Donkey of the Month: Lady Gaga, President Obama, BP's Tony Hayward or New York Governor (David A Paterson)

Welcome to my monthly rant about people acting like bad little boys and girls in, or reported as such, in the month of June 2010. The month was a busy month of men and women acting strange, outrageous, insane and just plain stupid. There were several candidates on the bubble who didn't make the elite eight, but somehow, I expect they will take another run at "Donkey of the Month" in the near future. Here are my elite eight candidates:

Nominee #1: Mildred Fernandez, Orange County Commissioner

Suspended Orange County Commissioner Mildred Fernández pleads not guilty

Suspended Orange County Commissioner Mildred Fernandez was charged May 17 on 14 counts including racketeering, bribery, grand theft and other campaign violations. Fernandez was arrested April 27 after an undercover sting operation involved her accepting campaign funds for a development project. She has yet to withdraw from the Orange County Mayoral race. (Red Huber, Orlando Sentinel / May 4, 2010)

It only goes to show that power and greed corrupt, and are gender bias. Good luck with the Mayoral race, Mildred (and oh yeah, with defending yourself as well).

Nominee #2: Jim Greer, Florida GOP former Chairman

Florida GOP ex-Chairman Jim Greer leaves jail after being indicted

State agents and Seminole County deputies walked into ousted Florida Republican Party Chairman Jim Greer's Oviedo mansion Wednesday morning while he was shaving and hauled him off to jail on corruption charges, alleging that he pocketed at least $125,000 in party funds.

According to state investigators, Greer devised a scheme to siphon off a cut of the donations from major Republican donors after he had fallen on hard financial times, despite a party salary of $130,000 a year.

Its stories like this one that makes me wish stoning was still a viable form of punishment.

Nominee #3: Ben Bernanke, Federal Reserve Chairman

Federal Reserve Chairman Ben Bernanke pushes loans for sound small businesses

Bernanke, however, said it's difficult to divine whether the decline in lending to small businesses was being driven more by weaker demand or reduced supply because loans are harder to get. Lenders and borrowers have different perspectives the problem, he said.

Hi Mr. Bernanke: I'm a business banker, I can say, "There are less qualified borrowers to lend to. There are fewer borrowers who demonstrate an ability to pay or re-pay a loan. I think you know this.” As a banker, I had to throw this candidate into the month of June 2010.

Nominee #4: Venus Williams

French Open 2010 Outfits: Serena Williams Looked Classy, Venus Williams Looked Nude

Just like at any other major tennis tournament, the Williams sister were once again top competitors and the subject of controversy.
Scratch that.

Only one of them riled up critics, and it was not the one who infamously berated a line judge.

No, this time around it was the older Williams, Venus, who caught everyone’s critical attention. Parading around in outfits that have been described as reminiscent of a burlesque house, a lingerie show, or the Moulin Rouge, Venus did not do her character any favors.

French Open 2010 Outfits: Serena Williams Looked Classy, Venus Williams Looked Nude.

Tennis is a sport I used to play a lot. It's a game that often reminds me of managing money because there's such a great deal of risk, reward and recovery. However, it's also a game that demonstrates and expects a great deal of grace, dignity and respect.

It's one thing to lose your cool in the heat of the battle over an umpire’s call you disagree with, but an entirely different thing to cognitively decide well before a match to wear an outfit on the court of play that so disgraces and disrespects the game.

The Final Four: The prior four candidates, while part of the elite eight, didn't have a chance to advance into the final four of June’s Donkey of the Month. Before we get out the Final Four, I'd like to ask the reader to allow me the indulgence of a little fluff in such a prestigious award as "Donkey of the Month" with my next nomination.

Nominee #5: Lady Gaga
Yes, you guess it...............................It's Lady Gaga, the super star entertainer in the music business:

Gaga goes batty! Diva pitches a fit at Mets' Citi game

The eccentric singer stripped down to her bra and bikini bottom and boorishly barraged fans and photographers with a double-barrel bird-flipping during a bizarre, profanity-laced meltdown.

It seems Lady Gaga was disturbed that the seats she was given for the Mets game were too close to camera people or Paparazzi, and in her mind that was enough to blow her lid and show the world the middle finger, two in fact.

I like a couple of her songs, but I doubt I'm her demographic target audience. That being said, I find her act to be a cheap knock off of Madonna, while on crack.

Since she was wearing the same bikini top and bottoms from a video she made, I have to guess this was really nothing more than a cheap publicity stunt. Bad behavior in entertainment seems to pay off.

It's a good thing she's a talented musician/singer and her fans love her. Otherwise, her vocation would include the repeated and intimate use of a brass pole. I want to thank the reader for that indulgence.

Nominee #6: President Obama
Recently, the President was pressing Congress to spend money it didn't have to help States and Cities as they don’t have the money to continue overpaying public employees.

Obama Appeals to Congress for $50 Billion in Emergency Aid

Congressional leaders received a letter from the president asking for almost $50 billion for distribution to state and local governments saying that increased spending is “urgent and unavoidable,” the Post reported. The money would protect the jobs of teachers, police and firefighters.

“Because the urgency is high—many school districts, cities and states are already being forced to make these layoffs,” Obama wrote, “these provisions must be passed as quickly as possible.”

Many economists are optimistic that packages such as this one could lower unemployment, but member of neither party seem eager to allow further spending; Republican concerns over record deficits are making Democrats think twice about approving more of Obama’s costly initiatives, the Post reported.

Luckily, politicians from both parties are listening to angry Americans voicing their concerns over more and more government spending. Is it me, or is it totally ridiculous for the President to recommend spending money from the federal government, money they don't have, to make payroll for public union employees at states and cities across American because states and cities don't have the money?
What a stupid idea.

Why isn't the President instead voicing his concerns about pay and benefit levels, and asking his union political donors to get real, it's in America’s best interest?

Nominee #7: Tony Hayward, CEO of BP

Tony is now starring in the Broadway Play: What Not to Say When Your Company Is Ruining the World, here are some of his lines:

“What the hell did we do to deserve this?"

"the Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume."

"the environmental impact of this disaster is likely to be very, very modest."

"there’s no one who wants this over more than I do. I would like my life back."

On June 1, Hayward responded to claims that cleanup workers were being sickened by the fumes from the oil they were exposed to by suggesting another possible, non-oil-spill cause. When nine workers fell ill, according to Yahoo News, he told CNN that "food poisoning is clearly a big issue."

And let's not forget his selfless act: BP chief Tony Hayward sold shares weeks before oil spill
And then reported on June 1st, 2010 was his best quote: “I would like my life back.“

I think it's safe to assume, Mr. Hayward has handle himself in this oil spill nightmare like one of the three stooges.

Nominee #8: David A Paterson, NY State Governor

State Plan Makes Fund Both Borrower and Lender

ALBANY — Gov. David A Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund.

And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund — from the same pension fund.

As word of the plan spread, some denounced it as a shell game and a blatant effort by state leaders to avoid making difficult decisions, like cutting government spending or reducing pension benefits.

“It’s a classic Albany example of kicking the can down the road,” said Harry Wilson, the Republican candidate for comptroller, who holds an M.B.A. from Harvard.

What complete idiocy. When I read this story for the first time, I imagined Governor Paterson breaking into his children's piggy bank only to pay them their allowance. It's about that absurd and stupid. Harry Wilson has it dead right, its classic kicking the can.

Summary: We had a lot of candidates this month for "Donkey of the Month." I'm one who's always interested in results or the lack there of. In the case of the final four nominees, Lady Gaga's ill behaved manner is really a reflection on her and possibly just a publicity stunt that doesn't affect many. And while Obama's stupid plan to spend federal dollars to support States and Cities is ridiculous, luckily for now, it gained no traction in congress. We're all frustrated with the way Tony Hayward has handle the situation as CEO of BP, but the correct course of action from the CEO wouldn't have stopped one drop of oil flowing into the gulf, which is really what we are all outraged about in the first place.

That leaves us with David A Paterson Governor of New York, who had the opportunity to stop the insanity for 19 million New Yorkers by voting down the craziness of borrowing money from the State pension plan to make required payments to the State pension plan. He had the ability to choose the right course of action, for the benefit of millions of New Yorkers, and he took the wimp's way out.

Yes, David A Paterson, Governor of New York, you are my Donkey of the Month for June 2010!

Hope all is well.

J.D. Rosendahl, Rosey

Note: My definition for donkey is: A being or animal that moves ardently and stubbornly in the wrong direction wasting every one’s time to the detriment of others. If you have a different definition, so be it, and that’s your constitutional right. I’ll be doing the “Donkey of the Month” on my website, and if should you have a candidate for this prestigious award, please feel free to make that nomination to me directly. Email your candidate, and why you feel they deserve the award. Also, email a link to supporting data. I reserve the right to write about and post such nominations. I look forward to hearing from you.

Charts: Another Doji. $INDU, QQQQ, and Our Shorts

Yesterday, I said, "The market might make an inside day." Today the DOW traded most of the day like that was going happen until is sold off late in the day, and yet another down day in this leg lower. The DOW tested it's neckline. The market is in rhythm with Doji, down day, Doji, down day, Doji, Doji, big down day, and another down day today.

DOW: Nothing looks remotely bullish on this leg down. We are sliding down with a steep down trend line. I think we have 1-5 days before we put in a bottom on this leg. At a price below May's low for the DOW. It could have been today, but I've got that as a very low probability. There's just no wash out of bottoming structure yet.



I'm having trouble seeing the bulls coming to the table prior to the 3 day weekend. Maybe we've already seen the distribution prior to the big weekend. Either way though, I don't see this leg down as finished, and the next couple days could be wild in either direction, as a thinly traded market is upon us due to Wall Streeters going on vacation early.

QQQQ: The Qs are leading the DOW falling below their neckline and provide a glimpse at what's to come. Technically, the chart on the Qs is all bearish for the time being pressing below it's neckline and into the bottom Bollinger Band with the bands widening on the move lower. The RSI has finally reached oversold levels.



From My Trading Desk
Two trades today: We closed our short on COH right at the early morning's low. I said yesterday, "I might flip this one." And it was a nice little gain. We entered a new full short position on BA.

BA: I was looking to short a DOW component today that carried the same traits as the DOW with a big down day followed by a little down day. Hence the short on BA. I look for a push lower to or below the 200 day MA soon.



DAL: I'm glad we closed the half position on DAL yesterday, the stock finally had an up day, and it was quite sharp. It only looks like short covering, and I think we get lower on this leg and test the lower neckline support.



SRS: The ETF had another strong advance. The upside potential looks good with plenty of room on the RSI to move higher. This is now my favorite bearish position. It's working quite well from our entry.



BRCM + CTSH: Our two tech. shorts have essentially the same set up: Bearish divergences on both the RSI and MACD. Both stocks have fallen below their 50 day MAs and closed at their lows for the day with the MACD rolling over. I'm expecting increased downside momentum to or below the 200 day MA and the bottom Bollinger Band, as that is what most stocks and indexes are doing in this sell off.





MCK: Continues to be a sticky short. It looks like its ready for some down side soon, as its closed below the 50 day MA.



Final thoughts: We are in the territoy of oversold, and it's at these areas where fear and greed go crazy. It's at this level of being oversold where the market could melt down or make another flash crash. It's also where we could see some panic buying. Buckle up, it should get bumpy the next couple weeks.

Hope all is well.

J.D. Rosendahl, Rosey

The Gold Market Trend Review: The Bull Bear Debate.

There’s a lot of buzz about whether the gold market continues higher, or whether it’s time for a correction. The short answer is both are still a viable option.

Below is the daily chart of GLD. It’s grinding higher within a narrowing band of resistance and support trend lines. It looks tired based on divergences on both the RSI and MACD.



A break out is surely coming in the near future. A break below the red trend line is not terribly bearish, but a break below the black trend line is a more bearish signal. That daily black trend line is also the trend line on the weekly chart below.



The weekly chart reflects bearish divergences on both the RSI and MACD, and volume has declined into recent highs. That also looks tired based on divergences on both the RSI and MACD.

Below is the monthly chart of GLD. The good news is the monthly MACD has made a new high recently with price, and no bearish divergence exist. That leads me to believe the secular gold bull is still intact even if a near term correction begins.



The crux of the bull bear debate is essentially the following:

Melt ups occur from over bought conditions, especially in bubble conditions. The monthly MACD currently allows for more time for this to occur. Should GLD break above the daily resistance trend line a melt up could occur because there is no overhead resistance.

However, should the monthly MACD roll over, a correction of size in price and/or time is due. My down side targets are the monthly trend line, which is where the 50 month MA resides. My secondary target is the red line, which is price support. We haven’t visited the 50 month MA in ten years and it’s over due for a test.

Summary: Based on the technical structure of GLD, the risk is elevated for a larger sell off compared to the prior correction. The GLD simply looks tired. Therefore, we have sold a third of our gold bar position, and a couple of gold stocks. In essence, we have cut our total gold/gold stock position in half. It’s simply based on elevated risk, and we manage from the risk side first, making money second.

If we get the melt up, we will choose a time to unload, which may require patience or an averaging out strategy. If we get the self off or correction we look to average back into metals. If it is the sell off, it will take the monthly MACD months maybe a couple years to reach the zero line where I want to re-enter the PM market.

Hope all is well

J.D. Rosendahl, Rosey

Standing Ovation: The City of San Carlos, CA and It's City Leaders

There's a new trend beginning to sweep America. Cities will close down police and fire departments and contract those services out with a neighboring city or upward to a county or state to save money and bring budgets back into line.

Please see: San Carlos Cuts Police From Budget

SAN CARLOS, Calif. -- The San Carlos City Council voted 4 to 1 Monday night to cut its police department from the city budget and contract out law enforcement services.

The decision came at the behest of City Manager Mark Weiss, who asked council members to approve outsourcing police protection so the city could make a dent in its $3.5 million budget deficit. Weiss said outsourcing police services can save the city, which has a population around 28,000 residents, around $2 million dollars annually.

"We've been cutting our administration, parks and recreation we've been cutting salaries but it still isn't enough to balance the budget,"

It's long over due that cities across America get tough on police and fire department pay and compensation. Unions across the land have failed to participate in the solution in a meaningful manner, which only leaves two viable choices for cities, which include Bankruptcy as is the case with: Standing Ovation: Central Falls, RI and its City leaders

Or, as is the case with the City of San Carlos, they have decided to cut the police department and have outsourced those needs. It's a brilliant move, and instead of continually cutting other services to the public, this move will save the City $2 million, which is a huge dent in their $3.5 million deficit.

It's a tough decision but a smart one by the numbers. If the unions can't step up to play ball, it's really the prudent move by smart people.

Let's hope the City of San Carlos, CA is a shining light as a solution for so many cities in America.

Absolutely, The City of San Carlos, CA and it's City leaders deserve a standing ovation.

Hope all is well.

J.D. Rosendahl, Rosey

Note: Standing Ovations are going to be a semi regular part of this website, as I want to recognize those who do great work, and positively impact our world in a financial or economic way. Should you believe someone, some organization, or entity of some kind is deserving of a standing ovation, I want to hear from you. It’s easy, email who you feel deserves praise, and briefly explain why you feel that way. Also, you must include a link to data that supports the claim and provides background as to why. Please indicate if you want me to use your name in part or total, or a code name, as the recommending source, or if you prefer to stay anonymous. I reserve the right whether or not to write about and post a standing ovation. I look forward to hearing from you.

Charts: Stock Market Trends Lower, and Today is Why We've Stayed Short, $INDU, $SPX, QQQQ, $VIX, IBM, AAPL, BIDU And Our Shorts.

The stock market got clubbed over the head today with a little flash crash as uncertainty filled Wall Street over slowing economies from China to the United states.

The markets began the day by following Asian and European markets lower. Asian stocks fell after an index that forecasts economic activity for China was revised lower. European indexes continued the slide after Greek workers walked off the job to protest steep budget cuts.

Yesterday, I was on the side of the market moving lower today because of the intraday price structure of Monday's market. I'll be the first one to admit we got a lot more downside today then I thought we'd get.

However, today is a perfect example of why we continue to maintain short positions. There is very little (if anything) that looks technically bullish about the stock market, and mounting evidence to be bearish.

$INDU: You'll notice the DOW spent two days consolidating right below the middle of the Bollinger Bands and then rolled over today. While it has been on a big move lower the past several days, you'll notice the RSI has not reached over sold conditions, nor has price pushed below the lower Bollinger Band.

It's viable we get more downside price structure with price testing down into the necklines. I've draw one neckline off closing prices, and the another off lows. The MACD is rolling over on the daily chart, which also leads me to believe more down side pricing structure is to come.



$SPX: On the SP500 we have similar traits to the DOW, except it has pushed lower into the lower Bollinger Band and the neckline zone. However, there's still room on the RSI for more down side pricing structure. In addition, we have the MACD rolling over, and the daily Bollinger Bands widening with today's decline.



QQQQ: As market participants flee risk, the Qs got hammer more than the DOW or SP500. It has similar characteristics as the SP500 and nothing looks bullish.



Note: I expect the indexes to trade differently as it relates to when or how they break their necklines, and maybe the DOW holds while the others break below. That's the kind of pricing structure that creates confusion, which Mr. Market loves to do.

$VIX: We have interesting price action in the $VIX. It held support at the 200 day MA, and then reversed breaking above the 50 day MA. Then spent a couple days consolidating on the 50 day MA before bolting higher today. My read on the $VIX is bullish near term with the daily Bollinger Band just above and the MACD turning up.



Big Stock Watch: We're not trading in the big names but merely watching them for signs of market health.

IBM: Even IBM wasn't safe today. We are in dangerous territory if IBM continues lower. We are only a few bucks away from it's bottom channel (support) line. Maybe the market finds a near term bottom when IBM hits the support line. Just a thought and nothing I'm married too.



AAPL: I really thought AAPL might hold up since it's the market favorite. However, the down day was too big and it looks very tired with classic bearish divergences on both the MACD and RSI, and the MACD is rolling over. Any significant move below the 50 day MA, and we should see selling pressure release and the stock trade lower in the coming days.



BIDU: Even BIDU is starting to show signs of being very tired. While there is no bearish divergence on the MACD. The stock is sitting at current support, and a break below might release some more selling pressure. It's very possible this has another new high in it because of the lack of bearish divergences.





From My Trading Desk:
Today we made minor adjustments. We closed half of the short on DAL, and opened a full short on COH. Outside of that we maintained our short positions, which are highlighted in the charts below.

DAL: It continues to be the best behaving short in the group. We took some profit today because the stock is in the area of expected near term support at the 200 day MA and the neckline. We've kept the other half because there is nothing remotely bullish about the technicals on this charts.



SRS: Quickly becoming our favorite new position. The ETF gapped up today and is pressing into a level where it could close prior price gaps with further upside structure. We still have a 2/3s position and will add the other 1/3 when we are a little deeper in the money, and get above prior gaps and closer near the upper daily Bollinger Band.



CTSH: We have a full short position going on this stock. It reflects good bearish divergences on both the RSI and MACD, and the stock and it's MACD have rolled over. A common thread in this environment of late is to break below the 50 day MA and head for the 200 day MA.



BRCM: This is my second short of a tech. company, along with CTSH. BRCM has similar characteristics, and I like having a couple of tech shorts. If risk flees the market, techs will get sold off more. Remember, the opposite holds true as well.



COH: We re-established a full position today. The stock like CTSH has very solid bearish divergences going on both the MACD and RSI. It's been down 10 days in a row, and continues to slide. It may find some kind of support at the 200 day MA. The Bollinger Bands are widening on this move lower. On this one, I might flip it if we get immediate weakness in the near term, and come back if it bounces. Just my thought for now.



MCK: This stock has held up the best of our shorts. I'm thinking of closing this position in the near future, and just moving on to something else that has more volatility. Although, it did close below it's 50 day MA, so maybe it will pick up steam soon.



In Summary: We continue to like the short side. From time to time we will close positions to manage risk and ideally take gains. When I think about the market for the remainder of this week, I have a couple of thoughts stuck in the back of my heard.

First, tomorrow is quarter end for mutual funds, and that may create some turbulence in either direction tomorrow. However, based on price, I think tomorrow might be a little inside day following today's sell off.

Secondly, we have a 3 day weekend coming up, and if we get any more downside of size, just how bullish are the bulls going to be going into a 3 day weekend?

We should expect more volatility with panic on both sides. It would not surprise me to see another little flash crash this or next week, as market players seem spooked by mounting global issues.

Finally, markets rarely bottom on days like today, so I'll want to see bottoming structure before I believe in a bounce of any size is coming.

Those are my thoughts and action plans. As always, tomorrow's market could change that.

Hope all is well.

J.D. Rosendahl, Rosey

Welcome to Oakland-The Model City: Part 3, The Big Vote

Last Thursday night, The Model City had their big vote. They essentially chose the lesser of two evils or the wimps way out, and once again lacked the fortitude or back bone to tackle the issues of budget deficits head on with a more decisive plan of action to reach budgetary solvency in the long term: Oakland votes to lay off 80 police officers

The Oakland City Council voted 5-3 Thursday to lay off 80 of the Police Department's 776 officers as it slashed at a $30.5 million budget deficit. The decision could be rescinded if the police union agrees to pension concessions.

Council members would like the officers to contribute 9 percent of their salaries toward their CalPERS pension, the same as every other city union worker.

Policemen contributing 9% to their own pension plan is not enough action to aid in curing the budget. Where’s the salary cut, where the hard cap on overtime and other pay, where a significant raise in retirement age to at least 60 or 65. They can’t get to budget solvency with Mickey Mouse solutions.

But police union officials see it differently.

They see a city that squandered money in good times and now is coming to employees to make up the difference. Firefighters pay into their pensions, but they were given a salary increase to make up the difference, Arotzarena said.

You can see anything you want the way you want, but police union officials are idiots if they really believe their above position. Yes, The Model City squandered money, and mostly on police and fire department pay and compensation plans.

The Model City continues down the path of insanity and stupidity, please see: Welcome to Oakland-The Model City and Welcome to Oakland-The Model City: Part Two, Oakland Police Brace for Cuts, Data Shows They are Overworked

The plan has one weird wrinkle:

It assumes that voters will pass a ballot measure in November that will suspend for three years a mandate that the Police Department have 739 officers. Without that suspension, the city will lose $20 million a year in police funding from a parcel tax that the voters approved in 2004.

If the parcel tax and the minimum staffing measures both fail, the city would be forced to lay off 202 officers by Jan. 1.

First, they made band aid solutions to balance budgets during the past few years in “hopes” the economy would turn around, so they wouldn’t have to make the tougher decisions. Now, they “hope” the tax payer will vote to keep higher taxes. I think the public is getting tiresome of over paying public employees and without bigger concessions from unions, I'd be surprised to see the public vote for this tax to continue. It’s a stupid policy to hope for the best while managing the worst.

Like other cities around the state, Oakland's property, sales and property transfer tax revenues have dried up during the Great Recession. The city's $407 million budget represents a revenue decline of $69 million in just five years.

At the same time, the city has been treating police and fire budgets as all but sacrosanct. As other city departments have been steadily whittled back, Oakland's budget has been increasingly dominated by public safety expenses.

The big reason we are starting to witness social outrage from the public is highlighted above. Citizens everywhere are tired of losing services because politicians and unions are afraid to tackle the union pay and compensation plan issue with any substance.

The Oakland Police Officers Association is seeking at least a two-year guarantee of no layoffs in return for pension concessions, something the council has been unwilling to do because future years have greater deficits.

"We have to look at the next five years and put this city in a position where we start correcting this incredible structural deficit," said Councilman Ignacio De La Fuente, a longtime labor leader.

De La Fuente has the right idea of looking longer term over 5 years. City officials are complete idiots if they guarantee no lay offs during the next 2 years. The city will be in budget short falls for the next few years, and they need to keep their options open. It also goes to show the unions are unrealistic about being apart of the fundamental solution.

The Model City will continue to model the budget deficit issue so common in America in a way that completely captures the shear lunacy and stupidity of some public officials and their strategies, and the overwhelming greed of public unions.

In the case of Oakland, the only viable solution is bankruptcy. This is due partly because they will never get real or ahead of this train wreck. Partly because they will experience declining tax revenues for the next few years, unless fees and taxes are raised. And last, because The Model City has no contractual right to lay off firemen, which will ultimately block the city from reaching budget solvency.

Oakland--I’m for BK (bankruptcy). How about you?

Hope all is well.

J.D. Rosendahl

Charts: A little Wedge, GLD, SRS, DOW, AAPL, and IBM

GLD: The gold market pushed into resistance but failed closing very close to support. The wedging continues to narrow, so we should expect a break soon. MACD? No clues at all.



SRS: The short real estate ETF regained some of what it lost Friday. It's hovering around it's 50 day MA. A consolidation in this area and break higher is bullish, and we might add to our position if such structure occurs. MACD is trying to show some legs, but not impressive so far.



DOW: Below is the 5 minute chart of the DOW from the recent low. Looks like a wedge pattern with a slight break below the wedge on the close. It also looks like a tiny head and shoulder top, as well. Could be a little wave E over throw, or another leg down.



Below is the daily chart of the DOW. Since we didn't gain any life, and stayed within Friday's price range, I'm thinking we move lower tomorrow from the wedge and the little head and shoulder patterns. If so, then I expect a bounce of some kind to begin. Why? Wedge patterns are often the next to last wave in a cycle.



AAPL: Continues drifting slightly lower. It still looks like a push higher is in the cards, and yet, it looks very tired. I like the view of a push hire out of a little flagging structure, then complete bearish divergences and roll over.



IBM: The stock has the same thing going as AAPL with the flagging structure.



From My Trading Desk:
Slow day, no new trades. We continue to watch the market structure for clues for low risk entrees. I still think we are in no mans land. I continue to prefer the bearish view, but want more pricing data before adding any new positions.

If the marekt trades lower than gains footing, I expect IBM and AAPL to possibly break out of the flagging structure moving higher as market leaders. I'm not trading either, and only using them in part to gauge the markets health or lack there of.

Pattern Failure:
The speculative chart I posted a few days ago has failed. This is why when trading small priced stocks, smaller trading positions are required for conservative traders. It's just risk management because not every trade works and there's greater risk in small price stocks.

NANX: Pattern Failure.

Double Dip: The One Chart That Say's Its Guaranteed. Where's Your Money?

With all the incessant analysis from economists, politicians, and bureaucrats of this nascent recovery sprouting wings, there is one great and simple chart that's screaming a "Double Dip" is guaranteed: See the weekly chart of the $BDI below.



The index had made classic bearish divergences on both the RSI and MACD. It has also made a bearish head and shoulders topping pattern. The technical analysis of the index is screaming economic collapse on the way.

Below is the Point and Figure chart of the $BDI. The price Target is roughly a 65% correction from the current price of $2,500 to $850. That's also screaming economic collapse. Whether we get that dire of an economy or not, a "Double Dip" seems guaranteed.





What is the Baltic Dry Index ($BDI).

The Baltic Dry Index is a daily average of prices to ship raw materials. It represents the cost paid by an end customer to have a shipping company transport raw materials across seas on the Baltic Exchange, the global marketplace for brokering shipping contracts. The index is quoted every working day at 1300 London time.The Baltic Exchange is similar to the New York Merc in that it is a medium for buyers and sellers of contracts and forward agreements (futures) for delivery of dry bulk cargo. The Baltic is owned and operated by the member buyers and sellers. The exchange maintains prices on several routes for different cargoes and then publishes its own index, the BDI, as a summary of the entire dry bulk shipping market. This index can be used as an overall economic indicator as it shows where end prices are heading for items that use the raw materials that are shipped in dry bulk.

The BDI is one of the purest leading indicators of economic activity. It measures the demand to move raw materials and precursors to production, as well as the supply of ships available to move this cargo. Consumer spending and other economic indicators are backward looking, meaning they examine what has already occurred. The BDI offers a real time glimpse at global raw material and infrastructure demand. Unlike stock and commodities markets, the Baltic Dry Index is totally devoid of speculative players. The trading is limited only to the member companies, and the only relevant parties securing contracts are those who have actual cargo to move and those who have the ships to move it.

Unlike stock and commodities markets, the Baltic Dry Index is totally devoid of speculative players. The trading is limited only to the member companies, and the only relevant parties securing contracts are those who have actual cargo to move and those who have the ships to move it. [5] The BDI will show how much a company or country is willing to pay to import raw materials immediately. For example, if a Chinese company has contracted out coal prices for the next year from Rio Tinto (RTP), then the spot price of coal increasing after a mine accident will not impact that established contract. However, when this company is willing to pay more per ton to ship the coal than to actually purchase it, an investor can see that price growth is accelerating.

All the pundits in the world can chatter about what might be or could happen in their vacuum of economic analysis, but all you need to know is if this index continues to decline the world is in deep trouble.

It only stands to reason if the cost of shipping raw materials is going down its because there's less raw materials being shipped and there is greater supply of shipping available. If there's less raw materials being shipped it's because the global economy is declining because the pace of economic activity is shrinking.

It will be a global return to the bottom of 2008, maybe beyond. This chart is all you need to watch, the pundits are just noise.

Double Dip coming, bank on it!

Hope all is well.

J.D. Rosendahl, Rosey

Dr. Obama and Universal Healthcare

Hope all is well.

J.D. Rosendahl, Rosey

Charts: Another Doji, $NYA, $SPX, $INDU, $COMPQ, $RUT, $BKX, IBM, AAPL, PCLN, JNK, IYR

The markets made another doji candlestick. That's 3 in five days. The markets have traded down all week, and both the DOW and SPX fell to the 61.8% retracement level today before holding and creating the doji.

We are in no man's land for trading. We haven't had enough down side to rule out another push higher. If we get a bounce starting next week, the structure will tell us a great deal about market health. If we don't get a bounce, the market is ready to fall part and provide flash crashes or gap downs. I'm on the side of a bounce for now.

I'd like to see more pricing structure for low risk trades. We continue to be more aggressive with open short trades: For my current short positions see: Charts: From My Trading Desk

Market Indexes:

$NYA: The most bearish of charts of the four major indexes because the 50 and 200 day MAs have crossed with the 50 day MA heading lower. If the index bounces but fails under the MAs, look out below, that's bearish. This is my primary view currently, as the daily MACD looks like it's providing a head fake on turning lower, so I like the bounce and fail. We should know next week.



SP500, DOW, and the NASDAQ: All have similar structure, and the 50 and 200 day MAs have not crossed, but the 50 day MA is trending for that. As the MAs pinch, the indexes might bounces. All have held their 61.8% retracement level so far.







Retail and Banking Sectors: Both have made the same little pattern in price, an inverse head and shoulders pattern. The $RUT made an Engulfing Candlestick pattern the past two days, and $BKX was close. We should expect a bounce from here. If we get the lesser of market bounces next week, look for these to test their necklines.





IBM: This might be the most interesting chart for Friday. The Markets rallied off lows to make a Doji, yet IBM finished at it's lows trading weaker than the markets. The MACD is rolling over strongly, so a continuation of this down move could be in the offing soon. We'll know next week. I'm watching IBM closely. If the stock gets below the bottom channel line, that could be it for the stock market.



AAPL: The stock is forming bearish divergences on the MACD and RSI. There's still a chance for another push higher, and if so, it should happen soon. That being said, the stock is showing signs of getting tired.



PCLN: It's been on a big sell off from over bought levels. Looks like a little inverse head and shoulders pattern with an Engulfing candlestick pattern. So a bounce to the neckline or it's 50 and 200 MAs is expected even if the pattern fails. If so, we should see that bounce soon.



JNK: The ETF has tracked very closely to the DOW since the March 2009 bottom, and is currently out performing the markets off recent lows. I like to keep an eye on this index because of correlations. I was short this a month ago, and waiting for an opportunity to re-load on that trade. It turned higher today, and looks like it could make another push higher.



IYR: Bounced off the up trend support. I was short this a month ago, and currently own the inverse ETF SRS. It does look like it's trying to move higher based on Friday's structure.



Well,that's what I'm watching for now.

Hope all is well.

J.D. Rosendahl, Rosey

Jobless benefits to end for 200,000 weekly

The Rupublicans throw up road block on unemployment continuation. Jobless benefits to end for 200,000 weekly

Republicans on Friday nixed a plan to extend jobless benefits to millions of Americans who have been out of work for more than six months.

The defeated bill — which fell three votes shy of the 60 needed to block a GOP filibuster, 57-41 — would have provided $16 billion in jobless assistance to states, including California. State officials estimate at least a “few hundred thousand” jobless would be affected by the lack of an extension of unemployment benefits.

Nationwide, about 200,000 people would stop receiving unemployment benefits every week, according to federal estimates.

Like it or not, good or bad, if not changed it will have a detrimental impact on many Americans over time. This, if this policy continues, is the beginning of the dead broke society and social unrest. America will grow angry out of policies like this if employment doesn't improve sharply.

It's also the beginning of the huddled masses society where multiple generations of a family will live in one house.

If continued, this will develop pressure on American incomes reverting downward to a global mean. As the supply of American talent remains unemployed and lose their benefits it will for better or worse provide greater motivation to take a job significantly less in pay then someone who already has that job. As human supply remains abundant, and demand for people remains soft, the value of Americans in the form of pay will decrease as a part of wage deflation. It's just math or the basic law of economics.

We can't go on paying benefits indefinitely and at some point we have to make tough decisions like this. Whether we do or don't the price tag is huge. Only a strong economy saves the day, and that seems like a zero percent chance at this point.

Double Dip, just around the corner!

Hope all is well.

J.D. Rosendahl, Rosey

Charts: From My Trading Desk

I'll do a recap of markets, big stocks, and some ETFs on Saturday. I want to review the 5 charts we are short or interested in shorting.

From My Trading Desk:

DAL: Easily my favorite short position. We added the other 1/2 position to bring us up to a full position. The stock is clearly weaker than the market, and the head and shoulders pattern continues to look good. I've drawn two different necklines off lows and closing lows. The right shoulder looks like a wedge type pattern and as such the down side target is somewhere in between our two necklines, so we should expect a test of that area in the near future.



Here's what I'm looking for in the near term for DAL. We've had an impulse move lower from the right shoulder breaking below the 50 day MA, which is rolling over and heading down. The RSI has yet to strike over sold, so I'm looking for the stock to consolidate based on being over sold on intraday time frames before pushing lower and testing the necklines of the head and shoulders pattern, which is also where the 200 day MA is currently. At that time, the RSI should strike over sold. The first attempt at the neckline should create a bounce.

MCK: We have a full position going on MCK. It's a company that makes me a little skittish being short because it's a very well run and profitable company. That being said, the technicals drive me to be short.



Today, the stock moved a little higher, and this one could still push into another high as a market favorite. The interesting thing that happened Thursday is the point and figure chart price target flipped from bullish at $85 to bearish at $62 on the daily time frame.

BRCM: We also carry a full short position on this stock. The stock made a small hammer today, and I've labelled it with the bullish wave count to present our risk.



If the wave structure is in fact bullish, it looks like a wave 5 coming with another push higher. I have that as my alt. count because we have a daily MACD trying to turn lower with divergences on the RSI and MACD.

SRS: We have a 2/3s position to date. A little disappointment today, as the ETF failed to follow through extending above the 50 day MA and rolled over a little. The door is open for a push lower, which is the reason we are scaling into this trade.



COH: We have no position currently. The stock has nice bearish divergences on both the RSI and MACD. I'd like to see a bounce to gauge if this move down is wave 1 or A of something much bigger to the down side, or wave C of a flat pattern like BRCM.



Hope all is well.

J.D. Rosendahl, Rosey