I looked at this chart on June 22nd. I wasn’t sure if the pattern that was building was bullish or bearish. It didn’t exactly break out, there’s now an extension to that ‘whatever-it-was’.

And I’m now leaning towards it being a bull flag (= falling wedge).

Dollar daily cycle low is due any day now. Today is day 20 of the daily cycle that usually lasts between 18-28 days according to The Smart Money Tracker.

If current dollar-market relationship doesn’t change, then U.S. dollar going up would be bearish for the market.

P/E ratio is north of 60, price to book value 2+, dividend 3.143%.

Monday 66%
Tuesday 77%
Wenesday 79%
Thursday 82%
Friday 78%
Op-ex and the first trading day of the month 55%-60%

Last time a serious strike happened right in the middle of a very hot summer (just like now) and they stopped picking up garbage. For 16 days. Ewwww…..

This time it’s worse. The whole city is shutting down! No park service, possibly no garbage pickup, ferry drivers were on strike since at least Monday.

Now, get this, LCBO – Liquor Control Board of Ontario - is set to strike at midnight (half an hour ago). LCBO is the only place where you can buy liquor in Ontario. (The Beer Store is part of LCBO. Oh there’s also the Wine Rack, but it only sells local wine).

Liquor stores were packed today. We’ve got 2 events coming up here – the Pride Parade this weekend and Canada Day on July 1st. I don’t know if the strike will last until then, but I guess people stocked up in advance.

Not that I’m a big drinker, but you see, I recently came across this article “No Booze? You May Lose. Why Drinkers Earn More Money Than Nondrinkers”, and now I’m worried.

Source: Times Online

Japan Considering Taxing Cash; “Nominal Rates of -4% Might be Closer to What is Required to Rescue the Economy from Another Deflationary Spiral”

Unorthodox, untried and, said one Bank of Tokyo Mitsubishi strategist, “in the realms of economic science fiction”, the recommendation has nevertheless begun floating around Tokyo’s corridors of power and economists have described Japan as particularly suitable as a testing ground.

I don’t know why they say it’s unorthodox and never tried before. Sweden has done it before, albeit in a slightly different form.

Edited to add: “Apart from France, within Europe, Greece, Norway, Switzerland, the Netherlands and Liechtenstein impose a wealth tax, although often with lower rates and higher thresholds of imposition than in France “

The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts.

Bertrand Russell, British philosopher

So I guess a bear flag – or a rising wedge – it is.

Regardless of the type (reversal or continuation), rising wedges are bearish.

$USD down = stock market up.

SIGNALS ARE STILL BEARISH

Contrary to popular belief, the U.S. economy is not bottoming, let alone recovering. In the past three weeks, income tax withholdings plummeted 4.5% y-o-y, which is even steeper than the drop of 4.2% y-o-y in the past three months. We expect declines in withholdings to accelerate this summer because tax refund season is over, 30-year fixed mortgage rates have shot up to 5.6%, and gas prices are at or near $3 per gallon in many areas of the country.

Another bearish sign is that companies and corporate insiders are huge net sellers of shares. Since the start of May, new offerings of $98.5 billion have been 4.6 times higher than the $21.4 billion in new cash takeovers and new stock buybacks. Also, insider selling of $3.9 billion has been 6.0 times higher than the $650 million in insider buying.

We are less bearish than we would be otherwise because our demand indicators are not too bearish. The TrimTabs Demand Index, which uses 18 flow and sentiment indicators to gauge demand for shares, is neutral at 49.2. Also, retail investors have not yet joined the party on Wall Street, which is somewhat bullish from a contrarian perspective. Since the start of May, U.S. equity funds have taken in a modest $7.1 billion even as the average U.S. equity fund has gained 8.6% in price.

We want to emphasize that we make our market calls mostly based on macroeconomic data and changes in the supply of shares, not changes in the demand for shares. But we will modify our market calls somewhat based on our demand indicators.

Projecting daily float expansion and contraction in the U.S. stock market suggests corporate selling should far exceed actual corporate buying this week. New and completed cash takeovers added $100 million daily to current liquidity in the past four weeks. We estimate actual stock buybacks are $200 million daily. Therefore, actual corporate buying should total $300 million daily.

On the other side of the corporate liquidity ledger, we expect $2.0 billion daily in new offerings and $100 million daily in net insider selling this week. Therefore, corporate selling should total $2.1 billion daily, which would be $1.8 billion daily higher than actual corporate buying.

June 15, 2009
Charles Biderman,
chief executive officer, TrimTabs Investment Research

$RIFIN broke down. Fibonacci retracement targets are on the chart.

• 50MA acting as support at the moment
• 20MA turning down
• Stochastics and MACD going negative

Going to trade (FAS: 8.34 0.00%) and (FAZ: 5.13 0.00%) off this chart.

(SRS: 21.05 0.00%)

Positive volume pattern showing accumulation – higher on up days, lower on down days.
MACD and others are cooperating.

TA is useless on Ultra ETFs? Ok, let’s see how IYR is doing.

(IYR: 31.25 0.00%)

IYR yields almost 9%! That’s for the positive.
Now negative: volume pattern is just the opposite of SRS, showing distribution (higher volume on down days, lower volume on up days).
Closed below 20ma which has been a pretty good support level during this rally. But need to see follow-through on that.
Today’s close qualifies for a Bollinger-Band-crash trade, so IYR *should* bounce tomorrow. Doesn’t have to, but should.