There's a new cop on the beat, it's the TigerSoft
"COP" Indicator and it's
flashing some new
warnings. The Santa Claus rally only lasted 2 days into January.
The market, here
measured by SPY (the ETF for the SP-500) and our key internal
strength indicators is
now in decline-mode again. The recovery high by the DJI over
9000 was not confirmed
by the blue Tiger Closing Power, by the magenta OBV
(measure of aggressive
buying/selling) or by the new TigerSoft COP-on-the-beat
TigerSoft COP's Black MA Indicator is now falling. If it falls into
negative territory, it
will become "BEARISH".
What has caused the market to drop so sharply?
Obama' s Scare Tactics Stop The Rally Cold.
Why Is The DJI Going
Many Unanswered Questions about Obama.
Needs To Take on The Banks like FDR!
by William Schmidt, Ph.D.
The simple answer is that the stock market, having tested for resistance
and found it
could not be
taken out (DJI 9100), now must test for support to regain confidence. That
presumably is still to be discovered, Until a price level is now reached that holds,
many traders will
avoid long positions and even go short. I should note that Obama has said
to indicate that
he will change the rules that Bush's SEC has enacted that makes it so easy
to sell short
aggressively and massively. This is a mistake. And it needlessly hurts the
market and teh
economy. (See the articles I have written about how the SEC has facilitated
anti-social short-selling.) Traders watch for clues from Obama. There is
him that makes
them afraid. Instead, his words of dear strengthen them.
Of course, the talking heads on TV explain the decline based on the higher unemployment
and much lower
retail sales at Christmas, But there's a lot more. Pessimistic economists are
daylights out of the stock market, too. Listen to the much heard Nouriel Roibimi
Each day's new bad economics' news gives him an opprtunity to promote his
services and get still more publicity. Since late 2006, Roubini has been
bearish. "Dr. Doom" is making financial matters worse. He is
Fear sells and
now he sells his research to a fast growing and increasingly frightened audience.
It's not fair, I know, to say that Roubini is only
negative. He has set out a long list of government
policies that, he
says, will limit the world economic decline. In particular, he says that a vast new US
programs is absolutely vital. The trouble is that all his incessant fear-mongering
has become quite
self-serving, not necessarily self-correcting and definitely self-fulfilling,
it hurts business
and investor confidence.
And what is worse? Now Roubini has the ear of Obama, who himself seems to regale in
how bad things are likely to get economically. While its true that Bush has left us
severely in debt and facing bigger national problems in nearly every arena, Obama
that he can make things even worse, if he does not stop scaring us by repeating
too, how bad the economic outlook is, in order to get get 80% Congressional backing
"stimulus" proposals and completely away from a number of Bush
Last Thursday, with 200 DJI points higher, Obama made a major
speech on the economy.
He was in a
stern and scary mood. Far from expressing confidence in American enterprise
ingenuity, the sense of the speech was, in essence, "Either you do what I
say or the
will collapse further and be weak for years." How is this different than
tactics? Like Bush scaring
Congress to get the $700 billion for banks last October,
busy scaring a much more Democratic Congress to get $700 or more billion
in tax cuts
and public works programs, as quickly as possible after January 20th.
Scare tactics may help politically, but this is not what Wall Street needs. I wish
about the positives, all the things that need being done, like building bridges, clinics,
etc.... to let people think more optimistically. He did not smile once in the 20
Stern. Austere. He reminded me of a preacher giving a sermon to
of this will depress everyone! He probably thinks that this tone serves his
purposes to keep expectations low. But it badly hurts confidence. And
Fear makes for a
deeper recession. How could he forget how effective Roosevelt was in 1933 when
in his inaugural address that the "only thing we have to fear is fear
iself". We are
see a big contrast between Obama and Roosevelt.
From the time
FDR was elected Governor of New York, he had
Wall Street and the big banks there had tried to thwart him. In contrast Obama
received very large campaign contributions from Goldman Sachs and the like. Time
will tell if
non-threatening approach to Wall Street works. Here are Roosevelt's words in
as he took the oath of| office.
"Plenty is at our doorstep, but a generous use of it languishes in
the very sight of the supply.
Primarily this is because the rulers of the exchange of mankinds goods have failed,
own stubbornness and their own incompetence, have admitted their failure, and abdicated.
of the unscrupulous money changers
stand indicted in the court of public opinion, rejected by the
hearts and minds of men.
"True they have tried, but their efforts have been cast in the pattern of an outworn
Faced by failure of credit they have proposed only the lending of more money. Stripped of
of profit by which to induce our people to follow their false leadership, they have
exhortations, pleading tearfully for restored confidence. They know only the rules of a
of self-seekers. They have no vision, and when there is no vision the people perish.
"The money changers have fled from their high seats in the temple of our
civilization. We may
now restore that temple to the ancient truths. The measure of the restoration lies in the
extent to which
we apply social values more noble than mere
Where FDR often employed charm, wit and a patrician paternalism coupled with a buoyant
optimistic combatativeness, Obama seems only solemn, threatening and negative.
"What's with his 100% dour and gloomy tone. Is this his personality? It
from Bush how to manipulate Congress? Whatever, it makes for more jobs
disappearing. And that's not good. I wish he had mentioned the "multiplier
examples. If he had mentioned Keynes,
it might have helped a lot of college
more out of their Economics 101 classes. He should have looked up JFK's
speech in this
vein to graduating Yale students in 1962.
I think the market is also going down because Obama seems ready to throw away
billions more into war-making in the other Bush quagmire a world away, Afghanistan.
is weak because short selling hedge funds may not be restrained under Obama. They
been put on notice that they harm the public welfare. Obama was silent on short
down-ticks, without the need to borrow shares and the need to prohibit short-selling ETFs.
And most of all, Obama was silent, deafeninglyu silent on the basic question of who will
pay for the
trillions Obama plans to spend on infrastructure and tax cuts for businesses and
individuals. Rich people fear it will come from their Swiss bank accounts. The
it is they
who will be asked to come up with all this money. Gold bugs warn that the necessary
simply be printed. Obama's silence on this has managed to scare everyone.
Look at the TigerSoft chart of the Dollar. Note its bearish head and shoulders price
and weakening internals. A bearish top has all but been completed.
Many US banks
Still Look Desperate,
despite Getting A Trillion in Subsidies.
What will Obama do when Citigroup wants another $50 billion?
Look at CitiGroup's chart below. It looks as bad as Washington Mutual or General
Professionals are still selling it, despite its getting $45 billion in TARP funds.
are not being
repaid. Home prices are still going down. Millions of consumers can't pay, and
not paying, their
credit card debt. Lay-offs are getting worse. Retail sales are worsening.
agencies are not
trusted. Businesses have been inflating their profits. CitiGroup may not be
many more billions of government money. Obama says he will put strings on any
more loans to
banks. What will they be? Will CitiGroup get enough money to survive?
little or no
public willingness to keep giving big banks more public funds, especially since they are
not making any
more loans with all this money. Will Obama keep handing them money? More
surely wake up and ask why if banks refuse to make loans, a publicly owned
national bank is
not set up to to make such loans. That is what North Dakota instituted in 1919.
NEED A NATIONAL PEOPLE'S BANK
now the FED can only loan money to big banks. It should be able to loan money
to individuals and
businesses using a national credit card. Besides this, it's time for Congress
to take on Bernanke's
trillion dollar giveaways to banks. His focus is too narrow. His ties
him to other options.
Bernanke is a monetarist. In partuiclar, he does not really believe in fiscal
stimulus, calling it
short-lived. And he is unwilling to entertain the obvious solution. The Government
should start its own
BIG people's bank to make loans to people and businesses, not just banks
as now. Banks would
then have a competitor they could not just buy out. And they would be forced
to make loans that they
are now unwilling to do so. The surviving big banks are also to big. They
need to be broken up,
not made bigger. Where is the national leadersip? No one in public office
is talking of this.
That alone shows how powerful the private banking lobby is. True, Republicans
won't like this.
But desperate times require desperate measures. No countries' people
be crucifed on a
collapse of a major part of the private banking sector should stand as notice that
they are an indulgence,
a dangerous deference to profane green and pure capitalism and a threat
to all Americans.
The concentration of banking in the US needs to be challenged. Only the
government can compete
with the likes of Citibank, Bank of America and JP Morgan. A government
owned people's bank
would also teach regulators the tricks banks use to avoid regulation and taxes.
The alternative is
grim: to let these banking mammoths, that are too big to fail, to get even bigger
and to have even more
control of Congress and the White House. That is not tolerable in a democracy.
In the TigerSoft chart below, we see that using a simple 5-day Stoichastic would have
brought gains of
more than 200%. That is a favorite tool used by professional traders.
It is scary when
Wall Street insiders and institutionals are selling CitiGroup on every rally,
government bailout and professionals, who control the stock, are still so bearish.
TigerSoft chart to those of companies that have failed and are now out of business.
See - http://www.tigersoftware.com/TigerBlogs/October23-2008/index.html
a ship tell you
the ship is not seaworthy. Think of rats when you think of big bankers who
have their run of
the Federal Reserve system.