Market Update: Still Ranging

So I would have liked to have seen a close under 1018'25 (which by measurements sake is the lower part of the range) instead we get a last 1/2 hour surge and close at 1018'50. Although not entirely clear, it tells me that we need one more attempt by buyers to get back to that magical 1025 area before sellers come in and do damage to the chart. This close means tomorrow is another wait and see kind of day. these ranges are proving to be tough to break free of.

Sellers would show that they were in control with a gap down tomorrow. Next downside target is 1006-1007 (the upper end of the previous ranging action)

Picture of the Day: Autumn

Market Update: Calling a Top

There have now been 3 new market highs since breaking out of the previous range (where 996-997 held the gravitational pull). None of which have been validated by more buying. Each new high as subsequently been rejected and that days close has been back in the range. This is a text book example of a top. Now I have said previously that it is going to take a lot of selling pressure to get out of this range and today didn't amount to enough as we tested the lower end of it once again. The market needs to gap down (or up) to get out of this range and the pattern that is emerging leads me to believe that it is going to be down.

This bearish prediction will be delayed further and partially damaged by a close above 1025 today.

But I can say with conviction that 1038'75 looks like the top

Rep. Frank eyes Fed audit, emergency lending curbs

We may be getting somewhere with Dr. Paul's bill to audit the fed. Hopefully Frank won't demand too many changes in the bill and it can get passed. Color me surprised!

From Yahoo News

WASHINGTON (Reuters) - Rep. Barney Frank, the chairman of the U.S. House of Representatives Financial Services Committee, said he plans legislation to restrict the Federal Reserve's emergency lending powers and subject the central bank to a "complete audit."

At a recent town hall meeting, Frank said the House would pass a bill to use an audit to crack open the central bank's books more widely, but in a way that will not encroach on the central bank's monetary policy independence.

In addition, he said the House would move to rein in the authority that allows the Fed to lend to a wide range of non-bank firms in "unusual and exigent circumstances."

A bill sponsored by Texas Republican Rep. Ron Paul that would allow the Government Accountability Office, a federal watchdog agency, to audit Fed interest-rate decisions has won the co-sponsorship of more than half of the House.

Fed Chairman Ben Bernanke has warned that the bill would compromise the U.S. central bank's policy-making independence and could undermine financial markets and the economy.

Frank said he has been working with Paul on compromise language. "He agrees that we don't want to have the audit appear as if it is influencing monetary policy because that would be inflationary,"
....
Frank said the audit and emergency lending provisions would be incorporated in broader legislation to revamp U.S. financial regulation that would likely pass the House in October. By seeking a compromise with Paul, Frank could strengthen the broader legislation's chance at passage.
....
The Obama administration has proposed giving the Fed responsibility for overseeing firms whose collapse could endanger the entire financial system. At the same time, it wants to strip the central bank of its consumer protection function, and invest that authority in a new agency.

Frank expressed unease at what he called the Fed's power to "lend money to anybody they want" in emergency circumstances. "We are going to curtail that lending power. We are going to put some restraints on it," he said.

Since the financial crisis struck two years, the Fed has used this emergency authority to prop up a number of non-bank financial firms with billions of dollars in loans, including insurer American International Group.

The Fed's actions have angered many lawmakers who are concerned the central bank has put taxpayer money at risk. Fed officials have defended their actions as necessary to prevent a deeper credit crisis and widespread damage to the economy.
.....
Frank said the House legislation would pave the way for an audit to look into what the central bank "buys and sells," but he said the data would be released after a period of several months to avoid impacting financial markets.

Bernanke is widely expected to win needed Senate backing for a new term as Fed chairman, but the central bank's aggressive efforts to stem the financial crisis have stirred controversy that is likely to color his re-nomination hearing.

Single Molecule Finally Pictured!

From the Daily Mail

It may look like a piece of honeycomb, but this lattice-shaped image is the first ever close-up view of a single molecule.

Scientists from IBM used an atomic force microscope (AFM) to reveal the chemical bonds within a molecule.

'This is the first time that all the atoms in a molecule have been imaged,' lead researcher Leo Gross said.
pentacene

The delicate inner structure of a pentacene molecule has been imaged with an atomic force microscope

The researchers focused on a single molecule of pentacene, which is commonly used in solar cells. The rectangular-shaped organic molecule is made up of 22 carbon atoms and 14 hydrogen atoms.

In the image above the hexagonal shapes of the five carbon rings are clear and even the positions of the hydrogen atoms around the carbon rings can be seen.

To give some perspective, the space between the carbon rings is only 0.14 nanometers across, which is roughly one million times smaller than the diameter of a grain of sand.

Read more: http://www.dailymail.co.uk/sciencetech/article-1209726/Single-molecule-million-times-smaller-grain-sand-pictured-time.html#ixzz0PccKWqQw

Today in History: How the "Colonel" Saved the Whales

It was 150 years ago today — on Friday, August 27, 1859 — that “Colonel” Edwin Drake struck oil 69.5 feet below the surface at his well near Titusville, Pennsylvania.

(The title of “colonel” was entirely honorific. Drake was a native of New York who grew up in Vermont and began his adult life in Connecticut. He had worked mainly as a railway clerk and conductor. He was a newcomer to Pennsylvania, and he was never commissioned in any military organization.)

Drake would not know of the strike until the next morning, Saturday, August 28, 1859, when workers, returning to the well after drilling late on the previous day, noticed that crude oil was bubbling to the surface and they reported it to the Colonel.

Although it was already known that petroleum oil (”rock oil”, as it was then called) would yield kerosene, it was not yet available in sufficient quantities and qualities to make its use commercially viable. People still depended in the mid-19th century on sperm whale oil for lighting homes, businesses, and streets, a product obtainable only by capturing and slaughtering whales.

The lowest historical prices of the least expensive type of whale oil was reached in the 1820s, when it was priced at $200 per barrel (in 2003 dollars). By 1855 whale oil was selling at more than $1,500 per barrel (in 2003 dollars). At 42 gallons per barrel, that works out to $35 per gallon (in 2003 dollars).

In short, whale oil was extremely expensive — and, of course, came at a catastrophic price to whales. By the late 1850s the worldwide sperm whale population was seriously dwindling and was coming close to extinction. Meanwhile, people in America and elsewhere throughout the world were approaching a crisis in lighting and energy supply.

Aware that previous attempts at drilling for oil had ended in failure, Drake had an idea that would made his discovery possible: He surrounded his drill with a pipe down to bedrock, thereby preventing water seepage from causing the drill hole to collapse. This enabled the drilling of holes sufficiently deep to permit oil to be tapped in large quantities. (Before Drake, only very small quantities of oil were recoverable, mainly through chance locations of oil percolating up to the surface.)

Drake’s initial production ranged from 10 to 35 barrels per day. He used the containers that were readily at hand on short notice — recycled whiskey barrels. In generating even that small amount of crude from a single well, Drake single-handedly doubled the world’s oil supply.

Drake’s achievement on this day in 1859 led directly and swiftly to the development of the petroleum oil industry, producing oil in sufficient quantities and grades — at amazingly low prices — to allow it to be used both for energy and for lubricants and in home, business, and industrial applications. This, in turn, led to rapid mechanization and industrialization, as well as to a revolution in the supply of energy to people’s residences, schools, places of business, and vehicles.

The whale oil business — not the whales — went extinct almost overnight, replaced by the petroleum industry.

Petroleum oil and its derivatives remain abundant and, in comparison both with historic prices and with the prices of all known alternatives, cheap to this day.

This is not to say that better and cheaper sources of energy may not yet be found and made practical. Such progress is, indeed, possible. After all, no one uses whale oil any more!

But on this anniversary it is worth noting, and celebrating, three important facts about Drake and his deeds:

1. An individual can make a huge difference in history. An entire industry and a civilizational revolution flowed from the ingenuity and enterprise of one man.

2. No government planner directed Drake; no government subsidy financed him. A thoughtful man observed rising prices and realized that there was a ready market for a better and cheaper product. He had an idea about where and how to look for that product. Backed by private capital that he used to acquire drilling rights, buy good equipment, and hire willing workers — all at private risk — Drake found that product.

3. No single human act has ever done more to preserve and perpetuate a major non-human species. Drake saved the whales!

Technically it was 2 days ago, but work with me here people!

Picture of the Day

Enjoy your Weekend everyone

Steeerike! Right down the middle. I don't know why he didn't swing at that one

1025 proves to have a huge magnetic attraction which in turn will require a HUGE push either to the upside or the downside. There are no outstanding objectives above so closing above 1035 (preferably 1038) will result in a move probably to 1054 on the way to 1100+. That said there are far more outstanding targets on the downside that still need to be tested all the way back to 880 and lower. When this range does break, I will be on the lookout for signs that the first break will be false (which is usually the case). However being that the market hates to repeat itself and the previous ranging around 995-997 had a breakout lower only to fail and make higher highs, I'm willing open to the theory of an over exuberant run to 1054 only to have it fail miserably and start the resumption of the bear market. Only time will tell.............

Pre Open Update

We often see similarities in chart patterns and the most important thing to understand about interpreting them is that the second time around the resolution is most likely going to be different.

If you look at the two trading ranges i have indicated by thick blue lines, they are defined not by their upper and lower limits but by the 995-997 level in the previous trading range and the 1025 level during this current one.

The key to these levels is that they offer a sort of gravitational pull and when they get established it requires a tremendous amount of either buying or selling pressure to break free of it. The farther it goes away from its normal orbit without breaking the more violent the snapback. This what is happening today at the pre-open shows what happens with a failed attempt to break free of the trading range. yesterdays test of the 1017 level didn't produce a break and as a result we are back in the upper range.

A close above 1035 would make me start to add into a small long position and a close above 1038 would make me long for a run up to at least 1054.

There really isn't a bearish perspective other than a rejection of this test of the upper end of the range.

Once Again Trying to Fan the Fires of Debate

So my first attempt at getting some healthy debate worked marginally well and therefore I am stepping it up a notch. From Breitbart's Big Hollywood. The rest of the article isn't worth your time but this nugget certainly is...

I saw a real fat girl once, slowly walking down the middle of an empty street in a “poor” neighborhood. She was eating from a bag of Cheetos. I was in my car at a stop light, watching her. I thought maybe no one told her that Cheetos make you fat, or maybe her life is so sad that that bag of Cheetos is the highlight of her day. Sometimes, Cheetos is the highlight of my day. I said a little prayer for her. Then, she dropped the empty bag in the middle of the street.

My empathy dissipated.

Statistics confirm the fact that most “poor” people have no fathers. My father told me that Cheetos makes you fat. He also built a gym in our backyard. We lived in a very “poor” neighborhood. Our house cost $10,000 when he bought it in the 50’s. The neighborhood then got worse. All of our neighbors’ houses began to look dirty and have five broken cars and beer cans in their front yards. Our house was always immaculate and our front yard always had freshly mown grass. My father took us to church 3 times a week. He read the Bible out loud to Grandma and Grandpa every Sunday night, at Grandma’s house, because Grandpa was an agnostic and wouldn’t go to church. My father taught me how to read when I was 5, so that when I started first grade I was the best reader. I skipped second grade. My father played the piano every night and taught us show tunes, and how to harmonize. My father taught us how to water ski. My father was a gymnastics coach, so he taught me a “flip flop” and I was the only cheerleader who could do that. My father protected us. He bought a bee bee gun that looked like a real gun, to scare burglars away. We were robbed four times. He said, “I could never kill anyone.” My father made us feel safe. He gave us confidence and a history and a future.

That Cheetos girl probably doesn’t have a father. And, no amount of government assistance, housing, food stamps, free college, or ObamaCare can give her that. She needs a father.

I wholeheartedly believe that there is much truth to what the author is saying that the problems existing in our society stem mostly from the lack of real authoritative role models in a child's upbringing. My posed question on this topic is who is to blame for what has happened to our lower class society and why is the Father figure missing?

Racketeering 101: Bailed Out Banks Threaten Systemic Collapse If Fed Discloses Information

Verbatim From Zero Hedge because i couldn't have said it better myself:
And so the guns come out blazing. The Clearing House Association, another name for all the banks that were bailed out over the past year with the generous contributions from all of you, dear taxpayers, are now threatening with another instance of complete systemic collapse if Bloomberg's lawsuit is allowed to proceed unchallenged, let alone if any of the "Audit The Fed" measures are actually implemented.

As a reminder, The Clearing House Association consists of ABN Amro, Bank Of America, The Bank Of New York, Deutsche Bank, HSBC, JP Morgan Chase, US Bank and Wells Fargo.

In a declaration filed in the Bloomberg Case (08-CV-9595, Southern District of New York), the banks demonstrate no shame in attempting to perpetuate the status quo with regard to the Federal Reserve and demand that the wool over the eyes of the general population remain firmly planted in perpetuity.

The Clearing House submits this declaration because the Court's Order threatens to impair the ability of our members to access emergency funds through the New York Fed's Discount Window without suffering the severe competitive harm that public disclosure of their identity will cause.

Our members have accessed the New York Fed's Discount Window with the understanding that the Fed will not publicly disclose information about their borrowing, especially their identity. Industry experience, including very recent and searing experience, has shown that negative rumors about a bank's financial condition - even completely unfounded rumors - have caused competitive harm, including bank runs and failures.
Surely transparency would facilitate rumor-mongering to an unprecedented degree. After all rumors spread much easier when everyone knows the true financial condition of banks.

And here, in plain written Times New Roman, you see what racketeering by a major bank consortium looks like:

If the names of our member banks who borrow emergency funds are publicly disclosed, the likelihood that a borrowing bank's customers, counterparties and other market participants will draw a negative inference is great. Public speculation that a financial institution is experiencing liquidity shortfalls - which would be a natural inference from having tapped emergency funds - has caused bank customers to withdraw deposits, counterparties to make collateral calls and lenders to accelerate loan repayment or refuse to make new loans. When an institution's customers flee and its credit dries up the institution may suffer severe capital and liquidity strains leaving it in a weakened competitive position.

Pardon me if I am a broken record here, but would rumors not spread much less if there was more transparency, if investors and other financial intermediaries were fully aware of the conditions of their counterparties, if banks did not have to cover their billions in reserve losses by pretending they are viable and essentially being constant wards of the state?

The Banks' racketeering has gone on for far too long.

And yet, it does not stop: the conclusion from the banks' letter:

In sum, our experience differs from the factual conclusions the Court appears to have reached about the nature of competition in the banking industry:

• The competitive harm to institutions that are publicized as needing emergency funding is not "speculative," but demonstrated by the recent multiple failures of financial institutions whenever information about their funding difficulty has been disclosed.


• The disclosure does not involve mere "embarassing publicity" but information that could result in the immediate demise of an institution.


• The disclosure would not merely "stigmatize "the institution or make it "look weak," but goes to its very viability.


• The disclosure of accessing emergency funding is not an "inherent risk" of market participation, but an extraordinary risk in extraordinary circumstances.


• Competitors can use the disclosure to advertise or publicize that they are financial stronger because they don't need emergency funding.

In a nutshell - the banks want their complete opacity cake and eat it too, or else, the racket goes, the transparency that will somehow promote massive rumor mongering will again destroy capitalism. In the meantime, the Ken Lewises of the world can continue touting how stable their businesses are based on optimistic future projections, while implicitly, they continue to survive merely thanks to the cash granted them by you, taxpayers.

AIG- Ex Squeeze me

Yet another reason why this is not a market for investors, but speculators......

With no significant news to speak of, AIG stock soared more than 29% to $48.89 midday Thursday in a move that appeared to be motivated by a wash of speculative trading and a possible short squeeze. Volume reached 73 million shares; daily average turnover is about 103 million.

The firm's stock price has exploded by more 250% since Aug. 4, a surge that has largely mystified market observers.

So AIG has a low of 6.60 mid July and today cross 50. So in 6 weeks with perfect timing you could have made 667% on AIG. AIG people not some random high beta internet stock. And people call this the end of the recession. Speculation like this is not the fuel for a market bottom or a new bull market, but a bear market rally. consider yourself warned.