Take care and enjoy the start of summer!

Cheers Oli

A full-blown recovery will last AT LEAST 5 YEARS …

NO COMMENT …

I just tilted the SELL BUTTON …

Every day a new recommendation, a new round of upgrades …

Today we had Goldman calling Bank of America a “conviction buy” … hmmm

JPMorgan and Citi hiked Goldman price targets and earnings estimates … hmmm

The interesting thing about this is … as the markets so far are holding up … less write offs are expected.

The analyst consensus for Bank of America’s Q2 is 1 cent per share … Goldman is now going for 25 cts.

So we all will see a lot more upgrades, trying to keep the hot air in the balloon …

But … the “real” earnings blaster is yet to come … PPIP … the program, which allows banks to buy their own bad debts for fantasy prices …

So … technically the market is turning … but on the horizon one can see already a second up-leg forming … at least … volatility and therefore the chance to earn money is granted

Fundamentals became funny mentals already

Is U.S. government-data being “massaged”?

Not nice

Democrats Look to Extend Federal Support to Muni-Bond Market

The House Financial Services Committee is scheduled to consider a series of bills that would provide massive government backing and intervention to the municipal bond market. Draft legislation is expected to be introduced as early as this week. A full committee hearing on municipal bonds is tentatively scheduled for Thursday, May 21, according to an internal staff schedule.

This latest intervention would:

- Create a liquidity facility through the Federal Reserve to purchase municipal bonds, much like what the Federal Reserve does with mortgage-backed and federal government bonds.

- Form a temporary federal government program to reinsure municipal bond insurers. Almost all municipalities buy bond insurance because it boosts their credit ratings. The cost of the insurance is usually lower than the higher interest payments that come with a lower credit rating. If the insurer runs into financial trouble, then the credit ratings on the municipal bonds drop because there is doubt about the insurance. Government backing would eliminate that concern.

- Provide additional regulation for financial advisors to municipalities. Many, including former Securities and Exchange Commission Chairman Arthur Levitt, have been calling for stronger oversight of the municipal bond market in the wake of pay-to-play bond scandals, in which banks and advisers have made gifts or political contributions, and received financing jobs along with the fees for those jobs.

One day … after guaranteeing everything … they will find out, that it was formerly known as communism … if not “banana republic” (some people get rich on the back of the rest)

Copyright by Tradestation

As you can see … the S&P started its downtrend in October 2007 and accelerated one year later into a virtual free fall.

After testing the parallel of the connection of the 2 highs (2000 and 2007), the market reversed course by performing a classic “bear trap” in March 09.

Despite the sharp upmove, we so far retraced only a MINOR portion of the recent still dominating DOWN TREND.

Interestingly … AT THE moment … we are retesting the former weekly Downtrend.

As this is the first attempt to break back into this down channel, chances are good to correct first a part of the current bear correction.

Remember … a WEAK market retraces up to 38%, a normal market between 50% and 62% and a strong market up to 77% or even more.

So far … we have a sharp FIRST corrective move … which should now start to lead us into a correction of this move. How far this correction of the correction will lead us, will determine, how far the “whole” corrective move might take us … to THEN decide, WHAT TYPE of market we are in.

RETRACEMENT LEVELS for the corrective move are:

822 … Minimum … 760 … Normal … 720 … Maximum

All considered that we already have seen the high for this move by now (probable as market seems tired)

So don’t get overwhelmed by the “experts” … wait for the correction … it is not the time to invest into equities now

Copyright by Tradestation

As you can see, the German DAX is in a weekly downtrend since the start of 2008.

I highlighted the following areas:

1. The start of the acceleration of the downtrend.

2. The attempt to accelerate “big time” to the downside, which failed 3 times (no follow up at all after the weekly closes BELOW the channel)

3. The exact retest of the channel in March 2009

4. “Today’s” situation … the 1st attempt to break out of the channel … verdict is still out

As you can see, we so far … despite the recent BULL RUN … only retraced a MINOR part of the DOWN RALLYE.

Remember … a WEAK market retraces up to 38%, a normal market between 50% and 62% and a strong market up to 77% or even more.

So far … we have a sharp FIRST corrective move … which should now start to lead us into a correction of this move. How far this correction of the correction will lead us, will determine, how far the “whole” corrective move might take us … to THEN decide, WHAT TYPE of market we are in.

RETRACEMENT LEVELS for the corrective move are:

4440 … Minimum 4250 … Normal 3900 … Maximum

All considered that we already have seen the high for this move by now (probable as market seems tired)

So don’t get overwhelmed by the “experts” … wait for the correction … it is not the time to invest into equities now

Stock price TRIPLED … and still they need around HALF of its market cap … IMPRESSING

So … at the end … reading between the lines … the first RUMOURS became true …

1. 16 out of 19 need capital … Goldman, JPMorgan and Morgan Stanley being the white ravens

2. Capital need will be around 150 bln $ … (Is that exactly the remaining TARP balance?)

3. Crisis is NOT over …

Be aware, that Roubini was quoted yesterday, that the assumptions of the stress tests are TOO POSITIVE … AUTSCH!!!

If one is an investor, NOW at last one should get the message … they keep manipulating and this market is only artificially inflated.

Take care!