Wall Of Worry Wednesday: Time To Climb?

Includes: BAC, BCS, CS, HSBC, JPM, RBS
by: Philip Davis


Are we there yet?

As you can see from David Fry's chart of the NYSE McClellan Oscillator, we are dipping into oversold territory and that usually doesn't last very long. Overbought doesn't last very long either and, as I mentioned in Monday's post, we took that July spike to "overbought" as one of the signs that told us to short the market into the August collapse. We went long at the end of August and cashed out our short-term portfolios two weeks ago so we aren't looking to catch any falling knives but, as I said yesterday - there are certainly bargains to be had already so no reason to have an empty long-term portfolio as we can hedge for a drop back to the August lows (S&P 1,100).

There's plenty of scary news out there. I sent out an early morning alert to members at 6:32 as Germany had a failed auction of $8Bn worth of 10-year bonds, with bids falling 35% short of the offer. Eurozone PMI reports SUCKED, now running at 29-month lows (May 2009, when the markets were about 50% lower than they are now) and Chinese PMI fell all the way down to levels not seen since March 2009, when we had a total market collapse - ah memories ...

To put a cherry on top of the bad news sundae, there was a shocking revelation last night that bankers lie AND cheat in order to make money! Yes, like I said, SHOCKING! Barclays (NYSE:BCS), Credit Suisse (NYSE:CS), HSBC (HBC), Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM) and RBS (NYSE:RBS) all being sued/investigated over manipulating the LIBOR market. Apparently this is coming from the EU, U.S., Japan and the U.K. While "shocking" to people who think the market isn’t rigged – IT’S NOT NEWS! Here’s my comment from April 18th:

More shenanigans from the Gang of 12: Three investment funds file suit against several major banks, accusing them of conspiring to artificially suppress LIBOR, robbing investors of returns. U.S. and U.K. regulators have been investigating the same allegations. Banks sued include: JPM, BAC, HBC, LYG, BCS, CS.

Read the above Bloomberg article – it’s very informative, but keep in mind this is simply an investigation moving forward that will prove that banks are liars and thieves who manipulate the markets and destroy people’s lives to make profits – not exactly an Earth-shaking revelation.

In other manipulation news: Comments from senior Saudi Arabian and Iraqi oil officials, as well as from OPEC’s secretary general, signal that they want the organization to maintain current crude-production quotas, as prices have remained high. OPEC had been hinting that some members may cut output. This is yet another attempt to create artificial shortages in the energy markets, even as gasoline demand is down 4.5% this year, according to MasterCard Spending Pulse.

October 1984 CoverWho needs Saudis anyway? Canada oil sands output is expected to triple by 2035. Production from the oil sands will more than triple over the next quarter century to 5.1 million barrels per day, Canada’s national energy regulator said in a report released on Tuesday. That's very nice as we only import about 3M barrels a day from countries other than Canada and Mexico and one of those is from our man Hugo in Venezuela, who supplies a bit over 1Mbd so we will be TOTALLY OPEC-free by 2035 - even if we don't reduce our current consumption. How's that Peak Oil theory looking now boys?

I would suggest reading Harry Hurt's "Feasting on the Oil Glut" - it's a great overview of how OPEC actually has little to do with pricing once it gets into the hands of the speculators who, as we discussed last week - are ripping off the bottom 99.9% of the Global Population for $2.5 TRILLION PER YEAR - destroying the global economy and literally KILLING tens of millions of people through starvation, etc. - clearly the worst criminals in human history and they punch in to work at the NYMEX every day wearing badges for GS, JPM, Koch and other firms they execute orders for.

And yes, it's pretty much the same group of criminals that has been destroying the global economy by manipulating the London Interbank Rates as well - what a lovely little club!

So the markets are manipulated and we can't trust anything we see as the banksters manipulate the rates of interest we pay and the prices of commodities to pull in more and more fees and trading profits while passing laws (or paralyzing Congress to extend existing laws) that make it possible for them to operate virtually tax free while the unfortunate people who inhabit this country get poorer and poorer every day while a pack of MORONS conduct their 14th (out of 27) debate, where they conclude what we really need to do is bomb Iran.

The Republican debates are, at this point, more like a reality show - only no one seems to ever get kicked off the island no matter how much they screw up. Every week is another drama and another screw-up and every week one of them says something that makes liberals write another check to the DNC - out of fear that one of these people may actually become president.

Newt Gingrich was the "moderate" yesterday, declining to firmly state that all immigrants should be deported (just the ones we don't like). Mitt Romney (and it's our 14th date now, so we should be able to call him Willard) added China to Iran as a list of "top threats" to the U.S. My gal Mishy did very well, I thought, and Huntsman was the big star as this debate was right in his foreign-policy wheelhouse. Rick Perry managed not to hang himself on stage so that was considered a good performance from the governor and Ron Paul needs a new topic to discuss (less war, less government, less taxes - you kids just get off my lawn and leave me alone!) while Rick Santorum thinks Africa is a country but that made him a foreign-policy genius compared to Herman Cain, who said he would stop terrorism by killing the terrorists first.

On the whole, it was just what you'd expect out of a debate that was sponsored by the Heritage Foundation - pro war and anti-people, grinding American into nothing more than fuel for the Military-Industrial Complex President Eisenhower warned us about 60 years ago. Anyway, it's 9:15 so the short story is, if any of these people win the next election - this country is doomed - not just in the short-term, but everything we ever imagined about America will die as this country takes the final step toward being nothing more than a Fascist, Corporate State. President Kennedy also warned us about the conspiracy of the top 1%.

I already told members this morning that none of this "news" is NEW and it's no reason to sell off. We were mildly bullish into yesterday's close but it's CASH that is King and we have no desire to do more than pick up a few quick day trades ahead of the Thanksgiving Weekend. The 2,200 line in the Nasdaq futures (/NQ) are a great line to go long off this morning and $96 should hold on oil (/CL) into the weekend while the 11,400 line on the Dow (/YM) is a good spot to go long there.

Be careful out there, and have yourself a very happy holiday.

Disclosure: I am long DXD, QQQ, USO.

Additional disclosure: Positions as indicated but subject to change (tight stops!).