New Govt program to Save Most Important Industry

This is an urgent request; since the government has made it their policy to inject endless gobs of cash in industries and companies that they decide as 'too big to fail" OR "too important, and must be saved" I have finally found the groups that must be saved at all costs, even if it means the end of TARP, TELP, TARP II, etc...

The industry I'm talking about is so important, has been an intricate part of America, and the advancement on the whole world. The industry is so interwoven with others; and yes it will lead to saving a few others as well. But, is not the growth of America worth it? Shouldn't we do our best to save the companies that built the middle class, the ones that brought people together and moved us to the industrial giant we are today? There is NO price too high, we must save America...

The industry I speak of is of course the wagon wheel makers. The makers of wagon wheels are specialist and it is not the unskilled labour jobs that will replace them like working at Walgreens or Wendy's. These companies spend a lot of capital to acquire their materials and the other industries that depend on them is nothing short of a long list of pro-American companies.

If we dare to let the Wagon Wheel makers go out of business the ripples in the economy will be felt for a long, long time. Can you even image what can happen?

• First we would lose the Wagon Wheel companies and all their skilled labour out on the streets
• Second, The The Covered Wagon makers from St. Louis to Armadillo would have to shut their doors in a matter of weeks from lack of inventory---all those workers then laid off (NOTE: need more unemployment benefits).
• Third, all of the other suppliers of parts to the covered wagons would stop production because of lack of orders.
• Fourth, The great wagon trains would come to an end. The United States would be a group of isolated areas with very little traveling-
• Fifth, the social havoc that would come next from all those guys named "Cookie" no longer on the trail hanging around living off government assistance.
• Sixth, with no travel by covered wagon we would have no need for frontier towns, gold rush or even the Internet (since we would just be hanging around with no mobility).
• Seventh, the end of the Wagon Wheel Coffee Tables- Without them more marriages would not end in divorce -no need for lawyers (a whole different profession touched by this madness.
• Eighth, Probably the most important industry in the country, one that must never be allowed to fail- The Buggy Whip Makers- will no longer be needed...THIS CAN NOT HAPPEN. Can you imagine a county without Buggy Whip Makers on every corner?

There are countless other industries and parts of the society that will be destroyed as so many groups are on the spokes of the Wagon Wheeler Makers. It is not an understatement to say without these Wagon Wheeler Makers the Country will stop moving forward- a new dark age may come about---your grandchildren will not forgive you if you let them go under and then they are stuck trying to find some solution in their generation.

Please stop the madness and demand that the President Obama and the US Congress nationalize the Wagon Wheel Industry to save us all..

posted by Peter Greene

GM under White House Control

So this weekend the Obama administration took over GM now Government Motors. They will say that they are just giving a few suggestions in order for the company to receive government loan (or bailout I don't know what word they are using today) for what the 2nd or 3rd time in as many months. These types of loans and rules that go with them are normal--IF they come from PRIVATE investors. Now the US Government is the number 1 investor in our companies.

This is a total socialist takeover of private companies, nothing less. I am not some nut screaming against government assistance, for example the FDIC insurance or SEC oversight of companies, or thinking that no rules are needed to keep the playing field level and fair. Heck, that is what I'm asking for -a level playing field. We have lost that now, we have new rules- some companies are "Too Big To Fail" or are too important as a manufacturing through back--this is not a level field of play. It is not capitalism that we have in the United States of America. This nation is the greatest because we all have the same opportunity, not a guarantee...to play favourites is total socialism-if you are on the list of the powerful government you are saved no matter what, if you are not on that list you die...

If GM or Chrysler or the banks can't find investors to back their plans then they need to re-organize, merge or perish...OMG, yes some companies go out of business or evolve. When this happens other small businesses with better ideas, products or way of marketing come along and fill in the gaps left. The problem is everyone things things happen in 24 hour news cycles. Get over it and let the capitalist system that built this country live.

How many people have bitched for years that the big auto companies kept the ideas of electric or some other alternative fuels cars from the public-now we want to save them?

There are a bunch of Buggy Whip makers heading to Washington this morning to get their bail out next!


posted by Peter Greene

Firm morning comments 3/27

Not much to say today that hasn't been said the last few days (ie. running into resistance and make strategic trims). Futures are down this AM after the market slammed up into the resistance areas yesterday that we had highlighted in our S&P 500 notes the last few days.We don't expect a deep, deep correction yet and expect the market once it pulls back enough (we will do an S&P 500 report for Monday to highlight levels traders may want to dip their toe back in on the long side) to make another attempt at this resistance level.If this second attempt fails then one could expect a deeper retesting sequence. However we would bet the market will set a higher low and do it on less downside momentum. This would then set the floor for a longer more durable rally.

However as we know market conditions can always change on a dime which is why we track internals constantly. Internal readings such as up to down volume ratios and advance to decline ratios help us handicap the footprint left by large institutions. And though they can be wrong at times when they collectively deploy their liquidity it is a wave you want to ride (on the upside) or avoid (or short) on the downside.

posted by Peter Greene

Boston Globe to go out of Business?

The Boston Globe , owned by the wildly successful New York Times (sarcasm alert), is in a LOT of trouble. They have over the past few years cut staff, redesigning the paper (read cheaper), and stopped coverings a lot of international/national events (using NYT feeds instead). Now another major round of layoffs this week.

The Globe will soon be gone in my opinion. How can this happen? We can blame the Internet, 24/7 cable news shows, or even the lack of government aid (yup sarcasm again). Buy, how is the cross town rival, Boston Herald, still doing ok and actually increasing distribution??? NY Times just announced pay cuts again and more layoffs...

Now the Herald is owned by same owners as the New York Post (and looks fluffy like it). Globe owned by NYT and their bias is so bad that even liberal bastions like Massachusetts and New York City are running from them. There is nothing wrong with having an opinion, heck I think smart people read different papers to get all sides. However, when every article is not reported as news but as filled with political bias people get pissed and stop reading.





posted by Peter Greene

Quick S&P thought from firm

yesterday the S&P 500 hit the lower end of our first real significant resistance area near 825. Subsequently this index sold off 3.9 % intraday from that level before clawing back slightly above its mid range. So over the next day or so, especially with the market pointing to a modest up opening, it will be important to see how much the market struggles up here.

What we have currently is a stiff resistance zone from previously broken support and the market up 23.12 % off its lows. This makes for a pretty stiff challenge to overcome and may make sense to sell lower cost basis names that have traded up recently then look to redeploy into those names on a good pullbacks.



posted by Peter Greene

3/24 S&P levels

We always say it is not the point move that matters but rather the sponsorship behind the move that’s most important. That said today’s market move was impressive because internals were stellar behind the scenes of yesterday’s advance. This is the second time in the last few weeks that both the up to down volume and the advance/decline intraday ratios simultaneously both scored very bullish readings. When the two of these metrics are both bullish at the same time it raises the odds that the buying is real and sustainable and not just short covering. That said we do think these bullish internal ratios suggest the market can keep move higher over time, however it won’t go straight up. As seen in the attached PDF the S&P 500 has now run back up into likely short-term resistance near the 823 to the 855 level.

Given there are still a lot of longer-term macroeconomic issues, tactical trading strategies, such as selling lower cost basis purchases made at lower levels over the last several weeks or placing tight trailing stops on profitable positions may make the most prudent strategy as opposed to not having any active sell discipline....



posted by Peter Greene

3/24 comments

As we have said before it is not the points gained or lost that matter, but rather the conviction behind the move that is most important and Monday's internals did not disappoint with the NASDAQ and NYSE both scoring up to down volume ratios and advancer to decliner ratios that were super bullish. This rally confirms the thesis/comments that we made on March 10th and then again on March 18th.


3/10/09 excerpt from FusionIQ Comments " Market internals (i.e. the number of advancers to decliners and up volume to down volume) on today's advance were the most bullish internal readings seen since the move off the 2002 lows ... " we also added ... "That said we believe today's rally is the start of good move higher (again it may not be the ultimate low - only hindsight will tell us that) however the surge of momentum suggests this rally will be worth participating in."

On 3/18/09 we stated, "So that said we continue to view this current rally as having legs with maybe another 10 - 15 % up from present levels (So buying on dips with appropriate stop losses would make sense for the time being). We also continue to view this as an opportunity to make money on the long side for a narrow window of time (1 to 3 mos)."


That said we think the S&P 500 can still rally in the near term up to the 850 - 860 region on the heels of the unwinding of the deep oversold conditions, the large piles of sideline liquidity and additionally money managers allocating into stocks so as not fall too far behind their benchmarks. At the aforementioned S&P 500 level some more aggressive profit taking is likely to ensue and it may be a good time to take some chips off the table (i.e. lock in some profits)

We would then look to reallocate on the next aggressive pullback. Techs continue to act better than the broader market and should dominate your portfolio more than any other sector at this point.



posted by Peter Greene

Geithner Seeks Broad Power To Seize Firms

The Obama administration will ask Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, White House spokesman Robert Gibbs said this morning.

This is being reported this am from the White House. Geithner also said that many firms outside of AIG are paid too much. It is full salary cap on the country soon.



posted by Peter Greene

Too Strong

These markets look like they want to close at the high of the day. Trying to keep the 800 level way below us ....may be support if it can...we have been looking for 5-15% rally before we start falling again...



Getting closer..a good trading market.





posted by Peter Greene

Morning stronger.

The US Treasury cooked up a new toxic asset plan..soooo financials up and futures up...this is what we had spoken about last Wednesday that there is cash and Institutional pent up demand that will bring this market higher...in the short term...

Tech names continue to look good for trades...



posted by Peter Greene

NCAA killing the market

You would think we had enough action on Wall Street with the banking problems, AIG hearings and a group in DC that want to install Marxist policies in every part of our lives. NO, everyone is focused on the NCAA Basketball Brackets. (ME TOO)

So, as the second day of games starts up the trading volume is falling flatter thank BMO's late night jokes (seriously if he does not have a TelePrompter he is lost? ) ....If you do not have CBS TV on at your office, at least you can watch Uncle Ben babble for the next few hours...

Is it beer time yet???



posted by Peter Greene

S&P hits 800....

As I said in the post from March 11th the % move looked for an 800 target in the S&P on this rally. We probably will stall for a few (minutes or days ) but the FED had gone nuclear and they are going to print their way out of the banking crisis....Look for another leg higher (as stated in this morning's note) and then a sell-off...

This is a tradeable market and it must be done that way. Do not fall in love with names.






posted by Peter Greene

Firm's morning comments...

On 3/10/09 we said " Market internals (ie. the number of advancers to decliners and up volume to down volume) on today's advance were the most bullish internal readings seen since the move off the 2002 lows ... "

We also said " When the skew of advancers to decliners and up to down volume is this strong it suggests almost a buying panic on the part of institutions to get back into the market. Additionally these strong internals also suggest that there is a confidence and conviction on the part of institutional buyers"

And last but not least, We said " That said we believe today's rally is the start of good move higher (again it may not be the ultimate low - only hindsight will tell us that) however the surge of momentum suggests this rally will be worth participating in. "

So here we are not many days later and up considerably from where we published those comments and now what ?

We still believe the combination of the market getting really oversold, attractive valuations, excessive negative sentiment, portfolio managers having a lot of cash on hand and the quarter end for many mutual funds coming up (ie. Window dressing time. After all if returns looked poor again more redemptions would follow) (and they last thing they want to show is down another 20+ %) led to a lot of capital redeployment. With the market moving higher quickly even more managers felt they would lag behind their peers and subsequent benchmarks thus even more money (ie. managers chasing the move) came into the market.

In addition was not unrealistic for many to think the stimulus package (no matter what you're thought on its long term ability to be effective or not) will goose the economy to some degree at some point in the not too distant future. So that said we continue to view this current rally as having legs with maybe another 10 - 15 % up from present levels (So buying on dips with appropriate stop losses would make sense for the time being). We also continue to view this as an opportunity to make money on the long side for a narrow window of time (1 to 3 mos).

However, ultimately we think this rally will fade and we will get a retest of the recent lows (check the history books, we almost always get a retest.) How the market handles that retest will tell us a lot in regards to the longer term picture. We believe tech and growth (since they have the best bases and most constructive chart patterns and corrected much less than the broader market during the down draft) still outperform in regards to sector and style bias respectively during this rally/bounce.

In Barron's this weekend, one portfolio manager, Felix Zulauf, made an articulate case that this will be a violent rally (900 on the S&P 500) followed by a move to new lows (450 on the S&P 500) with that ultimate bottom coming in 2011. This certainly in plausible and would anyone doubt it after what we saw in the last 12 months ? especially if this is a multi-year secular bear. However we believe at present the best one can get from this market is to try and dissect it and game plan for shorter horizons such as 1 to 3 months until more macro economic data allows for longer term forecasting comfort. This is a market where traders will continue to dominate and thrive (provided you try to capture return both on rallies as well as declines). For the foreseeable future Buy and Hold strategies should be kept on the shelf if one wished to make return.

Look for our full blown reports on the S&P 500 and NASDAQ 100 tomorrow, which will provide greater insight into levels where they rally may peter out.

As always don't BUY BLIND !! Have an exit strategy before you trade/invest (and stick to it) !!!

Best.

Kevin P Lane
FusionIQ



posted by Peter Greene

Happy St. Patrick's Day

posted by Peter Greene

morning notes

We have seen the continuation of the impressive rally, with move up to the old critical support levels-now resistance. As stated in the S&P piece we published Friday if this resistance zone gives way we are in for a move up to the 950 level in the S&P. (If you need another copy of Friday’s note please let us know). The advance/decline stats last week indicated that this tape may have the momentum to move through that resistance. Typically when you have a major support that get violated the market has to do a lot of work to go higher; if we blow through 780 on the way to 950 this will be a serious exception.

Not surprisingly our internal short term trading signals on many names are moving to neutrals off of sell signals. The amounts of new buys are not overwhelming yet. Now we wait and see if the rally has legs.

Empire State Mfg Survey8:30 AM ETMarch expected to print -30.8 vs. -34.65 in Feb.

Industrial Production9:15 AM ETConsensus expects -1.3% m/m fall in Feb. vs. a -1.8% reading in Jan. We should welcome production (and construction) declines until demand stabilizes as inventories need to be worked off. We’ve had two months of more stable retail sales data, which is a start.



posted by Peter Greene

Firm's morning comment

Back to where we started … As seen in the attached report the S&P 500’s multi-day rally back from the dead has brought the index smack dab backup towards its recently broken support zone near 780 to 740. This zone of resistance is likely to stall this rally short-term given the fact so much trading activity occurred around this level before it finally gave way. However we are never one to argue with the tape and certainly the advance/decline stats as well as the up to down volume readings the last two days suggest this market may be able to overcome this resistance easier than we would have previously imagined.

Additionally with AAII Bullish Sentiment as low as 18.92 last week there is certainly enough bearish sentiment out there to suggest investors are under-invested and sideline cash is quite ample to support a continued bear market bounce. With the quarter ending in just a few weeks we would also imagine that institutional (long only) managers will add liquidity here as to not fall too far behind the market relative return numbers.

If this resistance zone is taking out over the next few days week then the next resistance zone for the S&P 500 would be at 950.


posted by Peter Greene

PRISON

A judge ordered disgraced financier Bernard Madoff jailed immediately pending sentencing after he pleaded guilty to 11 charges. He will be sentenced June 16.

Earlier, Madoff admitted he began operating a giant Ponzi scheme in the early 1990s in response to a recession. He said that he started the fraud but that he believed it would be short and he could extricate himself. "As the years went by, I realized my risk, and this day would inevitably come," he said. "I cannot adequately express how sorry I am for my crimes."


I was wrong, wow it happens once and a while I guess


posted by Peter Greene

Madoff to prison?

So it looks. maybe, that Madoff will officially plead guilty to what he admitted in mid December. This king of the ponzi has woken up the federal authorities and there have been many similar (although smaller) schemes closed down. The begs the question : Did the SEC, FBI, et al ignore not only Uncle Bernie, but all possible frauds?

Hindsight is 20/20, however how come all the Stanford, Madoff and other crooked firms went undetected for so long? Someone was asleep at the switch !!

Anyway, my bet is the wimpy judge in the Madoff case will continue his track and let Bernie stay "free" for a while. I'm sure if any of us stole anything and pleaded guilty we would be off to Sing Sing...



posted by Peter Greene

Possible S&P Target? 800

If you look at the move from Nov '08 we moved just less than 20% before the sell off...if we had a similar move now it would mean low 800 in the S&P 500...

The Fibonacci levels look closer to 850 if you take high to low in the past year...

Reality is??? Probably neither...what if we failed today and go lower? What would CNBC have to say?


posted by Peter Greene

nice rally

Nice rally this morning, after holding that slight S&P support of 675 yesterday. The spring has been stretched so much that a bear rally is expected. Do we stay over 700 on S&P? I think not. I am not one of those S&P 400 guys, however to see low 600's is in the cards I believe. As always there never is a straight line down or up...





posted by Peter Greene

675 Hold that line??

The slight support at 675 on the S&P held the close Friday, and looks like holding so far today. I saw the headline in the WSJ someone looking for Dow 5000! WOW, I thought the idea of S&P around 600, so Dow around 6k was wild...More negativity is starting to hit...this is good as we need the fear and "end of the world" thoughts for people to give up...Then we find a bottom.

Feel closer...


posted by Peter Greene

Fed wants to keep AIG secrets

A top official tells Congress he opposes unmasking the Wall Street firms that have pocketed tens of billions of dollars in taxpayer bailout funds.

cnnmoney.com






posted by Peter Greene

GM may not survive

According to the company's auditors GM has "Going Concern" Risk...

Is anyone surprised...I have been saying that GM and Chrysler need ch11 bankruptcy to REORGANIZE. Even a merger to a leaner, meaner firm would be the best think..

Funny this news hits as Ford says they are actually retiring debt and making important corporate decisions to remain as a viable company.




posted by Peter Greene

firm's morning comment

Over the last few weeks in our S&P 500 Equity Market Review notes we have pounded home the idea that if stocks broke the 2002 lows we would experience another leg down. We suggested that the numerous rallies from that level since 1997 had proven a rewarding investment/trading strategy thus it became significant. We suggested that breaking that level was akin to breaking a dam and it would bust the psychological comfort zone that this level created for buyers. Since breaking those levels the broad market as measured by the S&P 500 has been off close to another 8.00% and nearly 23.00 % year to date.

You would think this drop, on top of last year’s drop, would have caused mass panic by now, yet sentiment for the most part remains more disbelief than fear. Until this sentiment trend reverses the path of least resistance (as crazy as that may sound given the carnage stocks have been through) remains down. Our downside targets for the S&P 500 are 675 then 600. At the latter level we think the convergence of what will likely be armageddon like sentiment and big support could create a final and significant low.One observation that suggests we may be in the last stages of this bear market and setting up for a final capitulatory low is the fact that over the last several days even the strong issues (the few that existed) are now also taken apart.Stay tuned for more updates ...


posted by Peter Greene

Hoyer to W.H.: Hands off our earmarks

The article below tells you how bad those pols in DC are


House Majority Leader Steny Hoyer has a blunt message for the White House on the issue of earmarks: Back off.

On Monday, White House Press Secretary Robert Gibbs hinted that the White House would be pushing for earmark reform, telling reporters: "I think that you'll see that the president is going to draw some very clear lines about what's going to happen going forward.

But Hoyer made clear Tuesday that he would have none of it.

While the White House can “suggest ways for us to reform,” Hoyer said, “I don’t think the White House has the ability to tell us what to.”

And the majority leader was quick to point out that before he hit the campaign trail, Obama was serving the people of Illinois in the Senate — and obtaining federally-funded projects himself.

“The president, of course, had earmarks, as you’ll recall, not last year but the year before,” Hoyer said.

Hoyer said that members of Congress have a responsibility to provide funding for their districts.

“’Earmarks’ are a pejorative term,” he argued.

Hoyer signaled that congressional leaders were receptive to the idea of some kind of earmark reform and were in discussions with the White House about the matter. But he declined to detail those discussions.

From POLITICO.com


posted by Peter Greene

Home Sales...ouch

Pending Home Sales - January, Actual: -7.7%, Estimate: -3.0%, Prior: +6.3%



posted by Peter Greene

Worst year for dividend cuts since 1938

US investors are facing the worst year for dividend cuts since 1938, data from Standard & Poor’s have forecast, as a growing tally of blue-chip companies across the globe slash pay-outs for investors. 







posted by Peter Greene

Governement comes to the rescue for AIG...AGAIN

So another $61 billion dollar loss for AIG and the government runs in to add more TARP money. If that is not enough the gurus are now re-setting all the taxpayer debt to illuminate ALL interest. The total US Taxpayer exposure to the knuckleheads at AIG is now over $161 BILLION dollars.



What's next for AIG??? They will need to split up the company, sell all foreign assets and spin off the remainder units...I thought that was the original fear of what would happen to AIG if the government did not put in money???



To Big To Fail!! That was the rallying cry...now we are were we should have been back in September, but now we have billions at risk...who is running this run-a-way ship???

STOP THE MADNESS..





posted by Peter Greene