For those of you with busy schedules, here is an executive summary:
Wow. What a day. Where do I even begin? The minor news was the stock market plunged. There were two other events that occurred Thursday, one an announcement of intention, the other a ruling by the Supreme Court that virtually assures catastrophic wave (C ) down will occur to its fullest potential, that an economic depression is coming.
First the markets. The Industrials plunged Thursday on very high volume, falling 213.27 points, closing at 10,389.88. The Industrials closed below their 50 day moving average for the first time since July 2009, and have experienced the worst 2-day decline since August 2009. Volume over the past week spoke clearly that a top of significance was occurring. Declines came on rising volume, and advances came on falling volume. Downside volume led at 87 percent Thursday, with declining issues at 79 percent, with downside points at 91 percent. S&P 500 Demand Power fell 7 points to 372, while Supply Pressure rose 12 points to 370, telling us the decline was powerful with deep pockets intervention coming in to support prices, buying hard with both hands, accounting for almost half of the buying. Without that intervention, stocks would have fallen twice as far.
The Industrials are now showing a loss for 2010. The fundamentals, the news, was not good Thursday. Initial Jobless Claims rose 36,000 to 482,000 in the latest reporting week. We also learned that the Philly Fed Index of regional manufacturing plunged to 15.2 in January from 22.5 in December, apparently making a beeline toward zero.
As far as the Elliott Wave count goes, a key bullish alternate labeling has been eliminated with today's decline. We believe Thursday's drop is part of a developing wave {3} down. Wave threes are usually the most dramatic moves. The 15, 30 and 60 minute Full Stochastics are oversold, suggesting a bounce is coming, likely wave {2} up of {3} down.
The Central Planners announced Thursday that they would impose size limitations on big Wall Street banks, and restrict their investment activities. The plan is to separate commercial banking from investment banking. Under the Obama proposal, banks that take federally insured deposits or have the right to borrow from the Fed would be prohibited from owning, investing in or sponsoring hedge funds or private equity firms. Obama called for limiting the size of a bank to 10% of the nation's insured deposits. Interestingly, the key changes only affect a few large Wall Street banking firms such as J.P. Morgan Chase & Co., but largely excluded is the giant of all the Wall Street banking firms - okay everybody, take a guess - yep, Goldman Sachs Group. That is because Goldman does not accept federally insured deposits. Goldman took a federal charter last year to accept free money from the fed and turned it into profits, however it paid off its TARP bailout loan and no longer needs a federal charter. This essentially gives Goldman Sachs a competitive advantage. This Central Planner step is a knee-jerk reaction to a misinterpretation of why Republican Scott Brown won the Massachusetts U.S. Senate election Tuesday. The real reason was the Central Planners are more focused on Wall Street banks, first to help them, now to hurt them, than the needs of American households. American households need cash from non-debt sources. The best source to provide across the board help would be a major income tax rebate to each and every household. That in turn would stimulate the economy from the bottom up, improving household balance sheets, generating spending to improve jobs generating small businesses.
There are two kinds of government. Think of it like this. Consider the situation where your neighbor has a cow, but you do not have a cow. One type of government approaches the situation and says, "How can we take away your neighbor's cow?" That is socialism, communism, under totalitarianism. The other type of government says, "What can we do to help you get a cow also?" That is capitalism under Democracy. The focus of the Central Planners has been to do the former, not the later. This approach is not interested in helping households increase their standard of living. This approach is more interested in punishing Wall Street banks who did well.
We learned Thursday, January 21st, 2010 that Goldman earned $4.79 billion in the fourth quarter 2009, and earned $13.4 billion for the entire year 2009.
Now to the meat of Thursday. The Supreme Court destroyed American Democracy Thursday. Stick a fork in it. We are done. The grand experiment in democracy called the United States of America had a nice run, about 235 years, but it has been destroyed today, Thursday, January 21st, 2010 from within, the Supreme Court of the United States. The Supreme Court virtually assured we will be completely ruled by an Oligarchy from now on, which will of course lead to dictatorship, as we saw happened in both ancient Greece and ancient Rome. The Constitution has been destroyed. What did the gang of five do? The Supreme Court ruled 5 to 4 that corporations are people, and therefore have the right to spend all the money they want to in support of any candidate they choose. The Supreme Court ruled that corporations have the first amendment right of free speech because they are "people."
They have erred of course, and violated the intent of the U.S. Constitution. They have stretched the definition of "people" to non-people. They have called black white. Up is down. They have redefined the plain definition of a word to something totally different than that word. Corporations are not people. That is common sense and plain to any rationally thinking honest person with a soul. Corporations do not vote. Corporations do not run for election to political office. Corporations are legal creations, associations of people with human souls (shareholders) who already have the right to vote and hold political office. The human souls who are shareholders are not the same as the corporation itself. They are different.
This ruling undermines the integrity of the election system. It throws out over a century of restrictions imposed by Congress against corporations so that they would not influence the outcome of elections. Corporations have an unfair advantage over the small guy, over real people, in the amount of money they control.
What does this mean? It means future Supreme Court Justices will be appointed by presidents who have been bought, purchased, and are controlled by corporations, and confirmed by U.S. senators who also have been purchased by corporations. It means Exxon Mobil, who earn $45 billion a year, can spend any amount of money they want on advertisements supporting a political candidate. It means any candidate who wants to get elected will cut deals with corporations in exchange for their billions in advertising support. It means Goldman Sachs will decide elections. It means Chubb and Cigna and General Electric and Microsoft and Astra Zeneca will put their people in place in our government, who will pass and enforce legislation favorable to their special interests.
Those who are happy with the Supreme Court's decision believe that large corporations are good, that they know what is best for us, that we should yield our rights and interests for the greater good as defined by large corporations' boardrooms. It means more Enrons, more AIGs, more Lehman Brothers, more World Coms. It means gasoline prices of $10 a gallon if Exxon Mobil decides it needs the money, it means free loans to Wall Street firms so they can invest the money and make more profits and distribute larger bonuses to executives. It means biologically developed diseases being spread over land masses in order to sell more drugs to cure those diseases. It means higher health insurance premiums, mandatory health exams to keep that insurance. It means the elimination of unemployment insurance, elimination of the minimum wage, elimination of social security. It means firing without cause and without severance. It means invasion of your privacy, requiring you to have a chip under the skin on your hand or forehead in order to buy or sell anything.
It means the elimination of antitrust laws prohibiting monopolies, it means the gobbling up of small businesses through unfair business practices. It means more wars so large corporations that produce military resources can profit. It means the changing of all laws and regulations to suit the desires of large corporations. It means no benefits for full time workers. It means requiring more hours or risk getting fired. It means euthanizing patients who are sick and costing insurance companies too much to keep alive.
This Supreme Court ruling changes everything. Whether you are conservative or liberal, you are now a slave, a serf, within the new ruling class, the large corporations. Power will be in the hands of the few CEOs and majority shareholders of the large corporations. Elected officials will be puppets.
The result cannot be good. For those of you who thought those large Head & Shoulders patterns in major stock indices with downside targets of zero were ridiculous, I'll bet none of you anticipated this Supreme Court ruling. Markets know the future. They know where they are headed next. They foresee tomorrow's news today. There are likely more surprises coming down the pike, which will assure the destruction of capitalism, of world economies. This is scary stuff. This decision by the Supreme Court has arrived like a thief in the night. It sets the table for one-world government as future purchased politicians yield to the wishes of large multi-national corporation sponsors.
The percent of DJIA stocks above their 30 day moving average fell to 30.00 from 63.33. The percent above 10 day fell to 13.33 from 36.67. The percent above 5 day fell to 3.33 from 33.33. The NYSE 10 day average Advance/Decline Line Indicator fell to negative -42.0, remaining on a "buy" signal from November 9th, needing to fall below the negative -120.00 threshold for a new "sell."
Our three Blue Chip key trend-finder indicators (other than the Demand Power/Supply Pressure Indicator) generated a new "sell" signal Thursday. The DJIA 30 day Stochastic Fast fell to 30.00, decisively below the Slow at 63.33, triggering a new "sell" signal from January 21st. The DJIA 14 day Stochastic Fast fell to 16.67, below the Slow at 56.11, remaining on a "sell" signal from January 20th, 2010. The Fast had to fall more than 10 points below the Slow for a new "sell." The S&P 500 Purchasing Power Indicator fell to negative -55.45, triggering a new "sell" signal from January 21st.
The McClellan Oscillator fell to negative -151.35 Thursday. The Summation Index fell to positive + 4,093.82. The Demand Power/Supply Pressure indicators generated an enter long positions signal Tuesday, December 1st, and remains there Thursday, January 20th. However, it is very close to move to an exit long positions signal as the two converge. New 52 week Highs on the NYSE rose to 174 Wednesday, with New Lows at 4.
The NASDAQ 100 fell 17.38 points Thursday, closing at 1,850.57. The Russell 2000 fell 11.25 points Thursday, closing at 628.36. The HUI Amex Gold Bugs Index fell 17.38 points Thursday, closing at 403.68. February Gold fell to 1093.9. Silver fell to 17.50, while March Oil fell to 75.74. The Dollar rose 0.02 to 78.38. Bonds rose a point to 118^20. The VIX rose 3.59 to 22.27.
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