Market and Political commentary for Dec. 17th.

Today is quadruple witching day for the stock market. There should be very high volume near the close and significantly higher volume for the day. To me what is very interesting this day is that wouldn't you expect the market to be roaring this morning since the Bush Tax cuts extension for 2 more years got passed and is on the way to President Obama for signing into law? Hmmm, why do you suppose that it isn't roaring?

Seems to me that yesterday we had the tax cuts in place and on January 1st and for the next 2 years they will remain in place, and the economy will not have any more dollars really added to spur the economy along. You see nothing much has changed except one thing, we now have a $900 Billion debt added to what we had as debt yesterday. That's a lot of money to pay off with increasing interest rates.

Oh, I'm sorry, didn't you know that interest rates have been rising rapidly in spite of Ben Bernanke's Quantitative easing, which was supposed to LOWER interest rates? Can you see the scam yet? The American worker and tax payer must now pay off an even larger debt than they had on their plate before the Bush Tax cut extension Bill was passed. The 10 year Treasury yield was down as low as 2.45% within 30 days ago, but now it is over 3.5%. How's that working for ya?! That's your best bought Congress at work for you. Where were all the loud Tea Party Republicans clamoring for us not to pass this Bill? They were bought off and silenced just like all politicians are. As I have said before, we have the best Congress money can buy, and this one cost more money than past ones. Now go out there and shop and stop complaining. Long term Slavery isn't that bad! Our ancestors managed it well but it only included the "colored's" back then. This new slavery is for "whites" too, as you, your children and your grandchildren will all be working to pay off this debt for their Master.

As you can tell, I am just sick of it. Why do you think many want to kill funding for public education and continue to make our education system inferior? Whose interest does that serve? How will these less educated vote when they are of age? Just like this generation of less educated. And that's how the game is perpetuated! It's the only way people will not vote their interests, now that Corporations are seen with equal rights as individuals in where they spend their money in elections. We are killing the American Dream for a generation at a minimum. What a sad day. Oh well, I've got to get ready for the day. Have a nice weekend, in spite of the news.

Year end stock market comment and prediction

OK, many are bullish and wondering when the big next leg up is in the market to 12,000 to 14,000 on the Dow. I know many still believe in Santa Claus and I would hate to disappoint you, so let's just say this. It isn't going to happen anytime soon. It is more likely we will go down to 6,000 than 12,000-14,000 over the next year or two. Below are some charts which to me say we are now very close to completing the right shoulder of a Head and Shoulder pattern, or "W" pattern, which I like to call it. Below are 2 charts of the Dow and S&P updated as of the close on Friday. With all the "movement" in stock prices and averages many have seen of late, when you put that movement in the context of very long term trends, the indexes have barely moved these past few months. But we are completing this pattern and as the arrow shows from the tilt of the "W" pattern it is pointed down. Is this a certainty? No, but I would say better than 75% chance it will. If I must stay on one side of a bet or the other, and let's not be mistaken here, buying stocks is professional gambling, I would say the odds are against any Bulls minimally for the next 3 months. First, here are the charts and then some additional comments.


One of the reasons I know the market is about to drop is that everyone who followed me to the short side of this market, which has been very painful the last 6 months, is planning to, or has abandoned their short positions. We are in the last throws of this rally. There are a lower number of new highs daily and the volume is drying up.

Watching Bernanke sweat on 60 minutes last week was also a sign. I have never seen him that nervous and worried and his concern was deflation he said, not inflation. His efforts to lower yields on the 10 year Treasuries has failed so far. 10 Year Treasuries closed well up over 3% on Friday, while the Fed would like to see those rates go to 2.25% or at least stay below 2.50%, where it was before Quantitative Easing 2 was implemented.

The third reason I believe we are close to a market reversal is that the Put to Call ratio has had a total of 7 consecutive days at 0.79 or lower. Going back over the daily data from Oct. 17th 2003 to the close of trading yesterday, this has never occurred. We are extremely overbought condition in the markets and in all Indexes.

Everyone is responsible for their own decisions when it comes to buying and selling stocks. All I do here is tell you what I am doing and what I am seeing. So from where I sit being long right now is fool hardy except in some rare exceptions and specific stocks. I recently purchased FXF, which is the symbol for the Swiss Franc currency. I bought it in the $90's and it is now $101.19 as of the close yesterday. I am expecting more an more pressure on the Euro currency. The video clip I have posted a number of days ago was a clue of how bad it is getting there with Sovereign debt issues. So I believe the Swiss Franc will rise on any pullback on the Euro. I also see Financials pulling back as well as many banks are in real trouble and with continued foreclosures, I see more banks holding the bags and getting into more trouble.

It is hard to give the positive financial message that everyone wants for the Christmas holidays. But there are positive things this holiday that should be the focus, instead of the markets. It's with your family and the blessings you have for having them in your lives. Friends too. I have several very close friends and I consider it a significant blessing in my life to enjoy sharing small talk and sometimes big talk with them. There are people doing good deeds every day that we don't hear about. We only see the negativity by watching the news. Doing that constantly can make you depressed. It doesn't mean the world is bad, it just means that the focus of the news. Occasionally, someone like Brian Williams of NBC shows people doing good deeds on his shows. It's the best part of the broadcast. The real world is full of people being blessed by other human beings. Look for that and you will have a better Christmas holiday.

Merry Christmas and a Happy New Year for all. Yeh, I know I'm early, but so what!

What's it going to take to get out of our economic funk? It's contrary to what you think!

We are all concerned about the economy and the stock market. The talking heads on CNBC and other networks like Bloomberg are asking questions like these: Will the Fed's Quantitative Easing work this time when it didn't seem to work last time? What's it going to take to get more confidence back to Consumers? Will the individual investor return to the stock market or have we lost a generation of investors? I have given these questions some serious thought and with my background of understanding people and the psychology that drives them, there are answers which will seem contrary to what the experts in the Fed and the markets are currently providing. Here are some of my answers to these questions.

For confidence to come back, the stock market must go down and have a retest of the lows! It is the only way where people will be convinced that the market is reflecting the economy. Without the drop, which by the way had been predicted by me incorrectly for the past 6-9 months, people believe the markets are being manipulated (which they are) and therefore an unsafe place to invest or to make money. It is the very avoidance of market turmoil, which has driven the lack of confidence in the connection of Wall St. to Main St. I am not saying it won't scare people, but they will feel relieved if there were a successful test of the lows and that there is the all clear sign with respect to investing in the market and the economy. The economy needs a spark right now and the Fed can't provide it. It has shot its wad already and it failed. The government isn't responsible for creating jobs, it's the Private sector. The Private sector won't until the mood of the Consumer is more optimistic and they are spending somewhat more than they have been.

I am afraid without the market drop, hordes of people will stay in a funk, things will remain depressed and many will feel there is no hope of recovering. The world needs the boldness and courage of the American people to lead the world out of this mess. The answer is NOT to try and protect the stock market but to allow it to reflect reality. We need the stock market to fall and retest the lows successfully so that we can reset the psychology of the public.