The Market

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Dear New World Investor:

Fractal analysis showed

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Dear New World Investor:

This week’s issue is one day early to allow for my travel schedule to the Money Show at the Marriott in San Fransisco.

As I said in the Flash Alert on Tuesday, I think the S&P 500 wants to do a test back down to 960, with a possible intraday spike down to 912. But time is running out, because this whole downturn should be over by Friday or Monday, Day 30 or 31 of the new 86-day cycle, with the next leg up to September 10 starting then. Many bears who missed the rally are now following Henry Blodget in claiming victory by having stayed out of this “sucker’s rally.” It won’t take much more than one more big drop into options expiration this Friday to get the weekend news stories talking about false rallies, Great Depression comparisons, W-shaped recoveries, increasing unemployment rates, increasing foreclosures – did I miss any other negatives that are widely-known and thoroughly discounted by the markets already?

After breaking 990-995, it is very typical to see a test back up to the breakdown area. The energy for this type of rebound

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The fact that it took so long for the S&P 500 to take a breather is testimony to

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Dear New World Investor:

In the June 11 Radar Report I outraged some of you and, in a June 15 article based on that Radar Report, outraged almost everyone on SeekingAlpha.com, with my statement that: “The recession is over.” I said you should not pay attention to the lagging indicators like employment, especially when cited by an otherwise bearish stock market forecaster as a reason the rally was a fake, manipulated, engineered by the evildoers on Wall Street, etc.

In my follow-up in the June 25 Radar Report I pointed out that the strength in the leading indicators and the coincident/lagging indicator confirmed that the recession ended in June. When I posted that as an article on SeekingAlpha.com on July 7, the howling doubled. No one actually said: “Off with his head!” But it was close.

So, in the spirit of “I never forget a mistake, that way I can make it over and over” I decided to cover the third group of economic indicators published by The Conference Board: The Coincident Economic Index. This is a bit trickier, because while the leaders turn up before the economy turns up, the coincidents are, well, coincident. So I had to forecast what the four components of the Coincident Index will look like for July, August and September in order to be sure the recession ended in June. I did that, and as my teen-age babysitter would text:

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Additional Writeups for the 8.6.09 Radar Report

First, thanks for your emails regarding the lightning strike.

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Dear New World Investor:

The strongest markets consolidate by moving sideways with an upward tilt. The furious advance that drove the prior upturn flattens out, but all those who are waiting for a major correction to give them a second chance to get on board keep buying the little dips, so the big retracement never comes. By the end of July, the Dow Jones Industrial Average was up 4.5% for the year to date (YTD), and all the Dow Indices (Transports, Utilities) hit recovery highs, confirming a Dow Theory bull market signal. The S&P 500 was up 9.3% YTD, and the Nasdaq Composite that most closely parallels our portfolios rose a whopping 25.5% YTD.

The Dow climbed to more than 10% above its 200-day moving average, rebounding from 34% below its 200-day moving average in November. Since 1921, 18 of the last 21 times the Dow rallied from at least 10% below to 10% above the 200-day level, it went on to post an average 18% gain during the next 12 months. We saw this buy signal most recently in 2003, 1999 and 1991. There were 17 gains at the six-month mark, averaging 8.2%, and 18 gains at the three-month mark averaging 5.7%.

This week started off with the Nasdaq closing above 2,000 for the first time since October 1 and the S&P 500 closing above 1000 for the first time since October 6. That means the S&P is up 50% in five months from the devil’s low of 666 on March 6. Some commentators are pointing to the five-month, 48% rally from November 1929 to April 1930, which followed a 50% drop from September 1929 through November. But the historic parallel fails, because in 1929 the Fed was about to massively contract the money supply, causing thousands of bank failures. Today’s Fed is trying to blow another bubble to lift the economy into recovery, with massive increases in the money supply flowing first into financial assets and eventually into the real economy. It’s going to work, too – at least for a while. The bill is to be paid later, of course, with very depreciated dollars.

The Cash for Clunkers program is wildly successful, showing once again that (1) if you offer people free money, they will take it, and (2) if Congress sees a popular program that they can spend $3 billion on today, no one but Ron Paul will point out that the $150 million per year interest cost will continue into the future forever. In fact, Congress won’t even think about, because it’s only 453 days to election day and nothing buys votes like giving away money.

The market still has barely enough short-term energy to get the S&P 500 up to

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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,