Grandich's Blog

During my 25 years in and around Wall Street, I’ve never seen so many markets at critical crossroads. Hundreds of millions, if not billions of people will be greatly effective by what occurs here and around the world in the coming days, weeks and months. While the “Don’t Worry, Be Happy” crowd on Wall Street and TOUT-TV don’t want to recognize the severity of where we stand, you must! This is not some movie like “Rollover” It’s the real McCoy. The “Happy” crowd will spin until there’s nothing to spin anymore. Don’t find yourself jumping off the cliff with these so-called financial advisers who made the biggest blunders in our lifetime.

While the average American sadly doesn’t grasp all what has gone on, and more importantly, what has not gone on in Washington, DC, the financial markets here and abroad do. Just two days ago, the “Happy” crowd jumped for joy on the news of a bad bank, good bank proposal that would solve what the $700 billion TARP program hasn’t been able to. Within 24 hours, non-members of the “Happy” group who don’t take “laughing gas” concluded there’s a whole host of difficulties in actually forming such a bank. Add to that the growing belief that the so-called stimulus bill was only stimulating to those who will receive record pork, horrendous economic numbers and the reality of what this could cost, and we found even TOUT-TV regulars unable to find a silver lining (If only they bought silver they would be better off).

How long before even the average American returns from the Obama honeymoon and realizes last fall was just the first act? Stay tuned.

U.S. Stock Market – The DJIA closed right at 8,000. I have spoken about how it and the whole market has been weakening technically and eating away at this area of support. A close below 7903 should bring on a swift decline to the one day low around 7500. It’s critical for you to take note that the DJIA only spent hours below 8000 so while the “Happy” crowd will talk about 7500 as the line in the sand, a serious break below 7903 is a very bad signal.

I’ve spoken about how down days have more volume and worse breath. Other bearish indicators include a tremendous fall off in insider buying and company buybacks despite much lower equity prices. If prices were truly cheap, this should not be happening. Perhaps they have their own cash flow problems.

Bond Market – I said in my year-end commentary that the U.S Treasury market was the last bubble and it would burst. I recommended shorting the 10yr and 30yr treasuries (My model portfolio used two ETFs for this). The 10yr. has gone from just 2% or so to 2.85% in just a month. The talk of lower mortgage rates has disappeared. I’m not alone in this Treasury Note belief. The $64,000 question is why are the Treasuries selling off despite bad economic numbers? Yes, the flight to safety has ease somewhat. But T-Bills saw much of the flight. I think the Chinese are selling. In just a month, the new administration has done more to ruffle the Chinese feathers then the Bush Administration did in years. If your response is they deserve it, just remember how much of our debt China has purchased and where we would be if they didn’t and/or stopped doing so.

Gold – Love it!

U.S. Dollar – Hate it!

Oil – Is attempting to build a base. I continue to like it for the long-term.

There’s still a few seats available for seminar on Feb 4th