Obama's State of the Union.

Reading the indicators. Feb 2010.

Of the many things that characterize Bull and Bear markets is this: 1. Bull markets tend to ignore bad news and Bear markets tend to ignore good news. A lot of analysts worried about whether we are in a Bull market or a Bear market rally. You can see why that is important.

Since, March of 2009, the Market rallied faster than expected. Now, the Market dropped over 500 points in the DOW and ignored the good economic news of increased GDP. Even though we know that the 5.7% growth in Q4 is a mirage, the DOW has ignored it. Investors (myself included) are shedding all the stocks they can.

The top graph shows the S&P fund over the last 6 months. We see that volume contracted while the rally went on. This would seem to be a contradiction. One analyst commented on a Canadian station that some large entity was manipulating the S&P during after hours buys. We do see an uptick in volume during the S&P 500 decline, which would indicate that large funds are dumping their aggressive holdings and preparing for a down market.

The cycle theory predicts a crash this year with gold later hitting a new high. What economic events would precipitate such stock action?

The next graph down shows initial unemployment claims and we see an uptick in January. Are we heading for a double dip recession? We will not know for a couple of months. Recent testimony in Congress by the economist appointed bu Democrats forecasts anemic economic growth for years and unemployment to stay above 10%. Other data indicate that lack of economic freedom rends to reduce growth and as we enter Obama's Socialist economy our growth is being reduced.

Besides the boneheaded prescriptions of Obama, there are other indicators that forecasts a downturn economically. The current Price to Earnings ration has shot way up and unless earnings improve, stock prices will come down. With the earnings forecast as flat, investors are dumping stocks. There also appears to be a decennial bias against years ending in zero. Years ending in zero produce drops in stock prices. When each decade's average is plotted, stocks advanced in four decades and retreated in eight.

The Chicago Fed published a graph of 80 or so indicators; here you see the 3 month moving average. When this indicator reaches -.70, we are heading into a recession. When this indicator reaches +.70, it forecasts inflation. The indicator is now -.7, signalling a descent into a double dip recession and a drop in the DOW.

Summary. Given that this is a year ending in zero, the historical average is for a down year on the Stock Market. The Chicago National Activity Index indicates as much. Large players are selling on Wall Street. The cycle theory also indicates inflation coming. The FED will create immense amounts of cash to stave off recession and that will initiate hyperinflation. Before that happens, gold and gold stocks will drop along with other stocks, but at some point gold will resume its upward climb.

And that's the way it looks now.

Winter Storm Osama.

It was suggested by Rush that we give names to our Winter storms, so I dub this one Winter Storm Osama. This name is bestowed on the storm on the day that news comes from afar as to how Obama blames GLOBAL WARMING on America and calls for people not to use the dollar and boycott American products. To be honest, this does not sound like Osama bin Laden. It sounds like Algore in Islamic garb.

The Obama regime: falling apart.

Failures mount on every front. The loss of governorships in NJ and VA (states carried by Obama) were dismissed as unimportant. But, the fact that a Republican candidate is within an eyelash of winning the Senate seat formerly occupied by Ted Kennedy is a harbinger of disasters to come. What are these disasters? Aside losing the House?

On the economic front, the economy continues to hobble along toward a double dip recession. In spite of manufactured numbers in govt statistics, the economy continues to shed jobs, spending is out of control and deficits as far as anyone can see threaten the dollar. The govt had to admit that the December job loss was in excess of 400,000 in spite of the phony numbers of November. There is no recovery in sight. In fact, many people can now see that Obama is trying to recreate the Depression when the govt became the chief source of income for millions, who then voted for Democrats for decades to come.

The man-made global warming scam is unraveling as not only the Northern tier of States, but those of the South as well, had seen an invasion of arctic air. And the snow keeps falling.

The War on Terror keeps heating up, in spite of the Obama regime's insistence to treat terrorism as a simple crime and provide captured terrorists with the rights of Americans, instead of treating them as hostile combatants. The Taliban is resurgent in Afghanistan as well as in Western Pakistan, in spite of the groveling by Obama in Egypt, Saudi Arabia and Japan. Somalia and Yemen are warming up as well. And there have been two terrorist acts in the United States, where intelligence failure was due to the efforts of the Obama regime to threaten the intelligence community if they did their jobs.

Iran continues its death dance with nukes and a war grows closer and closer. The US has increased its weapons stockpile in Israel, while the govt of Iran talks about building ten more nuclear production facilities and is in the process on making triggers for atomic bombs. Israel, meanwhile, is conducting a quiet campaign to protect its citizens against chemical and biological weapons. Sunni Arab governments in the Middle East are quietly signalling Israel that they don't want the Shiite government of Iran to posses nukes. Iran is taking steps to stir up proxy wars in S Lebanon and in the West bank and in Afghanistan.

Haiti is unfolding as bad as Hurricane Katrina. Not that it is the fault of the Obama regime (anymore than Katrina was the fault of George Bush), but some problems are just too hard to handle.

This is a trial post

One way to manipulate gold price.

Jeff Nielson describes how governments can try to manipulate gold prices. For us ordinary blokes the lesson is clear: trust the fundamentals. We know that the recent drop in gold price was manufactured by buying up UUP.

Copper: the canary in the inflation mine.

I remember when I used the copper price as a predictor of a breakout of the DOW from the March lows last year. This time, copper is signalling the coming of inflation. While, the regime believes that it can contain inflation by manipulating the zombie banks, the price of copper says otherwise. At the same time, we see the US dollar ending its rally and begin dropping again. The key indicator now is the 50 DMA. When that breaks its upward move, the dollar will begin another slide.

 

A third indicator is the S&P 500. Note that during the rally of November, the S&P actually flattened out toward the middle of the month as the dollar rallied. As the dollar hit top on Dec 21, the S&P 500 turned slightly positive once again. The Stock Market is reaching a possible top even if the dollar begins another drop. Almost everyone is bullish, which means that they are out of money. Stock valuations are way above the standard. On the other hand, the regime is boasting of increased factory orders, a drop in new unemployed and forecast of new hiring in the Spring. For now, the S&P 500 has resumed its climb, but the Market is on shaky grounds.

 

Advice to the Panty Bomber

Advice to the panty bomber.

 

A Nigerian of no name

Tried for a moment of fame

By using attire to set pants afire

To blow up a passenger plane.

His panties got into a bunch

From using an Islamic hunch.

He set off the fuse, but what is the use

If he can’t rape his promised rewards?

The moral of the story is this:

If you can take a good piss,

Be content with that and leave it at that

And give bombing airplanes a miss.

 

© Geezer Bela in Exile

Dec 29, 2009, Mt Vernon, TX.

All but commercial use permitted.

 

This was written after the attempted Christmas bombing. Clearly, I find it incongruous that a young Muslim man would aim for his reward in Islamic Heaven of raping 72 virgins in eternity by first roasting his cajones. Let’s hope he recovers from the ordeal as a punishment for his idiocy and is removed from the gene pool.

 

China Rising.

It was an interesting TV show. We saw a demonstration of the awsome power of Market Economics, as 200 million Chinese left the land and poverty. The numbers simply boggle the mind. What is impressive to me is the emergence of the beautiful Chinese textiles and dresses. Gone are the drab Mao jackets, along with Maoism.

China is undergoing tremendous steps of construction, industrial and scientific leaps. If you are a defeatist or a Socialist, you cower and fume at the inequalities that have developed in China. If you are a Capitalist, you rejoice at the opportunities and the prospect of having 1.5 Billion people come out from under the yoke of Socialism.

But, China is a contradiction that is beginning to be affected by those contradictions. The flourishing Market Economy under the leadership of a potentially oppressive political party is like a building built on quicksand. If the Party leadership changes, the whole thing could unravel. There are other internal contradictions. A large and rural population that is being squeezed economically and encroaching urbanization gives rise to periodic unrest. The inadaquecy of credit for small and medium-sized enterprises is a drag on productivity.

The greatest danger to China's economy is its vulnerability to the growing failure of European and American Socialism. In many ways, China's economy is artificial. It is geared to exporting low-cost merchandise. There was the example of the young woman who runs knitting machines making socks. They work 12 hours per day and earn 60 cents an hour. That is enough to pay for her food, her share of the 10 women dorm and she still sends half of her pay 'home,' the village where she is from. This is not a lifestyle that can be sustained for decades. In fact, she dreams of getting an education and bettering her circumstances. What threatens China though is not the willingness of the people to work hard and accept low wages, but the unwillingness of the West to accept a situation where they can not compete. In the world of unionized work forces, any competition from low-wage employees is considered unfair. And European and American Socialists are aiming to put crippling tariffs on Chinese merchandise. The first item getting this treatment in the US is steel grating, which will be slapped a tariff of up to 150%. Chinese exports can not withstand that sort of punishment.

Another vulnerability of China is industrial accidents. Learning to operate industrial machines is not easy and learning this fast has its dangers.

Still another vulnerability of China is in the area of morality and a spiritual vacum. Capitalism is a tool, like a knife. It can carve a slice of bread or carve someone's face. Only Christianity provides the concept of compassion, forgiveness and love and voluntary accepting moral limits that is needed to temper the rough edges of Capitalism. How fast China accepts Christianity holds its fate.