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9.11.2016 - Financial Intelligence Report Bookmark

September Slam?
 
NOTE>> Today is the 15th anniversary of 9/11.  There will be solemn observances of this event going on all across America. By all means, take your moments to pay homage to the thousands of people who were killed, and the tens of thousands that mourn the loss of their loved ones. The criminals will be outted one day...but for today, just pray for those in pain.  

 The market has been a very odd place for quite some time, but no more so than during the last two months. All manner of strange things have been happening, much to the chagrin of those who deal in such things. For instance, we hadn't seen the S&P move up or down more than 1% in over 40 days. That is a streak that hadn't been seen since the mid 90's.

There was the infamous "box" that I've been belaboring for those two months. Since the end of June, the S&P had been trading sideways in a range bound box, with the floor of the box at 2175 and the top of the box at 2190. ( on a closing basis) Then the box expanded a bit, as we had a close at 2157 for ONE day. Then back up into the range we went. After a while the box range appeared to be 2160 to 2190 with that one looming close at 2157 sticking out like the proverbial sore thumb.

All the while that we were in that very tight box, wiggling up and down in the range,all manner of hell was breaking loose. The 7th largest global shipper went belly up, stranding some 13 BILLION dollars worth of goods all around the globe. More companies declared lousy earnings. ITT announced it was closing, stranding 30K students and laying off 8K teachers. WMT laid off 7K people. CAT laid off another 2000. Sub prime auto credit woes were starting to really make noise. APPL released a new phone and everyone yawned. High end real estate ran into a wall and started falling in NY, and other cities.

On and on it went. Yet each day as the market faded, the central banks would rush in late in the day and push stocks right back up into the "box'. Really, it was quite amazing to watch.

 

 
That's a screen shot, courtesy of stockcharts.com at about noon Friday. See those intra day tails? That would be where the S&P was printing during the morning and early afternoon, only to see them send the market considerably higher for the close of business. Day after day the market "wanted" to fade, and day after day they jammed it back up.

They ignored so many horrid economic releases it was stunning. But then Thursday and Friday happened. Late Thursday we learned that fraud of the highest magnitude was discovered at Wells Fargo. Some 5, 300 people were fired as over a span of 5 years they were taking money out of customer deposits and opening new fake accounts. They'd get credit cards, etc. then when the fake account was overdrawn they'd actually send overdraft notices to the poor customers that had been robbed!

Then the Government released its preliminary find on jobs. Many don't' know this, but every year, usually in February the Gov. goes back and tries to adjust it's jobs data against a much bigger backdrop of real data such as tax receipts. Well the preliminary that was just released Thursday, suggests that they're already on track to have to take 150K jobs back out of their announced job creations. I suggest that by Feb, they'll find more they need to adjust lower.

Despite all that, despite the FBI laying out more of Hillary's criminal actions, despite more bad news, Thursday was still a flattish market day. But it was Friday where they really got grumpy.

We had "pink" futures heading into the session. By pink I mean they were a bit red, but when you have say the DOW futures off 11 points in an 18K point market... that's not red. That's pink at best. But at 8:30 things got sour. What was the problem? Fed head Rosengren was doing a speech and he said it was NOW time to start taking rates higher. A few other Fed watchers chimed in, with Gundlach coming out with a statement saying this is the big time. He said rates had hit bottom and felt that the Fed's were ready to hike rates and change the entire game.

The market instantly started peeling off futures points. By the time we opened, it looked ugly and sure enough we were down 160 DOW points and 22 S&P points in a half hour. But it got worse. Much worse. By noon we were down 32 S&P's. That's a big move folks, and the DOW was down 250. It was like someone had pulled the plug.

So let's chat about all this for a minute because there's no question that we are in a very unique time in history. First of course if the election. Never before have we seen the entire main stream media agree to just give up all pretense of objective journalism and do nefarious things to make queen Hillary look good. From blurring out the "Trump" shirt on a guy praising Trump, to cutting off the mike's on people saying bad things about Hillary, it isn't even hidden any more. They just do it right in your face.

The FBI continues to release more and more damaging evidence against her and the media plays if off as old news, nothing to see here. The wikileaks guy Assange says he's got more damaging evidence coming. The media down plays it. Hillary goes on a 4 minute coughing fit and then pukes up what appears to be green lozenges in her glass, but the media says the Republicans are conspiracy nuts concerning her health.

So we know the election is historic. Never in the history of the US has so much of the "machine" aligned to coronate their particular puppet. It's Hollyweird, it's the corpratists, it's the media, it's you name it, they're all lined up to do what ever it takes to get her in. Fearing that Trump could win this, they've now started to lay blame on Russia for playing with and tampering with our election process. You need to think about this one closely.
Why is the DHS looking at taking over the election process? Why is Russia being laid out as tampering with our voting? You can say what you'd like about conspiracy theories but I think it's pretty simple. If Trump wins, they'll say it was because the Russians hacked the voting. The DHS will come up with phony proof of them tampering. Then our puppet Attorney General, under direction from the establishment elites will say yes it happened and some how try and have the results annulled.

Let's get back to interest rates for a minute, and Friday's intraday puke fest. Why Friday? Why a 250 point dump, after trading sideways for 40 sessions? What about rates? What about the FIRST DEBATE coming up?? Don't laugh folks, it's all interconnected.

First let me state something right at the get-go. I do NOT know what the Fed's are going to do. But I can indeed make the case for a couple very different scenarios. The common wisdom is that since the economy does suck, because of things like global shippers going under, because of the jobs revisions, because of everything...they wouldn't dare. ESPECIALLY ahead of the strangest election in US history. Okay, I get all that. So the easy answer is that no, they don't hike rates.

I can even toss in some conspiracy stuff. Let's suppose that the Fed's are all aboard the "machine for Hillary". Wouldn't it be a psychological mind game for the market manipulators to take the market down and down ahead of the Fed meeting on the 21st. Then have them hold tight with NO hike, which would ignite a rally, just as we go into the Sept 26th Debate? People have short memories and Hillary could point to a roaring rebound market and say "Democratic Presidential policy is why we're heading back up to all time highs in the stock market!"

Don't think it's too crazy.

But there is another angle to this, which makes it even more confusing. The Fed's know that Trump has said in public that the Fed's have created a false market. They know that their propping action is now so blatant that everyone knows the Fed's only care about keeping the market up. Could it be possible that to save face, they actually announce a hike, DESPITE it being an election autumn? Could it be that they think Trump might win this, and they'd best get to looking like they're really doing something?

Hey... could be. As I said this "dot plot" has way too many paths to it.

Could it be that they KNOW Trump will win, and to crush his supporters, they've decided to change the game, and that instead of keeping the market up at any cost, will now pull the rug on the market, and force it to crash just as he's taking the helm? I could easily see the lunatic left pulling that off. The hatred of a Trump Presidency is so strong by the establishment, that I could easily see them punish every 401K holder by crashing the market and then blaming it on Trumps "wild ideas" that frightened the market.

Crazy? Maybe. But in this go around, there's NOTHING off the table. Nothing.
I have been calling for a global "reset" for three years. The world is awash in debt it can never pay. 15 billion dollars sits in accounts drawing negative interest rates, yes folks, the depositor pays. Usually the tried and true way of fixing things has been to start a war, go deeper into debt and then at the end of the war renegotiate who owes what and at what value. Thus we see the sabre rattling in Ukraine, Syria and now the South China Sea.

Considering that everything seems to be coming to a head at the same time, could it be that we're just a few months away from something "big?" Could we see a global market crash? Could we see a war? An assassination? A martial law? A civil breakdown?

I am NOT trying to be a fear monger. I'm a realist, and the input I am getting is painting a horrible picture. I want to believe that life just goes on as close to what we'd call normal as possible, but how can it? Let's for a moment suggest that "okay" nothing horrible happens in the next 6 months. Do the debts go away? Nope. Does the racial divide heal? Nope. Does Obama care become affordable? Does the trillions in student debt disappear? Nope. Does the average saver see a decent return on deposits, like we did for 200 years? Not that I can see. So what happens then? Nothing? Forever? Not possible.

In other words, IF something's going to happen, it would seem to me that we're certainly in the right season for it. Between the economy, the election, the Middle East tensions, etc... if a spark is going to ignite a fire, this is the most logical time. Yes I hope I'm wrong. But I fear I'm not.

Here's a tell folks. The Fed's have thrown together another Fed head to come out and speak on Monday. This wasn't scheduled. The person coming out to make statements has been a "dove" meaning she's been all about not hiking rates. If she comes out Monday and suggests it's time... then the game has changed and hold onto your hats. That's my thoughts.

The Market...

Friday was NOT your run of the mill down day. Friday was a "katie bar the door" rush for the exits as we haven't seen since the Brexit scare. Until Friday hit, volume on the SPY which is the proxy for the S&P was running 45 million, 58 million, 72 million, 50 million, etc. On Friday it was 221 million.

Nothing was safe. The IWM fell the XLF fell, the SMH fell. Very few sectors were spared. The DOW peeled off just shy of 400 points. The S&P down 52. That isn't your every day dip folks. That was something akin to a panic.

So, what's up with that? For two months I had to bore you to tears talking about how every day they kept the market safely inside the "box" between about 2160 and 2190. I said that this had to "break out, or break down" but we simply didn't know which way it would go. Friday we got the first answer, we broke down.

So the question really becomes this... until Friday you could see the manipulation in the market. No matter how down we might have been on say a random day at 1 pm, by the close we'd be safely back in the box, or maybe even pressing toward the all time high. But Friday that didn't happen. Instead of coming in and saving the day as they usually do, they stepped away and just let it fall like a rock. Did the Central banks decide "enough was enough?" was this some form of "warning shot" to the Fed's that you better not monkey with rates? Was this the start of a major rug pull? Or was this really just nervous Nellies because some Fed heads mentioned they want higher rates?

We've heard Fed heads threaten rate hikes 20 times. They didn't happen. Why would they panic so much over this one? Besides, didn't they "hike rates" last December, only to see the interest rates continue to fall? Indeed. But please take note that while the plunge looked ugly, there were indeed significant technical levels in play...

The Dow closed at its 100-day moving average 18,085, biggest weekly drop since the first week of January
S&P biggest weekly drop since early Feb, closing just above 100-day moving-average at 2120.
Russell 2000 biggest weekly drop since Feb, closing at 50-day moving average at 1217.
Nasdaq biggest drop since April, closing below its 50-day moving average at 5134.
Trannies closed below 50-day moving-average at 7841.

So what the heck happens now? As I mentioned in the commentary, if the "Dovish" Fed head comes out Monday talking about higher rates, I think we fall more. If she comes out neutral, to "dovish" again, I wouldn't be surprised to see a major dead cat bounce on Tuesday.

We didn't like what we were seeing at the noon hour, and we sold off our short term holds. Looking back it was a great decision. Now it's up to the central banks and what they do, as to whether we'll be buying this massive dip, or if it's time to either sit out or go short. Just a word of caution. We've all been trained to "buy the dip" no matter what, since for 7 years they've jammed the market higher. One day that will not work. Is this that day? I do not know. 

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