TrimTabs Has Competition

The Daily Jobs Update is now up and running and competing head-to-head with TrimTabs in reporting on trends in the withholding-tax data. The flagship chart shown here depicts the
business cycle of the US economy by plotting the second derivative of growth in the paychecks of American workers. Such advanced charts are not available anywhere else. (Click the chart to go to the live version which will update every business day at 4pm EST.)

In March of 2008, as the economy was poised to take one of its steepest dives in history, TrimTabs proclaimed the recession to be over, citing “growth” in the withholding data. Preposterous! At the same time, I posted “Withholding Craters!” here on the blog.

TrimTabs charges thousands of dollars for their research. And not only do I charge a tiny fraction of that on, but I provide awesome charts that update as soon as the Treasury Department releases the data each day.

Note to financial media: There’s a new sheriff in Withholding Town. Check with me before publishing something to make sure that you have the straight story.

Take that TrimTabs!

And since Goldman Sachs owns a stake in TrimTabs, take that Goldman Sachs!

Note: You will be pleased to know that the Alexa rating of is, already, far above that of

Note: the chart above is delayed by 90 days. So, it is current through 3Q09. Only subscribers can see the real-time charts, though both sets of charts update every day.

Thursday’s Trading – 12/31/09

For the bulls: The market has gone sideways since December 24th when it hit an extreme overbought condition on the McClellan Oscillator. That type of consolidation is almost always a bullish indicator.

For the bears: DIA has eked-out new highs, but it’s not exactly breaking out of its range. Exxon has stabilized, but is down below its 200-day moving average, which is not supposed to happen in a bull market. And if it is making a bear-flag on its daily chart, then the Dow has a serious problem.

Wednesday’s Trading – 12/30/09

On Tuesday night on CNBC, “Fast Money” opened with a story about how retail investors put money back into stocks last week. This is very curious because the mutual-fund industry’s trade organization, the ICI, won’t publish that data until this afternoon. Why do I get the feeling that Bob Pisani was instructed to sing a different tune after his comments on the subject Monday night? Exxon has stabilized over the past week, so that is a potential sign that the wave of redemptions might be easing up. We will see, but even so, there is no way the mutual funds are going to regain the $50 billion that was pulled out in 2009.

One of the guys on Fast Money also said that Morgan Stanley was “winning the PR battle” with Goldman Sachs. Maybe as far as bonuses are concerned, but the Virgin Islands’ pension fund is suing MS for selling them a “Triple A” CDO which turned out to actually be “Triple F”. Now that the bulk of the banking crisis is over, why not hunt down a few criminals?

Tuesday’s Trading – 12/29/09

On “Fast Money” on CNBC Monday night, Bob Pisani finally put the smack down on that dope Pete Najarian. Here I am on November 23rd, debunking his idiotic “Mutual Fund Monday.” Since that time, as I have been mentioning lately, the mutual funds have continued to report redemptions. So when Ponytail started raving about this week’s fabulous Mutual Fund Monday rally, I was gratified to see Bob Pisani slap him right upside the head at 3:40 into this video. Either Pisani reads this blog, or my readers email him with my ideas because I frequently see my memes controlling his brain.

DIA finally closed above its December 14th gap, and XOM is up two days in a row. If the pressure is off XOM, then the Dow can join the SPX and NDX and break out of its range. DIA has a new closing high now, but the intra-day high is still up at 105.38 from December 14th. The market is rather overbought here, so it will be telling whether or not DIA is able to pull it off.

Monday’s Trading – 12-28-09

The McClellan Oscillator is in overbought territory, and the VIX is near its lower Bollinger Band on the daily chart. So, those are cautionary signs for the bulls this week.

The IWM finally broke decisively above its October 6, 2008 gap, though it took 3.5 months to do so after I first posted the chart back here. The IWM may be intending to fill its TARP gap like the QQQQ has done. To do so, it needs to hit 70.63, which is another 10% up from here.

DIA has not broken out of its range yet. To see why, just pull up a monthly chart of XOM and take a look at its December candle. Nasty, right? XOM did manage to rally a bit on Friday, and if it can extend the momentum, that might be an indication that the wave of redemptions that has hit mutual funds is easing up.

Now that Christmas is in the rear-view mirror, let’s see if businesses go back to slashing labor costs. The UPS guy will be making less overtime pay, and department-store Santas have been given their walking papers, so if the payroll data holds up, then that might be a sign that something good is happening on the jobs front. And if something doesn’t happen soon, the Democrats are toast at the mid-term elections in November. Their campaign slogan will be: “We didn’t bring your job back from China, but we’re giving you free health care.” That will work about as well as the Republican’s “Recession? What recession?” slogan did in 2008.

Take a look at the IYT’s intra-day chart from Friday. The pattern is not an exhaustion gap, but it looks similar with that early-morning peak. It may have just printed a double-top with the December 15th peak. If it sticks this week, that would be a bearish omen.

The XLF’s 50-day moving average is threatening to cross below the 100-day. It’s not a death cross; just a gravely-ill cross.

Like it or not, Iraq is part of the American Empire, and I was amazed when the Iranian army seized one of our oil wells in Iraq recently. It isn’t often that somebody tries to bite off a piece of US turf. What was even more amazing was how the media down-played the event. Why would they do that? I think they were trying to help the president save face. But there is no way around the fact that the Iranians gave Obama a slap in the face. The Iranians have pulled out, but don’t be fooled – that was a significant event, and it’s a good idea to read George Friedman’s piece on the subject. In short, if the Iranians think an Israeli or US attack is coming, they have tactical incentives to begin the festivities themselves.

Note: President Bush got a nice slap from the Russians when they captured four US Humvees during the Georgia invasion in 2008. As far as I can tell, the Russians never gave them back. Here is the most recent info that I found on the subject from the BBC:

“…a senior Russian commander, Gen Anatoly Nogovitsyn, said four captured US Humvee armoured vehicles would remain in Russian hands as ‘trophies’.”

Thursday’s Trading – 12/24/09

Yesterday, I mentioned that Exxon was the boat anchor holding down the SPX and Dow. And sure enough, XOM was down again on Wednesday. But why Exxon? Why is Exxon being sold?

I believe I have solved the mystery. Almost two months ago, I wrote about how the mutual funds were suffering redemptions. Well, guess what? The redemptions have not stopped. In fact, mutual funds that invest in US stocks have now suffered redemptions for 18 weeks in a row. Hard to believe, right?

So who’s buying stocks? Pension funds? Hedge funds? Sovereign-wealth funds? The Fed? Beats me. If you have a theory, I’d be interested to hear how the the market can levitate while the mutual funds bleed out. This is a very odd market.

In any case, fund managers are likely selling Exxon to raise cash to meet redemptions. Exxon is actually down 16.4% this year, so tax-wise, it’s better than selling Apple, which is up 122.7%.

What happens in 2010 if the redemptions don’t let up? Something else has to be thrown overboard, right?

Wednesday’s Trading – 12/23/09

At first glance, it looks odd that the SPX can’t break 1120 and the Dow can’t break 10,500 while the NDX just sailed right through 1815. But the mystery is solved once you look at the Exxon (XOM) daily chart. That’s a big stock with a big effect on the large-cap indexes, and it is not validating a breakout.

Neither is oil itself (USO), or commodities in general (DBC). Energy stocks (XLE) have been the worst-performing sector over the past few weeks. The XLE is down 2.86% since November 16th.

Everybody is carrying on about how the surging dollar isn’t effecting stocks, but that isn’t exactly true. It does indeed seem to be hurting energy stocks, and might be what is preventing the SPX from breaking out after all.

This is a serious problem for the bulls. If the recovery is so fabulous, why are commodities stalled? And for the bears, if you see Exxon starting to turn up, well, let’s just say that you are being given an IQ test.

SPX Record Fractal Dimension Index Signal

It’s no secret that the market has been remarkably flat for quite a while now. So, it’s no surprise that the Fractal Dimension Index is giving an “end of range” signal. But the current 1.6584 level on the daily chart is the highest for as far back as I can make charts (1960) and could well be an all time record. See the red “x” on the chart (click to enlarge):

The market made a similar “flat top” pattern in June when the FDI went above the 1.55 threshold (blue arrows on chart). And we got a correction in that instance. But the FDI doesn’t tell us which way the market will break, just that a break is as imminent as it ever will be by fractal theory.

One thing we can probably say with confidence about this current range is that it will likely prove to be nearly impenetrable support or resistance in the future. Support if the market breaks higher, or resistance if it breaks lower.

Hillbillies Wreck America

“Because in the real world their shuttin Detroit down
While the boss man takes his bonus pay and jets on out of town
DC’s bailing out them bankers as the farmers auction ground
While they’re living it up on Wall Street in that New York City town
Here in the real world their shuttin Detroit down”

Indeed, Mr. Rich, indeed. But it’s important to remember one of the primary reasons why the USA has exported its manufacturing base to foreign lands: agricultural exports.

American agribusiness wanted to break down the trade barriers to their products in places like Mexico and China. However, those countries knew that if they allowed big American companies to wipe out their small farmers, those farmers would move to the cities looking for jobs.

So, deals were struck. American agribusiness got to expand their exports, and nations like Mexico and China got to expand their manufacturing exports to the USA. Many of the small farmers who were displaced now work in factories that used to be located in the USA.

If the farm states weren’t over-represented in the US Senate (on a population basis), the USA’s trade policy would likely be quite a lot more rational.

Friday’s Trading – 12/18/09

I didn’t have time to make any charts today, so I wrote a joke instead:

What’s the difference between a Mexican and a Detroiter?

Mexicans make cars and Detroiters live in their cars.

Note: Thank you NAFTA!

Note: I would say that the joke is clever, but not really funny – especially to Detroiters.

Note: I googled the joke and didn’t find anything, so I’m claiming copyright. Interested comedians can PayPal $100 to the email address on the About page for non-exclusive usage rights.

Note: Yes, people from Detroit are indeed called Detroiters. Just look at the demonym on Wikipedia (in the population section). And no, people from Charlotte are not called charlatans.

The Fizzle Pattern

On November 17th, I posted this XLF triangle chart (click to enlarge):

XLF Triangle - 11-17-09

How did it turn out? Here is what it looks like now:

XLF Fizzle 12-17-09

The XLF didn’t hit either my upper, or lower target. It just sort of drifted out, but notice that the upper triangle line has become a downtrend line. The pattern is now starting to look like a bearish descending triangle.

Watching the triangle play out, I thought: “traders have just lost interest in the financials and are off playing gold or something.” And now, it looks like traders have lost interest in the entire market. Will the SPX follow the XLF pattern and fizzle out too?

Here is what the textbook has to say about prices drifting out the apex of a triangle (page 103):

“If prices continue to move “sideways” in narrower and narrower fluctuations from day to day after the three quarter mark is passed, they are quite apt to keep right on to the apex and beyond in a dull drift or ripple which leaves the chart analyst completely at sea. The best thing to do in such cases is go away and look for something more promising elsewhere in your chart book.”

The SPX is not in a triangle pattern, but the XLF has lead the rally since the March low and might be giving us a clue as to what the SPX might do.

Wednesday’s Trading – 12/16/09

IP Round-Table
Vice President Joe Biden held a big meeting on intellectual-property yesterday. CNBC reported that the Obama administration was trying to protect jobs in the movie and TV industries. Of course, if anything comes of this effort, many jobs would be lost in the technology industry. It’s companies like Cisco that make it possible to download movies in a few hours, and would Apple’s iPod have taken off so spectacularly if it didn’t play MP3 files? I doubt it. For men like John Chambers and Steve Jobs, copyright infringement is the killer app to end all killer apps.

It’s FOMC Day
The SPX was trying to recover from a weeks-long 70-point downtrend coming into to the last FOMC announcement on November 4th. After the big event, the SPX rallied up to 1061, but then flopped over and plunged into a 1046.50 close. It looked like a victory for the bears, but the market gapped-up the next morning and rallied for almost two weeks. That gap has yet to be filled.

I suppose that the dip-buyers were waiting for a scary event to buy into on November 4th. Are they looking for the same play this time? Film at 2:15pm.

Tuesday’s Trading – 12/15/09

The market certainly does look strong here, so make a note of the upper levels of the Box of Beer.

The bears can take solace in two facts: 1) The market’s gains after the big XOM/XTO deal were rather unimpressive. 2) The QQQQ failed to close above its November 18th gap once again. The close on the 17th was 44.60, so that is the top of the gap. If the Q’s can close above 44.60, then that will be a strong indication that the market is intending to decisively break out of its range.

Of course, if the FOMC makes tightening noises in their announcement at 2:15pm on Wednesday, then all bullish bets will be off.

Monday’s Trading – 12/14/09

On Friday night, Kudlow did an entire hour-long show on Tiger Woods. Note to Kudlow: what the hell is your problem?

Zero Hedge has blown up. It now has an Alexa rating of 12,328, which is far above even Barry Ritholtz’s The Big Picture.

What does that mean? It means that Zero Hedge has a huge audience and could garner large advertising dollars. The moral of the story is that conspiracy theories are good business; very, very good business. People love to have reality spiced-up.

Note: if you use FireFox, you can install the Sparky plugin and it will show you the Alexa rank of whatever site you are on in the lower-right corner of your browser window.

USO Fractal Dimension Index

On November 23rd, I posted a weekly gold chart with a Fractal Dimension Index showing that gold’s trend was “long in the tooth.” And the trend did indeed come to an end. Look at how low the FDI was (at the blue “X” in the lower right corner) back then (click chart to enlarge):

Parabolic Gold Update 1

And now, by contrast, oil is giving an “end of range” signal. Look at how high the FDI is (blue arrow) on this USO weekly chart:


So, from a weekly perspective, oil is primed to begin a new trend soon, and at the moment, it looks like it may be a downtrend.

On Wednesday night, I wrote: “the Fractal Dimension Index on USO’s daily chart is only down to 1.49, indicating that the trend is not yet mature.” And USO did continue to drop more on Thursday and Friday. Here is the daily chart:


The FDI has only dropped to 1.45 (blue arrow), so there is more “fractal room” on the downside. USO is testing its 200-day moving average now (green line and green arrow). If that doesn’t hold, then the September 25 swing-low (purple arrow) is the next support level. Of course, bearish action on the daily chart, doesn’t guarantee a bearish outcome on the weekly chart.

Friday’s Trading – 12/11/09

My bullish falling-wedge did indeed play out, and since Wednesday afternoon, the market has formed a bull-flag. A 100% completion of the flag would take the SPX right up to the December 4th peak at 1119.

It’s not the greatest looking flag though. SPY had a high-volume jolt of selling at 1pm on Thursday, and the “cloth” part of flags should ideally be periods of quiet, low-volume trading. Apple also made an exhaustion gap on Thursday morning. It peaked right at it’s December 4th peak, which came on another exhaustion gap. Déjà vu all over again, though Apple held up better intra-day this time. Other red flags (ha, ha) are the BKX and IWM making 9/36/15 cross-downs

So, we have a mediocre-looking bullish pattern, and we also have the big retail-sales report at 8:30am, and it is always a potential market mover. Click on the entry on the Bloomberg calendar to see a chart.

The bulls need to get the SPX up to at least 1113. If the retail-sales report disappoints, and the market plunges, then it just might take out the lower end of the range. Bulls should be rooting for the banks and small-caps cross back up.

Thursday’s Trading – 12/10/09

Since I mentioned the XLU utilities ETF back here, it is up 0.68% nicely outperforming the SPX, which is down 1.65%. However, with oil rolling over, it’s starting to look like the smart money has moved into the utes as a defensive play. Utilities pay nice, safe dividends.

George has mentioned the tight Bollinger Bands on the daily charts, and they are indeed tight. Though in the case of USO, they’re getting stretched – to the downside. That’s not a good thing. If I get time, I will post a chart, but the Fractal Dimension Index on USO’s daily chart is only down to 1.49, indicating that the trend is not yet mature. The FDI is not magic, but it is saying that there is more room on the downside. For the bulls, USO did have heavy volume on Wednesday, and the last time it did that, on September 23rd, it did indeed mark a swing low.

The traders on Fast Money have been hopeful about gold all week. So I would expect gold to keep falling until they barf up their longs, get short, and turn negative.