Friday, July 8, 2011

Fiscal Austerity = Kryptonite

This morning we can take a long term weekly look at Google, ticker GOOG, below. Note the uptrend line (blue) break back in 08' followed by a serious shake and bake to kiss the broken trend line from underneath.

Now lets have a closer look at GOOG via the daily chart below.

We have broken down out of what could appears to be a substantial rising wedge. We have not only kissed the trend line from underneath, but da boyz had the nerve to even violate the prior resistance indicated by the purple line from the gap down.

How many Googlers bought this fake and shake? Are there any Googleites left or have they all converted religious affiliation to AAPL?

I happened to catch James Paulsen of Wells Capital Management yesterday (you can view the segment here) on the propaganda network (CNBC). Regarding economic growth, or lack thereof, Mr. Paulsen had this gem;

"soft patch that was the product of primary and temporary forces - weather and Japan - and also some market forces"

Yes it was the weather and if that excuse makes you a little suspect of you fund manager throw in Japan for good measure. Maybe add in an Icelandic volcano, sunspots, an eclipse and el Nino and you have the makings of someone involved in the management of $360 odd billion dollars.
Absolutely mind boggling.

But Mr. Paulsen is not worry free. He does worry about fiscal austerity road we are going down.

"we got a wonderful economic laboratory experiment going on in the world right now."

Is that what he thinks this is, an big experiment.
Nice attitude. I guess you can feel that way when it's somebody elses $360 billion right?

It is not often that you get someone talking and you can disagree with pretty much everything that comes out of his mouth. In Mr. Paulsen's defence, he seems like a decent cat, as oppose to my buddy David 'investing is easy' Tepper.

Sadly Mr. Paulsen's solution is to promote growth period as it always works. Now there is nothing wrong with promoting growth. The problem is Paulsen and his ilk growth don't promote growth as you, I, Ayn Rand or anyt other TRUE free market capitalist would - hint SAVINGS - rather theirs is a perverted view of growth that is created via mountains upon mountains of debt. You see Paulsen's word growth is simply code for give us all more heroin (DEBT) Mr. Bernanke and Mr. Greenspan before him., Its always worked in the past right Jim? Like Pavlovs dog. You must understand that the fiscal austerity that Mr. Paulsen abhors and is petrified of is to people like him as is Kryptonite is to Superman.

Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $96.70
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $98.25
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60


mochoajr said...

I worked for Wells in Dallas and went to see Paulsen speak around '07-08. He called the housing/mortgage mess all wrong. Thought it would be contained to the industries that make up housing or relate to housing, eg. housing stocks, home depot, etc. He's always been bullish; nice fellow though.

Harleydog said...


Thx for the note and for reading. Paulsen is yet another of the 'smart money' set who was either (a) too stupid or (b) too complicit $$$ to see it.

Like Nassim Taleb said, if you didn't see it coming (housing debacle) I don't want to hear your opinion.