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seekingalpha.com/instablog/...rong-warning-signals?source=feed
......It is certainly no secret that U.S. markets are dominated by financial-sector companies (in more ways than one). To begin with, the balance sheets of these companies are saturated with the leveraged bets which these companies have placed in their own, private casino: the derivatives market.
The general public knows virtually nothing about this market, while even many “market professionals” openly admit they have (at best) no more than a rudimentary understanding – of a side market with a nominal value far in excess of ten times global GDP.
However, this is only the beginning of the information-gap which envelops U.S. financial sector corporations. I have alluded on many previous occasions to the regressive move by the U.S. “accounting watchdog” to legalize “mark-to-fantasy” accounting – where these companies are allowed to list assets on their books at valuations which haven't existed for years, and to maintain those phony valuations indefinitely, simply by asserting that these assets represent “long-term investments”.
Even this doesn't fully describe the “veil of secrecy” which surrounds the U.S. financial sector. The Federal Reserve is currently doing everything in its power to prevent the American people from finding out what it did with trillions of dollars of their money – in propping up the U.S. financial sector with a plethora of “emergency measures” over the last two years.
In the case of these companies, it is a much easier question to ask “what do investors know” about these companies rather than “what don't they know”.
We know that these companies have been declared “strong”, “healthy”, “well-capitalized”, “stress-tested” - and even “profitable” by Treasury Secretary, Tim-the-tax-cheat Geithner, and a legion of media propagandists.
As I have pointed out on a number of occasions, the ultra-wealthy top 1% of the U.S. population holds 55% of all stock. Even more importantly, the vast majority of that wealth is managed by a relatively tiny handful of Wall Street firms .This massive concentration of market-share (and market control) obviously completely refutes any suggestion that U.S. equity markets are “open markets” - even before factoring-in the Plunge Protection Team, whose permanent, full-time job is to manipulate U.S. markets any and every time they move opposite to the wishes of the U.S. government.
However, this commentary is not devoted to the numerous, factual flaws upon which most technical analysis is based, but rather is focused on a few aspects of “technical analysis” which are not dependent on the previous assumptions (which clearly have no validity).
An example of such a “technical indicator” is insider-selling. As has been widely reported, U.S. insider-selling has been accelerating throughout this entire “rally” - a glaring reality which is completely ignored by the vast majority of “market experts”. Currently, insider-selling is at its highest level in years.
A second (valid) indicator is the extremely obvious decline in volume as U.S. equities move up to ever-more unsustainable valuations. As with insider-selling, declining volume on rising prices is a “technical indicator” based upon simple logic, rather than a set of unrealistic assumptions – yet (once again) this glaring fact is completely overlooked by most of these market-pumpers.
Over the last couple of weeks, we have now been provided with a 3rd powerful indicator of the future (downward) direction of U.S. markets: the explosion in the share prices of the some of the most-dubious, high-risk companies in the entire S&P 500: Citigroup, AIG, Fannie Mae and Freddie Mac.
Even the ever-servile, U.S. Treasury Department describes its massive bail-out of AIG as “highly speculative”.
At best, this stampede into these high-risk stocks represents “irrational exuberance”, and at worst an example of greed-blinded investors chasing a “rally” - which has been shunned by U.S. “insiders” for six, solid months
This “rally” becomes even more sinister when we start to combine some of these pieces of data. Many if not most of these market “insiders” are part of the Wall Street cabal of financial companies. The same group which has relentlessly been buying stocks for their own clients has been dumping their own holdings with equal fervor.
You don't even have to be a card-carrying cynic like myself to understand that it is not a wise idea to be buying (with reckless abandon) at the same time your broker is selling.
......It is certainly no secret that U.S. markets are dominated by financial-sector companies (in more ways than one). To begin with, the balance sheets of these companies are saturated with the leveraged bets which these companies have placed in their own, private casino: the derivatives market.
The general public knows virtually nothing about this market, while even many “market professionals” openly admit they have (at best) no more than a rudimentary understanding – of a side market with a nominal value far in excess of ten times global GDP.
However, this is only the beginning of the information-gap which envelops U.S. financial sector corporations. I have alluded on many previous occasions to the regressive move by the U.S. “accounting watchdog” to legalize “mark-to-fantasy” accounting – where these companies are allowed to list assets on their books at valuations which haven't existed for years, and to maintain those phony valuations indefinitely, simply by asserting that these assets represent “long-term investments”.
Even this doesn't fully describe the “veil of secrecy” which surrounds the U.S. financial sector. The Federal Reserve is currently doing everything in its power to prevent the American people from finding out what it did with trillions of dollars of their money – in propping up the U.S. financial sector with a plethora of “emergency measures” over the last two years.
In the case of these companies, it is a much easier question to ask “what do investors know” about these companies rather than “what don't they know”.
We know that these companies have been declared “strong”, “healthy”, “well-capitalized”, “stress-tested” - and even “profitable” by Treasury Secretary, Tim-the-tax-cheat Geithner, and a legion of media propagandists.
As I have pointed out on a number of occasions, the ultra-wealthy top 1% of the U.S. population holds 55% of all stock. Even more importantly, the vast majority of that wealth is managed by a relatively tiny handful of Wall Street firms .This massive concentration of market-share (and market control) obviously completely refutes any suggestion that U.S. equity markets are “open markets” - even before factoring-in the Plunge Protection Team, whose permanent, full-time job is to manipulate U.S. markets any and every time they move opposite to the wishes of the U.S. government.
However, this commentary is not devoted to the numerous, factual flaws upon which most technical analysis is based, but rather is focused on a few aspects of “technical analysis” which are not dependent on the previous assumptions (which clearly have no validity).
An example of such a “technical indicator” is insider-selling. As has been widely reported, U.S. insider-selling has been accelerating throughout this entire “rally” - a glaring reality which is completely ignored by the vast majority of “market experts”. Currently, insider-selling is at its highest level in years.
A second (valid) indicator is the extremely obvious decline in volume as U.S. equities move up to ever-more unsustainable valuations. As with insider-selling, declining volume on rising prices is a “technical indicator” based upon simple logic, rather than a set of unrealistic assumptions – yet (once again) this glaring fact is completely overlooked by most of these market-pumpers.
Over the last couple of weeks, we have now been provided with a 3rd powerful indicator of the future (downward) direction of U.S. markets: the explosion in the share prices of the some of the most-dubious, high-risk companies in the entire S&P 500: Citigroup, AIG, Fannie Mae and Freddie Mac.
Even the ever-servile, U.S. Treasury Department describes its massive bail-out of AIG as “highly speculative”.
At best, this stampede into these high-risk stocks represents “irrational exuberance”, and at worst an example of greed-blinded investors chasing a “rally” - which has been shunned by U.S. “insiders” for six, solid months
This “rally” becomes even more sinister when we start to combine some of these pieces of data. Many if not most of these market “insiders” are part of the Wall Street cabal of financial companies. The same group which has relentlessly been buying stocks for their own clients has been dumping their own holdings with equal fervor.
You don't even have to be a card-carrying cynic like myself to understand that it is not a wise idea to be buying (with reckless abandon) at the same time your broker is selling.
