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Hindenberg Omen - Twice Extended 88 comments
Both of those comment streams have become quite long so I am starting this Instablog for future discussion of the Hindenberg Omen. Alberta Rocks' latest review of the Hindenberg Omen is available at http://seekingalpha.com/user/357305/comment/879002
Future comments on this topic will be posted in the comment stream for this blog. Alberta advises that he may not post again for a while since the Hindenberg signal does not seem top be close at hand.
Note added March 23, 2010: This comment stream is getting rather long for easy navigation, so I have started a new Post http://seekingalpha.com/instablog/98115-john-lounsbury/60001-the-new-hindenberg-omen-blog . I hope further discussion will take place there.
Disclosure: No stocks mentioned.
Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.
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This post has 88 comments:
On the accuracy, I realize that it can give false signals that end up as corrections, but knowing that a major drop has never occured absent the HO signal helps calm the nerves.
HardToLove
So other than that, there's nothing really new except that the HO could become valid again this coming week as long as the rally continues. Not to mention the matter that even if the market falls from here, we still might not get the required number of new 52 weeks lows for quite a while (again, as detailed in my last post). Remember, those new highs and new lows always start at zero at the beginning of any new trading day. At the lowest point of the recent sell-off, the number of new lows only got as high as 23. You might think "how is that possible?". Again, as I detailed in the last post (where I attached a chart), it's a function of a quirky coincidence that's threatening to really mess with the HO this time around (for the first time in at least 30 years).
At this point, nobody (except the manipulators) knows whether the Dow is going to 6,000 or 14,000. Are we going to see a 22nd green Monday out of 25? Not likely, after Friday's max. pain manipulation for the ages, but who knows? The market hasn't been this overbought since Dec. 28th, but there's no rule saying it can't get even more overbought. There's no rule saying they can't run it up for 93 more days straight before they'll let it have a down day. For what it's worth, the recent 10 day rally was on decreasing volume every single day. I'm not kidding when I tell you this: if the volume continues on the same path it's been on for the past 10 days, on March 17th the average daily volume on the NYSE will officially be zero. Doesn't instill a hell of a lot of confidence in the recent rally does it?
A real strong case could be made for the dollar to shock a lot of people with its enduring strength, which of course would be deflationary. On the other hand, Ben just might let it resume its downtrend with no effort whatsoever to support it and purposely inflate the US out of debt rather than to default. That would make the USA the world's greatest pariah in the eyes of all those who have helped support her insanely wasteful spending habits over the decades, but Ben cares not for those who've loaned the USA money and who trusted the USA. He only cares about serving his lords and owners, the same den of demons who own the traitors in Congress.
Higher rates would ensure default eventually, since the burden of financing the debt will become insurmountable. That's not a "might". That's an assured outcome. But when it comes to rates on treasuries, Ben has little power. So it remains to be seen if a global credit crisis (and they're certainly lurking out there) encourages a whole lot of money into US debt (keeping rates low) or if the bond vigilantes get to work on the US and drive rates to the moon. It appears they're going to pick off the weaker countries first and save the best (biggest) for last. It used to be that they attacked corporate debt. Today that's small potatoes. Now they attack countries. But if they're going to leave the USA alone for now, they're just reinforcing the reasons for dollar strength. Actually it's more about foreign weakness. As John Mauldin said: "the US dollar is the worst currency in the world, except for all the others."
On a more pleasant topic, since we're enjoying the Olympics right now, I thought I'd offer you a quick little video that more or less shows where I've lived and played all my life. I love Alberta, but there's no getting around it, British Columbia is where God lives. I have family there and my daughter graduated from the University of Victoria, so I get to spend a fair amount of time in B.C. It's never enough though, so I plan to move there at some point in the not too distant future. FWIW, I believe I've been to every scene in this video. I've been in the "Empress", have done some insane whitewater rafting down the Kickinghorse River near Golden (class 5 rapids - a ton of fun). Hell, a buddy and I even got drunk one time when we were 23 and went rafting in a $59 plastic raft (akin to a toddler's back yard plastic play pool). The first minor set of rapids saw a submerged broken tree come roaring up through the floor of the raft, between my legs and dump both of us head over heels into the rapids without even a life vest on. I've never seen Tom since. I've always wondered how he made out. lol
I've seen a pod of killer whales that we weren't expecting and have been to some of these orchards and wineries. I've been on some of these beaches and have been on one mountain peak. And I've seen bears up close (as close as 10-20') more times than I could even count. I've had mountain sheep stick their head in my car window. But nothing beats dining on oysters and beer with my kids and friends at a classy harbour restaurant, watching the yachts come in and out. I don't have a yacht of my own yet but I have a nice 118 footer picked out. lol Western Canada's a lot of fun. As the video says, you gotta be here. I advise watching it full screen... it's big. Crank the volume and enjoy:
www.youtube.com/watch?...
I had the extreme pleasure of taking in the Olympics here in Calgary in '88 and got to see many of the events including the closing ceremonies. That's something I'll never forget. For any of you who are Olympics fanatics like I am, here's a 360 view of the 2010 host city, Vancouver. It's a stunner of a gem in a natural setting that's just too gorgeous to try to explain. David Letterman keeps calling it perhaps the most naturally beautiful city in the world. I haven't seen enough cities to know one way or the other, but it certainly blows 'my' socks off:
www.aerialphotoimage.c...
I'll come back here if the HO does anything notable which doesn't appear likely anytime soon. Until then, best of luck and happy trading :-)
Nice to know that some of the people on SA have "real and adventurous life's" beyond the day to day "wall of worry climbing and slippery slope sliding" of the financial markets.
Keep it real - I lost both my legs in a paragliding accident 4 years ago. I loved golf, but that became impossible - a little like trying to drive off the deck of a yacht in gale force winds (hahaha), so turned to painting, canoeing and fishing. Have done two canoe marathons (they grant me assistance for all porting points), white water rafting on the Orange and Zambezi Rivers. Bought a Canadian fishing canoe and enjoy fishing in the Knysna lagoon. Life can be great - it's a matter of mindset.
We did some whitewater rafting in Utah and Colorado that was spectacular (all except the water temperature). We did one four-day trip that included looking down Maytag on the Greene River. That was the biggest, nearly permanent whirlpool I ever did see. There was a news story about one time that two 50 foot commercial rafts got caught in Maytag at the same time. They had to bring in helicopters to pull them out! And once you get past Maytag, you immediately hit class 5 rapids below it. Out of five rafts we only lost one person. She was the only senior citizen on the trip that year. She got fished on quickly, but it took her nearly 24-hours to get warm again. We went in mid-May. She kept a daily journal and some of the group kept telling her that she should start out at least one entry with "No shit, there I was." But she had refused to use such vulgar language. Then, the night after her near death experience, she asked us to join her around the campfire. She had never read an entry in her journal to anyone before, but had decided it was time to read one to all of us. We felt honored. As she began to read we had difficulty holding back the laughter. "No shit, there I was, not knowing which way was up, zooming along under the surface of a mighty river at near freezing temperature. There were huge boulders all around! Suddenly I felt something grip my jacket and pull me up. Fresh air at last!" I'm not sure if that was it verbatim, but I believe I caught the gist of it pretty well. She expressed her gratefulness to those who saved her and then to the one who saved us all. It was a very touching moment. We went from nearly bursting out laughing to wiping the tears from our eyes.
LOL! Fortunately for you, the bear didn't know any better either!
HardToLove
Haha! You bet that mountain river water is cold, cold. When my kids and I went rafting, we were instructed about how to survive in case we got dumped into the rapids. Then, once we were in a gentle spot in the river, we were all given the opportunity to go overboard on purpose and practice it. My son was overboard before the instructor finished his sentence and I was right on his heels. It was a blast and surprisingly easy to do. It's basically, bum down and feet downstream. Use your hands for direction and wait it out until you get a chance to roll on your belly and then swim with calm powerful strokes, heading straight for shore. It really works! Fortunately, all three of us are good swimmers and very comfortable in a flowing river. My kids are particularly strong swimmers, having swam competitively for 8 years. My daughter won a bronze at Canadian Junior Nationals, so I was really comfy taking them out on lakes or rivers. But surviving class 3 rapids could be a challenge for me personally. I'd just as soon not test my skills. I think I could survive it but its the "cold" part I don't particularly like.
Maytag! What an awesome name for a hot spot in a river. That's a brilliant name. A great story too, about the elderly lady taking someone's advice about how to start her journal entry.
Speaking of bears. One time I was at an intersection (stop sign) where one paved highway was going to merge with the Trans Canada near Lake Louise. Man, what a beautiful lake that one is. Anyway, I saw a moose standing in the ditch, must have been 7' at the shoulder, with a rack about 5 or 6 feet across. I got out of my car and walked briskly right at him to see what he would do. He smiled, lowered his rack a little bit and started walking right at me, closing the gap in a bit too much of a hurry for my liking. Man, I didn't realize my car could screech rubber like that.
Your mentioning of swatting the bear's behind reminds me of one time when I was about 6. My brothers, sister and parents and I were all headed for a holiday in B.C. On the highway, the traffic had come to a standstill because bears were on the highway, stopping traffic and demanding food from the people in the cars. Like a pack of thugs, they were. One big burly construction worker with big work boots jumped out of his truck, ran right up to one of the bears and kicked him in the ass, chasing all of them off, back down toward the valley below. They were just black bears and really they're not aggressive.
My dad explained that the man was teaching the bears that humans are dangerous and to stay away from people. He was right, because when bears and humans have a bloody encounter, the innocent bear always gets hunted down and he (or another bear, as long as he looks like a bear) pays with his life. It's sad as hell. I love the bears, I really do. I've been very fond of them ever since I can remember... maybe 2 or 3 years of age when I saw my first one. It's not their fault that we encroach into their territory and get sloppy with our food.
Here's an interesting "still shot" video of a guy in Alaska playing tag with a polar bear. This would shake a guy up for a week or two:
www.youtube.com/watch?...
In Churchill, Manitoba, about 600 of these big boys come into town every summer and wait for the Hudson's Bay (and James Bay) to freeze again so they can get back out there and get some seals. Tourists from all over the world go to Churchill to see these bears. They have big Tundra Buggies with huge tires and they take the tourists out into the thick of wherever the bears are, for a close encounter of the 'mess your pants' kind. There's some great video of that on the interweb too.
Just for interest, what's the biggest bull you've ever seen at a rodeo? Probably around 1700 lb. Biggest black bear was in the USA at 600 lb. Biggest grizzly bear ever recorded was 1,600 lb. I believe that was one of the once famous Swan Hills grizzlies in northern Alberta. The biggest polar bear ever shot in Canada was 2214 lb. He was 11 feet bow to stern. That's one big bear, no? He was shot by a woman. I've seen a video on the net where a bear jumped off the ice and killed a beluga whale. I think you can still find it on Gooble.
It's a bit early to say any more about the HO, but with today's down action, that 10 week MA on the $NYA has turned south again. So as long as it's pointed south, the Hindenberg Omen is invalid. That could still change as the week progresses. We'll just have to wait and see how the week ends.
Take care!
Another time my fam was rafting down the Ohio Pyle in Western PA, a more gentle class 2 to 4. We came to a perfect moment where I charged across the raft and knocked both my nephews out into the rapids. For the rest of the trip is was a battle of angry men having a blast.
Years ago, up in the Adirondacks (the 'Dacks) I was invited to The Ausable Club, not far from Lake Placid. Upon arriving, we unloaded our two weeks of gear into a school bus. After a four mile trip down to the Lower Ausable Lake, we then put our gear into some gorgeous wooden row boats, about 100 years old ,each holding a gleaming polish. After about a three mile pull, we docked, put the boats up, and along came the warden. Into a tractor wagon we put our stuff. I, being the biggest, had to sit on a crude bar on the front of the tractor. Because if I didn't, with all the crap we brought, the warden was fearful the tractor would flip front end over back.
I wasn't real cheery about that task. After about two miles up and over a steep, we came down to the Upper Ausable Lake. We fetched down the canoes into the water. But the wind was blowing so briskly, the water chop was spilling into the canoes. The women were not far short of frantic. Carefully, we paddled near ashore and docked and the began hauling our gear up a 90 foot rise to a monstrous cabin, that non other than Al Capone used to own. Talk about a hideout! This place had 29 foot ceilings, and I recall that the entire compound was 112 paces long. Only three other campsites dotted the entire lake, one owned by a past CEO of whatever Exon was named back then.
Now for the bear part. We were rookies, first timers there, and had no idea what to do with the trash. About two hundred yards from "Tree House" as it was called, I dug a hole about three feet deep, threw the trash in and then rolled about a 100 pound boulder into the hole. The next time I brought out the trash, that boulder had been flipped out and was about 20-25 feet down the hill. Trash everywhere.
Later, beneath "Sibeadies Ledge," we discovered the trash heap, about a quarter mile away. All the trash was biodegradable. Bottle, cans, and plastics were crushed and thrown into separate 55 gallon drums, can and bottle crushers provided. In the winter, when the lake would freeze over, the help would chopper in and removed the garbage.
Just a Ten hour round trip to go into Lake Placid for smokes.
But of course! The warden would deliver the Sunday newspaper.
Good to hear from you, Rocks.
I am an old denizen of the Dacks. Still have some of the 46 high peaks to finish. Quite a few of the ones I have climbed have been done several times. I just love that area - mud, black flies and all.
I have been on Haystack three times. The last time was on an August day with occasional showers and wind gusting to 50 mph. I was with my 10 year old grandson who weighed maybe 75 lbs. I had to tie a rope around his waist to be sure he wouldn't be "gusted" over the side.
That's very cool to have stayed in the cabin that Scarface used to own. I wonder how he used to get up there? By water? Somehow I can't envision him going to all the trouble you went to, to get there.
Haha! That's funny about the boulder having been pulled out of the hole and rolled down the hill. That darned warden must have been some hungry.
44 degrees 04'30.21" north by 73 degrees 53'14.92" west you will zero in on a big fuzzy light brown blotch; that's where Al Capone would hang his hat during the rough times. I probably did more illegal things there than he did! (Long time ago)
Capone very likely trailed into the Tree House by the same route I did.
I am saving Marcy for #46. It was a deal that I made with two grandsons when they were 6 and 8. One doesn't hike any more and the other hasn'r hiked with me for 10 years (he was the one with the rope on Haystack. Even if I'm hiking by myself now, I'm going to stick to the same deal - Marcy will be the finishing peak.
Usually go every year with a bunch of friends. The camp usually turns out to be more dangerous than the river believe it or not. We have had drunks fall in the lake looking for a place to go take a leak and a bathroom fire with someone in the shower when the hotwater heater exploded some paint cans in the same closet and started an inferno. I get him out but all he had on was a towel. We had good laughs after each encounter since no one was hurt. Hillarious stuff for our old ages.
If you take a look at the chart at the link below, you can see that at long last, we're more likely in the coming weeks to be seeing new 52 week lows (if the market falls at all). You might remember that in the past few months, even if the market had fallen hard, it was very unlikely to see new 52 week lows due to the coincidence of timing that I'd mentioned in past posts, and as seen more clearly in the chart.
So the HO is now all set up to work properly once again. Perhaps this is the entire beauty of how it works. In any event, she's back on the job. It's possible that market action in the coming weeks "could" neuter it once again, due to that moving average issue. If that happens I'll let you know right here.
stockcharts.com/h-sc/u...
Have a great weekend and a great week trading.
For a lot of reasons (other than the Hindenberg indicator) the maintenance of a trading range market for many months seems the most likely outcome. A range between 9,000 and 12,000 or so seems highly likely. A range between 10,000 +/- and 11,500 +/- has a greater than 50% probability through September, in my opinion. Fourth quarter is the most likely earliest time for a significant decline or a breakout above 12,000. The outcome will depend on whether the economy can continue to grow as stimulus fades.
If we don't get that "reset event" our economy will drag along at a very slow recovery pace with continued unemployment at high levels for many years. We are a nation, IMHO, that has become too fat, dumb, and happy to recognize reality. The majority of those who remain gainfully employed are not feeling the pain. But the debt build up will require the pain to be spread across a broader swath of Americans. It won't be until that reality hits and a future full of more of the same becomes apparent that they will wake and smell the feces.
But now that the low was 52 weeks + 1 day ago, at least there's a chance now, of seeing the required number of new lows without having to have incurred a 30% crash in order to get them. You know what I mean? So the HO should work much better now than it would have a couple of months ago. It would have taken a horrendous crash for it to have triggered two months ago, and by then it would have been much too late. But we didn't have a horrendous crash, nor did the HO trigger. I guess that's exactly what it's supposed to do. lol Keep in mind though, that we only need to see 75 new 52 week lows out of thousands and thousands of stocks on the NYSE.
There are still those (a very small percentage of people) who ridicule the HO and proclaim it's less valuable than mundane indicators such as "who won the Superbowl". I could care less if people believe it has any value or not. There's no agenda here to convince anybody of anything. Late last year, John Lounsbury simply brought the Hindenberg Omen before us for our consideration, and I volunteered to run with the ball because I knew something about it. But it just makes me wonder how clueless people really can get. What are the limits of human stupidity and arrogance? People who refuse to listen to reason and who are instead filled with their own ego, believing they "know it all" and that all the mathematicians and Wall Street giants of the past knew nothing, just make me shake my head in disbelief. They remind me of a quote I like:
"Reason means truth and those who are not governed by it take the chance that someday the sunken fact will rip the bottom out of their boat." Sri da Avabhas
Some people will argue "the Omen produces a false alarm 20% of the time anyway, so why pay any attention?". It's those kind of people who dismiss the tsunami alarms too. Obviously they do so at their own peril. In any event Mark, I have a pretty strong sense that no matter when the HO eventually triggers, we will all have suffered a bit of a fright before then anyway. In other words, it never, never pinpoints an exact top. Our own spidey sense will probably have gotten a lot of us out of the market in time anyway.
Based on data such as this quote below though, we can assume (or at least I will assume) that the rally's running on vapor. Admittedly, I don't know who's quote it is. I just lifted it from a friend of mine on a different site where I participate most of the time now, and he would have got it from some solid source. I don't catch any mindless flak on other sites, and my contributions seem to be quite popular and appreciated. So that's where I offer my thoughts these days. lol
"Cash dropped to 3.6 percent of assets from 5.7 percent in January 2009, leaving managers with $172 billion in the quickest decrease since 1991, Investment Company Institute data show. The last time stock managers held such a small proportion was September 2007, a month before the S&P 500 began a 57 percent drop, according to data compiled by Bloomberg."
In other words, the bulls are "all -in". Any volume these days appears to be banks trading back and forth between each other, pumping up the value of their assets based on nothing. That's why when we have a huge volume day, it's always a down day... there are literally no buyers to speak of. The cabal is just making things for all of us worse and worse each and every day. The saddest part is that there's no need for it other than to line their own greedy pockets with yet more stolen money (overnight pump jobs on the ES futures, then tank it in the morning, that sort of thing is nothing less than theft by market manipulation). Hell, if Goldman is willing to purposely bankrupt Greece, they're perfectly willing to purposely bankrupt anyone else, including America, as long as they get paid handsomely for causing the bankruptcy and paid handsomely for offering the solution.
So keep your stops tight and hope she runs to 1500 on the S&P. Because when she breaks, she's likely to break hard. Best of luck buddy.
.
Thanks to the incredibly cheap lending "window." Arrgh!
Earnings season is almost complete. Earnings were very good. We live in tomorrow and the next day, but not within the reality of this enormous accumulation of debts. Put hand over eyes, pick a stock, plop down a bet and let it work, even if we're up 68% off the lows this time last year...le tee dah...pick your fav and let it rock, because this is what's happening.
Push comes to shove, both push and shove are on. Trade it nimbly; trade the news cycles. Yet...the big picture that is so ignored even still, is that we, as in North America, still ignore the power of global development. Global development, the fact that several hundred million people in just the past half decade, have become aware, been conjoined toward planetary economics...ie., they have money to spend. They have things that a mere decade ago their parents could not even conceive.
This, in large part, is what is the underriding driver to this gleeful rise in the markets.
Bottom line: Check your charts. Any of them down? Any of them? Doubtful. Play the game as it presents itself.
Enjoy your comments. Totally sure your outrading the masses.
Let's correct your final sentence first! I assure you my friend, I am not out-trading the masses. lol
Well there's hardly any argument on either side of the trade that the market has gone irrational. It's clear the skids have been greased and as illogical as it is (in my opinion), the market has been supported at every minor correction for reasons other than economic common sense. But it is what it is. If the goons want the market to run to 1500 on the S&P, then by golly that's where she's going, morals, ethics and economics be damned.
But the one overpowering fact that I just can't shake is the reality that there are so many glaring reasons why money should be disappearing off the face of the earth... back into the imaginary void from whence it came. Since 95% of all money on the face of the earth was loaned into existence, then if there is any credit contraction, the reverse of that process occurs. When loans are repaid, the money doesn't go back into the bank's vault, it goes back into the void that it emerged from on the day that loan was taken out. On a much larger scale then, the same thing happens when any loan is "called in" or when a corporation goes bankrupt, or a state defaults or a sovereign nation defaults.
Each and every occurrence of a default or bankruptcy effects many other entities all down the line in a really scary domino effect. For example, what would happen if an employee of, say Microsoft, were to find out that his paychecks were suddenly bouncing because Microsoft could no longer honor the checks? How is he going to make his next mortgage payment? He would have to sell something in order to come up with some American dollars in order to make that next payment. What would he sell? Maybe his car, maybe some tools in his shed, maybe some stocks, maybe a child. Multiply that by the number of Microsoft employees, and we've got a lot of selling of goods going on. That's deflationary as heck, and it was all caused by one corporate default.
I realize that's a rather silly example, but the point I'm trying to make is that any default has that exact same effect, only compounded mightily. And unfortunately the world is now full of sovereign nations, not to mention states of the USA, not to mention corporations, not to mention individual people who are on the verge of default. There is absolutely no credit expansion going on. Therefore, there is no inflation going on. True enough, the Fed is printing the seed money, but they're hoarding it for themselves and are in fact eating that seed money. It's not growing into anything. It's not growing exponentially into the economy via the mechanism of fractional reserve banking as it usually does. Therefore, there's really no inflation going on in spite of the Fed's printing. And the fact of the matter is that the Fed has absolutely no control over the monster of deflation. If a central bank had such power, Japan wouldn't be in their third decade of deflation and a relatively stagnant economy.
In my opinion, the mother of all deflations is what we're going to be facing. No, it's what we "are" facing right now. Decades of credit expansion are suddenly staring us in the face, demanding action to undo all those excesses. So in this dangerous scenario, any default (or even just threat of default) is going to cause another mad rush to buy American dollars. How soon we forget what the Dubai scare did to the stock market and the USD. And that was just a "scare" that hasn't even been truly dealt with yet. Not to mention Greece, Spain, Portugal... and now Austria, and all the others on the long list. England is actually in worse trouble than Greece, yet they have the audacity to point fingers at Greece and get all smug. Nobody does smug like the English.
If none of these problems faced the world, then yes, I'd say the markets could chug higher for some time to come. But they do exist. I'm just waiting for the next "event", as in some news story breaking, about a default. It's out there, and that's what causes me to be so suspicious and negative about the markets. Maybe I'm the epitome of the worrier... you know the investor who contributes so much to the "wall of worry". lol
Anyway, I'm just trying to eke out an existence like everybody else. Gone are the good old days when I was making some real good decisions, like the ones that lead to a gain of $23,000 on my best day. I'm lucky to make $500 in a week right now. And I won't go long until either the credit issue has been dealt with and handled (probably about 2015), OR until Goldman Sacks America allows the market to at least correct to the point where some semblance of rationality and sanity once again become evident. I'd go long if that happened.
I did indeed check my charts. None of them are down. But with the dangers that exist out there, and with the Fed's proclivity to screwing the masses as quickly and painfully as possible, I'm still not going long for now. Others will, and they'll make gains. Inflation will absolutely come some day. But I'm from the camp who believes deflation has to happen first. And there are some great minds on each side of that argument, so if I'm wrong at least I won't be alone. lol
Take care Maya. Best of luck buddy. Be suspicious (that'll keep you alive). lol
Could not agree more.
However, my concern remains that these markets can stay irrational for some time to come - at some point you have to go with the momentum - unfortunately that is exactly the time when they come off.
It's a itch that you can not get too!
I'm sitting on my hands for the immediate future - and that's not where the itch is!!!!
Keep it real.
And about that itch thing... dude, you made me blow coffee out my nose and all over my keyboard. Thanks a lot, eh. :-)
A family of 4 with household income of about $20,000 or so could receive a refund of as much as $7,000 without having paid in one red cent in withholding! Not only could they, they will. That is more than in the past by a significant margin. What that may mean is that we could see another wave of "stealth stimulus" hitting the economy over the next few months. This may put more money into the hands of the "poor" in very short order. This would also have a consequence of making the President a hero to all those receiving this redistribution of wealth.
I predict that car sales will rise significantly over the first and second quarters of 2010 (at least through April) before dropping like a rock when the temporary demand dries up. We could also see an uptick in home sales during this period. But again, I expect it to be very temporary because of the artificial stimulus about to be caused.
Happy hunting!
This is the so-called earned income tax credit. Poverty level wage earners with children file tax returns to get a government subsidy. They are subsidized for working; income from welfare, unemployment compensation or any other source that is not from working is not considered.
I did pro bono tax prep work in poor communities in the 1990s and saw many returns where families and single parents got thousands in earned income credit, which resulted in a check in the mail from Uncle Sam.
The only question I have is whether the credit has been increased in this recession. I have not heard anything about that.
McDonalds, get your Sausage Egg McMuffins ready!
You are getting ripped off!!!
And, of course, all those who have received a "raise" in their refunds will stick with those in power. And there are many millions of them.
As for illegal aliens voting or receiving tax refunds, that's clearly wrong and should be stopped. Our immigration policy is a mess, which is a surprise to no one.
I can't even comment on the family of four making $20,000 because there are so many things wrong with that. Poor people need help, but they mostly need help in not being poor. That is a tricky one, made trickier when such a large percentage of their income gets spent (by my observation) on beer, cigarettes, lottery tickets, and drugs. Don't get me wrong, I understand the impetus to get a short term fix to relieve the pressures of life (and of poverty), but I see so many folks who could be relieving their stress in the long run by saving money spend it instead on useless escapism. There are very real challenges being poor (I know, because I have been poor), but these are not made easier when money is spent on beer. And a tax refund that can be spent on anything is not the best way to target aid to the poor... see I knew I didn't want to get started with this. Try summarizing this issue in a few sentences and you either sound like a flaming liberal or a heartless bastard. It's tough. It sucks being poor. We should help people not be poor, not help them stay alive poor.
We don't need to keep the poor down by giving them just enough to feel good momentarily. What we need to do is teach them how to not be poor any more. IMHO, it's an attitude of resignation and the lack of desire to withstand more pain for a while in order to raise oneself up out of the mire. It starts with an education, something many of the poor refuse to get.
Okay, now I'm starting to sound like the heartless bastard. Sorry. I don't mean to seem that way. In reality, I'm a real softy. If you've read my comments elsewhere you'd know that I cater to poor people whose homes have been sold out from under them by the local governments. I buy those homes and let them stay in them, often at a loss. We work out what they can afford and I deal with it the best I can.
My heart goes out to them, but giving them money for nothing in return just isn't the right answer.
You have really done it! You succeeded in sounding like a bleeding heart liberal and a heartless conservative in the same discourse. And you know what? You are right on several counts in my opinion.
What I like about the earned income tax credit is that it rewards the minimum wage and near minimum wage earner with children for working. There is no credit for welfare or passive income.
What I dislike about the earned income tax credit is the possibility that the recipient "wastes" it on the beer and cigarettes that you mentioned.
The problem I see is that trying to do more to enable the recipients of the earned income tax credit payments to "make better decisions" could be, in part, self defeating. People often do not learn when directed as much as they learn from self experience.
The problem we have is that from our educational system for the young through the media and political discourse for adults, there is little material aimed at financial and economic literacy. People have simply not been exposed to the concepts and understanding of basic personal finance. They have settled on ideological "blankets" to cover up an abyss of ignorance. I am always amazed when the question of economic issues comes up that most people fall back to summarizing their position with political ideology statements: I am a conservative; or I am an independent; or I am a liberal. Further discussion usually produces no more than sound bites.
When I dig into macroeconomic data analysis, I often find results that refute both conservative and liberal positions. Sometimes a specific result does not support either.
People want simple answers to complex questions. That leads many to accept pabulum when what they really need are complex carbohydrates.
Just one example of how our aid causes problems that we might want to look at is when folks get punished for working more hours. This happens in disability, social security, medicaid, and many other situations. As a small employer I can not afford to offer health insurance to my employees (nor do I carry it myself). I wish I could but the economics just don't work. We do have insurance for poor folks in my state, though. Just not "almost poor". So I have some part time employees that would like to work more but if they do they lose their health insurance -- insurance some of them need to deal with serious medical issues. The smart financial move for them is to work less and get insurance rather than work more and lose it. This causes them (and me) other problems. I wish I could get them insurance so they could work as much as they want to work and better their lives, but I can't swing it either. This picture is broken. I could offer insurance to all my full timers, but the costs would put me out of business and if I tried to pass them on to my clients, I would lose out to my competition and again be out of business. So all of these folks would go from having insurance to being unemployed. But the point is the system of aid in my state punishes people who work "too much" and creates an odd disincentive for what the state SHOULD want -- more people working more hours and PAYING income taxes, not skirting below the line while not paying anything. My example is not unique to my business nor my state.
I agree. I hope my little tale of woe didn't sound like an endorsement of the current fix. There is a difference between identifying a problem (e.g. saying "It's cold in here") and endorsing potentially destructive solutions (e.g. set the couch on fire to raise the temperature in the room). You are right that we need to do better with this. In fact I think my example about employee hours shows that sometimes a half fix is no fix at all.
By the way, the state of social security and my own lack of insurance are the two biggest factors that drove me to explore investing. I figured if I was going to be on the hook for these expenses (and whether it is insurance by myself or paying my own medical costs, either one is substantial) that I'd better start looking for a return on my savings. I am lucky that I am able to do that. Not everyone is, of course. But it is an example of the kind of thing I think a responsible person does to meet anticipated obligations. Find some money somewhere. Cut your expenses or grow your income or both. Faced with the troubles we are as a nation, we need to all be doing this individually and finding politicians who can help us do it as a nation. (And just "raising taxes" is not growing income. Raising tax receipts because the economy is booming is not the same as raising tax receipts by tax increases, of course.)
We need to find ways to limit basic medical expenses and increase access to basic care. The fancy stuff can wait until we do these two fundamental things.
Since access is available, I'm not sure that much of anything will change with a requirement for everyone to have insurance unless the laws are changed to allow denial to those in need. I don't know many people who want to support such a change either. That would come down on the heartless side of the ledger, I believe. So, how do we reduce costs?
I know, I know: spread the risk across a larger pool. But, if the cost per individual rises for those not currently covered because now they have insurance to help pay for the costly prescription drugs or medical procedures, do we really reduce the cost?
What is the big urgency to get everyone insured? Access should be the emphasis. And the government's involvement will not reduce costs. Thus far, it appears to have done just the opposite.
If the government is paying and subsidizing nearly everything that's going on negative, why not also subsidized all things inherently positive?
Okay...I'm done dreaming now.
In short, if the government would just get out of the way people who make wise decisions would benefit and those make unwise decisions would not. But, when the government gets involved it usually works the other way around. There are too many examples to try to list here.
I don't want any handouts from anyone, and was quite angry when I recieved that free money check from Bush (which, I used in part, that check to stock up my wine collection, mostly American wineries).
Yet, we have the government rewarding those who make bad decisions, like buying a home they could not afford, those not trying to find a job, because unemployment probably pays as much as finding a job minus the taxes, like bailing Wall Street, subsidizing farmers to not plant, etc., ect., ect.
Like I wrote, I was dreaming.
So when I talk of "access" I am glad that we have ER's that will see anyone and I think they do a great job of helping when called on, but I wish we would emphasize methods that would improve access to BASIC care. This could be cheaper than spreading the cost of an ER visit among society and could help catch more problems early, again resulting in savings. If we're going to absorb uninsured trips to the ER, why don't we say everyone gets two free primary care doctor visits a year? It would be expensive, but how expensive really, I wonder, when a $300 visit might replace a $3000 one?
Just thinking out loud, here. I don't have a political platform worked out or anything. I just keep thinking that this nation has its priorities messed up. We wouldn't allow folks to clog 911 with parking ticket questions or expect them call the limo service because they can't afford a bus pass. So why do we accept that they go to a state of the art medical facility staffed with highly trained trauma surgeons to get a refill of their prescription inhaler? It just makes no sense. There has to be a more logical approach.
You make a lot of sense but things that make a lot of sense have problems in our political system because they usually tread on some special interests. And special interests have exercised governmental capture.
But this was my point. I witnessed the uninsured receiving treatment. No one was turned away. No one is being denied health care. However, I do see your point and wholeheartedly agree that those costs are probably higher than they need to be and that people without insurance probably put visits off and hope to get better by themselves often making things worse. But I don't think that there is one single answer to the problem.
There are free clinics where people can get primary care, just not enough of them. And, of course, these would be abused by those who should be insured but choose not to be because of the cost (and it's free, so why should they?). Maybe an expansion of such a system with means testing could pull enough people out of emergency rooms so that the hospitals could get back to using these facilities for emergencies. But, what about those people who could afford insurance but opt not to carry it? When they have an emergency, they need to be treated and then they need to pay for the treatment. I liken it to an investor. If the investor makes a bad decision they have to live with the consequences (loss). If a person who can afford insurance makes the decision to not have insurance, but then has an accident and runs up medical and hospital bills of $50,000, is their plight not due to a faulty decision? If the person could have afforded insurance, such an amount will be very detrimental to their lifestyle, but it is not insurmountable. Perhaps the government could create a fund to cover catastrophic medical expenses to pay out when the bill become more than is possible for a family or individual to bear. I'm not sure if this would reduce costs that much overall, but it could spread the risk for catastrophic medical costs over the entire population. But then I have a problem with that because someone (possibly the government) ends up making the decisions about who lives and who dies. It all sounds logical until you're the one that they're deciding about. It doesn't help me any that Congress gets a pass on being included in the pool. They all get better health care than the rest of us mere mortals. That, IMHO, is just wrong!
I will start a new instablog when Albertarocks provides his next Hindenberg Omen update and also post an announcement comment here. Ever since this series started the posts have become chat rooms. Some very interesting discussions have occurred (along with some less monumental things). I will try to highlight new input on the HO with a new Insta so people don't have to scan down scores of comments to get the new news.
stockcharts.com/h-sc/u...
Hope the coffee is still warm - that itch just gets worse! I feel a song coming on :
I feel it in my fingers, I feel it in my bones, this markets gotta correct, no matter what they say. Patience is but a virtue which we all need to pay!!!!
That's a great tune BTW. Sung to the refrains of "The A$$hole Song" by George Jones? I emailed this little ditty to Geithner by the way:
www.youtube.com/watch?...
I have a few of Murphy's books, among others, but I read them so many years ago that they're now stashed away in boxes somewhere and I haven't seen them for a while. However, his book "Technical Analysis Of The Financial Markets" is considered one of the best and I don't think there is anything he doesn't cover and explain very well. He also wrote "The Visual Investor" which is very good. Another good one is "Introduction To Technical Analysis" by Martin Pring. You can get any of these (and many more) at StockCharts (and elsewhere, possibly even in your local bookstore). But if you're looking for one good title, I'd recommend Murphy's book first:
stockcharts.stores.yah...
While you're at StockCharts, take a look at their free "chartschool" which provides a brief overview of many indicators and details about how they're constructed, how they work, what they're actually saying, and some examples of the indicators in action:
stockcharts.com/school...
If I could give you one recommendation above all, it's that when you learn about an indicator, focus on the mathematics that go into it in order to have a very clear understanding what the indicator is showing you.
But the real key is understanding that momentum indicators mean different things, depending on the overall trend. For example, stochastics can get into the condition known as 'oversold' or 'overbought', but those readings have entirely different meanings depending on whether the larger trend is up or down. An overbought condition, when the overall trend is up, is simply signaling a very strong and healthy market, so you should stay the course. On the other hand, an oversold condition, while the overall trend is up, is a very serious sign to pay much more attention to since it's warning that a return to the larger trend is imminent. It won't stay oversold for very long in an uptrend, but can stay overbought for a very long time in that uptrend. The reverse is true in a downtrend. This phenomenon is common to all momentum indicators, including the ultra important MACD.
Those are some good places for you to get a start. While waiting for a book to arrive, you can have some fun starting immediately at the chartschool in the link above. Hope that helps :-)
For the record, I really enjoy the "chat room" feel to this post and I hope it will continue.
Have you looked at the numbers in the last couple of days? I haven't looked at the details, but I know we have hundreds of 52-week new highs and a rising A-D. What is needed for a trigger is a narrow decline (a few sectors) while holding new highs above 75 for the market as a whole and keeping the A-D line positive.
We have been talking about a Hindenberg trigger being several months away, but couldn't it come in April or May under certain scenarios?
I'm wondering if you've misunderstood some of my last posts or if I've accidentally written something that was misleading. But I really like your question so if I go into a little more detail here than usual, then all readers will understand exactly where the HO sits right now.
As of this week's close, the 10 week MA on the chart of $NYA is essentially flat. But that situation will likely be taken care of at the first tick of next week. That would be a good thing, since that MA "must" be pointing up in order for the HO to be active and valid. So let's take another look at this chart (the same one that I'd included in a recent post). It also shows a few explanations:
stockcharts.com/h-sc/u...
So to answer your main question, the HO is currently alive and well and in theory we "could" get a signal from the HO at any time. I'm not at all suggesting that it's imminent, only that in theory we could get a signal whenever warranted. You suggested that we've been talking about a potential HO signal being several months away, but that's not correct. In Feb. I had warned that the HO would be very unlikely to trigger until near the end of March at the earliest. There were two reasons for that. At the time, the MA on the NYSE was pointing south, so the HO had been invalidated anyway. The other factor was concerning the fact that even if prices had fallen hard in early March, 52 weeks prior to that the market had not yet bottomed and was falling hard back then too. Therefore, the number of new 52 weeks lows would have been hard to achieve. Or in other words, back then if the HO was valid (which it wasn't) it would have taken a very nasty crash situation to have achieved the required number of new lows. Yikes! That's why I was giving those warnings not to rely on the HO.
But as I reported on March 5th, the HO had once again become alive and well since the MA had turned up, and will remain "on the job" as long as it "is" pointed up. Also, since the March 9th lows are finally more than 52 weeks behind us, and 52 weeks ago from today the market had begun to rise in earnest, we're now in the situation where the odds of getting the required number of new 52 week lows are much greater (much more normal odds) than prior to March 9th, 2010. So in actuality, the HO is in great shape right now, is functional and is able to give a signal as soon as all the factors are met.
You had also mentioned the advance-decline line. That indicator itself is not a component of the HO, but in a roundabout way, the individual components of the advance-decline line are included as "independent" parts of the HO. Here is a chart that shows the situation with the new 52 week highs. As you can see, that number can change very quickly and in fact at this very moment is signaling that a correction of some sort is almost certain next week:
stockcharts.com/h-sc/u...
So in summary John, the Hindenberg Omen is alive and well and is fully capable of signaling at any time. I'm not suggesting it will, but only that it is fully armed to do so.
I hope that clears up any misunderstanding. Have a great weekend :-)
p.s.: If I could find a job as a technical analyst, I'd take it in a heartbeat. You know anybody who needs a technician?
It just dawned on me that although I don't get any noise like that since I'm a subscriber to StockCharts, you might be seeing a login page or advertising or something. If there are any issues like that let me know what it is, and I'll adjust the positions of any notes that might be interfered with.
Thanks
I see the chart and all notations. I apologize that my last comment didn't reflect that I had seen the annotated chart the first time you posted it. I did see it (both times) and it was a memory lapse that lead to me to the question I last posted and you so politely answered, even though I was making you repeat yourself.
Thanks for your patience.
On the other hand, if it does give a signal it's still not necessarily panic time although we should all put ourselves on high alert if it does happen. It definitely will not pinpoint the exact high whether we get a correction or something bigger. Actually it's looking for significant little failures that wouldn't otherwise be noticed because under normal day to day viewing they would seem so insignificant as to almost be invisible. I suppose we might think of them as divergences or a kind of quirkiness in the market that shows an underlying weakness is developing. Anyway, right now it's on the job and is working just fine. In regard to the number of new 52 week lows required... as of Mar. 21st, it's not even close with that number sitting at 5. Nothing even on the radar really.
.
After the health bill was passed Sunday evening there were a lot of overnight fears about how the stock markets would react. They certainly reacted differently than what I personally expected. And from what I'm reading, I don't think I'm the only person who's more or less shocked that Wall Street trumpeted the occasion with a resounding rally. I'm wondering who other than GS was buying today because once again it was a green Monday on very little volume. And since the banks often trade 20-40% of the entire day's total between each other in order to give the illusion of good volume, these low volume days are not at all what they appear to be. They're much worse than that. That is not the stuff that a "real" stock market rally or bull market is made of... ever.
It would be logical to expect that on a day when the US markets rallied as hard as they did today, that we would be seeing a whole lot of new 52 week highs and fewer, if any, new 52 week lows. What we got was the opposite.
Last Friday the market produced 225 new 52 week highs. Today we should have seen something in the ballpark of 300-450 new 52 week highs... or perhaps as many as 560 like there were one day last week. Today we got basically ZERO change. Only 229 new 52 week highs were produced today in spite of what would normally be considered a monster day. A shockingly low increase of only 4. And the number of new 52 week lows did not drop to zero but rose 60%. How can we have more new 52 week lows when the market is putting on such a "show"? This can only happen when the market internals are turning to mush. Statistics like this should not be happening on such an "up" day. This is the type of thing that should make the hair on the back of our necks stand up a little bit. It's certainly not enough to warrant any great concern yet but it's a step in that direction. This is exactly what the HO is looking for and I'm just a little ahead of it... trying to anticipate. I'd say that although the HO is still nowhere near giving a signal, it sure felt a tremor.... or at least I felt the tremor. So far, that moving average on the NYSE is still pointed up too, but not by much.
Just put this information in the "for what it's worth" category for now. And take another look at this chart that I'd included in one of the posts above.
stockcharts.com/h-sc/u...
This one component of the HO shown in the chart (new 52 week highs) on its own is certainly flashing a warning. But who knows, maybe the markets will be pumped up another 10% without being given even so much as a 5 minute breather. But it sure doesn't look to me like that's what the market has in store.
For the very few of you who still read these comments whenever they appear, my intention is only to keep you informed and not to try to sway your thinking one way or the other. Obviously you know my bias (based on real technical analysis and real fear), but if nothing else, I just hope that nobody gets really slammed hard on the downside when it comes. Because history shows that the further this market is pumped on basically nothing but vapor and cheer leading, the harder it's going to fall eventually. Even the Wall Street boys and pit traders are now saying that. Even they can't believe this market. Welcome to the Goldman Sachs universe I guess.
But if I can pass along a few tidbits of knowledge about the market internals and the weakness shown within, you will hopefully be ready and benefit in your own way when the SHTF. Things might very well return to normal tomorrow. But if the components of the HO really start to act up, my intention is that you'll know about it before the HO does.
I have created a new blog seekingalpha.com/insta... with a link to the latest comment above. This comment stream is getting rather unwieldy so I hope you can post at the new Insta when you have another comment.
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News and picture summary of St Louis Airport tornado damage at GEI News and also my Instablog
Apr 23, 2011
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News, picture summary of St Louis Airport tornado damage at GEI News and my Instablog http://bit.ly/dVfo22 and http://seekingalpha.com/p/3lpy
Apr 23, 2011
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Most of world finally had an up day Tuesday and all 11 major markets in the Far East are following suit, led by Tokyo and Seoul (+1.8% each)
Apr 20, 2011
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