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 Post Posted: Thu Aug 26, 2010 7:49 am 
 
Yesterday we had a good finish, and at 5:00 am this morning it is looking like we might open slightly up. The driver for today will most likely be the Labor Department's weekly release on first time claims for jobless benefits at 8:30 am. Economists expect claims to drop from last week's 500,000 to 490,000 this time around - but economists have been on the wrong side of these projections for some time now.

At 10:30 am the EIA will be out with its weekly report on natural gas inventories. Yesterday natural gas hit a three-month low.

I'm also watching the Treasury's $29 billion auction of 7-year notes, following record low yields in yesterday's sale of 5-year notes. The results of the auction will be available shortly after 1pm ET.

Anything else could also happen. Ok, here is how I see it. On the S&P we have MAJOR resistance at or near 1131 area. Our first major line of support was at 1060, and we have blown through it. So now the question becomes, how low do we go?

Technically, I think our next line of support will come in at the low of 1022 reached on July 2nd. Obviously, a close beneath 1022 spells BIG trouble ahead. This is my opinion only. If you see something different, please interject and share.

I feel that breaking the 1022 level is the last thing this market needs as we head into the worst historical month of the year - September. If we break that level, and you are invested make sure you have a game plan.

Image

Until recently I was very optimistic on the economy recovering slowly over a long, long time frame, but over the last two weeks I have been turning very bearish on the current state of the markets. Now I don't believe we're heading back to the 666 area like some are predicting. To reach this low we would have to have some seriously bad things occur in the world (Black Swan events?) to make us come that undone.

I do think those that are predicting a possible drop to 950 could possibly come to pass, but to be completely honest, I really have no clue how low we will go. If going that low were going to happen then September/October would historically be the perfect time for it.

In the end no one, and I mean no one, really has any idea about what is going to happen. If they say they do, they are telling lies. This market will do whatever it wants, when it wants.

I spoke last week about a bubble in Treasuries, and I found an opposing argument, so felt it only fair to post............

'A Fantastic Time for Bubbles'

U.S. Treasury Bonds – Why They’re Hot

Quote:
At a time of economic uncertainty, investors want safety. U.S. Treasuries may no longer be viewed as impregnable, but they still inspire more confidence than, say, Greek government bonds.

Why They're Worrisome – Supply is supposed to bring down prices, but that hasn't happened: U.S. bonds have risen 14% in 2010, even as the government has issued $3.3 trillion in debt over the past two years. "This is the big one," says Doug Noland, senior portfolio manager at the Federated Prudent Bear Fund. "Bubbles happen because there is no restraint on borrowing, and that's exactly the situation we have now for the federal government."

Verdict: Not a Bubble – The national debt is still a manageable 40% of GDP. Economists warn that growth will slow when it reaches 90% of GDP. The Congressional Budget Office projects it will take nine years to get to that level, and that's if Washington, which is debating the deficit, does nothing.

Gold – Why It’s Hot – Gold was rising even before the recession. But panic over world markets and the health of European and U.S. economies propelled it into the stratosphere. Prices have risen 150% in the past five years, repeatedly setting new records. Meanwhile, small investors have stormed in. Some fear that stimulus spending could lead to massive inflation; they believe a tangible material like gold will hold its value better than other assets.

Why It's Worrisome – Inflation isn't rising. It's falling and likely to be restrained for some time by a tepid economy.

Verdict: A Major Bubble – Gold has already started slipping. It declined 6% in July to a recent $1,160 an ounce. Some economists are warning that continued weakness could lead to deflation. If that happens, expect gold to crater.


I’ve got more I will post shortly……….


Last edited by SgtWs on Thu Aug 26, 2010 2:37 pm, edited 1 time in total.

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