THINK OF YOU, OUR LIFE TOGETHER

I WILL BE THAT BUTTERFLY SOMEDAY,
AND I AM SURE WE WILL MEET AGAIN
HIGH ABOVE THE WORLD
WITHOUT A CARE, IN TOTAL PEACE
AND TOGETHER AGAIN.

IN LOVING MEMORY AND EVERLASTING PEACE. RUTH, MAY YOUR MOM REST IN PEACE.

DURATEK

ACTIVE SPX CHART UPDATED

Comments on chart are valid, higher lows DID lead to price rise, above short term downtrend line as drawn. Will be interesting to see how this all plays out.

Click to enlarge.

D

To one of my readers

lastch,
appreciate you comments. I have been studying technical analysis for over 8 years now and have been implimenting a system for identifying TRENDS.
It is not quite perfected as to signal exit points, but is very accurate and will be something I will use to trade over any other method. Trend Followers are the MOST succesful traders, so this is what I choose to emmulate.
Maybe I underestimated how I would fell posting to the thin air, not knowing how I was reaching or effecting people vs the email replies and phone conversations with my trading friends, all of whom are extremely saavy and knowledgable.
My reasoning was to have my blog so I could share what I was learning, and I am never short of an opinion.
IMHO, this US market is setting up to put a real hurting on as many as it can lure in.
Looks like it may run to 1280-ish on the SPX, the NAZ is still way underperforming, it led the way to 2000, it led the way in 2003 recovery, it is only group that has signalled the BEAR is BACK using my TA I developed.
Today is strong mkt it looked? YET TRANSPORTS were off near 2% !
Wasn't it the Trannies which led this mkt up? and hit NEW all time highs this year? Yes it was, now their path is diverging....ominous IMHO. UPS key transport missed earnings...so did DUpont.
EBAY INTC DELL AMZN YHOO MSFT all languish near 52 week lows or worse...what's going on?
90% up days then 80 and 90% down days...all in same month? MOST volatile mkt in 55 years, most dont see it...they see what CNBC is peddling.
For you my friend, have helped me realize why I loved my blog....to help open the minds and make people think about what is really going on.
One must not take what is handed them as the truth.
Check back in from time to time, I will do my best to put something of value on my blog as best I can.
Duratek

PICTURE OF THE DAY

I don't think a tradable bottom is in place, sufficient demand at current prices has not shown up IMHO. It may not be until normal cyclical lows made in Sept/Oct time frame. This I might ride into Dec and then skeedaddle until MArch.

Think about the action in the Dow, has it been bullish? higher highs? lows?

With extreme prices being paid in energy, and NO relief that can be seen, inflation is more than on our doorstep. And higher oil trickles down into almost everything we buy or need.

Dollar is soaring today, news reports say it's because of middle east unrest, imagine that the US $$$ as safe haven...LOL gues they do not care about the $trillions in debt and unfudned liabilities? Gold off in reaction.

So, we have an engine, in ASIA some have called CHINDIA (complete investor) that is gaining spedd and horsepower and is insatiable in its growing deamnd to feed....consume natural resources, this may be unstoppable unavoidable and the result could be a doubling in energy consumption in 10 years! HOW is this demand going to be met?

We are ill prepared and not moving FAST enough to deal with these andmany other issues. We have a puppet at the helm we only get lip service from.

Ford comes out with 500 HP Mustang, neat huh? SUV'S roam the land, Hummers on every street, it isnt that they can't afford the gas, it is the rate of consumption that is the problem, gas mileage MUST increase, conservation, more diesel engines, new fuels and technology.

Lots of talk about ETAHNOL, but it is nt very efficient, and it takes lots of POWER to produce, pesticides etc, sugar cane is more reasonable source, of which the US has none. INstead we put tarrif on incoming Ethanol and add a SUBSIDY you and I pay for towards US produced Ethanol, Ethanol cannot stand on its own without 50 Cent gal subsidy, again you and I pay.

My moving average work tells me NAZ is in bear market again, with the DOW and SPX VERY close, but no signal yet. But one thing seems very clear to me, the demand for stocks is dwindling while supply increases, this is setting us up for a big mistake. And we just had 3 staright triple digit losses.

Lemmings are staying put for now, and I still expect a nice rally from lows in Fall into year end, but that will only be a temporary lull before more increased selling action returns.

It seems like a NO BRAINER to invest in oil and energy related stocks here, you see it on every magazine cover, Peak OIL stories abound, "we are running out of oil"....WHO doesn't think oil is just going to keep going up?

And that is what bothers me, contrarian as I am, it seems too easy. TOO many people think this is true.

I agree no new oil discoveries of significance have been found in last 10 years. Demand from China and India is growing exponentially, these are all real situations.

My gut tells me a correction is coming and if I was wanting to add for start positions, this is what I might look for. Gold and OIL charts look like bull markets, so good chance of higher highes down the road.....but you always get bull corrections too.

When wanting a position in something, it is sometimes a good idea to ease into it, 1/3 a 1/3 and if trend is solid all in the amount you have decided you can risk, and an exit strategy.

Not every trade will be a winner, even if based on sound theory, so it is key to keep your losses small. It is NOT so important to be stubborn and be proven right. The best make mistakes all the time, it is just when they ARE right it is in big way.

COULD HIGH ENERGY prices, inflation, weak hosuing market, and FED rate increases all conspire to cause a Recession?

I think so, and wouldn't a world slowdown, weaken demand for oil? With lots of supply meeting current demand, if demand slackens, won't prices tumble?at least temporarily?

Things are getting VERY interesting, and troubling, stay tuned.

Duratek

BOJ BUSTS A MOVE

BoJ ends zero interest rate policy

Peter Alford, Tokyo correspondent 15 jul 06T

HE Bank of Japan has terminated its zero interest rate policy, marking the country's emergence from a twilight zone where bank accounts pay 0.001 per cent, a standard home mortgage rate is 2.5 per cent and apartments are worth 70 per cent less now than 20 years ago.Yesterday's decision to move the overnight call rate target, the so-called policy rate, from "effective zero" to 0.25 per cent for the first time since March 2001 underscores the central bank's confidence that Japan's long struggle with deflation is finally won.
Major retail banks greeted the news with an immediate interest lift for ordinary at-call savings bank deposits from 0.001 per cent to a princely 0.1 per cent.
Dai Ichi Life Research cautioned, however, that tangible benefits would only be felt by the rich and the debt-free elderly - the 12 per cent of households who control more than half Japan's Y728 trillion ($8.37 trillion) of bank savings and deposits.
Dai Ichi estimated the interest rate shift would add about Y557 billion annually to household incomes and cost home mortgagees an additional Y135 billion.
The yen, bond prices and the Tokyo stock market dropped yesterday and a senior analyst, Credit Suisse Securities chief economist Hiromichi Shirakawa, warned the combined effect of the Japanese tightening and US inflation news next week could roil world markets.
"We share (the BoJ's) concern, which is mainly a further downturn of equity markets globally," Mr Shirakawa said.
"Next week could be when we again see downward pressure on equity markets."
Two other uncertainties worry the Japanese markets; the timing of further rate rises and the future of BoJ governor Toshihiko Fukui, widely regarded as an important factor in Japan's stabilisation following a decade of BoJ policy failure.
"We have no intention to carry out consecutive rate rises," Mr Fukui told journalists last night. "We will adjust interest rates gradually while carefully checking the economy and prices."
However, Mr Fukui's gradualist language does not impress analysts such as Macquarie Securities Japan chief economist Richard Jerram who noted this week that so far this year the BoJ had tightened monetary conditions at the earliest opportunity and quickly. Some Tokyo market economists said yesterday the BoJ still planned to get to 1.5 per cent by March 2008 when 71-year-old Mr Fukui's term ends.
Others, such as Mr Shirakawa believe political conditions - the governing Liberal Democrat Party elects a new prime minister on September 20 - followed by worsening international conditions and a sharp downturn in the Japanese corporate profit cycle will prevent the BoJ from tightening again before mid-2007. On the second question, Mr Fukui indicated he intended to stay at the post. "I caused a fuss and worried many people, but I still have a duty to fulfil," he said. "There is no change in my intention."
The governor has been wildly assailed over his investment seven years ago in the now-notorious Murakami fund. Mr Fukui has been cleared of any illegality or conflict by a BoJ examination, but the association with alleged inside-trader Yoshiaki Murakami has made him bitterly unpopular - 72 per cent of respondents to a newspaper poll released yesterday said he should resign.

GLOBAL LIQUIDITY SQUEEZE???

http://www.contraryinvestor.com/mo.htm No wonder commodity prices have slumped?

Duratek

HOSTILE AND YOUR MONEY

Because I am HOME ALONE for a few days, I use this time to reflect, and to watch bad movies. So last night I chose HOSTILE and Underworld 2

Now Hostile started out great, great looking woman taking their clothes off, party time in Amsterdam for the 3 friends, until they find out the hard way they been had....."I make money on you, that makes you my bitch" says the beautiful vixen. As it turns out, unsuspecting people are being sold for torture, and you could pony up $50K and pick one to mame and kill as you like.....what fun!!!!! Underworld? well who wouldn't love a classic battle against werewolves and vampires?

We are at a crossroads, right here, right now! WHat to do?

Summer rally could be nigh, and it would make sense to come next Wed/Thur around the next Fed meeting on interest rates. 2 more hikes according to futures bets seem clear, MOST think 50 more basis points and DONE....some even think 50 comes next week signaling the FED IS DONE FOR NOW!!!!!

Isn't that what everyone is waiting for? Isn't that reason to PARTY ON DUDE?

Let's think about that. What would the END OF HIKES MEAN FOR US? It would mean SHOR TERM rates halt their rise, but longer term rates are controlled by market forces, and if they DROP, they would INVERT again (already are) signalling RECESSION ahead is likely.

Wouldn't the market like a potential CUT in interest rates by FED? but after such a historic rise in home prices and building activity, lowering rates would NOT, IMHO lead to another leg up in housing.

The US DOLLAR has been in rally mode, and as EWT calls for a 100 index move for dollar, so many feel it impossible to happen, majority long the Euro, that is Hedge Fund buying. A crowded trade is not where I want to be.

Long term rates have broken out, and is causing much pain in economy, higher credit card rates, double minimum payments not to mention a coming rise to all those in adjustable mortgages.

Consider that REAL INFLATION is present in economy, even in manipulated government data, the hawkish tone of FED might mean they overcompensate for these inflation possibilities, as they often overshoot. I mean what would you call keeping rates at 1% for a year when rates fell?

I was just in Fla., and I saw MUCHO for sale signs, prices are easing, inventory rising, speculators may be caught with hand in cookie jar. Speculators fueled the unwanted rise in prices, not NORMAL demand, and it also has unwanted side effect of raising everyone's property taxes!!!

I have read the negative savings rate doesn't matter, that as long as Consumer's keep spending we'll be fine, or if they begin to lighten up, Business Spending will cover the slack. But a recent CEO POLL showed 41% CUTTING SPENDING!!!!!!!



"FORTUNE TELLERS LIVE IN THE FUTURE. SO DO PEOPLE WHO WANT TO PUT THINGS OFF. SO DO FUNDAMETALISTS" ED SEYKOTA

"PROFIT TARGETS IMPLY A TRADER CAN PREDICT THE FUTURE. PROFIT TARGETS ARE PROFIT-LIMITING. TREND FOLLOWERS STAY IN THE MOMENT OF NOW, AVOID PROGNOSTICATION, AND LET THE MARKETS RUN AS FAR AS THEY GO." STUDENT OF ED SEYKOTA

"CONFIDENCE COMES FROM SUCCESS, TO BE SURE, BUT IT CAN ALSO COME FROM RECOGNIZING THAT A LOT OF CAREFULLY EXAMINED FAILURES ARE THEMSELVES ONE PATH TO SUCCESS." DENISE SHEKERJIAN

Friends, the markets will tell us, price action will dictate our course, and there is NO reason trying to predict what no one can.

Duratek

ABRAMOFF : FOLLOW THE MONEY

E-Mails Reveal Abramoff Requests, Contacts
By JOHN SOLOMON, Associated Press Writer
document.write(getElapsed("20060625T133227Z"));
39 minutes agoUPDATED 12 MINUTES AGO

Jack Abramoff leaves Federal Court in Washington, Jan. ...
WASHINGTON - Wanted: Face time with President Bush or top adviser Karl Rove. Suggested donation: $100,000. The middleman: lobbyist Jack Abramoff. Blunt e-mails that connect money and access in Washington show that prominent Republican activist Grover Norquist facilitated some administration contacts for Abramoff's clients while the lobbyist simultaneously solicited those clients for large donations to Norquist's tax-exempt group.
Those who were solicited or landed administration introductions included foreign figures and American Indian tribes, according to e-mails gathered by Senate investigators and federal prosecutors or obtained independently by The Associated Press.
"Can the tribes contribute $100,000 for the effort to bring state legislatures and those tribal leaders who have passed Bush resolutions to Washington?" Norquist wrote Abramoff in one such e-mail in July 2002.
"When I have funding, I will ask Karl Rove for a date with the president. Karl has already said 'yes' in principle and knows you organized this last time and hope to this year," Norquist wrote in the e-mail.
A Senate committee that investigated Abramoff previously aired evidence showing Bush met briefly in 2001 at the White House with some of Abramoff's tribal clients after they donated money to Norquist's group.
The 2002 e-mail about a second White House meeting and donations, however, was not disclosed. The AP obtained the text from people with access to the document.
The tribes got to meet Bush at the White House in 2002 again and then donated to Norquist's Americans for Tax Reform, or ATR.
Though Norquist's own e-mail connects the $100,000 donation and the White House visit, ATR spokesman John Kartch said Norquist never offered to arrange meetings in exchange for money.
Instead, Norquist simply wanted Abramoff's tribes to help pay for a conference where lawmakers and tribal leaders passed resolutions supporting the Bush agenda, ultimately securing a brief encounter with Bush, Kartch said.
"No one from Americans for Tax Reform ever assisted Jack Abramoff in getting meetings or introductions with the White House or congressional leaders in exchange for contributions," Kartch said, suggesting some of the e-mails might be misleading.
"If you look at some of Abramoff's e-mails to third parties, they might be misread to suggest that he was misrepresenting or confusing support for a project with a specific meeting," Kartch said. "This could have been deliberate or just unclear."
Kartch said: "People were invited to ATR's conference and to the White House only if they worked on pro-tax-cut resolutions. Nobody was invited because they made a contribution to ATR."
Lawyers for Abramoff declined comment.
The White House said Rove was unaware that Norquist solicited any money in connection with ATR events in both 2001 and 2002 that brought Abramoff's tribal clients and others to the White House.
"We do not solicit donations in exchange for meetings or events at the White House, and we don't have any knowledge of this activity taking place," said a White House spokeswoman, Erin Healy.
After the tribes' 2002 event with Bush, Norquist pressed Abramoff anew for tribal donations _ this time for a political action committee. "Jack, a few months ago you said you could get each of your Indian tribes to make a contribution. ... Is this still possible?" Norquist asked in an October 2002 e-mail.
Abramoff responded that "everyone is tapped out having given directly to the campaigns. After the election, we'll be able to get this moving."
The e-mails show Abramoff delivered on his original promise to get tribal money for the event that included the Bush visit, sending one check from the Mississippi Choctaw tribe in October and one in November from the Saginaw Chippewa of Michigan. Kartch said Abramoff didn't deliver on PAC contributions.
Norquist and Abramoff were longtime associates who went back decades to their days in the Young Republicans movement. Norquist founded ATR to advocate lower taxes and less government. He built it into a major force in the Republican Party as the GOP seized control of Congress and the White House.
Abramoff became one of Washington's rainmaker lobbyists before allegations that he defrauded Indian tribes led to his downfall and a prison sentence. He is cooperating with prosecutors.
At the time ATR dealt with Abramoff, Kartch said, "he was a longtime and respected Republican activist in Washington. There was no reason to suspect any of the problems that later came up."
The e-mails show Abramoff, on multiple occasions, asked clients for large donations to Norquist's group while Norquist invited them to ATR events that brought them face to face with top administration officials.
For instance, several months after donating $25,000 to Norquist's group, Saginaw officials attended a reception in the summer of 2003 at Norquist's home. They posed for a photo with Norquist and Labor Secretary Elaine Chao.
A few weeks earlier, then-Saginaw tribal chief Maynard Kahgegab Jr. had been appointed by Chao to a federal commission, according Labor Department and tribal documents obtained by the AP.
The Saginaw used the Chao photo, the commission appointment and photos they took with Bush at the White House to boast on their internal Web site about the high-level Washington access that Abramoff's team had won.
Labor officials confirmed that Chao attended the reception at Norquist's home. But they said they do not know who recommended Kahgegab to be appointed in May 2003 to the U.S. Native American Employment and Training Council. The department sought to remove the chief a year later after he lost a tribal election, documents show.
"This is one of hundreds of advisory appointments that are sent forward by agencies within the department for front office signoff," said a department spokesman, David James.
ATR's Kartch suggested Chao's contact with the Saginaw at Norquist's home was incidental. "ATR does many receptions for supporters. There were dozens of people in attendance that evening. This event was not organized specifically for any person, but was rather a widely attended general event," he said.
Norquist did make a special effort _ at Abramoff's request _ to introduce a British businessman and an African dignitary to Rove at another ATR event in summer 2002.
Abramoff bluntly told Norquist he was asking the African dignitary for a $100,000 donation to ATR and suggested the introduction to Rove might help secure the money.
"I have asked them for $100K for ATR," Abramoff wrote Norquist in July 2002. "If they come I'll think we'll get it. If he is there, please go up to him (he'll be African) and welcome him."
Norquist obliged.
"I am assuming this is very important and therefore we are making it happen," the GOP activist wrote back, promising to introduce the two foreigners as well as a Saginaw tribal official to Rove that night.
A day later, an ecstatic Abramoff sent an e-mail thanking Norquist for "accommodating" the introductions. "I spoke with the ambassador today and he is moving my ATR request forward," the lobbyist wrote, referring to the donation.
Kartch confirmed Norquist invited the foreigners to the ATR event, but Kartch said the group never asked for, expected or received the $100,000.
It was not the first time that Abramoff sought ATR donations in connection with lobbying business. E-mails dating to 1995 show Abramoff solicited donations from clients to Norquist's group as part of lobbying efforts.
"I spoke this evening with Grover," Abramoff wrote in an October 1995 e-mail outlining how Norquist and his group could help a client on a matter before Congress.
Abramoff wrote that the lobbying help he was seeking from Norquist's group was "perfectly consistent" with ATR's position but that Norquist nonetheless wanted a donation to be made.
"He said that if they want the taxpayer movement, including him, involved on this issue and anything else which will come over the course of the year or so, they need to become a major player with ATR. He recommended that they make a $50,000 contribution to ATR," the lobbyist wrote.
Abramoff cautioned one of his colleagues that the donation needed to be "kept discreet."
"We don't want opponents to think that we are trying buy the taxpayer movement," he said.
Kartch denied that anyone at ATR asked Abramoff for the money. "ATR is not responsible for comments by Jack Abramoff to third parties," he said.
Copyright 2006 The Associated Press

MARCH 2001 AND HIGH ALERT CRASH WARNING

http://www.gatech.edu/news-room/archive/news_releases/allvine.html

A Very Likely Scenario Is For Rate Cut To Cause A Short Term Bounce In Stock Market:
In the past the stock market normally advanced quickly on 1st or 2nd cut of rates by the Federal Reserve. If rates are cut on Tuesday, then this will be the 3rd cut. Our expectation is for there to be a market rally for a few days or a couple weeks. Then we expect the market to turn down and move into lower territory. In other words we believe there is a strong likelihood of a Bear Market Rally, but we do not believe this is the end of the Bear Market. Those needing to raise some cash could liquidate some stocks if the advance occurs, but I do not believe this is a time to be increasing commitment to the stock market.

Why Expect Immediate Advance In Stock Market (if it occurs) To Be Short Lived:
There are two fundamental reasons for believing that the Bear Market will continue, and it will take more cuts in the Discount and Federal Funds rate before the bottom is in place. The first problem is that levels of market valuation remain high and are not consistent with market bottoms. For example, the P.E. ratio of the S&P 500 climbed from 16 at beginning of 1995 to 36 (a 50-year record) at the top of the market in March 2000. The P.E. Ratio for the S&P 500 has come down to 22.6 from 36, but is still way above the average of 16.2 P.E. from 1970 to the present (see chart). In addition, as stock prices soared the dividend yield has fallen from 6% in 1980 to a little over 1% a few weeks ago (now 1.36%). In other words, for the market to put in a real bottom we would expect the P.E. Ratio to fall from 22.6 to around 15, or a decline of another 35%.

The NASDAQ Is Even More Overvalued:
The NASDAQ climbed to a P.E. of 200 at the top of the market in early 2000 and has fallen to around 80. The average PE for the NASDAQ is close to 35 times earnings so the NASDAQ could fall by another 50% to bring it down to its historical average.

Other Problems Hanging Over The Stock Market:
We have gone through the longest economic expansion in history that started in March 1991. The almost 10-year long boom has presented great economic times for many Americans. But at the same time there have been some excesses that have come along with the economic boom. To participate in the good times, consumer credit has exploded with credit cards being extensively used to acquire more of the good life. Home equity (% of equity in a home to the value of the home) has fallen sharply as home owners have refinanced their homes and increased their mortgages, while others have taken out secondary mortgages on their home to finance consumption. Huge credit card debt and home mortgage debt is a hangover from the longest expansion in the history of our economy.

Danger In A Near Zero Savings Rate:
The personal savings rate during the 1960s, 1970s, and 1980s ran from 7%-8%, but in the booming carefree 1990s the personal savings rate has fallen to near zero. With the implosion of the stock market and family wealth and job uncertainty (and rising unemployment if economy further tightens), it can be clearly anticipated that the personal savings rate will start to rise. When everything is bright (good jobs, easy credit, and growing retirement and investment portfolios), then people will cut their savings rate (as has occurred during the booming 1990s). If the saving rate were to start climbing from the 0-1% level now back to 7%-8% (the norm), then this could take 2%-3% out of GDP for several years and cause stagnation much like has occurred in Japan. If the black economic clouds grow, then Americans will pull back from their spending ways and start again saving for a rainy day. We could become more like Japan where personal savings has rapidly increased over the last 12 years while the Japanese economy has been in the tank.

Summary:

We expect the Federal Reserve to cut rates when it meets tomorrow and this is in our opinion the appropriate policy. In the past cuts in the Fed Funds and Discount Rate has been very bullish for the stock market. We believe there is a good chance of a Bear Market Rally if the Fed cuts rates on Wednesday. But after a few days or a couple of weeks, we expect the market to move to new lower territory. Primary reasons for this opinion is that levels of market valuation remain fairly high (not what are usual at market bottoms). In addition, there are excesses associated with the record long economic boom that will have to be worked out before the economy can again advance strongly with stock prices climbing.
*****
Flash forward to today!!! (Duratek)

We now have negative saving rate, consumption was NEVER curbed during the 2001 Recession nor anytime during the 2000-2003 Bear Market, only more excesses more piled up, more debt etc. We are LESS prepared then to deal with any economic adversity.

Higher energy costs, inflation in areas of consumer needs not wants make the disposable income scenario much worse, as wages have FAILED to keep up with even basic inflation.

Real estate has begun to deflate, a major driver of economy, and is why I believe the commodity prices have begun to decline, and may be entering a bear market.

Chinese stock market is in bear market and recently plummeted by 5%.

VIX ratio is now in an uptrend and we have experienced TWO 90% DOWN DAYS in stock market in past 30 days, VERY good chance Bear Market is BACK!!!!! The risk is to the downside, and we have enterred the weakest 6 months of stock market returns.

Stock market leadership is nowhere to be found, MANY Dow and SPX stocks near 52 week lows, any near 52 week highs continues to diminish near record levels.

IMHO, with cyclical bull rally in very elder stages, extreme caution is now advised. Consult with your financial professional to see if your portfolio can withstand the return of the Bear Market should that be the reality.

The financial mechanisms are surrounded by GS cronies, let's see what PPT team can do.

Duratek

SIMPLE IS BETTER

(click to enlarge)
http://stockcharts.com/h-sc/ui?s=$SPX&p=W&b=3&g=0&id=p64235656637

What IS crystal clear to me, is you can even have correction back to 75 WEEK EMA and STILL have a bull mkt! AS long as ????? all 3 of these MA’S are rising stacked on top of each other,

and when the 20 WK slices thru and down, this Bull is officially OVER IMHO, cause when Is the last time that crossover occurred? Back in 2000-2001

And UP again in 2002-2003, I don’t need to know anything more than that.

Duratek (How's my posse doing? or is it one hand clapping?)

PEBBLE BED REACTORS

May 23, 2006
Pebble Bed Technology and the Uranium Super Bullby Sol Palha
"Ability hits the mark where presumption overshoots and diffidence falls short." - John Henry Newman 1801-1890, British Religious Leader, Prelate, Writer
China has come up with a new nuclear technology called "pebble bed technology". Essentially power plants built with this technology could only do one thing if something went wrong and that would be to shut down. It would be impossible for these reactors to explode or melt down. The idea is rather simple. Balls of Uranium power these reactors and each ball of uranium is wrapped in an incredibly strong layer of silicon carbide. These spheres have a much higher melting point then the temperature inside the reactor could ever reach. So essentially it would be impossible for the reactor to meltdown or explode. This technology is in the test phase but if it works out as envisioned China will leap frog ahead of the US in this area and then one wonders if they would not export this technology to countries that could help them meet their energy needs. One such country is Iran; in 2003 Iran alone supplied China with over 14% of its oil needs. This figure is definitely substantially higher today. China is desperate for energy and they openly admit to this; when one is desperate for something one is willing to trade almost anything.
"We need every type of energy," says Zhang Zuoyi, head of the institute that helps run the pebblebed test reactor. "We are hungry." China's leaders won't listen to naysayers. They can't afford to.
Another point of interest is that China is about to embark on the biggest nuclear power building plant spree ever undertaken by any nation. Their goal is to derive roughly 4-5% of their Energy needs from Nuclear Power in the next 15 years. While this might sound small when compared to other nations this simple plan means that China will need to build roughly 45 nuclear plants in 15 years or about 3 plants every year. Imagine what effect this will have on uranium prices. Off course in the next few years they could come out with even better technology, which might mean even more nuclear plants. Right now the limiting factor is that no one has thought of coming up with a nuclear power plant assembly line. We are positive that one nation will adopt this idea and when they do installing a new plant will be something that takes months instead of years.
China's new pebble bed technology might be one of the reasons India is not too worried about the nuclear deal falling through with the United States. Not only is this technology superior but also it will most likely cost a lot less and they will not be pushed into a position of having to forcefully take a stance against Iran. Increasingly it appears that more nations are willing to stand up to the US and as the saying goes there is strength in numbers.
China is positioned to leapfrog the world in nuclear power precisely because it entered the race late. Until now, the country has built a hodgepodge of reactors with different technologies and safety features. But recently top leaders decided to build a newer infrastructure virtually from scratch based on the most advanced, and safest, technologies. Although the pebble-bed reactor is not yet ready for prime time, the government is buying equipment and designs that have never been built before. China plans to choose one design of three submitted by Areva of France, Atomstroy export of Russia and Westinghouse Electric for an $8 billion program to build reactors in the eastern province of Zhejiang. (Some industry experts say Areva will probably win, especially since the Chinese government may bristle at the recent takeover bid by Japan's Toshiba on Westinghouse.) The Chinese plan to work closely with the winner to learn how to design and operate the reactors. The goal is to use this technology as the basis for subsequent Chinese plants.
The most likely technology to export, of course, is the pebble bed reactor. All reactors, including the pebble bed, use uranium fuel to produce heat that is used to turn electrical turbines. In conventional so-called light-water reactors, the heat is generated by thousands of fixed metallic rods, which require elaborate cooling systems to keep them from overheating and backup cooling systems in case the primary ones fail. Furthermore, a conventional reactor must be housed in a concrete containment vessel to mitigate damage in case it overheats. In the pebble bed reactor, thousands of tennis-ball-size spheres coated in layers of silicon carbide, ceramic material and graphite each contain thousands of granules of the fuel, uranium dioxide. Because the pebbles dissipate heat so efficiently, say the designers, the fuel inside them couldn't possibly get hot enough to penetrate the graphite casing. The pebble-bed reactor, in fact, doesn't even have a containment vessel. Another advantage of pebble beds is that it's easier to make small plants and put them up quickly, which lends itself to China's plan of spreading plants around the hinterlands. Extracting fuel from pebble bed reactors to use for weapons would be difficult and expensive. Full Story
Conclusion
Even Ukraine which had renounced nuclear technology has decided that they need to build at least 15 plants over the next decade to prevent a repeat of the recent energy crisis when Russia cut of gas supplies to Ukraine. Almost every nation is slowly but surely embracing nuclear energy something that was once shunned. While we have many nations focussing on developing new technologies for nuclear power plants no one is spending the time and money needed to find new supplies of uranium and open up new mines. Current demand far outstrips the available supply and one can only imagine the uranium crunch that will be created in years to come unless a massive program to open up new mines and find new supplies of uranium is undertaken shortly. As usual a crisis that could have easily been prevented will be allowed to develop into a full blown disaster before something meaningful is done. The reasons are always the same; key big players are going to make fortune and the expense and misery of others. When the choice comes to down to money or doing the right thing 9 out of 10 times money wins. Hence make sure that you own the right companies and buy them at the right time as they are many useless so called uranium companies out there. One can also buy a great company at the wrong time. In order to win one has to buy at the right time and also sell at the right time.
"The principle of all successful effort is to try to do not what is absolutely the best, but what is easily within our power, and suited for our temperament and condition." - John Ruskin 1819-1900, British Critic, Social Theorist

PAUSE THAT WON'T REFRESH

http://www.bloomberg.com/apps/news?pid=10000103&sid=aD_NO5xcEUzQ&refer=us REAL worl evidence of inflation, Fed is bixed in a corner.

Last 8 X Fed discount rate reached 6% (we are there now) there was severe market reaction.

Evidence of 90% or near so down volume yesterday, selling pressure hits a new yearly high.

Vix highest level in 8 months, are the PRO'S getting nervous?

I may be jumping the gun, (meaning getting moving avg confirmation) but stock market action just as we were about to take out OLD bull market highs, making me think Bear market may be back, worst action since cyclical bull began, IMHO

Don't ignore history, are you going to stay fully invested in an aging bull mkt?

Duratek

REASONS

http://www.prudentbear.com/archive_comm_article.asp?category=Credit+Bubble+Bulletin&content_idx=54398

Doug Noland is THE place to go for raw data, and you WILL get something from this TOUGH read.

D

HOW MARKET TOPS ARE FORMED

Ethanol bull (PEIX) could be starting, remember ALL bulls correct, I think TOO many on board, it has been too easy, so a SHAKEOUT is coming, IMHO not bashing just MHO. certainly this stock has been hot.

BUT, if I am correct, and I am not alone, the top in the cyclical bull could be in.,,,and If I am correct it is very possible the bear rips ALL a new one....bonds MAY do better, but so far havent found bottom, a normal safe haven....gold sure has but WAY overbought will plummet in short order

IMHO A STEEP drop in commodities may signal tougher times ahead,,,,especially SILVER AND COPPER....used in all kinds of products....OIL fell as demand eased?

Utility avg usually tops 6-8 mnths ahead of DOW...it topped last OCT 2005. TRANS new ALL time high, but for 6 years DOW didnt agreee, and withing a snot shot this week it has run away from that new high (maybe it tries again)...NAZ topped months ago....so we dont have a unified market working to new highs together.
And we have VERY few of the Dow 30 close to 52 wk highs....and we have PLENTY of stocks off already by 20% or more....ad that % keeps rising.WHat is wrong with MSFT AMZN YHOO INTC DELL EBAY GOOG IBM GM WMT etc etc...many of these are making 52 wk LOWS Under your nose.
Insider selling is at a frenzy, whats their hurry? and here to http://finance.yahoo.com/q/it?s=PEIX Maybe I am wrong, but if your stocks are acting badly, take them out, shoot them, raise cash ....all IMHO

A BEAR has torn even the bears hide to hide....and hasnt it been easy to be a CRAMER?
Been 3 YEARS!!!! since last 10% correction......VIX is moving up, if that continues the PRO'S are getting nervous...you better too.

OK and dismiss me as a nut case, but remember the day you read this.....in the future.We are in a SECULAR BEAR trend, the FED and BUSH have fought it tooth and nail,,very well.....but it has grossly maladjusted our economy and made our "friends" STRONGER, helped build the Chinese Military too.Yeah, 10's of millions willing to work for $200 or less a MONTH!!! how they gonna afford OUR JUNK? oh yeah on credit?

You will figure out too late I am right, the trend may be changing back to the bear....and you cannot afford to drizzle saliva and let it rip you a new one..or can you?

Duratek

GOLD STANDARD, FED IN A BOX

1 M Chinese enter workforce every week (I think right? every day DOH!!?)
avg pay $190 aint gonna make them CONSUMERS instead of savers....as one astute Gov official said...." they need to be more like us!!! and us them!"
Chines official quoted as saying Gov needs to diversify TRILLION $$ reservese doubling maybe QUADUPLING GOLD reserves (reason for recent runup and iran)
State coffers in BLACK, new home buyers TRAPPED with rising costs for everything (cutting consumption or escallating debt or both) as the hidden tax PROPERTY TAX has sky rocketed with HIGHER asessments from housing BUBBLE, you wont see this OVER TAXXING refunded, GOV is OUT OF CONTROL with the taxes

Tarrif could be lifted on Ethanol, IMHO these stocks are VERY vulnerable if so (after speculative fever)

STocks should be near geared up as additive mandated for Summer driving season. Will the increased use of EThanol lead to INFLATION in the raw materials like CORN?

$700 gold? is this the "DATA" Fed is said to be looking at when meeting for rates? HOW does this go unnoticed? wouldnt INFLATION heat up and interest rates RISE sharply is the $$$ is NOT defended.

I think FED is in NO MAN'S LAND, a VICTIM......JAILED by their own hands/policies...NO WAY OUT.

A SEVERE correction at very least is LURKING.....none of us, anyone will see it coming as they stare at CRamer show.......

Up on deck? ATM snafu.......BUSH?repubs want EXTENSION of TAX cuts for RICH....and the AVG JOE gets killed by high energy, levitated Property taxes, and too high mortgages....the ATM tax etc.....etc....the DIV tax cut is for bleep.

"FOLLOW THE MONEY?"

http://www.contraryinvestor.com/moprinter.htm May commentary

When there isn't much to say I take a break, so let's catch up.

In a "floating on a sea of liquidity" and 8,000 hedge funds kind of market, it is not surprising to see a new high for move in Dow, and maybe all time high being less than 2% away, will follow......but all is NOT healthy.

As this rally goes into its 44th month from 2002/2003 lows, it becomes ever more LESS inclusive, and not all indexes have come along.

SPX and NAZ are far off their highs, Transports made new all time highs a year ago, without Dow confirmation, and in SEPT of 2005 the Utility index topped out!!! And can be a fore warning of end of the bull market.

What you must remember, is the rally from 2002 lows is in the context of a SECULAR BEAR MARKET, which will probably last up to the length of the preceding bull market, which means as long as 10- 20 years!

And there will be a few of these strong rallys, until the Bear has done its job and or run its course. Which is to restore ORDER, and the NORMS.

Dividend yields at near 2% is even LOWER than at any previous bull mkt top! At bear mkt bottoms near 6% is typical.

SPX earnings have been propped up from historic energy company profits and HUGE stock buyback programs.

Insiders are selling like mad.

It has been over 3 years since the mkt has corrected 10%.

Bear markets reduce speculation, volume on the BB (penny stocks) is DOUBLE what it was in 2000 !! DEBT has exploded, instead of consumers retrenching. Demand is being satiated, a gluttony, not pent up.

Housing has EXPLODED with excess speculation rampant and now unwinding.

I don't know if THE top is coming, but do feel some kind of important top is near, and we are now IN the dead zone for market, the seasonals nolonger supplying a tailwind.....IMHO caution is warranted.

Next update? when I feel like it.


Duratek