wpe50.jpg (1913 bytes)     TigerSoft News Service    1/12/2009      www.tigersoft.com     More information later today.
                                 Obama' s Scare Tactics Stop The Rally Cold.

  Why We Are Seeing The Stock Market Decline Again?

.... Obama Leaves Many Unanswered Questions.
                            ....   His Thinking Is Too Narrow. Too Timid. Too Orthodox.
                            ....   Banks That Are Too Big To Fail ARE TOO BIG and Should Be Broken up!
                            ....   FDR Took on The Banks.  Why Won't Obama?
                            ....   American Needs A People's Bank To Loan To People and Businesses, not just Banks!
                            ....  Why Does The Dollar Look So Weak?
                            ....   Why Are Professionals Still Selling CitiGroup Short?

                                       There's A New COP on The Beat 
                     It's The New TigerSoft "COP" Indicator.

                    by William Schmidt, Ph.D.   (C) 2009  www.tigersoft.com
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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
            indicator. The 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? 

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Obama' s Scare Tactics Stop The Rally Cold.

            Why Is The DJI Going Down Again?

                                      So Many Unanswered Questions about Obama. 
                                     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
             support is 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 nothing
             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 stock
             market and teh economy.  (See the articles I have written about how the SEC has facilitated
             extensive anti-social short-selling.)  Traders watch for clues from Obama.  There is nothing from
             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
             scaring the daylights out of the stock market, too.  Listen to the much heard Nouriel Roibimi
             of NYU.  Each day's new bad economics' news gives him an  opprtunity to promote his  
             his research services and get still more publicity.   Since late 2006, Roubini has been correctly, but
             also unendingly, bearish.  "Dr. Doom" is making financial matters worse.  He is downright frightening. 
             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
             public works 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, because
             it hurts business and investor confidence. 
                     And what is worse?  Now Roubini has the ear of Obama, who himself seems to regale in
              telling us how bad things are likely to get economically.  While its true that Bush has left us
              the country severely in debt and facing bigger national problems in nearly every arena, Obama
              should see that he can make things even worse,  if he does not stop scaring us by repeating
              ad nauseum, too, how bad the economic outlook is, in order to get get 80% Congressional backing
              for his "stimulus" proposals and completely away from a number of Bush policies.  

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
              and ingenuity,  the sense of the speech was, in essence,  "Either you do what I say or the
              economy will collapse further and be weak for years."  How is this different than Paulson's
              scare tactics?  Like Bush scaring Congress to get the $700 billion for banks last October,
              Obama was 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 he had
              talked about the positives, all the things that need being done, like building bridges, clinics,
              schools, etc.... to let people think more optimistically.  He did not smile once in the 20 minute
              speech.   Stern.   Austere.  He reminded me of a preacher giving a sermon to wayward children.  
              Four years of this will depress everyone!   He probably thinks that this tone serves his
              political purposes to keep expectations low.  But it badly hurts confidence.   And Fear makes for a
              longer, deeper recession.  How could he forget how effective Roosevelt was in 1933 when
              he stressed in his inaugural address  that  the "only thing we have to fear is fear iself".  We are
              starting to see a big contrast between Obama and Roosevelt. 

                      wpe115.jpg (6145 bytes)    From the time FDR was elected Governor of New York, he had
               challenged 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
              Obama's non-threatening approach to Wall Street works.  Here are Roosevelt's words in
              March 1933 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 mankind’s goods have failed, through their
                       own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices
                       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 tradition.
                      Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure
                      of profit by which to induce our people to follow their false leadership, they have resorted to
                      exhortations, pleading tearfully for restored confidence. They know only the rules of a generation
                      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 monetary profit."
                      ( http://historymatters.gmu.edu/d/5057/ )

                           Where FDR often employed charm, wit and a patrician paternalism coupled with a buoyant
              and optimistic combatativeness,  Obama seems only solemn, threatening and negative.

                      "What's with his 100% dour and gloomy tone.  Is this his personality?  It this his
              learning 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 effect" and
              given some examples.   If he had mentioned Keynes, it might have helped a lot of college
              kids get 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
              hundreds of billions more into war-making in the other Bush quagmire a world away, Afghanistan. 
              The market is weak because short selling hedge funds may not be restrained under Obama.  They
              have not been put on notice that they harm the public welfare.  Obama was silent on short selling
              on 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 Chinese fear
              it is they who will be asked to come up with all this money.  Gold bugs warn that the necessary
              money will 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
              formations and weakening internals.  A bearish top has all but been completed.            

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                  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
             Motors.   Professionals are still selling it, despite its getting $45 billion in TARP funds.   Its loans
             are not being repaid.  Home prices are still going down.  Millions of consumers can't pay, and are
             not paying, their credit card debt.  Lay-offs are getting worse.  Retail sales are worsening.   Credit
             agencies are not trusted.  Businesses have been inflating their profits. CitiGroup may not be able to
             survive without 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?   There is
             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
             people will 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.

                                      AMERICANS NEED A NATIONAL PEOPLE'S BANK

                      Right 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 blind
            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 should
            be crucifed on a bankers' cross. 

                     The 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.

                                                                CITIBANK MAY FAIL

                        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,
             despite the government bailout and professionals, who control the stock, are still so bearish.
             Compare its 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    Rats leaving
             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.

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