Desperate Markets, Despearte Hopes

There was no doubt about it today. The markets rallied and rallied hard but on below average volume. While the volume increased from yesterday's action, it is still below the average volume. According to IBD on Market Pulse, the closely followed IBD 100 index which represents the market leading stocks according to the CAN SLIM methods, lagged the S&P 500, NASDAQ, and the DOW today. To IBD this is a market divergence and continued caution regarding this rally was advised as the market has thrown one or two "curveballs" to the investors as of late. I still believe that the recent follow through day was too premature and the macro economic issues still is bearish.

What is interesting is the way the market rallied today. Presumably, the market rallied based on "Easing" tensions with Great Britain and Iran, falling oil prices, and "Promising" Pre-sales number from National Association of Realtors (NAR). I would like to break down this analysis by the main stream media who was pumping and pumping hard. On just one day's data! The other more realistic data was just thrown out the window today.

#1) "Easing" Tensions Between Great Britain and Iran: I don't know how the tension is easing when a country illegally captures 15 soldiers from Great Britain under the false pretense of violating Iranian water space. How can tensions ease when Iran has perpetrated such a blatantly callous act? I don't see anywhere in the news today where the two sides made any progress toward resolution of their differences. Iran has promised to not show the captured sailors and marines on TV or any media, yet they were paraded on Iranian News Paper not 12 hours after such promise was made. Is this progress? All it has shown was blatant disrespect by the hardline Iranian government who has no real intention of resolving this. Iran has NO INCENTIVE to resolve this situation as the price of oil has skyrocketed since this crisis. Britain is now demanding that they negotiate directly and this whole issue is getting rather silly. Britain knows that their global prestiege is at stake and I do not think that this will resolve as easily as the media thinks it will. No one can trust the Iranian regime whose intention is crystal clear: to dominate the Middle East and to continue to erode Western culture by terrorism. You cannot negotiate with terrorists and you certainly cannot negotiate with the ring leader. I would like to see the news headlines in 24 hours from now, which might go from easing to "grave". I think despite George Bush's many blunders, he is right about calling this a hostage crisis. I also believe that the tensions along the Iran-Iraqi border and this whole charade is Iran's attempt to draw US into the conflict. Iran wants a fight to show case their new found leverage and power on the world stage. They know all too well, that US has dissenting congress and the House, and a president that is not popular due to the Iraqi war. They would like to see nothing more than to have US engaged in a two front war. That will legitimize Iran's quest for Nuclear weapons. No one is buying their crap about "peaceful energy" uses. This is a brutal regime intent on blood. Media is wrong on this front. It is a wishful thinking. The crisis will esclate not "ease".

#2) Falling OIL prices: There was a market wide cheer today as oil dropped more than $1.30 and settled at $64.64. Great! Oil is so cheap now at $64.64, the inflationary pressures are all but mitigated in only one day! Oil rose from $58 per barrel just when the Iranian "hostage" crisis started to now at $64.64. It is more likely that our oil supplies, summer fuel blends, and continued confrontation with the British "hostage" crisis will lead to higher oil prices. It sure feels better though to see the oil prices at least for one day to go down, doesn't it?

#3) National Association of Realtors (NAR) reported 0.7% rise in "pending home sales" for the month of February: Yay! Housing has reached bottom! Let's rejoice in this often ridiculed indicator which is fraught with biases and inaccuracies. NAR has consistently been bullish throughout the current housing market crisis, only to mislead. In fact, the only group they serve are the realtors, after all, they are the group that stands to lose the most from this housing down turn, next to the mortgage lenders and home builders. What exactly does pending home sales mean? Wouldn't homes sold data indicate more factual representation of the health of the market? Also, did they disclose that this is a revised number and that home sales have slid 8.5% yer over year. How can this number be promising for the month of April and March sales figures? Especially when the homebuilders are basically crying out that their business has eroded to crisis point. Are people more apt to buy exisiting houses than new houses when credit crisis is ongoing and default rates are rising? One needs to only consider that the deliquency rate has doubled for ALT-A loans! http://market-ticker.denninger.net. This is an excellent site that is factual and is rather well written. Do not trust the NAR! They are self serving and doesn't have the right intentions.

And, so, my blog would never be complete without my daily take of Countrywide and Angelo Mozilo. Think about any one time in recent memory, with exception of yesterday, when a CEO appears on any national media and spends 2 hours trying to defend the industry and mainly, his company? None. That is why I grow even more suspicious and deeply sickened by the constant appearance of Mr. Mozilo on CNBC. Yet, he had the audacity to continue to sell 70,000 more shares today. Add that to the dubious "dear sir" letter by the two outgoing board members who seemed to be forced into writing this confessional. It is so transparent, again it sickens me. Anyway you slice it or dice it, abrupt departure of board members and other insiders (Mr. Kurland) is a bit suspicious. With ALT-A Option ARM loans getting bigger attention, it will continue to erode the smoke and mirrors of Countrywide. So, as Countrywide rises in price, I will continue to add to my put positions. I cannot believe that anyone would buy the BS spewed by Countrywide.

So, I sit disgusted but nevertheless convinced and more motivated to continue to hold firm and stand and watch this house of cards fall.