Wild (Warning) Wednesday

In honor of a new chain starting up...... and by the way, I believe this will shortly confirm as a chain reaction.....

First things first - an omission that I deserve to be spanked for - yesterday we posted a Hindenburg Omen. New Lows and New Highs both over 75, McClellan Oscillator negative, 10W Moving Average upward. Ding.

Note that since this is well outside of the "40 day" window this is NOT part of the previous cluster. It therefore starts the clock ticking on a new cluster; we need another one within roughly a month to confirm it.

And guess what - we got one. So now the clock is ticking - again - on another 40 day window. The last one CONFIRMED. Wanna go long the market right now? Me thinks not.

Second, a number of indicators that I watch but don't talk about flashed grave danger signs today at the close. These are my own "trade secret" things - stuff I don't share with anyone - but its sufficient to say that there's real trouble brewing in the internals of the market right now.

Earnings this evening did not produce good things. WaMu and E*Trade whiffed, along with an unexpected nasty - Allstate. Remember - no storms this year. Where's the whiff? Well, what do you think insurance companies do when they're holding premiums? Yep.

EBAY reported after the close and got a big pop but by the the conference call was finished it was all gone. They closed out the afterhours session where they went out at 4:00 ET - not good.

The futures have bled off their after-hours cheerleading along with it.

Oh, and there was a major flight to treasuries today, along with a selling of precious metals - this spells distribution.

Add all this up and a great big fat warning sign is staring you in the face. If you're long the market, beware. If you're short, well, you may be about to have a lot of fun at The Bull's expense. I got a special cartoon for the occasion if I prove to be right.....

Oil. OIL! Mr. Pickens now calling for $100. Oi. When does the equity market consider this important? Oh, I don't know, but look - gas prices have been held down by contracting crack spreads, and this is going to change kids. Oscillators always oscillate! I expect to see 20 cents a gallon or so of gas price increase show up - that'd be 7, 8% - within the next 2-3 weeks if not sooner. The bottom line on oil is that demand exceeds supply. That's the beginning and end of it, and the price will continue to rise until that is no longer the case. All the people crowing about "geopolitical" are smoking their oil instead of putting it in their SUVs.

At some point this becomes intolerable for the economy and we see bigtime knock-on effects; its just another piece of trouble that filters into the whole. $4 gasoline is coming soon, and I'd predict $5 but I think the recession will get us first and cap demand off, preventing that.

CPI came in up 0.3% headline, 0.2% core. Housing starts down 10.2%, permits down 7.3%, which is a steep acceleration in the decline in new permit activity. That's bad. REALLY bad. The futes didn't react much to either of the numbers initially, although they're bleeding a bit a few minutes later. Coming off the crazy elevated numbers this morning (helped a LOT by the fact that JPM didn't report a disaster, and KO had decent earnings - all overseas) this isn't all that surprising. Of course Intel and Yahoo didn't hurt - but can that last? Hmmmm.... we shall see.

Thornberg Mortgage (TMA), in what has become almost a ritual for these companies when they get in trouble, announced literally in the middle of the night a stunning loss of more than $8/share - nearly all of their shareholder equity - and suspension of their common dividend. Plenty of lipstick put on that pig - but man, does it still stink and the odor of waiting until the dark of night to post the news release didn't help. That shit ought to be against the law - anyone remember AHM? Oh well; I sold my PUTs when they went into the money a while ago.... looks like I was early on that one, but you never will go broke booking a profit!

Don't even get started looking at MTG.

"MGIC Investment Corp., the largest U.S. mortgage insurer, fell to the lowest since 1996 after predicting a loss for next year and saying home prices may drop 10 percent in the next 18 months. A gauge of financial shares retreated for a sixth day, the longest losing streak since 2005."

Oops.

Oh, on that "CPI" thing, the 12 month print as of last month determines the Social Security adjustment for COLA - so for the next year, you see 2.3%. Yeah, right. I guess if you eat computers this is somewhat accurate, but of course we know that you buy one of those as a durable but your food and energy prices - not to mention health care - are rising at a double-digit rate. Not that anyone cares, it would appear. The squeeze on the retiree is relentless - and ugly.

Next up, do you use PayPal and eBAY? Well, guess what! Your funds that are "parked" are exposed to that toxic crap risk. Nice eh? And did they tell you this? Well, if you dig for it. This is the sort of stupid shit that I hope people wake up to - and fast - before they lose a shitload of money. I never "park" anything in there - it comes out the day it hits - but a lot of eBAY sellers use PayPal basically like a bank.

Beware with that kids - its not a bank, is not regulated like a bank, and you have no safety for your funds in there AT ALL. Ask anyone who's ever had a problem with those clowns about it. There are all sorts of "sucks" websites around for PayPal and with some reason. Yes, I know, the "donate" button on my forum uses it. Believe me - the money doesn't sit in there for longer than it takes me to smell it before I ACH it out! Note that there IS a "bank-like" parking place, but of course the money-market fund returns "more."

Kids, there is no such thing as chasing returns beyond Treasuries that does not come with some measure of risk!

The Beige Book came out in a way that can best be described as "tepid at best" - or as Steve Liesman said - "blue". As in "sucking for oxygen?" Yeah. Oh, the market bounced on that. Why? Belief in more rate cuts, believe it or not. Doesn't help you if the economy dies, but heh, the short bus is still being ridden here....

Oh, if you think this SIeVe stuff is just theoretical risk? Uh, not quite:

"The receivers declared an 'insolvency event,' Deloitte said. That means the SIV is unable to pay its debts when they are due, according to its prospectus."

Just call it what it is - the SIeVe just let all the water out - they're bankrupt.

Nice.

Oh, don't look at the ABX..... Nice roller coaster you folks got there......





Heh, Mister, can you spare a quarter? Twenty-five?!

Here's your Technical!

PS: If you haven't signed the petition over at http://financialpetition.org/, please do so! This is important folks - and the fax transmissions are on me. That's right, you sign, I spend, your Congressfolk get your yelling at my expense!