The Cliff’s Notes for my post from yesterday subtitled “Does Romney’s Economic Plan Violate State Sovereignty?”*

The post garnered only one comment, from kharris, who complained that the post was incomprehensible and asked whether it was intended as facetious, and whether I could give a Cliff’s Notes version of it.  I can and did.  I wrote:

[The] post was not intended as facetious, although I’m sure it will be taken that way by the few people who read it.

Basically, the 26 state attorneys general are claiming in that lawsuit that the part of the ACA that relies on a significant increase in Medicaid, funded mostly by the federal government but partly by the states, violates the Tenth Amendment, which the political right claims gives states autonomy amounting to sovereignty not much different than the sovereignty of foreign countries vis-à-vis the U.S. government.

Their claim is that while the state governments are legally entitled to withdraw from the Medicaid program, politically that’s not a feasible option, because Medicaid is a popular program.  This means that the ACA’s requirement that the states spend more in order to remain in the Medicaid program and receive the federal funds they currently receive, the states will have to spend more of their own money on Medicaid in order to meet the requirements of the ACA.

The states claim that this additional requirement is large enough to require states to have to substantially reduce the appropriations for other priorities, such as education, and that therefore the ACA’s Medicaid expansion basically controls the budget process of state legislatures, and in this way unconstitutionally infringes on state sovereignty under the Tenth Amendment.

Enter Romney, and the economic/budget plan he announced last Friday, in which he would cut taxes across the board by 20%, cut corporate taxes by even more (I think), eliminate the estate tax, increase defense spending, leave Medicare and Social Security untouched, and “return Medicaid to the states,” and “send” the other safety-net programs for the poor “to the states” as well.  In other words, he plans to end federal funding for Medicaid and all the other programs.

Which according to the states’ argument in the ACA litigation, would violate the states’ sovereignty under the Tenth Amendment.

So, no, the original post was not intended as facetious.  The post was hard to understand, in part at least because the legal argument of the 26 states is ridiculous.  Yet the Supreme Court agreed to consider the states’ argument.

But a more important point is this: The economic/budget plan that Romney announced last Friday in an attempt to gain Tea Party support in Michigan would cut taxes by 20% across the board, eliminate the estate taxes, cut corporate taxes still further, and balance the budget, if it does, by entirely removing federal funding of all safety-net programs for the poor and telling the states that they should pick up the slack. More than half the states are claiming to the Supreme Court that this would violate the Tenth Amendment, because at least one of these programs, Medicaid, is too popular for it to be politically feasible to end it. 

The Supreme Court almost certainly won’t buy the argument, but what matters is that the states have made the argument.  And have made the point.

Also what matters, of course, is that someone who’s running for president on a claim to be exceptionally astute on business/economic/budget matters should have resisted the urge to put forward a budget proposal that bizarre and easily deconstructed by, well, almost anyone.

*Ooops. Romney did discuss cutting Social Security benefits in that speech last Friday, by raising the retirement cap.  Seems I was almost as distracted by the empty stadium as most of the news media was, and missed that.  But Gail Collins noticed, and noticed that rest of the news media didn’t notice.

Collins also discusses the payroll tax cap.  And Seamus, of course. 

Fannie Mae Serious Delinquency rate declines, Freddie Mac rate increases

Fannie Mae reported that the Single-Family Serious Delinquency rate declined in January to 3.90%, down from 3.91% in December. This is down from 4.45% in January 2011. The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Freddie Mac reported that the Single-Family serious delinquency rate increased to 3.59% in January, up from 3.58% in December. This is the fifth month in a row with a small increase in the delinquency rate. Freddie's rate is down from 3.82% in January 2010. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

These are loans that are "three monthly payments or more past due or in foreclosure".

Fannie Freddie Seriously Delinquent RateClick on graph for larger image

The serious delinquency rate has been declining, but declining very slowly. The recent uptrend for Freddie Mac would seem to require an explanation (I have none). The reason for the slow decline is most likely the backlog of homes in the foreclosure process due to processing issues (aka robo-signing), and with the mortgage servicer settlement, I'd expect the delinquency rate to start to decline faster.

The "normal" serious delinquency rate is under 1%, so there is a long way to go.

10 Mid-Week PM Reads

My afternoon train reading:

• Trade of the Year? (The Reformed Broker)
• Top 10 Hedge Funds By Net Gains Since Inception (Market Folly) see also Dalio Earned Clients $13.8 Billion to Lead Hedge Funds as Paulson Slumped (Bloomberg)
• Swap Talks Over Greece Could Test the Marke (DealBook)
• Grantham wonders if Marx was right after all (MarketWatch)
• Sorry, SEC. Fast trading on Wall Street is here to stay (Fortune)
• Bin Laden hide-out: Leaks suggest Pakistani officers knew (CS Monitor)
• Romney’s Top 10 Wealth Gaffes (The Wealth Report)
• The Writer’s Job (NY Books)
• Issues in Scaling Civilization: The Altruism Problem (Cultural Engineer)
• I Was a Warehouse Wage Slave (MoJo)

What are you reading?


Banks Rev Up Lending

Source: WSJ

Mark Ames: Why is Ron Paul’s Superpac Headquartered in Mitt Romney’s Backyard?

By Mark Ames, the author of Going Postal: Rage, Murder and Rebellion from Reagan’s Workplaces to Clinton’s Columbine. Cross posted from The eXiled.

Last week it finally started to dawn on the slow-as-Stegosaurs media: Why is Ron Paul going so soft on frontrunner Mitt Romney, his natural ideological opposite? Dr. Paul has been flaying every other candidate, particularly when that candidate threatens Romney’s front-runner status—why is Ron Paul so protective over internationalist/neocon Rockefeller Republican, Mitt Romney? Does this point to some sort of alliance between the two? And if so, doesn’t that raise further disturbing questions about the supposed rock-solid-principles guiding Ron Paul’s campaign?

You might expect the media—alerted to this “bizarre” alliance—to go looking for a possible money trail linking the two campaigns’ interests together. This is politics after all; stranger things have happened. Naturally the media has done no such thing. But if the hacks ever do get around to following the money, they would very quickly stumble across one of the biggest WTF factoids of this primary season: Ron Paul’s SuperPAC, “Endorse Liberty,” is headquartered in Mitt Romney’s backyard: Salt Lake City, Utah.

Moreover, the SuperPAC’s staff and founders include several former Romney supporters and Huntsman supporters. And one of the founding principles of Endorse Liberty, Ladd Christensen, is something of an oligarch in Utah: Christensen is the longtime business partner of John Huntsman’s billionaire dad. They founded Huntsman Chemicals together, as well as Hunstman-Christensen.

Huntsman endorsed Mitt Romney when he bowed out of the race—in fact, Huntsman has a history of stepping aside for Mitt Romney and playing his second banana, going back at least to the Salt Lake City Olympics in 2002, which John’s billionaire dad helped to fund on behalf of Mitt Romney.

So to repeat: Ron Paul’s SuperPAC is based in Salt Lake City, and one of the founders is Ladd Christensen, John Huntsman’s business partner in Huntsman-Christensen and Huntsman Chemicals.

Nothing to see here folks, keep moving along…

That might raise some potentially disturbing possibilities to a journalist or editor still interested in chasing down disturbing details and stories. Which probably explains why the media hacks aren’t interested in pursuing this possible angle, even though it’s staring them in the face. Instead, they’re trotting out a catalogue of fatuous “explanations” for the love-fest between Dr. Paul and Mitt Romney—explanations which have almost nothing to do with money and sleaze in politics, and everything to do with how Tiger Beat magazine might approach this election campaign.

The New York Times opined that the Libertarian hero’s alliance with the Rockefeller Republican is all about their wives. It even has a Spielberg-esque headline – “Amid Rivalry, Friendship Blossoms on the Campaign Trail” – designed to make everyone feel all warm inside about how American politics works. And wouldn’tcha know it, politics it turns out works just like in the sitcoms:

The candidates’ spouses, Ann Romney and Carol Paul, “know each other better than any of the other wives,” Mr. Paul said. He and Mr. Romney talk “all the time” and “we’ve met all their kids.” Once he telephoned Mr. Romney just as Mr. Romney was calling him. “Sometimes I’m never sure who issued a call,” he said.

Mr. Paul has already provided some tactical help: When Mr. Romney began to flounder in South Carolina and was under attack over his career in leveraged buyouts, Mr. Paul came to his defense, suggesting that his critics were anticapitalist. His campaign even issued a press release assailing other rivals for, in Mr. Paul’s view, taking Mr. Romney’s quote about firing people out of context.

In other words, if you’ve seen The Flintstones or The Honeymooners, that’s all the background you need to understand the deep politics of Ron Paul’s strange alliance with his ideological foe and primary opponent, Mitt Romney.

Mrs. Ron Paul: Ann Romney’s BFF

Not to be out-dumbed, the Washington Post also explored Dr. Paul’s touching friendship with the silver-spoon Mormon frontrunner, and found a life-affirming story about Americans from different sides of the railroad tracks coming together by finding how much they had in common deep down. The Post‘s Hollywood rom-con story was headlined “For Romney and Paul, a strategic alliance between establishment and outsider” and it featured deep insights like,

Despite deep differences on a range of issues, Romney and Paul became friends in 2008, the last time both ran for president. So did their wives, Ann Romney and Carol Paul. The former Massachusetts governor compliments the Texas congressman during debates, praising Paul’s religious faith during the last one, in Jacksonville, Fla. Immediately afterward, as is often the case, the Pauls and the Romneys gravitated toward one another to say hello.

Wrong-about-everything guy Charles Krauthammer assures America that although “they are objectively allies” nevertheless “it’s not because it’s a conspiracy or collusion or because, people will say, the wives are close.” Anyone familiar with Krauthammer’s record should as a matter of reflex automatically assume it’s a conspiracy and it’s all because their wives are close. (A question for Krauthammer: How is it possible that there can be an “alliance” involving no collusion? Stupid question, I know.)

To be fair to Krauthammer (not that anyone should be), he advances a more “reasonable” dumbshit-theory than the Wilma:Betty::Ann:Carol wives theory: According to Krauthammer and some others, the Paul-Romney love-fest is all about making Ron Paul the “Number Two” guy in the Republican Party. As if this is something Ron Paul and Mitt Romney work out on their own, without the massive powerful interests behind them, or the Republican Party machine, or anyone—just a couple of guys with some homespun desires and their wives in tow.

Give MSNBC’s Joe Scarborough some credit at least: He at least isn’t buying the bullshit and demanded answers about the “bizarre” alliance between Paul and Romeny:

“The thing that went unspoken but everybody knows, and that is that Mitt Romney and Ron Paul have formed an alliance,” Scarborough said. “It is such an obvious alliance that Mitt Romney would do well to just come out and admit it. I don’t know what he’s promised Ron Paul. I don’t know if Ron Paul is hoping that his son gets in the administration. But let’s just be really honest here — for all the people for Ron Paul to form an alliance with in the Republican Party, to pick out Mitt Romney is really bizarre.”


One can argue that the Romney-Paul alliance everyone’s talking about can be explained by heartwarming personal relationships, or by the laughable hope that Rand Paul will be put on the Romney ticket, or by the sort of vague idea that by playing favorites, Dr. Paul will become the “number two” in the party. But that doesn’t make a lot of sense—Ronald Reagan didn’t become the “number two” in 1976 by treating Gerald Ford with kid gloves; nor did George Bush Sr. in 1980, when he coined the phrase “voodoo economics” thrashing Reagan. It’s possible—monkeys exuent ex-buttium-Ronius Paulius is also possible—but it’s certainly not logical.

Another possibility, as I suggested, is money/oligarchy. You know, those things we all agree now that control our politics. That is why I would suggest that while there may be nothing to it at all, that at the very least it’s worth looking into why Ron Paul’s SuperPAC is headquartered in Salt Lake City, Utah—you know, the capital of Mormonstan, where Romney’s power and influence runs, as you might imagine, fairly strong. Of all the places in the United States isn’t it a little bit odd that the Ron Paul SuperPAC is based in Mitt Romney’s tribal motherland? Is it really so much to ask the media, all abuzz about the Romney-Paul alliance, to appropriate just a tiny bit of their resources into real investigative journalism, rather than more of the same fatuous, shallow celebrity-magazine fluff?

A few more details to consider here, in case you’re curious and not satisfied with the “our wives made us do it” theory:

* Ron Paul’s SuperPAC sugar daddy, Peter Thiel, whom I wrote about for The Nation, has a proven track record of using his money to play the cynical game of politics. According to a recent San Francisco Chronicle profile, “libertarian” Peter Thiel is funding a Democrat and former Obama trade official, Ro Khanna, in a primary challenge against anti-war, anti-PATRIOT Act liberal Democrat Congressman Pete Stark.

* Ron Paul’s SuperPAC sugar daddy Peter Thiel also funds other candidates supposedly anathema to antiwar, anti-PATRIOT Act, pro-gay marriage libertarians, including frothing pro-war GOP social conservatives Dana Rohrabacher, Ed Royce and Dan Lungren.

* Dr. Paul’s SuperPAC sugar daddy Thiel also donated the maximum allowable to the 2010 gubernatorial campaign of Meg Whitman, who was Mitt Romney’s campaign finance chair in 2008. Whitman was a protege of Romney’s when she worked at Bain capital; later, when Whitman was CEO of eBay, she made Peter Thiel rich when she bought out his PayPal in a deal roundly slammed as bad for eBay, but good for Thiel and Whitman.

Look, I’m just laying out some interesting leads here for journalists with budgets, leads that involve money and oligarchy in politics—someone out there with an expense account, for fuck’s sake, do your work! Sure, there may be nothing there—heck, it may have been Dr. Paul’s wife who suggested to Mrs. Romney what a wonderful idea it would be to base Paul’s SuperPAC in Salt Lake City. But if the media is willing to raise the question about the strange and rather unnerving alliance, it should be willing to look in strange places for unsettling answers.

One more thing: My labor isn’t free. If one of you actually gets off your ass and blows through Carlos Slim’s wallet to interview a few taxi drivers in Salt Lake, be warned: I will invoice you. Oh yes, I will.

Worry About 2013, Panic About 2014.

Worry about 2013. Be panicked about 2014. But this year a lot of good news is coming out. - in CNBC with Larry Kudlow

Related, SPDR S&P 500 Index ETF (SPY)

Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.

International Law, As Established At Nuremberg*: The ACTUAL Grounds On Which the Supreme Court Will Rule For Shell Oil’s Parent Company In Kiobel v. Royal Dutch Petroleum

In her post earlier today on Kiobel v. Royal Dutch Petroleum, the sort-of-Citizens-United-like case argued yesterday in the Supreme Court, Linda discusses the issue that was supposed to be the one that the Court would decide, because, well, that was the issue that the lower appellate court, the Second Circuit Court of Appeals, decided.  The issue is whether under the Alien Tort Statute, which was enacted in 1789 and allows “aliens” to file civil lawsuits in the U.S. for violations of the “law of nations,” allows aliens to sue corporations, or instead only individuals, for violations of human rights as defined under clearly-established international law.

The Second Circuit court said it doesn’t, and, as the excerpt from that opinion that Linda posts shows, the appellate panel used as its justification the judges’ own moral judgment that since individuals (i.e., the corporation’s top executives) make the corporate decisions to leverage the corporation’s resources to accomplish these heinous acts, only those individuals, and not the ill-used corporation itself, should be suable.  And that therefore, only those individuals, and not the ill-used corporation itself, will be suable in U. S. federal courts under the ATS.

Notwithstanding that the statute itself says nothing at all about who can be sued under it; it states only what acts the actor can be sued for.  And notwithstanding that the Second Circuit panel’s stated grounds for the ruling, if not necessarily the result (the dismissal of the lawsuit), conflict with the Supreme Court’s ruling two years ago in Citizens United v. FEC.  Which parlayed the First Amendment free-speech right of individuals into a right of corporate CEOs to leverage those rights of its individual human shareholders into a First Amendment speech right of the CEO to use corporate funds to advance his or her political preferences.

The plaintiffs in the case, 12 Nigerians, allege that Shell Oil aided and abetted the Nigerian government in committing horific violations of human rights against protesters of the company’s operations in that country in the 1990s.  According to the several reports I’ve read about yesterday’s argument, Anthony Kennedy, author of the Citizens United opinion, said at the very outset that he agreed with Shell’s statement in its brief that international law does not recognize corporate liability. Case closed.

But Elena Kagan (not a personal favorite of mine, for reasons that I’ll leave for another post, but someone who does demonstrate the ability to recognize distinctions in procedural/jurisdictional law in response to Kennedy’s indications that he cannot, and who is not shy about showing it; this is the second time in about a year that Kagan has done that during an oral argument) pointed out that international law addresses the acts that violate universally accepted human rights, but is silent on who can be sued for committing those acts.

And Samuel Alito and Stephen Breyer agreed. “Let's assume that the French ambassador is assaulted or attacked in some way in the United States, and that that attack is by a 10 corporate agents. Would we say that the corporation cannot be sued under the Alien Tort Statute?” Slate’s Dahlia Lithwick quotes Alito as asking Kathleen Sullivan, Shell’s lawyer.  Who responded, “Yes, because there is no assaulting ambassador norm that applies to corporations.” Oh?  Does the State Department’s Foreign Service know this?  

Lithwick also quotes Sullivan as saying that “Nuremberg, if it established nothing else, established that it is individuals who are liable for human rights offenses.” She must be right that that’s what the Nuremberg trials established, since the Nuremberg prosecutors didn’t indict Volkswagen and try to have it executed. 

Breyer suggested that pirates should incorporate themselves, under the name “Pirates, Inc.”  A company in which I want to buy stock, if it ever goes public. Under international securities law.  As established at Nuremberg.

Nuremberg, by the way, didn’t establish “nothing else.”

Lithwick suggests that a majority of the justices will not say that corporations cannot be sued under the ATS.  Given the 5-4 ruling in Citizens United, the juxtaposition of the two opinions would be too damaging to the Court’s standing among the public.  I agree; after all, the First Amendment doesn’t say that corporations have First Amendment speech rights, nor mention corporations at all, but that didn’t stop the majority of justices from …  well ….

But neither do I think the Court will say that the ATS does allow lawsuits against corporations for violations of internationally recognized human rights. I think a majority will decide not to decide that issue at all, in this case.  Instead, a majority will say what Alito said at another point: that the statute was not intended to allow people who have no connection to the United States to sue under the statute for violations of human rights by anyone—human or corporate—that himself/itself has no legal-status connection to the United States and that occurred outside the United States.  The Nuremberg defense will have to await another day to succeed or not.

Alito’s French-ambassador-assaulted-in-the-U.S. hypothetical was not a random fact selection. The purpose of the statute, it was made clear during the argument, was to grant ambassadors to the U.S. the right to sue in U.S. court for violations of human rights committed in the U.S—rights they have long had here anyway.  But this is a very old statute, and apparently predates those rights.  The statute itself doesn’t say that it’s limited to circumstances involving victims or perpetrators who have with legal ties to the U.S.  But, whatever.  

I expect that the Court will fill in those blanks.  Although I won’t bet on it. I’ll save my money instead for the Pirates, Inc. IPO.

*Just to be clear: The first part of the title—the part before the colon—is intended as sarcasm.  It's a takeoff on Kathleen Sullivan's weird claim about the meaning of the Nuremberg trials.

Miserable Wants Company

Frederick Sheehan is the co-author of Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve.

His new book, Panderer for Power: The True Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession, was published by McGraw-Hill in November 2009. He was Director of Asset Allocation Services at John Hancock Financial Services in Boston. In this capacity, he set investment policy and asset allocation for institutional pension plans.


Miserable Wants Company

Stockton, California (population: 292,000) an 83-mile drive northeast of San Francisco, and, more poignantly, 69 miles east of Vallejo, California (See: “The Coming Collapse of the Municipal Bond Market”), cannot pay its bills. Nor, is much else getting done. On-the-scene reporter Alison Vekshin (Bloomberg) filed a front-line view on February 23, 2012: “After a man with a laptop walked into Best PC Value computer repair in Stockton, California, owner Richard La Frentz telephoned the police. Hours before, the same man had been recorded by a security camera hopping a locked gate behind the store and stealing the computer. ‘The police didn’t come.’ They told La Frentz to call his insurance company, he said. ‘It is the Wild West out here,’ said La Frentz, 47 [but feeling considerably older - FJS], who keeps two handguns at his store in Stockton’s Miracle Mile shopping district. ‘When I call the police department, I don’t get help. The city can’t help me because of the condition it’s in.’”

The title of Vekshin’s story was “California’s Stockton Seeks to Avoid Vallejo Path to Court.” For entities not awarded illusory funding by the ECB, U.S. Treasury Department, or the State of California, reality pounces like a thief in the night, sometimes literally. The very next day, Bloomberg’s ace Stockton bureau chief (our very own Alison Vekshin) furnished the latest. Under the headline: “Stockton, California, May Ask Bondholders to ‘Suffer,’ City Officials Say,” we learned the Stockton City Council “will meet February 28 to consider a type of mediation that allows creditors to participate, the first move toward a Chapter 9 bankruptcy filing under a new state law.”

The privilege bestowed on bondholders, allowing them, perhaps, to prevent further assaults on Richard La Frentz, will not be shared by all. Like the “voluntary” participation of Greek bondholders in that country’s default, investors will be shedding exposure to other municipalities in similar straits.

Forbes magazine chose Stockton, California as “America’s Most Miserable City” in 2011. The selection committee explained: “Median home prices in the city tripled between 1998 and 2005, when they peaked at $431,000. Now we are back to where they started, as the median price is forecast to be $142,000″ in 2011. A graph on shows prices had been rising at a decent clip since 1995.

In May 1995, Federal Reserve Governor Larry Lindsey warned the FOMC: “There has been a lot of easing of credit terms. At some point this is going to stop.” Lindsey told the FOMC cadavers that bankers stopping by his office were lending on exceptionally easy terms. He went on to say that when bank “balance sheet go into reverse…. [i]t is going to exacerbate the downturn.” It did not turn out well for municipal balance sheets, either.

Fed Chairman Alan Greenspan thought the debt issue mentioned by Larry Lindsey was an “interesting one.” He was more interested though, in gunning the housing market. At the next FOMC meeting (July 1995) Greenspan grew excited about the home builders’ data, which was revving up. The future recipient of the Enron Prize for Distinguished Service noted, “if history is any guide…firmness in the home building area [would] exert…some upward movement in the motor vehicle area, which would be very useful.” Useful to the most melodramatic civil servant since Rudolph Hess.

City manager Bob Deis took exception to Stockton’s worst-in-show: “Stockton has issues it needs to address, but an article like this is equivalent to bayoneting the wounded. I find it unfair…” Employees at Best PC Value would tell Deis that no police protection from violent crime is unfair.

Where we find 67% house-price deflation, misery follows. Sixteen of Forbes’ Most Miserable Cities are in California or Florida. Before the deflation, the same cities enjoyed – Oh, how they enjoyed! – house-price inflation. City revenues would rise as far as the eye could see, which was not too far. Vekshin reported: “Stockton is already worse off than Vallejo. It had the eighth-highest violent crime rate in the country in 2010; the second-highest foreclosure rate in the U.S., behind Las Vegas; and the eighth-highest unemployment, at 15.9 percent in December, almost double the national average.”

During the boom, tax receipts took off like a rocket, as did spending and promises. Vekshin found: “A drop in property-tax and program-fee collections shrank the city’s revenue 20% to a projected $161.8 million in fiscal 2012 from $203.1 million in 2009. At the same time, union contracts drove employee pay and benefits higher.” The Titanic had a better chance of remaining afloat.

Stockton City Manager Deis fills in the blanks: “Next year, we expect to pay more for retiree health insurance than [salaries and benefits] for our current employees. Deis called the promises “a Ponzi scheme.” That’s just what municipal bondholders across America should be investigating.

An Apple a Day Keeps the Bears Away

Or whatever.  The stock market keeps grinding higher and everyone hates this market. The bears hate it because it is grinding them to dust. Bulls hate it because they are under invested and would like to go back and invest more. Brokers hate it because there is no action. We are all calling a top for months now and yet nobody has seen a top.

Now that DOW has closed over 13000 and SPX over 1370, do we throw away all the rules of TA, cycle analysis and just believe in the powers of Central Bankers? Buy the F**king dip?  I am no bear and I have no problem joining the buy program only if I could convince myself that this time is different. That all the divergences do not matter!  That this time is truly different!  The path of least resistance is up-ward. So the next we hear is DOW 13500 and SPX 1400.

Look at the 5 min. chart of SPX.

In the normal course I would have said it is a double top. But now I don’t know what to say.

The summation index (NYSI) is turning down and in the past it has been followed by market corrections.

NYSI(Source: Ciovacco Capital)

Will it be different this time?

J Wagner of FXCM has the following chart;

Mr. Wagner thinks AUD has some juice left.

Look at the weekly chart of AUD.

I am thinking that AUD is at the top of the range and not much room to run.

If we have to guess the Top based on TA, then there is no better person to guess than our good friend Cobra.

SPX target by cobra

As per his measured move target, SPX can go up-to 1376.

In the mean time, the trend table continues to be long.

Trend Following
Do not front run unless you know what you are doing. Market is smarter than all of us. Too many of us are calling for the top and reversal and it will come when we least expect it. While we wait for the market to show us the next bend, here are some interesting reads:

Thank you for reading . Please forward / retweet the post to your friends and join me in Twitter. (@BBFinanceblog). As always, I welcome your comments and suggestions.

Silver Short Closed

I feel like I jumped the gun amidst al the euphoria and confusion surround the silver plunge today and wasn’t comfortable with my position on the SLV March 30 puts purchased earlier for .12 cents a contract.  I broke my number one rule of failing to wait for confirmation, getting caught up in the excitement. As a result, I want to take the night to think about it and watch for market signs and clues tomorrow. As a result, I closed my position at .14 cents, for a 20% gain but realizing that after commission I essentially broke even.

Back to following the rules … Wait for validation!

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