Timing Market Turns

Trillion is the New Billion

noreply@blogger.com (Unknown) — Tue, 23 Sep 2008 07:38:00 +0000

September 20, 2008
Add 7 and 5, you get 12. In this credit and financial collapse, the estimated total of the faith and credit of the United States government dollars thrown at this problem is now going to be at the very least $1.2 Trillion. That is, $500 Billion already 'injected' by the Federal Reserve plus another $700 Billion for the new magic Federal market-making agency for toxic derivatives of mortgage backed securities, such as credit default swaps.

The 'clean cash' situation has gotten so thin that the Federal Reserve Bank has just asked for $100 Billion more to add to its $800 Billion in reserves, since they were down to less than $300 Billion of non-toxic dollars. Make that a $1.3 Trillion total. I am sure that this total will grow significantly in the next several days.

As the political Congress draws the legislation, the urge to go beyond saving the homeowner and their local bank and their local over-leveraged local industries (auto industry ?) will bring the attitude, "Well, while we are doing this financial sytem/industry bailout, a few other industries could use some help."

With fear of runs on banks atrophying the lending hearts of the nation's bankers who are hoarding cash, we hope these elected leaders recognize that the financial patient has two wounds, a financial system head wound and a gaping gut wound in the local retail and housing market.
The "no shorting financial stocks" rule implemented this week coupled with the prospect of a bailout reversed and then buoyed the markets into the weekend.

I don't believe the ban on shorting was necessary or useful. I believe the long term forward view of this newly created tool has too many pot holes for anything resembling "an effective measure". To all of us here, it closely resembles the 'buying time' and resting that occurred in at the end of October 1929.

At the end of October that year, the famed Black Thursday, October 24, 1929 was followed by an even worse week that included even higher volume. On Black Tuesday, October 29, 2008, the Dow Jones had lost nearly 40% of their value in 41 sessions from the all time high, Dow 381, on September 3. The last week of October, the market's drop lost more value than the entire annual Federal budget for 1929. The men on the floor were exhausted and after stocks rising a bit on Wednesday and Thursday, the 30th and 31st, the exchanges declared a Market Holiday, and closed on Friday, the November 1st session.

If the ban on shorting financials spurs more buying in the coming sessions, we will remain long. Our Time Locus dates of the 16th, 17th and 18th proved incredibly accurate, as usual. The week before had the Time Locus, September 10th, as a turn which resulted in a volatile lateral track into the 16th and the FOMC keeping rates flat.

With the prospect of the ban in effect until Congress issues its legislation, potentially until November 2nd, the markets will trade. But will it be true trading? Has this ban created an unseen hazard in the future? Is this the beginning of the C phase of the upward corrective phase from July - the phase 2 - from the May highs? What will it look like once the selling completes when the ban is lifted?

We ARE NOT predicting the next Depression but we see the similarity of market conditions, rising and spreading economic troubles. We remember that the history of markets is actually the history of human behavior, played out in a marketplace. And, We the People, the Traders and Investors, have not changed much over time. We have simply become technically better and faster at repeating the history we forget or never learned.

This is what the 50% retracement in 1929 into April 17, 1930, the 2 phase and subsequent decline, looked like in those surreal days of trading in 1929. The inset shows a similar action to the recent drops and reversals. We still have a major Time Locus for April 15, 2009.

So, how do you trade the lifting of the ban? Probably short, but maybe long. Right now, let's see what these administration and Congressional leaders put in the cake mix. Do you think politics will replace all of the flour and baking powder to produce a cake that never rises? I hope not. So, don't short the cake yet.

Never short the greatness and hearts of the American people. We always seem to get through the best and worst of times.

God bless America.
WBB

Global Markets Down Strongly

noreply@blogger.com (Unknown) — Mon, 17 Mar 2008 06:38:00 +0000

TODAY - We are publishing these comments from our membership site (delayed a wee bit). Patience and a clear head will keep your perspective real and sound. WBB

0145 EDT
Some will criticize the Fed and Bernanke for any reason that comes to mind. But remember, that this is a game of NOW - not yesterday. Many screamed about lowering interest rates faster/earlier/ more dramatically, but that wasn't the solution. It may have helped for a few days but not for long.

If a derivative cannot be valued nor traded for price discovery, then what is it worth? How much should the Fed secure to liquidate something no-one knows its tradable or even intrinsic value? This is the nature of the Sword of Damocles hanging over the Fed Chairman, the man who studied the causes and federal government acts that caused Crash of 1929 and the Depression (thank goodness he studied it). But remember that there was the causes to study like the effects the Republican Smoot-Hawley Bill that Hoover was against but eventually signed. There were no solutions to study, except letting the markets fall to near zero and then wait 25 years for them to recover.

So we have Bernanke sitting under the Sword of Damocles trying to untangle this financial hairball that the fat cat bankers and their well-healed customers have coughed up. The hairball must be lueined now! Yes, lueined or loosened. Luein is the absolutely perfect word. It was the word used by the oracle who proclaimed that he who would luein the cryptic knot of Midas at Gordium would conquer and rule all of known Asia. The brilliant tried for 100's of years but it was Alexander who tried too but realized that it did not matter how the Gordian Knot was loosened. He took his sword and cut it open with one blow to reveal all of the ends to the cornel bark strips inside the knot holding the chariot to the post.

So I say Bernanke should quickly grab that Sword of Damocles overhead and boldly slice through this knotted Gordian hairball of global financial enigmas. Either let the markets crash, or guarantee every strip of cornel bark in this hairball by opening the world's first global financial pawn shop.

Its a viability or solvency question now. Nothing more, nothing less. Solvency of every government and corporation around the world is on the butcher's block. Its that dramatic. I have restrained my words before today but it is time to state it clearly. That is what is at risk here and now. This is the source of my sincere "editorial" rah rah. If you are over 40 years, you know what October 1987 was like. This is a much broader global market. We can't stop the boulder if it gets going and crescendos into a rock slide.

We will continue to update throughout the day and potentially after the closing.

A man named Tom wrote about this banking crisis before it happened, and I like his perception.

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

We can all agree that banks are not inherently evil but they do effect the way we live. The man who wrote that 200 years ago understood and had the vision but was opposed by Hamilton, a central banking advocate. That man was Thomas Jefferson in 1802.
We will get through all this and be the better for it all, mates.
WBB

0131 EDT
A comment about all this leverage - A bank can theoretically and in practice accept a deposit $1,000 by a retail customer, and with current reserve requirements of 5,5%, can turn that $1,000, in multiple iterations of lending transactions, into $17,000 worth of loans to the asset side of their balance sheet. That is a normal banking function of leveraging 17:1 on the assumption that all the loans will not go under at the same time, even if they were not collateralized properly.

But, using the Carlyle Fund as an example of abusing the bundled mortgages, they had bundled loans instruments and re-leveraged them into an unrecognizable derivatives that had leverage of 32 to 36 to one. Yes, 36:1! No wonder they listed on the tiny Amsterdam Exchange.

0121 EDT
We will likely enter 100% short at the opening today unless something persuades us to elect a lower level for the position. Same routine and plan - feed the models, watch the reaction to the data, timing, structures, sentiments, volumes, momentums etc. At times like this, remember to avoid the urging of greed - set your targets and exit as your plan prescribes.
_______

The problem with the J.P. Morgan all stock purchase of Bear Stearns for $236 million (with an 'm') is that similar investment banks are now extremely vulnerable to be taken under too - Lehman for one example. At $2 a share, its an amazing turn of events since Bear closed at $30 on Friday.
_______

The Fed releases Industrial Production data at 0915 EDT Monday morning. They have seen the data and it potentially is not supportive of a growing economy.
_______

With an estimated $750 trillion, yes, Trillion, of collateralized debt derivatives, the Fed and the USA federal government is on the edge of a dire state of affairs here. If only 1/2 of 1 % of the $750 Trillion default - well, how does one handle the domino effect with an economy of $3 Trillion?

What I believe is occurring here is a Fed trying to find more thumbs to plug a financial dike. I hope something they do works but these are not the measures that will prevent a panic. The Fed and the U.S. Treasury and the U.S. Congress must get in front of the growing wave.
They all must categorically affirm that they will be the buyer and seller in this broken derivative market.

In effect, they must open wide the doors to the world's largest financial Pawn Shop. The Fed's invitation to the global financial markets should begin with the last stanza of the Lazarus poem on the great lady standing in the New York harbor.

"Give me your tired, your poor,Your huddled masses [of CDO's] yearning to breathe [trade] free,The wretched refuse of your teeming shore.Send these, the homeless, tempest-tost to me,I lift my lamp beside the golden door!" Emma Lazarus, The New Colossus 1883
[] by WBB
_______
Editorial-
This amazing and marvelous country can do it. It has saved the world several times before. The cynics and America haters are always wrong. Always! They have never erected a statue to honour the cynical, the hater and others of their ilk. Give it time and the USA will pull it out again. No doubts mate.

Every crisis has its opportunities and ours is to be short the indexes here and short the USD, for awhile. WBB

1115 EDT
CNBC has initiated Special Coverage tonight with the latest Fed cuts to bail Bear Stearns out of liquidity jail, and as Asia is down quite strongly.
AORD - down 2.5%+
NIKK - down 4%+
Hang Seng - down 4.85%+
Shanghai - down 2.4%+
Korea - down 3.58%+
WBB

1050 EDT - Sunday night
http://www.federalreserve.gov/newsevents/press/monetary/20080316a.htm

Press Release Release Date: March 16, 2008
For immediate release

The Federal Reserve on Sunday announced two initiatives designed to bolster market liquidity and promote orderly market functioning. Liquid, well-functioning markets are essential for the promotion of economic growth.

First, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets. This facility will be available for business on Monday, March 17. It will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities. The interest rate charged on such credit will be the same as the primary credit rate, or discount rate, at the Federal Reserve Bank of New York.
Second, the Federal Reserve Board unanimously approved a request by the Federal Reserve Bank of New York to decrease the primary credit rate from 3-1/2 percent to 3-1/4 percent, effective immediately. This step lowers the spread of the primary credit rate over the Federal Open Market Committee’s target federal funds rate to 1/4 percentage point. The Board also approved an increase in the maximum maturity of primary credit loans to 90 days from 30 days.
The Board also approved the financing arrangement announced by JPMorgan Chase & Co. and The Bear Stearns Companies Inc.

We will update through the morning as the EUR/USD has broken out again to new highs.

WBB

Friday, Nov. 2 - Reversal

noreply@blogger.com (Unknown) — Sat, 03 Nov 2007 01:12:00 +0000

Here is an excerpt from today's comments.

November 2, 2007

1630 EDT
The markets close on a rally based on a rumor of staffing changes, then the announcement of a weekend meeting at Citi. We don't see a low for Citi for several months - potentially in April 2008. It may be a swing trade, but we would not hold Citi until it touches another extremely oversold level above $31 in the months ahead.
WBB

1530 EDT
We will exit our short index Swing positions in the three indexes at today's closing. Time Loci have been updated for all indexes and ETF's.

We will enter 100% long in the Swing positions for SPX, Dow and RUT at today's closing.

We will enter 100% long in the NDX Swing position but we expect a slightly lower low in Monday's morning session for NDX. Positioning for NDX may wait for completion of the current downward intraday structure. Further, we expect a higher opening for all four indexes we trade at TimerTrac.

We are expecting to see upward action for the next 3-5 trading days.

Bernanke speaks twice next week and once before the Joint Economic Committee at the Capitol.

*** The EUR/USD may not be your trading vehicle but we expect that attention to how and what it reacts to next week will point to the track for the U.S. Dollar for weeks to come. Thursday's expectations for the European Central Bank's announcement is critical to a sustainable upward move in U.S. indexes.

WBB

Chart from www.stockcharts.com

FOMC Day - September 18, 2007

noreply@blogger.com (Unknown) — Tue, 18 Sep 2007 11:12:00 +0000

September 18, 2007
___________

FOMC Day

We expect the normal lateral pre-announcement track for the indexes today. We still believe that the FOMC will not change rates, but if Fed Funds is lowered we would prefer a 25 basis point cut.

Credit Liquidity Crisis - Rate Cuts Are Not the Way Out

Let's repeat a lesser known fact. The Federal Reserve does not regulate banks. It regulates bank holding companies. It uses an indirect tool, interest rates, to attempt to control the supply and availability of money and credit in this economy.

The Federal Reserve does not control or regulate the investment banks, like Goldman Sachs, or brokers, like Merrill Lynch. National banks, investment banks and brokers created this financial bubble. They loved it when their bubble was growing and glowing. Now, they just don't want to use their own capital to clean up their mess when the bubble burst.

They want to use our Federal government's capital mop and bucket.

Big Cut - Big Bear?

If the FOMC lowers by more than 25 basis points, then we may have to re-evaluate our view of a continuing Bull market. If you wonder about what would make me turn neutral to bearish for the longer term, it is a big rate reduction. The financial credit/liquidity seizure is a normal event in cyclical markets. It just occurs that this year's event is in the CDO market. Same story but different economic sector.

The "cleansing" must and will come, with or without a rate cut.

In past decades, the American economy was self-sustaining and self-fulfilling. The gradual change to its economic influence on other global economies today took about 50 years. Current domestic economic and federal policies affect significant changes around the globe in foreign domestic economies.

The British Northern Rock Bank story is a minor example of the ripples that come from this country's economic events. The credit crisis will not be solved by rate cuts, nor by a change in Federal Reserve monetary policy. The financial creators of these debt instruments must resolve this problem by publicly purging or writing down these assets. The investors in these credit vehicles will have to take their losses, and then make their way into the future.

Capitalism is not a panacea of endless profitable gambits.

Capitalism renews itself by shedding excess and, that shedding comes packaged with pain to those who invest in risk that fails. The shedding produces a leaner and more innovative, more expansive economy. The expansion filters deeper and deeper into the lives of all who live under the tent of a free economy. The benefits to the individual as well as to the economy, must be measured against the risk taken to achieve those rewards.

The perceived risks in the CDO investment market turned out to have a severe penalty measured against the modestly higher rates of return that are available in a U.S. Treasury risk free investment. Investors believed the creators and promoters of the fancy financial exotica. Most investors could not explain the risks nor understand the consequences of those risks becoming real.

Rate Cut Mania

Which has been hyped more, the credit crisis and the imminent collapse of the U.S. economy, or, that a Fed Funds rate cut of any amount will solve all of the financial and CDO market pricing problems? The two lies are Big Lies.

Big Lies shrouded in mystery, preached by latter day sainted economists and other media pundits who are believed by the masses, if they are heard often enough without counter arguments. Attitudes and behaviors are changed. People begin to wonder if disaster awaits them in the near future.

Isn't it a bit unusual that the creators of the problem are announcing the problem and its severity, while in the same sentence demanding the solution they have devised?

Nobody asks, "Who wins and who loses, if we do what you say to do? Who wins and who pays if your problem is solved?" These global financiers will answer questions only after you pay to fix their problem. It's the least they can do right.

Repeat - "It's a correction in a Bull Market."

If the FOMC cuts rates today, I believe that the correction may last longer and may drive index prices deeper than necessary. It doesn't automate the end of the Bull, but it might.
What does a rate cut really mean? It doesn't mean that real interest rates are too high. A rate cut does not mean that this economy has suddenly turned from growth to contraction in just 8 weeks.

A rate cut today will be seen as a concession to those who are unwilling to help themselves, but are able to take their own measures to solve their problems. "It is too painful!", they say. They want the Fed to kill the American economic goose that's been laying golden eggs, because they are sure the goose has a reproducible gold factory in its gut, instead of a gizzard.

The Federal Reserve will be seen as weak.

What a big rate cut will mean to the global markets is this: Sell U.S. dollar-denominated assets now! The $US will take a hard hit. Then the Asian carry trade adds to the slide in U.S. equities. The Yen goes home. Then, the perfect storm is waiting for the first real misstep by the Fed or the government to launch an out of control spiral downward.

This economy is not dying.

The U.S. economy is still slogging along quite well. Don't believe it? Then you don't know the American economic mystery or Americans themselves. Nothing stops them. Nothing. Some regions of the country aren't doing well like Michigan and Ohio. Some regional construction is well below the rates of 2005, like in parts of California and Florida. All are victims of their recent excesses and successes. Recovery for those in trouble depends on how they correct the causes of their troubles.

If Americans or their economy appear to be slowing or stopped, it's because they are down shifting to climb the next mountain of adversity. The only effective adversary the American people have is their own apathy. "We have met the enemy. It is us."

__________

I hope for no rate cut before the correction ends. Let the market's nature takes its course. After the correction, a rate cut will be okay but irrelevant to the American markets. Currency markets and foreign investors will still sell $US denominated assets, but it will be into a rising bull.

Forgotten lessons have to be re-learned don't they.

__________

As with any outcome today, we will be trading it.

We continue to expect 10-year Treasury Note yield to touch at least 3.94% and potentially 3.80%.

Let's see what reaction the P.P.I. brings before the opening.

W. B. Busin

Will you be Short? I hope so.

noreply@blogger.com (Unknown) — Thu, 13 Sep 2007 18:57:00 +0000

September 13

1420 EDT

"Trade what you see, not what you believe you see."

What do you see? What do you see on the daily chart? on intraday charts?

I see a daily sell on momentums, an hourly sell on sentiment (daily has been on a sell). But the biggest sell signal is the volume. Where did it go?

It does not really matter if the indexes go higher or lateral from this hour of Tuesday, September 13th. I trade with confidence, but am rarely sure.

At this point, everything I know and see is telling me to be short - as short as you can be (not catastrophe, or end of world).

There are a few times in a trader's or investor's life when they see the plain written word and signals to enter a market and take 1,000+ Dow points home with them in a few days. Further, after taking that 1,000+ points in a few days, the trader or investor has the opportunity to do it again by reversing the position.

In this situation, it is be short now, then be long at the lows in a few days. In my view, this is like knowing what was going to happen on September 27, 1998, or knowing what was coming on October 12, 1987 and reversing on the October 20th lows.

You may not be comfortable taking action now. Then you will likely stay in cash or hedged. If so, then that is what you should do. Investing and trading is about you and your plan. First, plan to not lose capital, then plan to make some. Follow your plan. Then trade it. Execute the plan.

If an investor wanted to be long, then the investor would buy U.S. Treasuries and hold for a few days.

Remember! The uptick rule is gone. The only downward protection to the indexes is the collars from the exchanges.

Lateral track into FOMC Meeting, Sept. 18th

noreply@blogger.com (Unknown) — Thu, 13 Sep 2007 02:54:00 +0000

Timing Market Turns
W. B. Busin Group Publishing

Current positions - 100% short

It doesn't matter if the FOMC cuts the Fed Funds rate and possibly cuts the Discount rate again. It doesn't matter if the FOMC doesn't cut rates at all. The straw man has been assembled, dressed in sacrificial sack cloth and trudging to the financial gallows. The Fed will be blamed no matter what it does.

That is like setting your house on fire and blaming the Fire Department for not stopping you.
Several weeks ago in this TimerTrac newsletter, we projected the 10-year Treasury Note yield to touch 3.94% and possibly 3.80% at the low of this stock market correction. We believe that those projections are still on target, as the Note yield closed today at 4.408% after breaking late 2006 support at 4.40% last week.

Tap on this Link to the 10-Year Note yield chart:

http://www.market-timing-wbbusin.com/10yearNote09122007MarketTimingbyW.B.Busin.html

If the stock indexes and Treasuries walk quietly laterally towards the FOMC meeting, Sept. 18, we expect rates to then drop quickly and bonds to register their final bullish upward leg. We expect stocks and indexes to drop downward toward the next published Time Locus turning point, Sept. 24th / Sept. 28th.

We expect that the long term 12-18 month look forward for debt will be extremely bearish since we project the yield on the 10-year Treasury Note to reach 5.5% within weeks, and at least 7.0% next year. We will add the 10-year Note to our timing coverage this month.

We view the end of early July high as the end of that bullish move in rates. The June high was just the 3rd wave high of the last leg from the March 2007 low.

Daily Sentiment remains fluctuating within the neutral spread.

http://market-timing-wbbusin.com/Daily_Sentiment_Index_-_Market_Timing_by_W._B._Busin.html

As for the next 4 trading days, we are and will likely stay 100% short in all index positions, both Swing and Investor. The risk is to the downside after the attempted rally into Fed Day.

W. B. Busin
W. B. Busin Group Publication

100% Short

noreply@blogger.com (Unknown) — Mon, 10 Sep 2007 19:01:00 +0000

September 10, 2007

We will enter 100% short in the Swing positions in all indexes at today's closing.

This intraday decline should not retrace to the opening highs. Between now and 1500
EDT the indexes will likely attempt to reach that level. We expect an massive
momentum divergence to begin the next leg downward.

If you are looking for a short entry for a position, the potential of a high near
1500 EDT appears to be the best intraday Timing Locus. The NDX has
remained the strongest in these counter rallies and the RUT breaking down
quickly.

The divergence should be plain to see for all indexes but the RUT may
be the earliest and point to the selling entry a few minutes earlier than the other
indexes.

We expect this decline to proceed into the September 18th low and to set in a
grand splash of a low. This should at least challenge the August 16th lows for
the senior indexes (Dow and SPX) while the NDX should drop well into new
lows and approach the "end of Bull market" level.

We will hold this short position until at least the closing on September 17th. We
want to confirm that the models are confirming with the certain levels touched
today that we should decline quite rapidly in the days to come.

Alert

noreply@blogger.com (Unknown) — Mon, 10 Sep 2007 04:59:00 +0000

This update is exactly the text we sent to subscribers today. It includes the two previous updates from Friday, September 7, 2007.

Today is Sunday, September 9, 2007

Good afternoon,

1715 EDT

We are 25% long in the Swing positions for all covered indexes.

We are 100% short in all indexes in the Investor Core positions, producing a
market neutral portfolio position.

It is rare to receive a message from us on a Sunday afternoon as long time
readers know. This message is the result of nearly 2 days of data analysis and
application of several filters to the results of our models. That is not how we
spend our weekends.

I don't like this trade.

I don't believe I have ever said that before in this newsletter.

I did not like this current 25% long Swing trade but entered it as the signal
occurred on a Time Locus and sentiment is in neutral allowing for an upward
move. As I discussed it with Group members, we began looking at the data
points in all the indexes, verifying intraday and daily structural phasing and
technical indications.

What I don't like is much more simple than the mathematics of all that is
contained in our models. I don't like being long when the observable precedent
patterns indicate to be short. The precedent pattern also indicates to not be in
cash. But all that was not clear with minutes to go before the closing on Friday.

The easiest precedent pattern to see is the NDX gap downward on Friday that
remains open. The NDX daily bar for Friday, the size of the gap and the break
below the upward trendline are all simple basics that at best warn of more
downward action to come.

We used two favored linear filters on the signal data produced by the data
preprocessing programme, and each confirmed our belief that any upward
movement was suspect and small at best. If you know what the term
'underdetermined' means (not enough valid support for the outcome), then you
know why I don't like this trade.

At its worst, the scenario replays the continuous downward move toward new
lows for this correction. This is a direct contradiction of my stated view that the
market indexes would rise toward the FOMC meeting on September 18th.

Is the timing correct for the September 7th and September 11th Time Loci?
Yes, they have been re-checked as were the last 11 minor and major Time
Loci. Do we have a Time Locus for the September 18th FOMC Day? Yes,
indeed we do - as always is the case.

Is the pulsive upward corrective structure complete? That is where the sand
leaked into the gearbox. I just don't know on the NDX but I am leaning toward
a completion of the upward phase after examining the re-mashed data. I am
suggesting a 75% to 85% probability that it is complete and that any upward
movement will be sold immediately by the markets.

Since we have not seen the markets open on the Globex platform, we will not
have an indication even then for several hours, whether we should take our view
to a trade status.

We have two trading questions: (1.) should we be in cash?
or, (2.) should we be short? If cash is where we should be, then it will be a
100% Swing cash position. If short is where we should be positioned, then it
will also be a 100% short position.

We don't expect an extreme downward opening at this point which will allow
for a breakeven position change on Monday's opening. We will decide what position to take as we see the overnight action on the Globex and in the currencies.

Look for an early morning update tomorrow and a potential change of position
before the morning's data releases. Then we will follow that with an update if
the markets react to the Consumer data release.

This is what trading can be like in times of uncertainty and when traditional
theories and techniques are not producing expected results. We will adjust our
trading as called for by these conditions.

WBB

_______

Previously on Friday:

1545 EDT
We will enter 25% Swing long in the NDX, Dow, RUT and the SPX.

The NDX data supports the terminus view also.

WBB

NEW READERS - A 25% or 50% Swing position represents that percentage
of your "trading risk capital". We define "trading risk capital' as 2% of total risk
capital, which is the combined amounts of daily capital net of profits and losses
taken by closing each day. Open trades should be treated as marked to
market at closing.

_______

Previously today:

1455 EDT (Friday)

If the indexes proceed downward into the closing, we may indeed have an excellent Swing buy signal to enter at today's closing. We didn't expect it but we will take as large as a 25% long position in the SPX.

Yes, it will be very high risk, but we did not take this morning's gap down because we expected an upward move into the closing back to the 60% level of however much today's decline set in. We then expected the completion of lower prices with a momentum divergence buy signal in the Monday morning session. This may still be the outcome, but we want to advantage the trade entry at a price low.

The trade can carry upward in its choppy slog until September 24th. We project a move of 35-45 points for the SPX, and a similar relative amount for the Dow.

The volume pattern setup is available and the intraday structure is near completion. Intraday sentiment has touched an extreme similar to the intraday of August 16th and the 28th.

It is a minor Time Locus date, and the models are indicating a low, not a high or an acceleration point. In terms of the model, it is forming a "terminus locus", an ending.

We have not completed quick-processing the NDX data yet but expect to find the similarities consistent.

Update by 1545 EDT with any trade entries.

Please don't get in front here. You may want to wait for Monday and use the signal as an analysis aide.

WBB

Simple Solution to an Ancient Problem

noreply@blogger.com (Unknown) — Thu, 06 Sep 2007 15:57:00 +0000

This story applies a simple solution to the current credit seizure and market fears that are prevalent at many investment houses today.

From FOXNEWS

Russian Mayor Bans Phrase 'I Don't Know'

Wednesday, September 05, 2007

The mayor of a Siberian oil town has ordered his bureaucrats to stop using expressions such as "I don't know" and "I can't." Or look for another job.

Alexander Kuzmin, the 33-year-old mayor of Megion, has banned these and 25 other phrases as a way to make his administration more efficient, his spokeswoman said Tuesday.

"It's a suggestion to the staff that they should think before saying something," Oksana Shestakova said by telephone. "To say `I don't know' is the same as admitting your helplessness."

To reinforce the ban, a framed list of the banned expressions has been hanging on the wall next to Kuzmin's office for the past two weeks, Shestakova said.

Some of the other prohibited phrases are "What can we do?" "It's not my job," "It's impossible," "I'm having lunch," "There is no money," and "I was away/sick/on vacation."

Kuzmin, a businessman who was elected mayor 1 1/2 years ago, wants to "shake things up" in Megion, a town of 54,000 in the Khanty-Mansiisk region, the spokeswoman said.

The region, located some 1,500 miles northeast of Moscow, produces more oil than the rest of Russia combined. As world oil prices have risen sharply in recent years, the region has flourished, and in stark contrast to the rest of the country its population has grown at the rapid rate of more than 7 percent annually.

But construction has not kept pace, and the lack of adequate housing is one of the town's most serious problems, Shestakova said.

"Town authorities are there to make town residents' life comfortable and prosperous," Kuzmin, a trained oil engineer who studied business administration in Canada, said in a statement posted on the town Web site. "Town officials must work out mechanisms to solve and remove problems, not to avoid them."

Officials who disobey the ban while in the mayor's office "will near the moment of their departure," the statement said.

Providing the mayor with wrong or incomplete information, or being late in reporting important information will be considered an attempt to undermine his work, it said.

Anna Borovikova, the mayor's chief of staff, said the novel approach has improved discipline.

"Before, it was so easy to say `I don't know.' Now before reporting to the mayor we prepare several proposals on how one or another problem can be solved," Borovikova said.

At first it was hard to remember not to use the banned expressions, she said, and they "slipped in sometimes."

Timing Market Turns

noreply@blogger.com (Unknown) — Thu, 06 Sep 2007 04:59:00 +0000

September 5, 2007

We exited back to cash at today's closing after entering 50% short in the Swing
positions in the indexes (25% short NDX) on Tuesday's closing. We were
short last week from the closing on Friday, the 24th, and exited the 31st before
the long weekend at breakeven.

We are expecting an upward bias toward Monday in a choppy lateral nature.
We expect that the action between now and the Fed meeting will get a wee bit
more volatile, as the guessing about a rate cut, or the news of trouble of another
CDO vehicle comes forward.

Sentiment

We expect our Daily Sentiment Index to remain in the neutral zone for several
days as the indexes slog toward the Fed meeting. Daily Index Sentiment Chart

Performance

We are maintaining a steady rise in all the Swing accounts, as seen here in the
SPX Swing position. Here is our verified Performance Graph from TimerTrac.

We remain 100% short in the Investor Core positions, portfolio hedged to
100% neutral, for all indexes.

Rate Cut?

We don't expect the FOMC to cut rates at the September 18th meeting. We
believe that if a Fed Funds rate is coming, it will likely be in early October after
the correction low is set in. A potential late September rapid decline is the only
other alternative that we can project a potential Fed Funds rate cut of 25 basis
points (less than 10% chance for Sept.).

W. B. Busin
W. B. Busin Group Publishing
http://www.market-timing-wbbusin.com/

What's Next? Market Crash? Downward? Upward? More lateral?

noreply@blogger.com (Unknown) — Sun, 02 Sep 2007 17:02:00 +0000

September 4th is the next major Time Locus for the indexes.

What will it be: a high or an acceleration point; or the least likely, a continuation of the past week's lateral move?

We believed it would be a market turn at a low. It won't be viewed by us as a low unless the SPX/NDX/Dow close near or below their Monday, August 20th intraday low.

We do view last week's action as the potential end of a lateral (consolidation) phasing. We have stated since the July highs that the swings have been shortened by volatility, weak volume patterns and by extreme moves in our proprietary market sentiment indicator.

The Daily Sentiment Index continues to show much faster movement just as the intraday sentiment has exceeded 80 (bearish) and 20 (bullish) several times last week. Last week reminds us that the normal 3-5 day swings are still under compression to a 2-3 day swing length. The extremes marked intraday highs and lows in index structure and form.

Investors are fully hedged to portfolio neutral from the Friday, August 24th high. Swing traders (3-5 trading days) are in cash.

Bernanke's speech this week clearly shows that the Fed is attending to its mission, and not what the shrill economists are 'demanding'. The Fed is not going to bail you out of your subprime mortgage portfolio. We are already seeing the exact bargain hunting we predicted and believe will continue in the collateralized debt (CDO) market with Citigroup scooping up a bargain this week.

It proves our point in a previous post that the complaint in any market about 'not knowing what something is worth' is a signal that the price is not low enough.

We have seen, traded and lived through several structural corrections in the stock markets and in the economy over the past 4 decades. From that viewpoint, we believe (even more today than 2 weeks ago) that the Bernanke led Federal Reserve Board and FOMC are doing their job just about as close to perfect as a human can be expected to perform. They have one eye on today and a real focus on what tomorrow will be like if they overreact to the hue and cry of a few stuck in the mire of their own making.

Does the Fed lower the Fed Funds rate at its September 18th meeting? We hope it does not. will there be continuing losses, even mega losses for portfolios and holders of some mortgage backed securities and derivatives? Yes, and it will continue for a few more years. Losses can be controlled by cooler heads than those that created and sold these super-leveraged instruments.

Just lower the price, take your loss, sell your portfolio to those that have the capital, and then move onward. Buyers are already waiting for the holders to lower their prices. Who is going to buy Carlyle Capital's assets if its parent, Carlyle Group, cuts it off in the next slide? Carlyle Capital has already received $200 million this week. Even the big and quiet fall hard and loudly.

Give me some direction.

Two scenarios are the easiest - more consolidation with withering heat like the high desert, or just retest the lows of Monday, August 20th. The RUT has already blazed that path through August 20th low for the other indexes to follow, if real buyers don't step back into the market after the long weekend.

Direction could be a difficult call if the indexes set in two extremes in one trading day, Tuesday. An apparent breakout upward or breakout downward that reverses to the opposite extreme by the closing will be easy to daytrade, but will take its measure of our models. That is the principal reason for our cash position in all index Swing positions (remember that we can only enter and exit at openings and closings).

Technicals say -

Momentum indicators, volume and volume patterns still point to a downward move. If divergent indicators were in control, we would give the downward direction a positive balance. The low volume rise from Wednesday through Friday is not unusual before a holiday weekend. Low volume and the patterns show weakness, but these same patterns can be found preceding a blowoff and a breakout of a trading spread.

The objective is to enter trades according to each person's risk management/money management plan. We will decide whether a change to short or long is the call after observing currency trading and tomorrow's track for international indexes. Join our email newsletter.

W. B. Busin

Bernanke's Speech - No Cure for SubPrime Market Melanoma

noreply@blogger.com (Unknown) — Fri, 31 Aug 2007 18:06:00 +0000

Bernanke's Speech - No Cure for SubPrime Market Melanoma

If you expected the announcement of a Fed Funds rate cut, you are probably a
disappointed residential housing speculator. If you expected some straight talk
about the mortgage backed securities mess, you are likely to be a somewhat
satisfied investor or trader.

What you may have missed is the ongoing reality expressed in recent data, such
as GDP, Jobless Claims, Personal Income/Expense, NAPM, Factory Orders
and Consumer Sentiment/Confidence.

In my view, these data reflect what we have been stating to readers throughout
this "credit crisis". The stock market's downturn is a normal correction in a Bull
market. It's not the beginning of a depression or recession. It sure could be if
the Street doesn't or isn't willing to take the cure.

Nothing has changed dramatically in Peoria.

It's still pretty normal out here, beginning 50 miles away from lower Manhattan.
We still have low unemployment, the consumer is still spending at a normal pace,
businesses are ordering goods and services, and replacement capital goods.
Kids are back in school and gasoline is still affordable for the SUV.

The credit crunch exists with the community of irresponsible lenders and
borrowers in residential real estate, and their cousins in the collateralized debt
markets. Only a small section of the whole residential market is under pressure.
It is predominantly contained and originated in the recent hot real estate markets
(or formerly boom markets) of California and Florida. The boom markets
became obviously "former boom" markets by mid-2006.

Everybody Loves a Boom

The booms began in 2002 and attracted the national builders and developers
like moths to a lantern on a starless night. Close behind them were the anxious
speculators with bulging credit lines to use to buy 5, 10 and 20 or more houses
before the first foundation was set in. The speculators would "flip" the houses
for a handsome profit and then move on to the next new residential gold mine,
following the builders.

The banks loved the high fees and the high interest rates paid by developers,
builders and speculators. In turn, the developers and builders loved the loose
and abundant credit available. The speculators grew in numbers quite rapidly as
consumers seemed to continually demand new houses. It was a true love fest
that eventually festered when they exhausted the demand for houses and
condos.

Nobody knows what to do at Boom's End

Existing houses rose rapidly in price as the speculators pushed prices higher and
higher each year for new houses. Homeowners were encouraged to load up
their newly found potluck of home equity with added higher interest rate
debt on their homes. Remember those offers of 125% home equity loans
arriving in the daily post?

A self-feeding and self-fulfilling cycle of a parabolic boom is what happened.
When the boom begins to slow, none of the participants can stop themselves.
They are fully addicted and blinded to any sane reason to stop. Just "Buy! Buy!
Buy!" Nothing new under the sun at this point. It's a boom that will never end,
right.

What's new and different in this real estate boom?

Non-conforming loans are not new, nor illegal, nor immoral. They have always
been a small fragment of the residential market. In the late 1990's,
non-conforming loans, or what is now called Sub-Prime Mortgages, became de
riguer for banks, investment houses and private equity groups who wanted more
interest income, and the grand fat fees that accompany these lending facilities.
Bank of America, Citigroup and Deutsche Bank were just a few of the major
demigods of this creativity in the mortgage market.

As all conforming mortgages are bundled together for investors to buy into the
future stream of payments, the "safe" rate of return (Americans are notorious for
paying their home mortgages) was not so safe in the sub-prime bundled
mortgage arena as it turns out. Isn't that how sub-prime is defined?

When does it make good sense to buy "sub-prime" beef or a "sub-prime" car?
It only makes sense when you can convince yourself and the guy who wants to
buy it that it's just as good as prime beef or a prime new car.

Demigods create the exotics

Meanwhile back at Reality Ranch, Wall Street investment houses and banks
used their creativity to birth all sorts of derivative investment vehicles out of the
bundled mortgage and other debt magma. What evolved from these creative
juices is now just generally called 'mortgage-backed securities' which is today's
lead balloon in the much larger category of exotic investments, called
"Collateralized Debt Obligations" or CDO's. It takes a Ph.D. in mathematics to
understand some of these exotic instruments. An entry-level math Ph.D. starts
at about $400,000 a year on Wall Street.

The prices of these convoluted instruments were set by a highly specialized
marketplace. It is even more specialized than you think because the creators
also made the market (set daily prices) in the CDO market.

So when a buyer, like a mutual fund or a pension fund wanted to buy some,
they got the creators price. After they owned it awhile and wanted to sell it,
they got the creators price. Great deal for the creators isn't it.

The problem is a pimple that became acne, but was really a melanoma.

It's all about the flow of money in and out of this CDO market. "More Liquidity
please!" cried the market. "Somebody please buy my beautiful junk!" screamed
the vendors. "How much do you want for it? How much is it worth?" asked
the investor. Quietly, almost sub-sonic, the vendor muttered, "I have no idea."
Sensing a potential bargain, the investor asks, "When will you know how much
it's worth?" The vendor glances up at the investors with one eye, "When you
buy it?"

The investor says he might be back, but he wants to check with a few others
first. The vendor calls out to the investor walking away, "Nobody else knows
what any of this stuff is worth either." And then adds with a sigh, "We just
need some liquidity."

The Liquidity Cure

The needed liquidity must come from the market master surgeon. Melanomas
aren't treated any other way but with excision. Cut it out, and cut fast. If it
recurs, the market surgeon will carve deeper and wider.

Governments have no cure for this but they do have a more disastrous solution.
A bailout. That's the non-surgical "two aspirin and call me in the morning"
prescription or, in this case, their cure for the cancer.

Bernanke, Dodd, Clinton and Bush - No surgeons allowed!

None of them have the cure. Bernanke knows and understands the problem,
but he's a Ph.D. doctor, not the market's surgeon.

Dodd knows Congress can't fix it. But if Congress can't fix it, he could still
get some good TV coverage for his presidential bid with a Congressional
hearing and investigation.

The Sen. Clinton promise of a bailout shows she predictably wants to be the
governmental WalMart, who will refund your money for that half eaten apple.

President Bush wants to help those who can help themselves, but don't need
help. They aren't in trouble with their FHA/VA loans.

The Unilateral Solution

Simply, let the buyers and sellers in the CDO market sort it out. Most of that
market trades in quality debt obligations from quality corporations and
governments. It is a critical part of the day-to-day financial marketplace. The
players in that market must clean their own houses of the rotting securities in
their inventory.

They say they don't know what's good and what's not so good and what's rotten.
Sort through them until you find the rotten fish. The whole pile is not rotten,
just the few that smell. The longer they wait and complain, the greater the
festering smell from the spreading melanoma in their kettle of fish.

It will be painful for them and the investors in those securities. But that's the
choice: radical surgery or live with the smell of your own necrosis.

Save the patient by excising the cancer. Now!

Or, kill the patient by seeking sympathy by complaining about the pain, and
re-telling the story about the pimple that grew into a melonoma. All you will get
are Hallmark sympathy cards with the a "Get Well" wish or the proverbial,
"Sorry for your loss."

How does the story end?

The CDO market struggles, then stock markets drop dramatically which forces the
needed re-pricing of assets in the CDO general market. Don't forget that there is always
somebody willing to buy a distressed asset. A few days ago, Warren Buffet was willing
to buy the troubled assets of Countrywide Financial for 25 cents on the dollar wasn't he.

Lower the price enough in a melanoma market and you will find your cure.

W. B. Busin Intraday Monday, August 27, 2007

noreply@blogger.com (Unknown) — Mon, 27 Aug 2007 19:00:00 +0000

1500 EDT

The formation and technicals for the NDX and Dow are showing a difference
with SPX and RUT.

The SPX/RUT are exhibiting weakness while the Dow/NDX are showing
signals that may produce an upward move from this time toward the closing.
The move may include higher highs than Friday's closing high. This is just a
potential for intraday traders and Swing traders.

We expect a similar narrow trading spread for tomorrow's morning session.
The downward bias to tomorrow's action should be more evident than today's.
If price does not begin to decline with more momentum, we may be incorrect
for the direction.

In general, we expect the market to retest near the recent lows as a any fine
correction will do. We are still monitoring the parallel to the 1998 correction
and its time variance. The time variance may be quite large with the aggressive
intervention by Chairman Bernanke and the New York and San Francisco
Fed's.

It may have shortened the entire correction by weeks. In 1998, Greenspan did
not intervene until mid-September and then aggressively after the correction was
over in October.

I have said that I do prefer Chairman Bernanke much more than Greenspan.
What he has done and not done are equally important. If as we expect, the
economy is slogging along at a more moderate pace (not crashing into
recession), then all the better.

If so, the Fed Funds rate should be left where it is. Fed Funds will likely rise in months ahead before it is reduced by the FOMC. To clip the 1992 Clinton campaign slogan, "It's the economy, stupid." seems appropriate at this point in the correction.

It's evident that the financial world did not collapse and we are not plunging into
the next Great Depression are we. (A few "Woe is me!" economists may wish
us the worst, but again, they are wrong.) The correction is not over in our view
but the lows may be set in for some of the indexes. Further declines should
appear in the next few weeks.

A positive conclusion about the correction is that it has been a healthy orderly
decline. The opportunity to find blue chip mutual funds and/or stocks for the
coming rise is a fine gift from the market. We would begin looking for stocks
bottoming early that are in the blue chip category. We continue to believe that
Dow stocks and other blue chip technology stocks will outperform in the next
move upward.

WBB
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"All Along The Watchtower, Bernanke Kept his View"

noreply@blogger.com (Unknown) — Tue, 21 Aug 2007 20:29:00 +0000

"All Along The Watchtower, Bernanke Kept his View"

Dylan wrote it, Hendrix covered it immediately, Matthews reprises it in 1999. Bernanke could be listening to one of the three versions (below) on his I-Pod. The allegory is simple and yet likely to ignored again in a few more years.

I like the Chairman a lot. I like what he's done and how he's done it. In fact, he may have done a wee bit too much too early, but I'll let you decide that in a month or two.

I'm bullish, very bullish - beginning in October this year. We have been discussing the correction since May. Would it be 1987 or might it be 1998? The 1987 pattern dissolved as the 1998 pattern came to prominence, and a grand scheme it has turned out to be.

So far, Bernanke has shown an understanding of the difference between who's in the quicksand, and those who feel like they are being pulled into the mire. He knows that those who feel pulled toward the mire are holding onto the rope of rescue for the rotter in the quicksand. Let go of the rope! But have mercy on his soul.

Bad lending policy makes for bad lenders making bad loans to bad borrowers. Is that news to anyone? Lenders should suffer their consequences, just as the hedge funds, who played the high risk game, and their investors should as well. This isn't a child's game where everyone goes home unscathed. Market battles are vicious to the ignorant or the blithe.

While the residential lenders gluttoned on huge fees, as they lent the public's money to the 'thieves', they ignored the late hour for affecting a rescue or a change.

All the warnings and signs have been re-told throughout the long history of 'mad money' woes. From tulips to silver to bundled mortgage derivatives, the jokers always think it's different this time. It will go on forever. It doesn't, does it. Tulips are $5 a dozen, right?

The results are always the same. Pleas for help are barely heard because the glutton's belly is still so full of the rot he's trying to digest. The gastronomic pain is so severe, he can hardly utter a whimper. But the tears flow, the hand is waves a third time as the rotter's head slips silently below the mire. No, that wasn't Bunyan's Christian ridding himself of his heavy bundle to escape the mire.

Why should they be rescued? They knew what they were doing. They lent long (interest only) by borrowing short (commercial paper). They lent to the most obese of borrowers wearing "Do Not Resuscitate" medic alert bracelets. It's difficult to say who are the greater gluttons, the lenders or the rotten borrowers.

When did you learn this most basic of market lessons that extended markets correct extensively? I learned it in 1974 and never forgot it. Ever. A day does not set the sun that some sense of 1974 creeps to the front and calms the trigger finger. It often whispers, "Patience, lad, more patience. Use that trigger finger on your cup of tea for a bit."

Mr. Dylan wrote the allegorical poem (some say apocalyptic), "All Along The Watchtower", in reverse chronological order. Reading it in reverse, you may see, as I do, the symptomatic squealing of today's gored hogs in this line: "There's too much confusion, I can't get no relief. There must be some kind of way out of here."

For me, I'll take the thief's advice, "No reason to get excited." Even though life and its markets are not a joke.

This market correction is only about half over. As Harry Truman once said, "I never did give anybody hell. I just told the truth and they thought it was hell." More down to come into the Labor Day weekend low, even if the Fed is filling its injection syringe or sharpening its rate scalpels.

First downward was lead by the RUT, then it was the SPX and NYA last week. It may be the NDX's turn this time.
______________________________________

I borrowed from Mr. Dylan, and I pray I have done no damage by imposing his words over this global dyspeptic-intermediation.

Read it in this chronological way for today's lesson in the potential of apocalyptic financial economics:

"Outside in the distance a wildcat did growl,
Two riders were approaching (Sir Dodd and his knave Barney), the wind began to howl."

"All along the watchtower, princes kept the view
While all the women came and went, barefoot servants, too."

"No reason to get excited," the thief, he kindly spoke,
"There are many here among us who feel that life is but a joke.
But you and I, we've been through that, and this is not our fate,
So let us not talk falsely now, the hour is getting late."

"Businessmen, they drink my wine, plowmen dig my earth,
None of them along the line know what any of it is worth (repos, mortgage backed securities)."

"There must be some way out of here," said the joker to the thief,
"There's too much confusion, I can't get no relief."

Then the original poem:

All Along The Watchtower
Bob Dylan
album: John Wesley Harding, 1967

"There must be some way out of here," said the joker to the thief,
"There's too much confusion, I can't get no relief.

Businessmen, they drink my wine, plowmen dig my earth,
None of them along the line know what any of it is worth."

"No reason to get excited," the thief, he kindly spoke,
"There are many here among us who feel that life is but a joke.

But you and I, we've been through that, and this is not our fate,
So let us not talk falsely now, the hour is getting late."

"All along the watchtower, princes kept the view
While all the women came and went, barefoot servants, too.

Outside in the distance a wildcat did growl,
Two riders were approaching, the wind began to howl."

_______

See and listen to the guys who understood the song:

Bob Dylan
http://www.youtube.com/watch?v=Q_ncQgjIlFM

Jimi Hendrix
http://www.youtube.com/watch?v=8aUDVpHxw9c&mode=related&search=

Dave Matthews Band
http://www.youtube.com/watch?v=hcBfiob0XbM&mode=related&search=

So far, it's just the 4th phase correction since the 2004 lows. 10-year Note rates go to 3.94%, or potentially to 3.80%, before this bull market correction is over.

Watch the EUR/JPY and USD/JPY for believable signals, like Yen down, then stocks are likely to rise.

With more downward action to come, we are preparing to buy the lows.

Join us if you want.

W. B. Busin

Timing Market Turns - FOMC Cuts Discount Rate

noreply@blogger.com (Unknown) — Fri, 17 Aug 2007 13:29:00 +0000

0900 EDT

We will enter 75 % long Swing positions in Dow, NDX, SPX and RUT. Stops for today's closing should be in the daily spread on Wednesday, preferably the highs on Wednesday.

This trade may only last until closing as today's action depends on the return traders to some level of "belief in the markets". Initial opening stops for first 90 minutes is yesterday's 1512 EDT low.

Cover long Treasury positions.

WBB

0825 EDT

We will update before the opening after we observe the reaction's aftermath.

As we have thought, the 1998 pattern appears broken or significantly shortened.

The FOMC's action is unusual since it is the Discount Rate that was cut and may have more bearish implications for stocks over coming weeks. It is bullish for today and likely into Monday.

We will update by 0915 EDT.

WBB

TWO MESSAGES FROM THE FOMC THIS MORNING AT 0820 EDT

For immediate release

Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward.

In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably.

The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.

Voting in favor of the policy announcement were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Richard W. Fisher; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Michael H. Moskow; Eric Rosengren; and Kevin M. Warsh.

For immediate release

To promote the restoration of orderly conditions in financial markets, the Federal Reserve Board approved temporary changes to its primary credit discount window facility.

The Board approved a 50 basis point reduction in the primary credit rate to 5-3/4 percent, to narrow the spread between the primary credit rate and the Federal Open Market Committee's target federal funds rate to 50 basis points.

The Board is also announcing a change to the Reserve Banks' usual practices to allow the provision of term financing for as long as 30 days, renewable by the borrower. These changes will remain in place until the Federal Reserve determines that market liquidity has improved materially.

These changes are designed to provide depositories with greater assurance about the cost and availability of funding. The Federal Reserve will continue to accept a broad range of collateral for discount window loans, including home mortgages and related assets. Existing collateral margins will be maintained.

In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York and San Francisco.

Timing Market Turns 08/15/2007

noreply@blogger.com (Unknown) — Thu, 16 Aug 2007 02:03:00 +0000

Timing Market Turns

We are still in cash since August 10th.

You may wonder why we haven't entered short.

First, it's expiration week in a perceived crisis for credit availability, with a week full of economic data.

Second, since the August 6th morning low we have two and a half days upward with a spike closing on August 8th (no trend). Then one down day followed by a spike down opening on the 10th that ended higher followed by two days down.

We expect an eventual retrace attempt but it is not a required action. In times like this, a patient swing trader and a cool headed investor takes an action that reflects their trading plan. We may miss a few quick trades but as we have stated for a few weeks 3-5 day swings had become shorter and more difficult to trade or cover risk for a long term portfolio.

The SPX is quite close to its overflow point at 1363. This is our structural level for the onsetting of a long term bear market. Closing below that level for more than 1 day will bring out the need to re-evaluate any structural phasing counts. It will also mean an entirely new trading structural plan, and also a revised investment devices to re-focus capital preservation for investors.
___________________________________________________

The downward move has persisted through many intraday and daily buy signals. The Fed continues to attempt to add liquidity. We believe that it may be making matters worse for all stocks, instead of just the mortgage lenders and the bankers who fund them, and the private capital hedge funds who are leveraged on the same failing computer models that are now all converging simultaneously.

Bad lending practices usually grow bad loans, which result in additional lending to the bad borrower. Then comes the non-performing part of the story by borrowers and the resulting matrix of derivatives dissolve. That's all we are going through so far.

"Cash is king" is not a fable, it is so true at times like this.

Unpopular words, perhaps - but people want to know what is really happening.

I was scared in the 1974 drop, but not since then. Not in 1987 or 2000.

Even if this does not become a Bear market, and remains just a correction, the future finger pointing at causes will be useless. We know the cause, it's a correction.

Finger pointing is for the vain; the vain who never saw it coming and still don't understand it. Who? Politicians. They will be ready to legislate a solution to a non-existent problem in a few months.

The recent SEC removal of the uptick rule (10a-1), in place since 1934, is not the cause of this decline. This is the 4th or 5th longest bull market in history, so far!

Bull markets have corrections, then they turn upwards and get going all over again. If the uptick rule has any influence, it will make the correction far shorter but just as deep as it should be. There's nothing new under the sun or in the markets.

The simple existence of the TimerTrac service is evidence that markets go up and then they go downward. This is not 1929, but it does still look a wee bit like 1998. The Fed liquidity injections are potentially disrupting the pattern.

We have our Time Locus Points listed for this correction into October, and our "start the bear market" levels ( in previous post ). We do not believe that more than one of the indexes will reach those levels and only intraday. A closing below those levels will jeopardize our "Continuous Bull' outlook for the months ahead.

We hope they help you.

These turning point dates are objective and without bias for direction. Our comments about the Time Loci dates reflect what our models produce and how we interpret same. The dates have an abnormal accuracy.

We will update our comments here at least weekly, during this correction. Or you may join our mailing list.

W. B. Busin
W. B. Busin Group Publishing
http://www.market-timing-wbbusin.com

Timing Market Turns

noreply@blogger.com (Unknown) — Sun, 12 Aug 2007 00:49:00 +0000

Market Summary -

Updated on Saturday, August 11, 2007

We did expect that Friday's action would be upward reversal and close positively. We believe the Federal Reserve actions actually held the markets in place.

It seemed to us that each time the Fed added reserves by buying mortgage backed securities, the small rallies fizzled. So the indexes slogged into the closing and we are left with structure and technicals that are likely to produce a huge run upwards on Monday, August 13th, 2007.

But our Time Loci are pointing to Tuesday as the end of this track. We then expect the normal shilly-shally into the derivative expiration on Friday.

If not sooner, we expect that Friday will end the "normal" market conditions. We expect to be partially or potentially totally short in the index Swing positions and Investor Core positions by Friday's closing or Monday's closing.

The 1998 track is still on course, but we do know nothing is perfect and the Fed's intervention may have altered the timing. A potential second effect of the Fed's intervention is that it might enhance the downward momentum we expect to begin at latest by August 24th, and, ending at a September 4th low. (There should be a strong move upward from that low, followed by a final downward movement into early October.)

Thank you.

Consider joining this newsletter at our website signup page.

We believe our work produces a unique view of what is coming.

God bless all of you.

W. B. Busin

http://www.market-timing-wbbusin.com/

1230 EDT, August 11, 2007

P.S. Bull Market is over IF these levels are penetrated and closed below for more than one day:
SPX 1364
Dow 11,939
NDX 1711

RUT was near critical support at 758, and 75.15 for the IWM; penetrating that level will quickly lead to the July lows of 2006 at 670. We don't view that as likely.

RUT's structure is much different from the above indexes. We believe it has tracked in an upward corrective structure (not pulsive), as similarly the SOX has tracked. It is a quite difficult and unpredictable structure even when it is trending with the higher capitalization indexes. But we will attempt to try and keep a hold on it and its timing.

RUT may not advance as well as other indexes early in the next upward move this Fall. But it may soon begin to outperform the 'blue chips'. That is a potential based on the 1998-2000 pattern. IWM traders may want to look to the DIA/SPY/QQQQ for the early months of the next movement.

Timing Market Turns

noreply@blogger.com (Unknown) — Sun, 12 Aug 2007 00:49:00 +0000

This is the August 8, 2007 market comments submitted to TimerTrac.com 's twice a week

Timing Market Turns

http://www.market-timing-wbbusin.com/

We track our trades at TimerTrac.com for the Dow 30, S&P 500, NASDAQ 100 and the Russell 2000 indexes. We trade them as if we were trading an unleveraged stock. We use a Swing trade (3-5 days) and an Investor Core (for hedging longer term investment positions).

We believe that the decline from mid-July has completed the first downward leg of a Bull market correction. Between now and expiration Friday (August 17th), the indexes will likely track laterally as resistance at the 50% retracement (potentially 62%) levels.

We have been writing about the near exact tracking of the indexes from the July high as relates to its matching decline in 1998. It is nearly to the day so far.

The similarities between 1998 and 2007 crises have been getting alot of press. It might first scare some people if they saw the charts from 1998, but we believe most people want to know where the market's going.

Look at these two charts:
NDX - Summer of 1998
http://i21.photobucket.com/albums/b295/wbbusin/ndxsummer98.jpg

SPX - Summer of 1998
http://i21.photobucket.com/albums/b295/wbbusin/spxsummer98.jpg

Interest Rates
We also believe that interest rates are about to crash as well. The 10-year T Note rate could reach below 3.94%, and potentially touch 3.80%.

Currencies
The major currency pairs are setting the stage for a massive repatriation of the Japanese Yen. By mid-September, there "carry trade" will be homeward bound, in our view. Look at the USD/JPY and especially EUR/JPY in 1998, and then what happened since then to both the Nikkei, the Yen and their economy.

We just alerted our readers today that the Shanghai SSE Composite should top at the latest by this Friday. We know the difference between top and a high. Potentially, parabolic markets are unstoppable until they do stop.

What if we are wrong and it's a Bear market? We cover that in the Market Summary. We also have an interesting comparison of FOMC 1998 and FOMC 2007. Hint: We like Bernanke better.

If the FOMC lowers at the September meeting, we believe that it might create the worst of conditions by rewarding rotten lending practices and policies. If they wait till just after the first week in October (before the October meeting), it will be viewed in the long term future as the right thing to do.

We are bearish on equities, bullish on the best of bonds till October, neutral on the major currency pairs (that's what we trade), or until something changes our view.

God bless all of you.

W. B. Busin
W. B. Busin Group Publishing

Give our newsletter a look at:
http://www.market-timing-wbbusin.com/

W.B. Busin Broadcast - Wednesday, March 7, 2007

noreply@blogger.com (Unknown) — Wed, 07 Mar 2007 16:55:00 +0000

Today is Wednesday, March 7, 2007

This information is for educational and informational purposes only. The information and data that we trade on is based in the various levels below. It is for our personal use and is shared with you for solely informational purposes.
We will update each Monday morning before the open (Tuesday, if market is closed Monday), Wednesday afternoon before the closing, and Friday midday. We will also inject updates when we see sound trend changes that can be tradable.
This is our preferred frequency and will be our basic service that will be available at the website. We will send a few messages between those as events and action may change our view.

_______

1205 ET March 7, 2007

The email service has been 'down' since 0300 ET when we tried to send a message to you. They are having trouble and I don't know when they will be online again.

Look at your email from the afternoon message on March 5th. The bias for the time loci that we are expecting in the second paragraph is now the opposite.

If the email service is not functioning by 1530 ET, we will post here with any position changes.

Thank you for your patience.

God bless all of you.

W. B. Busin

W.B. Busin Broadcast #4 - Tuesday, February 27, 2007

noreply@blogger.com (Unknown) — Tue, 27 Feb 2007 14:36:00 +0000

Today is Tuesday, February 27, 2007

_______

1530 ET

We are 100% in cash as of today's closing.

Here is an SPX chart with support levels:

http://i21.photobucket.com/albums/b295/wbbusin/SPX02272007retracement.jpg

Here is an NDX chart with support levels:

http://i21.photobucket.com/albums/b295/wbbusin/NDX02272007retracement.jpg

Cool heads prevail at times like this.

WBB

_______

Daily Time Loci for Indexes for Tuesday, February 27, 2007 -

February 28th -

We remain cautious and bullish.

God bless all of you,

W. B. Busin

W.B. Busin Broadcast #3 Tuesday, February 27, 2007

noreply@blogger.com (Unknown) — Tue, 27 Feb 2007 14:36:00 +0000

1420 ET

Now what about a bottom? Where is the bottom for this leg
down of the correction?

Sentiment indicates we are near a short term low, as in a small
reversal upward followed by more downward. It won't seem
like much, but the Tuesday, May 30, 2006 down day crushed
sentiment on a 1-day change. Price only dropped 20 points
and reversed the next day. Four upward days later came
the beginning of the decline into the mid-June lows.
Sentiment is currently at those same relative sentiment levels.

Not to discount a massive intraday reversal, but we believe it
will be difficult to recover the following levels at today's closing.
Closing at or above SPX 1437, Dow 12,565, NDX 1800 and
RUT 818 may maintain an uptrend. We give this a
5% chance of occurring in our most optimistic scenario.

In view of the extreme oversold sentiment and
technicals, we will exit on the closing today to
lock in some profits. We expect at least a modest
reversal upwards tomorrow.

We will exit to cash in all Swing positions in the three
indexes at today's closing.We may enter a small long
position on tomorrow's opening if the Yen settles back
to more realistic levels overnight (versus USD and EUR).

Bernanke will be trying to calm a few cases of
'market hypertension' tomorrow. He will likely be successful
won't he? He can blame Mr. Greenspan for the recession
talk he gave yesterday.

WBB

W.B. Busin Broadcast - ALERT CHINA Tuesday, February 27, 2007

noreply@blogger.com (Unknown) — Tue, 27 Feb 2007 14:36:00 +0000

0845 ET

We will enter 100% short in the Swing positions for the NDX, SPX and Dow for today's opening.

The reason is explained below. This is a very high risk trade and we are looking at exiting at today's closing if any of the reversal scenarios or lateral tracks become the dominant movement today.

We will update throughout the day if we have any comments of worth.
With a large downward opening gap in the futures, considerable upward pressure will soon be needed to close the gap.

How and when the gap is closed is the question. Our models show an attempt in the afternoon session that fails. The Wednesday track offers even less chance to close the gap unless the late afternoon session low is reversed. We are prepared to enter a long Swing position tomorrow if scenarios begin to materialize.

We don't see a downward spiral/crash beginning here. Extended markets have days like this one, especially when there has been no significant correction for many months. If day trading the YM, we would sell every intraday rally attempt that momentum indicators do not confirm.
We saw this decline begin in the currencies. We were stopped out of a small long USD/JPY position. We looked at sterling/yen and aussie/yen and saw the yen demand flying! A big surprise to us! Was it another BOJ action? We looked for info on the newswires through Sydney then Tokyo and saw the lead comments about China's 'reforms'. We reversed to a short position by 0245 ET and captured over half of the nearly 200 pips in the downward move.
What is important here is the extent that this downward move affects the U.S. markets. Recent history, April 2006, implies that it may be the start of a more substantial correction.

Email is delivering slowly - we will post updates here and in email for today, 27 February 2007.

Previously this morning:

We will exit all long positions to 100% cash on the today's opening in the Swing and Core positions for the NDX, SPX and Dow.

China tightened bank reserves and implemented other trading restrictions that resulted in a 1-day 9% drop for the Shanghai Composite Index. Many stocks were closed at their 10% daily limit.

The Dow futures has been down over 100 points overnight; the S & P 500 futures off nearly 10 points and the NDX futures off by 17 points at its lows.

With the next time locus for all indexes on Wednesday, February 28th, we will remain in cash till then.

This external event is further reason to keep stops in place.

WBB

U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

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Timing Market Turns - Wednesday 01/04/2007

noreply@blogger.com (Unknown) — Thu, 04 Jan 2007 06:13:00 +0000

Today is Wednesday 01/04/2007

Happy New Year!

We will soon publish our forecast for the early months of 2007 like we did last year.

We expect a year of turmoil for the markets as we foresee a multi-month correction to the 2006 upward movement. That correction is not likely to begin before early spring 2007.

The current correction that will unfold from this New Year's week will stretch for several weeks, but is not likely to carry too far away from the current SPX and Dow 30 levels, (e.g., SPX should hold above 1300 to 1320).

We expect another upward pulsive movement to follow on. It should be a final one in this ongoing rally from the lows of October 2004.

The correction that will follow the final upward move is expected to last for months, well into late 2008.

We shall have quite a bit more on this in our newsletter and website as time passes.

God bless all of you.

W. B. Busin

Timing Market Turns - Friday 08/04/2006

noreply@blogger.com (Unknown) — Fri, 04 Aug 2006 19:28:00 +0000

Today is Friday, August 4, 2006

This information is for educational and informational purposes only. The
information and data that we trade on is based in the various levels below.
It is for our personal use and is shared with you for solely informational
purposes.

______

1550 EDT
We will use option #1.

It may be a more enjoyable weekend with option #2 for others. It makes little difference at this point.

Have a fine weekend.

God bless all of you.

W. B. Busin

Timing Market Turns - Tuesday 08/01/2006

noreply@blogger.com (Unknown) — Tue, 01 Aug 2006 19:59:00 +0000

Timing Market Turns - 08/01/2006

This information is for educational and informational purposes
only. The information and data that we trade on is based in the
various levels below. It is for our personal use and is shared
with you for solely informational purposes.
______

1553 EDT

We remain in our current positions.

WBB