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November Update – Man, Do I Feel Richer! (by Goatmug)

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IN FED LANGUAGE, PRICE STABILITY MEANS A BLOW OFF TOP

Call it QE II, monetization, printing, or the precursor to QE III, call it what you like but just don't fight it.  The FED's overt action to inflate asset prices at any cost have trumped all market fundamentals and created an asset price surge into the stratosphere.  Chairman Bernanke states that he wants price stability, yet his definition of price stability must not include a normal ebb and flow, it must only include a moonshot ramp job.  I would contend that we have anything but price stability at the current moment.

I've captured a few sentences from Fed Governor Mishkin in a 2007 speech.  In this message he highlights the dual mandate that the Federal Reserve has in its role. 

 "According to this legislation, the Federal Reserve's mandate is "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." Because long-term interest rates can remain low only in a stable macroeconomic environment, these goals are often referred to as the dual mandate; that is, the Federal Reserve seeks to promote the two coequal objectives of maximum employment and price stability. In the remainder of my remarks today, I will describe how these two objectives are consistent with our ultimate purpose of fostering economic prosperity and social welfare. I will then talk about some important practical challenges in implementing these goals. "

Let's examine how we are doing with those goals?  Maximum employment — QEII and low interest rates have done nothing for this goal.  Stable prices?  We'll dig more into this, but this is absolutely false and prices are getting more out of whack.  How about moderate long-term interest rates?  I'm going to suggest that this is also missing the mark.  QEII is about reducing interest rates so the US can meet its debt obligations and keep the illusion of US solvency intact.  If and when there is a rationalization to normal interest rates there will be no such thing as moderating interest rates.  Strike three in my opinion on the mandates and target goals of the Federal Reserve.

What's the purpose of all the QE?  You must know that Chairman Bernanke and former Chairman Alan Greenspan believe that greater stock prices will lead consumers to buy more and borrow more as the "wealth effect" creates in their mind a sense of having more money.  The notion that asset prices are increasing caused many in the early 2000's to lose all sense of rational expectations and believe that housing prices would always go up, that houses were the equivalent of ATM machines, that living off of one's credit cards is ok, and that all people deserve and are capable of being rich.  While the mistakes and poor thinking in the 2000's were quite real, I am optimistic that Amerikans have learned some lessons and won't fall for the old asset price wealth effect trick again.  Perhaps I'm naive, but I think many are now focused on living within their means and paying off debt, not incurring new and larger obligations.

September and October have provided almost all markets with out sized gains and have posted record results.  Clearly the economic fundamentals must reinforce and justify the rocket launch right?  Let's dig in and see where we are at.

 RAILS – http://railfax.transmatch.com/  and http://www.aar.org/NewsAndEvents/~/media/aar/railtimeindicators/2010-11-rti.ashx

Total Rail Traffic continues to outpace 2009 levels for the current week.  We are about 10% higher than those levels, yet are still down 4.2% from 2008 numbers. 

RAILS / RECESSION INDICATORS

Waste and Scrap shipments are on par with last years levels.  These shipments don't give us a clear indication of strength or weakness.  Motor vehicle shipments are greater than 2009's dismal levels, but this should give us reason to pause and temper our elation.

 

Food Stamps – SNAP PROGRAM – http://www.fns.usda.gov/pd/34SNAPmonthly.htm

 As I mentioned an earlier post this week, the Food Stamps Program continues to see greater and greater participation.  The SNAP data continues to highlight how bad things have been on mainstreet.  More families are drawing on the resources of the federal government and taxpayer for their food needs.

 COMMERCIAL REAL ESTATE DATA – http://web.mit.edu/cre/research/credl/rca.html

Moody's MIT Transaction Report – Commercial Real Estate

The CPPI continues to decline and show an erosion of value in the national commercial property price index.  The figures released for August show another 3.3% decline in values in actual transactions.

 HOME PRICE INFORMATION / LEADING INDICATORS - ECRI – http://www.businesscycle.com/resources/

The ECRI data on home prices continues to show no improvement in this critical area of the economy.  Real prices continue to reel and go lower through the August data release while leading indicators suggest that the pricing is simply flat.

MONSTER EMPLOYMENT INDEX REPORT – http://about-monster.com/employment-index

Jobs reports last week were surprisingly good and we see improvements in the weekly data.  Unfortunately we are not seeing an improvement in the unemployment rate as more workers that just gave up are now coming back in search of job opportunities.  Our unemployment rate is still at 9.6% and is quite sticky at that level.

Despite the good release, the Monster.com Employment Index dropped from a level of 138 to 136 in October.  Why new job listings on the web would decline here is actually interesting.  This is a really good report to watch and get some indication of where we are going. 

 On a separate note, Monster reported excellent earnings a couple of weeks ago.  I should have been on this as an investment possibility as the huge surge in the index would and should have been a tip off to the potential rebound in earnings for the company.  I'll continue to keep that in mind as I track this and highlight it as a potential trade in the future.

 6 MONTH EURIBOR – Euribor rates continue to climb.  Some of this increase is a result of the European nations holding firm and refusing to follow the stupid policies of our Federal Reserve.  The lack of "relative" stimulus provided in Europe is marked by higher interest rates.  Having said that, there are still real problems in Europe with countries like Ireland and Portugal, and don't forget our old friend Greece.

 No matter what, it is unmistakable that there are "interesting" things going on in the last month as the 6 month Euribor rates have climbed about 15 bps or 10%.  This is an inexact gauge but it is an item I watch every day in an attempt to measure stress in the banking system worldwide.

 CDS SPREADS -  http://www.markit.com/cds/cds-page.html

To continue on the thread that sovereign debt is still an issue, I wanted to include some data related to the CDS (Credit Default Swaps) pricing to offer protection against a default of one of these countries.  You must recall that earlier this year CDS prices exploded as the European debt crisis was unfolding again.  I am absolutely certain this will happen again just about the time when everyone forgets that these countries are really insolvent (like the US and every large bank).  For those that aren't accustom to looking at these, note that the spread is 992 which means that a person would pay 992 basis points (bps) for protection against a default in a specific bond issued by the Venezuelan government.  992 bps is 9.92% a year!  I personally never traded country specific CDS, but did do significant amounts of CDS in your investment grade corporate bond environment.  Back in the early 2000's we would write protection on names like General Mills and Kraft for around 40bps (for very short time frames (1 year).  While Venezuela is improving over the last week and month, Ireland, Spain, and Portugal CDS spreads are going nuts. 

Increases of 25% are an indication of stress in the system!  DO NOT GO TO SLEEP ON THIS!  Remember April, when every thought we were going to keep going higher and then we hit this little debt crisis?  Can you say "DO OVER?"

 

Venezuela

Spread  992

Daily Change  28.55

Weekly Change -91.92

28 Day Change -24.08

 

Ireland 

Spread – 607

Daily Change  17.69

Weekly Change 109.17

28 Day Change  182.55

 

Spain

Spread 264

Daily Change  15.98

Weekly Change  39.83

28 Day Change  56.18

 

Portugal 

Spread   464

Daily Change  14.89

Weekly Change  70.65

28 Day Change  78.57

WLI DATA – FROM ECRI -  http://www.businesscycle.com/resources/ Last week's WLI Data shows continued improvement in the leading indicators.  As I examine this data I find that since June 18th of this year the actual WLI data is showing a change of around 1% from that time.  At the same time though, the S&P 500 is up more than 6% from those levels.  It is clear that there might be improvement here in as shown by the WLI, but the market's rally may be ahead of itself.

COPPOCK TURN INDICATOR

The Coppock Turn Data continues to signal a turn south in the markets despite the exponential run in markets.  The turn indicator has been wrong for two months now, but since it is a lagging indicator (14 month average) we must expect that and use this as just another slow warning.  As usual I've tried to project levels in which it would actually signal a continuation of the positive trend, that level is at 12,300 on the Dow.  I don't put much weight on this indicator, but include it as another data point.

FINANCIAL CONDITIONS INDEX– http://www.bloomberg.com/apps/quote?ticker=BFCIUS:IND

As you all know, I like the Financial Conditions Index provided by Bloomberg because it is a composite of many fixed income and monetary (liquidity) measures.  The FCI is showing a value today of .15 which is once again over the critical 0 level.  This is an indication that there is an expansion in the economy, but probably more accurately there is a huge expansion in the amount of liquidity in markets.  We are nearing the  0.5 level we saw in April and this is going to either be a level of strong resistance coupled by the resurgence in a market correction, or it will give us an indication that the economy is truly recovering and going to be the basis for even greater levels in the stock and "asset" markets. 

BALTIC DRY GOODS INDEX – http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

With the ever-increasing prices for copper and other commodities, one would think that spot rates for transporting these goods around the world would also be increasing.  In this case, that is actually not happening.  As I've posted many times, the BDI is subject to many issues other than simply that commodity prices are going higher.  First and foremost, I think the issue is that there is a ton of supply of ships available to move this cargo as shipping companies continued to order ships several years ago.  I have seen a few comments about purchasing some of the dry bulk shippers like DRYS.  Based on the chart I'm seeing, the thought of picking up a few shares might not be a bad one considering that there has been a recent breakout and it was confirmed with the move above $5.00 as I type.  I also like that the increase has come on increasing volume.  A very conservative trade could call for a stop to be placed at $4.75 and an upside target of $5.70.

 

 

DRYS CHART

USD INDEX – http://www.bloomberg.com/apps/quote?ticker=DXY:IND

The USD index continues its assault on lower levels despite 2 days in a row now of being up.  Since the May/June peak around $88, we've seen an almost uninterrupted dive to $76.  Imagine that, a 13% drop in the value of the dollar and a move up in the overall markets of around 16%!  Clearly the move higher in the markets is not due to improving economic fundamentals and a healthier environment.  The unsustainable recovery in index asset levels is purely a move derived from US dollar debasement.

The FED's announcement last week of the use of $600 Billion of newly minted QEII to "stabilize" our economy has essentially created an environment where everything simply goes up.  As the dollar goes down, asset prices in stocks, commodities, and everything else have simply risen to keep value somewhat constant.   And if you didn't believe that Bernanke and the FED were serious, there is the overt threat that there is even more liquidity behind the $600 Billion in case it is needed. 

While there is no proof that any of the QE will actually provide sustainable jobs or expansion in the economy, that doesn't mean that we won't have the facade of growth by way of ever increasing valuations of stocks.  Of course when you value those stocks in terms of foreign currencies or in hard assets you find that we are getting nowhere.

The area we are in is pretty critical and the $76.00 level must hold or else we will see a real fall in the USD and a tremendous surge (even greater than we've seen) in gold and silver and other anti-US currencies.  As stated previously, the gold and silver trades are now more than just commodities, they are trading as their own safe haven currencies and have taken on a life of their own.  Yesterday the dollar was actually up and we saw silver go nuts.  It is on days like these that I wish there was an easy and quick way to sell my physical silver as we've seen an almost 20% move in silver in two or three days.  I've heard several stories as to what is going on with these moves from a massive short squeeze to the filing of inquiries and court actions against JPM for silver market manipulation.  No matter what the cause, it is almost enough for me to want to exit.  I simply haven't due to the trouble associated with packing it up and sending it out for sale.  (Anyone want to buy some silver?)

 

NOVEMBER TRADING UPDATE

As much as the broader economy's recovery is still in doubt for me, there is little doubt that the FED is acting to not only buoy this market but to attach a rocket pack to its back and propel it to the loftiest levels.  The policies that are being executed are making it impossible for one to remain in less risky assets like money markets and also makes one very cautious to hold on to other fixed income type holdings as the specter of run away pricing erosion becomes more real.  What I mean here is that despite the notion that I still believe that we do not have inflation, there is rampant asset speculation in all the old standbys.  Oil, copper, wheat and grains, sugar, coffee, cotton, and more all are going parabolic.  I will say it again that this doesn't mean we have inflation, but it does mean that we have speculation like we did in June/July of 2008 where oil reached $147 a barrel.  No one can suggest that that price in oil was caused by actual demand, but it was caused by loose monetary policies that brought our economy to its knees.  It blows me away that we can have a FED that will sit idly by and allow it to happen again.  What kind of recovery will we have if my $100 a barrel target for oil is hit?

Despite my protests, the FED has promised QEII and will promise more of QEIII as the second version fails.  As a result our old trades are extremely profitable and are still ones that I highlight as winners.  We need to remain in commodities or their representative ETFs like DBA, DBC, JJG, SLV, GLD, and more.  We need to continue to trust in emerging markets for the reason that they are ACTUALLY growing at a pace well beyond the US's 2% AND are investments that are outside of the USD.  Countries like Chile,  Singapore, Malaysia, and Brazil have been my favorites.  They have been winners for me for sometime and that trend has not been stopped.  While there is every temptation to harvest gains, the real question needs to be….."And go where?" 

As we have discussed, the potential canary in the coal mine here is the stress in the European countries as measured by Euribor and also by the sovereign debt CDS that I pictured above.  If these continue to blow out this could derail the heroin induced rally the Fed has us on, just like what happened in April of this year.  I don't want to get too excited about any drop in the market though because we have rallied so much in such a little time with NO pullback.  We must expect some drop simply to digest the recent gains.  WATCH THESE CDS AND WATCH THE EURIBOR RATES THEY WILL BE THE INDICATION THAT SANITY IS RETURNING TO THE MARKETS!

Given the tsunami of liquidity and threats of more liquidity we will continue to see more of the same for the next month as the FED continues to debase and devalue our currency in an attempt to make us all feel richer.   Man, do I feel richer, don't you?

All Is NOT What It Appears To Be (Market Sniper)

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Back on August 13, 2010, Tim Knight posted "Moral Hazard Comes Home To Roost" http://dev.slopeofhope.com/2010/08/moral-hazard-comes-home-to-roost.html For nearly a month I have had an on-going internal debate on whether to write this post. Be forewarned, this post will take you down a rabbit hole. If you wish to lead what Aristotle called "the examined life" and choose to take red pills, read on. If you are an ardent taker of blue pills, I would recommend that you skip this post.

The subject matter is extremely complex. It is historically convoluted and replete with legal and finacial intricacies. I am not a lawyer and much of this is not even part of any law school curriculum. However, as a nearly life long real estate investor and a real estate broker, as well as being a retired Certified Residential Appraiser, I am very well versed in banking as it relates to real estate loans.

As many here know, I am a staunch hard money advocate. I have come to my conclusions over many decades of research and reading the lessons of history. The purpose of this post is not to deal with the subject of what money is and what money is not. For those so inclined, I would suggest an excellent book, one of the best treatise on the subject I have read, Nathan Lewis' book Gold: The Once And Future Money. The book is well written, historically researched and not a "gold bug" rant. The money issue is not central to this post but does have bearing. As further background, I would suggest, when you have about an hour, to take a look at five videos. Here is the link to the first. You will find the links to the other four here as well. http://www.youtube.com/watch?v=vVkFb26u9g8 Money as debt is central to the body of this post.

Historical Background

Two forms of government exist today in The United States Of America. The orginal form was under The Constitution. Basically, The Constitution was a union of the Sovereign States. Under it, the states retained most of the power and the federal government had limited power. Law was Common/Private Law.

With the Civil War came the aftermath and in 1871 the original United States became an entirely different creature: a corporation! This was done through a number of Reconstruction Acts passed by the Congress. What emerged was the UNITED STATES CORPORATION. The UNITED STATES CORPORATION does not operate under the United States Constitution. It operates under Corporate/Commercial/Public Law which has its roots in Maritime/Admiralty Law which is administrative in nature.

The Constitution is still there but dormant, usurped by what is also known as the Uniform Civil Code (UCC). This fact was made clear by Supreme Court Justice Marshall Harlan (Downes v. Bidwell, 182, U.S. 244 1901) by giving the following dissenting opinion: “Two national governments exist; one to be maintained under the Constitution, with all its restrictions; the other to be maintained by Congress outside and Independently of that Instrument.” Indeed, after 1871, nearly all power was transferred from the hitherto Sovereign States to the UNITED STATES CORPORATION. The states became mere administrative districts of the UNITED STATES CORPORATION.

Fast forward to 1913 and the Federal Reserve Act. The Congress in 1913 created a private central bank. Here is a list of shareholders. http://www.save-a-patriot.org/files/view/whofed.html How is this constitutional under Article I Section 8 http://www.usconstitution.net/xconst_A1Sec8.html ? ONLY Congress can coin money and regulate the value thereof. This is an undelagatable power. It would be the same as Congress granting LOCKHEED MARTIN CORPORATION the right to declare war! Ah!

Refer to the above. We are not operating under the Constitution but rather the UCC. The Congress can do as it pleases. Follow me here as this gets even more complex. In 1917 Congress passed the Trading With the Enemies Act (TWEA). This act was created to deal with countries we were at war with in World War I. It gave the President and the Alien Property Custodian the right to seize all the property of persons included in the act. Those persons could, if they wished to do business in this country, apply for a license.

By 1921 The Federal Reserve Bank (as Trustee for the Alien Property Custodian) held over $700,000,000 in "trust." This is of great importance because in 1933 48 Stat 1 of the TWEA was amended to include United States Persons. Executive Order 6102 was issued to seize the gold held by any United States Person. We were hence reclassified as enemy combatants and it became a federal crime for any United States Person to possess any gold in bullion or bullion coin form.

At the same time, in 1933, the UNITED STATES CORPORATION was bankrupt. Since the private Federal Reserve controlled the money, the UNITED STATES CORPORATION collateralized YOU so as to borrow the money. How could that be done? We are not owned by the UNITED STATES CORPORATION. Yes, indeed we are and through that corporation, we are indirectly owned by the Federal Reserve. I will explain this "mechanism."

The Straw Man

You will notice in all of the above, corporations are identified by all capital letters. That is how all corporations (a legal person but fictitious entity ) are identified under the UCC. Now, if you have it available, look at your social security card. Your name is in all capital letters. Have a checking account? Look at your name. All capital letters. Do an experiment, next time you open a personal checking account, attempt to get your name spelled with capital letter at the beginning only. Also, while you have your checkbook handy, get out a strong magnifying glass and look at the "line" where you sign your name. It is not a line. It is printing. Now you are twins.

One a natural person and the other a quasi-corporation, the straw man. This was done to you at birth. If you have the chance. Take a look at your birth certificate. Again, your name is in all capital letters! Take a look at the border of your birth certificate, bottom left hand side. Says American Banknote Company! You will also note that your birth certificate has a red number on it. All birth certificates in public hands are copies even the one at the county recorder! Where is the actual original? Within two weeks and three days each Certificate of Live Birth is to be filed in Washington D.C.

Evidence reveals that there is even a Federal Children Department established by the Shepherd/Townsend Act of 1922 under the Department of Commerce that appears to be involved in this process in some way. Every citizen is given a number (the red number on the Birth Certificate) and each live birth is valued at from 650,000 to 750,000 Federal Reserve dollars in collateral from the Fed. Since the early 1960's, state governments have issued birth certificates to "persons" with legal fictitious names using all capital letters. This "corporation" then generates taxes and wealth over its (your) lifetime. This is the way that the collateral (you) pay the "money" borrowed from the Federal Reserve by the UNITED STATES CORPORATION. Your birth certificate (or papers of naturalization) is actually a bond as well as a banknote. It is also a form of securities known as warehouse receipts. Your birth certificate meets all the requirements of A/7-202 of the UCC. To wit:

  • the location of the warehouse where the goods are stored…(residence)
  • the date of issue of the receipt…..("Date issued")
  • the consecutive number of the receipt…(found on back or front of the certificate, usually in red numbers)
  • a description of the goods or of the packages containing them…(name, sex, date of birth, etc.)
  • the signature of the warehouseman, which may be made by his authorized agent…(municipal clerk or state registrar's signature)
  • Adding insult to injury, if you wish to take your child as a deduction on your tax return, you have to obtain a social security card for that child.
  • You may wish to find out how you can regain your status as a Soverign Individual by taking control of your straw man! That is well beyond the scope of this post.

The Real Estate Loan

When I was a real estate appraiser when time was not pressing, I would often ask this question of the real estate broker who admitted me to property that had been sold. "I see that on this $1,250,000 sale, the buyer is getting a $1,000,000 loan. Do you know where that $1,000,000 comes from?" Never did get the correct answer.

The truth of the matter is simply this: until that loan is funded, the $1,000,000 does NOT exist in the known universe! The borrower creates the very money he borrows. Here is how that is accomplished. When you take out a loan, you signed a Promissory Note (and yes, your name was, again, all in capital letters). A promissory note is a monetary instrument, much like the dollar bills you have in your pocket. So in this case the promissory note for $1,000,000, to the funding bank, is the same as a $1,000,000 bill, same as cash. The bank creates a Demand Account in your straw man name. with a balance of zero.  The bank then takes your promissory note (can't fund the loan without it!) and puts it in your straw man demand account. Balance is now $1,000,000 in that account. The bank then writes a cashier's check (or bank wire) for $1,000,000 to pay the seller of the house your buying their Monies in Full. The balance in your straw man demand account is then reduced to zero.

IF the entire process stopped right here, there would be no crime committed, no fraud committed and everyone would be in an equitable position. The moment you start paying principal and interest payment demanded by the bank after your account has been brought to zero, your payments become your damages. The bank is extorting money from you and giving you nothing of value in return!

It would be like you borrowing $100 from me and I have a counterfeit bill printing business in my basement and then demand you pay me back with interest. The UCC has remedies (administrative) for this type of fraud. The banks can be defeated using administrative proceedures in the UCC. They can be beaten using their own rules under the UCC. It is common perception that the banks hold all the cards. They hold cards alright. Ten high with no flush or straight or even a pair and the game is not lowball. The borrower, once this is understood and acted upon actually holds the winning hand.

It can also be stated that when the bank made the "loan" the collateral was the property. They made a business decision. If the homeowner makes a  business decision to allow the bank to take its collateral that does not constitute moral hazard.

I have attempted to make a very murky and complex subject as simple and understandable as I could. Suffice to say, without honest money there can be no honest debt. Moral hazard in not paying the mortgage? What moral hazard?

An Unnatural Act

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Allow me to calmly and succinctly explain myself.

National governments going ever-deeper into debt to assure their citizens that the economy is going to be fine 'n' dandy isn't a cure.

It is, instead, a confession. A confession that the economies of the world are in bad shape and that politicians require the appearance of action in order to seem involved and concerned.

Printing trillions of yen and trillions of dollars isn't the path to a healthy economy. It isn't natural. It's a fake. And fake really bothers your host.

Even as a child, I intuitively knew that the Soviet Union would eventually fail. And even as a childish adult, I intuitively know the same fate awaits Bernanke. What is needed to return to a healthy economy is ingenuity, industry, and – above else – time. Time to heal.

What's happening now is an abomination, which is why I get repulsed when people embrace it as redemption. This charade isn't going to last.

The Turnaround Points That Make Sense

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Everything continues to line up nicely for the drop-into-the-900s that I've been waiting on for the past seventy-two years (OK, OK, not that long……….but it sure feels like it). Psychologically, I am being cautious not to jump the gun two steps ahead. What I mean by that isn't that I'm wrapped around just-how-great it will be once we get into the lower 900s. Instead, I am already "pre-chagrined" that the party will be over at that point.

I feel very much like Colonel Kilgore who, in Apocalypse Now, admonishes his soldiers that "some day this war is gonna end." You can tell by his demeanor he's pretty heartbroken about that prospect.

This is not to say that we're going to cycle into a bull market at that point (ha! bwa ha! pffttt!) But if I am to follow my 1937-1942 analog, what comes after a drop to 925 is a choppy rise back to around 1125 (spanning months, perhaps) and then we can go back into bear mode.

What on earth could push the market back to 1125? Well, our dear friends in D.C. will probably dream up yet another way to hasten the demise of our once-great republic with some cheesey giveaway; maybe Obama and Bernanke will carnally embrace in the Rose Garden, each give birth to live unicorns, and auction them off on national television to help bring down the deficit. I simply don't know, and it hardly matters.

Perhaps you think I'm a fatalist. I don't think so; and even if I was, what could I do about it?

But how low with the S&P get? As anyone conscious here knows, I've repeatedly called for 925, but there are other possibilities. Here's the graph, and beneath it is a brief discussion of each possibility:

0824-stopzones

MAGENTA ZONE: This is the area of "noise" that we hit early in July. Bulltards will be thumping their bibles and stating how this is the buy-zone, since it bounced there last time. We always fight our last battles, don't we? I don't think it's going to hold, and I think bulls are going to soil their pantaloons.

GREEN ZONE: This is the area just beneath, and frankly, in spite of my 925-is-coming declarations, this is where I officially will start getting nervous and tightening up my stops. To date, the market has made a series of slightly-lower-lows, and getting down to, say, the psychologically-important 1000 level and reversing would make a certain amount of sense. If we earnestly crack 1000, expect the darlings in D.C. to start thinking of creative new ways to whore themselves for the sake of Lloyd Blankfein.

YELLOW ZONE: This is where I strip naked and dance on top of a harpsichord. I've been aiming for this zone for almost a year now, and although I'll probably be tempted to hold on to my positions, I will push myself to cover my positions (or at least give them extremely tight stops).

GREY ZONE: This, to me, is the farthest the market could possibly fall this year. It represents a major Fibonacci level, plus it just so happens to be the measured target for that gorgeous head and shoulders pattern. If we drop beneath here, even Tim the Bear will be very, very puzzled and confused. I'm seriously not expecting us to get this far.

And there we have it! I am presently about 120% short………..and I sort of wish I was shorter………and have no long positions (I briefly bought BP and CBS late today, but I tossed them under the bus in short order). The rest of this month promises to be tres interesting.