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Wall of Worry Wednesday – Insurmountable or Time to Climb?

Isn't this fun?

On Monday we drew our 50% retracement lines for the Dow (13,000), S&P (1,395), Nasdaq (3,075) NYSE (8,050) and Russell (815) as well as the other global indices that we expected to be tested this week but I cautioned:

"How many times will the bulls be sucked in by the same empty promises?  How many times will they reach into their pockets and BUYBUYBUY the snake oil valuations sold by the Reverend James Cramer?

Now I don't mean to pick on Cramer but it is truly incredible how many times people begin a conversations with me by saying "Cramer says.."  Yesterday Cramer said to ignore the experts and their annoying FACTS and just BUYBUYBUY:  “No one from the Fed said anything today, yet the market roared, so I imagine these people are stumped beyond belief,” Cramer said. “It must be so troubling for them to rationalize this rally.”  

JEFF GUNDLACH'S EPIC PRESENTATION: 'To QE3 Or Not To QE3, That Is The Question'See, Cramer is just a great summary of everything that is wrong with investing these days.  What a ridiculous over-simplification to act as if the Fed has to say something every day to move the markets – the complete and utter ignorance/disregard of World events is truly stunning on Cramer's show, CNBC and pretty much all of the MSM who won't tell you anything that can't be reduced to a Twitable sound-byte.

On the right, we have the anti-Cramer – a thoughtful presentation by Morningstar's Fixed Asset Manager of the Decade, Jeff Gundlach, who is the only bond fund manager to win the Standard & Poor’s/BusinessWeek Excellence in Fund Management five years in a row.  I urge you to run through Jeff's presentation as it contains a fantastic series of charts that gives a well-balanced view of the global macros.   One very notable chart was this one, showing the divergence between stocks and commodities as Operation Twist has had no stimulative effect on demand:  

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undefinedThat's not a healthy-looking divergence, is it?  While the bulls are betting that commodities will catch up to the hyper-inflated stock prices, we've been betting the hyper-inflated stock prices will eventually run into the demand reality that is already tanking the commodity markets.  

As we noted in Member Chat this morning, the Central Banks are pumping free money into the banks (that will eventually become a burden on the bottom 99% taxpayers and their children and their children's children…), who are not lending it to boost the economies but are turning around (or "twisting") to buy Sovereign Bonds that the top 1% have been stuck with.  

Aside from the feeding frenzy by our local Banksters at the expense of the Fed, Spanish and Italian banks have used LTRO and EFSF funds to load up on over $600Bn worth of Government debt – debt that may well be defaulted on in the same way Greece just did.  It's nothing more than a stealth bailout of the top 1%, who are cashing in their bonds at top dollar and moving back to cash ahead of the next market collapse.  

Even the bankers to Europe's Top 1% in Germany and France are CUTTING their holdings in the same bonds by 50% as the bad-debt burden is transferred to the debtor nations, who will later be blamed for making these bad investments as the situation that is clearly visible now will, in the future, be used to justify even harsher austerity measures for their poor neighbors.  

“The more banks stop cross-border lending, the more the ECB steps in to do the financing,” said Guntram Wolff, deputy director of Bruegel, a Brussels-based research institute. “So the exposure of the core countries to the periphery is shifting from the private to the public sector.”

Corruption DemotivatorWhat a scam!  A great example of the Dooh Nibor Economy, where the Global Kleptocracy continues to run policies in their puppet Governments that rob from the poor and give to the rich.  While French and German banks lost money on Greece’s restructuring last month, a delay of more than a year allowed a similar shift of risk to the public sector. When the exchange took place, the debt relief was capped at 59 Billion Euros because fewer bonds were held by the private sector, including banks outside the country. If Greece had defaulted in 2010, the reduction could have been as much as 232 Billion Euros.  

This amazing Global Ponzi scheme is bound to end badly – the only question is when?  The bull case (see Cramer) is that the Fed and other Central Baniksters are placing a floor under the market so you "can't lose" – no matter what idiotic valuation you pay for stocks (Gundlach believes 8-10 is the proper p/e for the S&P 500 – now 15).  Essentially, people buying the market under this premise are no different than people who invested with Bernie Madoff, knowing it was a scam but not caring as long as they got their 20% returns – it works until it doesn't.    

This is a discussion I have with our Conservative friends all the time – it DOES matter where you get your money from.  We (the top 1%) are currently extracting our wealth and income from the bottom 99% at a record pace.  

The gap between the rich and the poor in America has never been wider and AMERICA can't, CAN NOT, recover if our survival plan is to get what we can and put it into our 3M lifeboats while letting the other 297M people go down with the ship.  The austerity actions being taken now are essentially a justification of theft along the logical lines of "well, those 297M people are going to die anyway so robbing them isn't REALLY a crime, is it?"  

According to Romney and the rest of the GOP, it is MUCH more important that we preserve his comfort and his lifestyle than to waste our time helping those who are unable to help themselves.  This is the same attitude the Germans are developing regarding their poor European cousins – why should we save you from collapse if it might cause us discomfort?  

The more the Corporate Media manages to convince the top 10% (no one else matters) that the bottom 90% are unsaveable or "not worth" saving – the more they are able to justify greater and greater abuses heaped upon those down below.  Dehumanization of the enemy is an essential part of a propaganda war and make no mistake about it – class warfare is a war and it's not a war that the poor are waging against the rich (despite what their PR machine would have you believe) – it's a war that the rich have been waging against the poor for 40 years now.  

This is the way things work people – I apologize for the Micheal Moore clip, I know that he is considered to be the great Satan and most of you have been brain-washed to feel sick at the mere mention of his name or the sound of his voice because he….  er….  well, because he did whatever horrible things that you think you know have maybe been insinuated about him by the MSM, right?  That's good enough for us because WE'RE REAL AMERICANS, right?  

Government DemotivatorReal Americans don't put up with agitators, unless those agitators are from the Tea Party or unless they are anti-tax agitators or unless they want to reduce (not COMPLETELY destroy) our Government because, as we all know, Government is the problem and private enterprise is the solution!  

Of course, in this upcoming election we have 242 House Republicans that should be re-elected – it's the 190 Democratic bums that need to be thrown out and THEN you'll see some real action.  The Republicans have been hamstrung so far by their 32% advantage in Congressional seats and now we have an historic opportunity to extend the reign of a Congress that only managed to pass 80 Laws out of 945 votes taken (with 5,970 resolutions killed on the floor) in 2011 – a record that may only be broken by the same team in 2012 as they are 0 for 89 votes with 627 bills killed in Committee in the first quarter of this year – go team!!! 

These people are destroying our country folks.  Do you really believe the World's largest economy can afford to do NOTHING for 2 years?  Is this going to be the winning strategy we reward – hamstring a sitting President, let the country run straight downhill and then run for re-election on the premise that, as long as you approve of the guy the people elect to be in charge – you might be willing to play ball.  This is not politics – it's extortion!  

Let's contemplate that while we wait PATIENTLY for the markets to correct.  The point in going over these Global and Political macros is to get you to step back from the day to day BS that the MSM likes to keep you focused on and contemplate the bigger picture.  We discussed many of our recent short plays in yesterday's post and there was no change in yesterday's Member Chat as we took advantage of that very silly move up to add back some short positions after Monday's profit taking.  

Now that we've completed our 50% retrace of the month's drop, we'll be happy to take quick bear losses and go longer if we can accomplish 3 of 5 of our 50% lines (see above) but clearly we'll be exercising a HEALTHY degree of skepticism against any short-term market moves.  

Early this morning, we took advantage of the morning pop to short the oil Futures (/CL) at $104.50 and we're just testing $104 now at 9am – so the Egg McMuffins are paid for and we're ready to start our trading day!  

Kleptocracy by WilliamBanzi7.  

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Oil Lines

R3 – 108.15
R2 – 106.61
R1 – 105.74
PP – 104.20
S1 – 103.33
S2 – 101.79
S3 – 100.92

Huge volatility!

Why are taxes so complicated:

http://www.slate.com/articles/business/moneybox/2012/04/grover_norquist_and_h_r_block_the_unholy_alliance_of_tax_prep_firms_and_conservative_activists_to_make_your_taxes_even_more_complicated_.html

 

Needless to say, taxpayers should have the right to dispute the veracity of the IRS’s calculations and submit their own form. And some classes of people are going to routinely have unusually complicated tax finances. Journalists, for example, often have miscellaneous travel expenses related to freelance assignments. People running substantial small businesses will still need accountants. But for the vast majority of the population, most of the pain of tax compliance could be eliminated by a few keystrokes at IRS headquarters. So why don’t we do it? Two reasons. One is lobbying by the tax preparation industry to discourage states and the feds from developing easier tax-paying systems, as California recently did. The second is lobbying by anti-tax conservatives. When the Golden State implemented its ReadyReturn system, it did so over the objections of Grover Norquist and his anti-tax pressure group Americans for Tax Reform, which fears that if taxes become less annoying voters might be less unhappy about paying them. After all, if the government did something to make your life easier it would be harder to tout the difficulty of tax compliance as a reason to abolish the progressive rate structure.

From an ideologue’s perspective, it makes perfect sense. But for you, the next time you find yourself struggling with IRS forms, remember that it’s big business aligned with anti-tax conservatives, not the government, that are causing you the pain.

Phil,

You’re thoughts on the best portfolios/plans for growth in an IRA as well as growth in a margined account that can be overseen daily, preferably after hours or every few days.

From ZH twitter
 
zerohedge ‏ @zerohedge
EURUSD sliding as French CDS passes 200 bps
 
If FR is dragged into this then we are approaching endgame..

Oil lines/stjeanluc – when you get time (can be after hours say) I had a question on your oil lines.  I see how the pivot points would be calculated, and I see the open/high/low in TOS for /CL but I don't see where you find the value at the close.  Do you just look at the value around 2.45 or 4pm?  Or is there somewhere I'm missing in TOS to see that?  Thanks, Scot.

Good Morning All! Phil, any thoughts on GNW? Any recs on this pullbacks? TIA!

Here they are….GLTA.

Go DEPO…. DepoMed (DEPO) +6.7% premarket after saying it will prepare and file a new drug application with the FDA in H2 2012 for its Serada treatment for menopausal hot flashes. Results of three Phase 3 clinical trials were positive and statistically significant for three of the four pre-specified primary endpoints.

Something else for my fellow stockaholics.  I think twitter the poor man's bloomberg.  Catch most of the news right on the spot.  Some very interesting people to follow in the list below
 
The 101 Finance People You Have To Follow On Twitter

http://www.businessinsider.com/the-best-finance-people-on-twitter-2012-4#

Oil Lines / Scot – My lines are based on the continuous contract prices using the Floor pivot calculations. So I use the high, low and close prices on the previous 24 hours. I actually programmed it to display automatically in my charting software.

Twitter / Dpas – For traders, the following list is also pretty good:

http://www.optionstradingiq.com/top-25-traders-on-twitter/

I just saw that last night and was going to add a few people to my account. Cramer is on that list but that's probably an oversight!

List / StJ – Thanks!! Just went through the list already have half of them 🙂  Also a very good swing trader i follow is Traderflorida.  Lately he is really on the same camp with Phil (short anything that moves)
 
Cramer is actually the most helpful of all to follow. Just need to remember to trade his advice costanza style 😉

List / Dpas – I might actually make sense to weed out people from both lists and create our own Twitter list for members. Let me know if you have any feedback on the value of some of the guys you follow…

ARNA – if you own stock, I hope you sold.  They continue their trip down the escalator…..

Pharm, 
Do you still like selling puts on PLX? TY!

We're living in an Apple World.  I'm voting yea for giving Apple it's own exchange and taking it out of any Nasdaq components.

BOJ buying Euro?

Man I can't believe I got suckered by the AAPL drop.  Bought the 600/615 BCS for $11.  Sold it for $5.  The spread was all the way down to $2.30, thought I made an OK decision.  Now AAPL is 617 and the spread is worth $10.50.  
 
I'm really bamboozled by this type of market.

On the CNBC website but not mentioned at all on the network.  Funny how the market ignores this like it's nothing:
 
http://www.cnbc.com/id/47084243

PLX/enni – no, I do like the may $5/7.5 BCS.  It is a bit more now from when we started playing it, but it still works at 1.10.  I do like the stock in here as well, playing until May.

FU PCLN!!!
FU CMG!!!

Some good names to watch tonight with AMEX, QCOM and YUM reporting!

ABT beat this morning and raised guidance, but they are caught in the downdraft this morning. Maybe Pharm will have more insight.

HAL beat nicely and are up over 4% this morning.

CHK scandal, is it serious?

Spanish and Italian banks loading  up on their Government debt –  beside transfering the burden on the tax payers: this also a scheme to decouple the countries belonging to the Euro zone. Now if one of those were to be cut of from the zone, there would be considerably less trouble for the other remaining countries and their banks.

Pharm – ARNA – I didn't sell. I actually just increased my position. Is everyone just assuming with 90% probability this will not be recommended on May 10th? Also, in your experience, how much further do you think this stock can fall without a pop into the May 10th decision? I mean if it get's the recommendation it will be a 10-12$ stock (if it follows VVUS' move). I dont know how this stock is lower than 2$ pre-decision… Anyways, just looking for some commentary. Yes, it has been frustrating to see the stock crash when I had my sell (1/2) at $4…. And why has your opinion changed so much from 18 months ago when you really liked them. Their drug hasn't changed….

CHL / Lol – We'll have to see what happens about these supposedly loans from the CEO. They are making new lows as we speak, matching the 2009 lows. 

Cashin saying that the PBOC is putting a floor under the euro at 1.30 because Europe is China biggest trading partner, trying to keep a strong euro!

And you wonder why we can't keep healthcare costs low in this country:

http://motherjones.com/kevin-drum/2012/04/how-keep-healthcare-costs-high-one-easy-lesson

 

In the interim, Abbott sought and obtained FDA approval for Tricor-2. That drug was nothing more than a branded reformulation of Tricor-1. Tricor-1 came in 67-mg, 134-mg, and 200-mg capsules; Tricor-2 came in 54-mg and 160-mg tablets. No new trials involving Tricor-2 were submitted to the FDA. But Tricor-2 came out while the generic company was still waiting to make Tricor-1, and thus Tricor-2 began selling with no direct competition.

Six months later, Tricor-2 evidently accounted for 97% of all fenofibrate prescriptions. By the time the generic copies of Tricor-1 came out, no one was taking it anymore, and they couldn’t penetrate the market.

Wash, rinse, repeat. The generic companies petitioned to make generic Tricor-2. Abbott filed a patent infringement suit buying them a 30 month delay. They got to work on Tricor-3. That tablet came in 48-mg and 145-mg doses. No new studies. They got approval. Evidently, 70 days after Tricor-3 was introduced, 70% of users were switched to the new branded drug. By the time the other companies got generic Tricor-2 out, Tricor-3 had 96% of the market.

I swear I’m not making this up. Wash, rinse repeat.

ABT reported this morning and they beat. Maybe their legal department is more useful than their R&D department!

Spanish bonds falling – from Zero Hedge

why is PCLN and CMG flying with AAPL giving up their early gains???

Jabo don't tell me you've gone to the dark side (long) CMG 🙂

Good stuff from Jon Stewart as usual…

http://www.thedailyshow.com/watch/tue-april-17-2012/the-great-buffett-caper

 

Republicans predictably filibustered, claiming that the estimated $47 billion it will raise in the next decade is a drop in the bucket. “That wouldn’t pay for half a day’s work on the secret reanimate Ronald Reagan project,” Stewart mocked.

But point taken, he added. Then again, didn’t Republicans say $300 million was an awful lot to spend on Planned Parenthood? “Let me get this straight,” Stewart said. “$47 billion in millionaires’ money is less than $300 million in mammograms and birth control.”

Jabob was alive and well at 9:54am! 🙂
 

jabobeast
April 18th, 2012 at 9:54 am | PermalinkIgnore this user
FU PCLN!!!
FU CMG!!!

Shouldn't oil be going the other way with a bigger build?

maybe I am reading that wrong

I think we all learned by now that oil prices have nothing to do with supply and demand.  Republicans were spinning the hell out of Obama's proposal telling people that prices in oil would be much higher if we had regulation.

Pharmboy     DEPO    What are your thoughts?  Seems to be showing signs of life…

EUR strength BS…this could go the other way very quickly

how so kustomz?

It's just unreal now…

http://www.bespokeinvest.com/thinkbig/2012/4/18/crude-oil-inventories-rise-again.html

But as our GOP reps will tell us, speculation has nothing to do with it. We need to drill, drill, drill. No place to store it, but what the heck! Insane…

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