US empire could collapse at any time, Pulitzer winner says

Hedges said that another pressure point is the US dollar, which he pointed out had been dropped by Russia and China in favor of modified ruble/renminbi exchanges.

"A few more deals like that, and our currency becomes junk," he said.

Hedges continued, "As long as we have relative stability, these lunatic fringe movements can be held at bay, but if we don't undertake serious structural reform, which we're not doing, then it is inevitable that we will come to a tremendous crisis - economic and political as well as environmental."

Link

A Few Charts

Weekly SLV

Daily SLV

Monthly US Dollar

Weekly US Dollar

Silver loosing it's shine? May be.

AAPL - Weekly Candlesticks

Apple has had a huge run. If you look at the RSI, MACD and $ flow they have been lower as the stock has been going up = losing steam = negative divergence.

It is hard to go against the trend. Until the trend is broken a stop loss or hedging with a put is best.

Look at the volume on down days. There is most certainly distribution going on.

NDX Weekly 10/13/10

Sometimes people tell me that I make calls and I change fast or that the calls I make are on point but sometimes don't "last" long.

I AM A SHORT TERM TRADER. IT IS FOOLISH TO BE A LONG TERM TRADER UNLESS THE TREND IS SHOWING THIS. THE LAST TIME WE HAD THAT SIGNAL WAS AFTER THE 00-02 DEBACLE.

Unfortunately I do not have the time to keep tabs on the markets like I'd like. I will provide short videos to help soon. I will give you a taste of the "knowledge". :)

The US Dollar 12 Years +

Freestockcharts is awesome! I use it with stockcharts.com. Both are worthy of paid subscription!

The Greenback has taken a beaten year after year after year. It has formed a higher low since the "bottom" of 08. The MACD and the RSI have been weaker considering that the pattern has been similar since last year. The $ flow has been week as well.

The 2 year trend is in tact and major support is around 75. If that is broken then 70 should be next.

Enjoy your trading - No, no comment. Too tough to call. Caution as usual.

INDU Monthly Update

GLD - Daily Candlesticks

This is super heavy volume. Silver and gold gapped up and closed lower on this volume forming a bearish engulfing, a candlestick pattern.

This could be the beginning of the end for the metals luster. At least temporarily.

NDX 9 30 10

Update NDX

$NDX - Daily Candlesticks: "


About a week ago I posted a question about the rally ending. I did not think it was so I did not comment further. It was heavy volume and it did pull back to the 10 day moving average.

On big up trends the rule is buy on every pullback until it stops working.

Now I am starting to see that we could be experiencing distribution. Too early to call but we're looking like we did in mid April b4 the fall. Need a tad more time.

Quotes of the month

It's a recession when your neighbor loses his job; it's a depression when you lose yours - Harry S Truman

I would rather live my life as if there is a God and die to find out there isn't, than live my life as if there isn't and die to find out there is - Albert Camus

Rally done?

$NDX - Daily Candlesticks








Heavy volume and formed a doji on the candlesticks. 2k is major resistance so there may not be enough steam left to break through. Pullback is in order. Will recalculate once this applies. If it closes above 2k with good volume, then still has steam left. Doubt it though.

London Metal Exchange, Belly Up?

NDX 8 26 2010

U.S. Next Bear Stearns?

Trennert sees two possible explanations.

“First, you want the deficit to look as low as possible now, so you keep your interest expenses low,” Trennert said.

“The other reason is more frightening. Marginal buyers of debt, in particular the Chinese, have shown they don’t want to lend long-term. They want the leverage that comes with having Uncle Sam go back to them every week or two.”

That means the deficit could represent a national security issue, Trennert says. “I don’t want to be overly conspiratorial, but certainly you’re conceding some sovereignty when you fund yourself this way.”

Video Report 8 22 10

Gold is looking much better than Silver. I like silver a lot but technically I don't see it going higher... Looks like it is weakening and perhaps even on the verge of breaking major support. Would love that so that I can buy more!

China dumped record US Treasuries

China cut its holdings of Treasury notes and bonds by the most ever, raising speculation a plunge in U.S. yields that sent two-year rates to a record low has made government securities unattractive.

The Asian nation’s holdings of long-term Treasuries fell by $21.2 billion in June to $839.7 billion, a U.S. government report showed yesterday. Total Chinese investment in U.S. debt declined 2.8 percent to $843.7 billion, the least in a year, following a 3.6 percent slide in May.

China, America’s largest creditor, is cutting back after scrapping its currency peg in June, giving it less reason to buy dollars and invest them in Treasuries. China is also turning more bullish on Europe and Japan, purchasing bonds of both nations. The shift comes as President Barack Obama increases U.S. debt to record levels, counting on overseas investors to buy, as he borrows to sustain the U.S. economic expansion.- Source

Foreigners Dump US Securities

Foreigners were net sellers of U.S. securities in June for the first time in five months, but increased their purchases of long-term instruments such as U.S. government debt, the Treasury Department said on Monday.

Overseas investors sold a net $6.7 billion of U.S. securities in June, including short-term instruments such as Treasury bills. They were net buyers to the tune of $17.1 billion in May, according to the latest Treasury calculations. - Source

On Mini Vacay!

Will be back next week... :)

U.S. Is Bankrupt

Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.

What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.

Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”

But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”

The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.- Bloomberg

Oil going higher?

I mentioned on the Video Report 2 weeks ago that crude was looking good. It has then since run up a few Dollars. Was reading this report and found it interesting

I received another scratchy, crackling cell phone call from my drilling buddy in the Texas natural gas fields today. You could almost choke from the dust on the line.

He told me that the BP Gulf disaster was turning the fundamental assumptions of the oil industry upside down, and that sharply higher oil prices were in the cards, probably $100/barrel by year end.

Major oil companies with deep pockets at risk were rushing to offload their existing offshore leases and partnerships in producing wells to avoid BP’s potential $30 billion hickey. - Source - Apologize for the inappropriate language.

Skype files for IPO

Skype, which expects to trade on Nasdaq, has drawn a large number of customers with free computer-to-computer services while a small percentage of its customers use Skype to make calls to traditional phones at discounted rates.

Atlantic Equities analyst Chris Watts said Skype's owners may see an IPO filing as a way to publicize the company in the hope that a strategic investor buys it outright.
Watts said that while Skype's growth has been impressive, investors eyeing publicly traded shares would be cautious about its prospects for revenue growth.

"That's the strongest point they have but it's also their problem," Watts said. "It's a very, very difficult business to value. The issue for most people is going to be: yes, they've got a very substantial subscriber base but a lot of their subscribers just aren't generating a lot of revenue." - Source

Freddie needs $1.8 bil from taxpayers

Mortgage finance giant Freddie Mac (FMCC.OB) on Monday said it would need another $1.8 billion in aid from taxpayers, bringing its total request since it was taken over by the government two years ago to more than $64 billion. - Source

Food Shortage = Higher Prices

The world faces an inflationary time bomb as shortages of food threaten to push prices to fresh all-time highs.

A variety of freakish weather conditions across the world has sent the price of staples including wheat, pork, rice, orange juice, coffee, cocoa and tea to fresh highs in recent weeks. Yesterday's decision by the Russian government to ban the export of wheat to protect home consumers saw grain prices jump 8 per cent on the day, on what was already a two-year high. Meanwhile, the burgeoning demand for foodstuffs and raw material growth in the resurgent economies of China and India has also driven oil, copper and other industrial commodities higher.- Source

Future Transportation in China

China has overtaken the United States as the world's biggest producer of greenhouse gases and biggest energy consumer.

But the country is also thinking in big and bold ways when it comes to how it will reduce pollution and a new plan to build a "straddling bus" is among the most space-age schemes yet.

In an effort to go green and relieve congestion without widening roads, the Shenzhen Huashi Future Parking Equipment company is developing a "3D Express Coach" ("three-dimensional fast bus").

The innovation will allow cars less than 2 meters high to travel underneath the upper level of the vehicle, which will be carrying passengers (PHOTOS).
According to China Hush, the 6-meter-wide 3D Express Coach will be powered by a combination of electricity and solar energy, and will be able to travel up to 60 kilometers per hour carrying some 1200 to 1400 passengers.

The first 115 miles of track is set for construction in Beijing's Mentougou district starting in late 2010. The Chairman of the Huashi Future Parking Equipment company boasts it will take only a year and 500 million yuan (around $73 million) to build the futuristic transportation system.  - Source

Successor to Warren Buffett

Twenty-one years ago, Li Lu was a student leader of the Tiananmen Square protests. Now a hedge-fund manager, he is in line to become a successor to Warren Buffett at Berkshire Hathaway Inc.

Mr. Li, 44 years old, has emerged as a leading candidate to run a chunk of Berkshire's $100 billion portfolio, stemming from a close friendship with Charlie Munger, Berkshire's 86-year-old vice chairman. In an interview, Mr. Munger revealed that Mr. Li was likely to become one of the top Berkshire investment officials. "In my mind, it's a foregone conclusion," Mr. Munger said.

The job of filling Mr. Buffett's shoes is among the most high-profile succession stories in modern corporate history. Mr. Buffett, who will turn 80 in a month, says he has no current plans to step down and will likely split his job after he leaves the company into separate CEO and investing functions. Mr. Li's emergence as a contender to oversee Berkshire investments is the first time a name has been identified to fill the investment part of Mr. Buffett's legendary role.

The development illustrates that Berkshire is moving toward putting in place—possibly sooner than investors anticipated—certain aspects of its succession plan. - Source

China Slowest in 17 Months

China’s manufacturing grew at the slowest pace in 17 months in July as the government clamped down on property speculation and investment in energy-intensive and polluting factories.

The Purchasing Managers’ Index fell to 51.2 from 52.1 in June, the Federation of Logistics and Purchasing said on its website yesterday. A reading above 50 shows an expansion. A separate China PMI is due to be released today by HSBC Holdings Plc and Markit Economics.

A deeper Chinese slowdown could weaken a global recovery already constrained by the debt burdens and unemployment of advanced economies. While growth is cooling, China’s full-year expansion may be as much as 9.5 percent, up from 9.1 percent in 2009, State Council researcher Zhang Liqun said yesterday. - Source

VR 7 30 2010

 

Things mentioned. Silver (SLV), Gold (GLD), INDU, NDX, US Dollar and Light Crude (WTIC).

Sorry for the crackling. I traced it to the mic. Will get a better one for next week!

Today and Past

Here is the INDU a year ago.

CHECK OUT THE VIDEO REVIEW FOR THE WEEK!!!!!!!

1st Video Review!!!

Best if viewed at 720 minimum.

I am sorry for how amatuer the first video is but I really wanted to try this instead of posting charts.

Tell me what you think!!!

Why Charts + Sentiment?

Charts - Cannot lie

Easy!!! Huge institutions usually leave tracks on where they think the market is going: Volume provides clues as to the intensity of that trend. 

Volume

Volume is the number of shares traded during a time frame (e.g., hour, day, week, month, etc.). The analysis of volume is a simple but very important for the of technical analyst. Volume gives clues as to the intensity of a price move. 

Trend

Refers to the direction of prices. Rising peaks and troughs form an uptrend; falling peaks and troughs form a downtrend. A trading range is characterized by horizontal peaks and troughs. Trends are generally classified into major (longer than a year), intermediate (one to six months), or short (less than a month).

Sentiment - Crowd is usually wrong

Psychology! What is being traded is people, not stocks. People never change...most traders keep on making the same mistakes again and again. That is good for us!

Open Interest 

Open interest for options is very similar to shares outstanding for stocks. Open interest helps to gauge sentiment in the options market. The higher the put/call open interest ratio, the more negativity on the index or equity. The lower the put/call open interest ratio, the more optimism there is. 

Short Interest 

The number of shares that bearish traders and investors have sold short is an equity’s short interest. This data is issued by the major stock exchanges. When short selling the investor hopes that the stock’s price will decline, permitting a future repurchase of the shares at a lower price to repay the lender.

NDX 100 (7 21 10)

Quick mid week post!

 We have a battle in our hands! We're in the 7th round, of 12, and the bull is a little dazed. He's lost the last 2 rounds but looks somewhat determined to get back in it.

Is the bear a tad cocky or is he confident? He lost 3 rounds in a row after a monster debut. However he's had 2 good rounds and doesn't seem like he wants to let go.

Report 7 16 10

Howdy. Not a bad week over all. However that last day was a bit of a bummer. When I have a tad more time I will try and do a mid week analysis. Let's get this part started!

Naz 100

Mid Month Look

The markets are faring well this month. The only exception is the Russell. Oil has done the best while the US Dollar is having a bad month. The precious metals are lagging and perhaps are entering into a consolidation phase. We'll look more into that next week unless I have some time during the week.

Conclusion:
So far this month is looking decent for the bulls. Even if we pull back a tad more it will still be an up month. In and out of small trades is best.

We are most definitely positioning ourselves for a huge rally. This rally will come when most will not expect it. Most will not want to jump in and be too afraid. HOWEVER, I still feel we have a tad more downside. There is not enough fear out there and complacency has sunk in. Don't think so? Look at this!

Look at the volatility of the Nasdaq 100 and the S+P and notice that it is not as high as previous, when we had big down days and weeks, and we are lower then previous times!!! Oh the complacency = trouble!!!

Enjoy your trading!!!

Confession 11

Almost half the Dow reports this week. Here is the list:

International Business Machines Corp. (NYSE: IBM)
Johnson & Johnson (NYSE: JNJ)
The Coca-Cola Company (NYSE: KO)
United Technologies Corp. (NYSE: UTX)
3M Co. (NYSE: MMM)
AT&T, Inc. (NYSE: T)
The Travelers Companies, Inc. (NYSE: TRV)
American Express Company (NYSE: AXP)
Microsoft Corporation (NASDAQ: MSFT)
McDonald’s Corp. (NYSE: MCD)
Verizon Communications Inc. (NYSE: VZ)

More Bite the Dust

Regulators shut down 3 banks in Florida, 2 in South Carolina and 1 in Michigan. 96 closures nationwide this year is far more than 2009, which was already a brisk year for shutdowns. By this time last year, regulators had closed 57 banks.

As losses have mounted he growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, and its deficit stood at $20.7 billion as of March 31.

Yahoo

Central Banks Abandon $

Last week, the United Nations released a report concluding that the dollar should no longer be the world's reserve currency because it is not stable enough. The dollar is down 5% over the past month, and even currency traders don't see it as a safe haven any more.

 

Just last week, America's debt lept $166 billion in a single day. That one-day run-up is greater than the entire U.S. annual deficit in 2007.

Forbes

Fed Reserve Worries

(Reuters) - The U.S. Federal Reserve's list of worries may be getting longer.

A fading recovery, persistently high unemployment, Europe's debt troubles and commercial real estate losses have garnered most of the attention. But some Fed officials have begun talking more about another trouble zone -- recession-hit U.S. state and local government finances.

Full article here

Report 7 9 10

Hope you all had a great weekend. It was really hot this week in NY but it "cooled" down for the weekend. The markets have also been scorching! Will they also "cool down?"

Last week we mentioned that we were closing in on a short term bottom. Let's analyze to see what may be up ahead for this week

Naz 100

Dow

Interesting note before leaving:

Over the last 6 decades, between August and October, the S+P 500 has had 33 up years, nothing special. However, when you add up the losses of the remaining years the bears still win as the S+P in this time frame has totaled a negative return of around 20%!!!

I will point out that when the market trades lower in these time frames it really trades lower! 7 years have been 10% or more. 3 years have been 15% or more.

What I Confirmed Long Ago

People are beginning to see and realize that the Dow is forming a Head and Shoulders pattern. About time!

I saw this early to mid 09 and showed it to a few colleagues at work. As usual people don't like negative news or underestimate the validity of technicians. Not all are the same my friends.


 Click here for source

US - $2Bil For Solar

Nearly $2bn in loan guarantees will be given to two companies to kick-start the US solar energy industry, President Barack Obama has announced.

One of the firms, Abengoa Solar, says that it is planning to build the largest solar power plant in the world in Arizona.

Full article here.

Question. Does the US not have solar companies?

Report for 7 2 2010

Let's start this month off with a some comparisons of how the US markets and other vehicles have fared against each other.Once a month, at the beginning, we'll report and see how the markets fared in previous time frames.

US vs Gold, Silver and Crude 1 Year

 US vs Gold, Silver and Crude YTD

 US vs Gold, Silver and Crude Month

Including the monster gains of last year this market is still up on a "365 day" basis. The worst performer was the US Dollar and the best were the precious metals. 

YTD the precious metals have done well but surprisingly so has the US Dollar. Interesting that these two have done well considering that they normally have an inverse relationship.

Over the last month everything has been beaten up. Best performer, and the only one posting a positive return, is the Amex followed by gold. The biggest loser, and only one in double digits, is the Russel 2k. Interesting to note that precious metals as well as the US Dollar are still trading very close.

Now let's take a peek on how they look on a chart with a 2 month time frame.

The Amex is the only US index that has a higher low! It also seems like their 20 day simple moving average is the only one that wants to crossover. Interesting. The precious metals and the Dollar are the only ones where the 20 SMA is trading above the 50 SMA.

Let's dissect the Dow.

Weekly

Daily

DIA Dow Diamond ETF Short Interest

Shares (millions): 11.80

Short Interest Ratio: 0.80

Percent Change: 4.8%

Short Interest/Float: 14.7%

DIA Dow Diamond ETF Put call Ratio

P/C ratio 1.41

Percentile Rank: 73 %

High (1 year): 2.87
 Low (1 year): 0.78

Enjoy your trading!!!

INDU 6 4 2010

This will lead to my next post on the Industrials.

US Martket vs All

You think the US market has been bad? Think again! Ouch on China! Since the beginning of the year bonds have been king. Gold and oil have not fared bad against the overall markets but seem to be losing a little strength. The only anomaly is the German markets. Impressive.

How $ Truly Works

 

This is a must for all that want to know how our money system really works.

Last 7 days?

Over the last 7 trading days the NASDAQ 100, DOW INDUSTRIALS, SP 500, US$ , GOLD, SILVER, LIGHT CRUDE, EVERYTHING has been going down!!! Interesting. Hmmm

IAG 10 23 09

Nice looking chart!

Broke out of an inverse head and shoulders pattern in the beginning of 09. Since then up moves have been on heavy volume and down moves on light. In September and October there was heavy accumulation and looks like a great buy on this pullback on light volume. Breaks 16 and it is gone!

There is also a huge short on this company and few analysts like it. Perfect set up for a contrarian play!

INDU 5 21 2010

 

Just a quick observance and one can see a head and shoulders pattern forming on a long term monthly cart.

A) Could trade between 9 and 11k for the next 2-3 years and maybe even 4-5. As one can see we've had a humongous run over the decades.

B) IF, IF, IF this head and shoulders pattern plays out, as this is one of the most bearish chart patterns, then we can expect a crash of EPIC proportions.

C) 1st scenario: If the DJ recuperates the recent highs and then the next level to test would be 12k. If it tests and then overcomes then 13 and 14k will be the next targets and the H+S pattern is done.

2nd scenario - DJ trades sideways 1-3 years then tests the neckline, 7k, and if it, if, if, it breaks then expect all heck to break out.

Conclusion:

Because of the financial situation in the US and worldwide I am swaying towards a continuation of the H+S pattern forming and perhaps even breaking... I am preparing for this. If I am wrong the investments I will be in should still do well regardless.