90% DOWN VOLUME DAY

Market was in an extreme overbought condition, so today was excuse to sell and take some profits. Many think that since the market broke ABOVE a 2 month consolidation range, the worst is over and that level will serve as support.

D

LESS CONFIDENCE BUT MORE CONSUMER SPENDING?

Today’s numbers provide a monthly breakdown of the quarterly data released yesterday by the Commerce Department that showed the U.S. economy grew in the third quarter at the fastest pace in a year. Gross domestic product expanded at a 2.5 percent annual rate, up from 1.3 percent in the prior three months.
Household purchases, the biggest part of the economy, rose at a 2.4 percent pace, contributing 1.7 percentage points to growth.

Less Confidence  http://www.bloomberg.com/news/2011-10-28/consumer-spending-in-u-s-rose-0-6-in-september-as-incomes-increased-0-1-.html

Purchases are climbing even as confidence sinks. The Bloomberg Consumer Comfort Index dropped to minus 51.1 in the week ended Oct. 23, the lowest in a month, from minus 48.4 the prior period. Ninety-five percent of those surveyed had a negative opinion about the economy, the worst since April 2009 and one percentage point shy of a record high.

WILL IT WORK?

"Will it work? I highly doubt it, but it does buy some time - and the markets were content. It appeared to take near-term implosion risk off the table, which set the stage for a huge short squeeze and destabilizing unwind of hedges across virtually all markets."
http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10589

LO AND BEHOLD THE MIGHTY RALLY

NO guesswork here folks, the US $ has been taking it on the chin all month, down another 2% today, so anything priced in $'s will be going up, gas, food etc.

Rally won't end until the excessive bearishness found at bottom in SEPT is vanguished.....might be closer than you think. One target we had was near 1300.

Mutual Fund cash at one of lowest levels ever record, so who is funding the rally? LEVERAGE? The FED GAME continues as unemployment claims remain over 400,000. STock rally helped to goose GDP to a not so rousing 2.5%, that level was higher than previous qtr, but it doesn't create jobs.

The EURO folk have agreed on another BAILOUT DEAL? Isn't that great news? Has what is broken been fixed?

We can all hope the lows are in, we are healing? my nose says different. CONSUMER SENTIMENT sank again to one of its lowest readings, not indicative of a recovery by any measure.....housing prices continue to fall....honestly a great number of Americans might be asking where is the recovery.

D

INTRODUCTION TO NEW CHARLES HUGH SMITH BOOK

http://www.oftwominds.com/investing-chapter1.html

"The monetary and fiscal “fixes” imposed by authorities around the globe since 2008 didn’t reduce the global financial system’s instability, they merely suppressed outward signs of instability. Beneath this tranquil surface, the “fixes” have greatly increased the global financial system’s instability. Like an apparently peaceful forest filled with dry deadwood, a single spark can ignite a new firestorm that will burn with greater ferocity and speed than the financial fire of 2008."

HERE COMES THE 200 DAY MOVING AVG.

I still think the analog with the 2008 rally right before the steep decline could be valid. A breakout of the then trading range preceeded the steep decline into 2009.

D

BREAKOUT OR FALSE BREAKOUT?

BREAKOUT FROM TRADING RANGE

Makes it more likely we get at least a test of the 200 MA.

D

THEN AND NOW

HOUSING RECOVERY

49 years

http://www.forecast-chart.com/graph-housing-starts.html

SELLOFF AT RESISTANCE

Price hits upper range of trading and we get an 87% down volume day. Players are buying the lower range, selling the upper range....there is no voting going on...that mechanism died years ago.

D

PBW WHY YOU DON'T JUST BUY AN IDEA

OBAMA gest elected in 2008 and PBW hits its high near $27, Obama promised clean energy investments and emphasis, also mentioned it in State of teh UNion Address.....lot of good that did.

D

VELOCITY OF MONEY AND WHY YOU SHOULD CARE

Understanding Velocity
velocity of money
Definition

Rate at which money circulates, changes hands, or turns over in an economy in a given period. Higher velocity means the same quantity of money is used for a greater number of transactions and is related to the demand for money. It is measured as the ratio of GNP to the given stock of money. Also called velocity of circulation.

 

Investopedia explains Velocity of MoneyVelocity is important for measuring the rate at which money in circulation is used for purchasing goods and services. This helps investors gauge how robust the economy is. It is usually measured as a ratio of GNP to a country's total supply of money.

 

SIMPLY :"how quickly money moves around economy the rate at which money circulates in an economy"

Read more: http://www.investopedia.com/terms/v/velocity.asp#ixzz1ax6BHPAA

THE IMPLICATIONS OF WHAT MY CHARTS SHOW   **(below is what the FED has tried to do to stimulate economy and economic growth an historic RAPID rise in the money IN CIRCULATION)

Declining Money Velocity and Its Implications

Our economy has a severe circulatory problem. While the Fed has greatly increased the amount of available money in its efforts to restore economic growth (Figure 1), the rate at which money has been flowing through the economy — the “velocity” of money — has been plummeting (Figure 2).

BUT the policies are NOT working, prices of things have gone higher, wages have not, employment is stagnant, pushes to cut govt spending will make it even worse. In the meatime, these FED policies of near 0 interest rates give savers a 0% retrun on money...and VERY LITTLE else to invest in except? THE RISKY STOCK MARKET!!! YOU GOT IT.....which the avg American has littel invested in (unlike the 1%) and their homes are still declining in value....(where most have or HAD investment)

D

UNDERSTANDING INFLATION AND WEIMAR HISTORY

http://www.johnmauldin.com/frontlinethoughts/can-it-happen-here   to access full article all you need do is fill in your name and email, no big deal, Mauldin a good read.

TOO SIMILAR FORMATIONS TO IGNORE

“Risk On” or “Risk Off”? Place your bets"

...." And if you don’t like the game, go protest at the door of your nearest friendly central banker. "
http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10583

WEEKEND REVIEW

Divergence still in place, I am still expecting a retrace to begin shortly. SOme other divergences are beginning to appear, 120 SPX points since the new low was registered, go figure!

This HISTORIC action in the form of unrelenting down and up action, 90% volume days will in the end cause another million or so investors to never put money into stocks again.

1300 SPX or above is possible, at the break of 1100, BEARS were roaring, obviously TOO MUCH. The market basically breaks down into waves of sentiment, and when they reach extremes...like the EURO SKY is falling, and the break BELOW the trading range.....eager bears, especially newbie bears were RIPE for the slaughter.

What you see now is NOT a statement on the economy or earnings, it is a rush to cover by those short a bit too long, and it may have a bit more to go. Then there will be MANY long converts, and if it goes too far north, then you could see an EPIC decline swell when the gas is gone..especially when many see the smoke lift and the anemic FED FED party cannot go on forever.

D

TEST OF 200 SMA COMING?

It has now started to decline in its trajectory

BAFFLING?

Tricks or Treats?

IS THE ALL CLEAR SIGNAL HERE?

"Fitch may downgrade BofA, Morgan Stanley, Goldman

Fitch eyes downgrades for Bank of America, Morgan Stanley, Goldman Sachs, 5 big European banks "

"NEW YORK (AP) -- Gap Inc. plans to close stores in the U.S., while expanding in China."

"S&P downgrades Spain's debt rating on weak economy

Standard & Poor's downgrades Spain's long-term debt rating, citing weak economy, bank risks"

PARIS (AP) -- French President Nicolas Sarkozy promised an "ambitious and humble" year as leader of the Group of 20 rich and developing economies, and he has a lot to be humble about.
Despite a warning earlier this year from Christine Lagarde -- then his finance minister, now IMF chief -- that a failure to address global imbalances would "lead us straight into the wall of another debt crisis," that is exactly where the G-20 has wound up.
Now the finance ministers and central bankers gathering for two days of talks here beginning Friday must explain how they let the global economy run straight towards the edge of a clearly marked cliff -- and what they can still do to stop it from falling over it.

NOT if you keep your eyes open. What is our "OFFICIAL" unemployment rate 2.5 years into some kind of recovery? Anhistoric high of 9.1%

OH yes THEY will keep trying to prop up the stock market, as the squueze continues on interest rates giving savers the shaft....and gd knows what else...

D