Chart To Be Frightful Over!

Top has been tested. Major wedge pattern now becomes the dominant chart pattern to watch.

The weekly S&P chart displays a large 17-month rising wedge pattern. The rising wedge is a classic bear pattern, resolved by a down move in about 70% of the cases. Notice that prices burst through the top boundary of the wedge in September and October, but could not follow through. This price action is known as a “last-gasp” blow-off.

The decline on the daily chart on Oct. 23 completed a 7-week triple top. The rally earlier today retested this top. Prices (as I draft this post) have reversed to the downside. If the market closes weak today, this price action would confirm the 7-week top and set up the rising wedge as the dominant pattern in play.

http://peterlbrandt.com/reversal-day-would-spell-doom-for-sp-500/

Interesting Chart

Big Tex - A Texas Legend at State Fair Up In Flames

ALERT ALERT CONSPIRACY THEORY BELOW

My Gold Analysis

Lauren Lyster Makes My Pants Go Crazy....Plus An Interview with Jimmy Rogers

Fibonacci Sandy

War on Drugs

In the early 1970s, the prison population in the United States was small and was steadily falling relative to the size of the population. Experts imagined that in a few decades, the prison system as we know it could be successfully dismantled, but that began to change after President Nixon began the War on Drugs in 1971, resulting in a huge influx of convicts.

CLICK IMAGE TO ENLARGE

The massive increase in prisoners has given rise to what some call the Prison Industrial Complex. Like its cousin, the Military Industrial Complex, government policy and spending continues to make private involvement in the prison system very lucrative. Taxpayer money is transferred to corporations to satisfy the increasing number of prisoners as a result of the drug war. 

As these corporations become bigger and more powerful, they can lobby for policies that will increase their business. Their business is to see you behind bars. More prisoners means more profit, which means more influence. It’s a continuing cycle that has reached a tipping point. 

Like all big businesses, private prisons invest heavily in government lobbying to ensure an ever increasing supply of new customers, in this case prisoners. Currently, private prison companies are negotiating with states to buy and manage public prisons, if in exchange the state can promise occupancy rates remain above 90 percent for at least 20 years. This of course only adds to incentivize the states to prosecute more citizens for more crimes. 

The Corrections Corporation of America’s annual filing even admits this is their goal: 

The demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts, leniency in conviction or parole standards and sentencing practices or through the decriminalization of certain activities that are currently proscribed by our criminal laws…For instance, any changes with respect to drugs and controlled substances or illegal immigration could affect the number of persons arrested, convicted, and sentenced, thereby potentially reducing demand for correctional facilities to house them.

In some cases, the private prison industry has even assisted in writing the laws designed to increase the prison population, as was the case with the controversial Arizona law SB 1070, which would inevitably jail foreign nationals suspected of being in the country illegally. 

The US has 25 percent of the world’s prisoners. It’s incarceration rate is the highest in the world and has increased by 10 percent since 2000. The US incarceration rate is only slightly lower than in the Soviet Union at the height of the gulag system just before World War II. At current rates, the US will surpass the gulag system by 2018! 

Financial writer Jeff Neilson has recently noted that while US new home inventory has been “plummeting straight down,” other reports indicate that construction of homes are up significantly, producing “50 to 100 percent more units than they sell.” Neilson’s conclusion? 

Either the official U.S. housing numbers were total fabrications; or, more than half of these ‘housing starts’ were units which did not require a ‘sale’ to an individual owner in order for the builder to be paid (since no builder can stay in business building twice as many units as they sell).

In attempting to come up with an answer to the question ‘how could millions of new U.S. housing units not require sale to an owner?,’ I could only formulate one possibility. All of these phantom housing starts were in fact prison cells.

Slave Labor 

The 13th Amendment to the Constitution specifically outlaws slavery “except as a punishment for crime,” meaning that convicted prisoners can be used as a source of forced servitude. During times of economic stress, demand for cheap prison labor increases.

With the expansion of the private prison system, we’re seeing new interest in the practice that goes way beyond making license plates. 

While cheap sweatshop labor is becoming increasingly common across the country, no one takes better advantage of the system than prisons. 

Alternet reports that almost 1 million prisoners are doing simple unskilled labor including “making office furniture, working in call centers, fabricating body armor, taking hotel reservations, working in slaughterhouses, or manufacturing textiles, shoes, and clothing, while getting paid somewhere between 93 cents and $4.73 per day.” They continue:

Rarely can you find workers so pliable, easy to control, stripped of political rights, and subject to martial discipline at the first sign of recalcitrance — unless, that is, you traveled back to the nineteenth century when convict labor was commonplace nationwide…It was one vital way the United States became a modern industrial capitalist economy — at a moment, eerily like our own, when the mechanisms of capital accumulation were in crisis.

Compare the cost of less than $5 a day with the cost of a minimum wage worker at $58 a day and you begin to see the perverse influence on the entire labor market. 

CNN Money reports that prison inmates are now directly competing for jobs in the rest of the economy, and employers are finding it increasingly difficult to keep up. Lost jobs are the result. They cite one company, American Apparel Inc., which makes military uniforms. They write: 

‘We pay employees $9 on average,’ [a company executive] said. ‘They get full medical insurance, 401(k) plans and paid vacation. Yet we’re competing against a federal program that doesn’t pay any of that.’

[The private prison] is not required to pay its workers minimum wage and instead pays inmates 23 cents to $1.15 an hour. It doesn’t have health insurance costs. It also doesn’t shell out federal, state or local taxes.

The new influx of cheap, domestic labor will inevitably drive down wages for both skilled and unskilled jobs. 

Perverse Incentives 

The profitability of privately run prison system has led to an increase in abuse within government positions. In 2009, two judges were convicted of fraud for accepting kickbacks from private prisons for sending juveniles to prison, even for minor offenses. In one instance, a 17-year-old student was sentenced to three months in prison for creating a fake MySpace page mocking an assistant principal. 

http://www.activistpost.com/2012/10/the-prison-system-runs-amok-expands-at.html#more

My Kind Of Wedding!!!!!!

Pennant Updates

Just an update on the major pennants.

Oil has broken out to the downside again. All the other charts have followed this move as the $USD has moved higher.

This still looks to have ominous outcomes ahead. IF  the USD continues to rise, the trend for the other tickers would most likely be down. First support for oil looks like $79. A break through of 80.50 on the $USD will set off a significant response. Its being watched by almost every technician on the planet.

http://blogs.stockcharts.com/canada/2012/10/major-league-pennants-start-to-wither.html

Busty Girl Perks

What Happens To All That Corn?

What happens with all the corn that is not used for ethanol? Many think it's used to make cereal and corn chips. But that turns out to be only 14% of all the non-ethanol corn usage. The biggest portion by far (36%) is used to make high-fructose corn syrup (HFCS). And much of HFCS is used for carbonated soft drink manufacturing. That means we should see soda prices in the supermarket continue to rise - which may be a good thing in terms of consumer health. 

Here are all the non-ethanol uses of corn. 

Non-ethanol corn usage (source: DB)

http://soberlook.com/2012/10/what-happens-to-non-ethanol-corn.html

Gold Windsock

After a vigorous rally that began in August gold hit a wall this month when it reached the resistance line drawn across the February high. Since then it has dropped nearly 5%, moving at a faster rate than would be justified by the recent strength of the dollar. We can see support from the next rising trend line, but we think we need to look at a longer-term chart to get the best perspective.

On the weekly chart below we can see that the rally actually effected a breakout from a triangle that contained the consolidation following the rally from th 2008 low, and price is currently pulling back toward the breakout point. This is a normal reaction, although it is not a pleasant experience. Such pullbacks don't normally drop all the way back to the line, but gold is more volatile than other price indexes. Note how in 2009 a full pullback after breakout took place.

Conclusion: While gold feels as if it is falling apart at the moment, the breakout looks convincing, and there is still good reason to expect that the decline will be halted by the support lines.

* * * * * * * * * * * * * * * * * * * * *

Technical analysis is a windsock, not a crystal ball. 

* * * * * * * * * * * * * * * * * * * * *

http://blogs.decisionpoint.com/chart_spotlight/2012/10/20121026cs.html

Voting

Conan on Apple Ipad mini

Great Visualizations

Aerial Data Visualisation Reveals Life In The United States

PBS is exploring the hidden patterns and rhythms that make America work. They are taking this data and visualizing it in a series being called, “America Revealed.”

Visualization of internet distribution

The pinpointed distribution of the unemployed

Domino’s Pizza’s raw ingredients’ delivery routes in the Northeast

U.S. electricity network routes

The New York pizza delivery path of one Domino’s employee on a Friday night

New York’s public transportation paths

Patterns of planes’ flight paths

Traced paths of deceased bodies being transported to their hometowns

U.S. imports and exports of beef

All the people in America’s towns and cities

Single food outlet of a nationwide chain, such as fast food resturants, supermarkets or grocery stores, bakeries, gourmet shops and restaurants

www.rsvlts.com/2012/07/30/aerial-data-visualisation-reveals-life-in-the-united-states/

Ahh...Not Good News Buddy

Here’s some rather disconcerting analysis from Moody’s on the state of corporate America. They highlight capital goods orders and correlation with business sales noting that such declines have only occurred in the mist of recession:

“Gains in the September durable goods orders report were not enough to accelerate US business sales. Core capital goods orders tightly correlate with sales and investment, and those orders fell 6.5% yearly last quarter — the sharpest decline in almost three years. Such a shortfall has been previously seen only in the throes of a recession. Domestic consumer spending growth may protect the economy from the full brunt of this distressing development, but businesses with international operations will not be as fortunate. When core capital goods orders have shrunk on a yearly basis, business sales growth fell by an average of 3.3% (Figure 2). Core capital goods orders held flat on a monthly basis in September; we must soon see them rise — like last month’s new orders subindex from the ISM Manufacturing survey — if we are not to see a deepening business sector slump.”

http://pragcap.com/orders-trends-raise-a-red-flag

Debt Bomb!

Cycle Time

The Kondratiev Cycle

Andrey V. Korotayev

Creator: Nikolai Kondratiev (1892-1938)

Duration: 50-60 years

Theory: Economic growth in capitalist countries comes in long waves and are determined by technological
 innovations.

What it predicts: Prices, interest rates, foreign trade, coal, pig iron production

Where we are now: The Kondtratiev cycle indicates we're in a blank period and at least 30 years away from
the next economic expansion period.

The Schumpeter Cycle

Wikimedia

Creator: Joseph Schumpeter (1883-1950)

Duration: 50-60 years

Theory: Shumpeter cycles actually revolve around periodic “clusters of innovation”

What it predicts: Global economic paradigms

Where we are now: Schumpeter's cycle says we're on the downswing from the most recent innovation cluster.

The Kitchin Cycle

Kithcin via JSTOR

Creator: Joseph Kitchin (1861-1932)

Duration: 40 months

Theory: The market gets ‘flooded’ with commodities as growth accelerates. When demand declines,
prices drop and the produced commodities get accumulated in inventories. But there is a delay
 between this and when entrepreneurs must reduce output.

What it predicts: Demand, prices, output

Where we are now: The Kitchin cycle indicates prices are in an upswing period, according to
TimingSolution.com. 

Source: Andrey V. Korotayev

The Juglar Cycle

Timing Solution

Creator: Clément Juglar (1819-1905)

Duration: 7-11 years

Theory: In addition to Kitchin's lagging inventory signal, there is an additional lagging fixed investment
signal.

What it predicts: Capital investment levels

Where we are now: The Juglar cycle says we're at the beginning of an upswing in capital investment,
 according to TimingSolution.com.

Source: Andrey V. Korotayev

The Kuznets Cycle

Wikimedia

Creator: Simon Kuznets (1901-1985)

Duration: 15-25 years

Theory: As a country develops, there is a market-driven cycle that at first increases inequality, and
then decreases it after a certain average income is attained.

What it predicts: Income

Where we are now: The Kuznets cycle indicates that given current high income inequality, the U.S.
should be at a new stage of development 

Source: Andrey V. Korotayev

The 17.6 Year Cycle

CNBC

Creator: Unknown, popularized by Art Cashin

Duration: 17.6 years

Theory: Stocks cycle through "fat" and "lean" years. 

What it predicts: Stocks

Where we are now:  The Cashin cycle says we are half-way thru a lean period for stocks,
Cashin said recently.

Source: Art Cashin

The Lehman Wave

Peels, Udenio

Creator: Robert Peels, Maximiliano Udenio et. al

Duration: 12-18 months

Theory: During periods of market instability, sales drop substantially more with companies upstream
in the supply chain. 

What it predicts: Sales

Where we are now: The Lehman wave says market volatility has dampened but is still a factor for
companies' sales figures. 

Source: Peels and Udenio

The Jevons Cycle

Azizonomics

Creator: William Jevons (1835-1882)

Duration: 11 years

Theory: Business cycles move in concert with sunspots.  

What it predicts: Food prices, inflation

Where we are now: The Jevons cycle says prices are still on an upswing, according to solar data
 from NASA.

Source: Cycle Research Institute

Read more: http://www.businessinsider.com/economic-cycle-theories-2012-10?op=1#ixzz2AJFBxgB7

Get Your Parachute On....And Get Small...This Might Get Ugly

2008 again? Maybe Worse! Watch This Closely! You don't want to be on the wrong side of this market if it the bear takes it's claws out and wrecks havoc on Wall Street, The Globe, and All Humanity!

Bohemian Rhapsody - Lego Style

GOING HYPER!!!!!!!!!!!!!!!!!

Pleasurable GIFs For Fed Day

Currency Wars Simulation

My Favorite Nigel Unplugged

3 Peaks and Domed House

Some friends who are technicians are all hot & bothered by the above 3 Peaks and a Domed House pattern.

As I have said in the past, I have no idea what the long term track record of this pattern is is;  I saw some good calls of TP&tDH in 2000, and bad calls of such in 2003 and 2005.

I present the above chart without opinion other than to say it is interesting.

Previously:
3 Peaks and a Domed House ? (October 24th, 2003)

Three Peaks and the Domed House redux  (December 3rd, 2004)

See also:
Three Peaks and the Domed House – Revisited, Barclay T. Leib, Sand Spring Advisors (January 14, 2000)

http://www.ritholtz.com/blog/2012/10/three-peaks-and-a-domed-house-2012-version/