Dear New World Investor:

This has been the strongest upswing in equity markets since 1938. On a fractal basis, this is one of the most overstretched markets I have ever seen – and one of the most confusing. I thought the upmove was done last Friday, and we would go into an 11-trading-day consolidation until August 10. We may even be in that, because a “running consolidation” can simply go sideways right around a new high. But since the prior run up was so fast and furious, I thought it more likely that we would see a quick drop back to 945 on the S&P 500, perhaps with a few touches of that level, to increase negative sentiment. While that could still happen, time is getting short. The problem is that while the

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July 14, 2009

Mary Schapiro, Chairman

Securities & Exchange Commission

Dear Chairman Schapiro:

Today you said you are taking steps that will reinforce your focus on investor protection and market integrity. If you do not investigate, prosecute and imprison the conspirators behind the April 28^th bear raid on Dendreon, no one is going to believe you. I sent the letter below to your Enforcement Division many weeks ago. A complete description of how the bear raid was pulled off has appeared on the Internet. One of the original perpetrators posted in advance that the raid was coming. This is a RICO case. Do something about it. (Also see http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-1-of-15/ You are up against thugs and the Russian Mafia, and everyone in the stock market knows it and expects you to do nothing, as usual.)

[followed by SEC letter at bottom]

* * * * *

July 14, 2009

Senator Maria Cantwell
Via Fax: (202) 228-0514

Senator Patty Murray

Via Fax: (202) 224-0238

Congressman Jim McDermott

7th District, Washington State Via fax to: 206-553-7175

Dear Senators and Congressman:

A company in your state and district, Dendreon Corp. of Seattle, was the victim of an organized bear raid on its stock in the Nasdaq Stock Market on April 28. The purpose of the bear raid was to “run the stops” of individual investors, many of them Seattle residents, to force the sale of their stock at low prices. The bear raid ran the stock from $25 to $7.50 in 75 seconds. More than 4,000 trades were placed, totaling three million shares, or about 50% of Dendreon’s (spectacularly high) average daily volume, causing Dendreon’s share price to lose more than 65% of its value. The conspirators then bought the low-priced stock to cover their naked short sales and closed the stock at $11.81. The next day the stock opened at $27, the conspirators unloaded their stock, and your constituents were fleeced. DNDN stock closed that day at $22.84.

I immediately wrote the SEC and they have done nothing to investigate this obvious manipulation. Nasdaq has done nothing after a 30 minute investigation. I am asking you to hold the SEC’s feet to the fire on this one, because unlike most of these manipulations this one left clear footprints. Some braggart posted on the Yahoo message boards that the raid was coming, and predicted it almost to the minute. They may have been a low-level conspirator, but for once the SEC has the key to break this ring of conspirators, and they are not moving forward.

Below is my letter to the SEC. This game has gone on for years, and the numbers aren’t as big as the Madoff Ponzi scheme, but it is exactly what the SEC regulators should be pursing if they want to repair their image on Wall Street as a toothless agency.

And please remember that the company, its shareholder employees, and many other shareholders are in the Seattle area. Ask the SEC why they are not investigating!

Very truly yours,

[followed by SEC letter at bottom]

* * * * *

July 30, 2009

Senator Ted Kaufman
Via Web Mail

Dear Senator Kaufman:

Thank you for keeping the pressure on the SEC to rein in short selling. For many years I published the Overpriced Stock Service, a leading short-sale newsletter. While I continue to think there is great value in selling short companies that are drastically overpriced and/or frauds, there is absolutely no need for the short selling abuses we have seen: Naked short selling, coordinated rumor-mongering, “running the stops,” and so on.

Wall Street does not take the SEC seriously on this issue because they don’t investigate even the most blatant examples of abusive shorting, and they won’t publish the list of short sellers in a company’s stock, just as they publish the list of long holders. A recent example of a blatant situation that the SEC refuses to investigate is Dendreon Corp, the victim of an organized bear raid on its stock in the Nasdaq Stock Market on April 28. The purpose of the bear raid was to “run the stops” of individual investors to force the sale of their stock at low prices. The bear raid ran the stock from $25 to $7.50 in 75 seconds. More than 4,000 trades were placed, totaling three million shares, or about 50% of Dendreon’s (spectacularly high) average daily volume, causing Dendreon’s share price to lose more than 65% of its value. The conspirators then bought the low-priced stock to cover their naked short sales and closed the stock at $11.81. The next day the stock opened at $27, the conspirators unloaded their stock, and the average investor was fleeced. DNDN stock closed that day at $22.84.

I immediately wrote the SEC and they have done nothing to investigate this obvious manipulation. Nasdaq has done nothing after a 30 minute investigation. I am asking you to hold the SEC’s feet to the fire on this one, because unlike most of these manipulations this one left clear footprints. Some braggart posted on the Yahoo message boards that the raid was coming, and predicted it almost to the minute. They may have been a low-level conspirator, but for once the SEC has the key to break this ring of conspirators, and they are not moving forward.

Below is my letter to the SEC. This game has gone on for years, and the numbers aren’t as big as the Madoff Ponzi scheme, but it is exactly what the SEC regulators should be pursing if they want to repair their image on Wall Street as a toothless agency.

Please ask the SEC why they are not investigating! Also see http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-1-of-15/ The SEC is up against thugs and the Russian Mafia, and everyone in the stock market knows it and expects them to do nothing, as usual.

My letter to the SEC:

The very unusual 65% drop in Dendreon (DNDN) shares on April 28 in a period of 75 seconds, just before they reported excellent clinical trial results, is worth your investigation. I have been a professional investor for 39 years, and this looked like an illegal conspiracy to run the stop losses. The stock went from around $23 to $8 in less than two minutes, and then was closed for trading as it rebounded to the mid-$11s. The next day, after the results, it opened up 100%. But many investors had been stopped out of the stock with “low” stop losses in the teens. One of my subscribers set a stop at $16.50 and was filled at $8.

This sort of organized market manipulation rarely leaves tracks, but this time it did. A new poster on the Yahoo Message Board for DNDN warned of a bear raid almost to the minute. How did he know? Who does he work for?

Here is his first post:

28-Apr-09 11:07 am   32.  URGENT ALERT BEAR RAID @ 12 30 pm central Today
Expect Massive BEAR RAID this afternoon @ 12 30 pm central last trade 24 suggest you sell short into strength MASSIVE BEAR RAID coming.. TODAY
Business & Finance > Investments > Stocks (A to Z) > Stocks D  >  Dendreon Corporation (DNDN) monthaphumchare…

Here are some others from the same morning:

27.  as a COURTESY I am alerting this board DNDN BEAR RAID today
u should be positioning on the short side of DNDN right now at 24 and on any additional strength ahead of conference by 12 30 stock will be in the throes of a MASSIVE BEAR RAID smart $ has a BIG…
Business & Finance > Investments > Stocks (A to Z) > Stocks D  >  Dendreon Corporation (DNDN) monthaphumchare… 28-Apr-09 11:27 am

28.  See u @ 17 today MASSIVE BEAR RAID
suggest you position @ current price 24.08 for expected massive bear raid today 12 30 pm central
Business & Finance > Investments > Stocks (A to Z) > Stocks D  >  Dendreon Corporation (DNDN) monthaphumchare… 28-Apr-09 11:20 am

29.  CNBC suckering U in Bear Raid coming
MASSIVE BEAR RAID today 12 30 pm central
Business & Finance > Investments > Stocks (A to Z) > Stocks D  >  Dendreon Corporation (DNDN) monthaphumchare… 28-Apr-09 11:12 am

30.  Re: URGENT ALERT BEAR RAID @ 12 30 pm central Today
HIGH Probability stock trades down to 17 today on Bear Raid after presentation Outside chance stock drops 50 %
Business & Finance > Investments > Stocks (A to Z) > Stocks D  >  Dendreon Corporation (DNDN) monthaphumchare… 28-Apr-09 11:10 am

31.  Re: URGENT ALERT BEAR RAID @ 12 30 pm central Today
Suggest you SELL SHORT last trade 24.09 continue to sell short on any additional strength ahead of 12 20 pm presentation by 12 30 pm today you will witness a MASSIVE BEAR RAID DNDN
Business & Finance > Investments > Stocks (A to Z) > Stocks D  >  Dendreon Corporation (DNDN) monthaphumchare…

Please don’t give this one a pass. Many hundreds of individual investors were harmed by an obvious market manipulation, most likely involving more than one entity and therefore a RICO violation.

Very truly yours,

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Dear New World Investor:

The Nasdaq was up today for the twelfth day in a row, the best consecutive days run since 1996. In the July 9 Radar Report I said: “…starting around midday on Friday or by Monday a heck of a two-month rally should begin.” The rally began Monday morning, July 13. The fractal analysis techniques I use work because they are based on sound statistics. Stock prices do not follow a normal bell-shaped distribution, they have “fat tails” – an excess of unusually positive and unusually negative events. Normal statistical methods like least-squares regression do not work on statistics that are not normally distributed. That is why calculations like “beta” and “alpha” are meaningless.

Worse than meaningless, actually, because a series of Nobel Prize winners have convinced market participants that the stock market is very efficient, index funds are a great idea, all stocks are almost always fairly priced and so on. All hooey, and the belief in and use of the wrong statistics has been the direct cause of the failure of numerous quantitative hedge funds that “blow up,” none more spectacularly than Long Term Capital Management in 1998. You would think that the total collapse of a fund – a $4.6 billion loss in four months after the “fat tail” event of a Russian bond default – based entirely on the most extreme version of the capital asset pricing model, which assumes stock prices are normally distributed, and managed by not one but two Nobel Prize winners in Economics, might have caused some folks to wonder if the underlying math is wrong. Not so far, though, and more quantitative hedge funds will blow up this year.

On the other hand, this morning on Tech Ticker on Yahoo Finance, Charles Lemonides, the chief investment officer of ValueWorks, said: “I don’t think it would be surprising to see a 12,000 number [on the Dow] six months to a year out. You’ll see the market retrace its old high which means I think that over a couple of years you’ll see 15,000 on the Dow.”

Why do people say things like that in public? I happen to think he is right, but there’s no hard evidence for it yet. There couldn’t be – it is too far into the future. I am content with letting the market tell us where it is right now and what to do in the near-term.

And there the news is good. This has turned into one of those rallies where there is no graceful entry point for the underinvested, and no graceful buy-to-cover point for the short sellers. Last Friday the S&P 500 was up less than half a point, and yesterday it was down less than half a point. There was plenty of bad news to focus on if the S&P wanted to fail at the 950 energy level. But every other day has shown tremendous strength, and this monster launch almost certainly means the S&P will get through my first target at

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Dear New World Investor:

Associated Press – Tuesday, July 14, 2009 – The stock market has been struggling to find direction over the past month, having largely given up on a massive spring rally as troubling signs began to emerge on the economy including rising unemployment and waning consumer confidence, undermining a sense of optimism that drove stocks sharply higher since March.

What does “largely given up” mean? It means the S&P 500 from its closing low of 676.53 on March 9 was up 39.9% at its 946.21 close on June 12, but as of last Tuesday morning when this was written was up “only” 33.5%. I don’t know why reporters write stories like this, unless it is to make all those who missed the rally feel better for a moment. Last Friday, at the very end of the prior 86-day cycle, an article appeared headed: “Bulls Get Summertime Blues, But It’s Hot Fun for Bears.” Dave Rovelli, managing director of US equity trading for Canaccord Adams, said: “I’m seeing conviction on the sell side. A lot of the smart money is shorting stocks right now, especially in tech, which we didn’t see for the longest time.” And how do we know they are the “smart money?” Why, just ask them. Or ask Dave. He added: “These guys can talk about green shoots, but there’s nothing out there. It’s all smoke and mirrors. The consumer’s aggressively shrinking. I’m not saying it’s going to a nightmare again, but we got way too ahead of ourselves.”

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Dear New World Investor:

The Flash Alert I sent on Tuesday still seems to be on target. Markets fell more than 2% Tuesday on light volume, several indices fell below their 200-day moving averages and lots of stops on technology stocks were triggered. After a feint below 880 on Wednesday to a two-month low, the S&P 500 came back to that powerful attractor/repeller area. Alcoa’s not-as-bad-as-expected June quarter report after the close yesterday kicked off a little rally today, that could as easily as not be given back tomorrow. But if the recent cycles continue to play out, this consolidation is over and starting around midday on Friday or by Monday a heck of a two-month rally should begin.

The market often moves in two steps of roughly equal length. The first leg down was 50 points, and now the SPX has again dropped about 50 points from the 930 high to 880. I still wouldn’t rule out a bear raid to 840 intraday that closes back at 880, but I give that less than a 20% probability at this point.

The Recession Is Over – What’s Next?

I posted an article on SeekingAlpha (http://seekingalpha.com/article/147472-why-the-recession-is-over) based on the Radar Report from June 25 that pointed out both The Conference Board Leading Economic Indicators and the Economic Cycles Research Institute Weekly Leading Indicators were in strong uptrends, confirming that the recession is ending now. You’ve already seen everything in the article, but you may want to click through to read the comments. Here’s a sample:

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