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!

Another new low on Put to Call ratio

Yesterday's market close for the week showed another new low for the Put to Call ratio. It closed on Friday at 0.66 and the week before it closed at 0.69. This is yet another sell signal that we are going lower. The question you might be asking yourself is why did the market have a good day on Thursday? Simple answer, 2 factors, both related. The first factor was the GM new IPO offering, which was a good thing if you want the government out of the car business. With the IPO, the government can get the money back they invested to save the auto industry and jobs. THe saving of jobs worked and it looks like GM has a better footing to do both.


Now the second factor, which I said was related was this, the market was manipulated by the Fed to stay up, so the IPO would be seen as successful. The Fed did say it's monetary easing (manipulation of the stock market as just one manifestation of the use of that word) was working this week when Bernanke spoke abroad. With prices propped up, it was a great climate for the IPO that day. But on Friday, the market reached a more bullish extreme as puts had been dumped on Thursday and Friday causing the Put to Call ratio to go even lower than last Friday, Nov. 5th.

We may be setting up a pattern of increasingly lower lows on the Put to Call ratio, which in turn will set up larger sell-offs and possibly this is how we have have the really big one. When that happens we should see this ratio drop as low as 0.5 or lower.

Below is a 1 month chart of the Dow. As I said on Nov. 5th, the Put to Call ratio signaled the reversal in trend. Compare where we are now, with an even lower Put to Call ratio yesterday. We did not go over the 25 day Moving Average line in yellow. So I see another leg down within the next week and a half. I say a week and a half because we have a short week because of Thanksgiving. So it will take the following week for the market to drop below 11,000 on the Dow and stay there. Watch the hype about what a great shopping day the day after Thanksgiving was for Retail Sales. It will be all lies!

There won't be much to post next week and you may be traveling, so let me wish one and all a very Happy Thanksgiving. My wife and I will be local and enjoying a Turkey dinner with my friend and neighbor, his children.

Market comments for Nov. 11th: Grantham video on CNBC

Yes, if you do nothing more today than listen to this video clip of Jeremy Grantham, Chairman of Grantham Van Otterloo, one of the most respected investment firms, you will not regret it. He manages over $100 Billion in assets and was interviewed by Maria Bartiromo on CNBC.

The market is down about 105 points on the Cisco news today. The Put to Call ratio was only about 0.90 this morning and has since gone lower to 0.83 as of this moment. It surely is not causing a stampede to buy Puts, so this market is still too confident of the Fed in my view and irrational.