For T-Bonds, a Crucial Test of Support Looms


Are T-Bond futures breaking down?  It’s important that we get it right, since, if they are and market forces are about to lay bare the biggest financial shell game in history, we want to be watching from the sidelines when the inevitable panic erupts.  From a technical standpoint, the key number to watch is 143^29, a “Hidden Pivot” derived from our proprietary runes. If this support were to fail we would infer that the selloff had significantly further to go, presumably to at least 141^09, before bulls would have a chance to reverse the tide. By then, however, it could be too late to calm the herd. Interest rates on the long bond would be up by about 25 basis points, to around 3.25 percent, and although that would still be shy of the 3.50 peak recorded last spring, it could suffice to unsettle equity markets and squash a a delicate uptick in real estate that has relied on massive infusions of credit created out of thin air by the Federal Reserve. At the very least, it would give pause to share buyers who have so far gotten 2013 off to a rousing start.

To be sure, T-Bonds have pulled out of tail spins before. Early in 2011, they reversed a nasty decline that had threatened to derail the banking system’s recovery from the Great Financial Crash.  And they did so again later that year, saving the day for a mortgage market that might easily have relapsed. This time, however, although T-Bond futures are not in a steep decline, weakness has persisted since summer. Because of this, the markets are in poor shape to withstand whatever shenanigans Obama and the Democrats attempt to pull in lifting the debt ceiling.  In fact, the carelessness with which the subject is being debated on Capitol Hill could itself be the catalyst that finally causes T-bonds to “revolt” as buyers other than the Fed itself desert the Treasury’s auctions. We should all want to be long gold and silver when that day finally arrives, as it inevitably must.

Whatever happens, we’ll be watching the charts closely when the March T-Bond contract comes down to 143^29, an occurrence that we would rate as all but certain over the next 2-3 weeks. A breach of that “hidden” support by more than two or three ticks —  or still worse, a close beneath it — would be warning of worse to come.   Click here for a no-risk trial subscription to Rick’s Picks that will give you access to our analysis in real time, as well as to a 24/7 chat room that draws experienced traders from around the world.

Comments on this entry are closed. February 6, 2013, 6:43 am

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Redwilldanaher January 24, 2013, 7:23 am

Be sure to avoid this link. It is dangerous because it shows what eventually happens when people become afraid of doing the right thing in favour of not rocking the boat.

Jill January 24, 2013, 1:51 am

Congrats, Rick, on your AAPL prediction that it had further to fall. Earnings call buyers are getting wiped out after hours today.

Chris T. January 24, 2013, 12:09 am


” On one hand you blame government as a hand picked group of powerful men determined to destroy and control its citizens, while you also blame the same organization that gets soppy eyed over the poor and less fortunate.”

This is not a question of on the one hand and the other, its ALL THE SAME HAND!

The soppy-eyed as you call it is just a front to placate that sector of society needed to move a democracy ON THE SURFACE in the way these oligarchs want:
ie, obtaining the votes from enough people to APPEAR legitimate.

Yes, that costs SOMETHING, but those costs PALE in comparison to what is gained by this system.

And AGAIN you are clueless:
it is exactly this development, going back at least to Lincoln, with little interruption since (from a feeble, yet stronger than ever since) opposition.

But it already reared its head with the First Banks of the USA.
Ultimately its Hamilton’s vision.

And Jeffereson and Madison warned about it 200 years ago, and described pretty much what would happen.

They TRIED to engineer a way to prevent this, but knew that “ever vigilance” would be needed still.

Ssd to say that these brilliant men were prescient enough to see what COULD happen, but not prescient enough to KNOW that it WOULD.

If this is just “conspiracising” (to use W talk), how come Jefferson could so accurately predict such a possibility?

Redwilldanaher January 24, 2013, 6:10 am

Good job Chris.

Chris T. January 24, 2013, 12:01 am

“Rick’s Picks Forum now featuring the indefatigable GARY L. and his realtime Theater of the Absurd supporting players.”

The sad part is, and that is true of so many progressives, that they are intelligent, yet clueless.
Gary is no different, he seems like an intelligent person from his posts, if totally misguided and so on.

At least if we knew that all of these people were dumb…
Of course a small section, is, as you say, malevolent:
they know the falsehoods they speak to be so, but the majority actually believes the crap they say

Redwilldanaher January 24, 2013, 6:11 am

If you are correct then maybe “delusional” fits better…

John Jay January 23, 2013, 8:29 pm

From Zero Hedge:

“Unquestionably, there is progress. The average American now pays twice as much in taxes as he formerly got in wages.”

-H.L. Mencken
What a wit Mencken was!

Rick Ackerman January 23, 2013, 10:26 pm

Mencken got a decal on my car bumper with this observation: “Every decent man is ashamed of the government he lives under.”

redwilldanaher January 23, 2013, 7:18 pm

There are literally countless reasons why I and many others do not respond to Gary in detail.

Gary’s main line of insanity and denial continues to focus on “this is as real as it has been at any other time”. I simply drop by from time to time tacitly seeking Rick’s grace to drop overwhelming evidence to the contrary on Gary’s grave via link and c & ps.

I guess I’m supposed to apologize for asking you to do the reading on your own???????

Oregon January 23, 2013, 8:37 pm

Gary’s focus is that “making money in this market is as real as it has been at any other time.” And your line of insanity and denial continues to be “even if you prove that you are making money in a rigged market I don’t care because the fact that it’s a rigged market is more important than you(Gary) making money; unless you(Gary) lose money, then I’m going to laugh my ass off and tell you what a stupid f-ing idiot you are, just like I tell you when you are making money.

So the meat-like substance in my cheeseburger is that if you are not going to put some points on the board like post your entry points, strategies, expectations, etc., or disprove Gary making money by being long in the CURRENT market, then why don’t you at least stop talking shit.

I have been at the game long enough to appreciate that while I agree with all of your points about what a rigged world we live in, and disagree with most all of Gary’s politics, that doesn’t change the fact he could be making money in this market and you could be looking like an obsessive ass.

Redwilldanaher January 24, 2013, 7:00 am

Oregon, you’re laughable. A complete misreading as I suspected. My issue with the Gary/Mario hasn’t been prediction oriented at all. You have either confused me with someone else or you’re just another Cramer type thinker. Whatever the case, I won’t apologise for providing proof that things are way more rigged than Gary and company are willing to acknowledge. If you find that dropping a few links in a forum like this from time to time is obsessive, I think you need to pull out your psych textbook for a refresher. Gary has evaded for years here. You obviously have no appreciation for the backstory. Ask Rick if you won’t take it from me. I am shocked at how poor the reading comprehension is here at this point. Anytime any of you want to argue over the purity of this bull market, please let me know and I will oblige you.

Oregon January 23, 2013, 6:41 pm

Judas Priest, red!
You are obviously an intelligent, articulate person. I have enjoyed your commentary many times in the past. But this thing with you against Gary is like watching a one on one basketball game where he just backs you down, backs you down, posts up and makes lay-ins all day long. And you are out there shooting from the first row, missing everything, but talking all kinds of trash. “What, you just gonna keep making those two footers?” “Ain’t you got an outside shot Gary?” “When I start hit’n the three ball you’re gonna be in trouble.”

You may be a better player… But check out the scoreboard every once in a while.

redwilldanaher January 23, 2013, 7:13 pm

Thanks for the laugh Oregon. To make a cheeseburger you need meat. I don’t see a cheeseburger in your commentary. Am I missing something.

My guess is that you’ve come to this game late and have no appreciation for the back story…

Chris T. January 23, 2013, 9:49 am

Gary L writes:

“The people in power from the early 80’s on, controlling the president and congress were wall street and financial CEO’s. They had exclusive power.”

You’ve GOT to be KIDDING!!!!!
Are you THIS clueless?

You put that is if it were a sea-change of a sort, something new and causal.
And without you stating it directly, you surely believe that this thus is all Ronnies fault.


No doubt you;ve heard of FDR?
What did he do before he started his path into politics?
Just who WERE those people that drafted him, smoothed his road, and bought him the last job he held?

Or stepping back another 20 years:
who were the people pulling Wilson’s strings?
Who wrote the Federal Reserve Act?

I am singling the D’s out here on purpose, but in fact, the Republicans are no better.

But it has been as you propose for many many decades, exactly (and to reiterate my posts from last week) so that this ruling oligarchy could prey on the productive sector of our country, the middle class, stealing from us by inflation and their other means.

Their MOST ENABLING tools were the do-good, but totally CLUELESS, progressives.
More harmful these than any others:
they had the courage of their convictions, and that smugness brooks no dissent.
You seem to be one of those too.

redwilldanaher January 23, 2013, 4:05 pm

Rick’s Picks Forum now featuring the indefatigable GARY L. and his realtime Theater of the Absurd supporting players.

redwilldanaher January 23, 2013, 4:17 pm

Yet behind the “do-good” useful idiot fool progressives were and remain malevolent forces…

gary leibowitz January 23, 2013, 10:37 pm

Seriously these extremes happen on a cyclical basis, just like all things ebb and flow. You explain everything away as all evil all the time. I use a common sense approach that believes government control, or lack of, is a macrocosm of an individuals human nature.

To listen to your rant we must have had an unbearable life all these hundreds of years, under ever oppressive rule. Gimme a break! On one hand you blame government as a hand picked group of powerful men determined to destroy and control its citizens, while you also blame the same organization that gets soppy eyed over the poor and less fortunate.

All complacent individuals, as governments, left to their own calling, will either excel in good or evil. The easiest road is usually the one where material rewards overshadow the spiritual one.

The only reason we had the glorious 50’s to look back upon as a shinning example of democracy at its best is because the war destroyed all competition. Men were no more or less greedy, but the cumulative affect of decades of power breeds complacency and lax rule of law. I bring up Ronnie simply because it was the start of corporate excessive control. Former Merrill Lynch CEO litterally had Ronnies ear. This was the start of an era that replaced cash with credit cards, and so it goes. If you look at the stock market and the unheard of move off the 1982 lows till present day, this has not been done before. Yes a new era. Extreme complacency and with it discarded laws to protect us from excess greed.

mario January 24, 2013, 3:45 am


first of all, there are many positives along with the worrisome negatives which exist.

Second, I have often read Gary’s acknowledgements that such negatives do exist and will at some point come to bear.

Third, Rick’s recent reference to Taleb’s Black Swan solidifies this point; which, where, when of the several extreme issues which exist will go nuclear and tool the markets we simply can’t know, but keep a vigilant eye to be as far ahead of the curve as possible.

Fourth, you seem to HATE people who take a moment to note the positive, reasonable economic news which exists and often it seems to me that’s all Gary is doing.

Fifth, the only thing more tiresome than Gary arguing the positives that I read on this board is
Is your vile negativity and insults.

Why don’t you invest in a FL condo for 50k and get yourself a net annual return of 10 to 15% on the rental income. That is available to you right now. And so is spending six months per year somewhere in Asia earning at least $30/hr cash teaching business English to employed professional Chinese folks.

The world around you is transforming, with a lot of negatives particularly hitting America, yet your your spewing of vile to Gary as a scapegoat is way over the top. Find a more useful outlet or take a freakin’ holiday will ya?

Cheers, Mario

Redwilldanaher January 24, 2013, 6:45 am

In case you’ve lost sight of it uh guys, this is a forum. It amazes me how you’ve read so many things that aren’t there. There are stock market levels and then there are things that are really important. You both have a problem with me because I value the truth and you’d rather not face it. It’s people like you that make the slide into dystopia possible. If you even just read zerohedge regularly you’d realise that corruption and central planning and propaganda are 3 standard deviations to the wind but my guess you choose to avoid doing so because truth is what you fear most. It’s a lot easier to live in a world where you are blissful to be ruled by sociopaths as long as they’re good at controlling the contrived reality they’re willing to let you see. It also has the added benefit of allowing you to live the good life while ignoring the the decay around you. Understand that I refer to societal and moral decay. You are both apologists and deniers and you effectively have chosen to cheer on the descent into global totalitarianism because a nearly 100% contrived surface view of things looks good to you. Keep hitching your wagon to the statists, I am sure you’ll experience great personal enrichment from it. Some of us won’t validate your embrace of malevolent overlords and the fact that we are relentless in our resistance troubles you. I challenge either of you to find one instance where I said that a rally couldn’t happen or where I predicted a massive decline. If you can’t do it, then please stop the propaganda and mislabeling. I wrote a piece for Rick several years ago that actually concluded that since tptb can change the rules at any time and that a free press effectively no longer exists, that anything was possible, yes even new highs.

The bottom line is that neither one of you do any research regarding the massive fraud that underpins all that you see. You are content to cheer it on because you are comfortable with it, it works for you. I am not. I simply want to emancipate my family from it in some real and permanent way and then to just be left alone. I don’t hate either of you, your rationalising and apologising just leave me feeling sick. As does the fact that you both seem to have already forgotten the 20th century…

mario January 24, 2013, 2:26 pm

You value the truth and we’d rather not face it?….what planet are you on saying something as idiotic , inaccurate and incorrect as that…? Blissful? Who? Unaware of and ignoring the decay? Who? Are you joking? My eyes are wide open about all the good and all the bad all across the globe, your time is better spent than sparring with me if you’re going to continue spewing asinine, baseless accusations …bottom line is your pisspoor attitude and misplaced aggression… your turn…

Cheers, Mario

mario January 24, 2013, 2:44 pm

Actually your accusations make me sick, you really need to go back and read my posts which more than acknowledge the existence the malevolent overlords and their games destroying the lives of lesser people et al; its been happening throughout history and its very unfortunate. Your problem it seems all you can think about, excluding anything good. , that’s a very bad and one sided place to be… Stop the Don Quixote and start responding as best you can to what reality IS which presents opportunity amongst the continuing ruins… You must have much better things to do than senselessly attack people like me and Gary and saying things about us which are completely untrue….as much as you worry about your family and future, so am I and that’s why in fact for example we have determined that our son will go to elementary school here in China rather than in the U.S. which in our list of pros and cons for both places, is a far worse place on balance to raise him …

redwilldanaher January 24, 2013, 4:13 pm

Good Mario. I’m glad that you are concerned for your sons’s future.

Aside from that, I lost a lot of respect for your commentary when you reflexively went for people’s arms literally like a dog that was being wagged by the tale (sp intentional).

Where is the real risk Mario regarding death from guns?

Does it still make sense in your world to punish innocent, law-abiding citizens and to leave hundreds of millions defenseless and unable to hunt for food effectively if the grid breaks down because deranged lunatics generally opt for firearms over bombs and gassing?

If need be I will bring all the statistics regarding 20th century mass murder by the STATE to bear on this. Do you need me to do that for you? Since you are now apparently acknowledging the decay and descent, does it now make sense to you to own and possess a long rifle? Even just for purposes of emergency hunting? Have you looked into the intentionally farcical media “reporting” and the timing of Sandy Hook? Do you know anything about operation mockingbird? Do you realize that Bernaysian reporting tactics are employed at all of these “events” for the specific purpose of producing “confused minds” because confused minds turn OFF to the situation?

If the Chinese were able to produce Tiananmen Square part 2 tomorrow, which side would you be rooting for? I would almost pay you to answer this question honestly because I don’t care at all for your warm and fuzzy portrayal of the superficial surface level life in China or anywhere else. I don’t like sugar coated Statism anywhere so don’t take it personally.

I also don’t care for your dismissal of secession and your treatment of it as if it is some kind of kooky idea. Did you advise the breakaway republics the same way months before the breakup of the Soviet Bloc?

How would history have been altered if Colonial Americans just rolled over too?

Vile now equals figurative language? Gary has made a career @ Rick’s carving out a spot for himself at the evasion table. Try to isolate something with him, as dozens have tried, and he’ll simply step around it and espouse even more crap that ultimately dooms us all. That’s a disingenuous tool in my book. That’s how I see it.

As for you, my take is that you’re a cheerful, expediency-oriented statist that has “go with the flow” / “can’t fight city hall” mentality because what you see immediately in front of you seems like its working. You’re much more about the collective than you are about respecting individual sovereignty. To each his own. I know where they are trying to take us and I know that your “get with the program” approach will only help them take us there.

I have never had an issue with making money in the markets in either direction. That’s the entire point of trading. I’ve been doing that professionally since 1992. My issue has always been “dont’ try to tell us that this is legitimate” when the market is ran up insanely. So far I have been right each and every time about the legitimacy of these managed bull runs. Care to tell me where the Nikkei is these days? Where NAZ 5000 went to? Why the DOW crashed massively 3 times in the past decade or so? Why real estate has gotten annihilated? Each and every time lazy people that don’t do any research told me that I was crazy to question the validity of these markets because of the “strength” they saw with their own eyes. Trading daily and from time to time positioning yourself for sea changes are 2 different things. I do both and I also appreciate the fact, as Rick notes from time to time, that the charade could evaporate overnight. Are you concerned at all regarding $700 trillion in unregulated derivatives bets guys or does out of sight out of mind work in that space as well? I could keep this going for days because I’ve taken my profession seriously and done the research that most people will not because the NFL is just so damned important. BTW, who won the stupid bowl last year? I have to wrap up here but…

BTW, When did peacefully opposing the boot on a man’s face become windmill fighting? I didn’t get that memo.

Answer this for me: What hasn’t the STATE and the International Banksters lied to you about and mishandled? Please tell me why you want to bank on them holding everything together. Please tell me why you prefer that to continue instead of trying to really live in freedom.

mario cavolo January 25, 2013, 1:56 pm

Thanks for your last reply Wayne. I have to say that here you came pretty close to describing my attitude and it makes me think on it further…..”As for you, my take is that you’re a cheerful, expediency-oriented statist that has “go with the flow” / “can’t fight city hall” mentality because what you see immediately in front of you seems like its working. You’re much more about the collective than you are about respecting individual sovereignty.”

…I do get the impression throughout history that the “common” citizens of a country are indeed at the mercy of their overlords. There was some kind of quote of which I can’t remember the source like >…”I’ll take a well run totalitarian state over a poorly run democracy anytime”…or something like that. I happen to agree. Even now more than ever, citizens are at the mercy of their govt and if that govt turns against them, a rifle, or an AK47 will have two results:

1. It will be like holding a Q-tip and no more. The might of a govt’s military intent on controlling you will vastly overcome your defense. That is obvious to me, whereas you wish to die guns ablazing, ok, I get it. But not me. My choice is to escape if and when possible to a place where such violence and guns don’t exist. America is the most violent country in the world by a factor of SIX to the second country on the list!…guns in private hands are huge part of that in synch with the social and moral decay which you rightly speak of.

2. The possession of all those guns in private hands will lead to further violent anarchy and blood, even amongst the citizens themselves as they faction and fight along. The right to defend yourself with arms in today’s world is irrelevant to when the writers of the Constitution thought it well. Though, you hit the mark well with your point about hunting for food.

I am still reading Penguin Book of World History by J.M. Roberts, an incredible and tough read. Its all the same right now. The rich and powerful manipulating in every way possible to control the common folks more than anything for their own gain…I get it, I get it. I just think there ain’t much I can do about it except move to somewhere that can work. I pray the direction of the Chinese govt continues improving, because if it goes the other way, you are absolutely right, it will probably lead to serious problems my family and I will have to face. How the hell owning a rifle would make any difference against the Chinese police deciding to scrutinize the details of my life and work, or kick foreigners out of the country beats me…there ain’t a damn thing I could do about it if and when that stuff might start happening. Ditto for developments in the wrong direction in the U.S. ….There are 150 countries across the world and lots of jet planes to move on…

Even in the political process, the overlords have it locked up against the common citizens to truly get involved and make a difference…Naomi Wolf’s excellent Give Me Liberty spells it out well, yea go protest so you feel like you’re making a difference, meanwhile the overlords keep playing their games…I don’t think my position makes me a pussy, and I am as disgusted and worried and scared for the future as you with all those things you mention I know are going on, hell, I teach clients communication/media/PR language so I know exactly what it is!, .I think I’m realistic about the way things are and what my options are..that is to say, realistically, severely and unfortunately limited in the face of a govt that goes against me. Someday, facing something that pisses me off so badly I might flip sides and go on the convicted warpath and die for the cause…such as if someone threatened my family, etc… there is that hot-blooded side to me which occassionally “goes off” , who would thoroughly shred anyone who might cross the line, etc. But these issues that you speak of Wayne are not ones of which I am going to take up my cross and gun and march with…

Cheers, Mario

mario cavolo January 23, 2013, 8:57 am

Hi All,

It seems to me based on history, we need a particular crisis or bubble burst to see another major market decline. What might it be, who the heck knows. Meanwhile, in the U.S. the elitists have gotten richer by relative degrees unimaginable, especially in the past five years, while the lower/middle class pressures have risen for over two decades. So what’s next is obvious, should happen and needs to happen. The rich should start paying a higher share of the taxes and other expenses (as they sure as heck can afford to by a larger margin than ever) and the entitlements and breaks to support the raped and pillaged middle class will increase as they are in fact, needed to support that sector of the population. The landscape of the U.S. , for better and worse, continues its transformation. While I never think of such matters politically, it is my understanding that such a position is labeled as democratic rather than republican, and is the direction Obama is taking that country.

Meanwhile, and very fortunately, the rise of Asia led by China is well in hand, such growth in that region supports the U.S. economy in many ways, regardless of how we had arrived at this state of affairs in global history. U.S. exports are on the rise, with record levels to China and that is the kind of news we should all hope to keep hearing. Finally, inflation here in China continues rampant, far higher than in the U.S. My favorite sandalwood shower soap, Shanghai Bee & Flower, was 3rmb a bar a few years earlier, its up to 4.8rmb. That’s well representative of the cost of living here…

Relating it all to T-bonds and rates…?…with such massive debt levels, any semblance of global economic sanity and stability depends on continuing low interest rates; this has been espoused by many, not stating anything beyond obvious.

Cheers, Mario

gary leibowitz January 23, 2013, 11:20 pm

Fighting windmills along side a few compatriots. My view is slightly different. I think the overwhelming pressure to draw in spending will win the day. That day should be before May 18th. I also believe interest rates on the t-bond can go one full point higher and not cause an immediate crash, if its in line with real economic growth. On all other things we are in agreement. Looks like China has not yet given up the battle to expand and inflate. That will help here, but for how long?

C.C. January 23, 2013, 8:00 am

If the proxy for positive sentiment & happy talk is the S&P/Dow – and we are certainly headed for higher-highs, how does this square with current (real) unemployment? What was the broadly accepted U3 number in 2006 by comparison? Does something not quite feel right to you – that we are rocketing past 5 year highs, but the runway below has been bombed out…?

bc January 23, 2013, 12:48 am

A currency crisis is just another term for a run on a central bank. We have little experience with this compared to other banana republics. In the modern world it happens literally overnight or over a weekend. People wake up on Monday to find all their money is gone, phtt. Study Argentina for an example of how it is done. It isn’t done by just wiping out bond holders though that happens too. Gary, if you mention FDIC insurance like that will save us you deserve to be crushed.

gary leibowitz January 23, 2013, 6:17 am

Why would you expect a currency crisis now? The talk on Washington is austerity and how to cut spending and increase revenue to stem the absurd debt levels. China appears to be heating up again. Why would our currency go before the EU?

I get it! The eventual outcome, no matter how slick politicians are will eventually fail. The million dollar qustion is when? I was blasted over a year ago to suggest earnings will be in a sweet spot even as the economy struggles. I was ridiculed to suggest that the final blowoff would be a result of rising interest rates due to steady economic growth.

Good news on the economic front usually translates to bad news for corporate earnings. It means more hiring, higher wage demand. Will this be the cause of the next crash? I suspect not, but it is possible. I believe the “perception” of a growing economy will cause rates to rise and in affect cause wall street to exit the stock market in anticipation of falling earnings. My thoery is just that, a guess. So far though my guesses have worked.


Seriously: ‘The Black Swan’, by Nassim Taleb. RA

gary leibowitz January 23, 2013, 5:35 pm

Rick, appreciate your concern for my advancement of knowledge. Doesn’t the “Black Swan” indicate a chaotic and unpredictable outcome? Wouldn’t all technical and “fixed” theories such as yours go out the window? The fibonacci theory would also have to be wrong. In any event the fact that the Republicans pushed the day of reckoning to May 18 (debt ceiling) is spooky. For the last 14 months I had expected the ending phase in May/June of 2013. Could the top occur at such an expected event?

In any event I will try to find it in the library.

I will also temper my responses here since it is clear I bring up your blood pressure.

BTW, your call for 1495 on SPX is also hitting my fibonacci turn date today. This market is over stretched here. Good bet for quick move down.

Cam Fitzgerald January 22, 2013, 11:29 pm

Well that was quite a thrust higher in the Dow this morning. We have broken Octobers highs and are exactly 300 points shy of 13,996 as I write this which is just a spits distance the way things have been moving. Hmmm. Wonder how soon we will see that number. Can it really be so far away?

Pat January 23, 2013, 12:47 am

With tonites stellar earnings from IBM and GOOG, the SPX will probably take out 1500 tomorrow morning, and new all-time highs in a few weeks. Dow 14K about the same time.


I have a longstanding E-Mini S&P target at 1494.50 that ought not be ignored, since it has the potential to produce a major top. And there is yet one more above it — let’s call it Mr. Big — but lurkers will have to pay to find out where it lies. RA

gary leibowitz January 22, 2013, 10:03 pm

Is 3.5 percent really such a huge number? Does it spell disaster? How about the thought that real economic expansion might have a chance to take hold. The debt ceiling out of the way, clears the way for future growth. Thats how i read the move up.

I stated last year that my assumptions for the last rally leg should be as a result of a turn up in rates due to anticipation of accelerated growth. In my mind rates would have to spike a full point higher before the stock market takes heed.

I find it curious that Rick has decided a rate hike is a result of bad faith as opposed to economic strength. Historically it is still well below the norm.

How much damage will 3.5 percent interest bring this market? If it is rising on economic growth than there is little doubt stocks will initially react positively. Interest sensitive segments will be impacted but a rotation out of these stocks will not derail this move.

Just look at AAPL as a great example of rotational strength.

The fat lady might be backstage rehearsing, but the curtain call hasn’t yet sounded.

gary leibowitz January 22, 2013, 10:21 pm

Regarding yesterday’s response: Every single economic correction has resulted in a weakening of american wages and perks (pensions, company benefits, unions) while increasing the wealth of corporations and the wealthy. Perhaps thats why most find it difficult to understand why the stock market is so high given the state of the economy for the average joe. If you find fault in this statement I would love to hear it.

The need to reign in spending after decades of middle-class destruction is counter-intuitive. Why not look at the wage component and benifits between the classes during good economic periods to determine the cause. It is rather glaring. I will state one more time that had the government not went on a social program spending spree this economy would have fallen over the cliff decades ago. The blame is still squarly on the politicians, but not simply because they catered to the middle/poor. It was a necessity after they allowed corporate america to take over.

I suppose I am arguing over the cause, not affect. I do believe the result would ultimately be the same disasterous expectations most have on this board.

Rick Ackerman January 22, 2013, 11:24 pm

Even an uptick of ten basis points could conceivably be a very big deal, Gary, since the global sum subjected to that increase amounts to gazillions of dollars worth of hyper-leveraged borrowing. If there were even the faintest suspicion that the Fed was losing its grip on rates even the teensiest bit, financial Armageddon would be upon us tomorrow. Of course, that could never, ever happen, right?

gary leibowitz January 23, 2013, 6:06 am

I understand your point but how do you determine an uptick above 3.5 percent will have an affect? Why would you assume the FED is losing its grip if after 4 years into the crisis there are signs of healthy growth?
You look at a hike in interest rates as the failure of this government to “control” the healing. I look at it as a natural response to healing. Case in pint, AAPL. You were absolutely convinced it’s weighted control on the indices would doom the market had it fallen hard. Well, it has and nothing happened. In fact money just got re-distributed to other segment.

I do agree there will be a tipping point where rate will not be sustainable. I just don’t think 3.5 percent will do it. In fact I think the exact opposite outcome will ensue. Any rise from here, might at first be an excuse to sell off the market, but if it is gradual, with economic indicators supporting this, I believe the market will rally. It’s all a matter of perception.

You keep seeing things as one sided, when clearly they have not been to date. You have made numerous calls suggesting the crash will be the outcome yet we have had a steady rise in each occasion.

Like I have stated over a year ago, you can’t force the markets to accept your assumptions on the eventual outcome. I believe in your future scenario but that doesn’t mean the next 3 months will be proven out. I also believe there are visible signs that warn when such an event is likely. The mortgage crisis is a great example. The signs were there, with extaordinary home price moves and absurd loans that the average joe heard about. The mania was there and lasted perhaps 4 years. I just don’t see the red-flag yet. Perhaps I am naive in expecting to see one, but I must play it the way I see it. I can’t anticipate some out of the blue crash without a pre-event. Rising interest rates, will not cause an immediate crash. There will be signs. Financial institutions, mortgage sensitive segment, will telegraph how the rates are received before we crash. Or so I hope.


One of these days, Gary, you’ll understand perfectly. In the meantime, though, please don’t try to quote or interpolate what I’ve supposedly said, since you’ve yet to get it right. I will also suggest that you read Nassim Taleb’s “The Black Swan”. He talks about someone just like you in an early chapter — about a guy who thinks, when he sees a white swan, or even a red Mini-Cooper, that that is evidence there are no Black Swans. RA

redwilldanaher January 23, 2013, 4:02 pm

Exactly Rick. I am starting to wonder if Gary is an artist, more specifically a performance artist. He’s trying to live and spread absurdism and he’s very proficient at it. Has he elevated it to an art form? Eye of the beholder I suppose…

Bam_Man January 22, 2013, 7:25 pm

Rick, you make it sound as though there is an actual

Treasury “market” out there to sell off. There isn’t. There is only the Fed and the other G-20 Central Banks and their electronic printing presses.

I am firmly in agreement with Kyle Bass. The whole phony construct will eventually collapse, but not until it looks as though it could never, ever happen. We probably get to a 1.00% (or less) yield on the 10-year before it all blows sky high.


You are right, of course: There is no actual “market” for Treasurys, since one cannot actually “sell” them, only trade them for other Treasurys or worthless Federal Reserve notes. RA

redwilldanaher January 22, 2013, 2:21 pm

Moving this over as relevant to what “supports” T Bonds…


6 simple paragraphs that all but Gary will appreciate:

There has likely never been a boom so great (and so fictitious) as the one that this country experienced for the last several decades. Its origins began with the hubris of government economists in the decade of the 1960s who believed that the economy could be managed like a piece of machinery. They believed that they had the tools (and wisdom) to eliminate business cycles by judiciously stepping on and letting off the gas at the correct times.

This incorrect belief is still fundamental to Keynesian economists, despite the impressive string of failures it has produced. Empirics notwithstanding, the belief is maintained. The misjudgments of practitioners, not the theory, are responsible.

The movement toward a social welfare state provided additional incentives for Keynesians. With its “costless” provision of increasing benefits to increasing numbers of people, the welfare state required that a boom be maintained lest the Ponzi scheme collapse prematurely. The Ponzians and Keynesians became natural comrades and allies.

Keynesianism promoted activist government. The welfare state was activist government taken to an extreme and required increasing amounts of money to survive. A symbiotic relationship was evident. The growth of one promoted the other and vice versa. The complementarity is apparent when one realizes that members of one of these cults generally belong to the other.

Whether this boom was the greatest in history might be debated. What cannot be debated is the fact that no other boom has been more dependent on government for its formation and maintenance. No boom in history has been created by easier money and bigger government interventions. Nor has any other been so desperately maintained by government.

As a result, this boom has been more artificial and damaging to the economy than any other. For decades the Fed and government interventions distorted interest rates and product prices. These incorrect price signals encouraged entrepreneurs to engage in behavior that should never have been undertaken. Massive mis-allocations of capital and labor are the result and they have built up over fifty years.

gary leibowitz January 23, 2013, 6:41 am

The people in power from the early 80’s on, controlling the president and congress were wall street and financial CEO’s. They had exclusive power.
Every single crisis since that time can be traced to them. The glaring fact that the wealth of this nation moved dramatically to the top can never be dismissed or explained with any other comparisons.

Every single economic collapse happened at the apex of such disparity. This government is controlled by elected officials needing to get re-elected. They were able, legally, to destroy the balance of economic power by slight of hand. Create money out of thin air and cater to the top. Increase the government debt with social programs to placate the masses has been a no-brainer. A win-win for reelection.

You blame this problem on a welfare state yet the ones at or near poverty have been losing out over 3 decades. The huge government deficit has benefitied the top tier at an alarming rate while causing more middle-class earning power to deteriorate.

Are my facts wrong? Are my conclusions wrong?

Every single crisis creates wealth at the top at the expense of everyone else. This recent crisis is no different, yet you want unions, workers rights, socialism to be further destroyed?

I don’t get it! My growing up with Superman as my comic strip hero leaves me to conclude we live in the bizzarro world.

redwilldanaher January 23, 2013, 3:59 pm

More top soil for Gary’s “this market is organic” grave that he has dug:

… But most of all it is the now all too clear realization that a “market” that needs the Fed’s explicit support 81% of the time in the past 1519 days (and counting) to prevent it from collapsing, is anything but a market.

Mustafa January 22, 2013, 10:19 am

Hey Rick can you put out some day trading touts for the e-mini Nasdaq? I’m getting my butt handed to me trading that contract. Also I signed up for the monthly subscription under the new subscriber special, but can’t access the chat room. Do I have to pay the regular monthly subscription in order to access it? Keep up the great work. You’ve been dead on the money with your calls lately, especially on the Dow and S&P-500.


Thanks for the kind words, Mustafa. Your subscription does include access to the chat room, but you may need to log in the first time from the My Account page. If that doesn’t do the trick, please click on “Contact Us” at the bottom of the Home page and let webmaster Mike Johnston know you’re having problems.

I don’t much track the Mini-Naz because I’ve grown comfortable forecasting the E-Mini S&P’s swings each day. However, if you remind me next time you’re in the chat room, I’ll take a look. RA

Mustafa January 23, 2013, 2:08 am

Thanks for the timely reply, Rick. I have tried what you’ve advised, but it did not work. I have also asked for help, but have not received a reply as of yet and this was done a week ago.


I have intervened personally in your behalf, bringing all of my influence, experience and personal connections to bear on this problem. Now, we shall see.

John Jay January 22, 2013, 7:17 am

After the Volcker led tough love of 15% long bond yields, and the S+L crisis where bankers actually went to jail for fraud, the elite came up with a new game plan.
Because it was way to hard to make an honest buck with the cost of capital so high, and the tough Securities laws Joe Kennedy set up to catch a thief.
Essentially the plan was “Easy Al” at the Fed, and change the Securities Law to allow fast and loose scams to operate perpetually with no government interference.
It took some time to get it all off the ground but by the late 1990s T bonds bounced around par and never looked back on their way to 3% yields.
The process of inflating away the debt is accelerating and the consequences are everywhere.
So much Fiat Money has been created that a bank CD pays 1%, a one year T Bill pays nothing at all, and the inflation in food and energy prices is frightening.
Gasoline from $1 a gallon to $5 in about ten years, with a recent pullback to $4 where I live.
And China holds a sub 10% portion of T paper now, we have inflated away their influence on that market.
And Obama making noise about “Climate Change” which translates to even higher energy prices for us.
You can look at a chart of the yield on a 30 year T Bond to see the progression of Fed intervention in the auction process.
My take, T bond prices may back and fill, and there is always a trading opportunity in any market.
But the “Debt Ceiling” is now seen as silly in DC, and we are off to new military adventures in North Africa.
3% T bonds and 3% home mortgages are the only thing enabling our faux economy to stagger on down the road, and Ben is not going to allow an honest auction, because that means the end of it all.
And, it has gotten so bad that I hope he can continue to pull it off, because we are way past the point of no return.
What a revoltin’ development this is!

Andy B January 22, 2013, 6:50 am

Hi Rick,
Isn’t gold supported/correlated by the bond, in the short term? As in ‘money printing’ supports both? I’ve heard Stewart Thompson cheer the bond higher so that gold can be elevated also. “Until inflation becomes the theme by institutional investors, and then finally the bond drops, and gold goes parabolic.” Don’t recent charts and thinking support Stewart’s thesis of gold/bond correlation in the short term?

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