Shenandoah

by John Galt

February 4, 2010

Did someone get the number off that truck that just hit me?

OUCH! Today is going to leave a mark. Then again, so is this chart:

If we see any hint of bad news in the job numbers tomorrow, this sucker is going to plunge hard and 1005-1020 becomes a critical area for the S&P 500 and once it is shattered, all bets are off until we reach the 901-910 area. Today mattered despite the lower volume. The DJIA reflected the same:

The long term trend line in light blue I added was one part of an ascending pattern which failed and now has reversed dramatically and will eventually test the 9380-9460 levels and that could be as soon as next week if the political elites do not remove their heads from their collective arses.

The Russell 2000 also broke down severely following the path of the big cap markets indicating that the capitulation in this bull phase of the long term secular bear market could indeed have the potential to break down and attempt to test last year’s lows.

The 540-550 range should be the next stop if the 200 DMA is violated with volume. What is leading the markets down besides an attempted repeat of last spring in the bond markets, currency markets and equity markets? Could it be our beloved government? Could it be the big lie has been seen through by the world an the EU and USofA are about to be exposed for dispersing crappola around the world and calling them AAA securities? Let’s ask the banking index and XLF….

That’s not good. The XLF is worse:

High volume during a down move. I look for a death cross in the technical formation and a disaster for the financials through March at least. Bernanke will have to re-engage in ZIRP AND QE if he wants to save the day and I do not know if the world trusts Obama or Bernanke to get this done. Right now they are swimming in jello and drowning.

Two of the leading troublemakers have been Goldman Sachs and JP Morgan Chase and guess what? They still are signaling that the market has a huge problem!

The bottom line is that with the world learning our government is incompetent, the data for years now apparently suspect, and worse, the biggest lie of them all which will impact our bonds, IMHO, severely:

The $6.3 Trillion on Fannie Mae and Freddie Mac’s books that are sitting OFF BUDGET per the Obama administration who are already claiming that they are doing it because the Bush administration is doing it.

This is not going to help the regional banks and as you can see from this chart of M&I Bank and it will be a bloodbath if the regionals are forced to take the bad paper back on their books:

As you can see from my comments, this stock is a zombie waiting for Woody Harrelson to take a chainsaw and lop it’s dome off. We are about to see the next wave of major bank failures and we will now see if this is 1937 or 1997 (LTCM) and how our banksters and politicians elect to play it.

Gold tanked today.

So what.

I said it would, remember this thread?

Be Leery of this Parabolic Move in Gold

Nothing has changed. This chart is still valid:

Thus while the deflationistas will run around saying “see I told you so” just smile and buy on these key dips. The massive move up is not over. The consolidation is still intact and the 1014 level on the gold futures has not been violated. Thus patience and wait until that last gap fills, take a measure of what is happening. If you’re a survivalist buying to preserve future wealth these drops are literally golden opportunities.

Tomorrow I will address the jobs number which I figure will be +/- 30K and the claims from this morning all in one package. The disaster which is this administration attempting to personalize and modify the Bush-Paulson fiasco of plans is only making things worse and I mean much worse. The failure to address and allow the mortgages to collapse and be counted at true valuations on the books of the financials has instead sowed mistrust and will precipitate a massive bond market crash, not just in the paper the banks issue but in our government debt issues. That will be the merger of the 1937 flashback with the proverbial Minksy moment. Get ready for a wild ride gang which will probably end with 25% unemployment in U-3 terms and 12% yields on the 10 year Treasury IF the idiots do not do a thing or elect to not monetize further. Thus I think when that moment hits,  some seriously dangerous and rash decisions will be made. Thus when all hell breaks loose, the rank amateur policy decisions we would expect from this group will be enacted. Prepare accordingly.

By John Galt

February 4, 2010

Gang, I know everyone is wondering:

Where’s that sarcastic commentator and author of the blovel everyone who hangs out here is fixated on?

I am back.

I received one of those once in a lifetime invitations Monday night to attend a Super Bowl party in Miami last night as a result of an invite from a vendor and then to play golf with some really great people from the same vendor courtesy of my boss of course. Not that our South Florida rep is happy about it, but thanks to his getting the flu, I got the invite.

(Get well soon)

Obviously I couldn’t stay down there more than a couple of days, especially since the boss was not going to pay for my hotel bill (good thing I have family down there) so with that being said, I am back, and shall fire out the next chapter:

“Where Shopping is a Pleasure”

I shall clean up the rough draft and have it ready for Friday morning, another one over the weekend and will have a LOT to say about the markets in the interim. If you want my opinion the reason this week is irrelevant thus far is because everyone with money is down there and they are not buying stocks, that’s for sure.

See you in the morning with more and yes, I was humiliated on the course (127) then again it’s a danged tough course.

-John