Munchin’ On The Numbers – The Plunge Protection Team

BawldGuy Note: Though this is yesterday’s update by Max, it was delayed due to the snowstorm bringing a foot of snow to Ohio, not to mention his neighbor’s 150 year old tree it felled.

2-5-10

CURRENT BUY – 100% of stock allocation $$$
KEYLINE 7-25-09 BUY 50% allocation only (S&P @ 970)
SIGNAL 10-9-09 BUY balance of 50% (S&P @ 1071)

1-25-10 SPECIAL INSTRUCTIONS ALL SUBSCRIBERS:

Establish stops on volatile stocks 12% below highest high last six months.
Use 25% stop for “Steady Eddie” stocks. Check each day to see if any close
below stop. If so, execute that exit the next day, at the open. These
instructions hold until we close above S&P 1160 (if we do).

THE BOTTOM LINE

Well, today was a really tough day for the market. We did go as low as 1044 on the S&P cash intraday and that is not good at all. And I will make one other observation. As the market trended lower and lower into the late part of the session, I was beginning to feel that we just might break the 1040 area, a crucial support.

Then, out of the blue, came a buying spree that ran the S&P close back above 1060 and the Dow 2 points above the key psychological 10,000 level. It began about 3pm and was very sharp and on heavy volume. Now, I am a realist. There is no way that common sense investors came into this market at that point and ran it back up, especially before a weekend. I am convinced that this was a clear cut intervention. I won’t go into it here, but the currency markets from time to time see government intervention to support the currency. This is usually openly announced. I do firmly believe that this also was an intervention, but to support the stock market.

I have seen trading day’s like this before over the last twenty years or so. It is called the “Plunge Protection Team” action by guys like me who follow the markets so closely. It has never been officially (by the government) acknowledged, but “we” all know it is there. I usually don’t comment on it, but today I just had to point it out. In light of this kind of thing, I remain very concerned for this market’s stability. It has NOT broken the Keyline area yet, or the vital support at 1040, but today’s kind of action tells me that the bears are gaining strength.

I will wait until my Super Chart Keyline tells me to exit, of course, but once more please observe the stops I have told you to set up over the last two weeks. Next week could be a “doozie!” Remember that word? It means it could be a really choppy market as investors via for control –- bull vs. bears. More on Monday’s Weekly Keyline Report.

COPPER AND CRUDE OIL

Today is the day for our Copper and Crude Oil charts update. First, Copper.

Most important here is that the current price remains above the Keyline and Cap line, in hyper rally mode. But, at the same time, it is not far above either one of these lines. What I first noticed was that the MOMENTUM SECTION has the classic rally setup of a very low green line (fast sto at 21) and high black line (slow sto at 81). Eighty percent of the time this setup does lead to a rally. Could be that we will see a challenge of the Keyline first and if prices fail to cross down after several days, we could see Copper rally here. But, I add this. If we do cross down the Keyline it may well signal that the financial problem coming down the pike will be deflation, not inflation. Won’t know the outcome for a week or so, but this is an important test. I will be watching it closely for you and reporting back.

But, the Crude Oil is something else all together.

Here the challenge to cross up the Keyline failed, and the resulting decline has been sharply lower prices. We are right on the current support, as I suspected we might be several days ago. Note that the MOMENTUM SECTION shows the green line (fast sto) down to 20. That would typically be a good sign if the black line (slow sto) was still in the 80-90 area. But, it is now in the mid-60’s and that means it can go either way. I also took a look at my daily chart (remember the one here is a weekly) and it is saying we very well might have hit a temporary support. But, if we were to pull back up to the $74-76 area, there is a lot of resistance. For now, let’s see if the current support holds and we get that small pullback up. But, I would not be a buyer unless it clearly crosses up that $74-76 area for now.

So, that’s it for today. As always, I do hope your trading day was a profitable one – but, as I said yesterday, that would be a tall order unless you were short. And will see you Monday, Lord willin’ and the creek don’t rise.

NEED SOMETHING TO TALK ABOUT TONIGHT?

SIX STORIES IMPACTING THE MARKET TODAY

1. Senate hits impasse on Financial controls bill. Looks like the agenda is really changing! Hummmm.
2. Senate did swear in Senator Brown from MA. Patrick Kennedy miffed! Camelot breaking apart??
3. Stocks recover right at end of very dismal day – JUST over DOW 10,000. Yeah, right. Blatant!!!!
4. China tells U.S. to pound salt on making it raise currency. Shades of 1956 between U.S. / Britain!!
5. Nashville hosts the Tea Party Convention. Will it emerge a force or a fractured movement????
6. Consumer Credit declines for 11th month in row. Are consumers reflecting jobs scarcity worries??

MY TAKE: #6 is little talked about but very important. #4 escalates the China U.S. financial disagreements. Go back to the 1950’s history books and study the financial war between the U.S. and Britain and its outcome. Can that be the future for us? Oh, my! #1 will be front page soon. Lots of infighting to go on here. #2 Brown is now officially a senator. Reid kept his word. Good. And #3 I commented on in the MUNCHIN today. Not a good sign.

Note: All closes at 4pm using continuous cash contract results

Disclaimer

** The top five sector stocks shown are stocks that are above their Super Chart Keyline and between $5 and $35 in price have been randomly selected from the stocks in the each sector. Their inclusion in the Report is not to be interpreted as a buy recommendation nor is the exclusion of others above their Super Chart Keyline to be interpreted as a sell recommendation. This data is given for informational and research purposes only, as we do not make buy or sell recommendations at any time under any circumstances.
?***Max Whitmore, “The Keyline Report”, and “MUNCHIN’ On the Number”report does not endorse or suggest any of the securities which are mentioned in any way in its Reports. They are provided purely for informational and research purposes only. Max Whitmore, “The Keyline Report,” and “MUNCHIN’ On the Number” do not recommend particular securities to anyone, ever, under any circumstances. The statements made herein include information obtained from sources we believe to be reliable, but no independent verification has been made and we do not guarantee its accuracy or completeness in any manner whatsoever. You should not make any investment decisions of any sort based solely on what you read in the Keyline or MUNCHIN’ Reports. The statements made herein contain general information and do not constitute an offer to buy or sell any security of any description. Subscription to any of the Reports mentioned above is consent by the subscriber of full release of Max Whitmore and the Reports mentioned herein from any claims or actions of any description, legal or otherwise, against Max Whitmore or the Reports. All material herein is Copyright 2010 by Max Whitmore. All rights reserved.

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