Market Death Spiral Continues 70 comments
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So long, November lows. Last week, the news media, always looking for a headline, were quick to point out the Dow Theory Sell Signal that occurred last week. Of course, there were plenty of analysts that came out of the woodwork to proclaim the Dow Jones Industrial and Transportation Averages as irrelevant indexes, and therefore Dow Theory had no great impact on the market. Since then, the DJIA now sits 7 percent below its November low after only a week and the S&P 500 is now below its November low. The Nasdaq is not far behind. It looks like the Dow Theorists may be right. Sadly, there are not many signs pointing to an improving market.
Currently, the DJIA now faces resistance at the November low in the 7550 area. It has support in the 7000 area. A fall below this level will likely trigger massive selling.
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The S&P 500 not only fell below the closing November low but its intraday low as well. The aforementioned lows are now resistance.
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The Nasdaq is the last index standing. It currently has support at 1295 and resistance in the 1430 area. Based on the recent market conditions, it will likely join its compatriots below their November lows.
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There is still divergence occurring in the market. Currently, 13.76% of stocks are above their 50 day moving average. This is higher than in November, when it stood at 1.17%. Divergence, yes, but it is certainly not comforting. Divergence between indicators may appear on the charts, but it may take time for the trend to change.
Click to enlarge
The bottom line is that the downtrend is still intact. If you are long, you are playing with fire. Now is not the time buy stocks. Period.
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On Mar 01 08:44 AM know nothing wrote:
> As long as the current administration continues on the path of socialism,
> and taxation with out representation, you can not expect to see any
> improvement.
>
> It's as if this administration is mad at anyone who worked for what
> they have, and didn't give their money to losers, so Obama is going
> to do that for us.
>
> The deficit spending under the Obama plan is sure to inslave the
> american people for generations to come. It's really sad!
>
> $401k's and IRA's people invested in the stock market will continue
> to lose their wealth, Obama is angry at the stock market, and the
> people who invested their hard earned dollars in the stock market.
> Now he is going to teach us all a lesson. He is going to teach us
> what it feels like to be poverty stricken. The american working man
> is about to experience slavery, of which noone ever thought possible,
> and our children and grand children will be endentured survents for
> life as well.
>
> 1 billion in interest payments, on a budget deficit, is unforgiveable.Unmanage...
> and unbelieveable! Whats more unbelieveable is he has only been in
> office for a little over 30 days and he is not done spending yet,
> he has almost a full 4 years left to spend.
>
> You hear about lottery winners just blowing millions of dollars until
> they loose all their winnings, well, This administation is acting
> like they won the lottery, and they won't be happy until they have
> wasted every dime, plus they are borrowing from other country's and
> blowing their money as well. Leaving the american people holding
> the bag.
>
>
On Mar 01 09:17 PM maxe wrote:
> "Now is not the time buy stocks. Period" I love this, the Americans
> are capitulating and giving up all hope, im buying now for sure!
Yes the markets are still in a major downtrend and can be expected to continue down. Current earnings for the S&P 500 indicate that we can expect to see a decline well into the 600s.
Now is the time to just be cool and wait this out - keep lots of powder dry. There will be nice $$$ to be made. And the market will tell us when it is time.
On Mar 01 08:24 AM boats.j wrote:
> Sucks to be American these days doesn't it! Karma coming home to
> roost. Sad, so sad!
On Mar 01 09:31 AM wpdragon wrote:
> Know nothing, your name says it all.
>
> Actually, it falls short - you're a moron.
>
> Obama's been in office 39 days and he's supposed to have cured this
> unmitigated DISASTER that your pals Bush and the 12 year republican
> congress caused? Actually, a disaster that has its roots in Reagan's
> failed economic theories?
>
> Get a life. I wouldn't trust you to manage a hummel collection you
> idiot.
>
> I have to agree with the author on the technicals, unfortunately.
You are a shameful sellout. This is conservative thinktank drivel. You think they respect you? Black single mother turned christo-fascist? They turned you out. I hope they pay you well. And if you are such a christian, read the new testament. Half of it is Jesus talking about helping the poor. He never rationalized, as you do, denying the poor because they were all lazy and shiftless idlers anyway, and coddling them would only reiniforce that. You are a self-hating propagandist.
On Mar 01 09:45 AM patio wrote:
> Written by Star Parker - an African American Columnist.
>
> ----------------------...
>
> Six years ago I wrote a book called Uncle Sam's Plantation. I wrote
> the book to tell my own story of what I saw living inside the welfare
> state and my own transformation out of it.
>
> I said in that book that indeed there are two Americas -- a poor
> America on socialism and a wealthy America on capitalism.
>
> I talked about government programs like Temporary Assistance for
> Needy Families (seekingalpha.com/symbo...), Job Opportunities
> and Basic Skills Training (seekingalpha.com/symbo...),
> Emergency Assistance to Needy Families with Children (seekingalpha.com/symbo...),
> Section 8 Housing, and Food Stamps.
>
> A vast sea of perhaps well-intentioned government programs, all initially
> set into motion in the 1960s, that were going to lift the nation's
> poor out of poverty.
>
> A benevolent Uncle Sam welcomed mostly poor black Americans onto
> the government plantation. Those who accepted the invitation switched
> mindsets from "How do I take care of myself?" to "What do I have
> to do to stay on the plantation?"
>
> Instead of solving economic problems, government welfare socialism
> created monstrous moral and spiritual problems -- the kind of problems
> that are inevitable when individuals turn responsibility for their
> lives over to others.
>
> The legacy of American socialism is our blighted inner cities, dysfunctional
> inner city schools, and broken black families.
>
> Through God's grace, I found my way out. It was then that I understood
> what freedom meant and how great this country is.
>
> I had the privilege of working on welfare reform in 1996, passed
> by a Republican Congress and signed 50 percent.
>
> I thought we were on the road to moving socialism out of our poor
> black communities and replacing it with wealth-producing American
> capitalism.
>
> But, incredibly, we are going in the opposite direction.
>
> Instead of poor America on socialism becoming more like rich American
> on capitalism, rich America on capitalism is becoming like poor America
> on socialism.
>
> Uncle Sam has welcomed our banks onto the plantation and they have
> said, "Thank you, Suh."
>
> Now, instead of thinking about what creative things need to be done
> to serve customers, they are thinking about what they have to tell
> Massah in order to get their cash.
>
> There is some kind of irony that this is all happening under our
> first black president on the 200th anniversary of the birthday of
> Abraham Lincoln.
>
> Worse, socialism seems to be the element of our new young president.
> And maybe even more troubling, our corporate executives seem happy
> to move onto the plantation.
>
> In an op-ed on the opinion page of the Washington Post, Mr. Obama
> is clear that the goal of his trillion dollar spending plan is much
> more than short term economic stimulus.
>
> "This plan is more than a prescription for short-term spending --
> it's a strategy for America's long-term growth and opportunity in
> areas such as renewable energy, healthcare, and education."
>
> Perhaps more incredibly, Obama seems to think that government taking
> over an economy is a new idea. Or that massive growth in government
> can take place "with unprecedented transparency and accountability."
>
>
> Yes, sir, we heard it from Jimmy Carter when he created the Department
> of Energy, the Synfuels Corporation, and the Department of Education.
>
>
> Or how about the Economic Opportunity Act of 1964 -- The War on Poverty
> -- which President Johnson said "...does not merely expand old programs
> or improve what is already being done. It charts a new course. It
> strikes at the causes, not just the consequences of poverty."
>
> Trillions of dollars later, black poverty is the same. But black
> families are not, with triple the incidence of single-parent homes
> and out-of-wedlock births.
>
> It's not complicated. Americans can accept Barack Obama's invitation
> to move onto the plantation. Or they can choose personal responsibility
> and freedom.
>
> Does anyone really need to think about what the choice should be?
>
On Mar 01 03:21 PM fabien_hug wrote:
> You are right, taking resources away from the most productive destroyers
> of value in recent history and allocate them for health and education
> will definitively destroy the good karma that drove this great nation
> on top of world.
On Mar 01 01:07 PM henarl wrote:
> Instead of worrying about how much of the taxes are paid by the top
> 2% or 5% and how many people don't pay taxes at all, it makes a lot
> more sense to replace the monstrously complex income tax system with
> a simple federal sales tax that makes the big spenders foot most
> of the bill. Tax consumers rather than earners. This would also
> eliminate the huge IRS bureaucracy, thereby saving more money. Of
> course those bureaucrats would fight this because they don't want
> to lose their government jobs and have to get a productive job in
> the private sector instead. Also, tax accountants and attorneys
> would have to find honest work too so they wouldn't like it. Oh
> well, those with vested interests in the status quo will probably
> keep it from happening. Too bad.
We will then have an opportunity to change the course of mankind away from ugliness that has built for hundreds of years culminating in the spectacular failure of American capitalism.
Will we choose to annihilate everyone on the planet? Will we choose to to put aside failed economic and political theories? Will we rise above our baser selves?
I'm not seeing anyone capable of drafting a new Magna Carta that will emphatically limit the powers of our latest and most awful monarchs, the bankers, and affirm that they never again be allowed to have power over our money.
A new Dark Ages is upon us.
you are correct. The stark differences between McCain and Obama were readily apparent to the average voter but the deceitful ,conniving media did everything possible to make Obama look like JFK and McCain look/appear like Nixon. One of the most dangerous outcomes from this election is the fact that soon no one will listen or pay any atention to this mass media. When that happens we could be ripe for anything from a revolution to a demagougue as President. The media from the main TV networks to the NY Times "sold their souls" to the devil in the adoration of Obama. Now they will pay the price as ratings, ad revenues, and circulation fall off a cliff. When a liberal newspaper recently failed in the Pacific Northwest one journalist bitterly complained that the people had lost a "watchdog" of Govt. Unfortunately we need to susbstitute the term "lapdog" instead. And now they will pay the price for their "bias". The day the NY Times goes bankrupt I will happily "dance on their grave." Bastards.
Yank
On Mar 01 04:16 PM Alphameister wrote:
> Kudos to "patio" for presenting the article by Star Parker, one of
> the best summaries of America's socioeconomic probems I've read in
> a long time. For anyone who understands the lessons of history, it
> wasn't necessary to wait until even one day of Obama's term as President
> to know he will be disastrous for America. He isn't an honest man,
> but he was surprisingly open about his socialist prescriptions for
> America and still the benighted electorate found him the lesser of
> alternative evils.
On Mar 01 01:16 PM boats.j wrote:
> Except that a consumption tax would result in a much higher rate
> for poor people than rich people. Poor people have no discretionary
> income. They'd be taxed on everything they need to live. Rich people
> have massive discretionary income and therefore would be paying a
> very low effective rate.
>
> A better way is to have a one page IRS law. As follows: Less than
> 70k a year 0%, 70k to 140k 15%, 140k to 250k 25%, 250k to 350k 35%,
> 350k to 500k 45%, 500k to 1 million 55%, 1million to 5 million 75%
> and 5 million up 95%.
On Mar 02 10:35 AM nukldrager wrote:
> Ridiculous. You are suggesting leaving someone who earns 5 mil with
> 250k net after taxes? Wtf. How about a flat tax no exemptions. On
> all levels of income. 15%
But.... be assured, in the long term the dollar is going to deflate. Congress is making sure it will (probably why Bill and Hillary are so interested in foreign affairs). The dollar will continue in short term popularity until the point that foreigners decide the pickings are ripe elsewhere. Then we have serious problems because Americans are failing to save anything for themselves yet alone any to fuel deficit spending of our govt.
Watch china (who by the way is funding their stimulus with our cash and no debt). China is also having a field day wandering around asia and africa continuing to buy commodities to fuel their economy (at discounted rates and in cold hard cash...no deficit spending there).
On Mar 01 11:14 PM Trader.V wrote:
> Our economy is so horrible the dollar is dropping in value, isn't
> it? Well, isn't it?????
On Mar 02 11:17 AM wisurvey wrote:
> Not initially. I think you will see a steady climb in dollar vs
> yen, euro thru this year. It is an anomaly caused by greater problems
> overseas and the short term, temporary result of the almighty 'stimulus'
> package.
>
> But.... be assured, in the long term the dollar is going to deflate.
> Congress is making sure it will (probably why Bill and Hillary are
> so interested in foreign affairs). The dollar will continue in short
> term popularity until the point that foreigners decide the pickings
> are ripe elsewhere. Then we have serious problems because Americans
> are failing to save anything for themselves yet alone any to fuel
> deficit spending of our govt.
>
> Watch china (who by the way is funding their stimulus with our cash
> and no debt). China is also having a field day wandering around
> asia and africa continuing to buy commodities to fuel their economy
> (at discounted rates and in cold hard cash...no deficit spending
> there).
>
On Mar 01 08:24 AM boats.j wrote:
> Sucks to be American these days doesn't it! Karma coming home to
> roost. Sad, so sad!
You should care is producers leave and it doesn't matter if they are rich or not.
It is funny that people who have more money than they know what to do with are mad about RETURNING to tax levels that Bush repealed. How has all that trickle down worked???
Lets see, lowering taxes on the rich has done nothing positive for the economy. Lowering capital gains taxes has done nothing positive for the economy. And what is the rich persons conclusion??? The economy is down so lower my tax rate and it'll trickle down.
Yes, so our overall conclusion is that although the financial crisis shows daily the overall greed of the rich in our country at the expense of the poor, the problem will be fixed by lowering the taxes of the rich so they can make even more money.
Yup, this all makes sense. Capitalism = Greed and undeserved yields
Socialism = Equal taxation
Regardless of your opinion as to whether they should have expensive houses and cars, those are debts that cannot be undone at this point (just try to sell an expensive house right now). So, when their taxes are significantly increased, there may be a significant number that find such increase to be in excess of their discretionary funds. This will add to foreclosures, defaults on various loans, and defaults on credit cards. If someone is losing a house, or going into bankruptcy, which thanks to the change in bankruptcy laws no longer provides a debt-free slate from which to start again, there is less incentive to continue to put in the very long hours in a stressful job with a lot of responsibility only to have the compensation for it go to pay down debts that still exist and high taxes to support other people who are not putting in those hours with that stress. Remember, these are people who would have been meeting their bills and continuing to have some discretionary income but for the double whammy of a higher tax rate and losing the majority of their deductions, including the mortgage deduction on which they counted.
This will add to the downward spiral, and not spread the wealth. We cannot assume that people placed in such situation will continue to make significantly taxable incomes rather than throw up their hands in defeat and join those who expect to be helped by all the remaining "rich" folk. If you think that the upper middle class income earner has a lot of tax deductions and ways to avoid taxes on that income, you obviously haven't been in those ranks and know not whereof you speak. The truly wealthy spend a lot of their income to legally avoid as many taxes as possible, yet even most of them still pay a very hefty amount by anyone's standards, and yes, they can leave this country because they have structured themselves in such a way as to make that option economically viable, despite the conditions elsewhere.
Assume that you will never take the majority of a wealthy person's income or assets. Isn't anyone doing the math? How can the upper middle class income earners who can manage to sustain themselves despite the tax increases (both Federal and State) possibly generate enough taxes to keep everyone afloat? The money needed to pay back the trillions we have spent and are continuing to spend is higher than the GNP for one year of the entire world. China will only buy so many bonds. And everyone seems to forget that bonds need to be repaid.
We have never faced a time when the economies of every country were so interconnected during a downturn, nor a time when none of the major world powers were better able to ride it out than the others. I'm glad that some of them think the Unites States is in that position, but I fear they are mistaken. We will only benefit from that perception for awhile.
We will all be facing a dramatically different life style as the global realities play out. There has been a lot of greed, both personal, corporate, and governmental, that has helped get us to this point. Likewise, there has been a lot of fraud and misuse of the system by those who want to be given what they think they are entitled to receive just because they are alive, but who do not want to sacrifice and work hard to get it. And then there are the most of us in the middle, who liked the idea of being able to work hard to get ahead, planned for our futures, and foolishly thought that life would continue as it had in the past. We may get a reprise for awhile by an economic stimulus from some new industry or something as elusive as seeming peace in the Middle East, but at the end of the day the price tags for all of the programs that have been and are being put into place throughout the globe will come due, and I fear we are kidding ourselves about the consequences.
On Mar 02 12:40 AM sether wrote:
> Your whole premise is faulty. Ambitious people, regardless of their
> race or socio-economic strata, will always strive to better themselves
> and achieve. Social programs are designed to facilitate that amongst
> the lower strata (again, regardless of race), who have fewer opportunities
> in their immediate environment. Civilized societies (especially those
> which claim to be based on 'Christian' principals) should promote
> social mobility by providing baseline minimums in education and health,
> which anyone is 'free' to accept or reject. Conservatives do not
> want an educated, heathly, or upwardly-mobile population, which is
> why they oppose these programs.
> You are a shameful sellout. This is conservative thinktank drivel.
> You think they respect you? Black single mother turned christo-fascist?
> They turned you out. I hope they pay you well. And if you are such
> a christian, read the new testament. Half of it is Jesus talking
> about helping the poor. He never rationalized, as you do, denying
> the poor because they were all lazy and shiftless idlers anyway,
> and coddling them would only reiniforce that. You are a self-hating
> propagandist.
>
On Mar 02 09:28 AM yank wrote:
> alpha:
> you are correct. The stark differences between McCain and Obama were
> readily apparent to the average voter but the deceitful ,conniving
> media did everything possible to make Obama look like JFK and McCain
> look/appear like Nixon. One of the most dangerous outcomes from this
> election is the fact that soon no one will listen or pay any atention
> to this mass media. When that happens we could be ripe for anything
> from a revolution to a demagougue as President. The media from the
> main TV networks to the NY Times "sold their souls" to the devil
> in the adoration of Obama. Now they will pay the price as ratings,
> ad revenues, and circulation fall off a cliff. When a liberal newspaper
> recently failed in the Pacific Northwest one journalist bitterly
> complained that the people had lost a "watchdog" of Govt. Unfortunately
> we need to susbstitute the term "lapdog" instead. And now they will
> pay the price for their "bias". The day the NY Times goes bankrupt
> I will happily "dance on their grave." Bastards.
>
> Yank
No one listening to mass media is what conservatives want. The FOX model of 'news' is designed to discredit ALL media by suggesting that it is all just opinions, left or right leaning, and that there is no fact-based reporting, and by extension no facts. This provides cover for whatever atrocities are committed by government / corporatocracy. Papers like the NY Times are one of the few big-media sources which still do actual investigative reporting. They are not perfect of course, but yes they are a valuable and still powerful watchdog. That is why they are the target of relentless and shrill attacks from the right. Don't worry, they will deliver the dirt on the left as it unfolds. The last 8 years have been such a shitticane of horrors from the right that naturally any media outlet's body of criticism from that time would seem heavy weighted on the right side of the spectrum (except FOX). Get real. Don't cry. By the way, in order to dance on a grave you must be capable of dancing.
On Mar 02 09:28 AM yank wrote:
> alpha:
> you are correct. The stark differences between McCain and Obama were
> readily apparent to the average voter but the deceitful ,conniving
> media did everything possible to make Obama look like JFK and McCain
> look/appear like Nixon. One of the most dangerous outcomes from this
> election is the fact that soon no one will listen or pay any atention
> to this mass media. When that happens we could be ripe for anything
> from a revolution to a demagougue as President. The media from the
> main TV networks to the NY Times "sold their souls" to the devil
> in the adoration of Obama. Now they will pay the price as ratings,
> ad revenues, and circulation fall off a cliff. When a liberal newspaper
> recently failed in the Pacific Northwest one journalist bitterly
> complained that the people had lost a "watchdog" of Govt. Unfortunately
> we need to susbstitute the term "lapdog" instead. And now they will
> pay the price for their "bias". The day the NY Times goes bankrupt
> I will happily "dance on their grave." Bastards.
>
> Yank
On Mar 02 09:28 AM yank wrote:
> alpha:
> you are correct. The stark differences between McCain and Obama were
> readily apparent to the average voter but the deceitful ,conniving
> media did everything possible to make Obama look like JFK and McCain
> look/appear like Nixon. One of the most dangerous outcomes from this
> election is the fact that soon no one will listen or pay any atention
> to this mass media. When that happens we could be ripe for anything
> from a revolution to a demagougue as President. The media from the
> main TV networks to the NY Times "sold their souls" to the devil
> in the adoration of Obama. Now they will pay the price as ratings,
> ad revenues, and circulation fall off a cliff. When a liberal newspaper
> recently failed in the Pacific Northwest one journalist bitterly
> complained that the people had lost a "watchdog" of Govt. Unfortunately
> we need to susbstitute the term "lapdog" instead. And now they will
> pay the price for their "bias". The day the NY Times goes bankrupt
> I will happily "dance on their grave." Bastards.
>
> Yank