Tuesday, September 30, 2008

1929 Stock Market Crash

Below are a few charts of the Dow Jones Industrial Average from 1929 and the early 1930's. With all the talk of 1929, it can he helpful to review the patterns. The lines on these charts are an 89 day linear regression(yellow line) with two sets of channels showing 2 and 3 standard deviations away from this linear regression.

Dow Jones Industrial Avg 1929(click to enlarge)

Dow Jones Industrial Avg. 1929 First Down Move (click to enlarge)
Dow Jones Industrial Avg. 1930's(click to enlarge)

Dow Jones Industrial Avg. 2007(click to enlarge)
Dow Jones Industrial Avg Now(click to enlarge)

Tuesday, September 23, 2008

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Monday, September 22, 2008

Treasury's Bail-Out Plan King Henry Paulson

Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.–The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.–The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for–

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.–The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.–The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.–The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.–The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.–The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.–The term “Secretary” means the Secretary of the Treasury.

(3) United States.–The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

U.S. Dollar Confidence

With the U.S. Congress debating the size and scope of the bail-out of the Banking (Economic) System, the U.S. Dollar is taking it on the chin as the size of the debt seems to have no end. Once the banking system's plan is done, does the government have plans for the automakers or the airline industries? What is in status for the Pension Benefit Guarantee Corp(PBGC). This is a government entity that takes over the pensions of failed companies. With out a doubt their budget is going to have to be increased, and what if they need assistance? No end in sight yet...

U.S. Dollar / Swiss Franc(click to enlarge)

Euro / U.S. Dollar

Explaining The Problem!!!

S&P 500 Linear Regressions And Opening Range Levels

Below are three charts of the S&P 500 Index. These charts show levels based on the opening range of the calendar year and linear regressions of long, intermediate,and short term. Combining these two concepts, make it possible to estimate when and where potential turning points might be.

S&P 500 Opening Range Levels(click to enlarge)

S&P 500 3day Linear Regression Chart(click to enlarge)

S&P 500 3day Linear Regression Chart short term(click to enlarge)

The volatile moves lately have exceeded the two standard deviation lines(yellow) of the intermediate term linear regression. Friday's recovery reached back and touched the intermediate term linear regression line. To coincide with this move, prices closed just below the short term linear regression line. The move required to return to these levels was over a 100 S&P points. Typically there is consolidation after large moves like this. While the moves could be explained by the financial news last week, it was also enhanced by option expiration on Friday.

The next level on the opening range chart is 1290.63. After the large move last week, it might take a move lower before any attempt is made at this level. 1229.45 is the key level to watch as we consolidate. A failure of this level will lead to more selling. This will almost certainly lead to the market to test the minus two standard deviation levels of the linear regressions of both the short and intermediate term.

Tuesday, September 9, 2008

Friday, September 5, 2008

S&P 500 Opening Range Extension 1229.45

Below is a chart of the S&P 500 Index with the extensions created from the opening range created back in the first few days of the year. Once failing at the 1290.63 level, it took very little time to head down toward the 1229.45. Volume also has started to pick up.

S&P 500 Index (click to enlarge)

Monday, September 1, 2008

Gulf Of Mexico Oil Operations

Offshore oil and gas operators in the Gulf of Mexico are evacuating platforms and rigs in the path of Hurricane Gustav. The Minerals Management Service has activated its Continuity of Operations Plan team to monitor the operators’ activities. This team will be activated until operations return to normal and the storm is no longer a threat to the Gulf of Mexico oil and gas activities.

Based on data from offshore operator reports submitted as of 11:30 a.m. CST today, personnel have been evacuated from a total of 223 production platforms, equivalent to 31.1 % of the 717 manned platforms in the Gulf of Mexico. Production platforms are the structures located offshore from which oil and natural gas are produced. These structures remain in the same location throughout a project’s duration unlike drilling rigs which typically move from location to location.

Personnel from 45 rigs have also been evacuated; this is equivalent to 37.2 % of the 121 rigs currently operating in the Gulf. Rigs can include several types of self-contained offshore drilling facilities including jackups, submersibles and semisubmersibles.

From the operators’ reports, it is estimated that approximately 76.77 % of the oil production in the Gulf has been shut-in. Estimated current oil production from the Gulf of Mexico is 1.3 million barrels of oil per day. It is also estimated that approximately 37.16 % of the natural gas production in the Gulf has been shut-in. As of June 2008, estimated current natural gas production from the Gulf of Mexico was 7.0 billion cubic feet of gas per day.

Article Continued At Rigzone