Living Inside a Broken Clock – Monday, Dec. 7, 2009
Living Inside a Broken Clock – Monday, Dec. 7, 2009
Tiny Tim crows about a few billion profit on the BAC warrants issue – now how about the $46 bb they still have in TARP money? Meanwhile Congress decides that the unused TARP money can be used to pay down some of the fiscal deficit as the circle-jerk continues.
The FED’s Maiden Lane garbage pile gets hit by a small domino, as Tishman Speyer defaults on a mezz loan in Chicago. Bernanke has $1 trillion more in such garbage on his B/S yet insists that he doesn’t see any asset bubbles. In Dubai they put you in jail for non-payment of debt, here they put the middle class into tax slavery to bail you out. Meanwhile, the Sheik’s personal investment vehicle “Dubai Holding” is expected to be the next to default. Think he’ll go to jail? Probably not, but I don’t think that Citi will be seeing any of the money it flipped back to Dubai in March 2009 after getting their bail out in a private placement with the Arabs – even as Kuwait dumps the stake it has left for $4 bb.
China continues to use its reserves to “beggar thy neighbour” policies and growth stimulus. The pre-communist regime was turfed out for destroying the wealth of the middle class with inflation. Don’t think that the Communist Cadre doesn’t remember what pushed them into power. Meanwhile, Japan muses about forbidding foreign workers.
US Unemployment remains “officially” at 10% in spite of trillions of dollars in monetary and fiscal stimulus over the last year. The IRS audits a woman in Seattle because she is making below the poverty line for a mother of three in that city. Someone has to pay for the next phantom stimulus package and Wall Street bail out. Tick tock. Tick tock.
EQUITY
SPX put another pin through ULTRAVIOLET of Friday and managed to close green. However, it still hangs below the trend line in undecided no-man’s land.
SPX managed to pull back up to the 1105.30 neutral pivot into the close on Friday. SPX = 1096 held twice at 11:45 and 14:30 EST – just above the close from Nov. 30, 2009. SPX has re-tested ULTRAVIOLET and yet insists on kissing her every day before sagging in defeat. Stronger support is at the green dashed line at 1086 and at the red dashed line at 1046.50. Volume was the highest it has been since October 30, 2009.
I don’t know if I’ve mentioned it before, but you can see the blue 5 above the “Since Sept 17” dotted white trend line – above Friday’s bar. This is a DeMark wave, which just counts sequentially. It says that we are putting in the top of wave 5. Everytime there is a new high – that is still part of this 5th wave. You can see the end of Wave 4 at the lower left of the graph (in blue as well). HOWEVER, there is also a yellow ‘C’ there, that does not show on the zoomed chart above. Wave 5 down was at the March lows, and since then we have had A(June 11), B(July 8) and C – Friday. My silly Pareto Math says 1123ish as the top between now and March. If we keep seeing dominoes (like Dubai, like the mezz loan default in Chicago, like trade barriers continuing to creep in) then it might happen sooner. The only way I’ll believe that the turn is in is if SPX closes below the green dashed line, and then goes on to set a new local low below 1029.38 – set on November 2, 2009.
Meanwhile, Asia was mixed (Oz and Hong Kong were red, all else green) but Europe is red. Retail sales beat expectations in Switzerland, but German factory orders fell (worse than expectations which were for an increase) MoM. Sentix Investor confidence measure (Europe) was worse than expected (and down).
ES drifted down and then got kicked when Europe opened at 3AM EST. The pivot at 1107.5ish seems to be the roof for now. 1100.50 is the point on the downside to watch. Pivots:
- R2: 1131.25 = Would be a new high – and not likely until the doubts in the bulls minds (Dubai, Chicago real estate etc) fade
- R1: 1118.75 = About a point above the high on Friday. It’s possible.
- Neutral: 1107.50 = The current roof – was resistance and support for most of last week, at some point or other.
- S1: 1096 = Bounced off of this level several times on Friday – but the TD level at 1097 was more important It’s no longer a valid support level. TD has 1100.50 as where buyers will come in.
- S2: 1083.75 = I believe that this is the point ES (and SPX) needs to clear for downward momentum to get established. It’s about where the dashed green line is on the SPX daily chart at the top (more or less).
FX
The USD has caught a strong bid. EUR = 1.49 seems to bring in the sellers. Worse than expected MoM factory orders are part of the problem, along with the US jobs data. Only the JPY is stronger (go figure after BoJ’s attempt to talk it down). EUR = 1.4757 seems to be the pivot support level of note at the present time. 1.4924 is the pivot above the selling. DXY has set a higher high on the 30 min chart and seems to have support where the last high barrier was located (bounced off the pivot at 75.482 overnight.
NEWS
- UK may tax the rich and banks. Dubai Holdings may default next hitting UK banks. Be careful if you’re long the GBP
- Kuwait sells their Citi holdings for $4 bb.
- Japan thinks about ban on temporary workers.
DATA
Consumer credit is at 15:00 EST – as the credit contraction is expected to continue. Apparently Xmas shopping is being done with cash.
Finally, if Rap is supposed to be the voice of the rebel and the common people, why is it all about guns and cars, and bitches and cash? Where are the “call to arms” for the middle class being sold into tax slavery to keep the financial elites and their political lap dogs in $40,000 bidets? I think the voices of our generation have been bought and distracted by Lady GaGa’s bikini and Shakira’s wiggle.
Cheers.
