If the effectiveness of the Public Education system were given a grade, it would surely get an F. The more we spend, the less we get. The evidence? http://markostake.blogspot.com/2010/11/educators-are-ones-needing-education.html.
The most basic question concerns whether the public coffers should be used to fund education at all? If you think about it, an educated population, like a strong army, is in society's overall interest. There is a direct and positive correlation between level of education and societally beneficial behavior such as higher employability, lower crime rate and out-of-wedlock births.
Economist Milton Friedman first proposed a system of school "vouchers" to make collective spending produce better results. Under the public school system, students receive a certain value through either cost-less tuition in K-12, or through subsidized tuition in the State University or junior college system.
Friedman argued that a key factor in the poor performance of the education system was lack of competition as reinforced by the tenure system and teacher's unions. The solution? Let students opting out of public schools use the money allocated to them by the state at ANY school. The result? A flourishing private school industry competing with other private schools for student dollars. Ergo, better performance by the education system.
While the voucher system contains a certain logic, there are numerous detractors. One argument against vouchers maintains that a large number of private, religious schools would receive public funding and cross the "church vs. state" issue in the Constitution. However, since it is the parents making the choice, it is hard to understand how the State could be imposing religion. In addition, there is also the objection that vouchers take money away from public education. Well, if you read Part 1 as linked above, one might conclude that taking money away public education might not be such a bad idea.
Other reasons in favor of school vouchers include the elimination of the inherent unfairness in having parents who pay for private schools pay twice: once in taxes for public education they don't use and the other in private school tuition. In addition, it would allow students of less wealthy parents access to private education, in particular specialty education in fields like music, sports or science.
Voucher systems are far from widespread, but are being employed in parts of 10 states and the District of Columbia. However, the total number of students receiving them remains quite low. Chile has the most advanced voucher system in the world actually employed covering 90% of its students.
Lastly, and perhaps most importantly, public education has been a breeding ground for political correctness and liberal politics. If you want to experience real censorship, just be either a Republican, Libertarian or Conservative in a University level Political Science class.
Marko's Take
Sunday, December 19, 2010
Thursday, December 16, 2010
Hindenburg Sightings Overtake Elvis Sightings
Just when we thought we had heard the last of the dreaded, but also much maligned, Hindenburg Omen, comes yet another sighting in Wednesday's trading according to expert Robert McHugh (https://www.technicalindicatorindex.com/Default.asp). In a short email sent out to his mailing list:
"Stocks generated a new confirmed Hindenburg Omen Wednesday, December 15th, an official signal with the second H.O. observation in the past two days. This Omen has appeared before all of the stock market crashes, or panic events, of the past 25 years. All of them. No panic sell-off (greater than 15 percent) occurred over the past 25 years without the presence of a Hindenburg Omen. Another way of looking at it is, without a confirmed Hindenburg Omen, we are pretty safe. But we have an official Hindenburg Omen as of December 15th, 2010, so we are not safe."
A reasonably thorough discussion of the complexities and calculations of the omen were discussed here: http://markostake.blogspot.com/2010/08/hindenburg-omen-all-over-financial.html.
The Nasdaq is now at a 3 year high while the Dow Jones Industrial Average, Standard & Poor's 500 and Russell 2000 are at clear 2 year highs. Yet, over the past 3 trading days, NYSE new 52 week lows have been astounding high. The exact number depends on whether you look at the Wall St. Journal or the Yahoo numbers, but new lows ran 2% to 3% of total issues traded each day. It would be normal to have 1/10th of those levels!
While we're looking at our second favorite zepplin, why not check the solar calendar? According to NASA, a partial solar eclipse occurs on January 4, 2011. The last eclipse, occuring early in the summer was total.
Whether a partial eclipse counts in the scheme of astro-harmonics remains an open question. The connection between solar eclipses, lunar cycles and stock market crashes was discussed more fully here: http://markostake.blogspot.com/2010/07/hindenburg-omen-confirmed-or-was-it.html.
So, add to that the horrible sentiment picture as described in these recent "Takes": http://markostake.blogspot.com/2010/12/psychology-of-investing-part-2.html, and one could pretty reasonably conclude that a helluva bear market is dead ahead.
As to Gold and the Gold Bugs Index (HUI), it really appears that a retracement to the 200 Day Moving Average (DMA) is upon us. That would be another 10% downside for the metal and about 15% for the precious metal stocks. Silver, if it should correct to its 200 DMA, would have about 30% exposure.
The prospect of a more significant drop in the precious metals sector is extremely remote in light of rapidly building global inflation pressures. This pullback, which ought to be quite violent but short to scare everyone, should be viewed as a terrific buying opportunity.
For now, investors ought to stay as liquid as possible, even though safe places to park money offer no return. Better no return than a sharply negative return.
Marko's Take
"Stocks generated a new confirmed Hindenburg Omen Wednesday, December 15th, an official signal with the second H.O. observation in the past two days. This Omen has appeared before all of the stock market crashes, or panic events, of the past 25 years. All of them. No panic sell-off (greater than 15 percent) occurred over the past 25 years without the presence of a Hindenburg Omen. Another way of looking at it is, without a confirmed Hindenburg Omen, we are pretty safe. But we have an official Hindenburg Omen as of December 15th, 2010, so we are not safe."
A reasonably thorough discussion of the complexities and calculations of the omen were discussed here: http://markostake.blogspot.com/2010/08/hindenburg-omen-all-over-financial.html.
The Nasdaq is now at a 3 year high while the Dow Jones Industrial Average, Standard & Poor's 500 and Russell 2000 are at clear 2 year highs. Yet, over the past 3 trading days, NYSE new 52 week lows have been astounding high. The exact number depends on whether you look at the Wall St. Journal or the Yahoo numbers, but new lows ran 2% to 3% of total issues traded each day. It would be normal to have 1/10th of those levels!
While we're looking at our second favorite zepplin, why not check the solar calendar? According to NASA, a partial solar eclipse occurs on January 4, 2011. The last eclipse, occuring early in the summer was total.
Whether a partial eclipse counts in the scheme of astro-harmonics remains an open question. The connection between solar eclipses, lunar cycles and stock market crashes was discussed more fully here: http://markostake.blogspot.com/2010/07/hindenburg-omen-confirmed-or-was-it.html.
So, add to that the horrible sentiment picture as described in these recent "Takes": http://markostake.blogspot.com/2010/12/psychology-of-investing-part-2.html, and one could pretty reasonably conclude that a helluva bear market is dead ahead.
As to Gold and the Gold Bugs Index (HUI), it really appears that a retracement to the 200 Day Moving Average (DMA) is upon us. That would be another 10% downside for the metal and about 15% for the precious metal stocks. Silver, if it should correct to its 200 DMA, would have about 30% exposure.
The prospect of a more significant drop in the precious metals sector is extremely remote in light of rapidly building global inflation pressures. This pullback, which ought to be quite violent but short to scare everyone, should be viewed as a terrific buying opportunity.
For now, investors ought to stay as liquid as possible, even though safe places to park money offer no return. Better no return than a sharply negative return.
Marko's Take
Sunday, December 12, 2010
The Psychology Of Investing (Part 2)
As described in Part 1 http://markostake.blogspot.com/2010/12/psychology-of-investing-part-1.html, successful investing is far more than understanding finance and business. If it were that easy, every MBA would be rich. In fact, even experienced professional investors endure breath-taking losses. Many, many hedge fund managers have lost every single penny under management in days because they made very basic mistakes.
Making money requires some degree of timing. While investment legends such as Warren Buffett and Benjamin Graham completely avoid market timing, they would not disagree that there are far better times to enter a position and exit a position than others.
Entering a new position when there is panic is a far better bet than when shoe-shine boys and taxicab drivers are giving stock tips. So, we turn again to different ways to measure investment sentiment.
Statistics from a mutual fund group called Rydex provides an interesting way to gauge how investors are thinking. Rydex has been a pioneer in the creation of inverse funds, that is, funds which produce returns when markets go down. Technicians have created "Rydex Ratios" which measure the employment of assets in long-biased funds versus those in the inverse or "short" funds. In general, the more assets are playing the short side, the more bearish investors are, and the more likely that a bottom is at hand.
A practioner of the Rydex Ratio is Shaeffer's Investment Research http://www.schaeffersresearch.com/. A recent graph of the Rydex Ratio using asset investment in long versus short Standard & Poor's 500 index funds can be accessed by clicking here: http://www.schaeffersresearch.com/streetools/market_tools/rydex_nu.aspx.
Another set of indicators employs options buying and selling statistics. Put options buyers bet on falling prices while call option buyers bet on rising prices. Therefore the "put/call ratio" tracks bearish versus bullish bets and acts as a contrary indicator. These ratios can also be found in Shaeffer's Investment Research by clicking here: http://www.schaeffersresearch.com/streetools/market_tools/cboe_eqpcr.aspx.
Probably the most comprehensive sentiment analyst is a guy named Jason Goepfert who has a newsletter known as Sentiment Trader http://sentimenttrader.com/. I have been a subscriber to this newsletter and it has been quite valuable as a resource. A little more information on Jason can be accessed here: http://wallstcheatsheet.com/knowledge/interview-knowledge/exclusive-sentiment-trader-founder-jason-goepfert-shares-3-keys-to-success.html.
Jason creates a very comprehensive measure of sentiment using a variety of indicators, of which some are the result of his proprietary research. His short-term position, as of December 10th, 2010: "We've been looking for a 2-3 day decline, but stocks aren't accommodating. We'll move back to Neutral if SPY trades above 124.16. If that happens in the first 1/2 hour of regular trading on Friday, then SPY drops back under 123.60, we'll move back to 25% Bearish." Goepfert's intermediate-term position is neutral.
Jason constucts several models of investor emotion. His composite index is constructed using the following indicators: Sentiment surveys, proprietary versions of the positioning of Futures traders, puts/calls, volatility indices, breadth ratios, the "Trading Index" or TRIN, and several un-published indicators.
He also measure the positioning of "smart" to "dumb" money, or those folks who have a tendency to be consistently right versus those consistently wrong. One example of "smart money" would be corporate insiders who are in the best position of knowing how their companies are doing. When corporate insiders buy their own stock, that is about a good of an endorsement of a company's prospects as you can get. Dumb money is your typical retail investor and option speculator, who tend to be wrong far more often than right. Currently, according to his research, smart money is 33% confident in a rally, while dumb money is 79% confident. Fortunately, Marko's Take would agree wholeheartedly with the smart folks.
Taking everything together, virtually any reasonably calculated sentiment measure is suggesting that market confidence is at unsustainable levels. Most measures are within striking distance or exceeding the type of euphoria which characterized the major tops in 2000 and 2007.
As for the Gold market, analyst Mark Hulbert measures sentiment in the precious metals arena. As of November 24, Hulbert's conclusion is that sentiment remains FAR from overheated. His most recent publicly available views are described here: http://www.marketwatch.com/story/contrarian-analysis-of-the-gold-market-2010-11-24.
We remain a bit cautious on Gold near-term, but expect any correction to be sharp and short-lived. It would be preferable for the precious metals complex to get a bit of a shake-out, but these types of parabolic moves often leave investors waiting for corrections which never come.
Marko's Take
Making money requires some degree of timing. While investment legends such as Warren Buffett and Benjamin Graham completely avoid market timing, they would not disagree that there are far better times to enter a position and exit a position than others.
Entering a new position when there is panic is a far better bet than when shoe-shine boys and taxicab drivers are giving stock tips. So, we turn again to different ways to measure investment sentiment.
Statistics from a mutual fund group called Rydex provides an interesting way to gauge how investors are thinking. Rydex has been a pioneer in the creation of inverse funds, that is, funds which produce returns when markets go down. Technicians have created "Rydex Ratios" which measure the employment of assets in long-biased funds versus those in the inverse or "short" funds. In general, the more assets are playing the short side, the more bearish investors are, and the more likely that a bottom is at hand.
A practioner of the Rydex Ratio is Shaeffer's Investment Research http://www.schaeffersresearch.com/. A recent graph of the Rydex Ratio using asset investment in long versus short Standard & Poor's 500 index funds can be accessed by clicking here: http://www.schaeffersresearch.com/streetools/market_tools/rydex_nu.aspx.
Another set of indicators employs options buying and selling statistics. Put options buyers bet on falling prices while call option buyers bet on rising prices. Therefore the "put/call ratio" tracks bearish versus bullish bets and acts as a contrary indicator. These ratios can also be found in Shaeffer's Investment Research by clicking here: http://www.schaeffersresearch.com/streetools/market_tools/cboe_eqpcr.aspx.
Probably the most comprehensive sentiment analyst is a guy named Jason Goepfert who has a newsletter known as Sentiment Trader http://sentimenttrader.com/. I have been a subscriber to this newsletter and it has been quite valuable as a resource. A little more information on Jason can be accessed here: http://wallstcheatsheet.com/knowledge/interview-knowledge/exclusive-sentiment-trader-founder-jason-goepfert-shares-3-keys-to-success.html.
Jason creates a very comprehensive measure of sentiment using a variety of indicators, of which some are the result of his proprietary research. His short-term position, as of December 10th, 2010: "We've been looking for a 2-3 day decline, but stocks aren't accommodating. We'll move back to Neutral if SPY trades above 124.16. If that happens in the first 1/2 hour of regular trading on Friday, then SPY drops back under 123.60, we'll move back to 25% Bearish." Goepfert's intermediate-term position is neutral.
Jason constucts several models of investor emotion. His composite index is constructed using the following indicators: Sentiment surveys, proprietary versions of the positioning of Futures traders, puts/calls, volatility indices, breadth ratios, the "Trading Index" or TRIN, and several un-published indicators.
He also measure the positioning of "smart" to "dumb" money, or those folks who have a tendency to be consistently right versus those consistently wrong. One example of "smart money" would be corporate insiders who are in the best position of knowing how their companies are doing. When corporate insiders buy their own stock, that is about a good of an endorsement of a company's prospects as you can get. Dumb money is your typical retail investor and option speculator, who tend to be wrong far more often than right. Currently, according to his research, smart money is 33% confident in a rally, while dumb money is 79% confident. Fortunately, Marko's Take would agree wholeheartedly with the smart folks.
Taking everything together, virtually any reasonably calculated sentiment measure is suggesting that market confidence is at unsustainable levels. Most measures are within striking distance or exceeding the type of euphoria which characterized the major tops in 2000 and 2007.
As for the Gold market, analyst Mark Hulbert measures sentiment in the precious metals arena. As of November 24, Hulbert's conclusion is that sentiment remains FAR from overheated. His most recent publicly available views are described here: http://www.marketwatch.com/story/contrarian-analysis-of-the-gold-market-2010-11-24.
We remain a bit cautious on Gold near-term, but expect any correction to be sharp and short-lived. It would be preferable for the precious metals complex to get a bit of a shake-out, but these types of parabolic moves often leave investors waiting for corrections which never come.
Marko's Take
Wednesday, December 8, 2010
The Psychology Of Investing (Part 1)
Successful investing is about far more than understanding value, balance sheets and quality of management. One also needs to be a pretty good amateur psychologist. Virtually all market tops and bottoms occur at emotional extremes: Bottoms coincide with widespread panic while Tops tend to be associated with some unjustified level of overconfidence or greed.
We continue our very bearish stance on virtually all of the capital markets. We've given dozens of reasons that this so-called "recovery" is unsustainable and, with it, a major, major peak is being formed in the capital markets.
In addition to all the reasons for concern previously discussed, another subset of technical analysis referred to as "sentiment" analysis is clear in its verdict: SELL!
The theory behind sentiment analysis is quite simple, and so logical that Mr. Spock himself would not even raise an eyebrow. Market peaks occur when buying power has become exhausted. This happens because those buyers have become either complacent, overconfident or just plain greedy. Once they've all bought in, who's left to buy?
This level of emotional extreme can be measured quantitatively, so one need not be an empath to get a good fix on things. The most basic form of sentiment reading is the market poll. There are several which have long track records, are consistently applied and easily accessible for historical analysis. The two of note are Investor's Intelligence which polls newsletter writers and the American Association of Individual Investors (AAII) which polls retail investors. Barron's reprints a number of these polls every week http://online.barrons.com/public/page/9_0210-investorsentimentreadings.html.
The AAII poll currently shows 49.7% bulls versus 26.2% bears. These numbers are at major, major top historical readings and suggest any further upside from here can not be ruled out, but must be viewed as quite limited. Investor's Intelligence confirms similar results. The most recent readings are consistent with levels virtually identical to the tops reached in 2007 and 2000, with 55.4% Bulls and 21.8% Bears.
Other sentiment indicators are less precise but, nonetheless meaningful. Just two days ago, Goldman Sachs issued its 12 month projection of 1,450 on the Standard & Poors 500 (SPX) or a gain of 25% from here. This forecast was not directly attributed to "Dear" Abby Joseph Cohen, but suffice it to say that Ms. Cohen is a notorious perma-bull who never met a reason not to recommend stocks even at extremes of overvaluation. She was quite bullish at the upper end of the Nasdaq bubble, issuing bullish forecast after bullish forecast. Somehow, she kept her job.
There is the "Magazine Cover" indicator. Mainstream publications like Business Week, Time and Newsweek are famous for having cover stories about the "Death Of Equities" or the "New Age of Investing" almost exactly at market peaks and bottoms. These publications act as investor polls in and of themselves, merely reflecting what their readers believe.
Another excellent sentiment reading, and probably the best one of all, is the level of market volatility. This one may be best because it's determined through actual trading. Volatility is a statistical measure of the expected degree of variability in stock prices over various subsets of time. It is a key component in options pricing, but very, very useful in understanding exactly where investors sentiments lie.
There are several measure of volatility, but the best one is called the VIX, which is its symbol. At market bottoms, the VIX will have readings of above 50. Literally translated, this means that investors have priced in a range of up or down 50% over the coming year. At the other end, VIX can print under 10%, indicating complete complacency or lack of fear. A 3 year chart of VIX can be accessed by clicking here: http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=vix&sid=0&o_symb=vix&freq=2&time=10.
You will note that VIX is currently incredibly low and confirms the very ominous readings mentioned above in the investor sentiment polls.
Think this is all there is to sentiment? Not even close! In Part 2 we'll discuss other very interesting indicators of how investors deploy capital and how it gives us pundits a means of understanding what's in their heads.
All in all, this is still a time to remain very, very cautious and keep levels of cash high.
Marko's Take
We continue our very bearish stance on virtually all of the capital markets. We've given dozens of reasons that this so-called "recovery" is unsustainable and, with it, a major, major peak is being formed in the capital markets.
In addition to all the reasons for concern previously discussed, another subset of technical analysis referred to as "sentiment" analysis is clear in its verdict: SELL!
The theory behind sentiment analysis is quite simple, and so logical that Mr. Spock himself would not even raise an eyebrow. Market peaks occur when buying power has become exhausted. This happens because those buyers have become either complacent, overconfident or just plain greedy. Once they've all bought in, who's left to buy?
This level of emotional extreme can be measured quantitatively, so one need not be an empath to get a good fix on things. The most basic form of sentiment reading is the market poll. There are several which have long track records, are consistently applied and easily accessible for historical analysis. The two of note are Investor's Intelligence which polls newsletter writers and the American Association of Individual Investors (AAII) which polls retail investors. Barron's reprints a number of these polls every week http://online.barrons.com/public/page/9_0210-investorsentimentreadings.html.
The AAII poll currently shows 49.7% bulls versus 26.2% bears. These numbers are at major, major top historical readings and suggest any further upside from here can not be ruled out, but must be viewed as quite limited. Investor's Intelligence confirms similar results. The most recent readings are consistent with levels virtually identical to the tops reached in 2007 and 2000, with 55.4% Bulls and 21.8% Bears.
Other sentiment indicators are less precise but, nonetheless meaningful. Just two days ago, Goldman Sachs issued its 12 month projection of 1,450 on the Standard & Poors 500 (SPX) or a gain of 25% from here. This forecast was not directly attributed to "Dear" Abby Joseph Cohen, but suffice it to say that Ms. Cohen is a notorious perma-bull who never met a reason not to recommend stocks even at extremes of overvaluation. She was quite bullish at the upper end of the Nasdaq bubble, issuing bullish forecast after bullish forecast. Somehow, she kept her job.
There is the "Magazine Cover" indicator. Mainstream publications like Business Week, Time and Newsweek are famous for having cover stories about the "Death Of Equities" or the "New Age of Investing" almost exactly at market peaks and bottoms. These publications act as investor polls in and of themselves, merely reflecting what their readers believe.
Another excellent sentiment reading, and probably the best one of all, is the level of market volatility. This one may be best because it's determined through actual trading. Volatility is a statistical measure of the expected degree of variability in stock prices over various subsets of time. It is a key component in options pricing, but very, very useful in understanding exactly where investors sentiments lie.
There are several measure of volatility, but the best one is called the VIX, which is its symbol. At market bottoms, the VIX will have readings of above 50. Literally translated, this means that investors have priced in a range of up or down 50% over the coming year. At the other end, VIX can print under 10%, indicating complete complacency or lack of fear. A 3 year chart of VIX can be accessed by clicking here: http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=vix&sid=0&o_symb=vix&freq=2&time=10.
You will note that VIX is currently incredibly low and confirms the very ominous readings mentioned above in the investor sentiment polls.
Think this is all there is to sentiment? Not even close! In Part 2 we'll discuss other very interesting indicators of how investors deploy capital and how it gives us pundits a means of understanding what's in their heads.
All in all, this is still a time to remain very, very cautious and keep levels of cash high.
Marko's Take
Monday, November 22, 2010
The Missile Crisis That Never Ended
The Presidency of John F. Kennedy, which lasted less than 3 years, was perhaps the most dramatic in history. His election, which at the time, was the closest ever, was marred by allegations of ballot-stuffing from the Chicago political machine. A key election issue was the so-called "Missile Gap" amid the paranoia that existed at the height of the Cold War with the Soviet Union.
A key figure in the entire episode with Cuba and the USSR, was none other than a 13 year old boy, Julio Antonio del Marmol. Last week, we introduced Dr. Marmol and some of his intelligence operations in this piece: http://markostake.blogspot.com/2010/11/world-war-iii-continuesconducting-war.html.
Yes, it does sound far-fetched for a boy not old enough to shave to be an intelligence operative. Send a boy in to do a man's job? If you think about it, who better? Who'd suspect a 13-year old? Not Castro! He gave young Julio, whom he considered a "pet", unfettered access to Cuba's military bases.
Del Marmol's uncle, who had direct contact to U.S. intelligence, recruited him to use his incredible access to gather highly sensitive information. At first, young Julio was tested by being provided with a camera spy pen to take pictures at the military base. This vintage spy equipment still exists, and can be reviewed here: http://www.pimall.com/nais/pivintage/smmovie.html. In case you're wondering, Del Marmol was NOT given a shoe phone. That privilege was saved for Maxwell Smart.
The camera pens used by Del Marmol contained several pictures each and were passed on to his uncle who then, in turn, passed them on to U.S. intelligence. Del Marmol's early work produced what he believes are the first photographs of nuclear weapons brought in from Soviet merchant ships for assembly in Cuba.
As these were reviewed by analysts at the Central Intelligence Agency for authenticity and found to be legitimate, Del Marmol was then shipped boxes of pens to then photograph the surrounding areas, landmarks, road signs, Soviet trucks and everything else needed to fully comprehend the unfolding military threat to the south.
As early as August 1962, the United States officially suspected the Soviets of building missile facilities in Cuba. During that month, its intelligence services gathered information about sightings by ground observers of Russian-built MIG 21 fighters and light bombers. U-2 spyplanes found surface-to-air missile sites at 8 different locations.
On Monday October 15, 1962, the CIA's National Photographic Intelligence Center reviewed the U-2 photographs and identified objects that they interpreted as medium range ballistic missiles. By Friday, October 19, frequent U-2 spy flights showed 4 operational sites.
History reports that an agreement was reached by which the USSR would remove and dismantle Cuban missiles in exchange for a pledge by the United States NOT to invade Cuba plus the removal of American nuclear weapons from Turkey. At this point, Dr. Marmol's information varies dramatically from the history books.
According to Del Marmol, nukes were NEVER actually removed from Cuba. In fact, over the last 5 decades, he contends that Cuba now has built an arsenal of several hundred intermediate-range ballistic missiles (IRBMs) and an atomic submarine fleet.
He further contends that the United States has been well aware of Cuba's and the USSR's deception, but remains mum so as not to admit to the failings of its own intelligence and to prevent the unnecessary alarming of the population.
For public comsumption, Cuba in 2002 signed on to the United Nation's policy of non-nuclear proliferation and issued this press release http://www.un.org/News/Press/docs/2002/gadis3225.doc.htm, calling the United States, the sole nuclear power of the Americas.
So, while the United States and United Nations continue to wring their hands about the nuclear programs of North Korea and Iran, neither of which has the ability to reach the our shores, a silent and fully-armed enemy lies less than 100 miles away with the ability to wipe out our largest cities.
An ongoing standoff has remained in place for nearly 5 decades. Cuba is safe from invasion and while Castro may be certifiably insane, he is NOT suicidal. Instead, the export of Castro's revolution is done through client states in Central and South America.
The threat from Cuba is far greater than just the ability to inflict military damage. Castro's forces are active in regime de-stabilizing activities in key "friendly" countries such as Mexico, Brazil and Argentina. Venezuelan strong-man Hugo Chavez is already a Castro disciple.
How do we know that Del Marmol's information about ongoing Cuban military strength is true? Admittedly, his information is circumstantial, but he points out that the United States has been the sole super military power for years and has left Cuba untouched while acting as policeman all over the world in places such as Bosnia, Sudan, Ethiopia and others despite Cuba's proximity to our shores.
According to Del Marmol, Cuba's plan is to export its revolution to the United States without firing a single bullet. How are they doing this? For one, they are sponsors of militant groups such as "The New Black Panthers". They also have masked operatives who attend illegal immigration rallies in key border states Texas, Arizona, New Mexico and California who intentionally incite violent riots.
It is believed that Cuba is the ringleader of "The Three Continental Union" comprised of entities in Africa, the Americas and Asia.
It's no secret that our way of life is in jeopardy from American-hating countries in the Middle East, the Taliban and North Korea, a patient and quite potent enemy lies barely a stone's throw away.
Marko's Take
A key figure in the entire episode with Cuba and the USSR, was none other than a 13 year old boy, Julio Antonio del Marmol. Last week, we introduced Dr. Marmol and some of his intelligence operations in this piece: http://markostake.blogspot.com/2010/11/world-war-iii-continuesconducting-war.html.
Yes, it does sound far-fetched for a boy not old enough to shave to be an intelligence operative. Send a boy in to do a man's job? If you think about it, who better? Who'd suspect a 13-year old? Not Castro! He gave young Julio, whom he considered a "pet", unfettered access to Cuba's military bases.
Del Marmol's uncle, who had direct contact to U.S. intelligence, recruited him to use his incredible access to gather highly sensitive information. At first, young Julio was tested by being provided with a camera spy pen to take pictures at the military base. This vintage spy equipment still exists, and can be reviewed here: http://www.pimall.com/nais/pivintage/smmovie.html. In case you're wondering, Del Marmol was NOT given a shoe phone. That privilege was saved for Maxwell Smart.
The camera pens used by Del Marmol contained several pictures each and were passed on to his uncle who then, in turn, passed them on to U.S. intelligence. Del Marmol's early work produced what he believes are the first photographs of nuclear weapons brought in from Soviet merchant ships for assembly in Cuba.
As these were reviewed by analysts at the Central Intelligence Agency for authenticity and found to be legitimate, Del Marmol was then shipped boxes of pens to then photograph the surrounding areas, landmarks, road signs, Soviet trucks and everything else needed to fully comprehend the unfolding military threat to the south.
As early as August 1962, the United States officially suspected the Soviets of building missile facilities in Cuba. During that month, its intelligence services gathered information about sightings by ground observers of Russian-built MIG 21 fighters and light bombers. U-2 spyplanes found surface-to-air missile sites at 8 different locations.
On Monday October 15, 1962, the CIA's National Photographic Intelligence Center reviewed the U-2 photographs and identified objects that they interpreted as medium range ballistic missiles. By Friday, October 19, frequent U-2 spy flights showed 4 operational sites.
History reports that an agreement was reached by which the USSR would remove and dismantle Cuban missiles in exchange for a pledge by the United States NOT to invade Cuba plus the removal of American nuclear weapons from Turkey. At this point, Dr. Marmol's information varies dramatically from the history books.
According to Del Marmol, nukes were NEVER actually removed from Cuba. In fact, over the last 5 decades, he contends that Cuba now has built an arsenal of several hundred intermediate-range ballistic missiles (IRBMs) and an atomic submarine fleet.
He further contends that the United States has been well aware of Cuba's and the USSR's deception, but remains mum so as not to admit to the failings of its own intelligence and to prevent the unnecessary alarming of the population.
For public comsumption, Cuba in 2002 signed on to the United Nation's policy of non-nuclear proliferation and issued this press release http://www.un.org/News/Press/docs/2002/gadis3225.doc.htm, calling the United States, the sole nuclear power of the Americas.
So, while the United States and United Nations continue to wring their hands about the nuclear programs of North Korea and Iran, neither of which has the ability to reach the our shores, a silent and fully-armed enemy lies less than 100 miles away with the ability to wipe out our largest cities.
An ongoing standoff has remained in place for nearly 5 decades. Cuba is safe from invasion and while Castro may be certifiably insane, he is NOT suicidal. Instead, the export of Castro's revolution is done through client states in Central and South America.
The threat from Cuba is far greater than just the ability to inflict military damage. Castro's forces are active in regime de-stabilizing activities in key "friendly" countries such as Mexico, Brazil and Argentina. Venezuelan strong-man Hugo Chavez is already a Castro disciple.
How do we know that Del Marmol's information about ongoing Cuban military strength is true? Admittedly, his information is circumstantial, but he points out that the United States has been the sole super military power for years and has left Cuba untouched while acting as policeman all over the world in places such as Bosnia, Sudan, Ethiopia and others despite Cuba's proximity to our shores.
According to Del Marmol, Cuba's plan is to export its revolution to the United States without firing a single bullet. How are they doing this? For one, they are sponsors of militant groups such as "The New Black Panthers". They also have masked operatives who attend illegal immigration rallies in key border states Texas, Arizona, New Mexico and California who intentionally incite violent riots.
It is believed that Cuba is the ringleader of "The Three Continental Union" comprised of entities in Africa, the Americas and Asia.
It's no secret that our way of life is in jeopardy from American-hating countries in the Middle East, the Taliban and North Korea, a patient and quite potent enemy lies barely a stone's throw away.
Marko's Take
Wednesday, November 17, 2010
The Titanic Syndrome
It sounds like something a trained psychiatrist would diagnose, but it is yet another arcane and statistical market quirk. This indicator was created by a gentleman named Peter Eliades, who publishes a newsletter called Stockmarket Cycles (http://www.stockmarketcycles.com/).
Eliades has been in the business of technical analysis since 1972, when he began to appear on Los Angeles-based UHF channel 22 as a commentator. Back then, a 14 year old real life Alex P. Keaton would watch him during school breaks from within the Beverly Hills High library. Kind of explains why my social life wasn't exactly brimming in those days.
Eliades predicted that the horrible early 1970's bear market would bottom during the week of December 9-13, 1974 many, many months in advance. It bottomed on December 9th. Publication of Stockmarket Cycles began in July of 1975.
In 1985, the first year he was rated by the independent rating services, Mr. Eliades earned the Timer Digest’s "Timer of the Year" award and placed second in 1986 in a close race which wasn’t decided until the final trading day of the year. In 1989, Mark Hulbert (Hulbert Financial Digest) named Mr. Eliades as the "Most Consistent Mutual fund Switcher" based on Eliades timing signals for the years 1985, 1986, 1987, and 1988. From January 1985 when Hulbert first started rating Stockmarket Cycles, through August 1990, Stockmarket Cycles had the #1 market timing record in the country with a timing gain of 174.3% versus a comparable gain in the Wilshire 5000 Total Return Index of 119%.
In other words, the man is no Abbey Joseph Cohen. Now, before we go on to Eliades' current outlook, it is important to note that he and "Marko's Take" do not exactly mesh at the current time. MT says market meltdown imminent with a sub 8000 low for the Dow Jones Industrial Average by early 2011.
From the latest Stockmarket Cycles update for Tuesday, November 16th:
According to Eliades, "we would say that there is a real chance for a short to intermediate-term decline over the next several weeks but because of significantly higher nominal four-year projections, those projections force us to continue to look for higher prices going into 2011."
While our penchant for tongue-in-cheek hubris suggests that we vote for us, last I checked "Marko's Take" has yet to win a single Timer's Award. Clearly, a conspiracy.
Eliades goes on to describe the Titanic Syndrome:
"Our good friend, Shon Saleh, a great institutional broker at Smith Barney in Century City California, jogged our memory today by asking a question about 52-week highs and lows after a new high is registered in the market. The answer to the question is the Titanic Syndrome, a market indicator devised by Bill Ohama. Bill recognized back in the 1970s and 80s that if the Dow Jones Industrial Average made a new high for the year or had rallied 400 points or more (remember this was back in the 70s and 80s when 400 points was a lot bigger percentage move than it would be today) and that new high was followed within seven trading days by a day which saw more 52-week lows than 52-week highs on the New York Stock Exchange, a Titanic Syndrome signal would be given suggesting a market top of some significance. Well guess what? Today was the seventh trading day after the November 5 new high registered in the Dow and the official number of new highs versus new lows on the New York exchange was 20 new highs and 139 new lows. New lows swamped new highs. On the face of it, a Titanic Syndrome signal was generated."
When employing these indicators which use historical data as a benchmark of their efficacy, it is important to take into account how the nature of markets has changed. Of particular importance has been the enormous growth of bond funds, ETFs and other exotic securities which may affect how the ratios of new highs and new lows relative to issues traded is computed.
Eliades does, in noting the presence of the Titanic Syndrome, expect a potential sharp correction possibly dead ahead. However, he views it as a correction, while we're thinking MAJOR MARKET TOP.
Marko's Take
Eliades has been in the business of technical analysis since 1972, when he began to appear on Los Angeles-based UHF channel 22 as a commentator. Back then, a 14 year old real life Alex P. Keaton would watch him during school breaks from within the Beverly Hills High library. Kind of explains why my social life wasn't exactly brimming in those days.
Eliades predicted that the horrible early 1970's bear market would bottom during the week of December 9-13, 1974 many, many months in advance. It bottomed on December 9th. Publication of Stockmarket Cycles began in July of 1975.
In 1985, the first year he was rated by the independent rating services, Mr. Eliades earned the Timer Digest’s "Timer of the Year" award and placed second in 1986 in a close race which wasn’t decided until the final trading day of the year. In 1989, Mark Hulbert (Hulbert Financial Digest) named Mr. Eliades as the "Most Consistent Mutual fund Switcher" based on Eliades timing signals for the years 1985, 1986, 1987, and 1988. From January 1985 when Hulbert first started rating Stockmarket Cycles, through August 1990, Stockmarket Cycles had the #1 market timing record in the country with a timing gain of 174.3% versus a comparable gain in the Wilshire 5000 Total Return Index of 119%.
In other words, the man is no Abbey Joseph Cohen. Now, before we go on to Eliades' current outlook, it is important to note that he and "Marko's Take" do not exactly mesh at the current time. MT says market meltdown imminent with a sub 8000 low for the Dow Jones Industrial Average by early 2011.
From the latest Stockmarket Cycles update for Tuesday, November 16th:
According to Eliades, "we would say that there is a real chance for a short to intermediate-term decline over the next several weeks but because of significantly higher nominal four-year projections, those projections force us to continue to look for higher prices going into 2011."
While our penchant for tongue-in-cheek hubris suggests that we vote for us, last I checked "Marko's Take" has yet to win a single Timer's Award. Clearly, a conspiracy.
Eliades goes on to describe the Titanic Syndrome:
"Our good friend, Shon Saleh, a great institutional broker at Smith Barney in Century City California, jogged our memory today by asking a question about 52-week highs and lows after a new high is registered in the market. The answer to the question is the Titanic Syndrome, a market indicator devised by Bill Ohama. Bill recognized back in the 1970s and 80s that if the Dow Jones Industrial Average made a new high for the year or had rallied 400 points or more (remember this was back in the 70s and 80s when 400 points was a lot bigger percentage move than it would be today) and that new high was followed within seven trading days by a day which saw more 52-week lows than 52-week highs on the New York Stock Exchange, a Titanic Syndrome signal would be given suggesting a market top of some significance. Well guess what? Today was the seventh trading day after the November 5 new high registered in the Dow and the official number of new highs versus new lows on the New York exchange was 20 new highs and 139 new lows. New lows swamped new highs. On the face of it, a Titanic Syndrome signal was generated."
When employing these indicators which use historical data as a benchmark of their efficacy, it is important to take into account how the nature of markets has changed. Of particular importance has been the enormous growth of bond funds, ETFs and other exotic securities which may affect how the ratios of new highs and new lows relative to issues traded is computed.
Eliades does, in noting the presence of the Titanic Syndrome, expect a potential sharp correction possibly dead ahead. However, he views it as a correction, while we're thinking MAJOR MARKET TOP.
Marko's Take
Tuesday, November 16, 2010
Hindenburg Re-appears
A major mystery for me this summer has been the strange levitation of the stock market, despite an endless list of reasons for it to get crushed. Not only does the market have to contend with a shrinking money supply, a failing financial system, crumbling European bailouts and an inept Federal Reserve, but it also seems that the entire galaxy is aligned against it. For more on the Hindenburg Omen, click here: http://markostake.blogspot.com/2010/08/hindenburg-omen-all-over-financial.html.
By now, the market should have begun its catatrophic descent. Why hasn't it? My guess is that all the hot air coming out of politician's yaps, coupled with the aggressive market support employed by the Federal Reserve and Helicopter Ben, has temporarily put a delay on what I still contend is inevitable. The best efforts of the Fed will not work. Here's why: http://markostake.blogspot.com/2010/08/unusual-uncertainty-meets-qe2.html.
Today's trading witnessed a very Hindenburg-like day. According to Yahoo Finance, there were 136 new highs and 164 new lows among nearly 4,000 issues traded. That would provide the initial trigger for the Hindenburg. As noted in prior pieces, there are a myriad of filters, but honestly, one needs no filter other than a gas mask to see that the "House Of Cards", known as the U.S. Financial System is on the verge of collapse.
But that's not all. Nearly every asset market has gotten incredibly and feverishly over-extended, including precious metals and mining stocks. We have discussed other technical indicators which are also very ominous, and those are discussed here: http://markostake.blogspot.com/2010/09/lets-get-technical.html, and http://markostake.blogspot.com/2010/09/lets-get-technical-part-2.html.
Add to that the rising inflation pressure showing up in prices at WalMart and other retail stores, plus in today's report on the Producer Price Index. Creeping inflation will put a cap on the Fed's ability to perform it's levitation tricks or a full blown hyper-inflation episode will ensue even sooner. It, too, is inevitable, once monetary velocity picks up.
So, what's an investor to do? Go To Cash! The only investments likely to survive this assault will be the very oversold U.S. Dollar and very short-term Treasuries. Yeah, the returns suck, but even 0% is better than losing 20% or more in a fairly short period of time.
Unlike the meltdown of 2008, which, too, was forsaged by a series of Hindenburg Omens, this one will not be an exact repeat. This time, Gold, Silver, Commodities and precious metals mining stocks ought to hold up much better. A correction to their 200 Day Moving Averages would be the most likely scenario, as discussed in this recent "Marko's Take": http://markostake.blogspot.com/2010/10/correct-me-if-im-wrong.html.
Better to wait for another entry point, well below current levels, than to sweat it out in a volatility spike down that may just give you a heart attack. And, the bargains that will become available will be well worth waiting for.
So, how long may stocks go? Obviously, no one knows, but a Dow Jones Industrial Average of between 6,000 and 8,000 would seem to be a logical target occuring early in 2011.
It's going to be a very, very cold winter for most investors. Store lots of blankets!
Marko's Take
By now, the market should have begun its catatrophic descent. Why hasn't it? My guess is that all the hot air coming out of politician's yaps, coupled with the aggressive market support employed by the Federal Reserve and Helicopter Ben, has temporarily put a delay on what I still contend is inevitable. The best efforts of the Fed will not work. Here's why: http://markostake.blogspot.com/2010/08/unusual-uncertainty-meets-qe2.html.
Today's trading witnessed a very Hindenburg-like day. According to Yahoo Finance, there were 136 new highs and 164 new lows among nearly 4,000 issues traded. That would provide the initial trigger for the Hindenburg. As noted in prior pieces, there are a myriad of filters, but honestly, one needs no filter other than a gas mask to see that the "House Of Cards", known as the U.S. Financial System is on the verge of collapse.
But that's not all. Nearly every asset market has gotten incredibly and feverishly over-extended, including precious metals and mining stocks. We have discussed other technical indicators which are also very ominous, and those are discussed here: http://markostake.blogspot.com/2010/09/lets-get-technical.html, and http://markostake.blogspot.com/2010/09/lets-get-technical-part-2.html.
Add to that the rising inflation pressure showing up in prices at WalMart and other retail stores, plus in today's report on the Producer Price Index. Creeping inflation will put a cap on the Fed's ability to perform it's levitation tricks or a full blown hyper-inflation episode will ensue even sooner. It, too, is inevitable, once monetary velocity picks up.
So, what's an investor to do? Go To Cash! The only investments likely to survive this assault will be the very oversold U.S. Dollar and very short-term Treasuries. Yeah, the returns suck, but even 0% is better than losing 20% or more in a fairly short period of time.
Unlike the meltdown of 2008, which, too, was forsaged by a series of Hindenburg Omens, this one will not be an exact repeat. This time, Gold, Silver, Commodities and precious metals mining stocks ought to hold up much better. A correction to their 200 Day Moving Averages would be the most likely scenario, as discussed in this recent "Marko's Take": http://markostake.blogspot.com/2010/10/correct-me-if-im-wrong.html.
Better to wait for another entry point, well below current levels, than to sweat it out in a volatility spike down that may just give you a heart attack. And, the bargains that will become available will be well worth waiting for.
So, how long may stocks go? Obviously, no one knows, but a Dow Jones Industrial Average of between 6,000 and 8,000 would seem to be a logical target occuring early in 2011.
It's going to be a very, very cold winter for most investors. Store lots of blankets!
Marko's Take
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