College Football

I know this isn't that important in the big scheme of things, but I hope the MESS that has been created this year via the BCS standings will finally, finally encourage the NCAA to move to a playoff system for college football. I will not hold my breath, as there have been several controversies already over the past several years that should have provided enough evidence to the powers that be that the BCS system is just not kosher.

As you may have heard, the Big 12 Championship game matchup was decided today by the 5th tiebreaker, which, unfortunately is the BCS ranking system. In brief, Oklahoma, Texas and Texas Tech all ended with a 7-1 record in the Big 12 South (and 11-1 overall), and were vying to play Missouri, the winner of the Big 12 North division. Texas beat Oklahoma back in October, 45-35, Oklahoma beat Texas Tech 69-21, and Texas Tech beat 39-33. Oklahoma got the nod for the Big 12 Championship because of a 0.9351 average, slightly better than 0.9223 average for Texas.

Personally, I really couldn't care about this, except as a casual football fan. However, there are so many players, coaches, universities and fans that pour so much effort, time, money and their heart and soul into college football that it just seems ridiculous that a computer ranking system (that takes into account "style points") ends up determining the championship, when every other sport in the NCAA and in the world is decided on the field.

Plus, it leads to pathetic pandering and campaigning by the coaches and universities, which just is so uncouth. This is a sport played by strong young men, and should be decided mano a mano rather than some nerdy computer algorithm.

Get rid of the conference championship games and start either a 8 or 16 team playoff from early December and that culminates in early January. It would not lead to global academic underperformance. The players are already receiving tons of help/tutoring and are still practicing football all throughout first semester finals in preparation for the bowl game. Plus, only 2 teams would end up playing in all 3 or 4 games, the rest would be eliminated earlier and the net time spent away from the books would be about the same.

This system simply does not make any sense. All I know is that Texas beat Oklahoma, and that Utah and Boise State are undefeated, yet it is unlikely that any of those teams have any chance at winning the college football crown.

Supply-Demand Economics

This is such a good news-bad news story/concept. The good news? The higher gas prices over the past year led to 11 straight monthly declines in miles driven by Americans. The high fuel prices had everybody salivating on methods and strategies for implementation of alternative energy sources and created the demand for more fuel efficient vehicles. Great, right?

Well, because it's a feeback loop, the decline in demand for fuel (not only by less driving but declining activity of world-wide economies), has led to an ABRUPT reduction in gas prices. This removes the impetus and inherent pressure to innovate, and I fear we will be back to square one. This is why we never learn the lesson. I think we need to implement a carbon tax. There is no other way around this. I know it is messing with free-market relationships, but, please, there is no need to be consuming so much oil, particularly when we get the majority of it for a high cost from not so friendly countries.

The Economy

Obama is doing a pretty good job at putting together his economic team. The free-marketers of Wall Street seem to really like his selections of Geithner as Treasury Secretary and Summers as Top Economic Advisor, as evidenced by the late day rally on Friday (which was really building up on a technical basis in the charts prior to the announcement) and the higher futures this morning. Not only are they centrist, but it's taking away uncertainty in these very uncertain times. Also, overnight, the government announced they will be bailing out Citigroup with a complex deal.

The script for the democrats and Obama can't get much better as far as drama and credit goes. Fairly or unfairly, Bush will go down in history as being the leader of the U.S. as it entered its 2nd greatest recession of all-time. He will also be remembered for socializing most of the banks and investment firms, and potentially for bailing out the automakers. Obama will come out looking as the "savior" as the economy will emerge (with or without his help) much stronger in the next 2-4 years. It's kind of ironic.

Watch the market today. It is an important day. There haven't been 2 big up days in a row in a very long time. If the market can tack on 4-6% today, then it would probably signify that a meaningful intermediate-term rally will take place (could rebound 30-40% from these levels). It actually wouldn't even be bad if the market went into negative territory after the higher futures, as long as it finishes up strong. It's all about the close and the last hour.

Cliff-Diving

There has been unbelievable price destruction of equities over the past several weeks. A few weeks ago, I posted the long-term chart of the S&P and indicated that a testing of the bear market lows from 2002-2003 would be inevitable. Well, I thought it would happen after some type of oversold rally to relieve some of the selling pressure, especially as we have entered favorable "seasonality" (November and December are typically very strong months).

I don't know what to say or what's going to happen next. Ever indicator that I and every other trader follows had been pointing to a rally. It never occurred and there has been a major price breakdown, below the lows of the previous bear market. The ultra-confusing thing is that the S&P is below, but the Dow and NASDAQ still have a little way to go to get back to those old lows. Will every index fall below? If they do, and there isn't a major rally in the next 1-2 days, S&P 600 and Dow 6000 will be the next stop.

I feel badly for everybody that has lost so much money in this market. It just doesn't seem fair that people can slowly put away money month by month in their 401K or investment accounts and have 5-10 years of gains disappear in a matter of weeks. No one ever said that the market wasn't risky, but still, it's just a travesty.

P.S. Ford hit $1 per share today and Citigroup fell below $5.

Five bucks with change to spare

Five dollars. That's not much money. You can barely get a good lunch these days for $5. But, do you know what you can get? One share each of GM and Ford stock, and you'd have 23 cents left over. It's unbelievable. The CEOs of the 3 U.S. automakers were on Capitol Hill today and took a grilling from the Senate. They stammered on their defense of why they need a $25 billion dollar bail-out. Chris Dodd pretty much summarized the sentiment many including myself are feeling about this issue:

The industry is "seeking treatments for wounds that I believe to a large extent were self-inflicted, but at a time like this, when our economic future is so tenuous, we must do all we can to ensure stability."

I watched some of the testimony. They had a PhD economist, Peter Morici, testify as well, and it was somewhat amusing to watch him directly rebut the promises that the CEOs were making in regards in becoming profitable in the very near future and being able to pay back the "loan". He cited that only Chrysler was even close to meeting the quality and efficiency standards that Honda and Toyota have in place, as rated by an independent quality assessment firm. Plus, he stated even with major job cuts in an attempt to improve their bottom line, the amount in pension benefits (about $105,000 per employee) that would need to be paid out will cripple their profit margins.

I don't have the annual balance sheets of these automakers (nor do I want them), but I will say that during the whole bull market run from 2003-2007, Ford and GM shares were flat/declining throughout. That implies terrible management. Here's what I would do: While these companies dug their own graves, the ripple effects throughout the whole economy would be horrific if they went under. Therefore, I would give the companies the $25 billion, with the conditions that all 3 CEOs are fired, and new CEOs are hired with proven track records of running profitable companies that produced quality products.

Our economy, bailout or no bailout, is in big trouble. Even Harvard's endowment investments are getting pummeled, as their account has lost 30% of its value this year.


At least health care is safe right?

Wrong!!

Read this article: Twenty percent of primary care doctors said they will cut back on patients seen, 10% said they will work only part-time, 11% plan to retire, and 13% are planning on finding jobs that don't involve patient care. Why is this bad? Because there is already a shortage of primary care doctors, and 67% of physicians surveys said they are working at full capacity or are overextended and overworked as it is. Oh, and 60% said they would not recommend medicine as a career. This is troubling, but understandable given what is going on in medicine these days. The demands for keeping up on the latest medical information, trying to manage elderly patients with multiple comorbidities, doing paperwork and fighting claims with insurance companies, and so on are just too much to handle for primary care physicians. That's why a job at a VA hospital is the way to go!

At least rich people in Santa Barbara are doing well. WRONG! More than 210 homes, including many multi-million dollar mansions have been destroyed by the wildfires. Worse yet, evidence is pointing to a bonfire started by 10 college students as the culprit. It's ashame, not only for the homeowners who probably lost priceless memorabilia in the fires, but also because of the added economic stress. California has already spent $305 million on emergency firefighting since July 1st, only $236 million more than was budgeted, and the state has a deficit of $11.2 billion.

Ok, that's enough of this Debbie Downer session. Have a good night!

Funnies

Bear Grylls on Man vs. Wild tonight, stranded on a desert island, said "No matter how tempted, never drink seawater, your kidneys will collapse". Perhaps they need a nephrologist consultant for the show! Also, in an episode from "Siberia", the locals sliced the neck of a yak, and he placed his mouth directly on its severed jugular vein and drank about a quart of blood. Even though it was nasty, at least the blood is isotonic and won't "collapse his kidneys".

I don't know who's a more talented and funny impressionist.

1. Frank Caliendo (watch this clip of him on the Tonight Show....his Leno, Bush, and John Madden impressions are awesome).

2. Rob Bartlett as the Godfather and Hulk Hogan. I love when he seamlessly breaks into Italian which pausing.


Has anyone ever been troubled by the Silversonic XL commerical? I think it is a little freaky. It's not really marketed for people with poor hearing, but instead seems to encourage eavesdropping. Watch this video.

Nuts and Bolts

Don't think we need to do something about the environment? Read this....brown clouds over Asia, decreasing the amount of sun to major cities there by about 25%.

This is cool...CSI meets Con-spiracy regarding the JFK shooting. There was NOT a second shooter.

This is ridiculous....what happened to separation of church and state?

A good argument for "taxes"....sorry Don! But it saves lives! I would also love to see similar studies on the effect of higher taxes on tobacco products.

This article, including the title, show why you cannot trade the stock market based on fundamentals alone. Expanding national deficit and unemployment were the two key economic numbers reported today. The market rocketed up in the 2nd half of the day. Technical analysis must be a huge part of the equation. In fact, now that I've learned about this stuff, it is hilarious that most of the newscasters, including those on CNBC and Bloomberg still try to explain daily moves on the news (e.g., "stocks plunge today based on credit fears, higher oil"...it's all crap). See my market update to the right. Today was an important day.

TF on the Detroit Bailout

Love Tom Friedman. He hits the nail right on the head again with a Scathing report on GM and the others. He has an excellent idea for what should be done IF the government decides to bail out the pathetic US automakers.

The devil inside me (or maybe just the free market capitalist) says let them fail, and use the taxpayer money instead to send the unemployed autoworkers to school, whether it be trade school or academic school. Or, better yet, let them fail, do nothing, and teach them all a lesson. The government cannot bail out every failed business and every unemployed worker in this economic cycle. It will probably be best for us to emerge from this recession (and ALL recessions eventually end) with true innovation and grit by both strong companies with innovative leaders and by resiliant and adaptable workforces. If we keep printing money for more and more bailouts, we are going to end up with massive inflation over the next several years. Remember we had inflation of 15-18% at the end of the 1970s. That's where we will be headed.

Potpourri

Some great articles on the current state and future of conservatism:

1. Mark Sanford, governor of South Carolina, blames the Republicans, not conservative ideology for losing the presidential election. I completely concur. I have been recently arguing with Bush/GOP supporters who hold conservative viewpoints. Haven't these Republican leaders failed in almost every facet??? (massive spending, huge deficit, bailouts, 2 endless wars and nation building in the Middle East, etc).

2. David Brooks on the Traditionalists vs. Reformers in the GOP. Regardless, as mentioned above, Conservatism is dying in the U.S., and that has happened with Bush at the helm. Now that Obama will be taking over, the conservatives are going to have to hunker down (as it appears they are already doing on a cruise). The Republicans used to be able to state their mantra in 8 words: Smaller government, lower taxes, strong defense, personal responsibility. One can argue that all but the "lower taxes" themes have been violated (budget/deficit huge, military forces stretched, bailouts galore), and the lower taxes will likely give way as we will face the "bills" for all of the spending, bailouts and unfunded mandates (social security and Medicare) over the next several years.

3. Are we really going to bail out the auto industry as well? I'm torn on this, because collapse of GM and or Ford will be devastating for the work force, but these corporations have been so uninsprining and run so poorly, that I kind of think survival of the fittest should be the principle to adhere to in this case. Who will the government bail-out next, Circuit City? Give me a break. GM continued to build gas-guzzling vehicles for years, while Toyota and Honda continued to produce better and more fuel-efficient vehicles.

4. Bush is going to publish his memoirs and admits he has made some mistakes, including "Mission Accomplished". Thanks, W.

5. Palin, on the concession speech she wanted to give on election night. She hints she wants to run for Pres in 2012. At least she will have 4 years to study up for the "gotcha" questions.

6. A new study, reported at the American Heart Association meeting, finds that 10-year old obese children had arteries equivalent to 45-year olds. One-third of American children are overweight. Get out there and exercise kids!! At least play Wii Fitness!!

7. This map is scary: depicts where homes are worth less than the mortgage.

History!

Wow! Not even close! A historic moment for sure.

I'm glad the campaigning is over. President-elect Obama will now have monumental tasks ahead of him: trying to steady the economy (less will be more), presiding over the two wars, dealing with other global threats (Iran, Pakistan, etc), the need to reform health care and social security, and the need bring a real energy policy to the U.S.

We will be watching closely....remember "the night is darkest before the dawn".

MNF

Chris Berman interviewed Obama and McCain at halftime of the Steelers-Redskins game. He asked what one thing they would each change about sports.

Obama said he would add a playoff system involving the top 8 teams to college football. He is "tired of computer models" deciding the champion. I agree. College football is the only NCAA sport that does not always have its champion crowned on the field. The college basketball is just as long as college football. Thus, the argument that the playoff games would interfere with the studies of the athletes is bunk.

McCain said he would aggressively pursue users of performance enhancing drugs in sports. He has been an advocate of this in his time as Senator, so no real suprise. The actual surprise was that McCain was pretty funny and used not one, but TWO Chris Berman catch-phrases and made Berman, as well as me, laugh pretty hard. And, I was all alone...did you ever notice that you laugh with less intensity when you are alone?? Anway, McCain said that he "could go all the way (staccato)...to the White House", and even though he is not being given much of a chance tomorrow by the pundits, "That's why they play the games". Berman fans know that these are two of his favs. Good job!

Election Eve

Don't forget to vote tomorrow! It will be a big day and probably a long evening.

There isn't much left to be said about the candidates and their platforms.

Instead, I will leave you will one final comedic-political sketch. This from radio pranksters from Canada who pretend to be Nickolas Sarkozy and Sarah Palin completely falls for it. Here's the audio.

Election Update

Only a few more days until the highly anticipated Presidential election. Finally, the campaigning will end and we can start the process of ridding ourselves of the Bush administration.

Here are some interesting links from around the web in regards to the election:

1. McCain-Palin conflict- the McCain campaign has realized the enormous gaffe in her selection, and fighting within the ticket BEFORE the election just isn't a good sign. A new poll indicates that 59% of Americans don't feel she is ready to be V.P.

2. The battle over Florida- Obama has a slight lead

3. Even George Will, one of the most prominent conservative writers in this country, can't hold in his criticisms of McCain-Palin anymore, including McCain's decision-making capability

4. The Economist (my favorite magazine), known for its economic conservatism and support of free markets, officially supports Obama over McCain. They cite McCain's poor choice of Sarah Palin, his indecision regarding the economic crisis, and his temperament as negatives, and cite Obama's ability to learn and excellent cadre of advisers, his style and discipline as reasons to support him.

5. Racism by attendees at Palin events continues.

6. Pretty cool map of newspaper endorsements.

7. Francis Fukuyama, from the AMERICAN CONSERVATIVE, endorses Obama.

8. A poll taken in Texas shows that 20% of people still think Obama is a Muslim.

9. Tim Gunn rates the fashion of the candidates.

10. Sarkozy voices harsh criticism for Obama's stance towards Iran. That guy has got chutzpah.

11. A dynamic view of the Electoral College over time. Very cool. Just makes you wish we had another system besides all vs. none for each state (why not use the method for most of the primaries- split the delegate?) and also makes you really wish we had other strong parties besides Republicans and Democrats.

Odds and Ends

1. Congrats to the Phillies. New World Series champs!

2. Give me a break...Joe the Plumber country musician?

3. Isaac Mizrahi, fashion guru, says the greatest fashion mistake is "bad hair". Has he looked in the mirror?

4. Speaking of fashion, maybe this is why I like the Christmas season so much!

5. These pirates off the coast of Somalia are out of control. 5 attacks in one day! Reminds me of my favorite pirate joke.

6. The numbers aren't adding up. How is Obama going to pay for everything? Doesn't anyone care about our deficit anymore?

7. Foreign accent syndrome. This wasn't in Harrison's. Incredible...watch the video. I would love a British accent or a Spanish accent like Javier Bardem's.

8. David Brooks with a great piece on perception vs. reality.

9. At 11:15 PM, Bill Clinton and Obama are campaigning together at a rally in Florida. I cannot even imagine how awkward it must be for Bill. All those months of battling him and now he has to go out on the stage and pledge his full support. Granted, it has to be done, but I'm just saying it must not be that easy to swallow the pride and do this.

10. Oh, how sad, Kim Jong Il is not doing well. I hope he recovers...he should be charged and tried for crimes against humanity.

Random Musings

Sorry I've been away the past few days...last few days were jam-packed with way too many interviews and a talk I had to give, so was barely aware of the news or the stock market.

Things I missed that were funny:

1. Will Farrell reprising his role as G W Bush on the Thursday edition of SNL

2. Jon Stewart "Gaffe-in" with funny flubs by our favorite politicians on the left and the right.

Interesting Things:
1. The Fey-Palin effect on real voters: small, but negative

2. Alan Greenspan takes partial blame for the financial crisis, by admitted his mistake in allowing completely unregulated free markets in the banking system. He thought the financial institutions would have looked after the best interests of their shareholders. Listen, capitalism is great, because it allows hard-working people to prosper. However, there is a point of excess, and when billions of dollars are involved, human nature, in general, turns people into greedy and conniving individuals. It's time to watch "Wall Street" again ("Greed is good") and also "American Psycho". Also, read this parable:

Once upon a time in a village, a man appeared and announced to the
villagers that he would buy monkeys for $10 each.

The villagers seeing that there were many monkeys around, went out to
the forest, and started catching them.

The man bought thousands at $10 and as supply started to diminish, the
villagers stopped their effort. He further announced that he would
now buy at $20.

This renewed the efforts of the villagers and they started catching
monkeys again.

Soon the supply diminished even further and people started going back
to their farms.

The offer increased to $25 each and the supply of monkeys became so
little that it was an effort to even see a monkey, let alone catch it!

The man now announced that he would buy monkeys at $50!

However, since he had to go to the city on some business, his
assistant would now buy on his behalf.

In the absence of the man, the assistant told the villagers. 'Look at
all these monkeys in the big cage that the man has collected. I will
sell them to you at $35 and when the man returns from the city, you
can sell them to him for $50 each.'

The villagers rounded up with all their savings and bought all the
monkeys.

Then they never saw the man nor his assistant ever again, only monkeys
everywhere!

Now you have a better understanding of how the stock market works.

3. The rating agencies are just as guilty in this whole financial mess. Read this story...there were memos that they would rate any deal, even if it was "structured by cows". Greed, again.

4. Farts can reduce blood pressure!! Awesome!

5. This one is for Don....a country that has socialist medicine came up with a huge medical breakthrough!!! How can it be?? (Read the story: potential cure for MS).

6. This is the most fair and objective examination I have seen regarding who is responsible for the current economic crisis. Scroll to the bottom to see the no fewer than 11 parties (including home owners themselves) who collectively share responsibility for this mess.

The stock market:

I'll keep this short. Extreme volatility in the markets again. Dow was only down 300 pts on Friday, but futures were "limit down". Vix closed at 79!!! If you understand this indicator, you realize that this is completely outrageous. Bottom line is no matter what the indicators are saying about over-sold conditions (new highs new lows, stocks below 40 day MAs, etc), it doesn't matter this time. In my opinion, there are now 2 major forces in play. First, the triangle I described last week on the 60 min chart has broken to the downside with a classic backtest and fall away.


This is clearly apparent on the daily chart as well.



Finally, we are destined to test the 2003 bear market lows. I would not be surprised to see the Dow down 1000 points (intraday) on Monday or Tuesday. Then, and only then can we start to form a good base and start to trade to the upside more rationally.

Financial Crisis in a Nutshell

Folks, this is a hilarious (and ridiculously true) "primer" on the subprime/financial crisis that we now find ourselves in. Please watch this powerpoint presentation, depicting the crisis as acted out by stickfigure people.

NEJM Editorial on Health Care

Great editorial today in NEJM on our health care system. The author makes 3 major points (inconvenient truths):

1. Over the past 30 years, U.S. health care expenditures have grown 2.8% per annum faster, on average, than the rest of the economy. If this differential continues for another 30 years, health care expenditures will absorb 30% of the gross domestic product— a proportion that exceeds that of current government spending for all purposes combined.

He lists great reasons why this is occurring, but the thing I would like to point out is that the "free markets" have not contained health care costs, as so promised by Newt Gingrinch and the AMA in 1994, as they squashed "Hillary Care".

2. Advances in medicine are the main reason why health care spending has grown 2.8% per annum faster than the rest of the economy.


I agree with the author's points (not listed here- see article). To expand further, we need to incorporate COST-EFFECTIVENESS into the CMS/Medicare approved drugs, procedures, etc. All a company needs to get approval from the FDA and for reimbursement from CMS is to demonstrate efficacy (often only compared to placebo). New treatments should be compared to standard of care and be evaluated by cost-effectiveness as well.

3. Universal coverage requires subsidies for the poor and those too sick to afford insurance at an actuarially appropriate premium; it also requires compulsion for those who don't want to help pay for the subsidies or who want a "free ride," expecting that they will get care if they need it.

This point is so critical. People think that someone else is paying for their health insurance in the U.S., and that health care taxes as they have in other countries would be crazy. Money quote:

When a firm pays $3,000 to $7,000 per worker per year for health care, it can get that money in only three ways: reducing potential wage increases, increasing prices for what the firm sells (which means lower real wages for workers everywhere), or lowering profits. During the past three decades, health insurance premiums have increased about 300% (after adjustment for general inflation). Where did the money come from for higher premiums? Out of wage increases that would normally accompany growth in productivity. During these three decades, the average worker has not received any increase in inflation-adjusted wages. Corporate profits, by contrast, have increased by 232% before taxes (284% after taxes), adjusted for inflation.

The most efficient, equitable way to achieve universal coverage is to make basic health insurance available to everyone regardless of income, employment status, family circumstances, or other characteristics and to pay for it with a tax roughly proportional to income or consumption.

People, stop being fooled! You are paying just as much or more for your non-universal health care as you would if we had universal health care. Think of all of the premiums, co-pays for visits and meds, uncovered costs, and the lack of increase in wages and then you might realize it. Also, health care should not be tied to your employment affiliation! How many people do you know that are working at a job that they dislike, just "for the health care benefits". Get with the program.

McCain on Imus

John McCain was back on the Imus in the Morning show today. It had been a long hiatus. I know Don Imus is barely relevant anymore, but it actually was a good interview. Imus asked some good questions, including the following (paraphrased): (the audio is within this link)

1. How can you be optimistic being so far behind in the polls? (he said he's closer in some polls than others and that Bush was behind Kerry by about the same margin in 2004 at this same point in time)

2. What is up with your pick of Palin as VP, after criticism from so many prominent Republicans? (he said she was the most qualified VP candidate in recent history)

3. How can you defend her after her terrible performance in her interviews with Charlie Gibson and Katie Couric? (she did fine in those interviews, was bombarded by "gotcha" questions)

4. How could she not even name a newspaper that she reads? (she reads the news "offline")

5. How can you defend the fact that she hasn't gone on any Sunday morning talk shows, including Meet the Press, generally considered a rite of passage? (his response to this is amazing, i.e., pathetic...listen to the audio)

6. Why do you keep making a case about William Ayers and not Rev. Wright? (I forgot his response, but Imus actually points out an interesting "double standard" by Obama)

7. Why does Gov. Palin keep saying that Obama is hanging out with terrorists? (he said there are some crazy people at his rallies, but only the minority)

8. Do you think race will play a roll in the election (people who said they will vote for Obama won't, i.e., the Bradley Effect)? No, people will vote for who they believe is the best candidate

Palin Supports Federal Ban on Gay Marriage

Today, Sarah Palin openly supported a constitutional ammendement to ban gay marriage, saying she believed that traditional marriage is the foundation for strong families. Of note, her view is different from that of John McCain, who feels this decision should be left up to the states.

I agree with Mr. McCain here. It's a states rights issue. BTW, the CT supreme court voted to allow gay marriage last week. I don't feel strongly that gay marriages must exist (although I do strongly support equal rights and civil unions, at the very least), but the argument that gay marriage will ruin the foundation of marriage just doesn't hold water. It doesn't seem that couples with "traditional marriages" in CT are suddenly seeing their marriages collapse because of the new ruling.

Powell Endorses Obama

Today on "Meet the Press" (haven't forgotten about you Timmy), Retired General Colin Powell, former Secretary of State for the Bush Administration, endorsed Barack Obama over John McCain for president.

He states his decision has nothing to do with race, and instead sites Obama's style and substance, Obama's "inclusive" rather than narrow-minded policies, McCain's poor choice of Gov. Sarah Palin (as she is "unqualified" to be president), and McCain's potential to place 2 more conservatives judges in the Supreme Court court as major reasons why he is endorsing Obama. He also called Obama a transformational figure and stated that the Republican Party has moved too far to the right.

Of course, he was openly criticized by Rush Limbaugh, who feels his decision is based purely on race. Limbaugh also thinks he is not showing loyalty to Bush and the Republicans, as they are the ones who anointed him a 4-star general.

"'Secretary Powell says his endorsement is not about race,' Limbaugh wrote in an email. 'OK, fine. I am now researching his past endorsements to see if I can find all the inexperienced, very liberal, white candidates he has endorsed. I'll let you know what I come up with.'" "'I was also unaware of his dislike for John Roberts, Clarence Thomas, Samuel Alito, Anthony Kennedy and Antonin Scalia. I guess he also regrets Reagan and Bush making HIM a 4-star and Secretary of State AND appointing his son to head the FCC. Yes, let's hear it for transformational figures.'"

I say good for Colin Powell for making what seems to be a well-informed and non-hasty decision and for doing what he feels is right in his heart, and not what is "right" for his former cronies. The culture of cronyism is a phenomenon that helped turn the Bush administration into a disaster. And for anyone who thinks his decision is based on race, PLEASE watch the video of his explanation on Meet the Press. I found his explanation to be completely reasonable, very well thought out with supporting evidence behind each one of his points, and finally, it was very heart-felt.

Market Update

Another wild day on Wall Street yesterday, although this time the swing was only 500 Dow points (the lowest of the week). It seemed like the market was going to take off in the mid-afternoon, only to get stopped cold and abruptly lose 4%.

Why did this happen? A look at the 60 minute chart shows that the downtrend line from the previous highs served as major resistance. The indices are forming huge symmetrical triangles. We should expect the S&P to fall to around 880 to test the lower part of that triangle. Then, the market will either: A) bounce up from there and try to break through the top part of the triangle again, B) bounce up and come back down again, or C) just fall straight through that downtrend line on this new wave down. The break of the triangle to the downside will trigger more massive selling. For conservative investors looking out more than 1-2 days, no major moves should be made until the triangle resolves to the upside or the downside. I can't tell you which way it will break, I can only tell you that when it does, it will cause major movement in the direction of the break. One pessimistic thing from a technical standpoint is that despite the very oversold conditions via a whole host of indicators, we cannot sustain a major rally. In the past 100 years, very oversold condidtions have always led to major snapback rallies. The 14% rally we had this past Monday may have been all the bulls can truly muster up. The other bearish problem is that these types of triangle resolve to one direction or the other about 2/3rds through the triangle, so according to my drawing on the chart above, we may have 2 chances at breaking to the downside but only 1 more chance (if we bounce up again) to break through the topside. These patterns do not keep going until the points of the triangle meet.

I mentioned that I had gone "long" the S&P and NASDAQ via the SSO and QLD. As I indicated in the comments section of "Double Bottom" yesterday, I got out of these positions late in the afternoon, as a failed rally on a Friday afternoon (and the downtrend line serving as fierce resistance), did not make me keen on holding long positions going into Monday morning. I'm sure that type of mentality among traders contributed to the decline in the last 90 min yesterday...who trusts this market? Bad news of failing banks, etc. tends to come out over the weekend and Monday's market could be ugly (again).

For all of you think that this technical analysis is baloney, let me point you to an interesting article today that utilizes fundamental analysis. In short, based on valuation, stocks are still not "undervalued". Based on data from previous recessions and stock market lows, valuations might need to drop even further, and estimates by these experts put the S&P in a range of 400-600 to get into the appropriate range (yikes). These facts are confirmed by the wise folks at Comstock Partners who also suggest stocks are far too overvalued (see text posted in the comments section for this entry...it's a bit long and didn't want to clutter the board).

Now That's Entertainment!

Folks, please, please, please watch these two videos. Obama and McCain gave tremendously funny speeches (roasts) at the Al Smith Memorial Dinner on Thursday night. The jokes are witty and cutting and hit at the very issues that have been debated over the past several weeks. It's refreshing to see them employing humor rather than the repeated sniping, scowls, and faces they make at each other in the debates.

Obama's speech


McCain's speech

Also, dont' forget....Sarah Palin will be on SNL tonight!

Post-Debate Wrap-up

My controversial views on the debate last night set off a firestorm. The post received 32 comments, an all-time record for my blog.

I did a little searching around the "internets" to see what others were saying about the debate.

First, the polls of "Joe-six pack", or the "Joe the Plumber" (I'm tired of the stupid "Joe" references by all of the candidates).

1. CNN Poll: Obama 58%, McCain 31%

2. CBS news: Obama 53%, McCain 22%, Tie 25%

3. Politco.com: Obama 49%, McCain 46%, but McCain won among independent voters (51-42%)

Second, amongst the pundits:

1. Time magazine: McCain A-, Obama B

2. Fox News: Amazingly, among 10+ pundits from Fox News, most felt Obama won the debate!! Fair and balanced!

Finally, fact checks:

1. MSNBC: Lots of stretching of the truth by both candidates

2. Factcheck.org: So many untruths by both candidates. It makes me sick. It seems almost everything each candidate said was untrue in some way. Yes, including the ACORN scandal.

I wish they could have some interns do real-time fact check during the debate and then pipe in the answers into the moderator's earpiece. Then the moderator can confront the candidates right there and then. Instead, the candidates get away with their drivel and most Americans will be none the wiser, because 95% are probably not going to read the post-debate fact check pieces on the internets. Heck, even I was getting all fired up about Ayers and ACORN until I was shown the truth. So, in essence, the debates just become a show and can sway American voters unfairly. The system has to be improved.

Double Bottom

The stock market continued another wild week with two massive down days after Monday's largest rally ever. Today, the Dow was down 400 points intraday, and although we didn't make a perfect double-bottom on the Dow and S&P that I was referring to in previous posts, the NASDAQ did make a perfect double bottom. When prices hit that low again, the market abruptly turned around and soared higher with huge gains for all of the indices. More importantly, these "hammering" candles put in on the charts today came on massive volume, which finally indicates that buyers are coming into the market. There is still a lot of technical damage on the charts, but now that the double-bottom is in place, we have a line in the sand, and can begin to trade to the long-side in the hopes of a counter-trend multi-week rally. I will be skeptical until we regain important resistance levels, but I did buy double-long ETF positions in the S&P (SSO) and NASDAQ (QLD; about 10% of portfolio each) at around 2:30 today, and for the first time in weeks, held positions into the close and overnight (I've been 100% cash otherwise with only occasional intra-day daytrades).

It's a Girl!!!

I usually don't like to post any personal stories, but you will have to allow me this one exception. My brother and sister-in-law, Sara, had a baby girl yesterday, Isabella Josephine. She weighs 7 lbs 3 oz, and is 19 inches long.

I have a few good reasons to share this personal story:

1. Most of you know my brother, Dean
2. She's really, really, really cute!
3. I'm a new uncle
4. There is an educational piece: Dean finds that tapping the baby's bottom with his index finger while cradling her is very soothing (to both her and Dean)

Congratulations Dean and Sara (and to my parents who are grandparents for the 1st time)!!