Sunday, August 5, 2007

The Day The Music Died






The Federal Reserve has lost control of the financial markets...

In the game of musical chairs, when the music stops, if you don't find a chair before all the others do...you're out of the game. How many hedge funds are about to be caught without a seat as the music dies, and booted from the game? Not enough...

Friday August 3, 2007 my be looked back upon in history as the "Day The Music Died" for the US Dollar, the Dow, the US Economy, and hedge funds across the globe. Many will ask, "Who kicked the jukebox?" And the answer will be in chours, "Sam Molinaro, CFO of Bear Stearns."

Poor Sam. Forever labeled a traitor for simply uttering the truth. "The turmoil in the credit market is the worst I've seen in 22 years," said Sam Molinaro, CFO of Bear Stearns on Friday. Sam opened the door and shined a light on the all the cockroaches of the credit industry. The Big Lie, Dow 14,000, is now forced to deal with the truth.


It’s the Fundamentals Stupid By: Peter Schiff, Euro Pacific Capital, Inc.
Amid the recent stock market weakness, the pundits are virtually unanimous in their claims that good underlying economic fundamentals are being trumped by irrational fear. However, if investors understood just how bad the fundamentals for the U.S. economy really are, they would dump stocks even faster. So, contrary to the rhetoric, it is not that investors are being too fearful, but that they are being too complacent.

During the recent stock market rally investors ignored some very disturbing underlying economic fundamentals. Therefore, the current weakness in the market is not in conflict with the fundamentals, but completely consistent with them. Unfortunately for the overall economy, the re-assertion of fundamentals is not exclusive to the stock market. Here is a look at what will likely happen to other asset classes and our economy should investors refuse to blindly follow the Pied Pipers of Wall Street:


Down We Go Again

A good does of the truth in this report.


Crude prices fall on revised hurricane forecast
Crude oil prices declined on Friday as investors decided to take profits and as Colorado State University weather forecasters cut the number of hurricanes they expect in the Atlantic this year from nine down to eight overall, and reduced from five to four the number of major hurricanes they believe will form.

This is just one more example of how clueless and stoopid Oil Traders are. I told you weeks ago Oil could see 77.10 by Labor. We just hit 78.40 and it's ONLY August 5th. I live in Wilmington, North Carolina. Bulls eye for Hurricane Alley. Trust me, nobody around here is letting their guard down because some quack in land locked Colorado of all places is predicting there will be ONE less hurricane this year than he thought. LOOOOOOOOL, how absurd. Hurricane season is really just starting to gel...they're out there, lurking. Only a fool believes otherwise. Besides, it ONLY takes ONE hurricane to devastate the Oil refining industry of the gulf coast. Just One!
Nothing in the supply/demand fundamentals of Oil has changed because of this "news", has it?


Hiring Cools in July; Jobless Rate Up
WASHINGTON (AP) -- The nation's unemployment rate inched up to a six-month high of 4.6 percent in July as hiring simmered down. Workers' wages, meanwhile, grew modestly. Wall Street tumbled.

The latest snapshot of conditions around the country, released by the Labor Department Friday, showed that new job creation has slowed. Employers increased payrolls by 92,000 last month, down from 126,000 in June. It marked the fewest add-ons in a month since February.

"Although slightly lower than the previous month ... we still think of these as good, solid numbers," said Edward Lazear, chairman of the White House Council of Economic Advisers. The labor market, he said, has been a "shining beacon" even as the economy has made its way through a sluggish spell over the past year.

If this clown offers to share his drugs with you, please decline...this goof has lost his mind. With Economic Advisers this out of touch, we as a nation are certainly doomed. Only the Truthsayer, Gold, can save you now. "Save yourself! Buy Gold Now!"


From Bob Chapman, The International Forecaster
They simply couldn’t hold back the flood. The Dow fell 281 to 13,182 wiping out two days of contrived gains created by the Fed and the “Working Group on Financial Markets.” Using our formulas the S&P FELL 355 and the Nasdaq fell 388 Dow points. In the last hour it was a massacre.

Gold responded by rising $8.10 to $672.70 and silver jumped $0.14 to $13.09 to make Friday a great day. The pros have finally realized that the elitists’ attempts to control all markets is not working well anymore and that the Fed had not only been lying about inflation but they had no intention of trying to correct it.


We got what we wanted and asked for Friday morning. Gold not only moved thru 668, but 672 as well. Silver bulls have regained control of the metals 50 day moving average. Things are definitely beginning to look up for the precious metals now. The Dollar was crushed Friday and was DOWN 48 pips to close at 80.19. Should the Fed foolishly come to their hedge fund and banking buddies rescue with a rate cut on Tuesday, the Dollar will implode and Gold will be on it's way to the Moon.

Gold has been trading in a Rectangle pattern now since January 22, 2007. Bounded on the low side by Gold 640 and on the high side by Gold 690.

As defined at stockcharts.com

Rectangles represent a trading range that pits the bulls against the bears. As the price nears support, buyers step in and push the price higher. As the price nears resistance, bears take over and force the price lower. Nimble traders sometimes play these bounces by buying near support and selling near resistance. One group (bulls or bears) will exhaust itself and a winner will emerge when there is a breakout. Again, it is important to remember that rectangles have a neutral bias. Even though clues can sometimes be gleaned from volume patterns, the actual price action depicts a market in conflict. Only until the price breaks above resistance or below support will it be clear which group has won the battle.

A breakout to the upside from this Rectangle at 690 projects to Gold 740. This is certainly realistic as the clouds over Wall Street darken. Couple this Gold projection with Silver's potential Reverse Head & Shoulders bottom and projected upside from a breakout there to 14.70 and the next several weeks in precious metals have the potential to enrich the faithful.






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