8/27T12:30 Notes from the Edge

This week in the GMT:

Global Money Trends (GMT), one of our most respected partners in our fight to see through the smoke and mirrors and reveal the truth, highlights the correlation between the presidential race and the Dow Jones average. After doing extensive work, GMT states that even small moves in the polls can have real effects on the markets. Generally speaking a move in favor of the democratic candidate results in a sell off in the Dow and vice verse. This knowledge may help us understand day to day volatility from here to Nov. 4th.

GMT also confirms our belief from three weeks ago that the current counter trend rally(CTR) should last 9 weeks. As discussed, the prior two counter trend moves during this bear market have lasted about 9 weeks and this third move should be no exception. So, if we are keep score, the markets are in the 7th week of the CTR. We should expect one more move higher on lighter volume before the bear market long term trend resumes in Sept..

RCM Comment:

Market manipulation or coincidence; you be the judge. A major hurricane is headed into the Gulf of Mexico and another is close on its heals, yet oil prices drop 2% today led by an 8+% decline in Natural gas prices. The Nat. gas market is notoriously thin and therefore easy to manipulate. Pundits will tell you on TV today that the energy complex is down because inventories were higher than expected in the Nat. gas market. However, I will offer another reason for the sell off. The powers that be want to mute the obvious rally in the energy sector that will take place next week do to the hurricane and they used the inventory number today to hammer a thin market before a long weekend to create a cushion. Am I right? Let's see where the energy complex is trading this time next week.

John Malden comments: "Dead man Walking"

In John's recent missive he analyzed the demise of companies like Bear Sterns, Fannie Mae, Freddie Mac etc. and came up with a list of developments common to all that were red flags. Using these flags he then searched the financial space for other companies that were exhibiting the same flags but have not yet totally collapsed. Here are both lists:

Red Flags:

Common stock too low to issue new shares.*
Preferred stock yield too high to issue new shares economically.*
Issuing debt is uneconomic.*
More write-offs coming in days to come.*
Business trends are awful.*
Denial and announcements that seem bullish to prop up the stock eg. large share buy backs authorized but never completed.

List of stocks symbols:

WM, WB, GM, F, NCC, RF, C, WABC, ZION, KEY