Returning from Rainmakerstocks.com

I have been blogging on Rainmakerstocks.com for the past 6 months.  That site will be my new primary website.  For now, due to some technical issues, I will once again be posting blogs at irreverantstocklist.blogspot.com.

I will begin blogging in earnest relating to the technical trading aspect of the market.  I have been busy with disseminating as much information and opinion that I deem important but I have been lax about discussing my trades, rationale, and charts.  I will ease back into that role.  

The market remains volatile and if you are a trader that is VERY SHORT TERM, this market has much to offer both positively and negatively.  Volatility has been extreme with VIX refusing to go below 40's.  Intraday swings of 150+ points on the Dow is expected.  Remember, these types of volatility does not happen at market bottoms or at the initiation of bull markets.  The sheer fact that we have this much volatility suggest that this market continues to implode and more damage is on its way.  

There is no more need to listen to or even trust our government officials at this point and it would be devastating to even believe that they know what they are doing.  Our Democratic CONgress, HOUSE (of cards), and the presidents (Bush and Obama) are taking us down the path of financial destruction and certain Depression.

This market is oversold and broken.  It is a emotional market with no real technical or fundamental basis for market moves.  It is a market that is "basing" for the next leg down.  You must, if you partake in this treacherous market, keep your time frame ultra-short and be quick with your trades.  "You are either quick or you're dead".  That old western era gun slinging mantra holds today and only the most intrepid (myself included) gunslingers need to occupy themselves in this market.

I will have a full analysis of the market on the next edition.

Disclosure: I am long AAPL, GOOG, FSLR, GS puts, and hold long SDS positions.

Disband the FED Now!

The Federal Reserve Bank (from now on FED) IS NOT AN ELECTED GOVERNING BODY. It is a private bank endowed by the US government the powers to regulate monetary policies and oversee proper and smooth operation of banks. It does not have any allegiance to the mass populace for which it is supposed to benefit. The FED has severe conflict of interest in its current form. Namely, many of the CEOs and Board of Directors from large investment banks and publicly traded companies (ie JP Morgan's CEO Jamie Dimon) sits as board members in New York Federal Reserve Bank. Is it any wonder that JP Morgan Chase got the exclusive rights to pillage and plunder Bear Stearns? Yes, at tax payer's expense no less. This is a prime example of the failure of the Federal Reserve Bank and the inherent conflict of interest. Housingpanic.blogspot.com recently posted an excellent blog regarding this plight. Namely, giving few individuals the immense powers to control the nation's monetary policy with so much conflict of interest will eventually destroy our great country.

What the FED and the Treasury did to FORCE the deal on Bear Stearns was illegal and a clear example of unchecked powers that have lead to this eventual outcome. Now, George Bush, Henry Paulson, and some of our elected and ignorant congressmen and senators seem to be backing the proposal for the FED to gain even more powers. This was inevitable I suppose, since the whole process by which the "BEAR STEARNS Bailout" was done illegally, without congress approval to use tax payer's money, and overtly stepping out of bounds of the powers of the FED. If the FED had done their job and regulated the greedy banks from perpetuating one of the greatest pyramid schemes of the 21st century, we would not be where we are today. The FED had clearly failed in their mandate. The irresponsible FOMC policies ranging from Alan Greenspan's tenure to the power hungry transformation of Ben Bernanke's FED capitalizing on the current credit fiasco continues to erode the economic, social, and basic rights of every citizens of the United States of America.

Thomas Jefferson was a vehement voice against a private bank regulating the monetary destiny of the country. In it, he repeatedly warned against such a rogue entity as the FED:

• "I sincerely believe... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale." --Thomas Jefferson to John Taylor, 1816. ME 15:23
• "[The] Bank of the United States... is one of the most deadly hostility existing, against the principles and form of our Constitution... An institution like this, penetrating by its branches every part of the Union, acting by command and in phalanx, may, in a critical moment, upset the government. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation, or its regular functionaries. What an obstruction could not this bank of the United States, with all its branch banks, be in time of war! It might dictate to us the peace we should accept, or withdraw its aids. Ought we then to give further growth to an institution so powerful, so hostile?" --Thomas Jefferson to Albert Gallatin, 1803. ME 10:437
• "The principle of rotation... in the body of [bank] directors... breaks in upon the espirit de corps so apt to prevail in permanent bodies; it gives a chance for the public eye penetrating into the sanctuary of those proceedings and practices, which the avarice of the directors may introduce for their personal emolument, and which the resentments of excluded directors, or the honesty of those duly admitted, might betray to the public; and it gives an opportunity at the end of the year, or at other periods, of correcting a choice, which on trial, proves to have been unfortunate." --Thomas Jefferson to Albert Gallatin, 1803. ME 10:437

** The above sources were quoted from an excellent site Thomas Jefferson on Politics & Government

What is frightening is that the insights from one of the greatest presidents of our country's short history, Thomas Jefferson, had the foresight to warn against the Bank of the United States, which eventually transformed into the Federal Reserve Bank. Woodrow Wilson created the FED in which he publicly lamented the creation, "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men."

Now George Bush and Henry Paulson wants to give the FED even greater authority and power. Yet, clearly the FED has been proved inept. Just witness the plunge the value of the dollar, increasing inflation, erosion of American wealth among other things. They want to expand the FED powers to oversee the investment banks as well as diminishing the regulatory authority of the SEC. However, if the FED had done its job, and if their authority should extend to examination of the books of various banking and insurance entities, wouldn't the current banking crisis be averted because many of the banks would be rendered insolvent and driven out of business and their executives sent to jail? That's what happened to Enron. So what is so different from the greedy banks that have put our country and the world for that matter in such grave financial disaster? Why does the FED insist on saving and rewarding those that have perpetrated such heinous acts? And the leaders of our country wants to reward the FED with even greater powers to abuse, neglect, and plunder.

It is all lies. At our current course, our government, our way of life, our prosperity, and our national security will be destroyed by the FED and the treasury. These two entities know nothing about prudence. I suspect that the sweeping calls for change stems from their illegal acts. We cannot continue to print our way out of this problem regarding the current credit crisis. It never was and never will be the problem of liquidity. It is one of solvency and trust. In order to instill a resumption of normality in the credit markets, we must reexamine the role of the FED and the honesty of the treasury secretary Henry Paulson. We must abolish the inherent conflict of interest between the executives on Wall Street, banks, and the Federal Reserve. Every day, we lose a bit more of our hard earned prosperity, our right to personal freedoms, and the sovereignty of our great nation. All at the hands of few rogue bankers (FED) who are more detrimental to our country than any that has tried to dismantle the greatest society that ever lived. I am quite certain our founding fathers would roll over in their graves, especially Thomas Jefferson, if he knew what Ben Bernanke and Henry Paulson is up to.

What can we do? Spread the word of this disgraceful band of people. Write to your congressman and senators and educate them. Let them know of your concerns and become loud and boisterous because this is your future. We have the right to exist with our rights and prosperity intact. The Bush administration's continued blunders in war and now on domestic policy must be stopped. I voted republican all of these years and will not do so in the next election.

Sign the petition to let your voices heard.

We have a real revolution on our hands. The question is, whose revolution is it? The pigmen revolution or yours?

FED Stoking. Inflation

Yes, the FED is worried about inflation. They said so in the policy statement today after dropping the FED Funds down to 2.25%. They are so responsible that they cut only 75 basis point. The Markets which currently own the FED cronies wanted 100 to 125 basis points. That really showed the markets didn't it?

The markets rallied on this crack, without thinking hard about the continued destruction of the value of the dollar, continued rampage of the oil prices, and continued deterioration of average American's purchasing power.

The FED has been on a mission. They support low inflation and shun greedy Wall Street Bankers. Their mission statement of increased transparency is on target. Who the F___ are we kidding! The FED has single handedly created destruction of the value of the dollar, stoked inflationary pressures globally, and revealed that they are pandering to the rich and greedy wall street bankers by bailing out Bear Stearns. Additionally, it is increasingly apparent that the FED has become quite the technical day traders as their "interventions" seem to come at key S&P 500 index support levels or at around options expiration times, eliciting huge short covering rallies. All of this may seem like that the market is on the road to recovery but if you look deep inside will reveal that this will cause a bigger market crash once the FED runs out of their manipulative lies.

The FED asserts that allowing Bear Stearns to fail would have been disastrous to the US banking system and the global economy causing cascade failures of other similar banks who depended on Bear Stearns for clearing. But the truth is that allowing Bear Stearns to into bankruptcy, which they rightfully deserved to do so, would have revealed that the off balance illiquid toxic derivatives had no market value and hence forth cause major catastrophic repricing and scrutiny of all major US banks. The banks are hiding these things off balance style using mythical fantasy pricing models which in real market would yield a fat zero. This is one of the reasons why Bear went under in addition to the smart money making a run at the bank. The FED could not absolutely allow this to happen for they would be found culpable in this act as well. The FED has the authority but not the dignity to push the banks to mark to market these illiquid issues to stem this credit crisis. How many stick saves and lies in the market place can we stand?

Shame on Ben Shalom Bernanke. He is using his playbook devised in the comfort of academia about how the "next" depression can be avoided and he seems to be going down his list of things to do step by step. The problem is that most of the time PhD thesis is not very applicable in the real world.

We have Jim Cramer jumping up and down like a monkey today gleefully proclaiming that the market bottom is in. How many times is this ass clown going to be allowed to spew this none sense? Isn't it bad enough that he recently advised one of his Mad Money callers against selling Bear Stearns one week before the total collapse? Where are the cops?

The US does not have a responsible fiscal policy. We have a support the greedy Wall Street Banks policy. The bail out of the stock market and Bear Stearns will cost the US tax payers trillions of dollars in the future and cost our offspring's future. Ben Bernanke must be stopped in his irresponsible attempts at pandering to Wall Street and destroying America's future.

Today's rally may have some legs as it has given the bulls some hope. Don't expect however, that the bear market has ended. The problems still remain unsolved on the credit front and we are entering a recession that will be longer and deeper than anyone has imagined. Additionally, given the fact that Ben has been using his playbook for Depression, we most likely are headed that way right now. That is probably why Ben doesn't give a hoot about inflation or the value of the dollar.

FED Lies and Stick Saves

What happened today to warrant the ramp in the stock market today? After countless stick save attempts, we finally got a meaningful ramp in the indices today. CNBC was proclaiming this to be the best rally in 6 years. Yes, the pump machinery was in full force today. You would have thought that Maria Bartiromo was going to have an orgasm right on national TV. Cramer is back to his old bullish self proclaiming that "certain" stocks are now buyable. But you can see the Jeckyl and Hyde right through Cramer's eyes. He is a poor confused soul.

The FED announced a $200 billion liquidity injection into the troubled AAA mortgage and other securitized debt. Yet, according to Karl Denninger, a closer look at what the package entailed reveals a lot of smoke and mirrors. You see, the market erroneously interpreted this as a bailout attempt by the FED to inject liquidity into halted credit market. But real money isn't really injected into the credit markets. In fact, a closer examination would reveal that there really ISN'T any new injection of hard capital OR bail out of AAA mortgage backed securities that really isn't AAA. Instead, the deal apparently is directed towards the primary brokers that the FED utilizes to sell the Treasuries. It appears that these broker dealers have gotten over their heads in shorting the very treasuries that they sell to end buyers in excess of 10X their asset value. This is one way that the dealers can earn a profitable carry trade. But, when the market is unstable and many more people flock to treasuries for safety it effectively drives up the prices and effectively "squeezes" the primary dealers. There is a crisis that isn't reported by the main stream media in the primary brokers.

So, FED lets the main stream media pump this event as a fix all for the markets. The DOW surges over 400 points and S&P 500 Index is now once again at 1320, in what was a breath taking rally. But for what? Why hasn't the FED step in a set the record straight. That this was not a bail out of all subprime mortgages but aimed at preventing a disastrous implosion of its primary dealers? When will the markets figure out that we are in deep trouble and that there is continued growth and contamination of all aspects of the credit markets?

I suppose we will rally for a while, but I don't see this going on for more than one week. Eventually, the market will wake up from its stupid stupor and realize that they have once again been lied to- By the FED this time. The various stick saves only prolong the inevitable washout that will come and will make that event even more painful.

Just for clarity, the FED's job is not to stick save the equity markets or save failed banks. It is not their job to act as an agent for fraud that is going on at many of our large financial institutions. Their job is to steward the economy into the right direction by monitoring inflation. Inflation is the killer of all economies and we are now losing that fight. When will our governors and policy makers wake up to the rampant abuses of the greedy financial institutions including the ones that profess to police them and do something?

It is very sad. But do not buy this rally. It is for fools. Do not listen to Cramer because he knows not what he does. Stay in cash or go short.

Late Stick Save That Failed...We Are in Trouble

Yes, the market tanked today and tried to stage a dramatic recovery late in the day.  It was sharp and it was breathtaking and put some doubt in this trader's mind about the impending break down of the major head and shoulders pattern in the S&P.  In short, that attempt failed.  But like many trading days before us, this event was forestalled by immense and possibly fraudulent rumors of Ambak bailouts to FED cutting intermeeting interest rates.  CNBC got into the act by doing their good citizen duties by aiding and abetting in the "pump".  Well today, the forces that be, could not over come the obvious, and for which I have been ranting about for months: WE ARE IN A RECESSION AND IT WILL BE WORSE THAN ANYONE CAN EVER IMAGINE!

Today's jobless numbers cast no doubt in anyone's mind that we are in a recession and all the warnings that came previously about this and promptly ignored by the main stream media, the market pumpers, and the financial community is now in fact a REALITY.

Already there are talks of depression and doom and gloom.  Why not?  It is sensational and this sells stories and TV ratings.  It's funny how CNBC (CNBS) all of a sudden features bearish stories and commentators.  Yet, one could argue that this might be the sign that the end is near for this bear market as people are turning increasingly bearish.  Yes, that's true but not in this case.  There are more than comfortable amount of "experts" out there that are pounding the table for the investors to buy the "dips" that bottom is near.  Until this noise and farce goes away and then maybe I will consider getting more bullish.  

We defended the all important 1300 level on the S&P 500 Index today.  Much concerted effort was made to finish above this level but alas it failed.  So we are in the precipice of a major market meltdown.  Market crashes do not happen near market tops.  They happen when the market is weary and beaten down.  I think we are near that event.  I have called for a market crash and technically we got one, albeit in a slow drawn out fashion.  But when one considers the magnitude of this credit crisis unrivaled since the 1930's, you can imagine without much effort that no matter how much stocks are down, they do not represent a good value right now.  I see further declines in stocks, especially credit sensitive techs.  We will continue to see multiple contractions to the likes not seen for a while.  

We are in trouble.  FED, Treasury, and Politicians are walking around with thumbs up their asses.  They look scared and they act as if they know not what to do.  I don't blame them.  But unless banks are forced to mark to market their secret junk they are hiding, this will not end.  The ludicrous cries for rate cuts will not do any good as evidenced by the current strings of rate cuts.  It is that we must restore trust back into credit markets.  We will not achieve this unless the government and the regulatory agencies stand up to the plate and say enough is enough.  Time is definitely running out.  If for a minute the FED or others have any back bone, they must make the tough choice to force the crooks in the financial community to come clean.  

Did anyone catch Angelo Mozillo's testimony today?  I almost puked.  Did anyone listen to Cramer's ludicrous rant today?  Thank God Erin cut him off.  Yes, we are in trouble because the powers that be won't do the simple thing to fix this problem.  Restore TRUST.

See you next week when the market is poised for a pounding.  Yes we might rally but that will be sold into and will be weak and short lived.  

All Things Google

There is much debate as to whether or not Google is finally a value stock in the main stream media. Google share price has certainly taken a hit since last October high of $749 to the current $448. Does this make Google a compelling value?

In short, no.

In the context of a bull market, given Google's growth rate and relative valuation when considering its peers, it does seem cheap. But we are not in a bull market anymore. We are in a beginning stages of a vicious bear market. In a bear market, multiple contraction occurrs and no matter how great the earnings or growth prospects are, share prices will suffer. Some may argue that the Google's share prices are at a signficant discount from that of four months ago. True. Google's prices have been discounted by 40% from its peak in October 2007.

What people don't take into consideration is that we are mired in a credit crisis unrivaled since the 1930's and a real specter of a full blown deep recession at best and a depression at worst. I know that the main stream media continues to wax optimism and continue to jaw bone about how there may not be a recession, "just a slow down" in the economy. You can believe what you want but look around you and there are ample evidence that the contrary is happening. But that is another topic for another time, and if you want to be educated, go check out the tickerforum.

Google derives 90% of its revenue and profits from targeted search ad revenue. With the downfall of lending industry related to mortgages and overall slow down in the economy (which is true), there is significant possiblity of real slow down in the search revenue in Google. Additionally, if you haven't noticed, the insiders have been selling their shares at an alarming rate. In an article by Nicolas Brulliard on WSJ Stock Sales at Google Send Shivers states that red lights are going off at this internet juggernaught.

Just today, after the market closed the following transactions were reported:
Dir Doerr sold 32,650 shares
VP Brown 583
VP Rosenberg 315
CFO Reyes 158

I know that Google insiders have been selling for years but the intensity and frequency is increasing. Time to try to correlate this with the recent price weakness. It may show that the insiders are not as fervent about the prospects of the economy and the company itself.

Additionally, today there was reports of EU approving the Google Double Click deal by March 11, 2008. I wonder in a time when companies should hoard cash for the upcoming economic slow down, if this buy out makes much sense. Only time will tell. It is certain that the market has voiced their opinion. I do not think the Google share prices will recover any time soon.

The stock continues to be a major whipping boy in the market. Doug Kass has cautioned that a $6 billion stock repurchase will be soon announced at Google. Does this make sense in light of increasing competition and a major acquisition of You Tube which has yet to monetize its content and the Double Click? Time will tell but for now, I believe Google has further down side to come. If you don't believe me, why not check out what happened to Cisco during the dot com melt down.

Reflections on Manipulation

Now, I am all for free journalism. It is what keeps information flow honest.  But when that freedom is blatantly abused and manipulated that destroys the very foundation of free speech and the freedom of the press.  Yet this is what goes on daily at CNBC.  It is no longer a medium of free and honest information but propaganda and sheer fraud.  

There is no doubt that CNBC is the de facto standard source for financial information for the American investment community.  Yet it has morphed into something more sinister.  It is a medium of rumor mongering and cheer leading.  The fact that they have the capacity to influence the markets the way they do, and not for honest purposes mind you, it has become the place for desperate hedge funds or companies to drop "rumors".  Last time I checked, CNBC is a financial news organization.  Doesn't rumors and speculations belong in the tabloids?  Is that what CNBC has become?  Should they change their name to CNBS?

Today, you could feel the desperation in the air as the markets broke through key support levels on the S&P 500 Index, a widely known level of 1320 was convincingly broken today, only to reverse late in the day.

Why?

It all started with what seemed to be a well coordinated onslaught of propaganda.  First, Charlie Gasparino (I would like to refer to him as "Gasbagarino" because that is what he is) appears and makes the entire market believe that the Ambak deal is imminent, "within hours".  That was at mid day, by that time, the market was clearly in full swoon with the Dow down more than 200 points for the day.  It seemed to have limited effect as the markets began to melt down further.  Then the news of Cisco Chairman John Chambers affirming 12 to 17% growth, further tried to prop up the markets.  Then another rumor was floated that the FED was cutting 50 bps imminently which started to infuse some hope into the markets and the indices began recovering from its lowest points.  Then at 3:20 EST, GASBAGARINO came out with an urgent breaking news update that while AMBAK bail out did not come to fruition, it should be completed within days and that the banks involved will work on this throughout the night to get the deal done.  By this time, Nasdaq was in positive territory and majority of stocks shook off the early losses and turned them into gains.

Where are the cops?

If I tried to do this, I would have the FBI breaking down my home door within hours.  

What gives CNBC the power to do this?  Are they immune to morality?  I don't know.  All I do know is that Charlie Gasparino has been at this for over 1 month.  Please consult my last blog regarding my rant on Charlie Gasparino.

Market cycles are inevitable part of investing.  By doing the "stick save" today, not only did the market not get the cleansing it requires for an honest leg up, it has perpetuated the vicious cycle of range bound volatile market.  Unless this stops, we can expect a slow bleed of the market place where only short term day traders like myself prospers.  

SEC where are you?  What about FBI?  I think there is enough evidence here.

Friday's job report will be interesting.  I wonder how many time old Charlie G will come out that time?

Hey Charlie You Gas Bag!

Charlie "gasbagarino" Gasparino,

How does it feel to be the butt of jokes on Wall Street? I know you're trying to make a name for yourself by getting ahead of the story so that you can be known as the CNBC editor who "BROKE" the AMBAK bailout. Perhaps you're looking towards the future and see some book deals? Lectures? Maria "Barfaromo" Bartiromo's spot? Sigh...

You used to be respectable and even hard nosed. Now you have become just a former half shell of yourself. Does your mother call you these days? Do you like yourself when you look into the mirror? Is this what you had in mind when you decided to be a reporter on Wall Street?

What? You don't know what I'm talking about?

How about this? You have been pounding the table about AMBAK in one way shape or form since the middle of January. You have been all over the place regarding this. One day, you're bearish and the other days, well, you just have to wonder how much you're being paid by AMBAK or by the hedge funds who continually try to pump the stock market by you spreading the "non news" for their own short term financial gains. Isn't this the sort of thing that you detest about Wall Street when you decided to become a reporter on Wall Street? So, what happened?

Now the deal may not work? They're hitting a snag? Of course it won't work, you know that. You are the instrument of Wall Street's games. You are a minion. You lack credibility now and, yes, you are the butt of jokes on the Wall Street. But, hey, I'm not your mother. You just go ahead in the path that you deem is the quickest route to success in your career. I suspect that you will be going around in circles for a while. While you're at it, look at what happened to Henry Blodget. Makes you think doesn't it? Different times, different pump, same results.

Now go home. Stare at yourself in the mirror and say "What have I gotten myself into?" And maybe, just maybe, if you have any integrity or back bone left, report the truth. Report facts.

I'm not a reporter and the fact is: No amount of bailout can retain AAA rating for a company wo is essentially bankrupt. Doesn't the prospect of splitting the company up into two parts tell you everything that you need to know? Of course you do. But you choose to err on the side of the darkness.

Have a good day. Next week's gonna suck for you.

On the Verge of Meltdown

It was a wild week no doubt. The majority of this week and last was like listening to a multitude of bullish chorus resonating their crack induced message: THE BOTTOM IS IN! You could hear it in the tone of uber bull Mark Hulbert and Peter Brimlow of Marketwatch.com fame. You could feel the smug arrogance of the bottom fishers building. You could taste the abject fear of the bears who have not made much progress over the past three weeks and their second guessing: COULD THIS BE THE BOTTOM?

In this irrational market for which was like teflon for bad news, much of the activity was probably manipulated on low volume. You could feel the tension and the excitement at the same time. People like Doug Kass was practicing witch craft of buying the dips and selling the rips. His increasing bullishness short term was also an indication that perhaps this reflexive snap back rally that began on January 21, 2008 SocGen lows could possibly be nearing its climax.

Anyway you look at it, it appears the time is running out against the bullish thesis. Like many bear markets before this, I suspect that many bulls will be caught on the wrong end of the tape. Many bears will be too scared to reload at the inflection point. No kidding. Bear markets are especially cruel to traders: bears and bulls alike.

AIG, the insurance company that could do no wrong, despite recent rumors surrounding their increasing exposure to this credit mess, finally came clean on Thursday night claiming over $11 billion in write downs. Their pathetic efforts at trying to down play this significance of "buying out of the money puts" and implying that their liability may be less than stated on earnings has got to be the single most ludicrous statement of the year. These jerks finally got check mated with no where to hide their lies any longer. I suspect there will be more "unforeseen" write downs to be had in the near future. I am patiently awaiting Goldman Sachs (GS) to also come clean at least to some degree regarding their credit exposure. Despite the company's silence, I think the analysts and the market is on to them. They closed below $170 on Friday.

Wall Street Journal is also getting the message that the off balance BS of our financial institutions regarding subprime liabilities must be stopped and the best way to heal from these wound is to come clean and mark to market their liabilities. As Karl Denninger aptly says, "they must mark to market their liabilities, and, if today it is a $0, then it is a $0. Perhaps tomorrow it may be more, but today it is a $0". You can hear the transcript of his recent radio interview on KFYI AM 550 with Terry Gilberg by clicking here. Also, be sure to tune in on March 15, 2008 for a full 3 hour exclusive interview on Terry Gilberg show for more indepth expose.

We are on the verge of another market meltdown. No matter how much the markets may downplay the significance of the cancer that eats within our financial system, it is there and it is worse than anyone can imagine. This time, not even Charlie Gasparino pump will save the markets. It is time to reload the shorts. Take your pick but think about the stocks that have had the biggest pumps the past few days and that may be the best place to start.

I am short Google, BIDU, BAC, and SPY.

Until the crooks in the Wallstreet can be taught a lesson in humility, Mr. Market will continue to exert and dish out much pain. This isn't over. We are barely out of second inning. Buy only with caution and if you're on crack.

Prepare to Reload Your Shorts- Just Not Yet.

Here is a thought. I am fuming over what happened on Friday. The deceit and manipulation continues. CNBC once again was the mechanism of this deceit. In an age where fair and objective journalism has been replaced with sensationalism and yellow journalism, it is not then surprising to see CNBC, the world's most watched financial cable TV network, take center stage once again. Instead of me running around with my head cut off crying "where are the cops?", I choose to formulate a plan to fatten my account balance.

In this schizzophrenic market, where good news is good news and bad news is even better news, it stands to reason that the current pump will continue in the short term. I cannot tell you that even astute technical analysis will help in this regard as this market trades on the side of irrationality and rumors (unsubstantiated at that). Thus even with the week full of economic data releases including heavy weights such as the PPI, GDP, consumer spending, etc... you can pretty much count on the fact that the market in the current iteration does not function on the side of efficient markets theory nor even on rationality.

The market is a consortium of mass psychology speaking as one voice. No matter how crazy that may seem, the market is pinning its hope on the following:
1. Election year rarely has a down year.
2. Bernanke will save us with more rate cuts.
3. Government intervention and bailouts, even in the form of nationalization such as Northern Rock of the UK fame, is a good thing.
4. The problems inherent with the subprime mess will magically go away because the banks and the governments are working on it.
5. We are near the bottom and the money on the sidelines will rush in to save the market.

Despite these reasons, the market continues to fall deeper into the abyss and with each passing day, the market continues its inevitable march towards the point of no return. While the banks continue to lie and deceive with their off balance tactics, and despite the fact that last quarter's earnings release related write downs were kitchen sink (where they expose everything that they have on balance sheet), I suspect that majority if not all of the banks will play "oops, sorry, I forgot to write down these."

Don't believe me? How is it that Citibank (C) (shittibank?) all of a sudden has another hedge fund that is going under for $10 billion dollars that the Citibank now has to take onto the balance sheet? Could it be that this was engineered by Citibank? For that matter, how bankrupt is Citibank anyways? Where would they borrow the next "guido" loan this time? From the Taliban? al Quaida?

Reevaluation of Our Current Economic Quagmire

One needs to only see the headlines this weekend. Marketwatch.com http://www.marketwatch.com/news/story/stocks-seek-light-end-tunnel/story.aspx?guid=%7BD30ADA20%2DF0E3%2D4DC4%2DB356%2D1197D16B5EB3%7D

The headline has already stated that the "The Stocks Shall Rise Again". So then, marketwatch.com has already declared that the stocks will rise next week. As if they have some form of power that can see into Monday's future. Perhaps they do. Certainly CNBC has the ability to help "stick save" the market that is acting according to the technical and fundamental economic conditions. It only took Charlie Gasparino to be used as an instrument of rumor mongering to save the market from the abyss.

So this is what has become of the markets. It is controlled by greedy wall street bankers and manipulators who would put Martha Stewart's "wrong doing" to shame by their blatant disregard for laws or ethics in order to pad up their wallets. It is neither rational nor fair but it has been that way since the market's inception. I would highly recommend the readers to read "Wall Street: A History From It's Beginnings To The Fall Of Enron" by Charles R. Geisst. The so called quant funds and computer programmed trades are another word for manipulation but it is accepted on Wall Street as business as usual.

What is immensely interesting is that the "Bail" out news of Ambac and other monoline bond insurers is nothing new and has been ongoing for a while now. But because of the nature in which it was presented on Friday, it gave the impetus for "squeezing" the shorts and paved the way for a monumental manipulation by the quant funds. The news that saved the market or shall we say, the news that manipulated the markets is old news and only gives a faint glimmer of hope to the economy and the stock market that is faltering-FAST! It gave an engineered respite at least for one more day. The main stream media is now calling for bottoms and rallies. Of course all of the credit related problems and recessionary pressures mysteriously disappear in this misguided euphoria.

What no one wants to talk about is how the economy got into this mess in the first place. It is because the smart money decided that it was a good idea to lie to the public and manipulate the credit markets. They created these incredibly complex vehicles of credit default swaps, CDO's, SIV's, and many more alphabetically designated acronyms that stands for one thing: FRAUD.

The irony now is that the whole culture of investment banking and banks in general have shunned government intervention in favor of free markets. But now that their "asses" are in the grinder, they are crying for government bailout. As if their actions that lead to the current dangerous dilemma has somehow blindsided these fine folks. The fact is, in the go go days of easy credit and Easy Al, it was the government, the banks, the stock market, and the world financial institutions that perpetuated the demand for these little known credit vehicles because it was "easy money". They blatantly encouraged easy credit to those that couldn't qualify for a Sears Credit Card. It is this credit demand that expanded the subprime cancer and anyone who could "lie" and is deemed "cerebrally functional" on the credit application was awarded homes, cars, and never ending stream of money thanks to the home ATM's. Many low level workers were instantly transformed into housing investors and just about everyone was goin to be millionaires investing in homes they knew they could not afford. But it was okay because the greedy mortgage brokers colluding with banks kept pushing more and more esoteric and poorly understood home loans with teaser interest rates and other dangerous back ended deals. Thus feeding these sheeples and naive minds the notion that if they didn't buy a home now, they would be left out of the American dream forever. So this went on and now we are finding that these actions threaten our economy in the form of credit collapse. The banks won't and can't lend to each other because they don't trust each other. Fitting.

So what did the monolines have to do with subprime? To make the long story short, there was no regulation of these businesses and those that ran these companies mislead the investors of its own companies by taking on these little known subprime credit vehicles by insuring them. The short end of the story is that they are on the hook for insuring over $500 billion dollars worth of loans that the banks made which are now worthless. Should the monolines go bankrupt (psst...they are already but the rating agencies such as MOODY'S, FITCH, STANDARD AND POOR'S, will not do the right thing by doing their jobs ethically and legally and proclaim them as such. This exposes the long standing conflict of interest that exists between the banks, insurers, and the ratings agencies. They are fed by these very people for their livelihood and they dare not now trigger anything that will lead to continued worsening of credit situation. I just want to know that if AMBAC, MBIA, FGIC, cannot continue operations without outside bailout via capital infusions and maintenance of the AAA ratings so that they can obtain more credit to stay afloat, then how are they even credit worthy? They are not. The whole aspect of monoline bailout by the bankrupt banks such as Citibank (C), UBS (UBS), and other banks that have the most to lose if these monlines fail to get the AAA credit ratings, then these banks and many other banks will have to come clean with more off balance worthless debt onto their balance sheet. The last company that did these end games relating to off balance shenanigans was Enron. We all know what happened to them.

Karl Denninger, a well known blogger who has outlined this issue extensively has been asking the same thing "where are the cops?" and has started a grass roots movement to petition the government to end the corruption and force the banks to mark to market all of their off balance losses so that the economy can move ahead to recovery. Until this happens, we will continue to see our future destroyed by these few greedy bankers, insurers, and financial institutions.

A link to the petition is here and I would whole heartedly encourage anyone reading this blog to sign and spread the word. While you're at the Market Ticker Forums, why not sign up and get involved in the discussions? It's free and it's a whole hell of a lot more educational than CNBC or any other financial sites that won't tell you the truth.

In conclusion, it is sad to see the relentless spin put on by the financial media, the companies involved, and the relative impotence of our regulatory agencies and governmental leaders who continue to look the other way. Since Ben Bernanke's famous speech last year in February when he declared that the "effects of the subprime loans are largely contained", how exactly has our economy and for that matter for the rest of the world fared? So as you rush ahead to believe that all is well and that a "bail out" is in the offing, please understand this, it is worse than you think and that our government is incapable of telling the truth or it is incapable of grasping the concept that a deteriorating credit condition and loss of credit liquidity is what lead to the last deflationary collapse of the economy. Think 1929.

We are indeed in a economic quagmire and those that lead you to think that the economy will rebound, or the recession will be mild (now more people are talking about it), DO NOT BELIEVE THEM!

By the way, here are the charts of S&P 500, does that look good to you? The manipulation on Friday managed to stick save this index.




click the image to view larger and clearer image.


Have a good weekend.

It's Decision Time for the Markets

So the time has come for the market to make up its mind. I don't think it will be in the upward direction. The market rallied furiously off the SocGen lows of January 21st. Many market pundits constantly call for continued rally and many are speculating on market bottoms. Behind the back drop of the continuing deterioration of the credit markets which now include bond insurers and municipal bonds, the "subprime" contagion is not only NOT contained but has grown like a terminal cancer.

The amusing thing about the bond insurers and the rating agencies are that the very function of the rating agency's job is to "rate" the health of the companies. In the case of AMBAC, MBIA, FCIG, etc... they are insolvent. That is why there is continued speculation of failed capital infusions and talks of splitting up the company into "good" company and "bad" company. Is this even fair or logical? I think we are in the precipice of another shoe dropping.

The market has thus far factored in that perhaps the worst is over and that the subprime write downs and constant issues associated with it has been past. But that is not the case as everyone who is remotely conscious will tell you. And those that constantly wax optimism about the economy and the stock market have sinister ulterior motives.

The market has sold down every rallies. Those who proclaim that this may be the most important buying opportunity are misleading the sheeples that choose to listen to them.

Northern Rock just got taken over by the government. This is not a good news. This proves the menacing tentacles of subprime that is now only rearing its ugly head. We are in for a deep recession with much pain. I believe we are setting up for another leg of the market plunge and I feel sorry for those who bought on the advices of mad men such as Cramer, Kudlow, and many other analysts who are always wrong.

Take caution. We are just beginning.

Cramer Just Shut Up!

Has anyone heard this schizzoid moron, mad money clown on TV these days, once again calling bottoms in midst of the developing bear market?  Bipolar mania is back and this guy is in full force.  One day it is buy tech, oh no wait...sell tech, then more flip flops.

Taken as a whole his words of "wisdom" on thestreet.com is nothing more than a lunatic man spewing none sense because no one on the website has the guts to call him out and tell him that his best years are past.  He IS LOSING people money!  Yet there are almost a cult status with his show Mad Money... I just don't understand.

So this clown is now out calling for the bull market when clearly, things aren't anywhere near close to that.  I am sure when the market rolls over again under the overwhelming stressors in the financial system he will claim that he has always been prudent and bearish.  But the fact that he can get away time and time again without any sort of repurcussions on his horrific calls and that the media hails him as a "guru" is beyond me.  Perhaps that is what this whole thing is about.

It is about cleansing the obviously corrupt, unjust, and inefficient financial systems in the good old USA

Markets Due for A Bounce

So, the market is finally realizing the futility of its situation. We are now mired in an environment where the market participants view the glass as empty. That is, good news is bad news and bad news is well, BAD!

Recent "dovish" FOMC minutes revealed that the powers that be are very concerned about continued deterioration of the economy related to the credit crisis and recession is at the forefront of their radar. However, instead of calming the markets, the FOMC minutes seemed to have a negligible effect on the market sentiment. That is, no one trusts this market right now. Technology (save for some solar stocks and agriculture plays), retail, and just about anything related to the stock market has been aggressively sold the past few days of the new trading year. Market participants cannot sustain nor are they willing to attempt to initiate a new rally. Most bounces are being sold into or shorted.

But, we are headed into the "over sold" territory. It is not the type that will initiate an aggressive snap back rally that we experienced after things got really out of control in early November 2007 but a reflexive dead cat bounce is in order. The market has failed to take out the 1445 level on the S&P 500 level on more than 4 occasions now and many stocks seemed to be holding their 50 day moving averages quite aggressively: Google, BIDU for example.

The market has all but discounted the effectiveness of the FED as having the ability nor the desire to help rejuvenate the markets in the same way that Alan Greenspan FED did in 2001 to stimulate the economy. We are in a different environment now and the FED does not have the same flexibility to exert stimulus via rate cuts in the same way that Greenspan's FED did. For too long the market participants have been calling for an aggressive FED cuts (Cramer, Kudlow, and other permabulls) but the target EFF (Effective FED Funds) prevents the FED with wiggle room. This is why at the last FED meeting they were only able to cut 25 basis points on the FED Funds and 25 basis points at the discount window. All of this lead to the current market sentiment which is obsessed with a recession- and for good reason.

I hear a lot of pundits who wax optimism that we will not enter into a recession in 2008. That we will miss it "barely" and that growth will resume. Can that happen? Perhaps, but not likely. The recent contraction in the ISM Manufacturing data coupled with ADP jobs data shows that we are in a recessionary environment. With housing still mired in the quagmire and real wealth being depleted as a result, straining the consumers, our economy may already be in a recession. Just look at the results posted by Bed Bath and Beyond (BBBY) yesterday. Granted, BBBY is not the vanguard of economic prognostication. However, their bleak 2008 outlook and guidance further adds credence that the consumers are quickly fading away. I shudder to think about the report next week on Holdiay sales in the retail environment, from which I gather, was one of the worst in recent memory.

One of the big mysteries out there recently is the sudden rise of Amazon (AMZN) on an upgrade by UBS on Wednesday. From my metrics and studying released data on online spending, it appears that Amazon (AMZN) may miss their already guided down estimates for Q4. This bears watching because if true, AMZN will take a beating when it reports earnings on January 30th.

Having said that, the markets have been in a foul mood lately for the past 5 days. If today's much anticipated jobs number is indeed bad, that may cause a wave of selling that might set this market up for a temporary bounce. My job is to anticipate but not get in front of that move until it confirms itself. In that case, I might be tempted to take Google calls for a short ride, as it found support definitively at 50 day moving average. I also might be tempted to take a stake in Apple calls ahead of Mac World.

Be careful out there! We are in a bear market.