Thursday, March 21, 2013

Dow Theory Buy Signal?

by Tim W. Wood, Financial Sense:
As a result of the Industrial’s move above their 2007 high last week, there has been a lot of talk about that advance triggering a so-called Dow theory “buy signal.” First let me say that according to the original writings of Charles H. Dow, William Peter Hamilton and Robert Rhea, there is no such thing as a “buy” or “sell signal” in accordance with orthodox Dow theory. Rather, our Dow theory founding fathers would anticipate trend changes, near anticipated market tops and bottoms, based on market behavior. It was actually these areas of anticipated trend change that they referred to as “buy and sell spots.” They would then take their positions accordingly and would then use the joint price movement of the averages above or below previous secondary high or low points to either confirm or negate their suspicions of the trend change. It was then these joint movements of the averages above and below secondary high and low points that served to confirm a bullish or bearish “primary trend change” in accordance with orthodox Dow theory.
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Chief Actuary for SS – Raid the Retirement Fund! / By Bruce Krasting /

Stephan Goss, the chief actuary for Social Security (SS) provided a detailed report on the status of the SS Disability Fund (DI) to the House of Representitives. The short story is that DI is going bust in a few years. The options to fix this problem were spelled out in the report. The extremes of the required “fix” range from an immediate cut in DI benefits of 16%, or an increase in DI payroll taxes of 20%.
Nothing new there. But, there is a ”Plan B” for the DI Fund. The solution is to raid the SS Retirement Fund for the deficits at DI:
 A simple tax-rate reallocation between OASI and DI, as was done in 1994, could equalize the financial prospects of the trust funds avoiding reserve depletion until 2033.
Note: “Simple tax-rate reallocation” means $40+b a year….
Bingo! The raid on the retirement fund results in no cuts in benefits, and no new taxes. What’s not to like about that result? The gutless wimps in D.C. would love to kick the can down the road a decade, therefore the Raid solution is an obvious choice. (The consequence of the Raid would be to reduce the expected life of the Retirement Trust Fund by as much as five years,.)
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Germany Warns That Banks in Cyprus May NEVER Reopen

from Activist Post:
ATMs in Cyprus were drained over the weekend, electronic transfers were halted, and riots ensued following a decision by European Union chiefs to raid private savings accounts to help pay for the country’s $13 billion bailout. It was believed that there were plans to stretch a bank holiday to at least one week, while the exact measures were decided upon. However, yesterday the Cypriot parliament rejected the scheme outright, leading many to speculate that this would be the start of something even worse.
Sure enough, much like the U.S. Federal Reserve threatened martial law and blood in the streets if Congress didn’t accept sweeping bailouts in 2008, now Germany is saying that Cypriot banks might never reopen after parliament’s decision:
Germany’s finance minister, Wolfgang Schaeuble said major Cypriot banks were “insolvent if there are no emergency funds,” according to a BBC report, meaning savers might lose all their money if no deal was reached. (Source)
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Savings Rate Of Americans

by Jeffrey Tucker, Laissez Faire Books:
Americans today live like there’s no tomorrow. You can see this in the data regarding retirement. People behave like they will never retire, and the prophecy is self-fulfilling. Under these conditions, they won’t.
A new survey shows that 57% of households have less than $25,000 in total household savings and investments. And the trend line looks terrible and is getting worse. Meanwhile, everyone is living longer, but not healthier, meaning that people will be more dependent in their older years than ever before.
The moralists are quick to condemn this as resulting from a deep character problem in all of us. But economists prefer to look more deeply at institutional factors. What could account for such shabby planning on the part of American households?
Look at monetary policy. Where’s the reward for saving? It’s not there. The Fed has nearly abolished the normal rate of return on savings.
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Bond crash dead ahead /By PAUL B. FARRELL / March 20, 2013
SAN LUIS OBISPO, Calif. (MarketWatch) – InvestmentNews latest cover is so powerful you can actually hear sirens atop a flashing neon billboard, megawarning in huge bold type: “Tick, Tick … Boom!”
A warning: InvestmentNews wants to make damn sure its readers, the 90,000 professional financial advisers who rely on timeliness and accuracy of every INews forecast, understand: “What will your clients’ portfolios look like when the bond bomb goes off?” Get it? Not if but when it happens.
Yes, they do expect the bond bomb to explode and are publishing “a special report on the impending crisis in the bond market.”
Yes, you heard them. “Tick, Tick … Boom!” Wake up, it’s an “impending crisis,” dead ahead. And to punctuate their message, InvestmentNews added an alarming photo of an alarm clock with huge bells, wired to rolled-up bonds looking like a stack of dynamite sticks. “Tick, Tick … Boom!”
InvestmentNews is not staffed by a bunch of alarmists, quite the opposite — conservative, trustworthy and methodical. They know the 90,000 registered investment advisers that rely on them are in turn responsible for advising millions of Americans and managing trillions of retirement assets. Yes, their audience demands reliable forecasts.
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As Cypriot lawmakers rebuked the idea of a one-time levy on all bank deposits, the markets are acting confident that whatever is going on Cyprus is not a sign of things to come for other countries. The ECB has “called” the bluff, so to speak, of Cyprus, and is continuing to support Cypriot banks, thus we see the stock markets of both Europe and the US up today. Today is also a very important day in the financial markets because later this afternoon the US Fed will release their monetary policy decision, statement, and hold a press conference to discuss future direction. If the Fed surprises the market and makes the discussion of curtailing QE this year, we look for a big sell-off in the SP 500. We don’t see the Fed doing that, but its possible. The fed will more than likely state that while the economic numbers have been getting better, there is no need to curtail QE as the unemployment rate is still higher than the Fed’s target.

In the energy markets, crude oil is up slightly after a big fall yesterday. After hitting the $94 level, crude has sold off to the low $90′s, and is now up $.34 to $92.50. Natural Gas has experienced a big run up this month, and now is taking a breather, and is actually down $.045 today to $3.92. We believe natural gas will indeed hit and cross the $4 level before summer.
We focus more on RBOB gasoline futures today. RBOB completed a classic seasonal rally in the beginning of this year, and since hitting a high of $3.30, has sold off almost $.30 in 30 days, hitting a low of $3.02 today. This is our very important pivot level for this market. If RBOB can stay above $3.02, we believe it can head up to $3.09 resistance. If RBOB breaks below $3.02 and more sellers enter the market, we look for our next target of $2.97 to be hit. Speculation that supplies will rise as refineries complete spring maintenance and increase production is one potential cause of the recent sell-off.
RBOB Gasoline

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McAlvany Weekly Commentary

Cyprus Depositor Insecurity

About This Week’s Show:
-The frailty of trust
-You can’t un-ring the bell!
-Gold buying driven by depositor concerns
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Expect Stunning Global Expansion Of Government Theft

from KingWorldNews:
In the aftermath of the disaster in Cyprus and escalating fears from investors around the world that their savings will be confiscated, today King World News spoke with Michael Pento to ask him what people should expect going forward. Pento spoke candidly about the frightening situation the West faces going forward.
Eric King: “Obviously (after Cyprus) people are worried that governments are going to go in and start to steal money right out of their bank accounts.”
Pento: “This is the truth. Governments follow something called, ‘The Rule of Law.’ But it is also true, Eric, that the rule of law is mutable. By that I mean the rule of law changes with the whims of politicians. In normal times what the government will do is they will steel the purchasing power of your currency surreptitiously. In other words they will just print money and steal the purchasing power of your money without your permission.”
Michael Pento continues @
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