June 2009

  With the U.S. sinking hopelessly into a black hole of debt, and households facing an avalanche of tax hikes that will at best postpone the nation's day of bankruptcy, we are all hard-pressed at this point to see a way to a happy ending. Lo, along comes an anonymous e-mail that describes a way to solve everyone's debt problems painlessly. If you think the plan can work, I would urge you to forward it to your congressmen. But if you see a fatal flaw in the logic, please drop by the Rick's Picks forum to explain. The forum can be accessed by clicking on the word "Comments" under the headline on today's commentary.  Here's the magical plan to cure America's"Accounts Receivable Crisis":  "It is the month of August, on the shores of the Black Sea . It is raining, and the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.  "Suddenly, a rich tourist comes to town.  "He enters the only hotel, lays a 100-euro note on the reception counter, and goes to inspect the rooms upstairs in order to pick one.  "The hotel proprietor takes the 100-euro note and runs to pay his debt to the butcher.  "The butcher takes the 100-euro note and runs to pay what he owes the pig farmer.  "The pig farmer takes the 100-euro note and runs to pay his debt to his supplier of feed and fuel.  "The supplier of feed and fuel takes the 100-euro note and runs to pay his debt to the town's prostitute that, in these hard times, proffered her 'services' on credit.  "The prostitute take the 100-euro note and runs to the hotel to pay for the rooms she rented when she brought her clients there.  "The hotel proprietor

Bear Rally Provides Cover for Spinmeisters Bailing out the economy and the banking system has been such a brazenly corrupt, mendacious and, ultimately, doomed enterprise that one could almost forget for a moment how very clever the perpetrators are.  If we needed proof that these guys are the slickest behind-the-scenes spin doctors around, consider the following two headlines that ran on successive days atop the Wall Street Journal’s front page. “Rate Rise Clouds Recovery” was the grim news that greeted us last Thursday, on day one.  The article described how, despite the Federal Reserve’s explicit strategy of buying as much Treasury paper as it takes... Read the Rest of the Article | Comments *** Like Gold at $990, but LOVE It at $918 Unh hee-yah! Unh hee-yah! Unh hee-yah!  Gold futures have been pumping iron for more than a year — and so much the better for all of us if they weren’t up to demolishing the $1000 barrier a couple of weeks ago after getting as close as $992 per ounce. We should regard bullion’s tedious ups and downs over the last eighteen months as quiet preparation for an explosive show of strength. When it finally happens, detonation will be so powerful... Read the Rest of the Article | Comments *** What’s Next, an Abby Cohen Sell Signal? Sometimes common sense comes from the most unexpected places. Consider this bearish take on the stock market from - better sit down for this - a Morgan Stanley strategist, Jason Todd: “Equity markets now implicitly need a V-shaped recovery to sustain further gains,” he told a reporter for the Wall Street Journal yesterday. “We do not expect such a recovery and therefore believe the next move is more likely to be down than up.” What’s next? A warning from Abby Cohen,

After yesterday's grunt-fest, the broad averages may downshift to a crawl ahead of the weekend. You can use the modest rally target and for the E-mini S&P to gauge the sincerity of bulls.

The intraday charts are extremely muddled, suggesting a close match between bulls and bears at the moment. The former would gain the upper hand, however, if they can push TLT to 81.09 today.

If the futures fall, the first place where I would recommend aggressive bidding is at _____, a Hidden Pivot derived from the somewhat obscure pattern shown in the chart.  Alternatively, it would take a pop to _____ -- one tick above the look-to-the-left peak shown in the chart -- to turn the  lesser oontraday charts bullish (although not the hourly).

After a promising thrust early in yesterday's session, the futures squandered the opportunity with a move sideways that looked like timid consolidation for a push this morning to _____. That's a Hidden Pivot resistance, and because the rally stalled within a single tick of its ____ midpoint sibling, I'll recommend shorting ____ with a stop-loss as tight as _____.  The trade will remain viable as long as the point 'C' low at ____ is not exceeded to the downside first.

The futures failed to create an impulse leg on the daily chart at the top of the last rally, so we should look for the correction to come down to at least _____. That would represent a 0.618 retracement of the move off last Thursday's lows, but any lower would corroborate our suspicions of latent weakness (i.e., of a bear rally).  Alternatively, a thrust to the upside exceeding _____ would turn the lesser charts bullish and give the futures a shot at, most immediately, _____, or as high as _____ if that number is exceeded on a closing basis.

The U.S. may still be able to cajole China and Japan into buying our soon-to-be-worthless Treasury debt, but members of the so-called BRIC alliance -- Brazil, Russia, India and China -- have been easing toward the escape hatch.   A subscriber of ours whose firm trades in far-flung global markets sent us the following dispatch -- a cautionary note for all who may have been unduly impressed by last week's nominally successful Treasury auction. Our correspondent writes as follows:   "Stop me if you've heard this one.  Four men met in a room (see picture below) yesterday somewhere in Central Russia to discuss how they were going to spend their money. Oh sure, they made a rousing and high-minded statement of their commitment to advance the reform of international financial institutions, asked for a greater voice for emerging and developing countries, and lastly expressed a 'belief' that there is a 'strong need' for a stable, predictable, and more diversified international monetary system. That last clause smacks of diplomatic delicacy over the words that no one seems to want to speak, the unmentionable US Dollar. "Let the impact of this meeting sink in, particularly since it was barely covered by U.S. media and in fact the U.S. was not invited. We think these guys actually talked about where their massive US$ reserves are going and whether they are prepared to continue to support our deficits -- or are they going to spend their Franklins before they lose value acquiring minerals, assets, and businesses world-wide to support growth in their own economies?  I don't know about you, but if I had to read between the lines of the slippery official ministerial poppycock, I'd sure bet that all of them went home thinking that door #2 is a much better option for them. Bottom line: Since I can still buy

I am in Telluride for the Bluegrass Festival but will check in on the markets later tonight, before I turn in.  If there are any interesting opportunities, I'll flag them in Friday's touts, but I won't be in the chat room during the day.