Friday, February 12, 2010

Your Money Is Being Yanked by Insiders

When CNBC's Maria Bartiroma blurts out, "It's four o'clock on Wall Street; do you know where your money is?" the resounding chorus from average Americans (people who work and make between $12,000 and $75,000 a year - about 65% of the population) should be "NO!" because, in reality, you don't.

Think about it. Your money, or what you believe to be your money, is all over the place. You've got some in your pocket, wallet or purse, in a drawer, a piggy bank, maybe buried in the ground in your back yard or stuffed inside a wall in your house. Some of it may be in a coin or stamp collection, or any other kind of collection. some of it is in the bank, some of it is reflected as credit on credit cards, or a home equity loan. Then there's investments, individual stocks, mutual funds, 401ks, Keogh funds, college funds, retirement funds, and so on.

Add to that the promised or held money, as in pension plans, social security, medicare, payroll withholding taxes, money in health care plans, etc., and you can easily understand that most Americans have no idea where their money really is, and, what's worse, who's using it, for what purposes and when. This is what makes investing absolutely the greatest gamble of your life. Playing roulette with real money you depend upon for anything other than fun is simply foolish. If you're a winning investor (about 12% of individual investors over the past 10 years), you may scoff at the tone of this post, but you have to admit that you sometimes have had doubts.

Watching the foolery on Wall Street this week was a real eye-opener. After Monday's sharp sell-off, there were two major gaps of more than 100 points apiece - on Tuesday's open and today's open - Tuesday up and today down, and six separate "pumping" events (three today) which managed to keep stocks in a fairly tight range and close slightly positive for the week. The scorecard still reads: 2 up weeks and 4 down for the year so far, a discouraging sign.

The various gaps and pumps (typified by large advances over a period of usually less than an hour) were all insider-driven, indicating quite clearly that the individual investor was at the mercy of the insiders and professionals. Anybody who made a dime trading this week who isn't wired directly into the Wall Street elite or a broker or trader, is either a genius or extremely lucky. The deck was so severely stacked against the little guy, he didn't stand a chance. while that's usually the case, this week was particularly volatile, a friendly partner of the pros, forcing more trades and more brokerage commissions while the investor is left holding a bag, suitably deflated.

Dow 10,099.14, -45.05 (0.44%)
NASDAQ 2,183.53, +6.12 (0.28%)
S&P 500 1,075.51, -2.96 (0.27%)
NYSE Composite 6,875.18, -23.54 (0.34%)

As if to throw cold water in the face of the market, advancers managed to finish ahead of decliners, 3398-2998, in opposition to the headline numbers and following an early-session trade which saw declining issues beating gainers by a 6-1 ratio. Truly, on the low volume reading, the market was yanked around by inside elements and manipulators. There is absolutely no doubt about it. There were 154 new highs to 59 new lows. Even though the gap continued to expand this week, the high-low indicator is becoming less and less meaningful as the calendar draws closer to March 9, the one year anniversary of the bottom. Stocks making new lows in comparison to last year have to be real stinkers. The high-low indicator may not make much sense as a trend indicator until maybe June or July.

NYSE Volume 5,202,259,500
NASDAQ Volume 2,168,768,250

Commodities did not participate in the rigged equity rally, and suffered nearly across-the-board losses. Crude oil dipped $1.08, to $74.20. Gold slipped $4.50, to $1,090.20. Silver fell 18 cents, to $15.41.

Besides commodities being stuck in a range, stocks, outside stellar performers and outright losers, haven't budged in 4-5 months. The top was really around Dow 10,300, back in early December. The rest of it on the high side was froth, or waste. The key numbers now are 10,050 and 9900 on the Dow, both of which should be tested within days. With all the turmoil in world markets - Greece, China, Dubai, elsewhere - the major indices are being held together by raw nerve. The inside game is still playing the "recovery" card until they're good and ready to dump out of all positions in a radical race lower.

They may all exit at once or continue the slow, Chinese water torture treatment of two days up and three days down for weeks and weeks, but, unless there's clear resolution on jobs (there aren't any new ones being created) and foreclosures (they continue to rise, year over year), the trend remains down. That's the bad news.

The good news is that there are only 36 days until Spring, baseball players report to Spring training next week and there are exceptional bargains in arable land, tools of trade and certain transportation devices (bicycles are cheap and riding them is very health-promoting). Seeds are - pardon the pun - dirt cheap.

Stop investing and start growing.

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