Investments That Work: McHugh's Mid-day Market Update

Thursday, July 2, 2009

McHugh's Mid-day Market Update

Stocks plunge mid-day Thursday, July 2nd. The decline is the start of the expected wave (C) down of B-down. This decline has further to go before completion, and could complete at our next phi mate turn date, which we will cover in this weekend's expanded newsletter.

The decline so far Thursday is four fifths of the first leg down of (C) down. In the last hour, small degree wave 4 within the first wave 1 down of (C) down formed a small triangle, meaning later this afternoon we could see another down-leg. However, the 15 and 30 minute Full Stochastics are showing prices are close to oversold on a short-term basis, meaning once the first wave 1 down finishes, over the next day or two we should see a wave 2 bounce. Wave (C) down should have five waves before completion. We show this move, available now, in updated mid-day charts for the U.S. S&P 500, Industrials, and Canada's TSX on pages 8 and 9 in the Australia Daily report at the Australia Daily button at www.technicalindicatorindex.com

Bad news on the unemployment front, the Labor Department admitted to a loss of 487,000 non-farm payroll jobs in June. The unemployment rate rose again, to 9.5 percent. This is the great struggle for 2009 into 2010 -- unemployment. It is going to get much worse. Why? Because everything the Central Planners have done fails to add jobs, fails to empower the American Household. They have merely replaced toxic assets of large financial institutions with hyperinflated monetary policy. Nothing is trickling down.

This sets the stage for a collapse in the economy, catastorphic wave (C) down later in 2009, into 2010.

Mid-day Thursday, Oil is down 2.50, Gold is off 10, Silver is down 0.35, the S&P 500 is down 20 points to 902, the Industrials are down 170 to 8333, the NASDAQ Composite is down 41 to 1802, teh Euro is weakder against the dollar.

Don't miss this weekend's expanded newsletter to learn about our next phi mate turn date, to learn how low this decline should go, to learn if there will be a bounce afterwards, and to learn more about this coming catastrophic decline later in 2009.

Also, we just posted our Expanded Australia Weekend and International report, including charts for the London FTSE, Germany's DAX, the NIKK, Canada's TSX, and the Australia SPASX200.

We found shocking patterns in Germany's DAX, Japan's NIKK, and the SPASX200, which add to the growing body of evidence that catastrophic wave (C ) down is coming later in 2009 into 2010, and it will be world-wide. The downside targets are astonishing. These patterns are not yet confirmed, but will be with drops below levels we mention in annotations on the charts.

Subscribers can access these charts at the Australia Weekend button at www.technicalindicatorindex.com

Stock prices have fallen further Thursday afternoon, as we suggested was probable in an earlier Thrusday Mid-day Market update, given the wave 4 triangle pattern. A short-term bounce could arrive early next week. Then more decline as wave B-down finishes over the next few weeks.

Grab our limited time only great offer of 14 months for only $259, available at the Subscribe Today or Renew Today buttons at www.technicalindicatorindex.com

We would like to bring to your attention that our 14 months $259 special will be ending soon, so you may want to think about this amazing renewal and subscription offer, available at www.technicalindicatorindex.com It is the best per month rate we have, a little more than $18 a month, for daily and weekend issues, and access to all features on our site, including occasional mid-day email reports and charts.

Best regards,

Robert McHugh, Ph.D.

Disclaimer

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Side Notes

Predatory Lending and The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) (Pub.L. 109-8, 119 Stat. 23, enacted April 20, 2005), was a law enacting several significant changes to the U.S. Bankruptcy Code. It was passed by the 109th United States Congress on April 14, 2005 and signed into law by President George W. Bush on April 20, 2005. Most provisions of the act apply to cases filed on or after October 17, 2005. Referred to colloquially as the "New Bankruptcy Law", the Act of Congress attempts to, among other things, make it more difficult for some consumers to file bankruptcy under Chapter 7; some of these consumers may instead utilize Chapter 13. Voting record of S. 256 [1].

Perhaps the most controversial provisions of the bill was the strict means test it established to determine whether a debtor's filing under Chapter 7 of the bankruptcy code would be considered as an "abuse" and therefore subject to dismissal. This decision was previously made by a bankruptcy court judge, who would evaluate the particular circumstances that led to a bankruptcy. Critics of the means test, which is triggered if a debtor makes more than their state's median income, argued that it ignored the many causes of individual bankruptcies, including job loss, family illnesses, and predatory lending, and would force debtors seeking to challenge the test into costly litigation, driving them even further into debt.[20]

The fallout of the recent recession/depression has shown the ugly side of banking and its opportunistic employment of abusive predatory lending practices. Coincidence? Did they see this collapse of the economy coming all along? Are they the reason for the crisis after all? Coincidence? I think not. More likely just another operation in the shaping of the world.

Contributions to GDP Growth

While residential investment is still near a record low share of the overall economy, I have serious questions about the sustainability of the increase. The extension and expansion of the tax credit by Congress might keep things going for the next few quarters, but after that things are likely to fall apart again. Just like we saw with the "Cash for Clunkers" (C4C) program, it is probably just encouraging those folks who might have bought later to buy now.

It is also tricking people into thinking that a house is more affordable than it really is -- just the way that teaser-rate ARM’s did, and we saw just how well that worked out. The FHA is handing out mortgages with only 3.5% down, and people can use the tax credit for that ridiculously small down payment. This has future disaster of biblical proportions written all over it. The next bailouts will not be of the banks like Bank of America (NYSE: BAC) and Citigroup (NYSE: C) but of the FDIC and the FHA.