Thursday, January 09, 2014 Zeb’s Vue

General Information and Analysis

 

US

Comment for 1/8/2014	Measure	Indicator	Ranking
Weekly RSI	WeeklyRSI	72.5	OverB
Long Term MVA (200 day MVA)	200 MVA	9.78%	Bull
5 Day Slope of 55 day MVA	Slope55MA	0.50%	Bull
Intermediate Trend (Using ADX)	ADX(14)	18.71	Neutral/Chop
Short Term Trend (Daily RSI 3)	RSI(3)	64.89	Bullish
Relative Volatility ATR vs. 1Stdev	ATR(90)	0.72%	Calm
VIX - MACD 10/30 (slope down)	MACD	0.12	Neutral/Bull

 

Comment:

Long Term price movement is bullish.  Short term, most oversold conditions are relieved.  Look for market to have an up bias today, with a better than 70% chance of chop again (unless new information enters the market).  Market is still awaiting Friday's Employment situation report, as today's Jobless claims report was clouded by holiday uncertainties, and a huge revise upwards of prior weeks claims. 

 

The table above is a rating for intermediate and long term trend in the S&P500.  I used the S&P 500 as the indicator for the USA stock market.  For day traders: You may find it useful to trade in the direction of the trend.  However, looking at any daily chart over lots of years, the trading direction for the day is pretty random. 

S&P PIVOT ES Mini March Contract - Tuesday- Useful on Wednesday 1/8/2014

High	1834.75
Low	1825.50
Close	1832.50
R2	1840.25
R1	1836.50
Pivot	1831.00
S1	1827.25
S2	1821.75

Stocks –

Zeb’s View:

The DOW (DJI) is higher this morning, as well as all futures contracts for the USA stock market.  The weekly jobs claims report was muddled by the holidays, but that is true every year at this time. 

Alcoa (AA) kicks off earning season this evening.  

Techically speaking, the S&P 500 cash appears to be forming a bull-flag.  In my opinion, technical patterns like these are useful only in the fact that so many retail traders (and even some professionals) follow them, and either fade them or go with the pattern and create truth out of human behavior.  (Mostly, it seems that pros fade these kind of patterns, which makes the market choppy.)

Overnight, the Asian markets turned lower, following the release of China's consumer inflation figure, which dipped to a seven-month low.  Not only did China's stock markets take a hit, but Japan's Nikkei shed 1.5%. 

While the USA stock market will open up, because of the uncertainty (again) the market is likely to be choppy.  VIX is at 12.87, which suggests traders and investors are very calm and unworried.  However, that only points "to nowhere" or chop.   

JP Morgan (JPM) "Kings of Mafia Banking":

Larry Levine is owner of Trading Advantage. He published the following this morning. 

All banks seem to be regularly hit with fines; however, JP Morgan is the poster-child for the bankster with the “get out of jail free” card.

Once again, JPM was nailed with another multi-billion dollar fine for breaking the law anew – this time due to its nefarious connections with Bernie Madoff.

Have you ever thought “Hmm that seems like a lot of payoffs. I wonder what the tally would come to?” Let’s have a look.

• June 2010: $48.6 million fine – Commingling JPM and client funds in London.

• April 2011: $56 million fine - Overcharging or wrongfully foreclosing on active-duty military personnel.

• June 2011: $153.6 million fine – Failed to inform buyers of CDOs it sold that a hedge fund assisted picking and bet against those CDOs.

• July 2011: $228 million – Fraudulently rigged at least 93 municipal bond transactions in 31 states!

• August 2011: $88.3 million fine – Conducted transactions with people or entities tied to Iran, Sudan, Cuba, and Liberia.

• February 2012: $5.29 BILLION fine – Settled what was called years of “shoddy loan servicing, illegal robo-signing, and faulty foreclosure processing.”

• February 2012: $110 million fine – Charged unwarranted overdraft fees.

• March 2012: $150 million fine – Settled with pension funds and other investors for post-2008 shady investment deals.

• April 2012: $20 million – Improperly extended credit to Lehman Brothers based in part on customer funds that were required to be kept separate.

• August 2012: $1.2 billion – Conspired to set the price of credit and debit card interchange fees.

• November 2012: $296.9 million fine – Misleading investors about the quality of mortgages that underlay mortgage-backed securities it sold.

• January 2013: $1.8 BILLION fine – Fined over “robo-signing” and other alleged abuses of the foreclosure process.

• March 2013: $100 million fine – Mishandling of the MF Gloal account that went bankrupt thanks to Jon Corzine, who is also not in jail.

• July 2013: $410 million fine – Manipulating energy prices!

• Sept. 2013: $389 million – Unfair billing practices (2.1 mln customers) that charged for credit monitoring services they did not receive.

• Sept. 2013: $920 million – The "London Whale" disaster clearly broke many rules and regulations that JPM ignores.

• Sept. 2013: $13 BILLION – Record deal to end U.S. probes of its mortgage-bond sales.

• Jan 2014: $2.6 BILLION – Acknowledged that it ignored red flags for about 15 years that Madoff used his account to run a fraud!

• Jan 2014: $350 million – Widespread deficiencies in the bank’s BSA and anti-money laundering compliance programs.

By the looks of it, the next announced fine (read: payoff to stay out of jail) that JPM will pay can be as soon as next month, or next week…or even tomorrow. JP Morgan bankers are allowed to wantonly flout the law because they are never brought up on criminal charges. And they never will.

If my addition is correct, the fines total $27,210,400.00. I guess it’s not cheap to stay out of jail.

JPM's revenue is $96.33 B.  $27B+  amount of fines hurts the bottom line.  Ever wonder where the money goes, when the Federal Government receives fine money?   The big banks (JPM, BofA, Wells Fargo, GS) are all breaking into your home and stealing, but when they get caught, all they pay is a fine, and as far as I can determine, the money goes into a black-hole. 

Actually, the answer is that much of it goes into the USA general fund, and it does not come back to the individual (or individuals) that are harmed.  However, the answer is a lot more difficult to track than one might surmise, and Sarbanes-Oxley complicated it by directing some of the money for some types of finds into a Fair Fund.  However, very rarely is there any money returned to investors out of the Fair Fund, and the fines that JP Morgan is paying do not go into the Fair Fund at all. 

There has been some very large research funds and Hedge Funds that have tried to track where "big" fines go, and they find there is no transparency to where the money goes.  Again, however, most Federal Government non-elected officials say it goes into Treasury or the General fund (the two being different), but again, the answer seems to be much more convoluted than what bureaucrats think.

So if you think you know, you probably know a generality, but not the whole truth.

The Stock Market at 7:17 AM Pacific Time

Just a note for today.  The stock market was up overnight (as reported earlier).  Since the opening, the market has sunk considerably.  The DOW and S&P are both in the negative at this time.

Depending on your time frame, the market would appear to be in a trend down.  However, if you look at the daily charts, prices on the major indexes are flirting with yesterday's close (a little under, a little over).  The S&P 500 futures contracts for example, touched yesterday's close, bounced up significantly, then retested. So far, YDClose is providing support.  Look for YDPivot to provide the next level of support.

Again, however, the market is likely to be choppy as earning season starts tonight. 

Have you ever wondered, how much of the earning reports get "leaked" before the date of reporting? 

Caution:  The price today could go down, and the retail trader has no information that would suggest it should go down.  If earnings season for 2014 (2013 reporting) is good, then why would the market go down just before release?  If earnings season for 2014 is bad, then why did the investment bankers know that and already position for a downward move?

There is no immediate answer to the dilemma of watching price and trying to forecast what big-investment-banks are doing or why.  Sometimes we are given a glimpse way after the fact. 

CONCLUSION:  The Public should invest long term, and diversify their portfolio.  Trying to out-guess investment banks and hedge-funds is a "fool's game". 

7:27AM PST - Market is approaching Yesterday's Pivot on the ES mini.  Look for that point to provide major support.