Underwater Mortgage? This might help.

Visit msnbc.com for breaking news, world news, and news about the economy

Here's the link to the website. youwalkaway.com

Here's what Bailout recipient Morgan Stanley is doing: Morgan Stanley walks away from 5 office towers.

Have you recieved a bailout yet? Didn't think so. But you're supposed to keep paying like a good little sheeple.
This is a link to the most recent (and quite belated) efforts to actually help us peasants and not the banks. You'll need to be at least 20% overvalued on your home and stop making payments to qualify. Easy enough.
Government plan to help homeowners

And a recent one from the hometown..
Should you walk away?<

The common thread is a complete lack of cooperation or proactive modification on the part of the banks. For those naive honest enough to still be honoring their obligations and doing what we've done for generations in this country, you have to ask why there are different standards for our financial oligarchs than for us peasants. Unfortunately no one will even return your call until you're at least three payments behind.

Wilshire 5k...trouble ahead.

This is the weekly chart of the Wilshire 5000, which includes 5000 component stocks and as such is the broadest snapshot of the US stock market. The top horizontal line is the 62% fibonacci retrace level of the 2007 bear market, which is of vital importace in large movements. Follow along that line and you'll see the Wilshire has bounced along it several times the past decade, making it an important support / resistance zone as well. Now follow the arrows from top to bottom. The top area is the current price level of the Wilshire at 12229, a mere 214 points from the retrace line (it's already up 153 so far this week). The middle area is pointing to MACD. This should be above it's zero line when prices are rising, and below it when they are falling. Prices are still rising but this is negative...a bearish divergence. The bottom arrow is pointing to stochastics, which visually do three things..when the blue crosses the red you get a sell signal, which we've had. When they're above the midline you're in an uptrend, which we are. When they approach the very top of the window or the very bottom, it's an indication of extreme overbought or oversold, meaning things are too giddy or pessimistic. It's not often you get this many indicators to line up. Throw in the fact the Wilshire will have rallied 80% or so from the March bottom without a meaningful correction (greater than 10%) and there's a very high probability the bears will probe short and the bulls will take money off the table..at the same time. Setting us up for the long awaited correction. Game on.

"YOU CAN'T HAAAAANDLE THE TRUTH!"

Apparently not all the judges are bought and paid for. Time to find out some long overdue details about just who got the goodies and why. Court Rules Fed must disclose bank bailout records.
For the record, I believe the Fed's concern is not that the public sees astronomical sums of money being channeled to a priveleged and connected few that won the hallowed "Too Big to Fail" designation, like GMAC. I believe their concern is that it will become common knowledge that our entire banking system was and still is bankrupt. When you use 30 and 40 to 1 leverage, in a fractional reserve banking system that at best requires a mere 10% of the money being lent to be actual reserves, you're open to some rather serious losses, should the bets ever go against you. The general mark-to-market accounting principles were changed, under intense congressional pressure, to hide the severity of the losses. We now use "mark -to -make-believe" where banks value assets at what they "believe" they are worth, if sold in an "orderly" way. Think I'm making that up? Click HERE. The losses are still there. The FED has printed 1.2 trillion dollars to buy mortgage-backed securities for the last year and prop up housing prices. Why? Wouldn't lower prices spur demand and let us get through this faster? Sure it would. So you have go back to the whole leverage bomb that went off in 2008. Banks cannot have everyone ask for their money back at once because it doesn't exist..fractional reserves remember? The system works because people don't do that...usually. But if you're leveraged at 40x that amount, like Citigroup was, then it takes 40x LESS losses than before to have the same effect..which is insolvency in a hurry. And which exists now, despite all the shennanigans. The FED is dutifully taking all that toxic crap from the bank's balance sheet and moving it to...yours the taxpayer's. Freeing the banks to get back to the vital business of speculating in the stock market, raping consumers with 29% interest rates on credit card balances they can no longer pay off, paying obscene bonuses because with all the rule changes the balance sheet looks GREAT! and of course lobbying congress not to change anything. Which is why I expect the FED to fight this all the way to the supreme court. And probably win, as they're persuaded it might not be in the country's best interest to be seen as Bernie Madoff wanna-be's by the rest of the world. Even if we are.

Follow up...I wrote that a month ago. Now this. Banks threaten to go to supreme court to prevent bailout disclosure *Sigh* I need to get paid for being right...

We're not alone...

Many people I speak to regarding construction, jobs and the future are universally pessimistic down here on Main St. If the old adage "misery loves company" is true, then you might be somewhat surprised to learn how global this recession really is. Click below to see how Europe and particularly Spain is doing. You might see some similarities to us and realize "across the pond" is a lot closer than it used to be. We gotta buckle up and git er done. This has a long way to go, and there is no quick fix. Recognition of the dramatic spending cuts at the government level necessary to put us back on a sustainable growth path is vital. Unfortunately the prevailing plan seems to be we can "spend our way out of this". We spent our way INTO this boys and girls.

Europe's bruised economies

Stupid in America

This is a video on education in America, union-style. It's actually from three years ago. The more recent post is underneath it. Grab some Pepto-Bismol or Rolaids you'll be compelled to use soon and watch.


After getting suitably pissed off about public employee unions sucking the life out of America you'll need a pick-me-up. I've got just the thing..click over to MISH's blog HERE
and check out his favorite new badass Governor Chris Christie of New Jersey. He's getting it done...more power to you Christie and bravo. Let's hope the independents can keep you in over the union's objections.

Shorts on the run!

As someone with the misfortune of knowing the structural and fundamental challenges facing our economy, I've lost quite a bit trying to short this market. Rules like "Don't fight the Fed" aren't written for no reason. There is an inherent upside bias when the printing presses are running flat out, as well as some serious whup-ass being doled out on a technical level to the "non-believers" out there. Cory Rosenbloom has an excellent summation of the clockwork precision with which the liquidity-assisted bulls have systematically destroyed the bears the last year, especially after textbook "sell" signals and other presumably safe entry points for reversals. They've been anything but. Read and learn...and since we've broken 1151 on SP "Everyone back in the pool!! It's all good!". The trend is your friend..until the bend.
Bear Traps abound

A ray of hope...

I must admit I'm feeling downright positive (shaddup!) after seeing this. Zero Hedge sums it up well and I encourage you to go HERE and read Senator Ted Kaufman's open letter to the president regarding Wall St reform and the necessity of rule of law applying equally to all. We need 99 more like this but the fact we have even one is encouraging.

When the inmates run the asylum...

When the judges, attorneys and politicans in charge of supervising public pay and pension obligations have the same pay and pension system as the public employee unions, the results are predictably catastrophic for budgets. Read on if you dare. It's worth your time.
Those of you with four years + of higher education and still paying back student loans 10 years out of school try not to projectile vomit on your monitor when you see the salaries many public servants make.

The $2 Trillion Hole
You might be thinking this is soooo last week. Surely these morons politicians must realize the dire financial straits we're in as a direct result of these outrageous pay and pension programs? That they are sucking the life out of the real economy so the elite "public" servants can earn more than your average family doctor? Ummm..apparently not. You might need one of these >>>

New L.A. Assembly Speaker Perez gives aide 65k raise to $190,000

I love the part where speaker Perez "remains steadfast" that they'll cut the budget by 15%. Uh-huh. Right after we raise it 20% for our salaries. California here I come....

Actions, not words Mr. President

For the "Everything that's wrong with the world is George Bush's fault" crowd I suggest you read the following article. The back room dealmaking of this administration is making Bush look like the poster boy for transparency, not to mention a model of fiscal restraint.
IBD: The Slaughter House
I suggest ignore the fiery town hall speeches with the "working man" look of rolled-up sleeves so artfully projected by Obama. Ignore the populist speeches crafted to sound like something between George Washington and Abraham Lincoln. Instead look at WHAT IS ACTUALLY BEING DONE AND HOW IT IS BEING DONE!
Bypassing the majority to do "what's good for them" because they obviously can't figure it out for themselves smells a lot more like elitist arrogance than inspired leadership to me. The Democrats have a majority. Put it to a vote like it's supposed to be done and let the votes decide.

"Houston..we found the stimulus."

A-Ha! I knew it had to be around here somewhere. If you were wondering why your financial reality seems to be lagging the "gee I don't know why we're getting voted out..things are just peachy around here!" crowd this might help. Click the video below to see..the top 3 and 6 of the top 10 wealthiest communities in all the land are in good ol' DC.

Right near da printin' press mon!

I must admit to being a bit surprised this was on CNBC...not their usual company line for sure. Bravo.

"We do spending right!"

Keynes would be proud...I just wish 90% of this wasn't intercepted by Washington and Wall St. I'm sure it'll trickle down eventually....All-Time record defecits will continue

Truth at last...

I love hearing debate over health care "reform". Exactly WHAT are we debating? Well let's ask one of the architects..she must know. Click and learn. (HT Mish..)

Say What? I guess we just have to assume the lobbyists have the sheeple's best interests in mind. What happened to that "transparency" stuff? With an administration that Tweets what they eat for breakfast we can't get one freaking page of over 2000 on a website so we can see what the Gub'ment is trying to do to 17% of the economy? Hmmmmm.

Truuust us comrade. Is for best. Whaaat a country!

Warp Speed!

OK you tech junkies! Cisco has unveiled the much anticipated CRS-3 router. Clocking in at a whopping 322 terrabits per second, the "Gotta have it NOW!" crowd can download the entire Library of Congress in one second. Or every person in China can place video calls at the same time. Very Cool. Heavy Duty Router

For all you Engineers out there!

Wall St/Main St Disconnect

One of my favorite blogs has highlighted the ever expanding gulf between us main st grunts' perception of the economy and WaWa Land's (Washington and Wall St) positively bubbly interpretation of the future. Check out the discrepancies here.
The Big Picture
If you happen to look at your savings(if you have any),credit card bills, mortgage, and various and sundry heaping piles of debt laying around your balance sheet, you might wonder how come stocks are doing so great? I'm not feeling it! Well my friends that's because YOU are not on the receiving end of THIS >>>>>>>>>>>>>>>>>>>

However, our Gambling Banking industry is. Take note of who's number one here: Top Hedge Funds by Assets I've also highlighted some concerns about how all this free cash actually gets used here: Who gets Zero percent? Print up 2 trillion fresh ones and lay em on the big betters and watch er go! I've got no problem with betting on markets. I've got a big problem with the economic elite getting a taxpayer backstop. Would you quit the ol Casino if you could lose...and lose... and lose...and if you lose too much your rich Uncle Sam comes in with a suitcase full of cash? For the people, of course. It just seems to be better if you're the right "people"

For more than just a rant you can dismiss as sour grapes from a poor guy I strongly advise you go HERE and read Trader Mark's latest missive. Included in there is one of the better long-term economic analysis I've seen from a "Main St" perspective and his most read article ever: Do the bottom 80% of Americans stand a chance? . Take in mind that was written in 2007 and you start to see some veeery bearish long term trends down here in the real world.

Nice setup..

This is as good a shot as you get for a swingtrade. We're coming up on major resistance (previous highs and channel bottom of sp500 1140-1150) and we are very overbought. Below is one of my favorite overbought indicators, 18 day Time Segmented Volume in relation to it's 20-day moving average. on a 2-day chart of the SP-500. The bet here is any savvy bulls that've been cruising along with the tide the last month will want to bag some profits, while at the same time aggressive bears will start probing short, creating a stall or outright reversal of indexes near these levels. I'll be hitting the weakest of the rally stocks here, as the rising tide has lifted all boats, and on a down move you want to target the laggards which should turn into downside leaders.
Follow the arrows down from previous peaks to get a feel for the overbought.compare previous price peaks to the distance TSV (pink line) is from it's 20-day moving average (blue line). It's unlikely prices can go much higher without a retrace in my mind here...and it could be quite a bit more than a retrace since the bulls have been running wild. Just when you think it's totally safe to buy is when it usually isn't..

Target is EEM via Shorting EDC, the emerging market bull which had been leading the downside move and is still well off the January highs..

Don't mess with da Bulls..

Anyone leaning short is getting it where it hurts today.

I'll be watching volume levels carefully to see if enthusiasm tapers off after the initial shortcovering burst. We're getting WAAYY overbought and there's a Big Ol gap to fill at SP 1123 after today, along with smaller gaps earlier in the week. Buyer beware...

I'm not a smart man...

After losing money I always check to see what went wrong. Years ago when I first began trading I was dutifully following William O'Neill's strategy of 5% stop losses, which he later moved to 8% as the market makers caught on to the 5% level and routinely gunned the markets to 5.1% past the logical stop to bounce you out. At the time I couldn't time entrys very well and took tons of losses. I began using points instead, but will be returning to the good ol 5% pronto. This would have not only kept me in my winners of the last month but also kept me from getting stopped out of yesterday's move as well.

Losing a little is part of the game, but losing when I'm right is intolerable...

Stopped on the HIGHS!

Few things tick me off more than being disciplined, using stops, then getting punched out at the worst price (your stop loss) only to have prices immediately reverse and put you back in the money. This happens so often I'm going to have to revisit how I use these...or time it better. Or quit trying. One of those.

Uh-Oh UPRO

This is a 2-day chart of the ultra SP-500 ETF UPRO, which is the 3-X leveraged version of the SP-500. It's not looking so good here...

Russell 2k play

Here's a quick rundown of how I set up a swing trade. The idea is you're trying to follow the smart money, which isn't that easy because..it's the smart money. They are the house that always wins in the end. If they don't win the Federal Reserve will jump in and bail their asses out but that's not today's topic.

The following chart is IWM, the i-shares etf that tracks the Russell 2000 index. I'll play this using the etf TNA, which is the 3x leveraged version. I use IWM to time entry and exit though because although both etf's track the Russell 2000, the leverage on TNA causes a "decay" over time that makes exact price correlations skewed. For example the Russell will be challenging it's 52-week high today, as well as IWM. TNA is almost 4-points below it's previous high.

Below I've got two "1" arrows and two "2" arrows stacked on each other. Note that prices at arrow 1 are nearly identical to arrow 2. The bottom arrows pointing to the blue line indicate moneystream, and the number 2 arrow is well below 1. If the smart money was piling into this move up the arrows should be in the same area at the same prices. They're not. This is a negative divergence, and often indicates smart money "slipping out the back door" while letting the dumb money pile in at riskier price levels.

IWM daily chart

One divergence isn't enough for me though, so I try to stack the deck. Below is the 3-year chart. The arrows go as follows:
1. 62% fibonacci retrace of the bear market. 2. Current price level.

3. Negative Relative Strength divergence (price sloping up, this down)

4. Negative Rate of Change divergence

5. Negative MACD divergence.

For the new guys the 62% Fib retrace level is VERY big in charting..it often takes several attempts to overcome this area, and price often reverses here. As for the rest, that's 4 negative divergences giving price "the lie", at an important resistance area. If everything was cool these indicators should be chugging along with price instead of heading south while price goes north. The indicators don't always win...that's what the stops are for. But when I've got this many saying something different then what price is saying, I take a poke at price going the other way.

If the bulls win and IWM powers up a point or better than today, it's "On like Donkey Kong!" to SP 1220 and my short "fantasy play". I'll show that one later. Until then good luck out there...

IWM 3-year chart