The financial blame game continues as a 2200 page document containing the financial autopsy of the collapse of Lehman Brothers was released to the public this past week. While Secretary Geithner claims little to do with the goings on, both he and the Federal Reserve must acknowledge some responsibility for the “near financial crisis” they perhaps abetted. It was Secretary Geithner who was President of the NY Fed during this mess and, we might point out that he occupied that post prior to the disclosure of the Lehman mess and the Bear mess. While these gents pat themselves on their respective backs for having averted a financial crisis, we might point out that is was on their watch that the crisis was born and grew to its final form. These same people are in charge of correcting the mess which is far from corrected. The current chatter is that we need to hold the accounting firms responsible for not seeing the mess. We do agree that the accounting firms need to be held responsible, but we feel that the regulators, who apparently were MIA (missing in action) should be held to task for the mess as well. We also feel that the Fed and especially the NY Fed should have been aware of and curtailed the financial hocus pocus seen during that time.
This brings us to health care and the bill that is making its way thru congress. Now is the time to object and change the bill which says; ” it shall not be in order in the Senate or the House of Representatives to consider any bill, resolution, amendment or conference report that would repeal or otherwise change this subsection.” Wow, you really want this verbiage in something that is as unpopular as this health care bill is? Do you understand that if this bill is signed into law, our elected officials will never be able to change it! If the bill is so wonderful, why is it that our elected officials have different coverage than we will be forced to have? If is so wonderful, let them be the first to enjoy the coverage….or lack thereof.
It is now time for all Americans to remove apathy from their behavior and it is time for us to pay attention to what our law makers are doings. Perhaps we should throw the bums out! If they are not doing the people’s business and reflecting the public’s view, they are not representing their constituents, but rather representing some strong arm politics. It is their job to represent the people who elected them.
Onto more cheerful subjects like the bankruptcy of various municipalities here in the USA, yes we understand that states can not declare bankruptcy. We worry about Greece and the rest of the PIIGS in Europe while here on our shores we have California, New York, Rhode Island, New Jersey etc. Look at the obligations and then look at the tax receipts they collect. There is a huge riff in the numbers. This past week Barron’s magazine ran a very informative article about this dire situation. I encourage all to read this article especially if you are muni bond buyers or holders thereof.
Monday: Industrial Production and capacity utilization are released at 9:15.
Tuesday: February housing starts are released at 8:30, February import prices are released at 8:30 and the FOMC meeting decision and statement to be released at 2:15. Wednesday: February PPI is released at 8:30.
Thursday: February CPI is released at 8:30, March Philadelphia Survey is released a 10:00, and February Leading Indicator Index is released at 10:00.
The US Dollar index has had three days of a lower close than the open leaving three red candles on the chart. Fridays sell-off perhaps was the exaggerated by the futures for March which expire on Monday. The US Dollar index closed below the lower Bollinger band and it is likely that it will bounce back inside that band. It is also highly likely that the volatility of the US Dollar index is going to expand. The market needs to close above 80.69 and then 80.74 to convince us of a change in direction. Currently, the direction is down. The 5-day moving average is at 80.368. The top of the Bollinger band is at 81.087 and the lower edge is seen at 79.870. We have a parabolic sell on the US Dollar index. The indicators that we follow herein are all continuing to issue a sell-signal with a little more room to the downside. Short term support will be seen at 79.51, 78.83 & 78.23. Although it is likely that the US Dollar will bounce in the short term, it clearly has changed directions and the trend should be respected. The one positive is that we are above the Ichimoku clouds for the daily time-frame, but remain below the clouds for both the weekly and the monthly time-frames.
Eleven days up and counting! The S&P 500 has punched through the January highs without much trouble. We do have signs of exhaustion on the chart and we have a doji-like candle as a result of the Friday session. Doji candles signify a period of transition. It basically says that both bullish buyers and bearish sellers were equally matched in the session and that neither had enough strength to overcome the other. This tells us that the mood could be changing and that it would not be surprising to see the market retreat from this level. As to being overbought, well, this market has remained overbought (stochastic indicator and the RSI) since February so, it has little value for signals. The Thomas DeMark Expert indicator is going sideways at dead neutral. Only our own indicator is issuing a mild sell-signal. The 5-day moving average is at 1135.52. The top of the Bollinger band is at 1157.36 and the lower edge is seen at 1075.45. We are above the Ichimoku clouds for the daily and weekly time-frames and are below the clouds for the weekly time-frame. This should be an interesting week for the S&P 500. Remember, June is the front month and also remember March options and futures expire this week.
Would you believe that the NASDAQ 100 is up 13 days in a row! The rally looks like a pole on the chart with a doji at the end of that pole. This index is also overbought as measured by the stochastic indicator and the RSI. Naturally, we are above the clouds for the daily and weekly time-frames but we are in the clouds for the monthly time-frame. The 5-day moving average is at 1889.97. The top of the Bollinger band is at 1936.48 and the lower edge is seen at 1758.38. We have signs of exhaustion on the chart. The Thomas DeMark Expert indicator is going sideways at neutral and our own indicator has issued a mild sell-signal. We would use a violation of the 5-day moving average as a trigger for a retreat. Remember this week options and futures expire and we have the ever important statement from the FOMC on Tuesday which should offer the market some volatility.
The Russell 2000 left a doji like candle on the chart as a result of the Friday trading session. Yes, we are overbought as measured by both RSI and stochastic indicator. We have been overbought since mid February. The Thomas DeMark Expert indicator is going sideways a dead neutral and our own indicator is bending ever so slightly lower. We are above the clouds for the daily and the weekly time-frame. At the moment the Parabolics are telling you to stay long. Were we long, we would use a trailing stop to get us out of the trade should the market begin to retreat. There is nothing wrong with removing profits, especially after such a robust run to the upside. Options and futures expire this week, options on the close of the Thursday session and futures at the opening of the day session. Why, because all of the issues in this index must open so that a value can be assigned and a settlement price can be established. This takes some time because we are dealing with small cap stocks which may not open as quickly and stocks with more liquidity.
Crude oil has a bearish engulfing candle on the chart. We also have a parabolic sell-signal. The 5-day moving average is at 81.22. The top of the Bollinger band is at 83.60 and the lower edge is seen at 75.77. All the indicators that we follow herein are issuing a sell-signal for crude oil. We are above the clouds for the daily time-frame, but in the clouds for the weekly time-frame. When looking at the monthly and the weekly chart, one is impressed that crude oil seems to be in a tight trading range. It would need to get above 83.95 to break out of this range on the upside and 69.50 on the lower end. This sideways action has been in place since July.
Gold has been in a retreat for several days. We need to see this market remain above 1088.50 or risk a sell-off to 1045.20. The indicators that we follow continue to point lower and are approaching oversold levels and have room to the downside. The 5-day moving average is at 1123.70. The top of the Bollinger band is at 1142.75 and the lower edge is seen at 1092.13. The downtrend line is at 1126.4. We are inside the Ichimoku clouds for the daily time-frame, above the clouds for the weekly and the monthly time-frame. Should the market say above the 1088.50 level, it would be worth a nibble.