Love Me, Tender (Your Resignation)

Click charts to ENLARGE.


Asset prices fall and everyday necessities like food, energy, and healthcare rise. With the Fed poised to fight the problem they cause, now Fannie and Freddie report a rich-slapping rise in delinquencies and the futures markets respond in kind. And Research in Motion's (RIMM) news disappoints to the tune of a double digit selloff after the close.

Let's look at some of the poster children for trouble.UPS...Brown wearing the brown pants.
____________________________________________________________The Transports ETF (IYT)...approaching support and with a head-and-shoulders pattern forming with a lower right shoulder.
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The US dollar. Hard to make a bet against it as it climbs the channel...BUT...hideously destroyed by the de facto official competitive devaluation pursued for years (long trendline).
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Tout TV line of the day so far. (On Bernanke) "It's not his fault that we're in this mess." In the Navy we had a saying, "it happened on your watch." Bernanke has had three years at the helm, and some of it is his fault, and after all, Greenspan tells us day after day that it's not HIS (Greenspan's) fault.

You think I'm unfair to Professor Bernanke. Check out Buffett's comments.
How now red Dow Industrials?
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From Richard Russell, via a post on Bill Cara's site...

How does the system of money creation work? A simplified but true explanation. The government needs ten billion dollars (aside from what it takes in income taxes or from what it borrows). So the government then prints ten billion dollars worth of interest-bearing US government bonds. Next, it takes the bonds to the Fed. The Fed accepts the bonds, and then places ten billion dollars in a checking account. The US government then writes checks to the tune of ten billion dollars against their checking account. But where was that ten billion dollars before the Fed issued the money? The money didn't exist. Can you believe it, the money was created by the Fed "out of thin air."
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Asset Allocation pivots (SP500 1300 coming into play today?)
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Actually, I don't want the Professor to cash in his chips. How would they find a replacement dumb enough to take the job (credit cycle unwindiing)?

Every day we're a day closer to the taxpayer funded bailout of fat-assed bankers...
Prima facie evidence? Washington Mutual (WM)...asterisk coming?

Dynamics:
Stochastics oversold: SPX 50%, NDX 53%
The VIX IS 21.4... (long VIX calls)

Investment hypothesis: we're in the final three days of the quarter. You think the hedgies are gonna give up this easily? They'll protect their longs (energy) and be talking up the markets. That's their DNA. Pray for the worst opening imaginable.

Good trading and great risk management to all.

Educational use only. Never intended as investment advice.