Stock Charts: Stocks Bounce Back From Friday's Sell Off.

$SPX 15 Minute:  I've put the Fib. retracement levels on in green.  We haven't even moved back to the 50% or 62% level.  That should happen in the next day or two.

$SPX 60 Minute:  The red line reflects we have not made a lower low yet, which leaves the door open for a new high as part of this leg higher.  It's really that simple and if it's higher it could take the rest of this week to scratch another new high.  So, we need to watch market structure and the Fib. retracement levels.

 
$SPX Daily:  On the daily chart, it looks like a little inside day today.  BBs are pinching, so we should expect price to move out of this little 30 point zone soon.  The MACD suggests it's lower, but again we need to make a lower low on the intraday chart and take out the gap in blue on the 60 minute chart.

IBM:  Holding up quite strongly, nothing bearish in Big Blue's pirce even though it's very over bought.

JNK:  Another test of the upper BB.

$VIX:  A little inside day and a little back test of the down trend line.  If this is going higher it should happen soon.

$WTIC:  For 3 days price traded below price support and the green trend line and that turned out to be a head fake pre-Egypt.  Now we have reversed and moving on the top trend line.  We should test that soon.  Above that should be really bullish.

COST:  Continued to move a little lower on an up day.  Seems like we test the lower BB and price support soon.  If so, it should happen soon.  Below support is far more bearish in structure.

CCL:  A little inside day just above the 50 day MA.  We should test the support lines.  Below that and the bearish view gains momentum.

BA:  Stock is in a channel and has rolled over with the MACD.  Today price under performed the market in what looks like an inside day for BA.

AMZN:  Price is still pushing lower below the lower BB but just a above a little uptrend line.  Below that, it could slide to price support, which is cluster support on the weekly. BBs are still widening.

FAZ:  The BBs are really starting to pinch.  We should expect price to move soon.

From My Trading Desk:  We did very little today with a minor short of AMZN.  We are still in wait and see mode on the market price structure.

Happy Trading

J.D. Rosendahl, Rosey

Tiger Wood's Dreams Turn to Sand

Not even Tiger Woods is immune to a collapsing real estate market:  Tiger Woods Dubai Golf Resort Halted as Luxury Market Struggles

Work on a Tiger Woods branded golf resort in Dubai has been halted by developer Dubai Properties Group, which cited a struggling luxury property market.


“The decision was based on current market conditions that do not support high-end luxury real estate,” Dubai Properties, a unit of Dubai Holding, said in a statement via mobile-phone text message today. “These conditions will continue to be monitored and a decision will be made in the future when to restart the project.”

Hundreds of developments in Dubai have been canceled or suspended after the financial crisis drove away speculators and caused lending to dry up. In October, Dubai Properties said it was reviewing the 55 million square-foot (5.1 million square- meter) Tiger Woods Dubai “in line with market dynamics and demand.”

The resort was to include a golf course designed by the former world No. 1 golfer himself, as well as 287 luxury villas and mansions, a boutique hotel and a clubhouse.

Comments on CNBC January 31st stated the golf course that has been built is no longer being watered and will be allowed to return to sand!  Dubai might be one of the biggest bubbles on the planet and not even Tiger Woods can escape it's impact.  Even if he hadn't had the extra marital issues and his reputation was pristine, this project would still get halted based on market dynamics.  It's that bad, but a great example of bubble dynamics.

Hope all is well.

J.D. Rosendahl, Rosey

The Brown Economy: Pushing it Down to the County

Brown's Countdown, Day 21:  Governor Wants all Juvenile Offenders in County Custody

Government reformers and youth advocates have long called for the state to get out of the business of juvenile corrections.

Now they're backing Gov. Jerry Brown's proposal to eliminate the state Division of Juvenile Justice and give counties responsibility for the state's most serious young offenders.

Brown wants to eliminate the division in three years. High costs, poor treatment and other shortcomings have made the agency a target of critics.

The juvenile justice transfer would complete a process that started in 2007 of giving counties responsibility for juvenile corrections. Previously, the state incarcerated about 10,000 juveniles.

Now the state has about one-tenth that number of young offenders in custody. They represent the most serious cases – murderers, robbers and sex offenders among them.

The Little Hoover Commission, a state agency charged with ferreting out inefficiency in government, called for the elimination of the Division of Juvenile Justice two years ago.

The commission's chairman, Daniel Hancock, said last week that he's a supporter of Brown's plan.

Local officials know juvenile offenders better than state officials do, and they can better serve their needs for rehabilitation and other things, Hancock said.

The commission came to the same conclusion in a 2008 report, noting that the state was spending the "startling" amount of $250,000 per offender per year.

Under Brown's proposal, counties would receive the same amount of money per offender as the state spends now, said Finance Department spokesman H.D. Palmer. The funds would come from an extension of tax and fee increases the governor wants voters to approve this year. Therefore, the state would save $242 million in the next fiscal year.

It's an interesting proposal to essentially consolidate juvenile correctional efforts and on the surface that might make sense.  What's completely out of place is the amount of money ($250,000) the State is spending on each offender.  And, voters need to approve the extension of tax and fee increases to support the plan of moving it to the county level. 

I wonder if voters are getting tired of being asked to approve taxes and fees when there is no resolution to the States' budget, when there are no concessions by public unions, and when the State's liabilities for pension contributions are out of control.

Should we be looking at more efficient ways to do things?  Yes.  But the budget deficit in CA is so big this is really chump change in the scheme of things!

Hope all is well.

J.D. Rosendahl, Rosey

Stock Charts: Stock Market Tops at Technical Resistance?

For the past few months, I've been calling for some kind of stock market top, with January 2011 as my preferred time frame. From the July 2010 lows to Thursday's close was a Fibonacci 144 days. Friday's minor new high might be the top I'm looking for.

For the past couple weeks I kept saying the market could test the 1,300 to 1,310 levels as part of that top. And last Thursday, Art Cashin said to watch the 1,303-1,304 resistance area: Watch S&P's New Resistance Are: Art Cashin

Today's high was 1,302.67!!! The price action Friday was constructively bearish, indicating further selling pressure in the near future and a correctional phase may have begun.

$SPX 5 Minute: On the 5 minute chart we have a 3 Black Crows pattern down from the top, which is a bearish pattern often stemming from a high point and is usually followed by additional selling pressure, which we got all day on the 5 minute chart.

$SPX 15 Minute:  The market made a minor high Friday to finish what look looks like a broadening top. 

$SPX 60 Minute:  Thursday, I said I liked the idea of the market trading lower Friday and even closing the gaps in green and red.  I also said that it's not bearish until we make a lower low, which we have not done yet on the 60 minute charts.  A break below the 200 period MA and closing the gap in blue are solid signs of a correctional phase.

$SPX Daily: There's a lot of great technical data in the daily chart. Thursday was the Fib. 144 day from the July 2010 low. We also have some similarities brewing in this high compared to the April 2010 top: look at the April high and we see price making a high and then going through a one day sell off then advancing for 5 days into a minor new high while creating a divergence on the RSI. In the past several days we have the same structure. And on both occasions, the market pushed the RSI into 70 for a month. Now look at the pitchfork lines, the April high finished right on the middle line. The January high is finishing by back testing the lower line. If this is the market high I'm looking for the correctional phase to continue next week. The lower BB and 50 day MA is the first support area. Price support in blue is major support.

$SPX Weekly:  We've reversed off the RSI at over bought just like the April top.  Price is stalling just below the upper BB.  The April 2010 high, the 200 day MA and uptrend line make likely cluster support we test.

$SPX Monthly:  The monthly time frame is the only time frame not reflecting any bearish clues.  It leaves the door open to support bulls in Time Frame Indifference, which could mean the markets continue higher without a correctional phase (Not my view) or hold the correctional phase to something of a more normal correction in price and/or time. For the monthly time frame to support the most bearish of Elliott Wave counts, the MACD needs to roll over.  As stated a couple times recently, I likely the idea of Mr. Market finishing near the highs for January.  After Friday, I also like the idea of the market closing near where it started for the month.  Mr. Market loves to push price into a place that puts Bull and Bears on edge, and either one of those should do just that on the monthly chart.

The Bearish View: I've been stating for weeks and months I thought January 2011 would put in some kind of top for Mr. Market. At this point, I'm going to leave it at we are due for correctional behavior in price and/or time.


If the bearish view is going to continue next week this is how it might happen: On the intraday, we should see some kind of brief bounce (wave ii) and selling pressure to continue after that and we need to close the gap in blue on the intraday chart and create a lower low on that time frame.

We might get a down day on Monday and Tuesday creating a 3 Black Crows pattern on the daily chart with next week being a down week, which will create follow through downward on the weekly chart.

On the monthly chart, if Monday is down for the day it could push the closing price for the month near the start of the month creating a bearish candlestick for January just like April 2010 and thus the first two candlesticks of a 3 month Evening Star would be in place. That would leave the door open for a down month in February to potentially finish that pattern. That would all support the most bearish of Elliott Wave Views.

It will be interesting to see how next week plays out!


IBM: A little sell side pressure in big blue has finally rolled the RSI over from very over bought levels. It's not really a bearish indicator for the market until it trades below trend lines and gap support. It could easily consolidate before making another high because there are no divergences.

JNK:  A little down day Friday and we might have finished 5 waves up from the Nov 2010 low.  Divergences in place.  Below the trend line is a bearish a sign the risk trade is coming off for Mr. Market.

$VIX:  Finally, we have a break out and over all down trend lines.  If this is going higher, the red line and 200 day MA should be the next stop.

$VIX Weekly:  The MACD is trying to turn up after bouncing off support and it could easily move up to the down trend line.

The Risk Chart:  The Risk Chart has created a divergence with a lower high compared to the stock market.

$SPX Weekly:  On the weekly, the MACD is trying to roll over.

My Watch List:

COST:  Another divergence in place.  Immediate cluster support at $70.

CCL:  Divergences in place and significant cluster support just below.

T:  From the January high, it looks like ABC down and we are in wave C.  Stock closed gap on Friday but there's room on the RSI and MACD to support a push to the lower wedge line.

AMZN Weekly:  MACD rolling over with divergences.  Price fell Friday to the middle BB.  Cluster support is $145-150 and we should eventually test that price zone.  It's there where the real battle between bulls and bears can take place.

FAZ:  I bought a position that is 60% of full a week ago and Friday closed at my cost basis.  Divergences in place support an advance could be in the making.  Watch the DOW.  Above the blue lines is initially bullish.  The black lines serve as my initial target for FAZ if we get a correctional phase for Mr. Market.  You can also substitute QID and TWM for FAZ if you want less leverage, the charts are similar.

From My Trading Desk:  Friday we closed our short on T for a gain and we scalped a short on AMZN for a gain.  Towards the end of the day I opened half short positions on COST and CCL.  I was waiting to see if the market was going to remain down for the day or bounce before adding those new shorts.

Next Week's Game Plan:  Next week could be exciting, but it depends obviously on Mr. Market.  If we get follow through and consistently bearish looking structure, I'm going to add to my bearish trades.  I'd like most to add to FAZ. 

Happy Trading.

J.D. Rosendahl, Rosey
http://www.roseysoutlook.blogspot.com/

Governor Christie is at it....................Again!

Gov. Christie moves to fire all but one member of Passaic Valley Sewerage Commissioners

TRENTON — For decades, the commissioners who ran the state’s largest sewage treatment plant operated it as if they lived in their own kingdom, accountable to no one — not even the governor.

They hired brothers, wives, children and in-laws; cut sweetheart deals for insiders; gave out lucrative, no-bid consulting contracts, and ran up lavish travel expenditures.

Today, Gov. Chris Christie said he had had enough.

He fired nearly all of them.

Taking steps to terminate six of the seven members of the Passaic Valley Sewerage Commissioners, the governor said using the state authority as a "personal spoils system" would no longer be tolerated. He gave the six until Thursday to voluntarily resign or he would move to have them removed for cause.

"The members of the PVSC board of commissioners have had more than enough time to begin reforming the commission, but have chosen instead to perpetuate a pattern of abuse," Christie said. "They have repeatedly engaged in unethical hiring practices, secured unwarranted perks and blatantly ignored conflicts of interest."

The unprecedented action came just over a week after a report in The Sunday Star-Ledger documented widespread patronage, nepotism and self-dealing at Passaic Valley. It marked the first time in anyone’s memory an entire state authority was virtually sacked.

The run-up to the governor’s action came after the commissioners had been told last week to provide a full accounting by today of all hirings and personnel moves at Passaic Valley in which they had been involved. In their responses, the governor’s office said, several acknowledged they had lobbied in favor of — or recommended — the hiring of relatives and family members to work at the PVSC. Commission documents indicate several of them also voted to award raises and promotions to those individuals.

Is there a better State or local leader in America today?  Governor Christie continues to be the toughest leader going, and he's a how to example of tough leadership in tough times. 

I hope he continues

Hope all is well. 

J.D. Rosendahl, Rosey

Bell, CA: Outsourcing the Police Department

Cash-strapped Bell to consider disbanding police department, cutting salaries and benefits [Updated]

City leaders in Bell will meet Thursday night to consider approving an action plan that would include deep cuts to salaries and benefits, elimination of the city's supplemental retirement plan and the possible disbanding of its police department, all as a means of avoiding bankruptcy.

The action plan is based on the recent findings by the State Controller's Office and the Los Angeles County Auditor-Controller's Office. A recent county review of Bell's finances showed that the city faces a deficit of $2.16 million unless drastic cuts are made. But according to calculations by city administrators, that deficit could grow up to $5 million by the end of June if the council does not take action.

"The city has reached a financial crossroad," the agenda report reads. "While the recommendations set forth in this report require difficult decisions to be made, without these actions, the City will likely be force into insolvency."

The plan offers the City Council a series of options, such as slashing compensation for employees up to 20% and laying off other city workers. The plan also calls for eliminating the city's supplemental retirement plan and some contributions to the state pension plan for future employees.

[Corrected at 10 a.m.: A previous version of this post said that the city would consider eliminating city-matched contributions to employee pensions. Employees currently do not make any contributions to their pensions. The city pays both the "employee" and "employer" contributions. Under the new proposal, the city would only cover the "employer" contribution.]

But one of the most difficult decisions city officials said they will have to make Thursday is the possible disbanding of its 83-year-old police department. The department currently operates at a cost of approximately $8.47 million annually, which is $2 million more than the city's expenditures for other operations, according to city officials.

The police department, whose contract with the city is under negotiations, is comprised of 45 full-time sworn and non-sworn employees, according to city administrators.

By contracting with the Los Angeles County Sheriff's Department, the city would save nearly $4 million and could potentially "eliminate the City's entire deficit without having to make further cuts in any other department," the report says.

The report also emphasized, however, that disbanding the police department is only one of several options that will be considered.

Bell, a city of roughly 40,000 people with a general fund of $13.5 million, is in this financial predicament in part because it had been rapidly increasing compensation and salaries of top city officials, accounting for a large portion of the budget.

Until they were force to resigned, former Chief Administrator Officer Robert Rizzo was in line to receive more than $1.5 million, with $846,000 for Assistant City Manager Angela Spaccia and $770,000 for Police Chief Randy Adams. All but one member of the council made close to $100,000 annually for their part-time jobs.

Other officials also received high salaries; both Lourdes Garcia, the city's director of administrative services, and Eric Eggena, the director of general services, were each paid more than $400,000 annually. Eggena has since been fired and Garcia agreed to a 61% pay cut. A third official was also laid off.

In addition, state auditors found that the city had to refund more than $5 million in illegal taxes levied during the previous administration's reign and now faces hefty legal bills because of the scandal. The city has racked up hundreds of thousands of dollars in legal fees from City Atty. Jamie Casso and his law firm since they were hired last summer.

The small town has also taken a financial punch from the poor economy.

In what has been one of the most mismanaged cities in the Bubble State, now local leaders are considering closing their police department and outsourcing this service to Los Angeles.

Simple math says, "It's a no brainer."

$4 million in savings by contracting with Los Angeles versus a budget deficit of $2.16 million, which could easily be $5 million.............................seems like good math.

The outsourcing of small town fire and police departments to larger cities, counties, and states seems logical for these cash strapped small towns.  We should see more of this in the coming months as budget deficits this year require tough choices because smaller towns and cities are running out of budget tricks and gimmicks while trying to avoid bankruptcy.

Hope all is well.

J.D. Rosendahl, Rosey

Smart People Talking Money: Madeline Schnapp Trim Tabs Director of Economic Research

Housing Recovery May Take Five Years-Plus: Report

It’s taken three years to process $1 trillion in foreclosed homes. At that rate, it will take more than five years for the amount of each individual’s mortgage debt, relative to their income, to get back to levels that were the norm in this country before the housing bubble, according to a report from TrimTabs Investment Research.

“For the debt-to-income ratio to return to 65 percent, mortgage debt needs to fall from its current level of $8.9 trillion to $6.4 trillion to $7.4 trillion,” Madeline Schnapp, TrimTabs director of economic research lays out very clearly in a report to clients today. “At the current pace, it could take four to six more years to work through the current and expected backlog of delinquencies."

One problem with this math could be that Schnapp assumes there will be very little income growth because of high unemployment so the only way to get back to normal is to lower the debt side of the equation through foreclosures. However, she’s also assuming 60 to 65 percent is the “sustainable” amount of debt to income an average homeowner can handle and many believe that will still have to come down even further. Either way, you’re left with at least a five-year slog, according to many economists and investors. 

“It may take longer than 4-6 years in my opinion to work through the delinquencies,” said Simon Baker, CEO of Baker Avenue Asset Management. He cited the stall in the foreclosure process taking place in the court system as banks are forced to prove they actually own mortgages that changed so many hands during Wall Street’s securitization process.

“The era of deleveraging is still in first half,” said Steve Cortes of Veracruz Research. “For this reason, the Fed's efforts to inflate the economy are not working. The effects of rising commodity prices are more than offset by the deflationary forces of deleveraging, especially in property arena, where a double dip is already a reality in many cities, and soon will be nationally.” 

Excellent math and some very well thought out comments. 

Yes:  The math could be resolved by higher incomes but it would need to be steady and sharp increases in income over the next 2-3 years.  And how many of us believe in that? 

Yes:  Debt to income ratios should be substantially lower than 65%, those are bubble market ratios.  When I started in banking back in the early 1990s I remember ratios around 35%.  If you're spending 65% of your income on housing you're stretched and probably dead broke every day.  If we eventually trend to more prudent ratios (30-40%), higher income isn't going to help much, even if we do get it!  Debt needs to come down!

Yes:  It will take years to unwind debt and leverage back into prudent norms.  The more Uncle Sam tries to prop up asset values, the longer the will take and that's why it's going to take years.

Housing doesn't come back until we complete the deleveraging process.  During those next several years we could deleverage ourselves into lower housing prices along the way. 

I love when smart people talk money using excellent and simple math!  Hat tip to Madeline Schnapp.

Hope all is well. 

J.D. Rosendahl, Rosey

HUD Mismanagement: Flushing Away American Tax Dollars on Belly Dancers

Fiscal responsibility, is that a term the government even comprehends directly or indirectly.  It's no surprise though how little respect the tax payer's money gets, nothing like the respect someone gives their own money.  I've clipped some highlights in what is a very interesting and long report:  HUD-Funded Housing Projects Wasted Money on Belly Dancers, Sex Offenders and Dead Residents

Even by Washington standards, $26 billion is a lot of money.

That’s the amount spent by taxpayers annually to provide housing for needy Americans. But there’s significant evidence that some of the monies have been poorly spent for years.

A joint investigation by ABC News and the Center for Public Integrity found that the Department of Housing and Urban Development has struggled to combat theft, corruption, and mismanagement in the more than 3,000 public housing agencies nationwide it funds, and particularly inside the 172 that HUD considers the most troubled.

The problems are widespread, from an executive in New Orleans convicted of embezzling more than $900,000 in housing money around the time he bought a lavish Florida mansion to federal funds wrongly being spent to provide housing for sex offenders or to pay vouchers to residents long since dead.

“I think we’re doing a good job. More importantly, I think a vast majority of housing authorities across this nation are doing a good job,” Assistant Secretary Sandra Henriquez said in an interview.

Oh Really!!!

One of the public housing authorities Henriquez cited for superior performance: Philadelphia. It has long been praised by HUD as a model agency, supposedly far removed from the “troubled” class of housing agencies.

But investigations last summer uncovered allegations that the then-Philadelphia Housing Authority’s executive director had spent lavishly on parties that included belly dancers, and had used more than $500,00 in housing authority funds to secretly settle claims accusing him of inappropriate sexual advances with female employees.

Last fall, after a series of newspaper exposes, the Philadelphia agency’s executive director was forced out of his $300,000 a year job running the country’s fourth largest public housing authority. And now federal investigators have opened their own probe.

Sandra Henriquez, Assistant Secretary:

“I would say the Philadelphia Housing Authority did a good job,” Henriquez said, asserting that the probe of the former director overshadowed the agency’s successful efforts to revitalize housing.

“I just find the before and after amazing, it’s an incredible story to tell,” she said.

The joint investigation by the Center and ABC, however, found allegations of mismanagement spread across the country.

SUCH AS:

For instance, HUD’s inspector general discovered that one senior official—Elias Castellanos, chief financial officer of the long-troubled New Orleans Housing Authority—used taxpayer money to buy a million dollar mansion in Florida, with a Lamborghini and BMW parked out front.

Castellanos was convicted of embezzlement and sentenced to nearly four years in prison, one of 43 housing officials across the country convicted of crimes over the last two years.

Donohue, the former inspector general, said corruption and fraud have flourished at HUD-funded housing agencies because federal officials in Washington have been asleep at the switch. And every dollar lost to fraud or mismanagement, he said, punishes the already vulnerable populations who live in public housing.

AND:

The public housing authority in Chattanooga, Tenn. was cited by the inspector general for doling out about $600,000 in employee bonuses, cost-of-living increases and severance awards in 2008 while on the brink of financial collapse.

AND:

An audit by Donohue’s office also found the public housing provider misused $788,000 in housing vouchers for the poor to pay unrelated expenses and diverted $1.2 million from a Fannie Mae loan.

AND:

Even though Chattanooga’s housing authority was on the troubled list and had a history of financial problems, HUD distributed at least $11 million to the agency from President Barack Obama’s American Recovery and Reinvestment Act.

AND:

During Donohue’s tenure as chief watchdog, his investigators uncovered some headline-grabbing examples of other mismanagement problems, like an estimated $7 million worth of payments to provide housing vouchers for dead people.

The investigative findings have begged the question of whether the root of the problem is incompetence or fraud.

“I think it’s a little bit of both,” Donohue said.

AND:

Investigators also found an estimated 2,000-3,000 registered sex offenders living in subsidized housing, courtesy of taxpayers, in violation of HUD’s own rules.

“I don’t know exactly how that happened,” Henriquez said when asked about the sex offenders uncovered by Donohue’s investigators. “This is truly a difficult issue. People make mistakes, we correct those. It’s again, what do our actions say when it comes to our attention? That is the bottom line.”

Dear Sandra:  I will take the job in Philadelphia for half the last salary of $300,000.  I promise to do a kick-ass job while protecting American tax dollars.  I promise I will not embezzle hundreds of thousands of dollars to buy a mansion.  I promise to not sexually offend anyone. I promise to not give myself huge salary increases and bonuses.  AND, if I need a Belly Dancer, it will come out of my own pocket.

HUD is flushing away tax payer dollars because there is little in the way of accountability over years of fraud, mismanagement and denial.

AND:  I think Assistant Secretary Sandra Hendriquez is in the running for Donkey of the Month for blinding denial and bobble headed suck up responses.

On a brighter note, a huge Kudos to ABC news and the Center for Public Integrity for doing solid investigating and the kind of diligent hard work HUD Mgmt. should be doing!

Finally, maybe Freddie or Fannie could loan HUD some money, maybe that will improve things. The most efficient use of the tax payer's money is to close down HUD and Freddie and Fannie and get the government out of the business of providing housing and financing! 

Hope all is well.

J.D. Rosendahl, Rosey

Stock Charts: Today Was Fib. Day 144 From the July 2010 Low.

$SPX 15 Minute:  A little broadening wedge structure with divergences building on the RSI.  I would expect the initial move Friday to retest this bottom wedge line, but we have nothing bearish in price structure.  We could easily take another run above 1,300 to maybe 1,310.  We have minor gaps in green to cover and a more significant gap in red.

$SPX 60 Minute:  If I'm using the comment from the 15 minute time frame, I like the idea of moving lower to begin with tomorrow.  We could easily test the up trend line and the first gap, but none of that would change the bullish tempo of the market.  That occurs when we finally make a lower low and close the gap in red.

$SPX Daily:  We have multiple trips to the RSI at 70 or above, just like in April 2010.  Will we create a divergence on this latest attempt?  Or, does the market need to shoot up to the over head trend line resistance?  This should work itself out in the next few days.

$SPX Weekly:  The market is still being held by price resistance and the market "might be" topping underneath the upper BB.

IBM:  IBM has become very over bought but notice there are no divergences and still holding uptrend lines.  Bullish Big Blue is good for Mr. Market.

JNK:  Is now testing the upper BB.  Will it push higher or is it ready to correct?  We should know soon.  It's bullish until it's below the trend line.

$VIX:  The 60 minute chart really high lights the wedge type structures on the large move down.  The daily chart is once again close to testing major support.

$WTIC:  Yesterday turned out to be a back test of price and trend resistance with a roll over today.  Price can now move lower and test the next level of cluster support at $80.  Again, it's interesting because the entire world is calling for a spike in oil prices and we may get there but the ending diagonal is calling for a correctional phase near term.

GLD:  It broke below minor support which opens the door for lower pricing down to the 200 day MA and maybe the next price support.

My Watch List:  Still keeping it relative short.  Again, it's moment stocks that are already up big that seem to be working best.  Stocks like NFLX, CMG, PCLN, and certain Big Cap Blue Chips.

T:  We have a short working on this one.  Stock dropped on their earnings announcement.  We have what looks like waves A and B of ABC down and we should be into wave C.  I like the idea of testing the prior lower or the bottom wedge line with the 200 day MA.  I don't think we'll shoot straight there but grind lower.

AMZN Weekly: The stock has stretched and looks tired. In after hours trading the stock is getting creamed as they missed their earnings announcement. We should see the stock trade below the middle BB tomorrow, which should push the weekly MACD clearly to the down side with a big down close tomorrow. Divergences on the weekly chart are bearish.  And notice the cluster of support in the $145-150 zone!  We could easily test that in the coming weeks.

From My Trading Desk:  Today was odd.  I went to close my Short of MOS for a loss and I guess I didn't make the trade a couple days ago.  It would have been a losing trade, but it turned out to be a gigantic laugher.  So, we took fractional positions off the table in SRS and UUP instead.  I'm using my big gain on FFIV to reduce positions and these two bearish ETFs just haven't panned out.  It happens.

I might make a trade on AMZN tomorrow, but I'd like to keep it light going into the weekend with the market elevated.  I still like the idea of Mr. Market closing near the monthly highs by month end, which I think will put the very bullish and bearish on tilt, which is what Mr. Market loves to do.

I'm still having a hard time with the super bearish EW count.  Again, there are very few if any topping patterns on individual stocks.  The environment reminds a lot of 2003 where the EW bears labelled every high as THE end while individual stocks did not reflect that kind of stress.  I still think we find some kind of top in the near future, but I'm expecting correctional behavior, which leaves the door open for a correction in price and/or time.  We might get nothing more than a back test of the April 2010 high or the 200 week MA.

Happy Trading.

J.D. Rosendahl, Rosey

The Brown Economy: The Battle Between City and State

L.A. City Council agrees to speed up spending $52 million in redevelopment money before governor can tap it

The Los Angeles City Council voted Wednesday to spend up to $52 million in redevelopment funds on public improvements around a downtown museum, hours before Mayor Antonio Villaraigosa was set to meet with Gov. Jerry Brown to discuss ways of shielding redevelopment agencies from elimination.

On a 12-0 vote, the council endorsed a decision, made last week by Villaraigosa's appointees on the redevelopment board, to earmark the money for new sidewalks, a public plaza and a 370-space parking garage next to the museum, which is planned by billionaire Eli Broad.

That museum, which would go up on Grand Avenue just south of Walt Disney Hall, has a scheduled opening of 2013 and could break ground within weeks.

Critics complain that redevelopment agencies siphon much-needed property tax revenue away from other services, such as schools, public safety and county hospitals. Brown has proposed the elimination of redevelopment agencies as part of his effort to close a $25.4 billion budget hole.

Villaraigosa and many other California mayors are trying to persuade state officials to come up with an alternative plan. Regardless of the outcome of those talks, Brown’s plan would not prevent the redevelopment agency from completing the improvements on Grand Avenue.

Under an agreement reached last summer with the Broad Collection, the nonprofit group that will build and operate the museum, the city earmarked up to $30 million for public improvements. Wednesday’s vote adds another $22 million.

The mayor’s redevelopment commissioners approved the new agreement last week, even though it was still being drafted. At the time, three board members complained that it had been sent to them hastily and one, Madeline Janis, voted against it.

Although redevelopment proposals are normally vetted by a council committee that focuses on economic development, Councilman Herb Wesson agreed to send the proposal immediately to the council for a vote.

David “Zuma Dogg” Saltsman, who ran for mayor in 2009, told the council that he opposed the deal, arguing that redevelopment money should be used to reduce blight. He questioned whether Grand Avenue, which features the Music Center and other cultural facilities, qualifies.

Redevelopment officials countered that the city would ultimately own the parking garage and the other improvements, including widened sidewalks and a nearby 35,000-square-foot plaza. They said the museum and associated projects would create 1,463 jobs, all but 100 of them in construction.

“We have to embrace good redevelopment when we see it,” Council President Eric Garcetti added.

Deborah Kanter, general counsel for the Broad Collection, said her organization supported construction of the plaza, saying it would be a “great public amenity” that would link Grand Avenue to a planned subway station. She said museum planners originally assumed that the work would not be completed for up to a decade.

Kanter said the new, more aggressive construction timeline is part of a larger effort by the redevelopment agency to speed up work that was originally envisioned as part of the nearby Grand Avenue project, which included a planned Frank Gehry-designed skyscraper. That project stalled after its financing fell apart.

“We are not the drivers here,” she said.

Now that the work has been accelerated, Broad will spend up to $6 million to add benches, plants, signage, trash cans and paving to the proposed plaza. “That’s what Mr. Broad is doing as a good citizen, because he believes in the museum project,” she said.

The Brown Economy:  Gov. Brown is pushing the idea of ending or terminating redevelopment agencies who get a portion of collected real estate taxes to use on redevelopment projects. Given budget deficits and pressures to layoff public employees, Gov Brown would rather see those funds go towards keeping teachers, police, firefighters, etc. 

Governor Brown is facing a $25 billion deficit and he's learning quickly that with out higher taxes and major public union concessions, he's got very little left to cure budgets but layoffs, service cuts and going after departments/agencies and raiding funds.

Redevelopment Agency:  In this current environment, should we be spending the public's tax dollars on redevelopment agency projects when there are more pressing needs for the money?  I think the answer is no!  But let's be perfectly frank, we should also not be spending it on over paid pubic union salaries and outrageous benefit costs.

Redevelopment Project:  Ironically, I'm financing a client's project now which just happens to be a redevelopment agency project.  He's buying the land now and when he's done building the commercial building in 9 months he gets his purchase money for the land back.  Also in the contract is the agency will spend $2 million for additional improvements to this property, which after ten years reverts to my client.  He's getting the worlds best deal and he's essentially putting no cash into this investment.

Jobs Growth:  Yes, putting this agency money to work will create new jobs, but at the cost of laying off someone working for the state, city or county because managing deficits require layoffs.  There's no true hiring benefit in this situation, but merely a shift in employment based on where we spend this money from real estate taxes.  At least, that's what the math says!  

Closing Redevelopment Agencies:  I'm all for closing down municipal departments and agencies that quite frankly should not exist.  We should let the free market cure blighted areas, and let price fall to a point where investment is attracted to redevelop such properties based on supply and demand or just bull doze some for these blighted properties.  Local governments shouldn't be in the business of real estate but providing basic services and protection.

In the Brown economy, the State is targeting the cities and a potential raid on their funds.  The cities in turn have done the smart thing by deploying the cash before the State can get their hands on the money.  It's State versus cities and hopefully in the aftermath, we'll see the Brown economy close many departments and agencies.

Hope all is well.

J.D. Rosendahl, Rosey

Blame it on the Snow: U.S. Jobless Claims Rose Last Week More than Forecast

New jobless claims disappoint, but blame it on the weather:  U.S. Jobless Claims Rose Last Week More than Forecast

More Americans than forecast filed first-time claims for unemployment insurance payments last week, indicating it will take time for the labor market to mend.


Applications for jobless benefits increased by 51,000 to 454,000 in the week ended Jan. 22, Labor Department figures showed today. Economists forecast 405,000 claims, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls rose, while those collecting extended payments fell.

A Labor Department official said snow in four southern states in previous weeks created a backlog of claims that were processed last week. While the economy has improved, it hasn’t been enough to reduce an unemployment rate that Federal Reserve policy makers said yesterday is too high and requires pressing ahead with a $600 billion stimulus plan.

“If claims drift higher, we’re just going to have to wait and see, tread water,” Julia Coronado, chief economist for North America at BNP Paribas in New York, said. “We’re creating enough jobs to keep the unemployment rate roughly steady and at a pace to keep the economy on track, but it’s not necessarily a picture of rapid improvement.”
Estimates in the Bloomberg News survey of 52 economists ranged from 375,000 to 428,000, after the Labor Department initially reported claims fell to 404,000 the prior week.

Winter Effects


The Labor Department official said winter weather in Alabama, Georgia, North Carolina and South Carolina in previous weeks kept people from filing claims. Those unemployed Americans ended up filing last week, boosting the claims number.

“In addition to seasonal volatility, we have this extra effect in the numbers,” the Labor Department official said as the figures were released.

The four-week moving average, a less-volatile measure, rose to 428,750 from 413,000.

The number of people continuing to collect jobless benefits increased by 94,000 in the week ended Jan. 15 to 3.99 million. Economists forecast the number would increase to 3.87 million.

The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.

Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 98,000 to 4.62 million in the week ended Jan. 8.

A snow based backlog or not, we have higher claims.  Snow isn't the cause of higher claims just the week they filed for unemployment.  Higher jobless claims are just that and still little signs of improvement on the Main Street economy.

Hope all is well.

J.D Rosendahl, Rosey

Stock Charts: Market Almost Traded Above 1,300

$SPX 60 Minute:  The market made a strong move on 1,300 today and barely failed trading above that.  We did scratch a new high and possibly creating another divergence.  If we turn down, the first technical issue is closing today's gap in red.  That being said, we have nothing but higher highs and higher lows, which only confirms a bullish trend.  To change that view, the market needs to trade down and close the gap in green, by closing that gap we also have our first lower low and maybe an indication of a correction phase has started.  Today's high could also be a wave (b) in abc from the prior high and then (c) down to the trend line and another push higher next week. 

$SPX Daily:  RSI is again over bought, will it create a divergences on the RSI? Outside of that not much has changed still grinding higher.  The over head trend lines are still rising resistance.  In recent blogs I've discussed the notion of a turn day by the end of January.  I like the idea of next week (end of January/early February).  I also like the idea of Mr. Market Closing near the highs for the month of January, which should put super bulls and bears on tilt.

$INDU:  A little Doji today but nothing looks bearish so far.  MACD still drifting upward.

$COMPQ and $RUT:  Both bounced back.  If we need to make new highs on these, it's probably because the SP500 is pushing towards the upper trend lines.  All of that is still very viable because we have no real technical damage.

IBM:  Big Blue took the day off.  It's very over bought on the RSI but the BBs are still widening.  I still think we could have more upward price out of IBM. 

JNK:  As expected it's moving higher but it's now over bought on the RSI but still looks like it wants to push higher.

$VIX:  Still supporting the bullish case for the market.  Reversed right at significant resistance.  If the SP500 needs to test the upper trend lines, this probably tests the bottom support lines.

$WTIC:  Oil back tested price and trend support.  It's pretty easy from here, back above the trend line could negate the bearish wedge, or we roll back over and continue a correction.  Could know tomorrow.

GLD:  Bouncing off support.  It's stuck between support and gap resistance.  The entire pattern doesn't look overly bearish unless it gets below support.

My Watch List:  I've got nothing for tonight in part because I haven't seen much I like and in part it was a busy day and didn't get a chance to look for new charts.

From My Trading Desk:  No trades today.  I'm probably going to keep it light the remainder of this week.  The price action tomorrow should be interesting.  We can easily get a little selling pressure but do not disturb the uptrend and that might be what we get tomorrow.

Happy Trading.

J.D. Rosendahl, Rosey