November 2010

DaBoyz were making their move late Sunday, bidding fair to put a squeeze on mini-index futures that could dash bearish expectations for months to come.  Check out the chart accompanying the E-Mini S&P tout if you want to see how little it would take to create a robustly bullish impulse leg of weekly-chart degree.  On the weekly chart, this rally is uncorrected going back to August!

The futures are up nine point Sunday evening -- for whatever dumb reason -- but it's not all innocent play, since the move has exceeded Friday's high, 1187.50, and thus sets up this vehicle for an even nastier short-squeeze at the opening.  The (very) crucial number is 1196.50, equal to an important peak made last April on the way down. If it's exceeded,  it seems likely the visually obvious peak at 1208.00 just to the left of it will be exceeded as well.

Solving the world’s debt problem dominated the discussion in the Rick’s Picks forum over the weekend, with the final word going to “Jill,” who congratulated the group for “putting on their thinking caps and devising some kind of solution rather than just abandoning all hope.”  From where we’re sitting, however, it is only those who have abandoned hope who truly understand the problem.  For in fact, there is no more a “solution” to the world’s debt problem than there is a perpetual motion machine or cold fusion generator to remedy the world’s energy problem. In the end, to restate C.V. Myers’ dictum, every penny of every debt must be paid – if not by the borrower, then by the lender. It’s as simple as that. And much as we’d like to believe that some financial genius will come up with a way to spare us the pain of a Second Great Depression, it ain’t gonna happen. Because the world’s debts total in the many hundreds of trillions of dollars, there is simply no discharging those debts without ultimately ruining the financial lives of most creditors, debtors, or more likely, both. However the unpayable sums are dealt with, as long as contracts are strictly enforced, deflation will continue to attend the process. Under the circumstances, the bankruptcy courts -- as opposed to a political system that may well eventually succumb to an anti-bank, populist tide -- will remain responsible for sorting out which creditors get paid, and how much.  By and large, this would visit pain on borrowers and creditors roughly commensurate with their respective sins of greed, stupidity and recklessness. A Wacky Idea In the forum over the weekend, the wackiest-sounding solution for the debt problem would have the U.S. Government print “debt-free money” that would be distributed to all