Swindlers List and the Game of Financial Chicken ~ The Risk Averse Alert

Friday, September 19, 2008

Swindlers List and the Game of Financial Chicken

Tonight, let's connect the dots and see how the London - New York - Washington axis of swindle might influence the market...

Where do we begin? Where's dot #1?

Here it is. Right between the lines...

Remember that one? The headline I added was, "President Bush Predicts Market Chaos." It's too bad investment banks are floundering. The guy could have had a future as an analyst ... maybe pen a column under the pseudonym "President Bust" ... calling it, "Sight on the Future Through a Wink and a Blind Eye."

Funny, because you might recall I also wondered aloud whether the administration was, indeed, sanctioning chaos. Of course, this possibility apparently has not been obvious to anyone but expert connect-the-dot players ... in whose company we now find the former Lehman Brothers ... victims of Tory intrigues codenamed "Swindler's List" (list - noun: a careening, or leaning to one side, as of a ship).

Nothing like a little chaos to make the Congressional "leadership" more pliant than a Hefty Trash Bag (and not worth much more, as well)...

So, continuing our journey ... we find over at dot #2 Senator John McCain making his break from the White House ... er, uh, I mean, for it ... with a rightful show of support for the victims of regulatory ineptness.

Time will tell if the law of [vote] supply and demand will bring the same vitriol directed at the CFTC...

But what a refreshing coincidence "Maverick" is going after Chris Cox and the SEC ... and on the very day it kissed Mother England's FSA.

I like what I see ... all the more because I am reading Mr. McCain might be circling the wagons for a political battle royale. This bailout thing is by no means a slam dunk.

I mean just look at dot #3... Here we find Tory Left and Tory Right both on the same page...

Oh boy. Is that smoke I smell? Where's the fire Jack? "Un-presidential comments," you say? You might better put a sock in it. You give "the man's" hand away.

Still, connecting the dots I am not at all inclined to panic. It is well enough right now to think the better part of the market's rally probably is over. Look at it this way... With so much in flux and even more at stake here, one might reasonably expect continued pressure. At least that's how I read trading today in financials...

XLF 5-min

Quite a rush for the exits after the open. Maybe Treasury's attempt at creating a market for otherwise worthless securities is not such a good thing by "mark to market" accounting standards. Truth is, too, Merrill's CDO markdown a couple months ago did not halt their trouble.


Price, RSI and MACD all are in a position suggesting the market is by no means out of the woods. Of course, this could change in another day like the last two. However, considering the S&P 100's technical alignment in conjunction with this politically charged moment, here too (like the XLF above) we see reason to expect pressure.

But, again, with so much at stake and everyone and their grandmother on the case, it's just hard to imagine things slipping away.


History suggests the possibility of volatility increasing further is unlikely. However, supposing we are in the midst of an economic breakdown crisis (something much larger than a mortgage securities problem, Mr. Paulson), the rate at which volatility comes in might be restrained over the near-term.

So, by this measure we might expect more or less directionless, sideways trading ahead, holding indexes well above yesterday's intra-day low. This might turn out being a [prolonged?] consolidation of the past two days' gains, which, once it's over, leads to a surge higher.


You can read about the NYSE Bullish Percent Index here. More than half of all issues trading on the NYSE are giving "Point and Figure buy signals." Truth be told, like Sergeant Schultz, "I know nothing ... NOTHING" about what this means.

However, hidden behind the mayhem of market action of late ... is this not a distinct sign things are not as bad as they seem? So, what else do I need to know?

How about this...

Despite positive near-term indications the NYSE Bullish Percent Index presents, it also reveals persistence of a general belief that, stocks are sound investments. Consider this in the context of the past year's trading and the current moment's profound tumult. Things hardly seem to be getting better. Yet you wouldn't know this by the NYSE Bullish Percent Index.

So, beyond presenting a positive near-term indication the market probably is not about to fall apart, longer-term the NYSE Bullish Percent Index might be seen presenting the face of irrational exuberance. Being alert to Elliott Wave possibilities suggesting the next couple years in the stock market could be quite rough, this condition is precisely what one would expect just prior to a wicked thrashing...

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Anonymous said...

By the way, Richard Russell changed his mind. He's told his sheeple to get to cash and T-bills immediately. In fact, he admitted he was wrong.

TC said...

Thanks for the heads up. Here's the story on MarketWatch:

Russell's Bad Year Gets Worse