I've been away but will start posting again on Monday

Yes friends, I was away in Santa Fe on business and didn't have a chance to post anything this past week. THere is much to comment on regarding the stock market and also world affairs so I will start posting shortly. Be sure to take the Mini poll on the Wisconsin Union busting situation.

Be safe!

What to do about Pirates?

I have been giving some thought as what to do about the Pirates who have boarded the Yacht of 4 Americans off Yemen and kidnapped them and are heading southwest to Somalia. There aren't many options even though our military knows where they are and are tracking them and wanting to stop them form taking the Americans on shore in Somalia for fear they will never been heard of again. So what would you do about this and what do we do to stop the Pirates from boarding and stealing ships for ransom?

The question is this, even if we took the most aggressive action and boarded the yacht and killed all of them and possibly lost the 4 Americans, I am not sure it would deter anyone from trying it again. It is a real problem. How about some suggestions from you?

Milestone achieved for me. 1500 Blog posts written!

Yes, I reached a milestone yesterday as I have posted 1500 Blog posts. I couldn't believe it until I saw it on my counter. In had never ever written a thing before starting this Blog. I didn't think I could do it and if I started it, I wasn't sure I would keep it up. I started this Blog in May of 2005 because I was angry about what I thought Bush and Cheney were doing to ruin our country. My first post was written questioning the wisdom of John Bolton's selection as Ambassador to the UN. I think looking back my fears were warranted as he turned out to be a terrible UN Ambassador.

I also wrote in that month with my objections to changing the Senate Rules about the Filibuster. It is interesting that back then it was the Republicans wanting to eliminate the filibuster rule but it took 14 brave Senators including some Republicans to join Democrats in stopping the effort. Interestingly, the same issue was proposed by a Democratic Senate recently but cool heads prevailed and several Democrats joined Republicans to keep the current Rule.

So this has been an adventure for me over the 6 years and now my blog includes stock market views as well as political views. Thanks to all of you who have visited and those who took the time to leave a comment. I have had well over 65,000 visitors in these 6 years who have read over 125,000 pages of my Blog. Hooray! :)

Dow 30 year chart: What is it telling us?

As we begin a long 3 day President's weekend, I thought a look back on this stock market climb. At first glance the Dow chart below shows a downward slanting "W" pattern, or, as many technical people call it, a Head and Shoulders pattern. But while that's an important point of this chart as the recent climb has been impressive, what I want you to look at is the bottom chart which is of Volume over the past year. You will see on that lower chart an average volume red line but notice in the last year the volume has declined to a low of the past 10 years. When volume is strong and price is increasing it is quite Bullish. When price rises and volume declines significantly, that is quite Bearish. In this case, there is no question that the entire climb of the past year has been on very low volume. You see it has been climbing without the individual investor participation. This rise has exclusively been down by the Fed and it is not sustainable indefinitely. The longer this market goes up, the bigger the fall. Don't be greedy. Take your profits and be happy you have them. Keep what you have then in cash and just wait.

Click on the image to enlarge it if you can't make out the details.

Vote on Wisconsin right to collective bargaining for State jobs

I have added a mini poll on the right margin which asks you whether you support the right of Unions for Collective Bargaining in State jobs. Please take a moment to take the poll.

Demonstrations in Wisconsin

We are now watching demonstrations in Madison, Wisconsin because the Gov. there wants to disband the Government Employees Unions right to collective bargaining. People are getting angry everywhere it seems and this battle is between the wealthiest interests and that of the Middle and not so Middle Class. It's tough to watch as this has been one result of the divided politics of the past 2 years. People don't seem to be able to reason with each other any more. It doesn't matter which side you are on either. Most elected officials seem to be doing it.

Egyptians are still protesting somewhat and now other countries are joining them. Now it's Bahrain, Libya, Yemen and the continuing fight for a voice in Iran. It seems that when a hard hand is used to quell the demonstrations, they are successful for the moment in breaking up the demonstrations, but it is sowing the seeds of violence from these peaceful demonstrators and it will end with many lives lost. It doesn't matter whose lives as all are precious. We are regressing as a civilized society and chaos seems to be inevitable.

It's a sad day for many today. Appreciate the freedom you do have but guard it well as it could easily be gone.

Looking back on the stock market for predictions of what's to come.

This will be a particularly long post today. I have gone back in time to see what I wrote back on Saturday, Sept. 4th, 2010 about the stock market and at that time the coming election, along with the stock market charts of that time to see what came true and what didn't. What's the point of this, you ask? Well in part because I was wrong in some of my predictions because I had no idea the impact of QE2 by the Fed and what that was going to be. Remember, that was pre election time and just a few weeks after Bernanke announced QE2. The stock market had reached what I thought was going to be its peak before the beginning of its long decline. I thought that top was at 11,400 on the Dow. I was proven wrong on that one.

So here is my entire post from that Saturday back on Sept. 4th, 2010 followed by an update to my thinking:

I believe in the coming few weeks there will be a great battle in the stock market for the very soul of the market. One group of players will be those Bears, who like me, believe we have been lied to and the markets manipulated to keep us happy. The other players are the Bulls, who believe the lies of the Government and the Fed and think things have been getting slowly better.

I do believe the stock markets will drop significantly in Sept and Oct., set up a angry Consumer and Electorate, who will then go to the polls in November and vote to "throw all the bums out". This will be followed by a Republican victory in the House of Representatives, which will mean a return to endless investigations using the new subpoena powers they will have in the Congress and they will continue to stop all legislation on Energy, Healthcare and of course any Social agenda to help the Unemployed.

A stock market rally will follow the election in support for the change and a Republican victory and election to a majority in the Congress. They will continue the Bush the tax, which are scheduled to expire in January 2011. They won't allow it to end as it has been big business for them to stop it, so the most affluent can keep their money, which, in part, pays for the politicians to vote their way. The consequence of which will be that deficits will be out of control going forward as will the interest payments we will need to pay each year to pay for all our debt. It will be an irresponsible policy move. Of course these newly elected members of Congress will get us into a catastrophe much quicker with reactionary new policies, and this will drive us faster to the Great Depression, Version 2.0.

I think the Fed has done an amazing job managing our psychology these past 18 months along with the Government. I haven't liked it, as I keep seeing the man behind the curtain pulling the strings, as you do. But the facts of what we see everyday is hard to change by hype and manipulation alone. We need to see positive change in our community with better Home prices and Sales, less For Lease signs from Commercial Real Estate problems, less unemployed and more hiring and the business community taking a bit more of the risk and investing in new capital equipment. That is why the stock market has been in a tight range between 11,600 and 9800 during this period, with no significant breakout in either direction. It has been a tradable range of -15.5% to as high as 18.4%, but the timing has not been very easy to trade as most of those moves happen within a few days in each direction and by the time one reacts 50-75% of the move is over. That works fine for Wall Street with their program trading, but isn't so good for the average individual investor.

The battles in the future are going to be between the have's and the have nots. It has already begun if you haven't noticed these past few years. The Middle Class is being slowly extinguished. Eventually Unions will become stronger again but if we aren't careful as a country, we are going to resemble a country in Central or South America, where workers fight to try and live and governments eventually turn like Venezuela. The wealthy in this country are playing a very dangerous game that is going to come back and bite them badly.

One must ask them the most difficult question, which some amongst them have finally asked themselves. When is enough, really enough! How much wealth must one have and when is it counterproductive to the society one lives in to garner more just for the sake of having it. Bill Gates asked himself that question, as did Warren Buffet. I salute them both. But how many more, which I will not name, come to the same realization. You made as much as you have because of the America of the past, which had a vibrant Middle Class. It is equally important for them to have a strong Middle Class as well. It keeps peace in the streets and hope in people's hearts. We need more of that now.

The anger of those politicians who are riling up voters and has spawned the Tea party, is a prime example of what I mean. Being a politician and saying "No" all the time, does not create great solutions to problems, where all can live with a truly compromised solution. They are one sided solutions and half the population is going to be unhappy with the change. We need genuine compromises by elder Statesmen (and Stateswomen) if we are ever going to attack the deficit, Social Security, Medicare, the Military Industrial complex and ensure our national and individual security.

So that's what I see ahead of us. You can make a difference by not letting your anger get the best of your choices. Think rationally, not emotionally, what is truly best for the majority of people and choose accordingly. As to the stock market, don't let the swings between the ranges drive you crazy. Pick a strategy and stick with it until it is proven correct or false. As the charts of the Dow 6 month, 3 year and 30 year show below, there is a great battle brewing both short term and long term. This too will be the effect and affect on the economy and the stock market as it is impossible to discern which leads which and which follows.





OK, that was back on Sept. 4th. What about now. What inspired me to write this quite honestly is that right now feels like the same wall of price movement we had back in 2000 just prior to the Dot.com bubble bursting. I was warning people when the Nasdaq was at 4,800 to get out and go to cash. People pointed out at that time that the market was still going to go up and break through 5,000 and go up to 6,000. Well if you remember, we did break above 5,000 and went to 5,200 on the Nasdaq before the bubble finally burst. That was a long 11 years ago, but to this day we have not managed to gain back losses many still have to this day. Yes, I was wrong, people did wring out another 600 points or 12.5% gains from when I said to jump ship. Those wise enough to sell at exactly the top made another 12.5%. But those who didn't sell at the exact top are still down over 50% from that time and there is no telling how long, if ever, it will take for the Nasdaq to go back to 5,200. I say this all today because I thought the top of this market should have been 11,400 on the Dow and a comparable level for the S&P 500 and the Russell 2000. But because of market manipulation by the Fed, here we are at Dow 12,273, almost a full 1,000 points higher than the 11.400 top I had predicted. That works out to 8.8% higher than where I thought the top was. I was wrong, period!

But do you now think the market is going to go higher? Do you think we are headed to the market high of 14,000 for the Dow? Maybe you think we are now at the beginning of a new Bull market? Are you now going to venture into the market with fresh money and take a grab for that brass ring? Hear this and hear this clearly. The market is going to have a really bad fall in my view. It has been painful being short in this market as long as I have. But my firm belief is that this market is going to retest the 6,400 level on the Dow again and I don't believe this time it will hold that level. Is it worth the extra gains you might get from here or should you declare victory and sell some of your holdings and pocket the gains? You know what I think. If I'm wrong here you might eek out another 1,500 points on the Dow as the Bulls are declaring. That's a gain now of about 10%. If I'm right and the market does drop and retest 6,400, you will have lost 1/2 of your investment, just like the drop of the Dot.com Nasdaq bubble when it burst. For me, I think we have been in a Bear market rally the past year plus. You decide!

Here are charts below which I had posted in Oct. 2010 of where I saw the market top and I added a new horizontal red line on each to show you how much more we gained since my warnings.

EGYPT IS FREE!

Yes, moments ago, President Mubarak stepped down as president and has turned over the country to the Military. The crowds have gone wild! It is a very happy moment for all who love freedom. The protesters honored their commitment to be peaceful. The honor of the protesters has been preserved and the future freedom of Egypt is one step closer this hour.

Egyptian protesters, now what? Affect businesses!

The best way for protesters to win this peaceful struggle to get President Mubarak to leave office now is to boycott all businesses. It will be the lack of business and the effects on business profits that will get the powerful upper class, which has supported Mubarak all these years to realize it is in their interest to get Mubarak out of office completely. In my view, this is the only thing left to do to have a successful outcome for protesters. Good luck. We are with you in spirit!

Egyptians have won, so it seems. UPDATE

The news out a few minutes ago was that President Mubarak will shortly announce he will be leaving office as soon as Constitutional changes are made to transfer power to the Vice President. The protesters have won. Egypt indeed may have won. We should all allow the joy of independence to guide our comments. It is the people of Egypt who need to decide what type of government they should have, not anyone else. Freedom is a wonderful thing and a right for all people. We shouldn't allow voices from our far right wing of the Republican Party to allow their fear of what is to come in Egypt to diminish the joy of freedom for these people. Many worry that Egypt will become a religious state under religious laws as their guide. It is not something to fear because this protest was all about jobs and being paid fair wages for the people to survive. If these stories of Mubarak leaving come true later today, I for one will be very happy for all Egyptians. Democracy can be messy, but freedom is a driving force of mankind.

UPDATE: 6:45pm

Well Mubarak disappointed everyone, except himself, because he did not quit his position as head of the Country. Demonstrators vow to b ring many more into the streets tomorrow. It has frustrated not only the protestors but also the US government because Leon Panetta had said he was resigning today. So much for U.S. Intelligence.

Chechen rebel claims responsibility for Russian airport Bomb

Tonight the headline reads as follows: "Chechen rebel leader claims airport bomb." What they are talking about is the terrorist attack at a Russian airport a few weeks ago. More comments from the article say the following, "A website affiliated with Chechen rebels has released a video in which insurgent leader Doku Umarov claims responsibility for last month's deadly suicide bombing at Russia's largest airport and threatens more bloodshed if Russia does not leave the region." What I find amazing is that there hasn't been much condemnation for the US gov't, although President Obama did speak to the atrocity and condemned it. But people here have not said much about it nor has the media.

We have a common enemy here and that is terrorism. Just because they attacked Russia shouldn't give us any comfort. The terrorists were targeting foreigners as it was at the Arrival area of the airport and not the Departure area. When Russia does respond to these attacks, and make no mistake about it, they will, we need to remind ourselves not to condemn Russia for what it needed to do to stop these atrocities, we need to support them! Working together to find these people would improve our relationship with the Russian Gov't and the Russian people. I hope we are helping to look for this guy, Doku Umarov.

I just can't wait for those who criticize this support of Russia for going after these criminals. I hope they find them and bring them to Russian justice. There is no excuse for terrorism of any kind. Always, innocent people die. The world has gone mad.

To read the entire article click here.

What a shame!

I know you think I am referring to Egypt, but I'm not. Although there is much to be thinking about when it comes to the events in Egypt. No, I am talking about the end of the Free Enterprise system by the Fed rigging and inflating the stock market artificially, where there is no connection to the reality of the real economy.

Look around you. See how many businesses have their office spaces For Lease. Look around you and look at the Food banks and the unprecedented demand of the new poor who were once the Middle Class strength of this country. Look at the compromises the President made to allow for tax cuts for the wealthiest 1% of the population causing almost a Trillion dollars of more debt to the mountain of debt which has piled up over the last 30 years since Reagan. Yes, that's right since Reagan, since we are now reminded that yesterday would have been his 100th Birthday.

Yes the stock market is rising and many believe they are wealthier and maybe they are temporarily, but the day of reckoning is ahead of us for no good reason other than the fear of what would happen of the Fed didn't pump up stocks.

What a shame!

Mini Poll Results

Today, the Unemployment rate went down to 9.0% so I thought that posting my Mini Poll results might be of interest and would mark a point in time so that I could start the survey again and see how people are now feeling about the economy and financial security. So here are the results of the Mini Poll survey.

The question asked: How do you feel about the next few years with respect to your job and financial security?

Answers:
18% said I'm Optimistic and think things will get better.
73% said I'm Pessimistic and think things will get worse.
9% said I'm neutral and think things will stay about the same.

The last time I summarized these results was on Dec. 31, 2010. Here's those results:
13% said I'm Optimistic and think things will get better.
63% said I'm Pessimistic and think things will get worse.
25% said I'm neutral and think things will stay about the same.

Clearly January was a more pessimistic read on things than was December's data.Yet the stock market rose continually. However Jan 1st marks the beginning decline for the price of Gold.

Please take the Mini Poll survey on the right margin. I will post the results at the end of March.

Market comments for Feb. 4th, 2011

Much has been written of the market rise from the low of 6,400 on the Dow in March 2009 to where we have returned to Dow 12,000. That rise of 5,600 points has taken just about 2 full years. I haven't seen by comparison anything written on the speed of the decline from the Dow 14,000 level down to the 6,400 level, so I thought it might be a good topic this morning.

The Dow was at its 14,000 peak in October 2007 and then dropped to Dow 12,000 within less than 6 months. Then it dropped from the 12,000 level to the 6,400 level in about 9 months. Seems to me, once it started the rate of decline was so much more rapid than the gain by double the speed.

It is my belief that when this market does correct it will have at least the same sharp decline. An article yesterday on Yahoo said that the author believes we are going to have a "Splash Crash", when it happens this time. I agree with him. The last gain of 1,000 points, going from a Dow 11,000 to 12,000 took a little over 2 months. Imagine losing those 1,000 points in a matter of minutes. That's the most likely scenario for the beginning of the decline. It will be a shock when it happens.

Now for some good news. The Unemployment rate for January was reported this morning to drop a very large amount and now stands at 9.0%. However Private sector jobs increased 50,000 vs. 139,000 jobs created in Dec. Last month the unemployment rate was 9.4% so the official counted unemployed number has dropped significantly. This should affect the market very positively as the market actually expected an uptick to 9.5%. Let's see what happens today. You can't get much better news than that for the Obama Administration and those still unemployed. The 10 Year Treasury yield has climbed to 3.60%, which is in the opposite direction to what the Fed has been trying to do with QE2.

Egypt update

It is apparent this morning here from the West coast of the U.S., that we are witnessing on TV organized pro-Mubarak "demonstrators" throwing Molotov cocktails at pro-democracy demonstrators. The fact that this seems so well organized, points to Mubarak attempting to discredit the pro-democracy movement by injecting violence into what has been 8 days of peaceful demonstrations. The whole world is watching and isn't being fooled by this deception. The fact that these pro-Mubarak forces surrounded the Tahrir Square in Cairo and then proceeded to attack these peaceful demonstrators is a desperate move by Mubarak. It has been reported that the dreaded undercover police are mixed in with the pro-Mubarak forces. These forces even have turned over Military vehicles. This will not end well and much blood will be spilt. The accountability for this lies on the hands of Mubarak himself. Let the world condemn these actions loudly and forcefully!

Are the new highs believable? You decide!

I have looked at the Dow 3 month chart tonight and what seems clear to me is that while we hit a new high today on the Dow and the S&P, when you look closely at the Volume today, you can see that Friday was the highest volume day. Yesterday's volume was higher than today's volume, which means that today's volume was the lowest of the past 3 days. It didn't convince me that we are now in a Bull market as some have claimed today. Take a look yourself at the chart below and you decide!

Today I purchased more TZA shares for $14.27/share. I know, you think I'm crazy. :)

Rapid Changes in Egypt call for being mindful about your portfolio

The events in Egypt show how fast the contagion for the desire for freedom can ignite the passions of a people. Now add the effects of the Social networks like Facebook and Twitter and you have an instant communication vehicle. Just think a little over a week ago Egypt was not on anyone's mind. Now it is there constantly because of the media attention to it on Cable news networks. Things were fine and all of a sudden things turned quickly.

There is something to consider here when it comes to our stock markets. You see, this is what will happen when one day soon our stock markets drop and scare everyone because we too will be in uncertain times. This market rise today to 12,040 on the Dow and 1307 on the S&P 500 reminds me of the year 2000 when the stock markets surged one day and then collapsed on another. It happened that quickly. It will happen again. Are you prepared for it?