Wednesday, April 8, 2009

Stocks Are Cheap, I Guess

According to the expert headline writers at Yahoo! Finance, "Insurance Companies and Homebuilders Sparked Wednesday's Rally."

Really! They said that, which doesn't adequately explain why the NASDAQ was sporting an 85-15% up to down volume bias, and probably wasn't the reason for any rally at all. Why stocks rallied today may have been hope for more crookedness, in the form of a relaxation of shorting rules proposed by the SEC, or maybe they were right in part, at least as far as concerns insurance companies, because the Treasury is rumored to be planning to include some life insurance companies under the bailout umbrella of TARP.

As for homebuilders, Pulte Homes (PHM) agreed to purchase Centex (CTX) for $1.3 billion in stock, which is amazing in that its hard to believe any homebuilder could even be worth $1.3 billion, let alone have that amount of stock available for the purchase of another homebuilder. Maybe they've been getting secret TARP funds from Tim Geithner.

In any case, the rally was not all that large as to get uptight about it, considering that it is occurring in the middle of the worst financial meltdown in the history of the world. Yes, you read that right. The worst EVER. Beating the tulip bust, the fall of Rome and even our very own Great Depression. Additionally, the rally fell apart precisely at 2:00 pm. So much for homebuilders and failed insurance providers.

Why is this the worst financial meltdown ever, you ask? Simple, because during the Great Depression the USA was a net exporter and routinely ran budget surpluses rather than deficits. We were on the gold standard then, as compared to the "thin air" standard we've been on since 1971, when the great (satire), late Richard Nixon repudiated our debts by refusing to honor the Bretton Woods agreements, thus taking our currency from one being backed by gold to one being backed by "the full faith and credit" of the United States of America, which is a very bad joke today because nobody has any faith in America anymore and we are a nation strung out on credit. The burgeoning national debt, now surging past $12 trillion, will never be repaid, ever, so, yes, this is the worst economic crisis and collapse in the history of the planet.

There are other reasons, such as the fact that we no longer have an industrial base, having shipped all of that to foreign countries, and the social safety net, which includes social security, welfare, and unemployment benefit recipients, were not even around during the Great Depression, though now they act only as an increase on GDP and a net productivity loss. Those people are freeloaders, producing nothing. So, those of you who believe the official government figure of 8.5% unemployment, start including retirees, welfare loafers and people supposedly seeking work, and you can just jump that number up to about 20-25% of the population, the same unemployment that we had during the 30s, but now we simply don't count those people as it might scare some other people.

America is collapsing quickly, so one naturally wonders why stocks are going up when all indications are that they should be going down. Maybe not you, but that's how I spend my idle hours, which are growing by the day due to my outstanding investment (make that trading) skills, thank you.

Apparently, today's little rally was short-circuited precisely at 2:00 pm because that's when the Fed minutes from the last FOMC meeting were released, and, of course, the Fed said that conditions sucked (they use bigger words) and the geniuses on Wall Street - who apparently were unaware of the horrible economic conditions - decided they should sell.

This market sucks, though. It has no direction except down. The rally of the last 4 weeks was a mirage, a total fraud. The economy sucks, your stocks suck, this country is headed straight into a black hole, and the worst part of it is that because of our corrupt politicians, bankers, CEOs and news media, the American public is largely unaware of the condition. That, however, is expected, as the majority of Americans have college degrees but are dumber than nails about anything that really matters, like the economy, the constitution, the rule of law, etc.

Dow 7,837.11, +47.55 (0.61%)
NASDAQ 1,590.66, +29.05 (1.86%)
S&P 500 825.15, +9.60 (1.18%)
NYSE Composite 5,176.48, +55.81 (1.09%)

On the day, advancing issues actually outdid decliners, 4628-1772, but the one true gauge which has remained constant throughout this episode, stretching back to October of 2007, new lows exceeded new highs, 69-10. Volume was weak, well off levels of just a week ago, another signal that nobody is buying except insiders with positions to protect.

NYSE Volume 1,314,803,000
NASDAQ Volume 1,851,850,000

Commodities also spent most of the day yo-yoing up and down, like there was something to decide as concerns the direction of prices. Oil was down, then up, then finished with a minuscule gain of 23 cents, at $49.38. Whoop-de-do! Gold gained $2.26, but remains at depressed levels, closing at $885.90. Silver also was up 13 cents, to $12.34.

Our fabulous Treasury Secretary, Timothy Geithner, said that results of the bank stress tests will not be released until after earnings for the guilty parties are announced, a sure signal that all the books have been fully cooked. Geithner is an obvious obfuscator and a complete, incompetent liar.

The nation has been led by elite crooks and criminals and the American people are paying a huge price for allowing it. In the end, one can only hope that the politicians and bankers will receive the treatment they so richly deserve. While today's tidy gains may look positive to some, they were merely a means for the banksters to steal again from both sides, buyers and sellers.

Stocks were completely out of kilter. The NASDAQ gapped up and stayed up, the Dow underperformed, all manner of technical levels were violated, including the most important support at 7775 on the Dow, but none of that matters since fundamentals don't matter, nor does sentiment, economic reports, earnings or any other measure. The big money makes the markets dance and they are playing all the wrong tunes right now.

The move engulfed yesterday completely, marking the 4th straight day of lower highs and lower lows, leaving investors scratching their heads in search of direction. Don't be fooled. The fundamentals are horrid and the markets will continue to decline. It's just a matter of when and by how much. Dow 5500 is looking pretty good, but 4000 is certainly not out of the question.

Stocks really aren't cheap, considering that in the near future, say six to nine months, most of them will be bankrupt or close to it. Some already are.

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