29 Nov 2012

 Almost back to neutral.  When/if this rolls over, we should see some substantial selling.  It may take a few more weeks for holiday complacency to disappear.  I'll post what I see.

Short term remains overbought.  A negative divergence in the previous peak and the next will be bearish.

I've been thinking about the tax situation.  If indeed taxes do go up (Obamacare, fiscal cliff, etc), it seems it would be better of me to keep paper losses (yes, I do have paper losses even though I've hedged this latest move) to realize them in 2013, and pay 2012 tax rates on my profits this year.  I'd like readers thoughts on this.  I also recognize that because the Federal Reserve loans as much new money into existence as required by the government, I'd guess that it is safer for Washington to continue using the inflation tax, that so few understand, instead of real transparent tax.

"We are grateful to The Washington Post, The New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But, the world is now much more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries."
David Rockefeller at the Bilderberg Meeting in June 1991 in Baden, Germany, as quoted in the 1991 issue of the Hilaire duBerrier Report

28 Nov 2012

 Medium term neither overbought nor oversold.

 Short term remains overbought.  Does not preclude a bounce attempt at a new high.

Long term remains overbought.

I'd like to thank those who regularly visit, and support my sponsors and advertisements.

"The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy."
Abraham Lincoln

27 Nov 2012

 Short term faded some more off of extremely overbought levels.

Medium term is still heading up.

"[It was] the poverty caused by the bad influence of the English bankers on the Parliament which has caused Benjamin Franklin

26 Nov 2012

 Medium term has at least broken its downtrend line.

Short term remains overbought.

Greece Plan M has hatched.  I'm sure it will be a stillborn like the rest of the plans.  The problem is structural.  The government borrowed more than it could ever raise in taxes from an aging / departing / suicide committing populace.  I'm waiting for when people will start to ask why is it normal for a sovereign government to be able to borrow at all.  Why should governments have credit ratings?

I get it, countries have "emergencies" (war, new infrastructure) that they need to borrow for.  However, it becomes a problem when the government gets to declare what is an emergency and rely on their banker buddies to lend the money into existence diluting every saving citizen's wealth.  Let's cut up the credit cards so people can go back to their lives.  Governments only spend what they can raise in tax revenue without needing violence.  It's that simple.

25 Nov 2012

23 Nov 2012

It was only a week or two ago when I was harping that we were oversold in the short term.  Amazing greediness has returned in this light volume week. We are near all time highs in my short term indicator - overbought.  The only two times near here were in August 2011.  Both bounces failed in the short term.


"The only way to deal with an unfree world is to become so absolutely free that your very existence is an act of rebellion."
Albert Camus

21 Nov 2012

"The paper system being founded on public confidence and having of itself no intrinsic value, it is liable to great and sudden fluctuations, thereby rendering property insecure and the wages of labor unsteady and uncertain. The corporations which create the paper money can not be relied upon to keep the circulating medium uniform in amount. In times of prosperity, when confidence is high, they are tempted by the prospect of gain or by the influence of those who hope to profit by it to extend their issues of paper beyond the bounds of discretion and the reasonable demands of business; and when these issues have been pushed on from day to day, until public confidence is at length shaken, then a reaction takes place, and they immediately withdraw the credits they have given, suddenly curtail their issues, and produce an unexpected and ruinous contraction of the circulating medium, which is felt by the whole community. The banks by this means save themselves, and the mischievous consequences of their imprudence or cupidity are visited upon the public. Nor does the evil stop here. These ebbs and flows in the currency and these indiscreet extensions of credit naturally engender a spirit of speculation injurious to the habits and character of the people. We have already seen its effects in the wild spirit of speculation in the public lands and various kinds of stock which within the last year or two seized upon such a multitude of our citizens and threatened to pervade all classes of society and to withdraw their attention from the sober pursuits of honest industry. It is not by encouraging this spirit that we shall best preserve public virtue and promote the true interests of our country; but if your currency continues as exclusively paper as it now is, it will foster this eager desire to amass wealth without labor; it will multiply the number of dependents on bank accommodations and bank favors; the temptation to obtain money at any sacrifice will become stronger and stronger, and inevitably lead to corruption, which will find its way into your public councils and destroy at no distant day the purity of your Government."
President Andrew Jackson, in his farewell address of March 4, 1837 Source

20 Nov 2012

"Everyone loves an early inflation. The effects at the beginning of inflation are all good. There is steepened money expansion, rising government spending, increased government budget deficits, booming stock markets, and spectacular general prosperity, all in the midst of temporarily stable prices. Everyone benefits, and no one pays. That is the early part of the cycle. In the later inflation, on the other hand, the effects are all bad. The government may steadily increase the money inflation in order to stave off the latter effects, but the latter effects patiently wait. In the terminal inflation, there is faltering prosperity, tightness of money, falling stock markets, rising taxes, still larger government deficits, and still roaring money expansion, now accompanied by soaring prices and an ineffectiveness of all traditional remedies. Everyone pays and no one benefits. That is the full cycle of every inflation."
...
"Until 1922 and the very brink of collapse, Germans and especially foreign investors were absorbing marks in huge quantities. Only the international reputation of the Reichsmark, the faith that an economic giant like Germany could not fail, made this possible. The storage factor caused by the investors willingness to save marks kept the marks from being dumped immediately into the markets, and thereby for a long while held prices in check. The precise moment when the inflation turned sharply upward, toward its vertical climb, was undoubtedly timed by no event, but by the dawning psychological awareness of the German and foreign investor that Germany was not going to back its money. With that, the rush to get out of the mark was on. Like a damn bursting, the seas of marks flooded into the markets and drove prices beyond all bounds. The German government strove mightily to outflood the sea. The sea of marks which had been stored up by Germans and especially by trusting foreigners flooded forth and fought to buy into other investments, foreign currencies, tangible goods, almost anything but marks."
Jens O. Parssons, "Dying of Money: Lessons of the Great German & American Inflations"

20 Nov 2012

I've been on the road so its prevented me posting a lot.  Sorry.  Looks like the oversold conditions of last week have evolved into a bounce.

 Short term isn't overbought.

Medium term remains oversold.

 Long term is still at upper bounds.

"Now there are indications that two technical fallacies may have affected the policy of your administration. The first relates to the part played in recovery by rising prices. Rising prices are to be welcomed because they are usually a symptom of rising output and employment. When more purchasing power is spent, one expects rising output at rising prices. Since there cannot be rising output without rising prices, it is essential to ensure that the recovery shall not be held back by the insufficiency of the supply of money to support the increased monetary turn-over. But there is much less to be said in favour of rising prices, if they are brought about at the expense of rising output. Some debtors may be helped, but the national recovery as a whole will be retarded. Thus rising prices caused by deliberately increasing prime costs or by restricting output have a vastly inferior value to rising prices which are the natural result of an increase in the nation's purchasing power."
"I do not mean to impugn the social justice and social expediency of the redistribution of incomes aimed at by N.I.R.A. and by the various schemes for agricultural restriction. The latter, in particular, I should strongly support in principle. But too much emphasis on the remedial value of a higher price-level as an object in itself may lead to serious misapprehension as to the part which prices can play in the technique of recovery. The stimulation of output by increasing aggregate purchasing power is the right way to get prices up; and not the other way round."
John Maynard Keynes, in a letter to F.D.R. in 1933

15 Nov 2012

"Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services."
Ben Bernanke, the current (2008) Chairman of the Board of Governors of the Federal Reserve Bank of the United States, in a speech he made on November 21, 2002 before the National Economists Club in Washington, D.C.

14 Nov 2012

As you can see, a lot of the timeframes are starting to become oversold.  Be wary of taking new shorts.

"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls . . . become 'profiteers', who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished not less than the proletariat. As the inflation proceeds . . . all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless."
-- John Maynard Keynes, "The Economic Consequences of the Peace", pages 220-223 (1919).

13 Nov 2012

Short term could be headed lower.  VIX is disagreeing with this signal as it also headed lower today.

 Medium term decreased today.

Notice how there is usually a declining, then a flattening and slight rise near the peaks.  Will we have a Santa Rally?

"The hardest thing for any liberator to face is the fact that a large percentage of the people he was trying to free wanted desperately to be slaves. And it’s broken the heart of every liberator to date. To date. Hardly any exception. A man would have to be awfully stupid not to see that. But he would be pretty dull if he didn’t see this too: Sure, sure – but the guys he did liberate were worth liberating."
L. Ron Hubbard

12 Nov 2012

"Whereas the truth is that the State in which the rulers are most reluctant to govern is always the best and most quietly governed, and the State in which they are most eager, the worst...You must contrive for your future rulers another and a better life than that of a ruler, and then you may have a well-ordered State; for only in the State which offers this, will they rule who are truly rich, not in silver and gold, but in virtue and wisdom, which are the true blessings of life.

Whereas if they go to the administration of public affairs, poor and hungering after their own private advantage, thinking that hence they are to snatch the chief good, order there can never be; for they will be fighting about office, and the civil and domestic broils which thus arise will be the ruin of the rulers themselves and of the whole State."

Plato, The Republic"

10 Nov 2012

 None of the long term indicators are oversold.

 The short and medium term failed to hold a positive divergence from the previous low.

This is the closest to being the same.

Medium term shows the negative divergence well.  I wouldn't quite say this is oversold yet either.

I added some longer term views of my indicators to show 2007 and 2008.

Whenever the economic life of a nation becomes precarious, the central government is forced to assume additional responsibilities for the general welfare. It must work out elaborate plans for dealing with a critical situation; it must impose ever greater restrictions upon the activities of its subjects; and if, as is very likely, worsening economic conditions result in political unrest, or open rebellion, the central government must intervene to preserve public order and its own authority. More and more power is thus concentrated in the hands of the executives and their bureaucratic managers. But the nature of power is such that even those who have not sought it, but have had it forced upon them, tend to acquire a taste for more. "Lead us not into temptation," we pray -- and with good reason; for when human beings are tempted too enticingly or too long, they generally yield. A democratic constitution is a device for preventing the local rulers from yielding to those particularly dangerous temptations that arise when too much power is concentrated in too few hands."
Aldous Huxley, Brave New World Revisited

8 Nov 2012

Medium and short term are still a little above previous lows.

"Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked: 'Account Overdrawn.'"
Ayn Rand

7 Nov 2012

 There are quite a few positive divergences from the previous lows in my indicators.  Now we just wait and see where they bottom.

 This gives you a better view in the short term.

And the medium term.

Wouldn't it be way too obvious if the stock market just sold off as soon as the election was over?  We'll see.  I'm not buying or covering yet, but I'd be cautious with new short sales.  On the bear side, the US banks (C, BAC) finally broke their uptrend lines.

"My recent adventures have made me quite the philosopher, especially at night, when I hear

naught but the stream grinding boulders into pebbles through an unhurried eternity My

thoughts flow thus. Scholars discern motions in history & formulate these motions into rules

that govern the rises & falls of civilizations. My belief runs contrary, however. To wit: history

admits no rules; only outcomes.

What precipitates outcomes? Vicious acts & virtuous acts.

What precipitates acts? Belief.

Belief is both prize & battlefield, within the mind & in the mind’s mirror, the world. If we

believe humanity is a ladder of tribes, a colosseum of confrontation, exploitation & bestiality,

such a humanity is surely brought into being, & history’s Horroxes, Boer-haaves & Gooses

shall prevail. You & I, the moneyed, the privileged, the fortunate, shall not fare so badly in this

world, provided our luck holds. What of it if our consciences itch? Why undermine the

dominance of our race, our gunships, our heritage & our legacy? Why fight the “natural” (oh,

weaselly word!) order of things?

Why? Because of this:—one fine day, a purely predatory world shall consume itself. Yes, the

Devil shall take the hindmost until the foremost is the hindmost. In an individual, selfishness

uglifies the soul; for the human species, selfishness is extinction.

Is this the doom written within our nature?

If we believe that humanity may transcend tooth & claw, if we believe divers races & creeds can

share this world as peaceably as the orphans share their candlenut tree, if we believe leaders

must be just, violence muzzled, power accountable & the riches of the Earth & its Oceans

shared equitably, such a world will come to pass. I am not deceived. It is the hardest of worlds

to make real. Torturous advances won over generations can be lost by a single stroke of a

myopic president’s pen or a vainglorious general’s sword.

A life spent shaping a world I want Jackson to inherit, not one I fear Jackson shall inherit, this

strikes me as a life worth the living. Upon my return to San Francisco, I shall pledge myself to

the Abolitionist cause, because I owe my life to a self-freed slave & because I must begin

somewhere.

I hear my father-in-law’s response: “Oho, fine, Whiggish sentiments, Adam. But don’t tell me

about justice! Ride to Tennessee on an ass & convince the rednecks that they are merely whitewashed

negroes & their negroes are black-washed Whites! Sail to the Old World, tell ’em their

imperial slaves’ rights are as inalienable as the Queen of Belgium’s! Oh, you’ll grow hoarse,

poor & gray in caucuses! You’ll be spat on, shot at, lynched, pacified with medals, spurned by

backwoodsmen! Crucified! Naïve, dreaming Adam. He who would do battle with the manyheaded

hydra of human nature must pay a world of pain & his family must pay it along with

him! & only as you gasp your dying breath shall you understand, your life amounted to no

more than one drop in a limitless ocean!” Yet what is any ocean but a multitude of drops?

* Here my father’s handwriting slips into spasmodic illegibility. —J.E."

David Mitchell, Cloud Atlas.  I recommend this book.

6 Nov 2012

 To add some needed perspective on the recent bounce, see the above long term chart.

 The medium term is still rising.

Short term is trying to rally from a not very settled inflection point.  We will see if it can last.

I saw that $6B was spent on the election between the two candidates.  This is a large number and disgusting, but it also shows what a great investment buying the presidency is.  Whoever wins will get to hand out the unborn's money to their friends at $4Trillion per year.  Yes, of course, you will say one of the teams would spend less than the other, but try spending a lot less and the economy (measured in phony nominal dollars) would collapse without massive corresponding tax cuts and incentives to invest.

Whoever wins will likely continue with posturing and maybe bombing Iran, continue putting blood on the hands of every US taxpayer, continue plundering the wealth of the world and future generations, continue to keep us alarmed with endless boogeymen and offering 'solutions' that we pay for, continue to keep the two teams debating over who has better policies on abortion and gay marriage, continue the path to the loss of the reserve currency (it is going to happen), and fail to listen or represent the populace anyways.  In this age of technology, why do we still have a massive centralized representative government that is easy to lobby for favors?  It also seems like a security disadvantage, but we aren't concerned with real threats.

5 Nov 2012

 Roll over and down or continue up?

Trying to carve out a low here and go up?

Both scenarios seem possible.  I will not speculate on what certain election results will mean for the short or longer term. We will just watch to see what the market gives us.


No man does anything from a single motive.
Samuel Taylor Coleridge

3 Nov 2012

"This Act establishes the most gigantic trust on earth. When the President signs this bill, the invisible government by the Monetary Power will be legalized. The people may not know it immediately, but the day of reckoning is only a few years removed. The trusts will soon realize that they have gone too far even for their own good. The people must make a declaration of independence to relieve themselves from the Monetary Power. This they will be able to do by taking control of Congress. Wall Streeters could not cheat us if you Senators and Representatives did not make a humbug of Congress... The greatest crime of Congress is its currency system. The worst legislative crime of the ages is perpetrated by this banking bill. The caucus and the party bosses have again operated and prevented the people from getting the benefit of their own government."
Charles A. Lindbergh, Sr. (1859-1924) Congressman (R-MN), father of famous aviator Source: December 22, 1913, the day before President Woodrow Wilson signed the Federal Reserve Act, in a speech before the House of Representatives