Market Clues

Stocks continued to idle just below significant resistance hit Wednesday afternoon, resistance which caused the Dow to drop 300 points in a matter of seconds, but the crowd is wildly bullish now. Apparently, the fact that October is just about behind us has the fever running high in the OEX crowd. That's a definite warning sign. This is the same crowd that was universally expecting the market to crash this week just a week ago.

We are in the end-of-month period we've been known to call the Monthly Buying Spree during bull markets. It hasn't been a factor during this (or the prior) bear market. This is the time of the month when both individuals and investment managers tend to put their savings to work in buying stocks in retirement accounts. Typically, the market will outperform in this period, but tends to give it all back very quickly in bear markets. So, we may find that the crowd is only bullish for the end-of-month spree and returns to a bearish attitude in early November. And, in fact, looking back at the last year of this bear market, the runup into month-end has been reversed very consistently at the beginning of the next month.

Happy New Year!

October is an extra-special month for mutual funds: their fiscal years all end on Hallowe'en (how appropriate). They tend to buy stocks they hold in their portfolios and run them "up the flagpole" so that their Hallowe'en "family portrait" looks good to prospective customers. Yes, it's illegal, Virginia, but the government certainly doesn't care to prosecute the securities laws they have on the books. Criminal behavior is so ingrained in this market that participants just "do it" and don't worry about it.

If this is a new bull market, there was no washout low in the bear market as there usually is. Maybe there were enough bearish trading vehicles that such washouts are passé today. After all, the trading volume in inverse and double-inverse ETFs, which rise in value when the market falls, has been several times that of their bullish cousins. This may be the first bear market in history in which a significant portion of traders are making money on the dips.

Scale Trading Bonds

Our recent scale trading campaign in the bond market started on October 21 and, as of today, we are completely out of the scale. Here are the results, which assume the trades are conducted during regular trading hours, incur a commission of $3 per round turn and trade one contract per scale line:

Scale Trade Campaign Results
Gross profit	$6625.01
Net profit	$6595.01
Total number of winning trades	10
Total number of losing trades	0
Average holding time per contract	2d9h10m30s

Scale trading is described in the book "You Can't Lose Trading Commodities" by Robert F. Wiest. The book is available from the author at American Scale Trader.

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+2.11%	+189.73
DIAMONDS TRUST SER 1 (DIA)	+4.24%	+380.96
Ultra Dow30 ProShares (DDM)	+5.22%	+469.12
UltraShort Dow30 ProShares (DXD)	-6.38%	-573.82
S&P 500 (index)	+2.81%	+252.88
S& P DEP RECEIPTS (SPY)	+3.39%	+304.37
Ultra S&P500 ProShares (SSO)	+4.68%	+421.17
UltraShort S&P500 ProShares (SDS)	-6.84%	-614.77
NYSE Composite (index)	+3.46%	+311.24
ISHARES NYSE CMP IDX (NYC)	+4.15%	+372.85
S&P SmallCap 600 (index)	+4.28%	+384.69
Ultra SmallCap 600 ProShares (SAA)	+9.31%	+837.17
Short SmallCap 600 ProShares (SBB)	+0.48%	+43.33
UltraShort SmallCap 600 ProShares (SDD)	-8.92%	-801.78
Russell 2000 (index)	+3.17%	+284.81
ISHARE RUS 2000 INDX (IWM)	+5.61%	+504.01
Ultra Russell 2000 ProShares (UWM)	+10.88%	+977.92
UltraShort Russell 2000 ProShares (TWM)	-11.17%	-1004.26
NASDAQ-100 (index)	+2.58%	+231.86
NASDAQ 100 TR SER I (QQQQ)	+3.34%	+299.89
Ultra QQQ ProShares (QLD)	+5.20%	+467.45
UltraShort QQQ ProShares (QID)	-5.24%	-470.70
S&P MidCap 400 (index)	+4.15%	+373.24
ISHARE SP MC 400 INX (IJH)	+5.02%	+451.26
Ultra MC400 ProShares (MVV)	+8.95%	+804.96
UltraShort MC400 ProShares (MZZ)	-9.77%	-878.83
GREENHAVEN Continuous Commodity Indx Fnd (GCC)	-1.81%	-162.91
Amex Gold (index)	+4.57%	+410.74
MKT VECT GOLD MNRS (GDX)	+4.43%	+398.06
STREETTRACKS GOLD TR (GLD)	-1.74%	-156.73
DEUTSCHE BANK DOUBLE SHORT GOLD (DZZ)	+2.37%	+213.51
DEUTSCHE BANK DOUBLE LONG GOLD (DGP)	-4.77%	-428.45
Semiconductor Sector (index)	+4.04%	+362.92
Ultra Semiconductors ProShares (USD)	+11.64%	+1046.68
UltraShort Semiconductors ProShares (SSG)	-11.83%	-1063.66
ISHARE DJ FIN SC INX (IYF)	+2.49%	+224.10
ISHARES LEHMAN 20 YR (TLT)	-0.91%	-81.47
ISHARESLEHMAN 7-10YR (IEF)	-0.77%	-68.89
ISHARES LEH AGG FD (AGG)	-0.12%	-11.19
ISHARES GS $ INVEST (LQD)	-0.74%	-66.92
ISHARES LEHMAN 1-3YR (SHY)	+0.08%	+7.49
ProShares ETFs
UltraShort Lehman 7-10 Year Treasury ProShares (PST)	+1.91%	+171.90
UltraShort Lehman 20+ Year Treasury ProShares (TBT)	+2.11%	+189.44
Short QQQ ProShares (PSQ)	-2.67%	-240.10
Short Dow30 ProShares (DOG)	-2.91%	-261.54
Short S&P500 ProShares (SH)	-2.61%	-235.04
Short MC400 ProShares (MYY)	-2.86%	-257.21
Short SmallCap 600 ProShares (SBB)	+0.48%	+43.33
Short Russell 2000 ProShares (RWM)	-5.31%	-477.57
UltraShort QQQ ProShares (QID)	-5.24%	-470.70
UltraShort Dow30 ProShares (DXD)	-6.38%	-573.82
UltraShort S&P500 ProShares (SDS)	-6.84%	-614.77
UltraShort MC400 ProShares (MZZ)	-9.77%	-878.83
UltraShort SmallCap 600 ProShares (SDD)	-8.92%	-801.78
UltraShort Russell 2000 ProShares (TWM)	-11.17%	-1004.26
UltraShort Russell 1000 Value ProShares (SJF)	-0.56%	-50.02
UltraShort Russell 1000 Growth ProShares (SFK)	-4.73%	-425.44
UltraShort Russell MidCap Value ProShares (SJL)	+0.43%	+38.53
UltraShort Russell MidCap Growth ProShares (SDK)	-7.01%	-630.65
UltraShort Russell 2000 Value ProShares (SJH)	-4.95%	-445.26
UltraShort Russell 2000 Growth ProShares (SKK)	-9.42%	-846.54
UltraShort Basic Materials ProShares (SMN)	-7.54%	-678.35
UltraShort Consumer Goods ProShares (SZK)	-3.99%	-358.44
UltraShort Consumer Services ProShares (SCC)	-7.38%	-663.12
UltraShort Financials ProShares (SKF)	-5.29%	-475.92
UltraShort Health Care ProShares (RXD)	-0.13%	-11.26
UltraShort Industrials ProShares (SIJ)	-6.95%	-624.80
UltraShort Oil & Gas ProShares (DUG)	-8.96%	-805.42
UltraShort Real Estate ProShares (SRS)	-7.78%	-699.70
UltraShort Semiconductors ProShares (SSG)	-11.83%	-1063.66
UltraShort Technology ProShares (REW)	-7.29%	-655.74
UltraShort Utilities ProShares (SDP)	-7.89%	-709.81
Short MSCI Emerging Markets ProShares (EUM)	-13.03%	-1171.57
Short MSCI EAFE ProShares (EFZ)	-4.90%	-440.28
UltraShort MSCI EAFE ProShares (EFU)	-7.21%	-647.80
UltraShort MSCI Emerging Markets ProShares (EEV)	-23.14%	-2080.88
UltraShort MSCI Japan ProShares (EWV)	-7.90%	-710.52
UltraShort FTSE/Xinhua China 25 ProShares (FXP)	-24.64%	-2215.04
Ultra QQQ ProShares (QLD)	+5.20%	+467.45
Ultra Dow30 ProShares (DDM)	+5.22%	+469.12
Ultra S&P500 ProShares (SSO)	+4.68%	+421.17
Ultra MC400 ProShares (MVV)	+8.95%	+804.96
Ultra SmallCap 600 ProShares (SAA)	+9.31%	+837.17
Ultra Russell 2000 ProShares (UWM)	+10.88%	+977.92
Ultra Russell 1000 Value ProShares (UVG)	+5.95%	+535.07
Ultra Russell 1000 Growth ProShares (UKF)	+6.20%	+557.55
Ultra Russell MidCap Value ProShares (UVU)	-1.77%	-159.09
Ultra Russell MidCap Growth ProShares (UKW)	+7.19%	+646.76
Ultra Russell 2000 Value ProShares (UVT)	+7.76%	+697.78
Ultra Russell2000 Growth ProShares (UKK)	+7.28%	+654.45
Ultra Basic Materials ProShares (UYM)	+7.94%	+713.64
Ultra Consumer Goods ProShares (UGE)	+3.26%	+293.39
Ultra Consumer Services ProShares (UCC)	+1.64%	+147.81
Ultra Financials ProShares (UYG)	+3.75%	+337.16
Ultra Health Care ProShares (RXL)	+6.25%	+561.78
Ultra Industrials ProShares (UXI)	+6.22%	+558.93
Ultra Oil & Gas ProShares (DIG)	+11.04%	+992.64
Ultra Real Estate ProShares (URE)	+9.44%	+849.15
Ultra Semiconductors ProShares (USD)	+11.64%	+1046.68
Ultra Technology ProShares (ROM)	+6.64%	+597.35
Ultra Utilities ProShares (UPW)	+9.68%	+870.09
Other ETFs
PowerShares DB Base Metals Double Short (BOM)	+7.02%	+631.10
PowerShares DB Base Metals Double Long (BDD)	-16.20%	-1456.48
PowerShares DB Base Metals Short (BOS)	+6.24%	+561.14
PowerShares DB Crude Oil Double Short (DTO)	+2.68%	+240.96
PowerShares DB Crude Oil Short (SZO)	+2.27%	+204.53
PowerShares DB Crude Oil Double Long (DXO)	-6.38%	-573.53
PowerShares DB Crude Oil Long (OLO)	-3.11%	-279.51

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 9:24 PM

Banks Are (Still) Killing the Economy and the Stock Market

The Fed cut interest rates Wednesday as low as they can go without putting money market funds out of business. And, it will have about as much effect on the economy as a drop of water in the ocean. In other words, nothing of any real consequence, a non-event.

Short term traders decided that the all-clear signal had been given on Tuesday and they bought more calls than puts on Wednesday. That's a turnaround as they had been consistently buying puts on every rally prior to today. And, for a while, they were right. The market slogged higher. However, what they didn't realize in their zeal to "catch the bottom" and "not miss the train" was that the support line which had given the market a rally from July to the beginning of September, and which had been broken decisively in mid-September, was just overhead. Now, in technical analysis, a broken support line, when approached from underneath, is almost always a solid ceiling of resistance. This case proved the point as the Dow hit that line and plunged, losing all of the day's gains and giving back a couple of hundred of yesterday's point gain as well.

Selling into the rally was indeed the right way to approach today's action, just as we expected. The market is likely still caught in that large, trading range pattern we first identified in early October. That continuation pattern is likely to keep the market bound within a trading range for a considerable period of time, but should present long term swing traders with some excellent profit opportunities in the next few weeks---regardless of how the Election turns out.

Tuesday and Wednesday's rally was due to a panic in the currency markets:

As some currencies wobble, the Japanese yen has hit highs against the dollar not seen since the 1990s. In an unusual step, the G-7 grouping of rich countries signaled Monday that it supported intervention by the Bank of Japan to cap the yen's rapid rise.

As with the dollar, the yen's rise is underpinned by a repatriation of capital to Japan, including money borrowed when Japan's interest rates were much lower than those of other markets. That spurred a flurry of speculative offshore bets that have become less attractive as the US and other central banks pare rates to aid their wilting economies.

The recent rally in the US Dollar has pressured commodities and currencies lower as hedge funds have been forced to sell their most liquid holdings in order to meet bank demands for cash. This artificial pressure (heaven knows, the banks don't really need any more money considering the trillions they're getting from the government) has pushed both commodities and stocks to extremely undervalued levels, assuming the world economy doesn't go into a Depression (of course, one can argue that a Depression is already underway, but that's still not proven). If we avoid a long Depression, long term traders are going to find an excellent buying opportunity---better even than the 2002-2003 lows, in fact---in the not-too-distant future.

No market goes in a straight line for very long. So, when the US Dollar turned down on Tuesday, it was an immediate signal for all those markets which had been under intense, bank-induced selling pressure to bounce. It's like compressing a ball by forcing it underwater. It takes a lot of force to push it lower, but once the force is released, it comes shooting up out of the water. That's what stocks and commodities have done. Stocks soared over a thousand points as the oversold condition was released temporarily. Oil zoomed higher, despite the fact that oil supply-and-demand fundamentals say it's still overvalued. Gold even rallied against the current deflationary background. These temporary moves relieve the pressure. But, eventually, that pressure returns as there is no sign the banks are letting up the pressure to "Sell, sell, sell!"

At one point this week, Volkwagen, the German automaker, found it was valued higher than Exxon-Mobil due to extremely high volatility as hedge funds were forced to cover naked short sales in the company's stock. Then, today, the company's shares lost tens of billions of dollars in value. Easy come, easy go? Or, just mark-to-market valuation, something we've railed against in the past and which is the number one proximate cause for the failure of banks which are "too big to fail." An Associated Press article explains the market's move succinctly:

Neil Mackinnon, chief economist at ECU Group, said much of the developments in VW is symptomatic of what's been going on across markets in the last few weeks.

"I think that a lot of the extreme and violent moves across asset classes has a lot to do with hedge funds deleveraging and unwinding positions," he said. "The position scrambling is largely responsible for the eye-popping moves."

Once the forced selling hedge funds has ended, some analysts think a semblance of normality may emerge.

"To the extent it is hedge fund liquidation that is driving the panic it could be over, if not by Thanksgiving, then at least by Christmas," said Charles Dumas, analyst at Lombard Street Research.

If hedge funds do return to the market at anything like the level they had before, then the extremes in volatility that have characterized markets in recent weeks may abate.

But with many expecting a global recession, it's unlikely the recovery in the Dow and consistent gains in Asia and Europe over the last couple of days signal that the turbulent days are over.

"The real question is how long this risk taking, bottom fishing or relief rally will continue given the risks on the horizon," said Divyang Shah, chief strategist at the Commonwealth Bank of Australia.

We Need an Old-Fashioned Purge---of the Banks

The real key to recovery is either getting completely rid of the banks and having the government distribute money directly to individuals (e.g., the State of Alaska), such as a citizen's dividend, or simply ordering the banks to start lending again. We prefer the former, but we know most of you prefer the latter (why you think the banks are still viable is one of the mysteries of the ages considering that they are the generators of the economic boom-bust (inflation-deflation) cycle of which we are suffering through the latest in a long line of busts right now). Now, if we do see a Depression, we hope you'll realize that it was not the politicians who primarily put us in a Depression---it was the banks. The banks own the politicians by funding them in legal (and illegal) ways. The banks don't deserve to continue inflicting damage on the economy and transferring funds out of the Treasury and locking them up in their vaults. Getting rid of the banks will require a restructuring of the financial system, certainly, but it won't be that traumatic to the economy considerating that the banks are simply mostly hoarding all that cash you, the taxpayer, has so generously provided them. Or, they're paying their executives to vacation in the Caribbean on company-paid holidays (putting that group of criminals in prison should be one of the first priorities when the purge of the banks takes place).

Maybe a purge of the banks will happen. Maybe the next leg down in the stock market will convince the new Administration to make a real change.

Hey, now there's a campaign theme that makes sense---Change. What a novel idea that we might stop making the same kind of mistakes over and over again and actually CHANGE the system by eliminating the banks.

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-0.82%	-74.16
DIAMONDS TRUST SER 1 (DIA)	-2.48%	-225.13
Ultra Dow30 ProShares (DDM)	-2.69%	-244.11
UltraShort Dow30 ProShares (DXD)	+3.14%	+284.49
S&P 500 (index)	-1.25%	-112.96
S& P DEP RECEIPTS (SPY)	-0.91%	-82.06
Ultra S&P500 ProShares (SSO)	-2.45%	-222.13
UltraShort S&P500 ProShares (SDS)	+3.77%	+341.70
NYSE Composite (index)	+0.72%	+65.54
ISHARES NYSE CMP IDX (NYC)	+0.59%	+53.53
S&P SmallCap 600 (index)	+2.11%	+191.37
Ultra SmallCap 600 ProShares (SAA)	+2.26%	+204.95
Short SmallCap 600 ProShares (SBB)	-6.02%	-545.64
UltraShort SmallCap 600 ProShares (SDD)	-4.96%	-449.54
Russell 2000 (index)	+1.73%	+156.49
ISHARE RUS 2000 INDX (IWM)	+0.52%	+46.78
Ultra Russell 2000 ProShares (UWM)	+1.19%	+107.51
UltraShort Russell 2000 ProShares (TWM)	-2.53%	-229.09
NASDAQ-100 (index)	-0.18%	-16.63
NASDAQ 100 TR SER I (QQQQ)	-0.25%	-22.76
Ultra QQQ ProShares (QLD)	+1.08%	+97.50
UltraShort QQQ ProShares (QID)	-1.23%	-111.91
S&P MidCap 400 (index)	+1.80%	+162.94
ISHARE SP MC 400 INX (IJH)	+0.75%	+67.71
Ultra MC400 ProShares (MVV)	+3.66%	+331.52
UltraShort MC400 ProShares (MZZ)	-0.46%	-41.88
GREENHAVEN Continuous Commodity Indx Fnd (GCC)	+4.65%	+421.54
Amex Gold (index)	+12.84%	+1164.29
MKT VECT GOLD MNRS (GDX)	+11.18%	+1013.70
STREETTRACKS GOLD TR (GLD)	+0.28%	+25.80
DEUTSCHE BANK DOUBLE SHORT GOLD (DZZ)	-0.26%	-23.86
DEUTSCHE BANK DOUBLE LONG GOLD (DGP)	+0.72%	+64.94
Semiconductor Sector (index)	-2.78%	-252.36
Ultra Semiconductors ProShares (USD)	-6.27%	-568.73
UltraShort Semiconductors ProShares (SSG)	+8.07%	+731.90
ISHARE DJ FIN SC INX (IYF)	-2.66%	-241.06
ISHARES LEHMAN 20 YR (TLT)	-0.50%	-45.62
ISHARESLEHMAN 7-10YR (IEF)	+0.15%	+13.30
ISHARES LEH AGG FD (AGG)	+1.90%	+172.52
ISHARES GS $ INVEST (LQD)	+1.69%	+152.82
ISHARES LEHMAN 1-3YR (SHY)	+0.06%	+5.39
ProShares ETFs
UltraShort Lehman 7-10 Year Treasury ProShares (PST)	-0.74%	-67.20
UltraShort Lehman 20+ Year Treasury ProShares (TBT)	+1.16%	+105.53
Short QQQ ProShares (PSQ)	-0.21%	-18.95
Short Dow30 ProShares (DOG)	+1.57%	+142.54
Short S&P500 ProShares (SH)	+0.99%	+90.02
Short MC400 ProShares (MYY)	-3.21%	-290.81
Short SmallCap 600 ProShares (SBB)	-6.02%	-545.64
Short Russell 2000 ProShares (RWM)	-0.97%	-88.17
UltraShort QQQ ProShares (QID)	-1.23%	-111.91
UltraShort Dow30 ProShares (DXD)	+3.14%	+284.49
UltraShort S&P500 ProShares (SDS)	+3.77%	+341.70
UltraShort MC400 ProShares (MZZ)	-0.46%	-41.88
UltraShort SmallCap 600 ProShares (SDD)	-4.96%	-449.54
UltraShort Russell 2000 ProShares (TWM)	-2.53%	-229.09
UltraShort Russell 1000 Value ProShares (SJF)	-0.54%	-48.77
UltraShort Russell 1000 Growth ProShares (SFK)	+0.39%	+34.91
UltraShort Russell MidCap Value ProShares (SJL)	-4.60%	-417.34
UltraShort Russell MidCap Growth ProShares (SDK)	-6.69%	-606.03
UltraShort Russell 2000 Value ProShares (SJH)	-2.43%	-220.05
UltraShort Russell 2000 Growth ProShares (SKK)	-3.94%	-357.23
UltraShort Basic Materials ProShares (SMN)	-8.00%	-725.21
UltraShort Consumer Goods ProShares (SZK)	+2.36%	+214.07
UltraShort Consumer Services ProShares (SCC)	+1.99%	+180.46
UltraShort Financials ProShares (SKF)	+6.54%	+593.23
UltraShort Health Care ProShares (RXD)	-3.91%	-354.53
UltraShort Industrials ProShares (SIJ)	-1.14%	-103.30
UltraShort Oil & Gas ProShares (DUG)	-2.91%	-263.52
UltraShort Real Estate ProShares (SRS)	+7.39%	+669.70
UltraShort Semiconductors ProShares (SSG)	+8.07%	+731.90
UltraShort Technology ProShares (REW)	+5.53%	+501.55
UltraShort Utilities ProShares (SDP)	+2.58%	+233.58
Short MSCI Emerging Markets ProShares (EUM)	+2.93%	+265.59
Short MSCI EAFE ProShares (EFZ)	+0.85%	+77.13
UltraShort MSCI EAFE ProShares (EFU)	-1.34%	-121.15
UltraShort MSCI Emerging Markets ProShares (EEV)	-2.14%	-193.70
UltraShort MSCI Japan ProShares (EWV)	+2.53%	+229.59
UltraShort FTSE/Xinhua China 25 ProShares (FXP)	-2.71%	-245.91
Ultra QQQ ProShares (QLD)	+1.08%	+97.50
Ultra Dow30 ProShares (DDM)	-2.69%	-244.11
Ultra S&P500 ProShares (SSO)	-2.45%	-222.13
Ultra MC400 ProShares (MVV)	+3.66%	+331.52
Ultra SmallCap 600 ProShares (SAA)	+2.26%	+204.95
Ultra Russell 2000 ProShares (UWM)	+1.19%	+107.51
Ultra Russell 1000 Value ProShares (UVG)	0.00%	0.00
Ultra Russell 1000 Growth ProShares (UKF)	-1.02%	-92.13
Ultra Russell MidCap Value ProShares (UVU)	+6.88%	+623.39
Ultra Russell MidCap Growth ProShares (UKW)	+4.86%	+440.31
Ultra Russell 2000 Value ProShares (UVT)	+4.21%	+381.43
Ultra Russell2000 Growth ProShares (UKK)	+5.95%	+539.59
Ultra Basic Materials ProShares (UYM)	+9.43%	+854.71
Ultra Consumer Goods ProShares (UGE)	+0.93%	+84.27
Ultra Consumer Services ProShares (UCC)	+0.61%	+55.69
Ultra Financials ProShares (UYG)	-1.01%	-91.77
Ultra Health Care ProShares (RXL)	-3.03%	-274.63
Ultra Industrials ProShares (UXI)	+3.58%	+324.72
Ultra Oil & Gas ProShares (DIG)	+4.42%	+400.55
Ultra Real Estate ProShares (URE)	-7.31%	-662.85
Ultra Semiconductors ProShares (USD)	-6.27%	-568.73
Ultra Technology ProShares (ROM)	-2.91%	-263.97
Ultra Utilities ProShares (UPW)	-2.16%	-196.03
Other ETFs
PowerShares NASDAQ-100 BuyWrite Portfolio (PQBW)	+3.74%	+339.13
PowerShares DB Base Metals Double Short (BOM)	-6.17%	-559.00
PowerShares DB Base Metals Short (BOS)	-5.04%	-457.02
PowerShares DB Crude Oil Double Short (DTO)	-4.24%	-384.74
PowerShares DB Crude Oil Short (SZO)	-4.80%	-435.14
PowerShares DB Crude Oil Double Long (DXO)	+21.69%	+1966.18
PowerShares DB Crude Oil Long (OLO)	+7.31%	+662.42

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 9:43 PM

Stocks rallied Tuesday in a bear market rally that boosted bullish sentiment, but was just a trading range move for a market which is waiting for clear direction.

As the global credit crisis spreads to emerging countries, who are now on the downside of the credit and commodity cycles as their debt and falling prices submerges them, focus is shifting to Europe, where waves of panic are hitting the currency markets and the banking system. The Euro, having lost almost a quarter of its value in just the last couple of months, is gasping for air. The failure of the "single currency" is no longer something to laugh about. This idea of a single currency for a set of disparate countries always was a jerry-built car of baling wire just waiting to hit a big pothole. And, we have hit that pothole now.

It seems the emerging markets were only too eager to borrow money they just knew they would earn in the next year or two. You know, with commodity prices at all-time highs, who could imagine they might actually come down? And so, as always happens in bubbles, the participants were guilty of that old sin of hubris and went deeply into debt to finance current purchases. Luckily for America, they mostly borrowed money from European banks. And, now, it's those banks which are basically insolvent and collapsing across the continent.

The bottom line is that the next wave of "subprime" defaults are beginning and, this time, they're hitting Europe hard.

The bond market continued to deliver scale traders profits as volatility there triggered two more profitable trades, bring total realized profits within the current single-contract scale campaign, for this week and last combined, to at least $5000, including commissions, by the close Tuesday. That's almost a 20% return on investment in just seven trading days. And, even better, there are no unrealized losses because there is only one contract in inventory as of the close Tuesday---and it's currently in a profit position.

Concern about the recent Yen-Carry Unwinding which has boosted the value of the Yen enormously and has battered equity markets worldwide, was eased Tuesday by a rumor that the Japanese Central Bank plans to cut short term interest rates by ½% this week, causing a reversal in equities that sent the Dow soaring back toward the top of the recent trading range. There is considerable ease of price movement within the range:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+10.88%	+889.35
DIAMONDS TRUST SER 1 (DIA)	+13.18%	+1077.90
Ultra Dow30 ProShares (DDM)	+22.59%	+1847.14
UltraShort Dow30 ProShares (DXD)	-22.21%	-1815.80
S&P 500 (index)	+10.50%	+858.39
S& P DEP RECEIPTS (SPY)	+12.05%	+985.38
Ultra S&P500 ProShares (SSO)	+22.12%	+1808.39
UltraShort S&P500 ProShares (SDS)	-21.09%	-1724.41
NYSE Composite (index)	+10.33%	+844.74
ISHARES NYSE CMP IDX (NYC)	+9.60%	+785.15
S&P SmallCap 600 (index)	+7.50%	+613.38
Ultra SmallCap 600 ProShares (SAA)	+16.93%	+1384.10
Short SmallCap 600 ProShares (SBB)	-4.05%	-330.85
UltraShort SmallCap 600 ProShares (SDD)	-12.65%	-1034.34
Russell 2000 (index)	+5.06%	+414.08
ISHARE RUS 2000 INDX (IWM)	+8.00%	+654.28
Ultra Russell 2000 ProShares (UWM)	+16.92%	+1383.03
UltraShort Russell 2000 ProShares (TWM)	-15.60%	-1275.53
NASDAQ-100 (index)	+10.59%	+865.82
NASDAQ 100 TR SER I (QQQQ)	+11.05%	+903.35
Ultra QQQ ProShares (QLD)	+20.92%	+1710.50
UltraShort QQQ ProShares (QID)	-21.58%	-1764.59
S&P MidCap 400 (index)	+8.61%	+703.81
ISHARE SP MC 400 INX (IJH)	+9.32%	+761.77
Ultra MC400 ProShares (MVV)	+17.57%	+1436.34
UltraShort MC400 ProShares (MZZ)	-18.95%	-1549.32
GREENHAVEN Continuous Commodity Indx Fnd (GCC)	+0.50%	+40.80
Amex Gold (index)	+13.16%	+1076.07
MKT VECT GOLD MNRS (GDX)	+13.41%	+1096.39
STREETTRACKS GOLD TR (GLD)	+2.23%	+182.36
DEUTSCHE BANK DOUBLE SHORT GOLD (DZZ)	-2.91%	-238.13
DEUTSCHE BANK DOUBLE LONG GOLD (DGP)	+6.08%	+497.01
Semiconductor Sector (index)	+9.33%	+763.08
Ultra Semiconductors ProShares (USD)	+19.18%	+1568.17
UltraShort Semiconductors ProShares (SSG)	-19.39%	-1585.26
ISHARE DJ FIN SC INX (IYF)	+12.24%	+1001.04
ISHARES LEHMAN 20 YR (TLT)	-1.46%	-119.09
ISHARESLEHMAN 7-10YR (IEF)	-0.81%	-65.89
ISHARES LEH AGG FD (AGG)	+0.35%	+28.63
ISHARES GS $ INVEST (LQD)	-0.66%	-54.02
ISHARES LEHMAN 1-3YR (SHY)	+0.12%	+9.74
ProShares ETFs
UltraShort Lehman 7-10 Year Treasury ProShares (PST)	+1.89%	+154.38
UltraShort Lehman 20+ Year Treasury ProShares (TBT)	+2.85%	+233.00
Short QQQ ProShares (PSQ)	-10.82%	-884.82
Short Dow30 ProShares (DOG)	-10.94%	-894.67
Short S&P500 ProShares (SH)	-11.02%	-900.86
Short MC400 ProShares (MYY)	-8.79%	-718.53
Short SmallCap 600 ProShares (SBB)	-4.05%	-330.85
Short Russell 2000 ProShares (RWM)	-7.35%	-600.68
UltraShort QQQ ProShares (QID)	-21.58%	-1764.59
UltraShort Dow30 ProShares (DXD)	-22.21%	-1815.80
UltraShort S&P500 ProShares (SDS)	-21.09%	-1724.41
UltraShort MC400 ProShares (MZZ)	-18.95%	-1549.32
UltraShort SmallCap 600 ProShares (SDD)	-12.65%	-1034.34
UltraShort Russell 2000 ProShares (TWM)	-15.60%	-1275.53
UltraShort Russell 1000 Value ProShares (SJF)	-15.18%	-1240.76
UltraShort Russell 1000 Growth ProShares (SFK)	-18.54%	-1515.56
UltraShort Russell MidCap Value ProShares (SJL)	-18.46%	-1509.37
UltraShort Russell MidCap Growth ProShares (SDK)	-15.21%	-1243.50
UltraShort Russell 2000 Value ProShares (SJH)	-14.92%	-1220.15
UltraShort Russell 2000 Growth ProShares (SKK)	-14.85%	-1214.38
UltraShort Basic Materials ProShares (SMN)	-22.66%	-1852.96
UltraShort Consumer Goods ProShares (SZK)	-16.77%	-1370.85
UltraShort Consumer Services ProShares (SCC)	-21.86%	-1787.31
UltraShort Financials ProShares (SKF)	-23.59%	-1928.76
UltraShort Health Care ProShares (RXD)	-10.96%	-896.41
UltraShort Industrials ProShares (SIJ)	-17.39%	-1421.42
UltraShort Oil & Gas ProShares (DUG)	-24.30%	-1986.37
UltraShort Real Estate ProShares (SRS)	-33.28%	-2720.61
UltraShort Semiconductors ProShares (SSG)	-19.39%	-1585.26
UltraShort Technology ProShares (REW)	-21.10%	-1725.10
UltraShort Utilities ProShares (SDP)	-18.34%	-1499.83
Short MSCI Emerging Markets ProShares (EUM)	-19.10%	-1561.82
Short MSCI EAFE ProShares (EFZ)	-13.62%	-1113.27
UltraShort MSCI EAFE ProShares (EFU)	-26.22%	-2143.38
UltraShort MSCI Emerging Markets ProShares (EEV)	-39.69%	-3245.02
UltraShort MSCI Japan ProShares (EWV)	-22.36%	-1828.50
UltraShort FTSE/Xinhua China 25 ProShares (FXP)	-35.14%	-2872.98
Ultra QQQ ProShares (QLD)	+20.92%	+1710.50
Ultra Dow30 ProShares (DDM)	+22.59%	+1847.14
Ultra S&P500 ProShares (SSO)	+22.12%	+1808.39
Ultra MC400 ProShares (MVV)	+17.57%	+1436.34
Ultra SmallCap 600 ProShares (SAA)	+16.93%	+1384.10
Ultra Russell 2000 ProShares (UWM)	+16.92%	+1383.03
Ultra Russell 1000 Value ProShares (UVG)	+16.88%	+1379.72
Ultra Russell 1000 Growth ProShares (UKF)	+18.84%	+1540.36
Ultra Russell MidCap Value ProShares (UVU)	+18.79%	+1536.09
Ultra Russell MidCap Growth ProShares (UKW)	+16.67%	+1362.63
Ultra Russell 2000 Value ProShares (UVT)	+14.37%	+1175.27
Ultra Russell2000 Growth ProShares (UKK)	+7.33%	+599.56
Ultra Basic Materials ProShares (UYM)	+21.11%	+1725.68
Ultra Consumer Goods ProShares (UGE)	+13.92%	+1137.93
Ultra Consumer Services ProShares (UCC)	+16.26%	+1329.69
Ultra Financials ProShares (UYG)	+17.13%	+1400.33
Ultra Health Care ProShares (RXL)	+13.02%	+1064.21
Ultra Industrials ProShares (UXI)	+16.09%	+1315.41
Ultra Oil & Gas ProShares (DIG)	+21.62%	+1767.29
Ultra Real Estate ProShares (URE)	+33.01%	+2699.12
Ultra Semiconductors ProShares (USD)	+19.18%	+1568.17
Ultra Technology ProShares (ROM)	+22.59%	+1847.21
Ultra Utilities ProShares (UPW)	+18.53%	+1515.08
Other ETFs
PowerShares DB Base Metals Double Short (BOM)	-3.84%	-313.70
PowerShares DB Base Metals Short (BOS)	-3.09%	-252.84
PowerShares DB Crude Oil Double Short (DTO)	-2.34%	-191.39
PowerShares DB Crude Oil Short (SZO)	-0.47%	-38.15
PowerShares DB Crude Oil Double Long (DXO)	+10.89%	+890.02
PowerShares DB Crude Oil Long (OLO)	-1.02%	-83.56

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 9:27 PM

Stocks rallied Monday, then slipped back as the crowd awaits the fabled "capitulation low" which washes all of the weak hands out of the market and sets a significant bear market low. Then, the crowd will buy with both fists---or so the theory goes.

The latest government bailout of private companies appears to be centering on automakers. After decades of mismanagement of their companies, top management is getting rewarded for its inability to plan ahead and produce transportation appropriate for the 21st century. Welcome to the crowd at the public feed trough, Detroit. You'll find seats at the banquet table next to your colleagues in insurance (AIG), banks (JPMorgan, et al) and home lenders (Freddie and Fannie). At the rate things are going, all the big, inefficient and poorly-run companies in America will be nationalized by the end of the year. At taxpayer expense, of course.

By the way, in case you missed it, remember that $700 Billion cash infusion the government is making to big private banks? It was supposed to "encourage" them to start lending again, wasn't it? (The government would never meddle in private industry and actually "require" them to do what they've been given a government franchise to do, now would it?) Well, forget that idea, that's so last week. This week, the big banks are on a buying spree---buying up smaller banks with the money the government plopped in their laps. They say they'll be sure to start lending again later. This is what's known as the "free market" according to Republicans---take taxpayer money and give it to the rich. Next thing you know, they'll be promoting "democracy" by passing a poll tax.

The biggest surprise of the year will not be seeing the stock market rally. The biggest surprise will be seeing a Republican win re-election to the Congress.

Stocks showed strength, just before swan-diving into the close:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-2.42%	-203.18
DIAMONDS TRUST SER 1 (DIA)	-2.60%	-218.23
Ultra Dow30 ProShares (DDM)	-4.66%	-390.10
UltraShort Dow30 ProShares (DXD)	+5.65%	+473.43
S&P 500 (index)	-3.51%	-293.86
S& P DEP RECEIPTS (SPY)	-3.70%	-310.05
Ultra S&P500 ProShares (SSO)	-6.68%	-559.65
UltraShort S&P500 ProShares (SDS)	+5.79%	+485.44
NYSE Composite (index)	-4.26%	-356.63
ISHARES NYSE CMP IDX (NYC)	-4.30%	-359.93
S&P SmallCap 600 (index)	-5.20%	-436.12
Ultra SmallCap 600 ProShares (SAA)	-10.22%	-856.63
Short SmallCap 600 ProShares (SBB)	+3.16%	+264.63
UltraShort SmallCap 600 ProShares (SDD)	+8.55%	+716.32
Russell 2000 (index)	-5.40%	-452.87
ISHARE RUS 2000 INDX (IWM)	-4.90%	-410.33
Ultra Russell 2000 ProShares (UWM)	-9.44%	-791.18
UltraShort Russell 2000 ProShares (TWM)	+9.16%	+767.54
NASDAQ-100 (index)	-2.69%	-225.49
NASDAQ 100 TR SER I (QQQQ)	-2.78%	-232.83
Ultra QQQ ProShares (QLD)	-5.84%	-489.60
UltraShort QQQ ProShares (QID)	+4.34%	+363.44
S&P MidCap 400 (index)	-4.29%	-359.86
ISHARE SP MC 400 INX (IJH)	-5.26%	-440.47
Ultra MC400 ProShares (MVV)	-9.84%	-824.27
UltraShort MC400 ProShares (MZZ)	+9.60%	+804.14
GREENHAVEN Continuous Commodity Indx Fnd (GCC)	+0.82%	+68.99
Amex Gold (index)	-9.83%	-823.92
MKT VECT GOLD MNRS (GDX)	-10.43%	-874.33
STREETTRACKS GOLD TR (GLD)	-0.04%	-3.48
DEUTSCHE BANK DOUBLE SHORT GOLD (DZZ)	+0.36%	+30.08
DEUTSCHE BANK DOUBLE LONG GOLD (DGP)	-0.45%	-38.03
Semiconductor Sector (index)	+0.11%	+9.47
Ultra Semiconductors ProShares (USD)	-0.32%	-27.15
UltraShort Semiconductors ProShares (SSG)	+1.13%	+94.37
ISHARE DJ FIN SC INX (IYF)	-4.20%	-351.53
ISHARES LEHMAN 20 YR (TLT)	+0.07%	+6.06
ISHARESLEHMAN 7-10YR (IEF)	-0.06%	-4.69
ISHARES LEH AGG FD (AGG)	-1.00%	-83.61
ISHARES GS $ INVEST (LQD)	-0.65%	-54.06
ISHARES LEHMAN 1-3YR (SHY)	-0.25%	-20.91
ProShares ETFs
UltraShort Lehman 7-10 Year Treasury ProShares (PST)	+0.17%	+13.95
UltraShort Lehman 20+ Year Treasury ProShares (TBT)	-0.95%	-79.77
Short QQQ ProShares (PSQ)	+2.41%	+201.93
Short Dow30 ProShares (DOG)	+2.17%	+181.75
Short S&P500 ProShares (SH)	+3.00%	+251.19
Short MC400 ProShares (MYY)	+5.00%	+419.13
Short SmallCap 600 ProShares (SBB)	+3.16%	+264.63
Short Russell 2000 ProShares (RWM)	+4.52%	+378.48
UltraShort QQQ ProShares (QID)	+4.34%	+363.44
UltraShort Dow30 ProShares (DXD)	+5.65%	+473.43
UltraShort S&P500 ProShares (SDS)	+5.79%	+485.44
UltraShort MC400 ProShares (MZZ)	+9.60%	+804.14
UltraShort SmallCap 600 ProShares (SDD)	+8.55%	+716.32
UltraShort Russell 2000 ProShares (TWM)	+9.16%	+767.54
UltraShort Russell 1000 Value ProShares (SJF)	+0.29%	+24.10
UltraShort Russell 1000 Growth ProShares (SFK)	+6.87%	+575.34
UltraShort Russell MidCap Value ProShares (SJL)	+8.43%	+706.32
UltraShort Russell MidCap Growth ProShares (SDK)	+5.17%	+433.47
UltraShort Russell 2000 Value ProShares (SJH)	+8.44%	+706.90
UltraShort Russell 2000 Growth ProShares (SKK)	+11.31%	+947.66
UltraShort Basic Materials ProShares (SMN)	+13.20%	+1106.38
UltraShort Consumer Goods ProShares (SZK)	+4.73%	+396.40
UltraShort Consumer Services ProShares (SCC)	+5.94%	+498.10
UltraShort Financials ProShares (SKF)	+8.66%	+725.31
UltraShort Health Care ProShares (RXD)	+7.51%	+628.94
UltraShort Industrials ProShares (SIJ)	+4.75%	+398.29
UltraShort Oil & Gas ProShares (DUG)	+10.18%	+853.34
UltraShort Real Estate ProShares (SRS)	+11.47%	+961.07
UltraShort Semiconductors ProShares (SSG)	+1.13%	+94.37
UltraShort Technology ProShares (REW)	+4.38%	+366.92
UltraShort Utilities ProShares (SDP)	+8.49%	+711.30
Short MSCI Emerging Markets ProShares (EUM)	+2.49%	+209.03
Short MSCI EAFE ProShares (EFZ)	+6.79%	+568.86
UltraShort MSCI EAFE ProShares (EFU)	+10.27%	+860.80
UltraShort MSCI Emerging Markets ProShares (EEV)	+6.19%	+518.24
UltraShort MSCI Japan ProShares (EWV)	+11.71%	+981.59
UltraShort FTSE/Xinhua China 25 ProShares (FXP)	+21.04%	+1762.79
Ultra QQQ ProShares (QLD)	-5.84%	-489.60
Ultra Dow30 ProShares (DDM)	-4.66%	-390.10
Ultra S&P500 ProShares (SSO)	-6.68%	-559.65
Ultra MC400 ProShares (MVV)	-9.84%	-824.27
Ultra SmallCap 600 ProShares (SAA)	-10.22%	-856.63
Ultra Russell 2000 ProShares (UWM)	-9.44%	-791.18
Ultra Russell 1000 Value ProShares (UVG)	-11.10%	-930.05
Ultra Russell 1000 Growth ProShares (UKF)	-10.31%	-864.03
Ultra Russell MidCap Value ProShares (UVU)	-7.38%	-618.12
Ultra Russell MidCap Growth ProShares (UKW)	-5.48%	-459.34
Ultra Russell 2000 Value ProShares (UVT)	-6.87%	-575.50
Ultra Russell2000 Growth ProShares (UKK)	-10.45%	-875.41
Ultra Basic Materials ProShares (UYM)	-15.50%	-1298.49
Ultra Consumer Goods ProShares (UGE)	-2.59%	-217.31
Ultra Consumer Services ProShares (UCC)	-3.86%	-323.12
Ultra Financials ProShares (UYG)	-8.00%	-670.32
Ultra Health Care ProShares (RXL)	-7.77%	-650.77
Ultra Industrials ProShares (UXI)	-6.48%	-543.08
Ultra Oil & Gas ProShares (DIG)	-10.20%	-854.31
Ultra Real Estate ProShares (URE)	-11.52%	-964.85
Ultra Semiconductors ProShares (USD)	-0.32%	-27.15
Ultra Technology ProShares (ROM)	-5.10%	-427.57
Ultra Utilities ProShares (UPW)	-7.79%	-652.97
Other ETFs
PowerShares DB Base Metals Double Short (BOM)	-2.58%	-215.81
PowerShares DB Base Metals Short (BOS)	-2.24%	-187.33
PowerShares DB Crude Oil Double Short (DTO)	+2.99%	+250.74
PowerShares DB Crude Oil Short (SZO)	+2.37%	+198.23
PowerShares DB Crude Oil Double Long (DXO)	-12.22%	-1024.09
PowerShares DB Crude Oil Long (OLO)	-1.70%	-142.45

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 9:54 PM

Banks continue to crush the stock market by forcing hedge funds to sell assets to meet margin calls on loans taken out during the last bull market. While most of this forced selling is being done in markets outside the US and involves commodities as well as stocks, enough is being done in the US to compress the market back to the recent lows. Surprisingly, Friday's early morning selling, which pushed the futures to a new low and limit down, did not translate in the cash market dropping to a new low, which is a sign that the market is "compressed" valuation-wise. Buyers are finding that current stock prices are at decade or more lows and are stepping up to pick up long term bargains while they are on sale.

That's not to say those same stocks won't be at fire sale prices in the future, but at current prices, those stocks are discounting not only a Depression, but a Great Depression like the 'Thirties. Thus, any holding period of a few years or more should see the market substantially up from today's levels, even if they are going somewhat lower in the near term. Long term accumulators, such as Warren Buffett, are buying with both fists because their time horizons are long enough for them to see that this is an opportunity for the long term. This assumes, of course, that the companies they are buying will have enough capital to survive the worst of the Depression. Any stock which goes bankrupt will, of course, lose everything.

The strength of the US Dollar in this crisis is due not just to the simplistic explanation of "Flight to Quality." Actually, it's more a matter of carry trade unwinding. Hedge funds borrowed in US Dollars and, in order to invest in markets around the world, converted those dollars into foreign currency, usually those that paid higher short term interest rates than in America---this is called a "carry trade" because the interest earned in the foreign currency offsets the cost of borrowing funds in the "carry currency" (the US Dollar). Usually those dollars went into markets such as Australia, where overnight interest rates soared to several times the US rate. This flood of cash into Australia caused the Australian Dollar to rebound from a low of about 48¢ (US) in 2001 to a high almost at parity to the US Dollar (98.27¢) just three months ago. But, within the last three months, the Australian Dollar has crashed back to close Friday at 62.16¢---all due to the unwinding of hedge fund "carry trades." We have a situation where the banks are forcing fire-sale pricing not only on stocks and commodities, but also on currencies as well. Is there any doubt left that we have a broken system which depends upon the good judgement of bankers to keep the economy working? Bankers have no accountability to the people. In fact, their goals are usually in direct opposition to the goals of the people and this vile institution must be eliminated in order to right the economy. If we don't annihilate the banking system, we will just repeat the cycle over and over again until we do so.

The depth of the current Depression is shown by readings on various economic indicators which are showing record lows. For example, the growth rate of the Economic Cycles Research Institute's Weekly Leading Indicator is at a thirty-three year low. Most who are talking about the depth of this Depression compare it to the Great Depression of the 'Thirties. However, historians with a larger view compare it the Long Depression of the late Nineteenth Century, for which there are much more exact parallels with today.

The Long Depression was triggered by a real estate boom in Europe which turned to a bust and triggered a credit crisis around the world. The boom turned to bust in 1873 and lasted until 1897, a period of twenty-four years. Compared to the Great Depression, which lasted from 1929 until 1949, it was only four years longer, but was even more devastating to the average person than the Great Depression. In fact, the Long Depression was originally called the Great Depression, but was renamed later (after the 'Thirties). Scott Reynolds Nelson, professor of history at the College of William and Mary, describes a remarkably similar situation to the present,

The emperors supported a flowering of new lending institutions that issued mortgages for municipal and residential construction, especially in the capitals of Vienna, Berlin, and Paris. Mortgages were easier to obtain than before, and a building boom commenced. Land values seemed to climb and climb; borrowers ravenously assumed more and more credit, using unbuilt or half-built houses as collateral. The most marvelous spots for sightseers in the three cities today are the magisterial buildings erected in the so-called founder period.

But the economic fundamentals were shaky. Wheat exporters from Russia and Central Europe faced a new international competitor who drastically undersold them. The 19th-century version of containers manufactured in China and bound for Wal-Mart consisted of produce from farmers in the American Midwest. They used grain elevators, conveyer belts, and massive steam ships to export trainloads of wheat to abroad. Britain, the biggest importer of wheat, shifted to the cheap stuff quite suddenly around 1871. By 1872 kerosene and manufactured food were rocketing out of America's heartland, undermining rapeseed, flour, and beef prices. The crash came in Central Europe in May 1873, as it became clear that the region's assumptions about continual economic growth were too optimistic. Europeans faced what they came to call the American Commercial Invasion. A new industrial superpower had arrived, one whose low costs threatened European trade and a European way of life.

As continental banks tumbled, British banks held back their capital, unsure of which institutions were most involved in the mortgage crisis. The cost to borrow money from another bank---the interbank lending rate---reached impossibly high rates. This banking crisis hit the United States in the fall of 1873. Railroad companies tumbled first. They had crafted complex financial instruments that promised a fixed return, though few understood the underlying object that was guaranteed to investors in case of default. (Answer: nothing). The bonds had sold well at first, but they had tumbled after 1871 as investors began to doubt their value, prices weakened, and many railroads took on short-term bank loans to continue laying track. Then, as short-term lending rates skyrocketed across the Atlantic in 1873, the railroads were in trouble. When the railroad financier Jay Cooke proved unable to pay off his debts, the stock market crashed in September, closing hundreds of banks over the next three years. The panic continued for more than four years in the United States and for nearly six years in Europe.

The long-term effects of the Panic of 1873 were perverse. For the largest manufacturing companies in the United States---those with guaranteed contracts and the ability to make rebate deals with the railroads---the Panic years were golden. Andrew Carnegie, Cyrus McCormick, and John D. Rockefeller had enough capital reserves to finance their own continuing growth. For smaller industrial firms that relied on seasonal demand and outside capital, the situation was dire. As capital reserves dried up, so did their industries. Carnegie and Rockefeller bought out their competitors at fire-sale prices. The Gilded Age in the United States, as far as industrial concentration was concerned, had begun.…

The echoes of the past in the current problems with residential mortgages trouble me. Loans after about 2001 were issued to first-time homebuyers who signed up for adjustable rate mortgages they could likely never pay off, even in the best of times. Real-estate speculators, hoping to flip properties, overextended themselves, assuming that home prices would keep climbing. Those debts were wrapped in complex securities that mortgage companies and other entrepreneurial banks then sold to other banks; concerned about the stability of those securities, banks then bought a kind of insurance policy called a credit-derivative swap, which risk managers imagined would protect their investments. More than two million foreclosure filings---default notices, auction-sale notices, and bank repossessions---were reported in 2007. By then trillions of dollars were already invested in this credit-derivative market. Were those new financial instruments resilient enough to cover all the risk? (Answer: no.) As in 1873, a complex financial pyramid rested on a pinhead. Banks are hoarding cash. Banks that hoard cash do not make short-term loans. Businesses large and small now face a potential dearth of short-term credit to buy raw materials, ship their products, and keep goods on shelves.

If there are lessons from 1873, they are different from those of 1929. Most important, when banks fall on Wall Street, they stop all the traffic on Main Street---for a very long time. The protracted reconstruction of banks in the United States and Europe created widespread unemployment. Unions (previously illegal in much of the world) flourished but were then destroyed by corporate institutions that learned to operate on the edge of the law. In Europe, politicians found their scapegoats in Jews, on the fringes of the economy. (Americans, on the other hand, mostly blamed themselves; many began to embrace what would later be called fundamentalist religion.)

In the end, the Panic of 1873 demonstrated that the center of gravity for the world's credit had shifted west---from Central Europe toward the United States. The current panic suggests a further shift from the United States to China and India.

Today, we're seeing this shift of Industrial power from America to the Far East, and the effects of this Depression are being felt worldwide, just as in 1873. Europe is being battered by deflation as is America. The new leaders, China and India, are seeing the effects of the credit crisis slam the brakes on their growth rates. Still, the future belongs to the Far East and America will never recover completely from the shock of this credit crisis. The best days of both America and Europe are well in the past now, something Americans find hard to admit, but know, deep down, to be true. Take, for example, the cost of living. It takes two paychecks to support a family today where a generation ago one paycheck well-supported raising a family. And, everyone knows that inflation has reversed whatever wage gains had been made in the last generation. Finally, the stock market has now reversed all the gains of the last decade, and more.

This was not necessary. It was planned by the power elites to keep you in your place. Until you realize the truth of that statement and work to overthrow the banking system which is behind these periodic purges, you and your descendants will continue to be victims of the banking system, serfs in your own land, until the end of time.

A warning we have yet to heed from the middle of the last Great Depression---

"We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money (at the request of the consumer) we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."
                   ---Robert H. Hemphill, Atlanta Federal Reserve Bank, 1938

Voting is underway now for President and Congress. Get out and vote for a change. Let's make it another American Revolution!

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-3.59%	-312.30
DIAMONDS TRUST SER 1 (DIA)	-6.09%	-528.99
Ultra Dow30 ProShares (DDM)	-10.11%	-878.60
UltraShort Dow30 ProShares (DXD)	+7.03%	+611.00
S&P 500 (index)	-3.82%	-332.39
S& P DEP RECEIPTS (SPY)	-5.04%	-438.17
Ultra S&P500 ProShares (SSO)	-7.21%	-626.89
UltraShort S&P500 ProShares (SDS)	+7.41%	+643.64
NYSE Composite (index)	-4.31%	-374.49
ISHARES NYSE CMP IDX (NYC)	-3.93%	-341.98
S&P SmallCap 600 (index)	-2.95%	-256.24
Ultra SmallCap 600 ProShares (SAA)	-6.73%	-584.60
Short SmallCap 600 ProShares (SBB)	+2.13%	+184.83
UltraShort SmallCap 600 ProShares (SDD)	+6.49%	+563.93
Russell 2000 (index)	-3.17%	-275.50
ISHARE RUS 2000 INDX (IWM)	-3.72%	-322.88
Ultra Russell 2000 ProShares (UWM)	-8.92%	-775.29
UltraShort Russell 2000 ProShares (TWM)	+7.42%	+644.98
NASDAQ-100 (index)	-3.38%	-293.88
NASDAQ 100 TR SER I (QQQQ)	-3.21%	-279.35
Ultra QQQ ProShares (QLD)	-5.77%	-501.47
UltraShort QQQ ProShares (QID)	+8.29%	+720.26
S&P MidCap 400 (index)	-2.88%	-249.94
ISHARE SP MC 400 INX (IJH)	-2.46%	-213.58
Ultra MC400 ProShares (MVV)	-5.92%	-514.66
UltraShort MC400 ProShares (MZZ)	+5.82%	+506.04
GREENHAVEN Continuous Commodity Indx Fnd (GCC)	-3.53%	-306.84
Amex Gold (index)	+4.91%	+426.85
MKT VECT GOLD MNRS (GDX)	+5.69%	+494.22
STREETTRACKS GOLD TR (GLD)	+2.21%	+191.91
DEUTSCHE BANK DOUBLE SHORT GOLD (DZZ)	-2.74%	-238.41
DEUTSCHE BANK DOUBLE LONG GOLD (DGP)	+5.76%	+500.62
Semiconductor Sector (index)	-2.03%	-176.05
Ultra Semiconductors ProShares (USD)	-2.28%	-198.15
UltraShort Semiconductors ProShares (SSG)	+1.88%	+163.13
ISHARE DJ FIN SC INX (IYF)	-3.97%	-344.93
ISHARES LEHMAN 20 YR (TLT)	-1.06%	-92.45
ISHARESLEHMAN 7-10YR (IEF)	-0.42%	-36.79
ISHARES LEH AGG FD (AGG)	-0.84%	-73.33
ISHARES GS $ INVEST (LQD)	+0.40%	+34.57
ISHARES LEHMAN 1-3YR (SHY)	+0.08%	+7.24
ProShares ETFs
UltraShort Lehman 7-10 Year Treasury ProShares (PST)	+1.88%	+163.45
UltraShort Lehman 20+ Year Treasury ProShares (TBT)	+2.50%	+217.24
Short QQQ ProShares (PSQ)	+3.38%	+293.71
Short Dow30 ProShares (DOG)	+3.87%	+336.44
Short S&P500 ProShares (SH)	+4.36%	+378.73
Short MC400 ProShares (MYY)	+2.69%	+233.81
Short SmallCap 600 ProShares (SBB)	+2.13%	+184.83
Short Russell 2000 ProShares (RWM)	+3.40%	+295.38
UltraShort QQQ ProShares (QID)	+8.29%	+720.26
UltraShort Dow30 ProShares (DXD)	+7.03%	+611.00
UltraShort S&P500 ProShares (SDS)	+7.41%	+643.64
UltraShort MC400 ProShares (MZZ)	+5.82%	+506.04
UltraShort SmallCap 600 ProShares (SDD)	+6.49%	+563.93
UltraShort Russell 2000 ProShares (TWM)	+7.42%	+644.98
UltraShort Russell 1000 Value ProShares (SJF)	+5.20%	+451.90
UltraShort Russell 1000 Growth ProShares (SFK)	+3.51%	+304.77
UltraShort Russell MidCap Value ProShares (SJL)	+5.82%	+505.77
UltraShort Russell MidCap Growth ProShares (SDK)	+7.09%	+616.13
UltraShort Russell 2000 Value ProShares (SJH)	+2.04%	+177.37
UltraShort Russell 2000 Growth ProShares (SKK)	+7.47%	+649.19
UltraShort Basic Materials ProShares (SMN)	+6.56%	+570.45
UltraShort Consumer Goods ProShares (SZK)	+8.10%	+704.05
UltraShort Consumer Services ProShares (SCC)	+6.30%	+547.59
UltraShort Financials ProShares (SKF)	+7.59%	+659.29
UltraShort Health Care ProShares (RXD)	+4.57%	+396.92
UltraShort Industrials ProShares (SIJ)	+9.48%	+823.56
UltraShort Oil & Gas ProShares (DUG)	+8.07%	+701.49
UltraShort Real Estate ProShares (SRS)	+13.15%	+1142.82
UltraShort Semiconductors ProShares (SSG)	+1.88%	+163.13
UltraShort Technology ProShares (REW)	+6.30%	+547.63
UltraShort Utilities ProShares (SDP)	+3.04%	+263.78
Short MSCI Emerging Markets ProShares (EUM)	+12.15%	+1055.57
Short MSCI EAFE ProShares (EFZ)	+3.85%	+334.50
UltraShort MSCI EAFE ProShares (EFU)	+13.28%	+1154.21
UltraShort MSCI Emerging Markets ProShares (EEV)	+19.41%	+1687.12
UltraShort MSCI Japan ProShares (EWV)	+10.40%	+903.89
UltraShort FTSE/Xinhua China 25 ProShares (FXP)	+19.42%	+1688.00
Ultra QQQ ProShares (QLD)	-5.77%	-501.47
Ultra Dow30 ProShares (DDM)	-10.11%	-878.60
Ultra S&P500 ProShares (SSO)	-7.21%	-626.89
Ultra MC400 ProShares (MVV)	-5.92%	-514.66
Ultra SmallCap 600 ProShares (SAA)	-6.73%	-584.60
Ultra Russell 2000 ProShares (UWM)	-8.92%	-775.29
Ultra Russell 1000 Value ProShares (UVG)	-0.90%	-78.57
Ultra Russell 1000 Growth ProShares (UKF)	-0.82%	-70.96
Ultra Russell MidCap Value ProShares (UVU)	-4.28%	-372.41
Ultra Russell MidCap Growth ProShares (UKW)	-6.32%	-548.98
Ultra Russell 2000 Value ProShares (UVT)	-7.14%	-620.13
Ultra Russell2000 Growth ProShares (UKK)	-3.60%	-312.63
Ultra Basic Materials ProShares (UYM)	-3.93%	-341.79
Ultra Consumer Goods ProShares (UGE)	-7.02%	-609.75
Ultra Consumer Services ProShares (UCC)	-3.76%	-326.97
Ultra Financials ProShares (UYG)	-4.51%	-392.31
Ultra Health Care ProShares (RXL)	-3.99%	-346.61
Ultra Industrials ProShares (UXI)	-9.17%	-796.76
Ultra Oil & Gas ProShares (DIG)	-8.13%	-706.89
Ultra Real Estate ProShares (URE)	-13.16%	-1143.59
Ultra Semiconductors ProShares (USD)	-2.28%	-198.15
Ultra Technology ProShares (ROM)	-5.82%	-505.47
Ultra Utilities ProShares (UPW)	-6.00%	-521.84
Other ETFs
PowerShares NASDAQ-100 BuyWrite Portfolio (PQBW)	-0.71%	-62.08
PowerShares DB Base Metals Double Short (BOM)	+3.65%	+317.42
PowerShares DB Base Metals Short (BOS)	+0.92%	+80.23
PowerShares DB Crude Oil Double Short (DTO)	+5.36%	+466.25
PowerShares DB Crude Oil Short (SZO)	+1.83%	+159.05
PowerShares DB Crude Oil Double Long (DXO)	-19.35%	-1682.18

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 2:17 PM

Issuing dubious creditworthy ratings to mortgage-backed securities makes it appear we are incompetent or "have sold our soul to the devil for revenue."
               ---Note to executives at Moody's (a bond rating agency)

"Let's hope we are all wealthy and retired by the time this house of cards falters."
               ---Internal 2006 email at Standard & Poors Corporation (a bond rating agency)

(Thanks to the The Daily Pfennig (Chris Gaffney, one of the very few bankers you can trust) for these quotes.)

Hmmmm.... Why didn't they let the rest of us know instead of giving $40 Trillion worth of toxic waste paper their highest credit rating? Sounds like actors in a well-scripted play who planned to be long gone before the proverbial material hit the fan.

The US is becoming a third world country in many ways. And, even though we invented the Internet, we are one of the most backward nations in bringing Internet access to the public. The reason why is simple: mass media monopolies have been fighting progress since they were founded---and they continue to try to keep Americans from expressing themselves freely. It's time we stood up to the mass media elites and told them we're sick and tired of them standing in the way of technological progress in this country. If the FCC can't stand up to these forces of evil, then we have truly descended to a state of plutocracy and the people will be forced to rise up and overthrow their current rulers and take back our country. Click on the following link to tell the FCC you support free airwaves for all in America:

For more information on this issue, read this.

Stocks staged a big turnaround as the bottom of the trading range was tested on Thursday:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+2.02%	+172.04
DIAMONDS TRUST SER 1 (DIA)	+2.48%	+211.57
Ultra Dow30 ProShares (DDM)	+4.66%	+396.79
UltraShort Dow30 ProShares (DXD)	-3.01%	-256.14
S&P 500 (index)	+1.46%	+124.54
S& P DEP RECEIPTS (SPY)	+1.20%	+102.55
Ultra S&P500 ProShares (SSO)	+0.11%	+8.96
UltraShort S&P500 ProShares (SDS)	-1.85%	-157.92
NYSE Composite (index)	+0.74%	+62.73
ISHARES NYSE CMP IDX (NYC)	+0.15%	+13.10
S&P SmallCap 600 (index)	-2.69%	-228.89
Ultra SmallCap 600 ProShares (SAA)	-5.55%	-472.72
Short SmallCap 600 ProShares (SBB)	+3.26%	+277.47
UltraShort SmallCap 600 ProShares (SDD)	+7.48%	+637.31
Russell 2000 (index)	-2.32%	-197.38
ISHARE RUS 2000 INDX (IWM)	-2.97%	-253.10
Ultra Russell 2000 ProShares (UWM)	-5.78%	-492.06
UltraShort Russell 2000 ProShares (TWM)	+7.63%	+650.41
NASDAQ-100 (index)	+0.85%	+72.17
NASDAQ 100 TR SER I (QQQQ)	-0.39%	-33.40
Ultra QQQ ProShares (QLD)	-0.91%	-77.93
UltraShort QQQ ProShares (QID)	+0.34%	+28.60
S&P MidCap 400 (index)	-2.60%	-221.90
ISHARE SP MC 400 INX (IJH)	-2.56%	-218.44
Ultra MC400 ProShares (MVV)	-5.56%	-473.29
UltraShort MC400 ProShares (MZZ)	+4.63%	+394.17
GREENHAVEN Continuous Commodity Indx Fnd (GCC)	+0.13%	+11.29
Amex Gold (index)	-5.61%	-477.55
MKT VECT GOLD MNRS (GDX)	-5.84%	-497.61
STREETTRACKS GOLD TR (GLD)	-1.48%	-125.93
DEUTSCHE BANK DOUBLE SHORT GOLD (DZZ)	+1.73%	+146.96
DEUTSCHE BANK DOUBLE LONG GOLD (DGP)	-3.40%	-289.68
Semiconductor Sector (index)	-1.36%	-115.55
Ultra Semiconductors ProShares (USD)	-3.95%	-336.83
UltraShort Semiconductors ProShares (SSG)	+3.98%	+338.98
ISHARE DJ FIN SC INX (IYF)	-1.54%	-131.14
ISHARES LEHMAN 20 YR (TLT)	+0.74%	+63.20
ISHARESLEHMAN 7-10YR (IEF)	+0.13%	+11.40
ISHARES LEH AGG FD (AGG)	-1.76%	-149.93
ISHARES GS $ INVEST (LQD)	+0.63%	+53.58
ISHARES LEHMAN 1-3YR (SHY)	-0.06%	-5.06
ProShares ETFs
UltraShort Lehman 7-10 Year Treasury ProShares (PST)	-0.35%	-30.10
UltraShort Lehman 20+ Year Treasury ProShares (TBT)	-1.35%	-115.10
Short QQQ ProShares (PSQ)	+0.46%	+39.06
Short Dow30 ProShares (DOG)	-1.60%	-136.63
Short S&P500 ProShares (SH)	-1.76%	-149.62
Short MC400 ProShares (MYY)	+2.46%	+209.69
Short SmallCap 600 ProShares (SBB)	+3.26%	+277.47
Short Russell 2000 ProShares (RWM)	+2.48%	+211.70
UltraShort QQQ ProShares (QID)	+0.34%	+28.60
UltraShort Dow30 ProShares (DXD)	-3.01%	-256.14
UltraShort S&P500 ProShares (SDS)	-1.85%	-157.92
UltraShort MC400 ProShares (MZZ)	+4.63%	+394.17
UltraShort SmallCap 600 ProShares (SDD)	+7.48%	+637.31
UltraShort Russell 2000 ProShares (TWM)	+7.63%	+650.41
UltraShort Russell 1000 Value ProShares (SJF)	-0.72%	-61.08
UltraShort Russell 1000 Growth ProShares (SFK)	+1.03%	+87.74
UltraShort Russell MidCap Value ProShares (SJL)	+2.77%	+235.94
UltraShort Russell MidCap Growth ProShares (SDK)	+3.91%	+332.85
UltraShort Russell 2000 Value ProShares (SJH)	+9.15%	+779.09
UltraShort Russell 2000 Growth ProShares (SKK)	+5.87%	+500.17
UltraShort Basic Materials ProShares (SMN)	+3.65%	+311.11
UltraShort Consumer Goods ProShares (SZK)	-0.75%	-63.55
UltraShort Consumer Services ProShares (SCC)	+3.12%	+265.47
UltraShort Financials ProShares (SKF)	+2.67%	+227.48
UltraShort Health Care ProShares (RXD)	-3.66%	-311.41
UltraShort Industrials ProShares (SIJ)	+1.22%	+103.81
UltraShort Oil & Gas ProShares (DUG)	-11.63%	-991.12
UltraShort Real Estate ProShares (SRS)	+3.75%	+319.77
UltraShort Semiconductors ProShares (SSG)	+3.98%	+338.98
UltraShort Technology ProShares (REW)	+0.40%	+33.73
UltraShort Utilities ProShares (SDP)	-6.87%	-585.54
Short MSCI Emerging Markets ProShares (EUM)	-2.81%	-239.74
Short MSCI EAFE ProShares (EFZ)	-2.07%	-175.98
UltraShort MSCI EAFE ProShares (EFU)	-4.97%	-423.59
UltraShort MSCI Emerging Markets ProShares (EEV)	-4.32%	-367.62
UltraShort MSCI Japan ProShares (EWV)	-7.46%	-635.92
UltraShort FTSE/Xinhua China 25 ProShares (FXP)	-0.86%	-73.38
Ultra QQQ ProShares (QLD)	-0.91%	-77.93
Ultra Dow30 ProShares (DDM)	+4.66%	+396.79
Ultra S&P500 ProShares (SSO)	+0.11%	+8.96
Ultra MC400 ProShares (MVV)	-5.56%	-473.29
Ultra SmallCap 600 ProShares (SAA)	-5.55%	-472.72
Ultra Russell 2000 ProShares (UWM)	-5.78%	-492.06
Ultra Russell 1000 Value ProShares (UVG)	+0.56%	+47.33
Ultra Russell 1000 Growth ProShares (UKF)	-1.23%	-104.86
Ultra Russell MidCap Value ProShares (UVU)	-4.16%	-354.76
Ultra Russell MidCap Growth ProShares (UKW)	-5.36%	-456.90
Ultra Russell 2000 Value ProShares (UVT)	-9.67%	-823.63
Ultra Russell2000 Growth ProShares (UKK)	-8.71%	-742.26
Ultra Basic Materials ProShares (UYM)	-8.25%	-702.62
Ultra Consumer Goods ProShares (UGE)	-2.33%	-198.39
Ultra Consumer Services ProShares (UCC)	-0.15%	-12.97
Ultra Financials ProShares (UYG)	-3.89%	-331.67
Ultra Health Care ProShares (RXL)	+0.25%	+20.99
Ultra Industrials ProShares (UXI)	-7.04%	-599.48
Ultra Oil & Gas ProShares (DIG)	+11.11%	+946.58
Ultra Real Estate ProShares (URE)	-2.56%	-218.44
Ultra Semiconductors ProShares (USD)	-3.95%	-336.83
Ultra Technology ProShares (ROM)	-1.55%	-132.11
Ultra Utilities ProShares (UPW)	+8.25%	+703.24
Other ETFs
PowerShares DB Base Metals Double Short (BOM)	-0.86%	-73.59
PowerShares DB Base Metals Double Long (BDD)	-0.41%	-34.54
PowerShares DB Base Metals Short (BOS)	+1.56%	+133.11
PowerShares DB Crude Oil Double Short (DTO)	-2.70%	-230.38
PowerShares DB Crude Oil Short (SZO)	-0.32%	-27.54
PowerShares DB Crude Oil Double Long (DXO)	+8.56%	+729.27

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or by check. Visit our Subscription Page ("http://www.marketclues.net/") for details!

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 12:26 AM

We're naturally skeptical toward conspiracy theories. Experience shows most of them are just rationalizations for mistakes and stupidity, which are much simpler, down-to-earth explanations which fit many situations. It takes quite a bit of evidence to convince us that a conspiracy theory is the best explanation to fit the facts.

Is the credit crisis just the culmination of a long-planned campaign to transfer wealth from the many to the few? While any conspiracy theory must meet the test of hard evidence to be considered valid, we've pointed out over the years the juxtaposition of illogical events and decisions which seemed to indicate that America's persons of influence (Federal Reserve Chairmen, Presidents, Treasury Secretaries, Congressmen and other bureaucrats holding various posts of authority over the financial system) were acting in very "strange" ways, even incredibly stupid ways for anyone with even a subpar IQ. Just as when the evidence pointing toward a turn in the markets coalesces into a coherent whole, the evidence has been coalescing for years that the country is being led toward a debacle of immense proportion, whether via ignorance or intelligent direction. Many have warned that this path would lead to disaster, yet no one in authority has been willing to do much more than seemingly patch the system while watching it get ready to implode.

Why is that? Is it laziness? That seems unlikely for persons of ambition who have devoted themselves to public service, an activity which takes a great deal of time and resources to attain. Is it stupidity? In their writing and speech, that doesn't seem to be the answer, since they all went to college and have attained substantial measures of achievement in their chosen avocations. Stupidity has a great advantage as an explanation: it lets the powers-that-be off the hook as simply irresponsible and not criminal. As in, "We can't blame the poor creatures for they know not what they do."

But, there is a point beyond which we cannot look the other way and rationalize the intentions of these people who are in charge. The actions of these so-called "leaders" and their hangers-on, including 42,000 Washington lobbyists, have gone far beyond stupid. They have done things so incredibly stupid that we have to admit they must have known exactly what they were doing in order to create the credit crisis. Things make a lot more sense when you realize that America has been "directed" into this crisis by the deliberate actions of a group of people who are bent on getting what they want. The form of government in America had been too restrictive for this group of people. They found it onerous to convince the public of what we should do. So, they have taken it upon themselves to coerce the public into giving them the power to make decisions. In other words, forget "democracy" completely now. We never even had a real democracy in the first place. We had a republican form of government which worked as long as the people were mostly kept in the dark.

In other words, as long as the elites could make decisions that weren't popular, the public protests could be essentially ignored and defused via mass media which parrotted the party line (in other words, both wings of our Republican-Democratic party---the so-called "Silent Majority"). Today, we have the Internet and instant communications which is less and less controlled by the mass media opinion makers. We have alternative sources of information from other countries which provides a balance for the pre-digested pablum that's typical of American mass media. American citizens are not isolated from the world, although many still retain the idea that their country is always right when it comes to military affairs in other countries. In fact, many still believe that what the President says is the truth, strange as that may seem to many who understand the lessons of Vietnam and other military fiascos this country constantly engages in.

For example, America's addiction to foreign oil requires that we send our soldiers to the Middle East to take control of the region in order to assure ourselves of a stable oil supply. The powers-that-be can't simply directly explain this and ask the public to approve, for most of the people are moral people who think that course of action is simply the wrong course of action---especially when their sons and daughters are being shipped home in boxes. It's obvious that, by their actions and decisions, the powers-that-be never intended to wean America from its dependence by switching to alternative forms of energy. Just look at the evidence. During the oil crises of the 'Seventies, many government-sponsored programs were started to produce alternative fuel. Many succeeded. One of those programs, for instance, came up with a way to turn agricultural waste products into gasoline at 50¢ per gallon. We're not talking about corn to ethanol, we're talking waste products to ethanol. That program built a prototype plant which proved the concept was valid. What happened? The project was shut down and closed permanently by the government lackeys in charge. Was that program revived when the price of oil soared in recent years? No, nobody in government took the responsibility of reviving that program. Instead, they appropriated billions to bribe farmers to grow Corn to produce ethanol in a misguided attempt to rid ourselves of our addiction, resulting in soaring food prices on a global basis. There was never any intention to switch to alternative fuels---the billions spent on alternative energy research forty years ago was just another transfer of wealth to the rich.

President Eisenhower warned the country in the middle of the last century of the dangers associated with what he called the "Military-Industrial Complex" and what we are seeing today is the logical outgrowth of that insidious influence on our society. Why is America constantly at war around the globe? It feeds the megacorporate coffers with money and keeps the super-rich in power. They make the decisions in this society, it's not a democracy and never was. And, that's just what this latest credit crisis is all about.

We were reminded of this grand conspiracy theory by Paul B. Farrell's latest piece, Wall Street's 'Disaster Capitalism for Dummies'---14 reasons Main Street loses big while Wall Street sabotages democracy, which provides more evidence of this idea that the whole "credit crisis" is an entirely manufactured crisis designed to transfer the wealth of the country (maybe the entire planet) to a small group of people who are planning to rule it like the lords of the middle ages. Far-fetched? We're heading in that direction and who's to say they aren't planning for a day in the future which looks like something out of medieval times? Can you guarantee that's not what's happening?

As the article points out,

So you, me and the other 300 million better get out of denial. America is no longer a democracy. Voting is irrelevant. Best case scenario: We're a plutocracy, a government ruled by the wealthy, the richest 1%, the Forbes 400, the influential wealthy elite, while the other 99% are their "servants." Meanwhile, the inflation-adjusted income of wage-earners has declined for three decades.

Worst case scenario: America's no democracy and as a result of the meltdown and the surrender of our power to Wall Street's new Disaster Capitalism we are morphing into what one WWII dictator called "corporatism," a "merger of state and corporate power," kind of like what's going on now with Goldman Sachs' ex-boss as de facto president.

Now, the onus is on those who claim the credit crisis isn't a grand conspiracy. The evidence may be circumstantial, but it all points in just one direction.

The stock market is in the midst of adjusting to the stark new reality of "Disaster Capitalism" and dropped sharply as we warned subscribers it would do on Wednesday several days ago:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-5.69%	-514.45
DIAMONDS TRUST SER 1 (DIA)	-5.06%	-456.98
Ultra Dow30 ProShares (DDM)	-10.61%	-958.91
UltraShort Dow30 ProShares (DXD)	+10.31%	+931.63
S&P 500 (index)	-6.10%	-551.17
S& P DEP RECEIPTS (SPY)	-5.70%	-514.62
Ultra S&P500 ProShares (SSO)	-10.00%	-903.37
UltraShort S&P500 ProShares (SDS)	+11.32%	+1022.27
NYSE Composite (index)	-6.95%	-628.29
ISHARES NYSE CMP IDX (NYC)	-6.07%	-548.09
S&P SmallCap 600 (index)	-5.54%	-500.14
Ultra SmallCap 600 ProShares (SAA)	-10.67%	-963.72
Short SmallCap 600 ProShares (SBB)	+7.98%	+720.44
UltraShort SmallCap 600 ProShares (SDD)	+10.14%	+916.02
Russell 2000 (index)	-5.40%	-488.24
ISHARE RUS 2000 INDX (IWM)	-5.06%	-456.95
Ultra Russell 2000 ProShares (UWM)	-9.83%	-888.27
UltraShort Russell 2000 ProShares (TWM)	+10.00%	+903.37
NASDAQ-100 (index)	-3.61%	-326.17
NASDAQ 100 TR SER I (QQQQ)	-2.76%	-249.66
Ultra QQQ ProShares (QLD)	-6.76%	-610.87
UltraShort QQQ ProShares (QID)	+5.58%	+503.65
S&P MidCap 400 (index)	-5.88%	-530.99
ISHARE SP MC 400 INX (IJH)	-5.72%	-517.03
Ultra MC400 ProShares (MVV)	-11.27%	-1018.25
UltraShort MC400 ProShares (MZZ)	+11.29%	+1019.79
GREENHAVEN Continuous Commodity Indx Fnd (GCC)	-3.58%	-323.32
Amex Gold (index)	-15.91%	-1437.28
MKT VECT GOLD MNRS (GDX)	-15.22%	-1375.14
STREETTRACKS GOLD TR (GLD)	-5.68%	-513.29
DEUTSCHE BANK DOUBLE SHORT GOLD (DZZ)	+7.94%	+717.35
DEUTSCHE BANK DOUBLE LONG GOLD (DGP)	-13.50%	-1219.79
Semiconductor Sector (index)	-6.15%	-555.32
Ultra Semiconductors ProShares (USD)	-8.57%	-773.74
UltraShort Semiconductors ProShares (SSG)	+8.61%	+778.12
ISHARE DJ FIN SC INX (IYF)	-5.99%	-541.35
ISHARES LEHMAN 20 YR (TLT)	+2.03%	+183.29
ISHARESLEHMAN 7-10YR (IEF)	+0.76%	+69.04
ISHARES LEH AGG FD (AGG)	+1.16%	+104.73
ISHARES GS $ INVEST (LQD)	-1.15%	-104.15
ISHARES LEHMAN 1-3YR (SHY)	+0.14%	+12.90
ProShares ETFs
UltraShort Lehman 7-10 Year Treasury ProShares (PST)	-2.34%	-211.41
UltraShort Lehman 20+ Year Treasury ProShares (TBT)	-3.41%	-308.00
Short QQQ ProShares (PSQ)	+2.62%	+236.61
Short Dow30 ProShares (DOG)	+4.83%	+436.66
Short S&P500 ProShares (SH)	+6.18%	+558.02
Short MC400 ProShares (MYY)	+5.85%	+528.20
Short SmallCap 600 ProShares (SBB)	+7.98%	+720.44
Short Russell 2000 ProShares (RWM)	+5.33%	+481.63
UltraShort QQQ ProShares (QID)	+5.58%	+503.65
UltraShort Dow30 ProShares (DXD)	+10.31%	+931.63
UltraShort S&P500 ProShares (SDS)	+11.32%	+1022.27
UltraShort MC400 ProShares (MZZ)	+11.29%	+1019.79
UltraShort SmallCap 600 ProShares (SDD)	+10.14%	+916.02
UltraShort Russell 2000 ProShares (TWM)	+10.00%	+903.37
UltraShort Russell 1000 Value ProShares (SJF)	+13.46%	+1215.64
UltraShort Russell 1000 Growth ProShares (SFK)	+12.02%	+1085.87
UltraShort Russell MidCap Value ProShares (SJL)	+15.10%	+1364.45
UltraShort Russell MidCap Growth ProShares (SDK)	+13.95%	+1260.54
UltraShort Russell 2000 Value ProShares (SJH)	+10.87%	+981.92
UltraShort Russell 2000 Growth ProShares (SKK)	+11.53%	+1041.39
UltraShort Basic Materials ProShares (SMN)	+17.51%	+1582.10
UltraShort Consumer Goods ProShares (SZK)	+9.12%	+824.11
UltraShort Consumer Services ProShares (SCC)	+9.54%	+861.87
UltraShort Financials ProShares (SKF)	+12.18%	+1100.17
UltraShort Health Care ProShares (RXD)	+11.89%	+1074.23
UltraShort Industrials ProShares (SIJ)	+11.98%	+1082.39
UltraShort Oil & Gas ProShares (DUG)	+19.42%	+1754.77
UltraShort Real Estate ProShares (SRS)	+13.13%	+1186.38
UltraShort Semiconductors ProShares (SSG)	+8.61%	+778.12
UltraShort Technology ProShares (REW)	+7.66%	+692.26
UltraShort Utilities ProShares (SDP)	+11.26%	+1016.78
Short MSCI Emerging Markets ProShares (EUM)	+10.16%	+917.41
Short MSCI EAFE ProShares (EFZ)	+8.14%	+735.65
UltraShort MSCI EAFE ProShares (EFU)	+15.37%	+1388.45
UltraShort MSCI Emerging Markets ProShares (EEV)	+22.14%	+1999.66
UltraShort MSCI Japan ProShares (EWV)	+14.23%	+1285.07
UltraShort FTSE/Xinhua China 25 ProShares (FXP)	+22.12%	+1997.98
Ultra QQQ ProShares (QLD)	-6.76%	-610.87
Ultra Dow30 ProShares (DDM)	-10.61%	-958.91
Ultra S&P500 ProShares (SSO)	-10.00%	-903.37
Ultra MC400 ProShares (MVV)	-11.27%	-1018.25
Ultra SmallCap 600 ProShares (SAA)	-10.67%	-963.72
Ultra Russell 2000 ProShares (UWM)	-9.83%	-888.27
Ultra Russell 1000 Value ProShares (UVG)	-12.08%	-1091.10
Ultra Russell 1000 Growth ProShares (UKF)	-10.86%	-980.95
Ultra Russell MidCap Value ProShares (UVU)	-14.66%	-1324.28
Ultra Russell MidCap Growth ProShares (UKW)	-13.65%	-1233.25
Ultra Russell 2000 Value ProShares (UVT)	-10.21%	-922.77
Ultra Russell2000 Growth ProShares (UKK)	-9.58%	-865.46
Ultra Basic Materials ProShares (UYM)	-13.97%	-1261.91
Ultra Consumer Goods ProShares (UGE)	-8.09%	-731.14
Ultra Consumer Services ProShares (UCC)	-12.01%	-1085.33
Ultra Financials ProShares (UYG)	-13.22%	-1194.61
Ultra Health Care ProShares (RXL)	-9.15%	-826.96
Ultra Industrials ProShares (UXI)	-5.96%	-538.03
Ultra Oil & Gas ProShares (DIG)	-21.74%	-1963.84
Ultra Real Estate ProShares (URE)	-14.85%	-1341.24
Ultra Semiconductors ProShares (USD)	-8.57%	-773.74
Ultra Technology ProShares (ROM)	-7.43%	-671.62
Ultra Utilities ProShares (UPW)	-12.31%	-1112.15
Other ETFs
PowerShares DB Base Metals Double Short (BOM)	+6.73%	+607.80
PowerShares DB Base Metals Double Long (BDD)	-18.32%	-1655.17
PowerShares DB Base Metals Short (BOS)	+2.92%	+263.92
PowerShares DB Crude Oil Double Short (DTO)	+6.36%	+574.12
PowerShares DB Crude Oil Short (SZO)	+4.11%	+371.34
PowerShares DB Crude Oil Double Long (DXO)	-20.31%	-1834.74

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 8:36 PM

While the Presidential campaign finally winds down (did this one start two years ago---it sure seems like it did), voters go to the polls to cast their ballots in record numbers. Texas, for instance, reports twice as many voters cast ballots on the first day of early voting on Monday. Clearly, most voters have already made up their minds and further invective from politicians isn't likely to sway the majority. In fact, it's a bit humorous when the Republican candidate, while desperately trying to put distance between himself and the current Republican Administration (which just happens to be the most socialistic presidency since Roosevelt in the 'Thirties), starts accusing the Democrat of being a "socialist." Now, that's definitely the pot calling the kettle black! Boys will be boys, though, and we know not to believe a word they say on the campaign trail---or, even when they get into office.

Stocks hit overhead resistance Tuesday and gave back some of the week's gains in slow trading:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-2.50%	-231.77
DIAMONDS TRUST SER 1 (DIA)	-2.86%	-265.01
Ultra Dow30 ProShares (DDM)	-4.53%	-419.49
UltraShort Dow30 ProShares (DXD)	+4.72%	+437.16
S&P 500 (index)	-2.96%	-273.90
S& P DEP RECEIPTS (SPY)	-2.91%	-269.81
Ultra S&P500 ProShares (SSO)	-5.71%	-529.14
UltraShort S&P500 ProShares (SDS)	+5.60%	+518.52
NYSE Composite (index)	-3.76%	-348.15
ISHARES NYSE CMP IDX (NYC)	-3.99%	-369.46
S&P SmallCap 600 (index)	-2.98%	-275.87
Ultra SmallCap 600 ProShares (SAA)	-5.63%	-521.38
Short SmallCap 600 ProShares (SBB)	+0.46%	+42.24
UltraShort SmallCap 600 ProShares (SDD)	+4.49%	+416.41
Russell 2000 (index)	-2.78%	-257.54
ISHARE RUS 2000 INDX (IWM)	-2.76%	-255.82
Ultra Russell 2000 ProShares (UWM)	-5.37%	-497.52
UltraShort Russell 2000 ProShares (TWM)	+5.10%	+472.73
NASDAQ-100 (index)	-4.73%	-438.15
NASDAQ 100 TR SER I (QQQQ)	-5.18%	-480.02
Ultra QQQ ProShares (QLD)	-10.05%	-931.62
UltraShort QQQ ProShares (QID)	+9.92%	+919.05
S&P MidCap 400 (index)	-2.80%	-259.33
ISHARE SP MC 400 INX (IJH)	-2.75%	-254.66
Ultra MC400 ProShares (MVV)	-6.66%	-616.75
UltraShort MC400 ProShares (MZZ)	+5.34%	+494.49
GREENHAVEN Continuous Commodity Indx Fnd (GCC)	-1.10%	-101.52
Amex Gold (index)	-9.58%	-887.85
MKT VECT GOLD MNRS (GDX)	-7.74%	-717.25
STREETTRACKS GOLD TR (GLD)	-3.15%	-291.54
DEUTSCHE BANK DOUBLE SHORT GOLD (DZZ)	+5.09%	+471.94
DEUTSCHE BANK DOUBLE LONG GOLD (DGP)	-7.48%	-693.33
Semiconductor Sector (index)	-4.03%	-373.40
Ultra Semiconductors ProShares (USD)	-9.10%	-843.16
UltraShort Semiconductors ProShares (SSG)	+8.56%	+793.34
ISHARE DJ FIN SC INX (IYF)	-1.79%	-165.45
ISHARES LEHMAN 20 YR (TLT)	+0.53%	+48.96
ISHARESLEHMAN 7-10YR (IEF)	+1.06%	+97.87
ISHARES LEH AGG FD (AGG)	+0.88%	+81.27
ISHARES GS $ INVEST (LQD)	+0.99%	+92.02
ISHARES LEHMAN 1-3YR (SHY)	+0.20%	+18.79
ProShares ETFs
UltraShort Lehman 7-10 Year Treasury ProShares (PST)	-2.03%	-187.92
UltraShort Lehman 20+ Year Treasury ProShares (TBT)	-2.12%	-196.76
Short QQQ ProShares (PSQ)	+5.57%	+516.13
Short Dow30 ProShares (DOG)	+2.85%	+263.88
Short S&P500 ProShares (SH)	+3.37%	+312.57
Short MC400 ProShares (MYY)	+2.28%	+211.64
Short SmallCap 600 ProShares (SBB)	+0.46%	+42.24
Short Russell 2000 ProShares (RWM)	+3.01%	+278.47
UltraShort QQQ ProShares (QID)	+9.92%	+919.05
UltraShort Dow30 ProShares (DXD)	+4.72%	+437.16
UltraShort S&P500 ProShares (SDS)	+5.60%	+518.52
UltraShort MC400 ProShares (MZZ)	+5.34%	+494.49
UltraShort SmallCap 600 ProShares (SDD)	+4.49%	+416.41
UltraShort Russell 2000 ProShares (TWM)	+5.10%	+472.73
UltraShort Russell 1000 Value ProShares (SJF)	-0.64%	-59.20
UltraShort Russell 1000 Growth ProShares (SFK)	+6.06%	+561.25
UltraShort Russell MidCap Value ProShares (SJL)	-1.45%	-134.73
UltraShort Russell MidCap Growth ProShares (SDK)	+6.93%	+642.07
UltraShort Russell 2000 Value ProShares (SJH)	+5.07%	+469.83
UltraShort Russell 2000 Growth ProShares (SKK)	+5.01%	+464.62
UltraShort Basic Materials ProShares (SMN)	+11.48%	+1063.25
UltraShort Consumer Goods ProShares (SZK)	+3.72%	+344.37
UltraShort Consumer Services ProShares (SCC)	+3.94%	+365.50
UltraShort Financials ProShares (SKF)	+3.61%	+334.02
UltraShort Health Care ProShares (RXD)	+2.31%	+214.38
UltraShort Industrials ProShares (SIJ)	+4.65%	+431.09
UltraShort Oil & Gas ProShares (DUG)	+7.62%	+705.94
UltraShort Real Estate ProShares (SRS)	+7.33%	+679.22
UltraShort Semiconductors ProShares (SSG)	+8.56%	+793.34
UltraShort Technology ProShares (REW)	+11.05%	+1023.98
UltraShort Utilities ProShares (SDP)	+5.99%	+554.95
Short MSCI Emerging Markets ProShares (EUM)	+7.09%	+656.74
Short MSCI EAFE ProShares (EFZ)	+5.81%	+538.35
UltraShort MSCI EAFE ProShares (EFU)	+10.31%	+955.00
UltraShort MSCI Emerging Markets ProShares (EEV)	+14.34%	+1328.72
UltraShort MSCI Japan ProShares (EWV)	+4.82%	+446.55
UltraShort FTSE/Xinhua China 25 ProShares (FXP)	+16.20%	+1501.00
Ultra QQQ ProShares (QLD)	-10.05%	-931.62
Ultra Dow30 ProShares (DDM)	-4.53%	-419.49
Ultra S&P500 ProShares (SSO)	-5.71%	-529.14
Ultra MC400 ProShares (MVV)	-6.66%	-616.75
Ultra SmallCap 600 ProShares (SAA)	-5.63%	-521.38
Ultra Russell 2000 ProShares (UWM)	-5.37%	-497.52
Ultra Russell 1000 Value ProShares (UVG)	-4.37%	-405.24
Ultra Russell 1000 Growth ProShares (UKF)	-7.26%	-672.96
Ultra Russell MidCap Value ProShares (UVU)	-4.12%	-381.49
Ultra Russell MidCap Growth ProShares (UKW)	-7.17%	-663.89
Ultra Russell 2000 Value ProShares (UVT)	-2.31%	-214.28
Ultra Russell2000 Growth ProShares (UKK)	-3.59%	-332.42
Ultra Basic Materials ProShares (UYM)	-12.43%	-1151.43
Ultra Consumer Goods ProShares (UGE)	-3.79%	-350.88
Ultra Consumer Services ProShares (UCC)	-4.36%	-403.71
Ultra Financials ProShares (UYG)	-1.71%	-158.23
Ultra Health Care ProShares (RXL)	-2.40%	-222.69
Ultra Industrials ProShares (UXI)	-3.51%	-325.39
Ultra Oil & Gas ProShares (DIG)	-6.33%	-586.17
Ultra Real Estate ProShares (URE)	-6.68%	-619.21
Ultra Semiconductors ProShares (USD)	-9.10%	-843.16
Ultra Technology ProShares (ROM)	-10.62%	-984.45
Ultra Utilities ProShares (UPW)	-6.38%	-590.83
Other ETFs
PowerShares NASDAQ-100 BuyWrite Portfolio (PQBW)	-0.57%	-52.79
PowerShares DB Base Metals Double Short (BOM)	+4.36%	+404.00
PowerShares DB Base Metals Double Long (BDD)	-6.60%	-611.33
PowerShares DB Base Metals Short (BOS)	+3.35%	+310.56
PowerShares DB Crude Oil Double Short (DTO)	+4.83%	+447.58
PowerShares DB Crude Oil Short (SZO)	+2.14%	+197.91
PowerShares DB Crude Oil Double Long (DXO)	-10.79%	-999.59
PowerShares DB Crude Oil Long (OLO)	-0.73%	-67.63