From: dcbinkowski@ameritech.net
To: ;@smtp105.sbc.mail.ac4.yahoo.com
Subject: Fw: EW chart of S&P
Date: Thu, 19 Nov 2009 01:44:20 -0600

 
 
About 6 months ago I provided the attached chart (and e-mail) with upside targets for the market.  The mid-point target (the one I clearly felt at the time was most likely to mark the rally top, S&P 1123) is ALMOST here.  Not quite here, but it is JUST around the corner now.  Since the time I drew this chart with the upside projection around S&P 1123, I have learned that a 62% retrace is often an even more common retracement than 50%.  S&P 1123 being the 50% retrace of the entire decline of the Wave 1 leg down from the 2007 peak (above S&P 1500).  S&P 1200+ being the 62%-ish retracement of the decline we had from 2007.  These are known as Fibonacci retracements.  If you look that up on the internet I'm sure you'll find something that a few investors out there think is no more credible or reliable than astrology !  Yet, Fibonacci retracements are based on patterns that occur in nature, and humans are natural creatures, subject to the weaknesses of their own human psychology.  After all, nothing brings money into the market like very high prices, right !?  Everyone finally wants a piece of the action, now that the market has risen in price more than 60%, and some sectors over 140% (financials).  NOW everyone wants to buy finally, which is the most ass-backwards way to trade that there is.
 
I put some degree of faith in Elliot Wave analysis and Fibonacci retracements.  After all, Fibonacci retracements helped Ellioticians peg the bottom of the market close to Dow 6,000 and kept us out of buying the market until it got relatively close to that level.  Now the retrace is playing out perfectly too, and has almost reached the mid-point target where we will begin to continue selling into strength for the next phase of the market selloff - whenever that comes.  It almost feels like this market will NEVER stop going up, and thats why I think we're getting closer to the top finally...  But I MUST ADMIT, the market certainly COULD reach up another level to S&P 1,200-ish or Dow 11,300 from here.  Watch for a big blowoff top in the market where the few last buyers who haven't gotten all his money exposed to risk FINALLY throw in the towel and buy.  There will always be those few people who miss the entire rally and then at the last up hour on the last up day, throws his money into the meat grinder because he can't believe he missed the whole rally, and he can't stand one more day of thinking everyone in the world is making money in the market but him.  Thats the day you want to get mostly OUT of risk and get to cash if possible.  Its a buying panic and its volcanic in nature.  It could start with a big nasty gap up in prices (following a long continual rally like the one we're in now).  Then comes intra-day, a mountain peak that takes prices even higher, then by early afternoon the market starts selling off and it erases the entire day's gains and more (closing the big gap and runup it had all day).  This will hopefully mark a top to this awesome rally we've had, and give you a MOST PROFITABLE exit on the last of your stocks - if you haven't sold them already.  After that moment when almost everyone's money is trapped IN the market, and all people are holding all stock (but no cash to buy MORE stock) the prices in the market will do little more than fall, for quite a while.
 
Not only is mutual fund cash reserves at a virtually non-existent 1%, I found out today that individual investor cash reserves are in the high teens (17% or 19%?), which is the LOWEST cash reserve they have held onto since July 2007, the first all time top of the market indexes.  This is indicative to us contrarians of course, as a market rally that is running out of ammunition.  Even if people WANT to participate after they run out of money, even if mutual funds WISH they could buy more stock, they've got nothin' left to buy it WITH.  No money means all the wishing in the world won't get them more stock on that first 500 point or 1000 point dip.  They will be nervous holders of stock amid falling prices, rather than prospective buyers of stock in a rising market.  Big difference.
 
Have fun, be careful...
 
 
----- Original Message -----
Sent: Monday, May 25, 2009 10:04 AM
Subject: EW chart of S&P

 
This is an attempt to present the near term road map for the S&P in one "simple" chart. Yeah sure, thats not cluttered looking ! This is based on EW analysis and basic trending as well.  If you see these events unfold, keep your eyes peeled for the next thing to happen, and try to position yourself for gains, or conversely, protect the gains you have already made when we reach market tops.  About the time we reach those levels there will be "no bad news", the euphoria will be palpable, and everyone will think the worst is over.  Thats when you should be most on guard for market disruptions.
 
Long story short, these charts favor a pullback (down) in the indexes from the last high (S&P 930) to approximately S&P 800 - 830.  This gives back 38%-50% of the rally (respectively) measured from the last market low of S&P 666.  The upside target for Wave 2 (logical 38-50% retracement point) is S&P 1014 - 1121.  So you see I'm not actually bearish except in the very large structure we are in, and in the short term pullback.  In the mid-term I see plenty of upside until we get back into that downtrending channel that started in 2007 and went to last October 2008.  All this pullback (P2) does is get us back in line with a bearish downtrending channel really.  In otherwords the larger "pullback" is actually the move UP we're having now.  Pullbacks work in both directions, and in a primary bear market, the pullbacks move to the upside.  There is no reason not to try to make money using these pullbacks to the upside.  Just don't mis-identify upside pullbacks in a declining market, for a true bull market if we aren't in one.  Otherwise more pain may await even after making some of this market decline back this year, it can all happen again, and I'm predicting it CAN happen, and to a worse extent than the last decline.  With our government furiously trying to re-inflate the economy though I'm not sure who will win this battle, so the outcome has yet to be seen.  If you paid 700 for the S&P you'll be really happy when it moves to 1100.  If you paid 1550 for the S&P you'll only be marginally comforted when its "back" at 1100, but the formula for deciding where the market goes AFTER THAT isn't decided by what you paid to get in.  Never forget that the market doesn't care what you paid to get in.  [...deleted some superfluous text about a magic Toyota Corolla... Refer to the original e-mail I send 6 months ago to get the reference...]
 
The rally does not indicate the bear market has ended or that more downside is not ahead once we get up there.  In fact, being at price levels that high with earnings still impaired, just means the structure is even MORE fragile at S&P 1100+, and the market is even more likely to fall back again.  S&P 400 here we come (but only after a blistering rally to S&P 1100+).  At least this is what Elliot Wave analysis would indicate...

 

 

 

Subject: So Hated People Will Hate You Just For Liking It

Your issue of Gains, Pains, & Capital is online.

Today's essay:
-------------------------------------------------------
So Hated That People Will
Hate You Just For Liking It
 
Dear David,
 
I hope you're not angry with me. Indeed, few essays Iíve ever written have drawn as much ire as the one in which I proposed that the US Dollar might rally. The US Dollar is indeed hated, so hated that people will hate you just for considering that it might rally.
 
Virtually every day I receive emails from people asking me about the coming massive US Dollar devaluation or when the Zimbabwe-esque hyperinflation will hit. Whatís striking about this is that I receive more of these sorts of emails today (when the Dollarís at 76 or so) than I did last summer when the Dollar hit a 30-year low of 72.
 
In fact, the Dollar is so hated that it recently broke a nine-month downtrend and virtually NO ONE noticed. I know you probably think Iím a jerk just for mentioning this. But you can see it for yourself:
 

---------------------------------------------------
I've Just Published a 20-page Special Report
Detailing the Coming Financial Collapse

If the Dollar rallies Stocks will absolutely IMPLODE.

I just issued a 20-page Special Update to my subscribers showing them what's to do if this happens

We've already opened four trades. And we've got four more on deck for when the FIREWORKS begin.

David, are you ready for the Crash?

---------------------------------------------------

Of course, this could simply be a ďhead fakeĒ as the Dollar continues downward to test its 2008 lows. But I canít help wondering if this recent move might be the start of something bigger: a potential Dollar rally that would catch 98% of the world off-guard (98% of investors are bearish on the greenback).
 
If youíve been reading my essays from this week closely, you know that MOST of the stock market gains generated by the US markets have come from the Dollar losing value. Indeed, the US Dollar and the stock market have been trading at a near perfect inverse correlation for months now. Every day that stocks rise, the Dollar falls and vice-versa...  Which is why Iíve noticed that the US Dollar broke its downtrend the EXACT same time that US stocks broke their uptrend.

To see how the Dollar's recent action kicked stocks in the teeth... as well as the frightening similarity between the Dollar's recent move and the one it staged in July '08 which resulted in the stock market entering a free-fall, Please Click Here.
 

OmniSans Publishing LLC

6531 River Clyde Drive
Highland, MD
20777
US
 

From:  dcbinkowski@ameritech.net

Subject: US Steel - Stuck in the middle

Date: Fri, 30 Oct 2009 21:30:19 -0600

 

Hmmm, US Steel.  It sounds like a solid company one could invest in, doesn't it?.  In March it hit price levels that resembled the decline seen during the Great Depression.  And if you're not going to buy a stock at those kinds of prices, when WOULD you buy stock?  But do you know US Steel in 2003 got to a low of about TWELVE dollars?  Not to pick on any one company, but a materials sector play like US Steel or Alcoa, I would not expect to see halfway back to the March lows if we were truly in a "recovery".  I wouldn't expect to see a bearish cross on the 20/50 day moving averages 10 days ago either.  So, in just 24 trading days US Steel has dropped by about $16, shedding 1/3 of its price.  At THIS point I'm more inclined to think its becoming a better value the lower it goes, but if the dollar keeps strengthening, this can go even lower..  Last year's high for US Steel during the commodities mania (which I shorted) was over $175 per share, so I DO believe we're closer to the lows here than we are to the highs of LAST year.  I don't know where we are relative to the FUTURE highs though, which is the only important thing when you buy stock.  The future..  I believe US Steel is one of those companies that will do well down the road (as should all commodity and agriculture stocks that do well when world population is showing a bacterial rate of growth.  But the only entries I'd take on investing in it begin here and lower than here (when people really begin chucking it out the window). 
 
However, I wonder what bullish shills and analysts tell their people after something like this.  After they pumped the market shamelessly as a wonderful buy in the past couple months.  What "stories" do they trot out now to explain and excuse their bad advice over the last month, which just lured fresh money into the shredder (again) ?  I don't know.  This price and LOWER is where value might start to present itself, but with the dollar just now poised for a possible rally, I wouldn't touch materials or commodities here, unless they grant lower entries.  And even there I'd just nibble selectively if the market keeps falling, because it COULD be a long way down..  I just know I was buying the market in March and February, and I've been selling the hell out of it lately (while it was still GOING up and appeared to be topping).  The probability we break down here is increasing it would seem.  Many markets have already broken their uptrend (including Transports - conclusively broken uptrend).  But I'd like to see more chart development because I don't really trust this market to act right in EITHER direction right now.  I'd love to see more downside in this market though, to really wash out the weak hands.  Thats the only way any market can truly bottom.
 
US Steel is just supported now at the 200-day moving average (not shown here), so by all means it could bounce.  It COULD go up, but I certainly wouldn't have wanted to hold onto it beyond September for a $16+ loss on it while waiting to see what would happen next.  The March to September trade on this was the juicy part, the rest is just the market playing games with hangers on...  And anyone who bought a lot of this stock near the September highs when all the analysts were spouting nonsense about a recovery.  They are being annihilated right now. 
 
Will the market go up or down next week?  The only honest answer I can give to that is ... Yes...

 

Another look at the dollar
==================


Yes, its different than 97% of everyone in the world is seeing it (to be exact) - doesn't mean I'm right though.  Unfortunately, its possible they can be right for longer, and they can drag it on and on until they break me (or I lose patience) but there are so few people remaining to be sucked into the short dollar trade (about 3% are left to be convinced that the dollar can ONLY go down from here) - so how much more money can they bring against the dollar really when so much concensus has already been found (and thats what broke the downtrend last year, excessive bearishness left it nowhere to go but up).  

The "carry trade" is whats at play here I believe.  Its where people borrow currency (it used to be the Yen, but now its American dollars) because they sense weakness in that currency.  They know the rate will be exceptionally low and it will stay low so they borrow tons of it to buy risk assets with.  Not only is interest on it basically 0% (costing them nothing to borrow) but they also anticipate when they exit their trades, effectively when they "pay back" the borrowed money, it will have also declined in value since the time they borrowed it - so they come out ahead there too..  Its a clever thing, but it seems like it would have been much better to do this more from 2003 to 2008 when it had a long drop ahead of it.  Now we bottomed in 2008 possibly and even broke the downtrend once already (a serious red flag for continuing a bearish attitude).   Doing it here seems like the worst time (to me) to do a carry trade, but, people figure they must know what they're all doing, right?  Other people follow the example, and before you know it the whole world (or 97% of it) is short the US dollar, and hoping against hope it will do nothing but fall so they can all profit from it.  The whole world is playing the lottery, and they're all playing the exact same number.  Now who will pay if they all win?

A hint of rising interest rates could bring all that "certainty" to an abrupt and violent end but as I've said before Japan kept their zero interest rate policy for 16 years - still, did THEIR market no good so I'm expecting about the same here either way.  Did I send you that fractal analysis of the Japanese Yen?  It showed the same thing I'm expecting actually, a contrarian RISE in the yen even with everyone anticipating weakness here...  Its encouraging because I know the past and the future do tend to rhyme, even if they aren't identical always...  

If the bond market starts to raise due to external concerns (like Japan's runaway yen) I think that will also jam up the dollar too.  I think a bit of actual fear over what the fed CAN do to rates is what is needed here.  Raising rates is the "right" thinkg to do to protect the currency.

----------------------------

This is no guarantee I'm right this time, but check this out ...  It seems I have not been on the wrong side of the dollar really the whole time I've been at this (even before I knew much about what I was really doing - 2007 and prior).  Being contrarian worked each time so far even though the first two times I didn't even realize consciously thats what I was doing (I didn't yet understand the idea of Elliot waves and full effect of contrarian sentiment yet).

* Dollar falling enormously - I was long stocks heavily from 2003 on to the end of 2007 in my 401K (unarguably 2007 marked "the TOP") I was invested about 80-90% long the whole time before considering getting out at what I thought could be a top.  I got out half at 13,500 and most of the other half at 12,800.  Noone told me this was the top, noone rings a bell and declares it, I just knew.  This is before I knew 1% of what I know now about technical analysis.

* Dollar RISING in 2008 sharply and unexpectedly - I was SHORT OIL right before the decline in oil started (due to the dollar about to explode upward).  I called for a commodity bubble collapse in mid 2008.  It hapenned to enormous effect (oil lost 75% of its price in months) and Potash, Monsanto, and all the big agriculture / commodity complexes fell completely apart, bursting all those bubbles.  Right again, even though everyone was SO certain oil was going to $200 and beyond, and the dollar was finished.  If the dollar is finished why did it rally enormously (more than in the prior 6 years) and even break the bearish downtrend conclusively.  That kind of rise doesn't seem like the price action of something thats "finished", and it brought down the whole commodity bubble in a matter of months, completely tore it to pieces...

* Dollar falling in 2008 then 2009 - both times I was long the market before the dollar declined, which drove the market up, and I had oil, silver, and gold + gold miners, from their absolute LOWS ($700 gold), and several times oil went up into the dollar decline.  I did NOT chase the long dollar trade into its top (though 95% of everyone then had BECOME bullish, I turned bearish again).  I used that dollar strength to get LONG things that would go up as the dollar fell (contrarian), even though the dollar "was going up".

* Dollar starting to rise now (possibly) - 97% short interest (even more people short now than in 2008), this is when I'm seeing the most risk to the upside in the dollar because its 100% against what 97% of everyone out there expects.  We'll see if I am right, and if I am, can I manage to profit sufficiently from it !!!  It seems that being right and making a profit off being right are often two different sets of skills.  I've had no problem being in general, "right", but I have had a problem TRADING these moves to their full profitability.  I need to be able to HOLD WINNING MOVES for longer times, and CUT LOSING moves faster.  If I could master those skills also, I'd make better money.

Lets hope we can hold the next primary wave to its full effect.  The next move could be the biggest move the market has seen (but didn't believe could happen).
 

 

Wave 2 as he's presenting it on his chart would be the first counter-trend move against the newly formed (but as yet unconfirmed) uptrend in the dollar.  Wave 2 has an important characteristic, I think its the prime characteristic.  Its very memorable for me...

That is, the bottom of Wave 2 (the move I believe we're in now to the downside starting this year), is that people are even more bearish at the bottom of Wave 2, than they were at the bottom of the move that started Wave 1 (i.e. the lowest low on the chart from 2008).  As I've pointed out before when the dollar bottomed in 2008 and rallied strongly into 2009, almost noone recognizes Wave 1, because by the time it breaks the downtrend few could have caught it and the move is almost over once its above the downtrend line.  Then as it whipsaws back and starts to re-approach the former lows, people get even MORE bearish than they were at the former low.  They are now comforted that the dollar is again going in the direction it had been for 6 years before it broke the trend line (red flag!) and so they get even more short, ignoring that annoying little fact..  They do this in spite of the fact that  (#1) the price action broke the downtrend, meaning its a clear opportunity for a trend reversal and further correction  (#2) the new low is still higher than the previous low from 2008, meaning possibly a new uptrend.  Only breaking the lowest low and closing below there can disqualify this as being Wave 2.  We haven't been able to do that so far even with the might of the majority (97%) pushing on the short side trying to get it to resume doing what it did for 6 years prior to 2008 when it bounced.  Even at the bottom of Wave 1 (the all time low) only 93% of everyone was bearish.

Also, the stories about the dollar going to zero, losing our currency reserve status, the government going isolvent, have saturated everyone's thinking lately and its being yelled from the rooftops by all the Johnny come latelies to the dollar short trade who just now noticed that the dollar has been falling for 6 years.  So dollar fear is peaking.  And this is all we can manage after that?  A 6 year downtrend line that got busted to the upside, and a possible higher low forming right now (forming possibly the beginnings of a new uptrend).  This is what bottoms look like in any market.  This is much like the March lows were for the market, but in this case iit should be the dollar's turn to melt up and the market's to retire lower in the face of the rising dollar.  

This is only confirmed for most people at the Wave 3 of 3 (point of recognition), that takes the yet unrealized trend to a HIGHER high than the first bounce (the first bounce is seen by all to be a dead cat bounce UNTIL we bounce again even higher.  Now the new trend is confirmed and people panic into the trade, starting Wave 3 up.

------------------------------
His only question, is it a benevolent dollar rise or a malevolent rise ?  I want the malevolent of course.  Muaahahaaa....

http://seekingalpha.com/article/163641-how-will-markets-react-to-a-dollar-rise?source=article_sb_popular

I fleshed out his chart, showing visually what a Wave 3 would do to the dollar from here, it would go up beyond last year's highs, conceiveably dragging equities below the March lows - less than Dow 6,500.

"Sadly, we can find more malevolent reasons the dollar could strengthen than benevolent."

BROKEN TRENDS:

 

Look familiar?
 
Kenny's commentary on the broken trend-line on the logarithmic chart.  This is technically a back-test of the broken trend line from underneath (which we have a higher probability of bouncing DOWN from, than of breaking to the upside.  Once you flip sides on a trend line it is loathe to give up its new boudaries to just go right back to the other side.  Instead, the market, most times, end up fully exploring that side of the trend-line.  That looks painful if you ask me, because there is a lot of open territory (risk) below this market level.  Sufficient strength "could' be coaxed out of people to buy their way through the reistance level with increased volume (volume is the battering ram of the bulls, if it isn't there, it can't really break resistance).  So if that level of continued exhuberance can't be coaxed out of people here, the market will naturally retreat back downward, in the direction of least resistance, seeking a different outlet, a more bearish one, until the market exhausts all of the sellers.  So far, the market has done a great job of alleviating much of the overly-bearish sentiment that persisted at the recent lows.  Maybe now the market can get on with its orderly destruction of wealth and keep trending lower from here... 
 
Its not conclusive that the market cannot go higher, but I'm increaingly betting in the other direction now with each "up" week that gets stacked onto this rally.  Rallies don't last forever, even though some sparks of hope have carried us this far, I'm expecting it to not carry us to new market highs ... ever.  But if it does, I guess I'll start being a believer when I see the trendline we are under, being broken conclusively to the upside.
 

The Most Dangerous Words on Wall Street are "The crisis is over".  I like this video quite a bit.  He's at least conservative in his plan to only lose 2% if he's wrong about the market falling apart from here.  Thats the kind of discipline that takes emotion out of trades and helps you keep all your money intact (well, 98% of it).

 
 
   .... "Ultimately the medicine is debt destruction.  Its time, and its price, and its paying the bar tab..."
 
My commentary:
Lets be real.  The "consumer" (responsible for 70% of this economy) is in for years of fiscal restraint.  There is not likely to be a new bubble of wreckless spending starting from here before the market normalizes and destroys all the bad debt thats been accumulated..  People's piggy banks (their homes) were just shattered all over the floor, and lenders are in a de-leveraging phase, trying to disgorge endless quantities of bad debt from their balance sheets.  i.e. the homes the banks used massive amounts of borrowed money to buy, have declined so much in value that the banks are effectively insolvent after the first 3.3% of the decline.  The 20, 30, 40% further decline just added absurd levels of insult to injury.  I don't even know how banks can function right now except as wards of the government, on the public dole for the next 20 years while they try to unwind their assets just to get back to zero basically.   Banks are all worth about $1.00 in my opinion.
 
The majority of market participants just learned just in the past 2 years that the market actually HAS two directions (up AND down), so keep that in mind as they keep jamming this market upward (now above 9,500), the market is likely to be sucking in retail money from here on higher (public participation phase).  This does not mean I think we stop right here and now, and the market is folded rapidly in half (though thats always a pleasant thought for me).  I think this rally "can" go a big further, but not nearly as far as we've already come in the rally so far.  So its an exercise in diminishing returns from here leaving a large piece of your life savings at risk.  How much is the possibility of Dow 11,000 worth, to leave it all ride here? 
 
Its perfectly okay to hold some stock into this phase of the rally, but I recommend you part now with the better part of investments in equities and put most in cash to just earn interest...  Then take that last core position you are holding and whittle it out gradually into the market AFTER they show you the next 500 points, 800 points, 1200 points.  Only IF the market can cough up those additional price levels, THEN grudgingly sell them some of the remaining stock you're holding, leaving the core position to snowball into little more money if the market keeps running up.  Otherwise if we fold down lower, just HOLD the last 10-15% core position you couldn't get out of and let it drop as far as it drops.  Its only 15%, and if the market is folded in half again from here you only lose 7% of your life savings before having the opportunity to slam the reamining 93% into risky investments again at the next bottom.
 
There may be people out there staying heavily invested (long-side) the market here running on "hope" that this market will chug straight to 14,000 to let these majority of losing investors out clean with no losses.  I guarantee you, sure as I am sitting here, this is NOT how the market works.  Heaven forbid those investors load on on entire NEW risk from these price levels, after having missed the bottom..  They may be doing this out of some expectation of a second 50% rally (on top of the first 50% rally).  I think those people are looking to be dissapointed (at best), or obliterated (at worst) over the next 8 years or so.  Please use cautious money management when holding large equity allocations in your 401K's.  Just because its your life savings that doesn't mean the market can't take half of it if you don't employ some basic money management when at market extremes.  This doesn't "feel" like an extreme to most people right now because they don't look at the indicators.  They are looking at the prices and see that we "came from" Dow 14,000 and appear to be "going back" there now (since the market is currently pointed upward).  If you smooth out this data, it shows we are going down and just gathering potential right now to make a hard charge downward or we'll go "extremely sideways" :-)  from this mid-point in the trend.  The downtrend is unbroken still and right now dumb money vs. smart money sentiment is as divergent as it has ever been.  
 
-- Bullish Percent index S&P (sentiment): 83%
-- Bullish Percent index Financials (sentiment): 85%
-- Current recommendation (401K speed):  10% to 20% stock allocation AT MOST, 80% to 90% in MONEY MARKET **
-- Current recommendation (trading account):   No clear recommendations, though I AM building short positions in real-estate/financials for the next drop.
 
** Cash or Money Market, -NOT- bonds.  Bonds will fall a great deal with rising rates later on, THEN I start buying them gradually.

 

2007 definitely put a convincing looking TOP on China's market.  Have we corrected far enough back to the upside, such that almost everyone believes the old game is back on?  For this market to finally reverse course (and go lower) most of the bears must be flipped to buyers, and regular old bulls must become mega-bulls, galvanized to their cause once and for all that the market will NEVER, EVER go down again from then on. They must tie themselves to the mast of the market, and refuse to sell (much the way perma-bulls did from Dow 14,000 all the way down - until finally at Dow 6,500 they wanted out with a passion).  That is the kind of sentiment in the market that leads to a lasting and potentially destructive top in the market.  I know...  I know...  I hear the stories too like everyone else has heard on TV for weeks now.  The economy is all fixed.  We're "recovering", or "recovered" or even in a "new bull market".  Thanks to the hero, Bernanke.  And China's market is even better than ours !  Green shoots, government stimulus, cash for clunkers, dollars for dummies, whatever.  It fixed everything about the once ailing markets, and now we can recover, and China has already recovered, and will lead the world out of recession. 
 
Even the banks have gotten back their swagger over the past 6 months.  And believe me that was a mistake.  Lets see them now try getting more bailout money now after declaring record earnings last quarter, after the emergency mark to market suspension makes them appear solvent for the past 6 months.  Their balance sheets will continue to erode, and they will continue to be swamped under their own debt as they disgorge these rotting assets into an already over-supplied housing market (which drives housing even lower or at least supresses any major rise in housing prices). 
 
The cheerleading on CNBC is endless, the cavalcade of bullish analysts is endless, I hear them calling for S&P 1200 now (we are around 1040 right now, so that would be about 15% more of a move up from here).  To aid in this illusion of new market health, the economists' consensus has been that there is zero chance we have a double dip, or have any kind of re-test of the lows, except for the occasional 1 or 2% pullback.  And any of that nonsense will supposedly be met instantly by indiscriminate buying from all this "money on the sidelines".  This is the kind of talk you generally see around market tops (not market middles or market bottoms).  According to pundits, this is supposedly what will happen any time the market attemps to get a grip and take a breath to the downside.  
 
Now to the charts.  This is CHINA's market, an often hyped market which CNBC is pushing as a good "buy" right now.  Of course, who wouldn't buy a market that has jutted straight up 100%, is half way back to an unsustainable high it just fell from.  Seems like a great deal to me.  <Sarcasm>.
 
The charts in this e-mail are logarithmic view (not linear).

Weekly view.  Just a bit further view of the uptrend and parabolic move up that ended the last bull market in 2007..  Even on a log chart this move appears parabolic...

Now a bit longer view.  This chart goes back 20 years, and never broke the trend this badly before.  It wanted to in 2003 (kinda like the US markets "wanted" to correct), but we didn't let it.  Human intervention, herculean efforts to push growth - zero interest rates held too long, loose policy, giving just about anyone laying around in the street a loan to buy their very own house.  How long can we prop up that house of cards?   Maybe we can do it again, maybe we can't.  Maybe we can build a nice new bubble right back on the trend line and pump it up almost as high as the last one that couldn't sustain itself.  See where I'm going with this?  I think all roads lead downward once government runs out of breath to keep re-inflating this pig.  Its not infinitely inflateable, and there are physical limits to how far markets can go without correction.  The only way to get through it is sober and disciplined money management, without chasing all the hype on CNBC from week to week.  The market has had a magnificent upward correction.  Great.  But what is NEXT ???