Anybody who complains about flaming tap water is just a sissy. And those are the naysayers who are fighting the hydraulic fracturing process that has flooded the market with an infinite supply of natural gas. The Wall Street Journal has a story on the environmental backlash. (If you don’t have a subscription, you can read this older story from CNNMoney.) I suppose if the opposition is effective enough, this could finally break natty out of its infinite bear market.

In a related story, a Goldman Sachs analyst, fresh from vacationing in Hades, put out a research note saying that Satan is contemplating a switch from oil to gas to power the fires of Hell.

You heard it here first.

An unusual megaphone pattern (broadening top) has formed on the breadth charts. Here is a 15-minute chart of NYSE breadth over the past two weeks (click chart to enlarge):

The NASDAQ has the same pattern.

George has been mentioning SPY’s megaphone pattern, however a breadth megaphone is much more rare and doesn’t automatically occur along with a price megaphone.

What does it mean? It means that trader emotions are swinging very wildly, between fear and greed as usual, and signifies an unstable condition.

Tuesday’s Results
As the talking heads on CNBC were raving about IBM’s earnings report after the bell, the futures were yawning, and IBM sold-off. That is not the reaction that you want to see if you are a bull.

SPY and DIA were able to close their down-gaps from Friday morning. IWM and QQQQ did not have gaps, but they closed above their Thursday closes. So that was strong. However, the XLF, XME, and IYT were not able to close their Friday gaps. The XME and XLF are the two top sectors since the March low, and the transports (IYT) are considered to be a bellwether by many large investors. So, overhead gaps on those three ETF’s are significant to the entire market.

World Ends in 2012
Make sure to have your survival condo ready:

…we have acquired an Atlas “F” Missile Base, considered to be one of the strongest structures built by man, and redesigned it into a “Survival Condo”.

Kudlow Gets Giddy
Larry Kudlow will be beside himself over the Republican win in Massachusetts today. But it was no secret that the Democrats were going to get the boot this year. Joe Sixpack is (surprise!) not happy about having his job sent to China. And he will see to it that every Republican elected this year will be a one-term-er if he is still unemployed in 2012.

Last week on his CNBC TV show, Larry Kudlow shouted at his guests: “Corporate America has huge profits, why aren’t they creating jobs!?”

I can’t even believe how idiotic Kudlow is. Here is a man who believes in wide-open free trade, the crushing of unions, epic-scale outsourcing of jobs to foreign lands, the massive importation of workers, and the de-industrialization of America, and he can’t figure out why Corporate America isn’t creating jobs?

Note to Kudlow: exactly what part of IBM’s “No Americans” hiring policy don’t you understand?

Kudlow is the most vociferous advocate of our new Favela-style economy, and he is baffled by the sorry state of the US jobs market? WTF?

Look at this: during the economic disaster of 2009, Mexicans were having a grand time doing frivolous things like trying to set Guinness Book records. Look how much fun they were having in Guadalajara in September 2009. Meanwhile, people in Detroit were literally trampling each other to collect handouts from the government.

When you adopt a free-trade policy (NAFTA) with a low-wage country like Mexico, you are encouraging companies to move factories down there. And so they have. This is not rocket science.

Note to Kudlow: I know your brain, such as it is, is all befuddled now, but try to follow along anyway.

Corporate America is creating plenty of jobs – in China, in Mexico, in Argentina, in India. And even when they are forced to create jobs here, they use Kudlow’s immigration policies to avoid hiring Americans.

Look at this: because they have to keep their data centers close to home, IBM is being forced to create jobs in the USA. But if you are an unemployed American, don’t get your hopes up – so says Bob Cringely:

IBM is also building several new “global delivery centers.” One of these is in Dubuque, Iowa. Why Dubuque? It is my understanding that IBM hopes to reduce its labor costs and one way to do this is by choosing remote locations like Dubuque with few locals who could qualify to be IBM techs or engineers. Experienced IBMers being downsized in places like New York won’t move to Dubuque, so they can be replaced with cheaper (and younger) labor. Dubuque’s lack of native talent means IBM can staff the centers with mostly foreign H1-B personnel, again so they can pay them less and have no long-term benefits exposure.

Thomas Jefferson said: “Merchants have no country“, and we are seeing that concept playing out right now. If you adopt trade- and immigration policies that allow companies to eradicate their American workforces, they will do so.

Wide-open free trade is certainly the most efficient way to develop the global economy. However, it does not guarantee that the growth will be spread out evenly over the planet. In the first decade of free trade, the invisible hand has re-located the USA’s industrial base and millions of jobs to low-wage nations. Nations that aren’t even political allies of the USA.

The BRICs (Brazil, Mexico, India, China) and Mexico have never been US allies. In case you don’t know, our best allies are the UK, Canada, Australia, and Israel. IBM is moving a lot of jobs to Argentina too, but during the 1982 UK-versus-Argentina Falkland Islands war, the USA gave logistical support to the UK. (And we will probably do so again if Argentina tries capture the Falklands once more.)

Will the Chinese use the industrial capacity that we have transferred to them to build an army big enough to recapture Taiwan? Will the Mexicans use all of the auto plants that we have sent to them to build tanks to recapture the vast territory that we captured in 1848? Will NAFTA eventually make Aztlán a reality? The precedent for such events has already been established in BRIC-nation Russia’s recapture of territory from US ally, Georgia.

Free-trade has been a crushing blow to the US economy. Perhaps the invisible hand will direct some business our way soon, but as we see from the policies of our own corporations, things don’t look promising. Corporate America would create jobs in the USA again given appropriate trade- and immigration policies. I say, change the policies. Sacrificing our prosperity for the good of the global economy may sound noble, but in reality such a policy is actually treasonous.

If the cities of Guadalajara and Detroit had to field armies and meet in battle, who would win?

If you live in Chicago, and go to see Floored, be sure to post your review in the comments.