NEW HOME SALES

In 2000 and in 7 of the last 8 "RECOVERIES" Housing has led the economy....OUCH! Company earnings are led by head chopping and less by revenue growth.....cost of raw materials is eating into corp profits as would adding addt'l employees..... so what are we to do?

rally like all is well and balanced until that lie can;t be told anymore with avg dude believing it...for many its all in again

D

THEN AND NOW

I grew up in the 60's, back then lots of families made do with one salary, and the mother could stay at home, raise the kids....perhaps later on getting a part time job.....the US $ was strong.

It wasn't hard to get a job, most recessions didn't last very long, 6 months on avg or less....there wasn't so much debt back then.

Technology and hosuing drove the economy into the 2000 top, FED policy in fear of Y2K threw gasoline on the fire. What began as a growing managable expansion ended in WILD speculation and over building of capacity.....debt beagn to grow but was still under control.

We had ENRON...we had WORLCOM, and we HAD INTEL (INTC) which now 10 years later is maybe 25% of what it was then....

FED didn't like slow down, but that is what heals for the next push, BUT instead FED(Greenspan) lowered FED FUNDS to then unheard of 1% and kept it there! INstead of healing they begot another, this time more wild speculative bubble (#2)....real estate....housing mortgage debt bubble.

Rather than let it heal, and take the pain so we could rebuild from the ashes, the FED again embarked on an even more insane gambit and lowered funds to 0%....and it's still there at 0% 2 years later!!!!

If the economy could stand on its own 2 feet, would rates be 0%? Would the tax cuts inacted to battle last bear (10 years ago) be extended another 2 years? WOuld another round of QE be needed? WOuld 20% of Americans need gov't assistance? Would the housing market still be barely off its worst levels of 2009?

We keep hearing of jobs growing, housing recovering, exports growing and GM rebirthing..etc.....so when will FED END THIS INSANE GAME? Where savers get nothing? Where speculation is fostered? Where margin debt as exploded again to new highs....where leverage is not a dirty word......my g-d haven't we learned anything?

SO adding even MORE DEBT to the system is the way to heal a bursted debt bubble?

But amidst all the pain and hurt on main street, there is a once in a lifetime rally on wall street....and HUGE bonuses are the rage again. And bullishness has come back to peak levels and beyond....and it only took barely 16 months to accomplish that.

Maybe they pulled a rabbit out of the hat, but not in any way I can understand. The US is now saddled with $14 TRILLION of debt and no end in sight.....how can that be good? and we are not adding in Medicare and Social Security some say could add $50 TRILLION more.

MOST States and cities are BILLIONS away from balancing their budgets, Municipal bonds have sold off sharply.....cuts have been announced, many police and fire fighters will be laid off.

SO who knows folks, paper assets may rise to the heavens.......on a wing, a prayer and a Ponzi scheme.

I have NO doubt, the actions of these foolish men, desperate to fool the people and maintain their POWER, will end badly.....what you see now is what seperates PHASE ONE from PHASE 2 of a secular bear market....thats my take....PHASE 3 is out there....waiting

Duratek

SPX RISING

SUpport shown at the 20 and 50 DMA, both rising and uptrend line drawn, this is showing bullish behavior and trend.

Transports, NAZ, GOLD and RUT (small caps) have weakened and not hit new highs. The Dow has for the move, but SPX has not (1296)

Pattern of bullish monday action continues, almost a given.......how much better could it get? IS a smackdown still lurking around the corner? maybe, it just isn;t going to show on a Monday...........little guy is lured back, but top calling a difficult job....maybe just not yet.....sellers have not gotten heavy handed....no profits until you sell.

D

"DO YOU THINK THEY ARE ON TO US?"

http://imgs.sfgate.com/c/pictures/2010/11/06/mn-fed07_PH_0502518640.jpg

WHAT BAGHOLDERS DO

NEW YORK (AP) --" Viacom Inc. CEO Philippe Dauman's compensation more than doubled in 2010 from the year before, according to an Associated Press analysis, mainly because of stock options and awards.

Dauman's overall pay package climbed to $84.5 million from $34 million, according to a review of securities filings made on Friday.

His base salary rose 5 percent to about $2.6 million from $2.5 million. He received a performance-based bonus of $11.3 million, down 10 percent from $12.5 million the year before."

* His base salary already in excess of 50 X avg worker if based on $50K salary. What bagholders do is get coerced by FED policy of 0% returns on CASH or safe investments, and forcing you for returns into riskier asset classes, such as stocks, such as VIACOM!

So when you BUY these shares and hope to make a little green
(VIACOM SHARES YIELD scant 1.20%) sports a MAMOTH debt to equity ratio of 73.95...what a deal. Cash of $677 M, debt of $6.7 B. BOOK value of 15, stock price $48.......remember yes when you buy, this allows liquidity for the INSIDERS to cash out those HUGE outsized and GROSS stock options

WHAT CEO OF WHAT COMPANY IS WORTH $84 MILLION a year in compensation?

D

ADVANCE DECLINE FOR CLUES. Weekend Post

ADvance decline for NYSE gallery view

No market has ever topped with ADV/DECL also reaching new highs? according to Lowrys in past 78 years that is true.....

The stock market in SIMPLE terms is NOTHING more then flow, and fear to greed and back again....but basely it is supply and demand. Again in past 78 years NO TOP has formed under current supply and demand data.

The wrinkle for me, and sure always a first time, is the intervention....the FED, the games, that said I think all THAT WILL come into play down the road.

My GUESS if its OK and the weekend, is we will FIND THE TOP right where it normally occurs...IN march-April or OCT.....and the normal signs of deterioration will then be there....NO DOUBT this is NOT another GREAT BULL......valuations no longer attractive, so when MOMO is proven to have topped, then its only a matter of time.......the greater degree trend play will be at hand .

That greater trend IMHO, is resumption of the Secular Bear Market, why? because at no bottom in the last 10 years did we reach the avg valuations or dividend yield found at any other secular bear bottom......It's that simple.

If this rally follows a 100 years of market data, where those betting against the grain are confounded and seperated from their money because the market data does not support their fundamental opinions and emotions....the market doesn't care what we think.......and the backdrop doesn't matter either.....unemployed or housing data blah blah.....

We are corecting from perhaps a near generational selling spree and oversold condition. HISTORIC measures have been taken to stimulate stock market and FORCE investors into risk......choices? 0% on savings...a travesty....a HUGE disfunction.

These gimmicks work for awhile, but in the process, like 2003-2007 they build up worse imbalances and build even greater bubbles.

We've come a long way, but I see warning signs, I see people spending $40 plus to fill tanks, things we need fuel and food are at or near inflated highs and several countries are moving to control inflation, could slow growth.

ENGINE to world economies is not USA anymore, it is CHINA, their stock market TOPPED in AUG of 2009 !! food for thought

D

RODIN?

NOT ON SAME PAGE WEEKLY WRAP

Obama goal: 'Putting the economy into overdrive' he said today in a speach. What was he waiting on the last 2 years? but NOW is the time to put economy in overdrive, not earlier....how about getting the bitch in 1st gear? What about ALL THAT RHETORIC about keeping jobs here in the US? do they ever remember their campaign promises?

Above charts show the diverging markets, the DOW is easiest to manipulate as it consists of only 30 stocks...thats it.

RUT are small caps, NDX is technology and along with Transports I showed earlier, recently they have reversed course, but DOW keep chugging along like all is good.

GE was the bullish "STAR" of the day, lets take a closer look:

The industrial giant said its year-over-year revenue rose 1% (this is growth??? really 1%??? how so the "earnings miracle with basically no revenue growth??) to $41.4 billion -- the first positive growth in nine quarters.

GE Capital, the company's finance division that was hard-hit during the financial crisis, continued to bounce back in the fourth quarter. Net income in the unit rose to $1.1 billion from $100 million a year earlier.

GE carries an ENORMOUS AMOUNT OF DEBT NEAR $500 BILLION......what has GE CAPITAL had to writedown on mortgage assets? does anyone know

I don't think correction has run its course, see you all MOnday which has been like a LOCK for gains, will that continue. SOme things do seem to repeat like rallys in December...

D

WHAT EVERY AMERICAN HAS TO WORRY ABOUT

*CLICK TO ENLARGE

No matter what you hold, the value will nosedive as the $ value erodes. THIS is what happens when one group gets preference over another. FED RESERVE policies are directed at the stock market, all things people need FOOD AND ENERGY have skyrocketed.....but the $ we use to buy them has been losing value.

At same time our government is indebting us and future generations with debt we cannot and will never pay off.....higher bond yields under this scenario could touch off an avalanche.

We all might think we're hiding safe in cash, NO % money markets, but if $'s continue to LOSE value, we all lose.

SHort sighted politicians (ignorant ones too) and HARMFUL ZERO RATE FED policies, and direct targeting of the US stock market.....will come back and bite us on the ass

D

TRANSPORTS LAGGING DOW

Approaching recent DOW high as of yesterdays action, there were only 45 NEW HIGHS (27 new lows).....that wasn't so hot for a new or nearly new recovery high.....distribution me thinks

D

LOOKING FOR VIX WAVES

SHORT TERM GOLD TOP?

IMHO break of my consolidation zone would add confidence that has occurred. And potential cross of 20/50 EMA

BETTER NOT BREAK THIS CHANNEL

Price moves inverse to yield. For almost 30 YEARS! BONDS have been in a BULL MKT. EVEN AS we have piled on RECORD DEBT, ISSUED RECORD Treasuries (now mostly 2 and 5 yrs, some 10 years) YIELDS have continued to ? FALL !! wow what happened to supply and demand? during record bull rally of stocks?

2011 will will have US need another $1.5 TRILLION? NO END IN SIGHT....until the BOND VIGALANTIES SHOW then please g-d be merciful.......IMHO that will be the mutha of all bubble collapses and bring in untold pain and collapse, this is what bubbles bursting do....each time one grows, shows up, choices are made.....choices to DELAY REPAYMENT OF ABUSES....EXCESSES......F no we just piled on more again...lots more....am I wrong?

SO we sit here with record stock leverage, record lows of cash in funds, near record bullishness and an all in mentallity by experts, roundtables, ALL SEE NICE 2011, NONE speak of any problems issues.....and stupid me though I want to see BLUE SKIES...all I see is birds shitting on my car and it's like 2007-2009 NEVER HAPPENED

D

CONSUMER CONFIDENCE LEADS THE MARKETS....usually

Rising in the 90's. FALLING into 2000 and rising end of 2002......Peaking in 2006 (prior to 2007 top)

Is there NOT good correlation between how Consumers "SAY" they are feeling, about present and even future circumstances?

Don't Consumers (they are really just like you and me) PRESENT situation the PURPLE LINE fell like nothing has changed?

HELLOOOO, can you SEE the PURPLE LINE? Where is it? WALDO is slugging, slinking along the worst readings since the inception of this indicator. The WORST it ever was is still the worst it ever was, EVEN WITH 90% supposed wealth effect of an historic manipulated jacked up, jerked up trumped up, hyped up overvalued overbullish stock market ponzi drama......SOMETHING DOESN'T ADD UP?

Maybe MOST on the street people have most value in homes, and the loss of value there DWARFS this FED Induced gambit by a mile.

Nearly 2 years into supposed recovery, 2 years into 0% FED FUNDS EXPERIMENT.....this is what we have to show for it?

But dont fret.....we are told companies have record profits and record cash hordes.......does this remind you of the AirTran Commercial (right airline?) where the guy gets fired over the phone........."where are you.....?"

Yeah it feels like that

D

"NOT TRYING TO ATTRACT DEPOSITS" or 'HOW'S THAT WORKING FOR YOU?"

One bank official told me yesterday at a MD Regional Bank...."we're not trying to attract deposits right now.....we just lowered our CD rates again"

They did have some kind of special running, where you could get .20% on your money......I got very excited.....NOT

Back in the day I remember getting 6% on my Money Market Funds, I was so tickled to give the banks my money and gain without risk. OH what did I do with the interest payments I got? I SPENT IT!!!! IMAGINE THAT!!!

We have HUGE BOOMER POPULATION.......all coming of age over next 10 years....retiring....wanting LESS RISK, wanting to SELL HOMES AND DOWNSIZE......how's that working out?
And how's it gonna work out with the reckless FED intervention and DIRECT manipulation of STOCK MARKETS? WHAT WILL HAPPEN when already at or near RECORD LEVERAGE has reached its limits? are there limits?

IF we had ORGANIC growth my friends, If we had actually gone in and broken up these big banks that control our world so they couldn't damage us like they just have, control us....maybe we HEAL over this period and begin to rebuild oursleves.

HECK NO!!!!!!!!!!!!! We got more newcomer political mumbo jumbo BS promises of "CHANGE" and " TRANSPARENCY"....how's that working out for ya?

NO instead of ROOT OUT the evil and evil doer's we pay them record bonuses, and squash and dismantle their competition (BEAR and LEHMAN the chosen lambs) and now the big banks are COLOSAL BEHEMOTH BANKS that control everything between maybe a mere 4-6 of them.

Has their been ONE, EVEN ONE PROSECUTION OF ANYONE INVOLVED IN THE GREATEST FINANCIAL GAMED CRISIS IN HISTORY?

How is the CHANGE I can believe in? How is pouring TRILLIONS OF DEBT ONTO A COLOSAL PILE OF DEBT and DEFICITS going to fix anything?

The US has reached $14 TRILLION with a "T" in deficits, and are within $300B from a debt ceiling that you can bet will be raised again, and again, and again to infinity.....because the deficits are shattering every record each and every year.....$300 B is chump change.

Secular change in hiring, why would corporations HIRE and ADD overhead, (in general) when they are supposed recording RECORD PROFITS qtr after qtr with what they have? more head count means less profit and less for the INSIDERS.

We have recaptured the stock losses in just 2 years what took 5 years from 2002-2007, some doubling in 16 months. SOme lile mid caps rising to NEW ALL TIME HIGHS>

Sure, the object of this FED largess was to create a WEALTH EFFECT and spur COnsumer Spending, which like every other time they try this was to help companies hire more people....instead like the banks they SIT ON THEIR CASH. THEY HAVE HELPED THEMSELVES.....how's that workin for ya?

How's that meeting with Chinese President doing? Get them to float their currency yet? It's become a dual like bewteen us Mugsy Bogues (5'6" BBAL) and them SHAQ 7ft 350 lbs....all we can do is get some photo opps and smile and say "buy more of our stuff". They agree to buy what they already would buy $45B of planes and shit over some years....WOW does that equal our one month trade deficit with them? HERE WE GO!

D

PUTTING IT BEHIND THEM

"Last year was a necessary repair and rebuilding year," said Chief Executive Brian Moynihan in a prepared statement. "Our results reflect the progress we are making at putting legacy -- primarily mortgage-related -- issues behind us."

The bank posted a fourth quarter shareholder loss of $1.57 billion, or 16 cents a share, compared with a loss of $5.2 billion, or 60 cents a share, a year earlier. Last year's results included a one-time Troubled Asset Relief Program-related charge of $4 billion.

Excluding the mortgage business writedown, the bank earned $756 million, or 4 cents per share.

Analysts projected earnings of 14 cents per share, according to Thomson Reuters I/B/E/S.

Total revenues decreased 11 percent to $22.7 billion.
The bank's fourth-quarter results were the second straight to include large charges.

In third quarter, the bank reported a $10 billion writedown of its cards business after the U.S. Congress approved a financial reform bill that includes curbs on debit card fees banks can charge merchants."

"Shadow inventory threatens housing recovery" headline

What recovery? WHo needs an opinion when you have fact...

D

Debt crosses $14 trillion mark

Debt crosses $14 trillion mark

YIELDS TIGHTEN AS WEDGE NARROWS

Yields are a big part of the market equation, some would argue rising yields are "sign of strength in economy".

The FED will even say that out of the other corner of their mouth, but they began this round of QE with attempting to LOWER YIELDS, helping make housing more affordable....how'd that work out?

All the action is taking place above the 200 SMA, and I find that bullish action suggesting better chance we see break to upside.

With moutain of unsustainable debt looming over the world, especially here, how will HIGHER yields help?

In the meantime the FED continues their abusive policy of screwing savers with near 0% returns...how's that working out?

D

90% DOWNER

Wednesday was a confirmed 90% plus down volume day, what usually follows is 2-7 days of rally. Today up volume was a weak 51%, the market remains overbought, so when rally attempt fades good chance decline will resume.....no ONE is expecting it to do much damage.

D

"READING TEA LEAVES OF FED RESERVE

http://gonzalolira.blogspot.com/2011/01/kremlinology-call-it-fed-res-ology.html#more

OUR ECONOMY

Buying shit, looks like potential double top. Crappy job market, 11 MILLION under water in home value....record rise to old highs for RTH on 16 months....yep makes sense

Chinese market falls near 3% overnight

D

3D THE NEXT GREAT THING FOR CONSUMERS?

NEW YORK (AP) -- "From Hollywood studios to Japanese TV makers, powerful business interests are betting 3-D will be the future of entertainment, despite a major drawback: It makes millions of people uncomfortable or sick.

Optometrists say as many as one in four viewers have problems watching 3-D movies and TV, either because 3-D causes tiresome eyestrain or because the viewer has problems perceiving depth in real life. In the worst cases, 3-D makes people queasy, leaves them dizzy or gives them headaches.

Researchers have begun developing more lifelike 3-D displays that might address the problems, but they're years or even decades from being available to the masses."

YOU wear the goggles, not for me, give me good acting and directing with story that pulls you in, and BLU RAY is plenty enough fun for me

D

LONG AWAITED CORRECTION COULD BE HERE

PERFECTION IS PRICED IN , nothing less will do, but FED printing press could be smoking up

D

ODDS AND ENDS

NEW YORK (Reuters) -" Goldman Sachs Group Inc posted a 53 percent decline in quarterly profit on Wednesday, in part reflecting lower results in fixed-income trading."

"Wells Fargo 4Q profit up, aided by lower reserves" - AP (same link)

Bank "profits" aided by lowering loan loss reserves? even as housing prices continue to slide?

2010 ends as 2nd worst year for home construction - AP story link

Starts are about 50% LESS than during a normal economy, recovery.

Chinese President HU (not WHO) is here, first visit since 1997. He has stated NO CHANGE IN YUAN currency valuations, and Pres Obama has insisted things muct change, as has Congress. Chinese currency manipulation has destroyed US manufacturing and gives them unfair advantage.

Even a 20% revaluation would not help, Chinese workers on avg make 10% of what US workers make. THEN we have to BORROW to buy the CHinese products...think about it next time to see an ipad that allows 65% margins for Apple....they dont want to make it here, but they want you to buy lots of them...but nobody cares.

A SUPER BULL would be first time one started without dividend yields and PE'S matching the avg of all other MAJOR BEAR BOTTOMS in history....with almost everyone bullish and all in as cash held by FUND MGR'S at all time low.....you always need new money coming in....always must find the greater fool to hand off to....it's ALL PAPER PROFITS until you sell.

The SECULAR change may be employers attitudes towards overhead, meaning head count. LESS people doing more with aide of technology is good for profits.....

WHO THEN is going to buy the enormous inventory of unsold homes and the addt'l shadow inventory held off the market because just like diamonds held in a vault in Russia, it would crash the market.

CHINESE have further hinted they want the YUAN to be the reserve currency, and they are already our equal or better militarily, which they built with US $'s.....thank you very much! welcome to 3rd world status

D

NOWHERE TO GO BUT UP?

Calls for SUPER BULLS are fine, any outcome is possible. But 33 years of RALLY isn't followed by just 16 months of bear, it can usually be anywhere from 1/3 to 1/2 of the time.

AFter 1932 crash it took over 20 years to reclaim the highs, now we've done that in some cases (mid caps) in less than 2 years?

Anything is possible, even a secular BEAR lasting 10 - 16 years

D

NEW SUPER BULL HAS BEGUN?

ANYTHING IS POSSIBLE? His interpretation of what bullishness extremes matching or exceding 2007 are contrary to almost anyone else, but you never know

D

TNX (YIELDS ON 10 YEAR) STILL TRACKING IN A WEDGE

KEEPING IT REAL

I'll jeep talking about whAT IS REAL, i DONT GIVE A HOOT IF ANYONE IS LISTENING. So many go about their lives oblivious of what else is going on...it's time to wake up America....to say we're the greatest is lip service, let's make it the greatest

DEEP LAYOFFS IN NJ CITY!! in the MOST crome laden area, #2 in the country..... 50% of police force and large portion of Fire fighters given pink slips......WHO CARES it's just where the poor people are.....there's your damn recovery for ya

D

WAVES INTERPRETATION

Possible count of the PHASES of a SECULAR BEAR.....I think we are in long in tooth PHASE II portion. *(click to enlarge) JMHO

D

HERE'S YOUR AMAZING HISTORIC RALLY IN REAL MONEY TERMS!

NAHB INDEX LIMPS ALONG

link for chart above

FXstreet.com (Barcelona) - "The National Association of Home Builders of the US published today the Housing Market Index unchanged in January at 16, neglecting a market forecast indicating it would tick up to 17.
*(this is STILL below any prior reading in history of index)

The official release features David Crowe, NAHB Chief Economist, stating: "The HMI and its subcomponent indexes are holding steady following a below-expectations finish in 2010 [...] At this point, housing remains on the sidelines of a weak economic recovery.."

Also I have indicator I use which measures trend of fear vs price, trying to locate any CHANGE of existing trend. This indicator is close to reaching 2000 levels. This alone will not predict a top, but would put me on high alert.

D

Bull /Bear Market Relationships and the Existing Rally

Bull /Bear Market Relationships and the Existing Rally

TIM WOOD BEAR BULL MARKET REALTIONSHIPS

"The bottom line is that the bull market advance that began in 1974 ran 33 years and consisted of eight 4-year cycles with a total advance of 2,385%. Note that this advance has been roughly double the previous bull market advance, in terms of the percentage move out of the low in which the bull market began. At present, we are seeing the ongoing rally that should prove to separate Phase I from Phase II of what should prove to be a bear market of approximately 10 to 12 years duration. To think that a 33-year bull market was corrected in a mere 17 months simply has no historical basis. Based on the historical bull and bear market relationships, this bear market is expected to run some 33 to 37 percent of the duration of the preceding bull market. If so, with the bull market having lasted some 33 years in duration, a typical bear market relationship would last some 10 to 12 years, which, based upon the 2007 top, would take such a decline into 2017 to 2019. I will discuss other aspects of the bull and bear markets including phasing and values in the next post here in a couple of weeks."

CHINA INFLATES< MARKET DEFLATES

Chinese Market falls below 200 EMA and SMA and below DEC lows, last made high AUG 2009 !!! this isnt warning for this mkt?????

Market fell 3% overnight.

D

DOES THE CHINESE STOCK MARKET MATTER?

I think it does. It set it last HIGH one and a half years ago! World markets are intertwined these days.

They are worried about inflation, and should be, they have raised min wages twice this year, one time by 20%.

Here the FED is seen as savior, not instigator. FED low rates foster major imbalances but flow liquidity to stocks, a target of their largess.

Read here Doug NOlan's ISSUES 2011

"I’ll posit that each year of massive government marketable debt issuance reduces the likelihood that central bankers will be able to exit their market liquidity backstop operations. History has shown how systems become precariously addicted to inflationary measures and market interventions. The Fed’s balance sheet will only move in one direction. And when push comes to shove, they may be forced to buy municipal debt or monetize more Treasurys to help finance bailouts. For now, the most important Issue 2011 is that serious structural deficiencies ensure that the Federal Reserve errs on the side of liquidity creation. This would seem to ensure a year of even greater Monetary Disorder, with the risk of heightened instability throughout global fixed-income, currency, commodities and equities markets."

I was listening to financial radio this morning....."buy Ford, but Citigroup, Buy Amazon, Buy Apple......" there was NO talk of valuations, excessive bullishness or possibilities of a correction.

We had a 16% correction last summer, and Lowry's points out NO BULL MKT has ever had 2 PLUS 10% corrections.....and none expected yet.......but maybe 5%?

2011 it would be nice to see some real economic progress, but patient is on GOVT and FED teet and without it, cannot go it alone....or FED FUNDS would not be 0%.....have fun for now, but this kind of prop job cannot last forever and will leave a nasty hangover IMHO.....WHY isnt CHINA jiggy?

D

Henrik Freischlader-The bridge

CONSUMER SENTIMENT "UNEXPECTEDLY FALLS"

It can't even get above the WORST it was in 2001...how sad is that....but manipulation will keep the rally going...

D

LEVERAGE BACK TO PRE-CRISIS LEVELS

"As of the end of 2010, hedge funds have increased leverage to within 10 percent of pre-credit levels, according to a report from UBS Prime Brokerage Services and have likely increased risk up even more to start this year, traders said.

Gross leverage for funds has climbed 43 percent from the bottom reached after the collapse of Lehman Brothers in 2008 and is up 13 percent in 2010, according to UBS. Risk-taking surged in the second half of the year as hedge funds scrambled to avoid the fate of another year of underperforming the S&P 500 [.SPX 1283.76 --- UNCH (0) ] and as the Federal Reserve signaled it was ready to flood the market with more liquidity through its second round of quantitative easing. "

The good ship lolipop are ALL tucked into the bullish fold with all kinds of leverage ALL pointing in the direction, and all the experts polled are ALL bullish and STOCKS can ONLY go UP.

D

RED BOX OUCH!!!

"Coinstar Inc., operator of Redbox DVD vending machines, plunged 33 percent after preliminary fourth-quarter sales and profit missed projections because of delayed access to Hollywood’s newest movies.

The stock fell as much as $18.95 to $38 in extended trading at 5 p.m. New York time after the announcement, the biggest drop in more than a decade. Coinstar slipped 28 cents to $56.95 in regular Nasdaq Stock Market trading. The company said today in a statement that it plans to report complete results on Feb. 3.

Coinstar has agreed to a 28-day delay in receiving the latest DVD releases from Hollywood, giving studios a four-week window to sell their latest movies before offering them for rental in Redbox kiosks. The delay requires management to do a better job of selecting titles to keep customers renting while they wait for newer releases, said Michael Pachter, an analyst with Wedbush Securities in Los Angeles."

Love Song - Elton John (Tumbleweed Connection 7 of 10)

CHIN-FLATION

9.6% GROWTH EASING?

BEIJING (AP) --" China's central bank has raised the amount of money banks must keep on reserve for the seventh time in a year, in its latest move to counter inflation.

The central bank on Friday ordered state-owned banks to set aside an additional 0.5 percent of deposits as reserves, effective Jan. 20. Reserves vary by institution but could be close to 20 percent for the biggest commercial lenders.

China's inflation rate jumped to a 28-month high of 5.1 percent in November.

Mindful of the political turmoil linked to past bouts of inflation, Beijing is trying to curb a flood of money in the world's second largest economy following a lending spree triggered by stimulus aimed at fighting the global financial crisis.

Last month, the central bank raised the benchmark 1-year lending rate by a quarter percentage point to 5.81 percent. But it has more often used increases in bank reserves to help reduce the amount of cash circulating in the economy.

Inflation is especially sensitive for Chinese families that spend up to half their incomes on food. Rising incomes have helped to offset price hikes, but inflation undercuts economic gains that help support the ruling Communist Party's claim to power. ***(HERE we take out FOOD and ENERGY when reporting inflation!!)
Chinese banks reportedly lent a total of 7.95 trillion yuan ($1.2 trillion) last year, overshooting the official lending target of 7.5 trillion yuan.

The frenzy of lending over the past two years has helped China rebound quickly from the global crisis. But, combined with bad weather and rising global commodity prices, it has complicated efforts to cool inflation. "

ONE THING LED TO ANOTHER

FED TAKES THE CREDIT FOR THE STOCK MARKET RALLY......AND ECONOMY

If the economy is so hot, why leave rates at 0%?

D

IS QE2 HELPING THE ECONOMY?

SOMEONE'S OPINION is it driving down value of $ (exports) and lowering interest rates?

NADA to BOTH!

GOVERNMENT AS % OF GDP

courtesy of investor centric

US HAS HIGHEST CORPORATE TAX RATES IN WORLD

Canada is around 18%.

US cannot keep running deficits of $1 TRILLION PLUS ($1.5T 2011 est), taxing the shit out of corporations, and running 0% (FED) interest rate policies which goose consumer, send jobs overseas and inflation, and PUNISH savers......enjoy this manipualted smoke and mirrors boom while it lasts...do you cure a debt bubble bursting by adding record debt?

D

RALLY GETTING INCREASINGLY MORE SELECTIVE

" A ONCE IN NEVER EVENT"

Zero Hedge offers an interesting TA tidbit....and historical event.

SO WHAT ELSE IS NEW?

More people applied for jobless aid last week- AP

"More people applied for unemployment benefits last week after retailers shed temporary holiday employees. The Labor Department said Thursday that the number of people seeking benefits jumped by 35,000 to a seasonally adjusted 445,000 for the week ending Jan. 8."

There were OUTFLOWS from equity funds first week of 2011 over $4B.....and Bonds got some inflow....is anyone asking WHO is buying? we know who

D

TRANSPORTED

From 2003-2008 it took 5 years from low of Recession to HIGH, unemployment fell to 6%, there was auto and housing boom, expansion of credit.

2009-2011 in just 2 years the TRansports have come back to the highs....2 years! BUt unemployment is 9.4% (17% U6) and credit has contracted, debt bubble has burst....WHAT is driving economy with 8 MILLION OUT OF WORK?

Gov't transfers and $TRILLIONS poured into Banking (WALL STREET) that found its way from FED to stocks and commodities.

Seniors continue to suffer from HIGHER PRICES, but remember when you take out the stuff everyone NEEDS like food and energy there is NO inflation! what a joke! But if laptops and TV's and things you don't need go down, inflation is under control.

Rather than heal and recover naturally, the FED has instead been determined to INFLUENCE EQUITY PRICES......we know how that ends up dont we?

D

MORE OF THE SAME

The market continues to advance inspite of oversold and bullish readings. Measures of desire to buy continue to make new highs and selling continues to wane. With this ocurring, the final high should not be here.

At some point there will be no one left to pay higher prices and the momo will subside, until then you either ride along or wait for better prices to buy in.

The market is swayed by liquidity, and the FED has made sure there is no other game in town....somewhere down the road we will find out if the economy and market can stand on own 2 feet......and whether we put a crown on the head of FED or get our pitchforks

D

DOW 1980-

The call for HEAD AND SHOULDERS pattern in DOW as shown does not allow for much more price appreciation as left shoulder is at 11,750, todays close 11755. We also have broadening mega phone pattern.

You can see difference in DOW'S pattern since 2000, it looks nothing like 1980-2000.

IMHO the 2000- 2011 pattern exhibited is Bear Market action, but it does allow for a new high. But the action last 10 years is much more volatile than what we saw previous 20 years.

Then we had tech revolution, low debt.........we are in the winter protion of a long term cycle....as the FEd and all fight it tooth and claw

D

SOME THINGS TO PONDER

1. 2 yr per cent change in oil similar to those in 2000 and 2006, similar to those that heped bring about Recession.
2. Speculators are near historic long positions oil. Spike not from demand, acting like tax on consumers.
3. Near Record high in Vacant housing units
4. Deflating home prices continues
5. For 2.5 years into recovery 9.4% unemployment unprecedented
6. U 6 rate near 17%
7. # unemployed for 27 weeks plus a record and as % of total unemployed
8. State and local govt's forced to raise taxes and make cuts
9. Debt equal to GDP $14 Trillion and rising
10. Debt to GDP ratio near 400%
11. Soverign risk and State govt's risk of deafult
12. We have NO inflation.....if you take OUT FOOD AND ENERGY!! why bother reporting it then?
13. Inflation on the RISE in Asia
14. Chinese stocks below 2009 and 2010 highs
15. CRB commodity index at new highs.
16. Business not able to pass along higher prices (may hurt profits and hiring)
17. FED pinning funds rate at 0% for over 2 years (AKA JAPAN) economy cannot absorb even a .25% increase?
18. FED has stated they have targeted stock prices. STocks artificially being pushed higher
19. Savers getting NOTHING for their cash. Retirees being punished for not wanting risk, FED is forcing RISK for returns.
20. There is NO free market
21. Bank acounting fiction overstates profits
22. Bullish polls at or above 2007 highs, near unanamous professional opinion higher stock prices in 2011.
23. Cash levels in mutual funds at record lows, an "all in"mentality"
24. US $ is quietly within spitting distance of its 200 day avg....not good for exports.
25. 94% of SPX move in 2010 came on just 12 trading days? FIRST monday of every month!
26. Market was nose diving last summer until FED announced QE2.....market cannot rally on its own....not healthy condition.

I may not be as popular as when market was getting killed in 2008, I am off my peak but still get substantial readers coming to my blog. But invest as you see fit, to your tollerance of risk, everyone is different. Just keep in mind how we got here, and there is still a good chance when the rally is done you will remember 2007 and 2000 again, as it appears that is all but forgotten.

The market does work both ways, and I dont remember a time it made sense at very least committing NEW FUNDS to a market near or above bullish extremes....party VERY CROWDED and overextended....MOMO is FUN until it ends...buying stocks just because you think they go higher is a fools game IMHO

D

CELENTE

Not everyone bullish......greatest depression still possible

Imagine all those retied people, they are SAVERS, not speculators at retirement age....and not getting a thin dime in returns. They don't have a lifetime to make up for lost periods.

Current policies don't solve the underlying issues, and in the meantime weaken our competitiveness, ship more jobs overseas, and screw savers.

D

ALCOA "BEATS STREET"

Sure maybe it has already run up, but this was not BUY THE NEWS........if "beating" the street estimates was so great.....time to get in....but maybe AA and stocks in general no longer are attractive in valuation, but MOMO is all that is left....selling news could trigger a broader decline, keep tuned.

D

CHOPPY ACTION and LIFE SUPPORT

30 minute chart shows off action well. Dull market I stay away from. Market churning here with fewer stocks participating in rally, there are divergences and many other reasons to be on watch for the start of some more serious selling due anytime.

I don't know what will spark it, and it may not be END of rally, but I smell something coming this way. NO DOUBT money not in market at this point, wants in at lower prices.

Bullishness suggests frothy action with not too many worried about protecting profits.....so I am not personally committing any new funds long here, though if market comes back enough I would reconisder.

3rd and 4th quarter could be turning point as majority of stimulus and liquidity would have waned by then....this is NOT beginning of another Secular move IMHO.....I would like to be wrong this time folks.

When you look at gov't eforts, additional deficit spending on top of what was already committed, and expansion of FED balance sheet, there is the crux of the matter......this rebound is not ORGANIC but ARTIFICIAL.....and it is not open ended.

FED funds at 0% for 2 years, no talk of raising interest rates controlled by FED (what they charge BANKS for money). If we had a REAL REVIVAL rates would be going UP, like every other recovery.

FED pays banks for their excess reserves......this policy gives banks reason NOT to lend.

Savers are severely punished by getting next to NOTHING in interest, NO incentive to give banks deposits. Has ground work been laid to build a sustainable lasting fair market economy?

NO

TOO MUCH REGULATION

"The Chamber emphasized the "regulatory tsunami" Washington has imposed over the past few years as one of the central problems. It is very concerned with the stress that last year's health care reform puts on businesses, citing the 159 new agencies, commissions panels, and other bodies the legislation creates. It also attacked the Dodd-Frank financial regulation bill. Here the Donahue cited big numbers too:

Dodd-Frank contains 259 mandated rulemakings, another 188 suggested rulemakings, 63 reports, and 59 studies. My grandchildren will be old and retired before it is all implemented.

He also worries about the Environmental Protection Agency's aggressive approach to rulemaking, citing 342 new rules in the process of being developed and completed. The Chamber said it is not against climate change rules, but wants Congress to impose them instead of the EPA.

What's so bad about all that regulation? It's tough to do business in an environment where the rules of the game are constantly undergoing major changes. It's like trying to ground yourself while the floor is shifting beneath you. So the first step, the chamber thinks, is to reduce the regulatory burden stifling the private sector from expanding and hiring."

How Important is BDI?

Possible explanation to BDI weakness

BDI APPROACHING LOWS OF 2009 !

Some of the weakness of BDI could be explained by new carriers coming online.......but if we had REAL ECONOMIC EXPANSION and subsequent expanding demand, if you consider rise in costs of almost all commodities, one should expect to see at VERY LEAST a recovery in BDI.....not an all out collapse....this is pretty much that.

From Wikipedia, the free encyclopedia
"The Baltic Dry Index (BDI) is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index tracks worldwide international shipping prices of various dry bulk cargoes.

The index provides "an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Handymax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain."

FIXED MARKETS

zerohedge.com link

CHRIS WHALEN: "PAPER ASSETS HEADED TO ZERO" 7-6-2010

YIELDS TIGHTEN RANGE

CORRECTIVE PHASE

Futures red this AM, CHinese markets down again and are not following world markets higher. The awaited corrective phase may have begun, we will monitor for what it may mean.

ANother conservative writer seems to have thrown in his hat. John Mauldin begins most recent letter....."2011, better than muddle through".

D

EMPLOYMENT PARTICIPATION RATE

Indepth discussion at Mish's Blog link here

HOW DO WE EXPLAIN THIS?

OR THIS?

We know Consumer sentiment is below previous recession readings, we know jobs are hard to get. We know housing has not recovered. We know same store sales have been dissapointing. We know a lot of things that should have us scratching our heads at above charts.

One can only hope that stocks are leading indicators......still. Maybe $4T pumping trumps all that....if enough people (not analysts) skeptical about 2011, that should it continue to surprise to upside, if retail investors have been holding back....the lure will be too great...they will come back after 90% plus gains....they want a sure thing....tops don't usually form with a fizzle, without little guy rabid bullish......that may be coming.....cheap credit is what small to mid cap companies thrive on....continue to need low interest rates. M and A activity has heated up, stock buybacks.....bolstering stocks......like the little guy why weren't they buying back in 2009 at MUCH MUCH LOWER PRICES?

Duratek

SECULAR BULL NOT BEAR?

I guess it all depends where youy look......you would be at all time new highs had you invested here.......this is more inclusive than 30 or even 500 stocks.

The rally has gotten selective enough that a correction is near, but with buying the way its been, not likely THE TOP at all......folks it doesn't have to be about what you see or hear on the streets...charts don't lie

YIELDS CONTRACTING

WHY the surge to safety? yet dull market? $ strength? bagholders are setup IMHO or consolidating the up move for yields...

OPTION ADJUSTABLE MORTGAGES

These will reset in 2011 as shown, may cause additional defaults.

Market seemed settled today, but something is brewing IMHO.

D

SMELLS LIKE ROSES?

EMPLOYMENT SITUATION REPORT

read more here @market ticker They can say what they want, spin all they want.....above tells a different story....policies have failed, what recovery is "taking hold?"

MAN BEHIND CURTAIN, EMPLOYMENT LIES

"While today's unemployment number came at a low 9.4%, well below expectations, the one and only reason for this is that the labor force in America has plunged to a fresh 25 year low. Assuming a reversion to the mean in the long-term average participation rate back to 66%, means that the civilian labor force, which in December came at 153,690, a drop of 260,000 from November, is in reality 157.6 million, a delta of 3.91 million currently unaccounted for. Maybe someone can ask Bernanke during his imminent presentation before Congress what happened to the unemployed population, which would have been 18.4 million if this labor force delta was incorporated, resulting in an unemployment rate of 11.7%." more at zerohedge

TRUTH OR CONSEQUENCES

This does not look like prior recoveries.

WASHINGTON (AP) -- "The government is expected to report Friday that businesses stepped up hiring in December, a trend likely to gain momentum in 2011.

Economists are predicting that employers added a net total of 145,000 jobs last month and that the unemployment rate dipped to 9.7 percent.

Some are even more optimistic after a private payroll firm estimated this week that companies added nearly 300,000 jobs in December. Also encouraging was a report that fewer people applied for unemployment benefits over the past month than in any four-week period in more than two years.

A decline in layoffs has consumers feeling better about the economy and spending more freely. This past holiday shopping season was the best in four years "

Actual jobs added were 103,000 almost HALF the median GUESS. BUT unemployment rate dropped from 9.8 to 9.4% !!! something amiss there. Many went OFF the NOV. rolls as their 99 weeks ran out......now they don't get counted...bravO!

Workweek unchanged, but wages are seen higher in 1st qtr as tax cut kicks in, may add to consumer spending. May add to an UPSIDE GDP report next qtr....all this priced in IMHO but could extend rally and give bear little hope.

ADJ M BASE IS PLUNGING

Contrary Investor "at any rate" Jan read.

USELESS REPORTING

WASHINGTON (AP) -- "Federal Reserve Chairman Ben Bernanke goes to Capitol Hill on Friday more confident about the economy and the outlook for hiring, but not enough to pull back from the Fed's $600 billion bond-buying program.

Bernanke's testimony before the Senate Budget Committee is his first congressional appearance since the Fed announced in November it planned to buy $600 billion in Treasurys through June. The bond purchases are designed to boost the economy by lowering interest rates and lifting stock prices. "

Friends, there is no mention in this IMPORTANT story that interest rates have actually gone UP!!! BUT raising STOCK PRICES is not in their mandate and they are OPEN about this manipulation and false rally!

D

WHAT ARE RATES TELLING US ABOUT QE2?

During periods of BULL MARKETS, it is best to STAY invested, and ignore drawdowns as the market will meander its way higher to THE TOP and it is too hard ot time, being out of the market at certain times will destroy your returns.

Using market funds and ETF'S can give you exposure to exactly what the index you desire is doing.

Last 10 years stocks have gone nowhere suffering 2 bear markets, this has caused many to shun stocks. But with FED keeping Funds rate at 0%, savers are being punished with near zero returns......maybe 85% rally has lured some back.

I do not feel at these levels, with rising rates the market is no longer a good value. The market is underpinned by Fed money and MOMO, without the $TRILLIONS poured in the rally would not exist.

Last AUG stocks were suffering thru a 16% decline UNTIL the FED spoke of additional measures, saving the market.

I have warned of the 2 bear markets, instead of coming out of stocks 100%, the portfolio needed rebalancing for fear and stress. Bonds and commodities were the ticket and RAISE CASH to 40%, even a tad of inverse etf's but not for everyone.

IN 2009 after FED got hot and heavy, stocks bottomed, fear was high, bulls non existant....how do we know it would be a bottom?

WRONG QUESTION......stocks were on sale, go shopping. Because you raised cash you have money to buy stocks on cheap.....you know after 50% haircut, they will come back, BUY income producing stocks to lessen risk....Bear markets hurt people, but bear markets give you chances to buy cheap.

Stocks are NO LONGER cheap....but there is FEAR towards BONDS.....so far I agree....when stocks falter Bonds will catch a bid.

GOLD? under correction, but long term still in bull mkt.....unless certain Support levels give, probaly not.

There is news, then there is stock action. BUY CHEAP SELL HIGH....most do opposite. MACRO view tells me to be wary, that this is cyclical cull not new secular bull....so sure I have been top watching....easy money made IMHO.

I would be raising cash again....even a drop to 1150 many anticipate that level as BUY THE DIP....need cash to buy.

A higher bid, liqiudity and less fear build a bull market and rising prices.....and the stock market is the ULTIMATE PONZI SCHEME that is always looking for the NEXT GUY to pay MORE for the stocks...when they are scarce prices fall......in a true bull market you buy the dip...usually when 200 EMA is tested and holds.

There are lots of things I am watching, I will report as things develop.

D

Prophets Of Doom - DEER IN HEADLIGHTS

This is a must see documentary, experts in fields of FINANCIAL, PEAK OIL, WATER, FOOD PRODUCTION and TECHNOLOGY (shown here and least important of group) share their wisdom. (and how pollution plays into this)

The brain of MOST humans only wants "CAN KICKED DOWN THE ROAD", but that is not what is best for our world and children and beyond.

We are quickly depleting the world of its resources, and at some point this will be apparent to anyone with a pulse, there could even be wars over natural resources and control over them...the US is at forefront of the oil gluttony and CHINA is right there.....but they are growing quickly, adding more cars....10 years ago they were not an issue......

Our economic policies have turned us into mere CONSUMERS OF THINGS, and hence we dont make much, our $'s and JOBS have fled overseas, impoverishing the people and empowering the producers. With our money CHina has gone around the world buying up resources, right now they account for 97% of ALL RARE EARTH MINERAL PRODUCTION. You can thank yourself, you can thank our gov't and you can especially thank the FED RESERVE POLICIES.

I am looking BEYOND the current manipulated, caluclated, manufactured stock rally built on $TRILLIONS of borrowing and money printing.

If this current rally was anything more MANUFACTURED, than after 2 YEARS!!! of 0% interest rates and 90% HISTORICAL PONZI RALLY.......interest rates would begin to move up at the FED.....they are saying the ECONOMY cannot even sustain a .25% increase in rates!!!!!

This is powerful, that's what $TRILLIONS poured directly onto stocks will do, but its not organic, its manufactured and it will fail at some point.

YOU CANNOT PRINT YOUR WAY, OR SPEND YOUR WAY TO PROSPERITY. YOU CANNOT GET OUT OF A CREDIT DEBT BUBBLE BY? PRINTING MONEY OUT OF THIN AIR AND CREATING EVEN MORE DEBT!!!!!!!!!!!!!!!!!!!!!!!!

WHAT WILL US GOV do with $14 TRILLION in debt? with another $1.5 T added for 2011, and beyond......this doesnt even account for the biggest can kicked down road, Medicare and Social Security of which accounts for another maybe $50T......that can is rather rusty......

Things 20-30 years down the road, not enough worried about......and what is solution of govt and much vaunted FED? create more debt, issue more PAPER MONEY...INFLUENCE STOCKS so the masses can be fooled! for now.....we are bankrupt, broke....insolvent and so are many banks without a mark to market value rule......

Sure stocks can and probably will go higher, sucking in avg person at the top.....when the sucking sounds begin anew, they will be like DEER IN THE HEADLIGHTS...and go down with the ship.

This is remarkable, but nothing more than manipulated BEAR MARKET RALLY, not a NEW SECULAR BULL...no not built like this....IMHO

OIL is $90 PLUS , this filters down into EVERYTHING we do or make....production of food, transportation of food and goods.

Water is contaminated almost everywhere on planet, spoiling the fish and wildlife in the food chain. In some areas there is not enough drinking water, and we all need water (I have been interested in water ETF's for some time and energy)

WE devour 30 MILLION BARRELS of oil PER DAY! just the US!....but we cannot build even ONE NEW NUCLEAR PLANT?

Kicking the can down the road. WHY DEAL WITH any crisis NOW? when we can foist it on someone else or delay the day of reckoning?

If you think they solved or did anything real about the financial crisis of 2009 you are sadly mistaken......I am waving that CAUTION FLAG TODAY....going agaist the OVERWHELMING BEAR 100% CHORUS OF BULLISH CRIES of some new dawn has arisen...in a near unanamous bullish roar....buy low (it was) sell high (it is).

I don't argue there is a powerful rally, I argue bullish sentiment is getting overwhelming.....fundamentally not much has been fixed...just papered over.....adding MORE DEBT TO A DEBT CRISIS TO RALLY IS LUNACY...as solution....and THEY WONT STOP....they cannot until it POPS AGAIN...and it will.

Maybe I'm the idiot, maybe I dont get it.....but I am flat out defensive and see an ugly end to this...JMHO

Duratek

Mino Cinelu, Kevin Eubanks and Dave Holland - Whirling Dervish

US ECONOMY ON LIFE SUPPORT

Kathleen Pender @ infowars
Global Research
December 2, 2008 (YES this was before the new programs were added $800 BILLION PLUS from GOV'T and QE 2 and new $800 B Bond spree by FED YIKES!)

"The federal government committed an additional $800 billion to two new loan programs on Tuesday, bringing its cumulative commitment to financial rescue initiatives to a staggering $8.5 trillion, according to Bloomberg News.

That sum represents almost 60 percent of the nation’s estimated gross domestic product.

Given the unprecedented size and complexity of these programs and the fact that many have never been tried before, it’s impossible to predict how much they will cost taxpayers. The final cost won’t be known for many years.

The money has been committed to a wide array of programs, including loans and loan guarantees, asset purchases, equity investments in financial companies, tax breaks for banks, help for struggling homeowners and a currency stabilization fund.

Most of the money, about $5.5 trillion, comes from the Federal Reserve, which as an independent entity does not need congressional approval to lend money to banks or, in "unusual and exigent circumstances," to other financial institutions."

You wonder where recovery and demand come from? $8.5 TRILLION that's where.....poof out of thin air.....if the US economy can't even withstand a move off of ZERO INTEREST RATES.........IMHO that tells me all I need to know....this is not a grass roots, sustainable, on the cusp on a new era grand super bull market expansion...

These new era beginnings also start with managable debt, and SPX DIVIDEND YIELDS near 6%.....they are about 2% now! this is something ....else...
D

BDI BREAKS 2010 LOWS

Tal Wilkenfeld - The river of life

"THIS IS THE MOST DIFFICULT TIME TO INVEST"

Insights from Vanguards Jack Bogle

TEST OF OLD HIGHS LIKELY IN SECULAR BEAR TREND?

*click to enlarge chart

Hard to believe? When hasn't FED action led to higher stock prices eventually? But the manipulation and intervention cannot last forever. This artificial sweetner has given illusion of economic prosperity of which doesn't exist in this country, to those we've exported jobs, sure.....we're also exporting inflation to places like China....take note Chinese stock market rally has stalled and looks NOTHING like that of the other major markets like US....even though they are engine of growth? how whacky is that?

I'm still looking for some kind of January comeupins, as bullishness is off charts and is at or near other previous major tops, but that doesn't mean this rally will end with correction, but 3-5% would be normal....beyond that we would have to asess.....I am in minority even suggesting a decline is possible....with all this new years cheer.

Friday will bring jobs report, traders are angling for a bullish one, most suggesting 150,000 jobs added......let's not argue and say sure, it would take 6 years to gain back the 8 MILLION jobs lost....since many were manufacturing, what chance is there?...there are jobs, but you better be the best of the best......so many 6 figure jobs of bygone era are replaced with whatever you can get.

We are building a Sovereign Debt BUBBLE, that may be next to or is in process of bursting. The US can never pay its debt back, at best hope to pay the interest which is mostly in SHORT TERM TREASURIES even as we experience historical LOW long term rates.....should these move up could derail the whole system.....data misleads inflation experience.

Crude is at $92, and is forcing up gasoline prices, like a tax on Consumers....the AVG JOE has seen little or no wage appreciation in years to help cope with rising prices.

ODDLY? state property tax asessments are now coming in with HIGHER property values even in face of 3 year contraction in HOME VALUES! States cannot allow a lowering of already weak tax reciepts...and there is no chance of winning an appeal.

New Congress, optimism is in the air, none of the fear present during crisis can be found.....a ONE SIDED "experts" poll have 2011 a very bullish year, none of the experts expect much fuss in 2011......FED GOT YOUR BACK.

FED holding HISTORIC funds rate at 0%, providing BANKS (who can use money for stocks) a FREE source of funds to speculate.....PROP up stocks.....small caps have led gains showing animal spirits. 50% of gains for 2010 came in December.....banks BONUSES will be ROBUST....BANKS do not have to take mark downs on mortgages as rule mark to market still suspended....that was game changer.

Markets can and do rally in the poorest of times, that is when you find the MOST CYNICAL of investors........the smile has been wiped clean off the bears faces, their fur stripped off....and we end up with a most one sided bullish opinion......how's that make you feel?

D

A BILL THAT NEVER COMES DUE

SOVEREIGN DEBT is the next crisis, We currently owe $14 TRILLION that doesn't include the "unfunded liabilities" which some have said could easily equal $50 TRILLION.

2011 and beyond budget deficits may come in near $1.5 TRILLION, the Gov't will issue bonds to cover this and it is obvious this debt can never be paid back, we could only hope to keep paying the interest on it.....out one savings grace is the RESERVE CURRENCY...sleep tight at night.

Goosing the stock market is the FED'S main job and priority, it is very comforting to know prices can never fall.

D

2011 STOCK MARKET AND BEYOND

The FACE of the CRISIS

2011 and LONGER TERM PREDICTIONS yelnick typepad

One of my most "trusted" subs has shown to be very accurate in predicting market direction. That is because it is based on shares supply and demand, and not the news, demand for shares has moved back into the dominant position. Until sellers re-emerge and trend, there is little chance of the Bear MKT beginning again.

Rare are bull mkts with more than one 10% correction, we already had a 16% correction last summer, so if you agree, any stock weakness in the new year could be a buy the dip moment and rid yourself of any poor performing issues.

Now, from a fundamental standpoint, none of this may make any sense to you. But the Federal Reserve has positioned SHORT TERM interest rates at 0%, and to you that means near 0 return on safe investments, in particular MONEY MARKET ACCTS.

The current rally is running on fumes, and getting VERY SELECTIVE, so IMHO we are setup for some kind of weakness in January.

COULD Business use their cash horde and begin to invest, spurring job growth? YES, of course they "COULD" but will they? WHAT is the inducement to invest here?

PEORIA — Caterpillar Inc. announced it will build a new large engine factory in China.

"The company said the plant, which will be built in Tianjin, China, will supply customers in China and Asia with engines in the 3500 series and be the third Caterpillar facility to make that series.

The 3500 series is made in Lafayette, Ind., and at a facility in India. The new plant, which will begin operations in 2013, will not affect operations at those plants, said Caterpillar spokesman Jim Dugan.

“This new plant will support the growing demand for our large engines in China and all of Asia. It’s a capacity expansion,” Dugan said.

The new $300 million plant will be Caterpillar’s largest engine facility to date in Asia Pacific, the company said."

Nice $300M investment, a shame it's not here! Current policies and trade imbalances favor Asian growth over Domestic.

ANother prediction I read said the US $ will surge against the YEN and EURO next year, saying it's worse over there, our economy will outperform theirs.

Midcap stocks and technology have outperformed. Gas may be heading to $4 gallon, Interest rates will rise.

I would expect unemployment claims to continue to recede, after all there have been SO MANY ALREADY LET GO, what we want to see if job growth, to this point the damage of lost jobs has already been done.

Here is justice in America from the crisis. story on Mazilo CEO of Coutrywide. $100's of millions pilfered, I believe a settlement around $75 M was reached, letting hm KEEP the BULK of his gains. "without admitting any wrong doing......" his mugshot above.

We already know what's wrong with economy, so rehashing it doesn't make for increased volatility.

TOPS are difficult to predict in real time, only after the fact. Telegraphed is the support shown for stocks, alternatives are few is any.

Maybe they bought some more time, and if in time things don't get worse, the stock market continues only game in town, that's exactly what they wanted. But they cannot keep charade up forever, and we know the real back bone of any sustainable economy is savings and investment a trend we will be watching closely and for what form any weakness takes when it comes....and it's coming in the new year, you can almost bet on it

D