$2.5 Trillion - That’s the size of the global oil scam.

It’s a number so large that, to put it in perspective, we will now begin measuring the damage done to the global economy in "Madoff Units" ($50Bn rip-offs). That’s right - $2.5Tn is 50 TIMES the amount of money that Bernie Madoff scammed from investors in his lifetime, yet it is also LESS than the MONTHLY EXCESS price the global population is being manipulated into paying for a barrel of oil.

Too bad I’m going to miss this, I’m away for the day but have fun on what is probably going to be the lowest-volume day since our top in mid-October. Let’s call this a bonus rally as market pushers take advantage of the low, Veterans Day volume and lack of substantive news to goose us over our 5% levels, which will now give us some critical bullish lines to hold.

That was some day yesterday.

We even had to flip bullish in the afternoon (slightly and reluctantly) but, when push came to shove and they asked me for my opinion on TV, I had to tell them I still thought we were toppy. I said that despite the Fast Money crew sitting in the studio right below me actively advising their viewers to chase the performance and, right after them, our friendbuddypal Jim Cramer told his viewers that no news is good news and the market is in a "a positive and delicious void" where we don’t have to worry about any pesky facts interfering with our buying premise.

"The problem is all inside your head", G20 said to me
The economy’s an easy fix if you don’t want to wait
All we need to do is globally inflate
There must be fifty ways to dump the dollar

G20 said it’s really not our habit to deflate
Furthermore, we have elections and the voters hate to wait
So we’ll indebt ourselves, by lowering the rates
There must be fifty ways to dump the dollar
Fifty ways to dump the dollar

In early November 1999, the Dow was at 10,500.

10 Years later, it’s a different Dow that sits at 10,000 than we had back then with AlliedSignal, Citigroup (C), Eastman Kodak (EK), GM, International Paper (IP), Minnesota Mining, Philip Morris and SBC Communications now replaced by Cisco (CSC)), Chevron (CVX), Hewlett Packard (HPQ), Kraft (KFT), 3M (MMM), Pfizer (PFE), Travelers (who became Citigroup in 1999, ironically), Verizon (VZ) and Exxon (XOM). The Dow finished 1999 1,000 points higher, at almost exactly 11,500 despite the fact that many people thought computer clocks would fail to roll over and wipe out Western Civilization on January 1st.

Is it time to buy the buck?

As noted by Andrew Wilkinson on Wednesday, there was a huge volume surge in UUP call options, the ETF that tracks the US Dollars index value, ahead of the FOMC statement. 155,000 November call options were bought at the $23 strike level and another 155,000 were purchased at the December $23 strikes. The November calls came in at around .15 and are now .25 (up 66% in one day on UUP) and the December calls were executed around .25 and are now .40 (UUP up 60%) - this is not bad for a day’s work but was it just a day’s work or are we betting on a trend?

Unemployment benefits will now be extended to 79 weeks!

The Senate approved a measure to extend the current benefit program by another 33% and, in a bid to aid the property market, the bill would also extend for five months a tax credit for home buyers, AND expand it beyond first-time purchasers. There will ALSO be a new tax break for businesses that would give large companies bigger refunds to make up for recent losses. Specifically, it would let large firms claim cash refunds on taxes they paid going back nearly five years. Will extending the unemployment checks currently being collected by 6M people save Christmas? Will GS et al now claim losses to get back the tax money they paid in ‘05, ‘06 and ‘07?

Ah, I love Fed days!

Hope springs eternal and the pre-markets are already up half a point (7:30), which suits us just fine because the level I set to flip bullish in Monday’s first Alert to Members (and mentioned again in yesterday’s morning post for those of you who don’t need to know these things on time), 9,775, was perfectly tracked by the Dow yesterday and we even adjusted for the extra 5 points at 10:04, after we tested 9,980 at 9:57. The 9,780 line was tested 5 times in yesterday’s trading but, rather than stay more bearish, as we did on Monday’s failure, we took the DDM $39 calls (which I also mentioned in yesterday’s post) for $1.15 in anticipation of a nice pre-Fed move up.

Just two weeks ago, on October 17th, I warned in the Weekly Wrap-Up that it was "Dow 10,000 or Bust" for the next week and we failed that one and last Wednesday we were looking to hold NYSE 6,900 and that failed too. Now we enter into the second phase of our limbo game where the deep-voiced guy asks the question "how low can you go?" and we’ll be setting our next bar at our long-standing 9,650 target for the Dow, which we are already hitting in pre-market trading. If that fails, we’ll have to look down to S&P 1,000. As you can see from Jesse’s Chart above (click to enlarge), we took a nice bounce off serious resistance yesterday but we’re just not feeling it yet, even though the market is now as technically oversold as it was in March.

Here’s a scary chart pattern for you from our Chart School:

Elliot Wave

The Dow began the month of October at 9,712 and finished the month of October at EXACTLY 9,712. Now I don’t want to say the market is manipulated but… No, I’ve got nothing, there are no buts - the market is totally manipulated! Either that or you believe that the random outcome of tens of millions of traders around the globe trading hundreds of billions of shares of stock would just so happen to begin and end the month within .50 after going as low as 9,378.77 (on the 5th) and as high as 10,157.94 (on the 21st). So that is literally a 1 out of the 779-point swing coincidence to hit that 9,712 nail on the head.

Wheee what a day!

Who said we placed a spread bet on the Dow moving 200 points one way or another in yesterday’s morning post? Me, that’s who. And how much did the Dow move yesterday? 199.89 points. OK, so I was wrong by .11 but our plays worked out just fine and we flipped bearish again as we flew up. We’ll see if my streak continues this week. We would have gone more aggressivley bearish but we were worried about end of the month (and end of the year for many hedge funds) window dressing that would keep things going for one more day.

Do 18M unemployed people care what our GDP is?

That’s the question the market will try to answer today as we get a measure of another 500,000 pink slips handed out last week. Hopefully, by the end of the month, a net 450,000 of those people will find new jobs but what is the cumulative effect? The bottom line is that, in the past 52 weeks, 25M people have lost their jobs and 20M of those people have gotten a job back or quit the workforce (which is just as "good" as measured by government statistics), which still leaves just under 6M people "officially" unemployed. With 10% unemployment and the average person knowing 144 people, that means we have a population where each person knows about 14 unemployed people and, obviously, that is not good for consumer confidence.

Big test today!

The Dow failed to retake the upside of our band in multiple attempts yesterday but the NYSE held the critical 6,900 line which is our first real breakdown level to be tested. As I said to Members in yesterday’s Morning Alert, if the NYSE blows it, the next critical line is Russell 575, and the Russell is, in fact, our weakest index already as they have blown their 5% level (off the top) of 589 (our watch level from Monday’s Post) and now must retake 600 before we can call them turning up.

It’s nice to see the market behave normally for a change, going down on big volume and actually staying down as we get mixed economic news (click chart to enlarge). Volume was at the highest levels since Sept 17th where, sadly, we dropped another 5% over the next two weeks. Watching our levels kept us from making stupid mistakes yesterday and by 10:28 we had lost faith in the "rally" and we went for SRS as a long and sold the $9 puts for .60, now .40. This is a fun way to play the volatile ultra-ETFs as we don’t mind owning SRS at net $8.40 (would be all-time low) if it went the wrong way and was put to us.

Yes we are reluctantly bullish and only technically bullish at that. All we are asking of the markets is for them to take out our very simple levels and hold them for more than a day or two. Those levels are (and have been since early September): Dow 10,087, S&P 1,096, Nasdaq 2,173, NYSE 7,204 and Russell 623. These are, according to the 5% rule, the levels we need to hold in order to establish a floor in the markets that justifies setting higher upside targets. If they cannot be crossed, then these REMAIN our upside range targets and we need to start seriously considering the possibility that we may still get a pullback to Dow 9,650, S&P 1,020, Nas 2,075, NYSE 6,900 and Russell 575.

Our new Watch List is only 2 weeks old but is already performing very well with 10 of our 13 positions winning already. And that’s not even counting the buffer we get from our hedged entries. Two of the three losers were knocked out of winning positions on Friday’s dip - it’s all about timing! Still, great progress but not so much so that some of the positions can’t still be entered, I highlighted my comments at the end of each trade as to whether or not I still like them.

What a wild week we are having!

We dumped our shorts as planned yesterday morning, getting a very nice dip at the open. My 9:36 Alert to Members was even titled "Take Those Short Profits!" and our upside targets were set (as they were in the morning post) at: Dow 10,087, S&P 1,096, Nasdaq 2,173, NYSE 7,204 and Russell 623. Where did we finish? Dow 1,081, S&P 1,092, Nasdaq 2,165, NYSE 7,182 and Russell 613 - so a bit short of all of our targets but not bad considering we were opening 167 points below that on the Dow so perhaps I can be forgiven for a 6-point miss…

I’ve never embedded a video before but you just have to see this so I’m learning a new trick. Keiser puts out some gems like:

The last Beige Book report was on September 9th.

At the time the Dow was looking toppy at 9,650 and we had poor consumer confidence numbers (just like yesterday) and poor consumer credit numbers (no change) and the book had very little "good" news to report (see my analysis) - yet the market broke over 9,600 again that day and then took off all the way to 9,900 a week later. At the time, we were looking for any excuse to go higher on the hopes that this earnings period will look like last one, but have we now come too far, too fast?