What’s the latest rumor?
That’s what the market is trading on now. No one is waiting for an actual deal to be reached and we are getting that classic Bugs Bunny Market effect, where investors are stampeding in and out of positions whenever Lloyd and Co. throw the switch. Once again we are forming the "M" pattern that we predicted on the Big Chart and we completed "neat" M’s yesterday, unlike the sloppy Ms we had in May and the neat M’s are bouncier, of course, because they lead to oversold conditions.
We did get a bit oversold yesterday, as you can see from David Fry’s NYMO chart below, with a 2% drop in our indexes and the VIX rocketing up to 23, which is up 35% since Friday’s close. Now THAT’s panic! Note on the NYMO, we are no as oversold as we were in mid-June (when the Dow bottomed at 11,862 on Greek panic) and before that mid-March (Japan quake panic – Dow 11,555) and before that Mid November (China Panic – Dow 11,000) and before that late August of last year (State Governments were going to default – thanks Meredith! – Dow 10,000).
Are you seeing a pattern here? Aside from the fact that every quarter, the Gang of 12 finds some reason to stampede everyone out of equities and into Treasuries so they can buy low (from us) and then pump the markets back up so they can sell high (to us) – those panic lows are getting progressively higher: 10,000, 11,000, 11,555 and 11,862, which just so happens to be the -2.5% line on our big chart. These are not coincidences folks, this is what happens when we let Robots control our markets!
795 will be our first test line on the Russell but, if that holds, we will be happy to begin layering in some bullish bets as the fix will once again be in and all it will take is a little magical fairy dust sprinkled around by the IBanks and we can rally again. What will it be? What magic words will flip that switch and send investors flying back into equities?
In this morning’s Alert to Members, I predicted that less than 400,000 people losing their jobs was likely to do the trick as we played the S&P futures (/ES) bullish off the 1,300 line, which is right where we are coming into that jobs report. The Dollar is at the high of the day (ironically) at 74.58 so the market manipulators are in great position to slap it back down and give us an artificial rally into the open. All we need to top that off is some kind of rumor that there’s a deal on the debt and it’s off to the races again.
If the market is still in an upward trend, and making higher lows of similar NYMO dips, then we DO NOT expect the Dow to fall below 12,000. This will be put to the test this morning as XOM had disappointing earnings ("just" $10.7Bn in profits) and is down 2.5% in pre-market trading. That’s 20 Dow points right there and CVX fell in sympathy so the Dow is going to have a 30-40 point handicap at the open so just holding onto 12,300 is going to be a tall order this morning.
8:30 Update: "Only" 398,000 people lost their jobs last week! Isn’t that great? It is a good number for the markets because that plus the totally crap Beige Book yesterday puts QE3 back on the table so the conditions are ripe for a very nice reversal if only the Europeans can pull it together and get the Euro back over $1.43, which will send the Dollar back below 74.40 and that’s very possible because Germany’s unemployment went down 11,000 in July, keeping their unemployment down at 7%.
Germany’s gains are Spain’s losses, of course, with Spanish retail sales down 7% year over year and 20% of the people in that country out of work thanks to those brilliant austerity measures that the Republicans are so anxious to try out here. Italy also suffers on the alter of Germany’s gains as bond yields there are back to their 6% July highs.
This is coming as "THEY" are doing a DSK on Italian Finance Minister Tremoonti, who has been widely credited with keeping bond vigilantes at bay but now the Conservative rag-sheets and Murdoch (allegedly) satellite stations are calling for him to step down because he may have (pause for dramatic impact) – PAID $1,436 A WEEK FOR AN APARTMENT IN CASH AND (and here’s the scandal) the landlord did not declare the income!!!
"One big question. That 1,000 euros a week, was it paid under the counter? Is there a receipt?" Libero, a conservative daily fiercely loyal to Berlusconi but hostile to Tremonti said on Thursday.
See, all countries are run by childish morons with the mainstream media distracting the population from real issues with fluff as the media hurls mud at anyone who isn’t wallowing in it already. That’s how they make sure that good, honest people want nothing at all to do with politics, giving dishonest slime-balls free reign to set up a Kleptocracy that grinds the hopes and dreams of the people into dust. Once the fruits of a nation’s labor are sold off to the Banksters and rented back to the people at rates they can never repay, it’s mission accomplished as an entire nation becomes a wage-slave state in service of the top 1%. It reminds me of a poem:
First they came for the communist countries,
and I didn’t speak out because I wasn’t a communist country.Then they came for the EU PIIGS,
and I didn’t speak out because I wasn’t an EU PIIG.Then they came for the US States and the Middle Class ,
and I didn’t speak out because I didn’t live in that state and I’m not Middle Class.Then they came for me
and there was no one left to speak out for me.
The Banksters are coming for you – you have been warned!
