DJIA

open 10,857.98

close 10,835.28 down 22.86

day high 10,869.26

day low 10,798.88

today's volume 158,833,681

3mo avg. daily volume 188,840,749

DJTA

open 4,529.69

close 4,543.97 up 12.78

day high 4,555.36

day low 4,497.74

today's volume 16,781.311

3mo avg. daily volume 17,088,941

DJIA

open 10,809.17

close 10,858.14 up 46.10

day high 10,886.21

day low 10,728.64

today's volume 167,112,601

3mo avg. daily volume 191,533,394

DJTA

open 4,511.16

close 4,531.19 up 22.48

day high 4,538.64

day low 4,460.94

today's volume 19,681,334

3mo avg. daily volume 17,247,576

 

Options expiration yesterday on metals.  That's not something I care enough about to keep forefront on my mind, but admittedly I was wondering why it finally decided to bounce above $1,300 today, and it makes since that some expirations occurred yesterday.  No one wants to be the guy who blows through that "double aught" number.  However, 24 little hours later and we're thirteen-aught-nine and rising aftermarket.  Doesn't hurt that Consumer Confidence was down.  Treasury rises with gold, and surprisingly so do the equities.  This market makes no sense from a practical standpoint, and all the sense in the world when viewed through monetary-policy-colored glasses.  I'd park a high for gold at $1,325 or in that range, per-chance $1,350 as a top end, but the drop wont be significant, so it's irrelevant.  I still side with Sinclair, as he's often correct, and consider a $1,650 high with a legitimate 50 - 60% retrenchment to follow, perhaps bringing us back to the high $1,300 to low $1,400 range.  Anything under $1,300 today is a good buy, but I'm always a buyer so it doesn't matter what prices are to me.  

My speculating is less in gold (which is about accumulating, not speculation) and more in how much can I turn my back on the equities and housing markets before we see our black swan event.  Chips are stacked against the markets, volume down, incredibly high monetary creation and the claim that it's nothing, and global currency devaluation to continue the fist fight to be the worlds lowest bidder speaks only one language to me, hyperinflation.  When the average American wakes up and realizes that our major concerns are inflationary not deflationary, it will be too late for us, and then we will be playing catch up with the rest of the world.  Europe has inched that direction, Asia leads the way.  Don't believe me?  Then why has even good-ole' Switzerland increased it's exports to the bulk of their GDP?  How many US Dollars you have is becoming far less important these days, and the only think keeping them afloat is our consumption.  Until the rest of the world has bled us dry, "measured" inflationary concerns remain a political issue... in countries other than ours, the political issue is that of avoiding bloodshed and starvation, in this country, doesn't mean much more than a few sour grapes tossed around on the networks.

A single step backwards for us can equate to tens and hundreds of steps forward for almost everyone else, so no one will argue with us as we crush our currency.  China has no problem following suit.  Asians expect currencies to occasionally be destroyed, and it's happened in Europe enough that they prepare, no wonder demand for physical assets has skyrocketed in places like China.  Here, however, we have multiple generations nursed on the sweet milk of reserve currency status, a milk far harder to quit than heroine.  

My rant ends here, forgive me, but it's frustrating and exciting all in the same breath.  Very few people get the pleasure of witnessing in their lifetime what could equate to a complete shift of global domination.  From Africa to the Middle East, to Europe to Western and across the Pacific to the East.  The last 6,000 years or so, there have been a great number of battles won and lost over small plots of land, a few million acres here and there, but only a few times have entire ways of existence been destroyed.  It is both fascinating and terrifying.  Get to know your neighbors, at some point in this generation, you may be glad.

DJIA

open 10,860.03

close 10,812.04 down 48.22

day high 10,873.20

day low10,809.62

today's volume 143,908,331

3mo avg. daily volume 191,853,961

DJTA

open 4,515.63

close 4,508.71 down 6.30

day high 4,538.50

day low 4,506.36

today's volume 22,273,034

3mo avg. daily volume 17,112,784

Two unique instances today, I don't think I've seen volume on the industrial's this low all summer, nor the transport's beat their highs, let alone on the same day.  My studies of Dow Theory tell me that this means absolutely nothing, so I will dwell on in no longer than the instant it took to notice, and the moment it took me to notate here.

The name of the game is competitive currency devaluation.  We get away with it because everyone else depends on us purchasing their cheaply made goods and services to keep their populations fed just enough not to riot.  Therefor we can do what we want, as long as it's measured.  Perhaps one day it will no longer be measured increases in money supply (as if currently about $30 billion stated each month is "measured") but we'll worry about that when it happens.

I steal this thought from David Burgess, analyst from McAlvany Wealth Management, but it's worth sharing.

 

To give us some clue as to the future, I have provided two graphs. One charts the Nikkei 125, Japan’s stock index, and the other charts Gold in Japanese Yen terms. I’m not trying to pick on Japan here, but its fiscal and economic situation is one that closely resembles our own.

Following the breakup of the Japanese mania in 1989, the Japanese Central bank panicked and lowered its benchmark interest rate to 0% by roughly 1995 and kept it at that level ever since. The result, as shown in the charts, has been perpetual deterioration in the value of the Japanese stock market while gold, in yen terms, gained substantially (from January 1995: Nikkei down 55.26%, Gold in yen up 192%).

In our case, the Fed reached near-0% rates at the end of 2008, and since then both gold and the Dow have risen, with gold up 68% and the Dow up 33%. We suspect the reason we haven’t entered into a polarized situation like Japan’s has more to do with the strength in the bond (Treasury) market than anything else. But, given the Fed’s obvious contempt for the dollar, it’s only a matter of time till the bond market buckles under the pressure. That will usher in a near mirror image of Japan’s experience – right here in the U.S. In a nutshell, we have gone past the point of no return here; inflation is now an inevitable conclusion, and in a big way. Stay tuned…

Living in a world of rising gold along side rising equities (on diminishing volume) and dramatic increase in debt purchasing at these interest rates spells endgame to me.  Perhaps he's right, and all we have to see in our future is dramatic inflation, devaluation of currency on a global scale, and a decrease in the "hopes and dreams" standard of living we'd grown so accustomed to.  One thing we cannot argue is that a mild step backwards for US is a couple huge leaps forward for most everyone else, and as this world becomes less US/Euro centric, we will see more and more devaluation battles between currencies.  I'm often asked when someone's going to tell the emperor to put some clothes on, but I doubt that would do anything at this point, anyone who matters is already placing their bets (or already has, and just incrementally adding to them) and the rest are fodder. 

Apologies for missing numbers yesterday.  Despite a huge juicing of the fed, adding 11.059B for the week ending on Wednesday, we had a minor fall yesterday, almost 77 points on the INDU's.  Gold continues to rise, and the "when's it going to fall" question is the wrong one to be asking right now... especially since I'm watching MSNBC with a Wall Street trader talking about waiting for it to fall.  You could literally bet against everything they recommend, and probably be right 75% of the time.

Fascinating week, excited to see how my below rant turns out.  I actually started writing this yesterday and got sidetracked by that pesky job stuff... enjoy.

Broken Eggs
Being in a specific industry, it is unfortunate to watch any time regulators from Washington DC with no understanding whatsoever of how things operate decide to step in and tell those who have done it professionally for years and decades what to do.  It is always fortunate when it is not your company, but in a niche industry like tangible precious metals, many sit with bated breath.  There are emotional arguments on both sides and the outcomes should prove very telling of how the politicians that be truly feel regarding this small, but very prominent industry.  Having been following this story for a number of months personally and professionally, I feel that we are witnessing a regulation committee complaining about a company doing exactly what they claim to, which to me feels like a witch hunt; my opinion is understandably biased.  However, the witch hunt is not asking that the companies involved be burned at the stake, but simply provide understandable disclosure.  The Austrian in me argues that companies to a fine enough job putting themselves out of business when people realize there are better alternatives, but there's always a few broken eggs along the way, and in this country, the minority of broken eggs have established an impressively loud voice and are pandered to. 

At least as much as I've read thus far, H.R. 6149 does not request any information that shouldn't be part of the deal anyway, so we'll see what this animal could morph into, but I am less concerned than perhaps I should be.  But both parties involved have legitimate arguments and the defendants (so to speak, although this isn't a trial, it kind of feels like one) claim to already provide all the information the committee is requesting... which brings back my comment of witch hunt.

Ultimately, this is an issue of taking your beatings gracefully.  The stock market crashes so everyone wants to sue Wall Street.  Housing prices lose value so everyone blames the realtors.  The gold coins drop in value dramatically (or are priced way to high to begin with) so sue the dealers.  I've purchased vehicles before, should I sue the car dealer when I can't sell my car at a profit?  I wonder if that's coming?

Here's a link to the Committee on Energy and Commerce website, read the "briefing memo" first, and as of this morning, Friday, you can read through the testimonies if interested.  CLICK HERE!!!

DJIA

open 10,761.11

close 10,739.31 down 21.72

day high 10,805.38

day low 10,708.40

today's volume 168,591,822

3mo avg. daily volume 197,716,849

DJTA

open 4,508.37

close 4,467.64 down 43.63

day high 4,532.98

day low 4,451.26

today's volume 17,947,900

3mo avg. daily volume 17,332,716

Another day of nothing.  This market seems to have lots of movements, but only the occasional interesting close,  like this past Monday, anticipation of another nothing of an announcement I highlighted yesterday.  Waiting to see confirmation somewhere, high or low side, this is all still a lot of volatile nothings on low volume.  No interest means no volume, and I'm nervous of a disinterested market.

Monthly Fed Press Release

DJIA

open 10,753.39

close 10,761.03 up 7.41

day high 10,833.39

day low 10,717.74

today's volume 186,650,987

3mo avg. daily volume 197,542,367

DJTA

open 4,475.95

close 4,511.27 up 36.15

day high 4,540.46

day low 4,473.94

today's volume 16,591,000

3mo avg. daily volume 17,382,502

We had about a 1:2 up:down day today, although markets closed marginally higher when all was said and done.  Although a run up today prior to the Fed announcements, the markets corrected back down just in time to close.  I'd like to share proof that stock prices have nothing to do with company values any more.  Granted, looking at the P/E Ratio's of any company will make one wonder why one should buy a share of something that will take on average 15 years of added earnings to match the current price should be enough of a hint that Wall Street is in the whorish business of sales, not wealth creation, preservation, or proper investment.  However, further those sentiments with rising markets over the past week in anticipation of the Fed's Press Release issued today.  Below are excerpts I grabbed from the Fed Reserve website, the full release can be found by clicking HERE.  I read a lot of these, and this one is the best I've read in a while watching the spin doctors do all they could to make it sound as positive as possible.  For those of you with a much stronger understanding of proper literary devices than I, please enjoy your nervous chuckle as much as I did.

Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months. The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term.

My favorite line is one I did not put to bold font at the end, "The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability."  Unless my English is off, that means that in a hypothetical context of price stability, we would see a return to higher levels of resource utilization.  Meaning two very obvious things to me... a) we're probably not going to have long-term price stability which means b) we're not going to have better resource utilization.  So my concern about the stock market seems justified, in that how can you buy a company that produces resources, when there's no where for those resources to go.  It's the age-old argument from the Keyensian Monetary Theorists, that if you smash a window at a Bakery, the Baker has to buy a new window, which puts people to work.  But from the Austrian School, the counter argument is sure, but you're fixing unnecessary problems and those funds could have been put to better use elsewhere.

The question I get all day long is, "when are the markets, especially the Gold markets, going to correct?  Now thankfully people are asking for the right reasons, the desire to increase exposure at cheaper prices.  Below is a chart courtesy of Jim Sinclair's site.  Since we have not seen a short-term correction in the price of Gold, the opportunity may present itself to increase a position... however, with each day the rise continues, so does the support line.

 DJIA

open 10,608.08

close 10,753.62 up 145.77

day high 10,774.13

day low 10,608.08

today's volume 157,124,719

3mo avg. daily volume 197,670,369

DJTA

open 4,434.33

close 4,475.12 up 41.46

day high 4,495.93

day low 4,434.33

today's volume 12,703,521

3mo avg. daily volume 17,454,598

Dollar for dollar another large single day rise and an over 90% up day today on about the lowest volume I've seen in a long time.  Jockeying for position before the FOMC communique tomorrow, and after these moves, if I were a betting man I'd place the money on tomorrow finishing on the down side, although moderately, as the Fed can't have things look ugly no matter what they announce.  If things are too bad, assume the Presidential Rose Garden get's some use.

First there was Ayn Rand and Greenspan's "Gold and Economic Freedom" article.  Then there was 30 years of, well, who knows what the guys was thinking... but here he is again, freshly quoted from last week and all the reason in the world.  Even the masters of the universe can't argue with this...

Dow/Gold and Your Financial Triangle

A topic of conversation which will soon hit a water cooler near you is that of the Dow/Gold Ratio and how it affects the growth and income portion of your portfolio.  Around here, we discuss mandates, not assets, and how those purposes and mandates play into the different aspects of a well diversified and organized portfolio.  There are only three things you can do with money; spend it, save it, or try to turn it into more money.  So traditionally there has been a basic understand that for part of your assets are held in cash (spend), part of your assets are held in things that hold long-term preservation in mind like gold or land (save) and the finally, part in the more exciting stuff where there's the issues of both risk and reward (growth).

Not surprisingly, by means of the traditional human spirit, we take the first and last of those three categories the most seriously, the first because it means we get to eat today, and the last because we want to drink champagne with our steak, not Bud Light with our burgers.  Although those people who focus on the Cinderella of the story, the mandate that encompasses insurance and long-term asset preservation, tend to have the greatest net-worth gains throughout the course of lifetimes and certainly generations.  The rest of us who are unfortunately not quite on the billionaire list, but hold true to our disillusion of grandeur to attain that status eventually, think those small handful of brilliant money managers who make those assets in only one short lifetime got "lucky," and we can get lucky too...

I digress from the point, but only to emphasize the importance of segregating those three mandates from each other and treating each with equal value.  The easy ones are cash and preservative assets.  At all times hold a position in both cash and long-term preservation assets like gold or dirt.  Those mandates never change and the assets that work best for them rarely change either (although every fiat currency inevitably fails, but that is a story for another day).  However, what to do about that pesky growth portion that gets the most interest and attention.  That does not mean that allocating within a certain asset class is proper planning, like buying a lot of different equities in different industries, but that is what the average Wall Street mogul needs to sell you, because it's an easy way to package and liquidate off the shares of certain items their firm wants to get rid of.  Instead, consider allocating your growth portion among different asset classes that serve different purposes at different times of your life. 

What the heck do I mean?  Since I disagree that holding a broad-based stock portfolio long enough will just naturally cause gains, I recommend viewing that benefits of different industries depending on important factors like Dow Theory, unemployment and inflation/deflation figures, and of course, the Dow to Gold Ratio.  Sure, the US Stock Market has made marginal corrections off of the tragedy that befell 401k and pension plans nationwide back in 2008/2009, but where's the growth?  The rule of 72 helps us ball-park the frequency of a doubling effect on our investments, but it's been 10 years and most people are only up the money they've put in.  All the while, our cost of living has more than doubled. Why not, instead of becoming addicted to any particular growth asset, you consider buying the right growth asset at the right time.  And most importantly, having a reasonable exit strategy.


The unfortunate reality is that this only works because not everyone does it.  We know what happens when everyone plays the game at the same time, the game gives up on them.  For examples, look at the "(insert financial term here)" - bubble.

And now here's the topic at hand, the great and magical Dow/Gold Ratio and how it has played out over the last hundred years or so.

When all that is said and done, how does it apply practically?  Look at the spreadsheet below.  Assuming an initial investment of $30,000.00 in precious metals in the year 2000 at a rounded $300.00 per ounce.  Or, 100 ounces of exposure to the gold market.

At that time you could have purchased 100 ounces of gold or 500 shares of General Electric Stock.  I use GE because they are the original big boy and only remaining one on the DJIA today.  The Dow/Gold Ratio was at 40:1 at the time.  Today, we are roughly 8:1.  By swapping that gold out you could now pick up over 8,000 shares of GE, and at roughly 0.48 cents per share annual dividend, you're now picking up $4,000.00 a year. But look how things compound from here if we move to a 3:1, 2:1, and maybe even a 1:1 ratio between gold and the DJIA.  A swap out of gold into GE at today's dividend yield, and in 10 short years you have leveraged your purchasing power into GE 116 fold, and are earning annually in dividends almost what your initial investment was, 58,100 shares netting $27,888 a year.

For more information, please click on the LINK at the top right of this blog, The McAlvany Weekly Recap and read the article for Sept. 17th, 2010.

 DJIA

open 10,571.75

close 10,594.83 up 22.10

day high 10,603.69

day low10,522.48

today's volume 170,301,326

3mo avg. daily volume 197,377,600

 

DJTA

open 4,472.94

close 4,429.08 down 45.09

day high 4,472..99

day low 4,401.51

today's volume 15,262,539

3mo avg. daily volume 17,537,408

 

A slightly down day on the issues, but the INDU's closed up when it was all said and done... the TRAN's didn't get the message at the end of the day that they were supposed to rally, perhaps Washington isn't speaking loud enough.  I wonder where the floor on volume will be... it has to be close at hand, although I have no statistics to warrant that thought, only emotional and heart-felt speculation, which of course is the worst kind.  Russell listed total volume on NYSE and all associated exchanged at 3.58 billion... If I remember correctly it wasn't but a few weeks ago we were more in the 6 billion range.  That seems like quite a drop to me.

 

Gotta run, more to come.

Mid Month Treasury Yield Curve Rates courtesy of US Treasury Website. 

September 2010

Date	1 mo	3 mo	6 mo	1 yr	2 yr	3 yr	5 yr	7 yr	10 yr	20 yr	30 yr
09/01/10	0.16	0.13	0.19	0.25	0.50	0.75	1.41	2.02	2.58	3.35	3.65
09/02/10	0.15	0.14	0.18	0.25	0.50	0.76	1.43	2.06	2.63	3.41	3.72
09/03/10	0.15	0.14	0.19	0.25	0.52	0.81	1.49	2.14	2.72	3.49	3.79
09/07/10	0.13	0.14	0.18	0.25	0.49	0.77	1.41	2.04	2.61	3.37	3.67
09/08/10	0.10	0.14	0.19	0.24	0.52	0.80	1.46	2.09	2.66	3.42	3.72
09/09/10	0.10	0.14	0.19	0.26	0.57	0.87	1.57	2.20	2.77	3.54	3.84
09/10/10	0.10	0.14	0.19	0.27	0.58	0.88	1.59	2.24	2.81	3.58	3.88
09/13/10	0.10	0.15	0.19	0.26	0.53	0.82	1.51	2.15	2.74	3.52	3.83
09/14/10	0.11	0.15	0.20	0.26	0.50	0.77	1.43	2.09	2.68	3.48	3.79
09/15/10	0.11	0.15	0.20	0.26	0.50	0.77	1.46	2.13	2.74	3.55	3.87

DJIA
open 10,526.42

close 10,572.73 up 46.24

day high 10,587.80

day low10,480.78

today's volume 167,420,793

3mo avg. daily volume 197,350,249

DJTA

open 4,450.73

close 4,474.17 up 23.44

day high 4,483.35

day low 4,423.83

today's volume 13,313,288

3mo avg. daily volume 17,689,467

An almost 50/50 day today on the advance/decline ratio's... although obviously favored enough in the advance side to push us back up to a positive.  Every single day we have a moderately rising market on drastically declining volume, I get more and more confident that we will see some debacle in the next 6 months... targets aiming right for mid to late November, but to me it seems a little too cliche or obvious to have a drop right after the mid-term elections.

All I know is I've said it before and I'll say it again right now, I can't envision 11,000 on the INDU's ever again... well, perhaps after hyperinflation pushes the prices of everything up...

... now a 2:1 gold/dow ratio also seems a little interesting in the mean time...

 DJIA

open 10,544.13

close 10,526.49 down 17.64

day high 10,588.32

day low 10,499.70

today's volume 192,411,808

3mo avg. daily volume 197,520,951

DJTA

open 4,447.77

close 4,450.73 up 3.29

day high 4,486.25

day low 4,421.88

today's volume 14,758,653

3mo avg. daily volume 17,802,330

 

 

And here I thought we were looking at a moderate $10 billion a month... perhaps closer to 3 times that amount seems more prudent.  Below, information shared courtesy of Bill King and the King Report, posted from the New York Fed website, link can be found here. Tentative Outright Treasury Operation Schedule

Across all operations in the schedule listed below, the Desk plans to purchase approximately $27 billion. This is the amount of principal payments from agency debt and agency MBS expected to be received between mid-September and mid-October.

	Operation Date1	Settlement Date	Operation Type2	Maturity Range
	September 15, 2010	September 16, 2010	Outright Treasury Coupon Purchase	9/30/2014 – 8/31/2016
	September 16, 2010	September 17, 2010	Outright Treasury Coupon Purchase	3/15/2012 – 2/28/2013
	September 20, 2010	September 21, 2010	Outright Treasury Coupon Purchase	9/30/2016 – 8/15/2020
	September 22, 2010	September 23, 2010	Outright Treasury Coupon Purchase	3/15/2013 – 8/31/2014
	September 24, 2010	September 27, 2010	Outright Treasury Coupon Purchase	9/30/2014 – 8/31/2016
	September 28, 2010	September 29, 2010	Outright TIPS Purchase	1/15/2011 – 2/15/2040
	September 30, 2010	October 1, 2010	Outright Treasury Coupon Purchase	2/15/2021 – 8/15/2040
	October 5, 2010	October 6, 2010	Outright Treasury Coupon Purchase	9/30/2016 – 8/15/2020
	October 6, 2010	October 7, 2010	Outright Treasury Coupon Purchase	3/15/2013 – 8/31/2014

The next release of the approximate purchase amount and tentative outright Treasury operation schedule will be at 2 p.m. on October 13, 2010. ______________________________
¹Operations are tentatively scheduled to begin around 10:15 AM and close at 11:00 AM.
²Nominal coupon operations are specified as “Outright Treasury Coupon Purchase” and TIPS operations are specified as “Outright TIPS Purchase.”


In the mean time, short treasuries are up, the markets will close marginally up, and all precious metals are up pretty substantially today... Looking forward to numbers here in a short bit.


 

 DJIA

open10,458

close 10,544.13 up 81.63

day high 10,567.59

day low10,458.60

today's volume 190,715,523

3mo avg. daily volume 197,317,916

DJTA

open 4,401.01

close 4,447.44 up 46.26

day high 4,471.77

day low 4,401.01

today's volume 12,633,634

3mo avg. daily volume 17,958,165

Another day, another solid open and a sell off throughout the day.  Today saw average volume, which is a rarity now-a-days, but I recall a month ago average volume was about 10% higher, so still nothing to write home about.

Freeze, Fight or Flight

Everyone says the "fight or flight" mentality naturally kicks in when something's life is at risk.  I live in Colorado, where deer and elk encounters are very commonplace; especially on the highways, and primarily when you're traveling at 60 mph and there is otherwise nothing that could possibly be done about the situation.  If you have never experienced the phrase, "deer in the headlights" than you can't know how true it is.  Most times you are able to swerve out of the way... unfortunately sometimes you are not.  I've never been involved in a deer collision, but my parents have, and most everyone I know has, so I say a quiet prayer every time I get behind the wheel, especially during winter when they have retreated from the high country in search of food, and most importantly, at night.  I mention this fact of life we must deal with out here for one reason... the deer does not know it's life is in danger.  In fact, it does not know that unless it does something, it's life is over.  It's a guarantee.  A deer can do quite a number on the front end of a car, but the car always wins.  

I think of the bond markets and real estate markets right now.  There is a crisis looming, and there are unfortunately few of the "traditional" options.  Wall Street tells us that if not stocks, then bonds, and the flood into debt instruments has been impressive.  What is interesting is at the "moderate" inflation rates we have today (as per last FOMC meeting minutes, a paltry $10 billion monetized a month is all we'll have for the indefinite future), people are still running for "guarantee's."  I was at one time a licensed annuity broker.  I never fully understood the concept of sacrificing any semblance of liquidity for "a guaranteed rate of return."  Where they really get you is when you actually do annuitize and then it's not even your money any more.  The only way to win is to live longer than their stated payout dates... but what people don't understand is that insurance companies are in the business of making money, like everyone else is.  So whatever they say about doing what's best for "you," even when that's true, they're certainly not doing it at there own expense. 

So people today are absolutely flooding into "guaranteed" rates of return in bond portfolio's or fixed rate annuities, which are also usually invested in some form of note or bond portfolio, expecting things to be fine... and they will be, assuming that interest rates do not increase during the duration you own the asset.  

So, do I believe interest rates could increase at some point within the next 7 years... well, how would you answer that question?

So we are frozen.  What will be impressive is a wave of flight capital seeking true safe haven's should there be a looming crisis.  To the few of you arrogant enough to fight these markets, more power to you, and if the rest of us are wrong you're set to make a large fortune... ...if the rest of us are wrong... of course.

DJIA

open 10,415.01

close 10,462.77 up 47.53

day high 10,471.28

day low 10,403.17

today's volume 140,315,413

3mo avg. daily volume 198,073,041

DJTA

open 4,389.35

close 4,401.18 up 13.11

day high 4,424.23

day low 4,387.68

today's volume 11,186,232

3mo avg. daily volume 18,051,285

 

 You can't possibly go into a weekend commemorating/remembering/mourning 9 - 11 (I don't know the right word to use, I'm sure the White House has coined an appropriate adjective... I just know celebrating is probably not correct).  A little lower week to week, but that's it.  Have a nice weekend, and keep an eye on that volume, if you think this market is about to take a turn for the better, I have lots of stuff I'd love to sell ya :)

DJIA

open 10,338.49

close 10,387.01 up 46.32

day high 10,426.70

day low 10,335.69

today's volume 166,757,540

3mo avg. daily volume 199,883,647

DJTA

open 4,341.53

close 4,400.40 up 58.98

day high 4,437.23

day low 4,341.53

today's volume 14,278,827

3mo avg. daily volume 18,346,085

Definition of doldrums  courtesy of www.infoplease.com.

doldrums (dol'drumz) or equatorial belt of calms,area around the earth centered slightly north of the equator between the two belts of trade winds. The large amount of solar radiation that arrives at the earth in this area causes intense heating of the land and ocean. This heating results in the rising of warm, moist air; low air pressure; cloudiness; high humidity; light, variable winds; and various forms of severe weather, such as thunderstorms and squalls. Hurricanes originate in this region. The doldrums are also noted for calms, periods when the winds disappear, trapping sailing vessels for days or weeks.

 

Sounds like a good definition for political Washington DC or Financial New York.  Lot's of self proclaiming bright and sunny days, promising wonderful lifestyles and brewing massive storms and hurricanes.

 

Boring markets in boring days.  It rained here all day in sunny southwest Colorado.  No volume, no interest, it seems breaths are bated awaiting on "something" to fix the problem... at least for most of us.  I've heard it argued before that on any given day 80% of volume on the markets is institutional buying and selling.  Dow Theory has always argued that everybody knows more than anybody... but it seems Wall Street is less of an "everybody" these days, and more of one collective voice on one small group of a few thousands traders, hedge-fund managers, and firm moguls.  You ask a collective "everybody" if they think we have "good times" ahead of us, and see what they say... ask your neighbor how much of his money is actively invested in equities, or if he's curled up into the safe arms of the almighty US Dollar... or better yet, dreaming of security in a bond portfolio showing the worst yields in their lifetime.  Ask "everybody" and let's see what we all say.

 

Would you short these???  I'm not, but it's enticing :)

 

 

DJIA

open 10,446.80

close 10,340.69 down 107.24

day high 10,446.80

day low 10,332.40

today's volume 149,035,913

3mo avg. daily volume 201,972,683

DJTA

open4,386.84

close 4,341.42 down 45.98

day high 4,390.02

day low 4,311.34

today's volume 13,697,980

3mo avg. daily volume 18,680,682

No volume... no interest, no substantial movements, or breakouts, or anything... pretty much just no anything.  Market rebounds on "better than expected('s)" on Friday, as stated unemployment numbers are excitingly at, what, 9.6%??  Of course a sell off follows this week.  I'm actually surprised it waited until today.  Can't have ugly numbers going into a holiday weekend, the Labor Day travelers won't buy that extra soda at the gas stations if their precious stocks are off 2 points.

Below a chart on the Industrials, diminishing numbers into a fairly convincing head and shoulders pattern.

Have a nice week, and hope you had a nice Labor Day.

DJIA

open 10,270.08

close 10,320.10 up 50.63

day high 10,320.37

day low10,253.96

today's volume 149,931,903

3mo avg. daily volume 203,768,523

DJTA

open 4,284.86

close 4,342.03 up 58.62

day high 4,343.71

day low 4,283.83

today's volume 13,515,359

3mo avg. daily volume 18,960,379
 
Click to see this Reuters article  for more information.  A few thoughts on Obama's Rose Garden discussion this week.  Quotes and comments below...

"Obama cited possible steps such as extending tax cuts for the middle class that are set to expire this year, increasing government support for clean energy development, and rebuilding more U.S. infrastructure."  I hate to use a bad quote from a bad movie, but "show me the money."  Bernanke already confirmed moderate to no inflationary growth for an extended period of time, keeping interest rates low.  But our President clearly has no concept of fiscal policy.  Wait, how about another bad quote, "have your cake and eat it too."  You cannot have something that costs something for nothing.  So if the funds are not coming from taxes and not coming from the fed, how does he expect to pay for this?  Now to quote something that actually does make sense, Hitchhikers Guide to the Galaxy, "Presidents don't have power, their purpose is to draw attention away from it."  Pay no attention to the man behind the curtain, and as long as the American public has no clue what's going on, they'll gladly swallow the cough syrup... it's all placebo, but hopefully to the White House, that doesn't matter.
 
"He also said he was considering "further tax cuts to encourage businesses to put their capital to work creating jobs here in the United States." How many mom and pop shops outsource their labor?  And for those that do, how much?  See this ADP Employment Report where is mentions that large businesses, defined as those with 500 or more workers, saw employment remain essentially flat while employment among medium-size businesses, defined as those with between 50 and 499 workers decreased by 5,000. Employment among small-size businesses, defined as those with fewer than 50 workers, decreased by 6,000.

I have about had enough... and for those of you out there who think changing parties mid stream will ultimately do ANY good, you're wrong.  The best thing that could happen to the Dem's is to lose seats for the next two years, that way the looming catastrophe falls on Rep's shoulders... remember, we silly little Americans have no attention span and even less ability to rationalize, reason, and create realistic opinions about things... perhaps we deserve socialism, free market capitalism is for a less dependent group of people than most of us tend to be.

Life is not about trying to make the world into the Utopia you hope it will become, life is about understanding what type of boat will ride best on top of grime that pours out of the Capitol Hill sewers.

DJIA

open 10,020.09

close 10,269.47 up 254.75

day high 10,279.08

day low 10,020.09

today's volume 205,712,227

3mo avg. daily volume 203,737,671

DJTA

open 4,122.01

close 4,283.41 up 160.78

day high 4,295.16

day low 4,122.01

today's volume 19,080,103

3mo avg. daily volume 19,023,444

Was on vacation this weekend, and just too lazy to post numbers for yesterday, so here's a little catch-up.  Big moves down followed by bigger moves up (at least today that is).  Net/net is, we've gone no where.  Low volume and most of the up move today on both INDU's and TRAN's occured at open, or very close to it... my short term prediction, watch for us to start closing below the 10,000 mark consistently... and probably pretty soon... Friday?!?

Will the election have any play into the markets?  I don't know, but I do know the markets could have a lot of play into the elections, depending on what moves occur when.  As the boys and girls at Zero Hedge say, on a long enough timeline the survival rate of everyone drops to zero... No wonder the lead writer calls himself Tyler Durden (for those of you who had Fight Club in their DVD collection like I did).  Sovereign debt is doomed, perhaps the stock markets will be the bastion of safety, as everyone from the hedge-fund managers down to the general public flee failing "income" assets like muni's and seek the security and safety within private enterprise and free markets... or perhaps the political officials in their blood-lust drunken stupor regulate further free-market trade as their financial system fails?  If so, then yes, the markets could have a dramatic effect of the political events of this coming November... and even more so two Novembers hence.  Oh, and vice versa should also be the case, but unfortunately the pessimist in me believes this is a discussion over the heads of the average American.  I'm not saying the ostriches out there are dumb by nature, but it still seems by choice.

Forgive the ramblings as in the long run it all falls on the shoulders of the markets.  Control or not, markets do NOT lie... they are not capable of lying, at least on a long enough time line.  So, my question remains, does the Average person run to a free market when the public markets fail... or do the public markets step in and corral the private markets under their leadership, claiming the currency wouldn't have failed in the first place if it wasn't for the free markets intervening into a perfectly good control system... does the public buy this if it happens... or do our citizens follow on the heels of Asia and India and start stockpiling gold coins... as par for the course in America, a day late and a dollar short.


My play you ask?  Precious Metals and cash until the next (what seems inevitable) decrease in the equities... a rebound in the equities may coincide with the start of the greatest sovereign debt collapse in our countries history... followed by a Dow Theory ride between liquid gold and invested equity positions for a few years until interest rates reach early '80's levels... where I take a good portion of my assets and live off the 18% fixed R.O.R. for, say the next 30 years...  Assuming anything shy of Armageddon, I'd expect business and market cycles to continue as they always have... they just require a lot more patience than most of us can stomach.

Until next time