I Was Nervous

I was nervous the night before last. I had watched the market moves all day made money, and I simply was unsure if yesterday would try a second bottom test. Hence, we had no open put signal and missed a good profit.
An intraday alert went out at the 9550 crossing yesterday for an ITM call, with a high risk attached, as the market could still go to our 9376 bottom.

We're not convinced yet that October will be filled with surprises. What had appeared 10,700 on a bull run early year end run up to the Fibonnacci retracement could actually be charted. I could prove it to myself.
At the same time, I've not "understood" the run up, and felt nervous our euphoria would lead to a bubble burst.

I'm still studying key dates, and economic indicators and am not ready to project beyond our current Dow projections. Read them carefully. They may now actually reverse in an uptrend with a shorter top.


And to get smart:

Volcker: Obama's Reforms Maintain 'Too Big To Fail'
URL: http://www.rollingstone.com/politics/story/30219673/the_lie_machine

And, from the boy that started it all, read with a cavalier attitude as Bubbles Greenspan, who helped create this mess, now speaks:


Greenspan Says U.S. Will Need to Tighten Credit, Raise Taxes

Oct. 1 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the U.S. will have to both tighten credit and raise taxes as the economy pulls out of the worst recession since the 1930s.

“The presumption that we’re going to be able to resolve this without significant increases in taxes is unrealistic,” Greenspan, 83, said in an interview with Bloomberg Television yesterday.

The budget deficit this year is forecast to widen to $1.6 trillion, boosted in part by President Barack Obama’s $787 billion stimulus package. Between 2010 and 2019, deficits will total $7.1 trillion, according to the Congressional Budget Office.

Greenspan also said the Fed will have to withdraw money from the financial system to avoid inflation. The central bank has doubled its balance sheet over the last year to $2.2 billion as it battled the recession that began in December 2007.

The economy will grow at a 3 percent to 4 percent annual pace in the next six months before slowing in 2010, Greenspan predicted. Growth will be aided by a surge in the stock market and inventory restocking by companies. Share prices are likely to “flatten out, even though earnings are doing very well.”

The Standard & Poor’s 500 Index has jumped 56 percent from its low for the year on March 9, an ascent that’s had a “very positive” impact on the economy, Greenspan added. The index fell 0.3 percent yesterday to 1,057.08.

Job Cuts

The world’s largest economy shrank at a 0.7 percent annual rate from April through June, the best performance in more than a year. An unexpected decline in a gauge of business activity released yesterday, along with a private report showing employers cut more jobs than forecast, indicate a recovery may be slow to take hold.

Greenspan, who was appointed Fed chairman in 1987 by President Ronald Reagan and served until January 2006, praised the steps has taken by his successor, Ben S. Bernanke, to help pull the economy out of recession.

“The Fed has done a splendid job,” he said.

Still, the size of the Fed’s balance sheet is “not sustainable” and will eventually have to be reduced to “something just north of $1 trillion,” he said.

“My concern is that legislation or other actions on the part of Congress may prevent” the Fed from withdrawing the stimulus, Greenspan said. “Unless we sterilize or unwind the big monetary base we’ve built up, two, three years out inflation really begins to take hold.”

Representative Ron Paul of Texas, a Republican, is leading an effort in Congress to repeal the central bank’s immunity to audits of monetary policy.

Consumption Tax

Greenspan said that the odds are growing that the U.S. will have to enact some form of consumption tax to help reduce the federal budget deficit.

Obama has pledged to bring down the deficit without raising taxes on middle-income Americans. The CBO estimates that this year’s budget shortfall will equal 11.2 percent of the economy, the most since World War II.

Greenspan said he is “quite impressed” by Obama and called him “a very intelligent man.”

“But I don’t think he is sufficiently in control of a very serious budget problem,” the former Fed chief said.

Greenspan said that an overhaul of financial regulations is needed. Treasury Secretary Timothy Geithner has proposed the most sweeping changes to the rules governing Wall Street in seven decades, including giving the Fed authority to monitor risk across the financial system while stripping it of its consumer-protection role.

‘Broke Down’

“It’s very obvious that a lot of things which were in place in the regulatory area in the markets failed,” Greenspan said. “It broke down and it’s got to be fixed.”

Bernanke has opposed ceding the central bank’s power to regulate the safety of financial products to a new agency. Greenspan, for his part, called such power “peripheral” to the Fed’s main role.

He also cautioned against responding to the financial crisis with excessive regulation. While agreeing that the government should have a say on executive compensation in the institutions that are receiving government aid, Greenspan voiced wariness about extending that control to other banks.

“You have to be careful here because this should be a relationship between shareholders, directors and executives,” he said.

And for more fun:
http://www.wsj.com/article/SB125434960666354035.html?mod=WSJ_hpp_sections_markets