Laughing with ZH, while laughing at Cramer

Maybe I'd give Cramer a break if he accepted my Facebook friend invitation like Aaron Task did. I don't know if Cramer's Facebook manager looked at my profile, saw my website and saw all of the not so flattering articles written over the years? Or perhaps it's the reality that I'm just not that important, but hey, Aaron Task is my buddy!!

I hope you had time today to look at the videos in the last post or you'll have time tomorrow to watch them.

I'm getting ready to shutdown for the night, I've been working non-stop since 10:30 this morning and hoped to have my market post up by now so I'd be able to take a day off tomorrow, it didn't happen, but I have collected a lot of charts, I'm made some really interesting discoveries and  still have some indicators I'm working on and I still have about 50 breadth charts to go through, but so far, I think I'm on the right track and that would be my initial "Gut Feeling" I had back on Friday, September 23rd while we were still in an accumulation zone, which means I had a pretty strong feeling about how this "bounce" from accumulation would turn out before it even started . I have mentioned this gut feeling nearly every day since then, posting chart examples and what not.

Seeing what smart money or whatever you prefer to call them, is doing (meaning they were accumulating) doesn't tell us what they plan to do. They can accumulate, drive the market higher for a few days (which can be for any number of reasons-hypothetically, there can be an event that they know about that will serve as a catalyst and they need to delay a bigger move for a period of days, or it can be related to options expiration or any of a thousand different reasons) and bring it back down to finish what they started. If there's one thing I've seen pretty consistently and if you are a member who has been around for awhile you have seen it too, Wall Street plans way in advance and usually its based on some event that they know about and that we will only find out about later and sometimes we say, "Ah Ha! They knew about this and that's why they did what they did"

If what the SEC says about the S&P rating' agency is true (specifically that they leaked the downgrade to Wall Street some time before they actually carried it out), as I showed in an earlier post, then this is one of those times that we can look at the market action from that period several months later and say, "Ah Ha!".

Some of you know that I was privy to Morgan Stanley's inter-office trade memos some time ago. I have talked about this, although today is the first time I named the firm. I thought back then, "This is going to be great, I have a true inside line". The truth is I couldn't make heads or tails of what they were doing and it made ZERO sense when looking at the market. Why? Because in retrospect, as I showed you with the accumulation of Home Builders (HOV) several years before there was a housing boom, these guys plan out their moves months and even years in advance, making those trade memos absolutely useless as far as actionable information.

I don't know how  get sidetracked on these rants, especially when my wife has been patiently waiting over an hour for me to wrap it up for the night.

So back to Cramer. This s not a new theme for me, I've covered Cramer's calls dozens of times at Trade-Guild. First of all remember that Cramer is Wall Street Alumni, he was from Goldman Sachs and had his own fund. When you consider his circle of long time friends, you'd be smart to think twice about taking his trade recommendations from his TV show, as if you- a nameless, faceless viewer are more important to Cramer then his Wall Street pals.

So Zero Hedge posted this today about Cramer's call on Kodak.   Here's the actual CNBC piece.

And here's my take on the event...

 Here's Kodaks performance since Cramer's call, if you bought and held, you lost  about 97% to date.

 Here's distribution in Kodak right around the time of the call. I have long maintained that Cramer's calls have enabled his Wall Street buddies to sell in to Cramer-created demand. We saw this VERY CLEARLY happen with oil as the multi year uptrend in oil ended. 3C called the end of the uptrend after 5+ years TO THE WEEK! Ironically it was the same week Cramer told his viewer's, "on the next bad inventories report, Buy, Buy, BUY!!!" That was the top in oil.

 Here's the date he made the comment.

Looking back at the time period, we have 1) a short period of accumulation 2) a move higher which clearly shows Wall Street selling in to demand 3) a range in the market with resistance formed 4) a very common head fake move above that resistance before the fall (note the uptick in volume and remember, it's not the huge moves in volume that you should be watching for, but more subtle moves (what everyone else knows isn't worth knowing), 5 continued distribution through out the range bound top 6)-a mystery event called "It's late and I'm tired' and 7) Cramer's call which created retail demand as Kodak was sold off hard.

This happens all of the time with his calls, if I watched the show I could probably bring you hundreds of such events.

GOODNIGHT! See you tomorrow!

IF You Follow the Signs, Are Honest with Yourself and are Diligent, the Truth Shall Not Be WithHeld From You

Below are the first two videos of a 4 part series dealing with the Financial Crisis. If you missed the HBO special, "Too Big To Fail", I would suggest trying to find it and watch it, it gives an excellent account of the Bear Stearns, Lehman, AIG and even GE crisis. It shows just how unprepared the world was, but more specifically the U.S Treasury, then headed by former Goldman Sachs CEO, Hank Paulson and The FAD'S Bernieanke.
However, this series presented strangely by Al Jazeera, in my opinion is even better and gives a broader perspective. *Comments continue below*

Meltdown: The Men Who Crashed the World 




Meltdown: A Global Financial Tsunami

If you think what we have seen thus far as it has been documented is bad, just wait until the truth starts coming out about contagion in Europe.
I have taken a lot of flack and some nasty emails over the last 2+ years by bulls for calling the March 2009 rally that lasted until just recently, "One of the Greatest Bear Market Rallies the World Has Ever Seen" and a "House or Condominium of Cards".
The truth is none of the underlying problems have been fixed. Money has laid a thin veneer or facade of, "All is well and will get better" over a financial crisis which in my opinion will dwarf the Great Depression.
As far back as 2007, which in retrospect was showing obvious signs of trouble, however talking heads we still on TV talking about DOW 20,000. I did a 5 part series on the market and unfortunately, part 1 didn't upload properly, but dealt with historical bubbles, many of them and probably a few you've never heard of. There was also a prediction as to what the market would look like when this is all over. I said, "This market is like being nauseous, infected with food poisoning and as much as we may not want to throw up and as long as we may try to put that inevitability off, this market will not get better until it lets out all of the poison" You can view monetary policy as the act of trying to put off the inevitable. My conservative prediction if I remember correctly was that the Dow would be trading below $5,000 when this is all done, and my not so conservative projections were about half of that.
So if you have time, here's a time capsule of 4/5 of my videos recorded on November 11, 2007 in an effort to show Trade-Guild.net readers, just how bad the situation was and still is. *More Comments Following the videos*
Part 2



Part 3



Part 4


Part 5


Many of you have seen these charts, but this hopefully puts some long term perspective on the situation, these are long term charts.

 Dow-30 1929-1934. The Crash of 1929 wasn't the surprise most people have been taught it was, the economy was showing deterioration years before the 1929 crash. The red arrows show distribution, white shows accumulation and green is confirmation.

 Dow-30 1929-1931, during the bear market decline there were at least 5 bear market rallies which tend to be strong, they are characteristically sharp and often pull money back in to the market as people believe the bear has ended. Look at some of them, a 39% rally in a month!

 This is a shorter term chart for a shorter term event, the Black Monday 1987 Crash, again, there were signs of trouble long before the crash as historians reveal.

 The 2000 Tech Bubble top, which obviously had less effect on the Dow then the tech heavy NASDAQ. This chart even shows the accumulation that started the 2003 bull market.

 The Dow 2007 market top vs. our present situation. The length of the distribution during the rally that started in March 2009 is easily confirmed by looking at volume, fund money outflows and unprecedented insider selling. As of now, this current market looks worse in the long term then the 2007/2008 market.

A long term view of the S&P-500 showing accumulation at the 2002-2003 market bottom leading to the bull market which was largely sustained by consumer purchases due to a lot of equity in their homes. We also see the accumulation of the March 2009 area. I remember seeing this accumulation at the time as I was trading exclusively for a livelihood. There was a vicious consolidation around the time when many expected the market to break lower, my self included. It was very hard to reconcile the positive divergences being see at the time, however myself and another trader that many of you know, David from Trading-to-Win, were both trading at the time and worked together and talked most of the day, nearly everyday. We wrote many articles on our websites about the infamous PPT (The Plunge Protection Team). David and I became very good at timing FADRAL REZERVE (the misspelling is purposeful due to their new ease dropping program) announcements and interventions. It was simple really, any time the market was plunging toward an important or final support level, the PPT would come out and announce something. One day as we watched the market head toward new lows, we posted, "Watch for the PPT any minute now".  A mere 10 minutes later the PPT saved the day. For many of you who know David, if you don't believe it, ask him.
The thing about kicking the can, whistling past the graveyard, and building a taller house of cards, none of it can cure the underlying illness and it will become reality at some point, you can only extend and pretend for so long.

More on The S&P Rating's Agency Investigation

In this post I told you about the SEC's Investigation of the S&P Credit Ratings Agency

At the time the Rating Downgrade occurred on August 5th, it was known that the Treasury and White House had known about the impending action on Friday morning, the action coming late Friday.

Now the SEC says it won't name names in it's investigation, but one of the NRSROs not only had conflicts of interest, but leaked the rating downgrade. That leaves very little to the imagination as to who they are talking about being only 1 US rating's agency downgraded the US, the S&P.

Bloomberg Headlines:

*SEC SAYS `LARGE' CREDIT RATER APPEARED TO LEAK PENDING RATING

*SEC DECLINED TO IDENTIFY WHICH RATER MAY HAVE LEAKED DECISION

*SEC STAFF FOUND CONCERNS AT EACH OF THE NRSROS

The Staff is concerned that the apparently unnecessary delay in release and publication of some credit rating actions increases the possibility that pending credit rating actions will be inappropriately disseminated.

*SEC STAFF FOUND FAILURE IN MAKING TIMELY/ACCURATE DISCLOSURES

*SEC STAFF CITES SOME FAILURE TO MANAGE CONFLICTS OF INTEREST

But have ni fear, this will not continue:

*SEC DECLINED TO NAME NAMES IN CREDIT RATERS REPORT FOR FAIRNESS

*SEC STAFF EXPECTS CREDIT RATINGS AGENCIES TO ADDRESS CONCERNS

It wouldn't surprise me one bit and this is the inside information I talk about nearly everyday here at wolf on Wall Street.

Here's what the market looked like that week.

The yellow arrow is August 5th, the action came after the market close, the yellow box is the week of August 1-5.

I'm sure you can come to your own conclusions. However, I will remind you that was a week in which we had seen some strange signals.