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Archive for October 1st, 2010

Stocks blithely ignore traditional warning signs

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by Rick Ackerman
Originally posted Sep 29, 2010

I wrote here recently that the stock market is almost completely driven these days by algorithmic trading and prop-desk automotons who couldn’t care less about whether the ups and all-too-infrequent downs of the broad averages accurately reflect “reality.” Following is a post from the Rick’s Picks forum by “3 Lions” that nicely frames the insanity of it all. The theme is especially timely given the mini flash-crash perpetrated in bullion Monday night. This brazen, quasi-criminal shakedown not only allowed DaScumballs –aka the Night Shift – to steal gold and silver futures for far less than they were to fetch later that morning in more liquid markets, but to pick off widows and pensioners in some key stocks that trade round-the-clock, such as Apple, IBM and Google. –Rick Ackerman

UNEQUIVOCALLY, WE HAVE REACHED A WATERSHED OF THE U.S. STOCK MARKET and therefore global stock markets. Never mind whether traders or investors are making money or not; the stock market has now become nothing more than a casino where the “table” almost always wins. Business-news channels in the USA are nothing more than offshoots of Hollywood sitcom studios which 20 years ago would have been rejected for children’s TV as being too dumbed down. The U.S. stock market has become so far detached from reality that justifiably it cannot be called a stock “market.”

Those of us who believe that one of the best ways to keep proper tabs on the financial charade is by perusing the consistently accurate touts in Rick’s Picks should spare a thought for those still bogged down in ancient trading methodology, such as Elliott Wave analysis, that began life when the stock market was indeed a “market.” A trading/investing friend of mine had 24 years in a row of profits until 2009/2010, when his proprietary trading method failed dismally. During the last 18 months, Bob Prechter has had more wrong calls than the Shanghai telephone exchange, and Dr. McHugh likewise. (I must point out that I have great respect for both of these men — they are still as clever as they always have been, it is just that the rules have changed).

What Hindenburg?
It even looks like the otherwise invincible Charlie Nenner has got the top wrong (some say he is a secret agent of Goldman Sachs, but he does get it right 90% of the time). There are so many charting indicators (i.e., no fewer than six Hindenburg omens) that say this market should be collapsing  – but it isn’t…so far.  To cap it all, the infallible and rare VIX Bollinger signal almost two weeks ago signaled “down, down, down,” but in fact we have gone up, up, up!  Meanwhile, the latest figures reveal that U.S. corporate insiders are selling 1411 shares (!) for every share they’re buying.

Undoubtedly, this market will not go down until “Da Boyz” are totally overwhelmed by some kind of trigger event that sets off a chain of events that will see the legs of their “table” collapse. It will be a “flash crash” of immense proportions rather than a “stair-step” decline. The only thing that is still favorable to Main Street is low interest rates, so when they start to rise, that will most likely be the trigger.

Elite Between a Rock and a Hard Place

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from The Daily Bell
Posted originally September 30, 2010

CAPITAL CONTROLS EYED AS GLOBAL CURRENCY WARS ESCALATE… Stimulus leaking out of the West’s stagnant economies is flooding into emerging markets, playing havoc with their currencies and economies. Brazil, Mexico, Peru, Colombia, Korea, Taiwan, South Africa, Russia and even Poland are either intervening directly in the exchange markets to prevent their currencies rising too far, or examining what options they have to stem disruptive inflows. Peter Attard Montalto from Nomura said quantitative easing by the US Federal Reserve and other central banks is incubating serious conflict. “It is forcing money into emerging market bond funds, and to a lesser extent equity funds. There has truly been a wall of money entering many countries,” he said. – UK Telegraph

Dominant Social Theme:
We’re doing everything we can here at the central bank. You’re simply going to have to trust us. It will all work out.

Free-Market Analysis:
There is an argument made by some, especially in the alternative Internet media that the powers-that-be are trying to undermine the US dollar in order to set up a more globalized currency. But we think this perception may give policymakers a bit too much credit. True, there are IMF SDRs waiting in the wings, but making the jump from dollars to SDRs (and thence to bancors) is a risky proposition. Additional sub dominant social theme: “Things are terrible but we’ll come up with a new financial system next month. We’ve already worked it out.”

The point we want to make in this article is that the elite is not firmly in charge of the current economic environment but is rapidly losing control – with various attendant consequences. The unraveling of the system has not only been swift and shocking, its been playing out in real-time over the Internet, which is just about the last place you want a generalized discussion about fractionalized, fiat money and central banking. Why is that? Because every time central bankers propose a monetary fix, ten thousands blogs step up to analyze the preventive medicine and to explain once more how the system really works.

It is no coincidence, as we pointed out just yesterday, that the power elite has set up a banking system with quasi-religious overtones. Central banking is a fundamental dominant social theme for the elite. The power to print money from nothing is the power to play God. But the elite never expected a generalized discussion about how the system worked. The idea was to baffle people with incomprehensible terminology while impressing them with the grandeur and magnificence of the money plants themselves – the great Romanesque temples that have been built throughout the Western world to honor money power.

The whole idea, between the vocabulary and the architecture, was to make the edifice so impressive and incomprehensible that people would simply tune it out, believing it to be somehow “beyond them.” But the Internet itself has thoroughly undermined this ploy. Every movement central bankers make, every new scheme, is analyzed not by the mainstream media that can be counted on to present a sympathetic perspective but by a distinctly more hostile crowd with a broad Internet reach.

Of course those who run the current money system are still determined to do so in a way that supports its mystery and asserts its control. The Western system of commerce is foundering right now. By overprinting money for decades, the powers-that-be managed to distort Western economies so badly that price information is virtually useless. Combine this with bailouts, and you have a recipe for continued joblessness as the market itself cannot tell the difference between a going concern and a useless one.

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