VIX Buy Signal

The VIX closed above its upper Bollinger Band on the daily chart Tuesday, and that’s a pretty good buy signal:

The last such signal was on November 16th, and was good for a 20-point SPX rally. The SPX did indeed print a Gravestone Doji for November on the monthly chart, but that doesn’t preclude a little bounce here. While this VIX signal has a good track record, an intensification of the financial panic in Europe could easily blast the VIX higher.

China’s PMI surprised to the upside Tuesday night, but the futures didn’t bounce very much until three hours after that. So, perhaps it won’t be a catalyst for the SPX on Wednesday. Jobs Fever will be taking hold now, and the estimate for Friday’s big report is +168,000 jobs. If the number does come in strong, I will be interested to see if the market can steamroll the November Gravestone Doji or not.

Bulls Staring Down the Barrel of Gravestone Doji

If the bulls can’t rally the market up today, they will be stuck with a bearish Gravestone Doji candlestick on the monthly chart (black arrow). The last one in April (purple arrow) was a bad omen indeed:

The April gravestone was caused by the European crisis, and you could say that this one is too. And if the Germans are slaughtering the PIIGS to drive the u-rue down, and spike their exports up, well then, one could be forgiven for expecting more mayhem from across the pond, no?

Even Our Skyscrapers Are Made in China

Donald Trump says that most of our building materials now come from China. So now even our buildings are made in China and merely assembled here.

Donald Trump wants to smash both OPEC and the global sweatshop cartel. An ace negotiator and businessman is exactly the kind of leader that we need in the White House in 2012. Trump will re-negotiate our trade agreements so that they actually benefit Americans. Here is Trump talking with Greta Van Susteren:

IWM Weekly Golden Cross Spells Doom

A golden cross is supposed to be good news, and on the weekly chart IWM’s 50-week average (red line on chart) has crossed above the 200-week average (blue line). Click chart to enlarge:

So, “what’s the problem,” you ask? Well, this type of cross is very rare. In fact, this is the only one since the IWM was invented ten years ago. To see more, we have to go to the long-term Russell 2000 chart:

Now, let’s take a closer look at those two crosses. First, the one in January 2004:

After making the cross, the market corrected until the middle of August! Things worked out a little bit better after the September 1991 cross, but the market still went sideways for three months:

The moral of the story is that it takes a lot of work for the market to make a Golden Cross on the weekly chart. And an extended period of consolidation shouldn’t come as a surprise.

iPad Pollution

Does you iPad produce more pollution than your car? Maybe. While there is no exhaust pipe coming out of your iPad, it is made in a Chinese factory using electricity from pollution-belching power plants. And it travels across the ocean in a cargo ship that produces absurd amounts pollution. The 15 largest cargo ships produce more pollution than all the cars on the planet combined!

A study of just how much damage an iPad inflicts upon the planet would be a good project for one of you environmentalist types.

And this is just another reason why the factories should be brought home: off-shoring is speeding up the demise of planet Earth. All of the “green technology” BS that we are pursuing here is a joke compared to the Chinese death star.

Here is an article on container-ship pollution.

US Navy vs. China Showdown

The USS George Washington aircraft carrier is scheduled to participate in military exercises with South Korea in the Yellow Sea on Sunday in a show of force after North Korea’s attack on South Korea this week. The carrier was scheduled for similar exercises in July after North Korea torpedoed a South Korean naval vessel. However, China demanded that the carrier stay out of their “exclusive economic zone” and the exercises were moved to the eastern side of the Korean Peninsula in the Sea of Japan.

And the Chinese are protesting again. Will the US Navy blink this time? Film at 11 on Sunday.

The Navy says they are going to the Yellow Sea, and this time I suspect that they will defy Beijing. China has done little to reign in its demented protégé, so perhaps a message needs to be sent on that topic. The George Washington also paid a visit to Vietnam in August, and that may have been a message to Beijing also. The Chinese claim all of the South China Sea.

There’s no law that says that China must be a political ally of the USA. As a sovereign nation, they can support our enemies in countries like North Korea and Iran. But why, may I ask, does this non-ally get unrestricted access to our market? Iran has no such privilege, and neither does North Korea.

QE2 Dollars Stuffed into PBOC Mattress

Like a giant demented chipmunk stuffing its furry cheeks with acorns, China continues to squirrel away the Fed’s stimulus dollars. “Don’t Fight the Fed” you say? Well, what the Fed giveth, the PBOC taketh away.

The dollar has strengthened since the first QE2 dollars were injected into the market on November 12th.

When people study the velocity of money, they only look at bank lending. Are the banks just sitting on their reserves? But what about the Mercantilist reserves? $5.5 trillion strong, according to Dr. Bernanke. Should that not be considered when analyzing velocity?

I see a lot of nattering about the dollar losing its “reserve currency” status. If I have time, I will address that topic further, but I ask you this: Is China merely holding its $2.6 trillion dollars in reserve in order to facilitate commerce and save for a rainy day?

Don’t be ridiculous. Mercantilist nations hold dollars as a strategic economic weapon. And it has grown to such a scale that you could say that they are imposing deflation upon the USA.

Mr. Hu, Tear Down This Currency Wall!

Paramount Leader Hu, if you seek to relieve your people’s hunger, turn off the yuan printing presses. Let your currency rise against the dollar. Let your people buy more food from American farmers.

Here is a story about food inflation in China. Can you imagine spending 50% of your income on food alone?

People are blaming QE2 for raising food prices. But if China allowed its currency to be set by market forces, the yuan would rise against the tide of fresh QE2 dollars, and all imports from the USA would fall in price. As a matter of fact, you could say that the USA is trying to lower food prices for the Chinese people, but are being thwarted by the Chinese government that is buying up all the QE2 dollars in the foreign-exchange market to prevent the yuan from strengthening as it should.

The increased productivity of the Chinese people should be rewarded with a higher standard of living. But instead, the regime in Beijing is literally starving its people. And Tea Party members here in the USA think they have it rough!

China prints money at almost quadruple the rate of the Fed. See the chart here.