King of the Mountain
Research for Online Investors

by John Dalt

9/20/10

The market is up this morning, but beware; interest rates on 10-year treasuries have reversed their movement of the last week and are moving lower.  This signifies concern by investors about the safety of investments in equities.

The president appeared on CNBC for a “Town Hall” at noon eastern time. This was a love fest.  Where is Rick Santelli when you need him? Phone call ins were not allowed. The president reassured capitalists everywhere with “There is nothing inherently wrong with the profit motive.”  Inherently wrong?

The FDIC closed six banks on Friday.  That makes 125 so far this year, compared to 94 at this time last year.  Three of the banks were in Georgia, with one in each state of New Jersey, Ohio and Wisconsin.

The cost of this weekend’s closures is expected to amount to $347.6 million.  The FDIC’s insurance fund was $20.7 billion in the red on June 30.  The FDIC is backed by the U.S. Treasury, so will not run out of money until we do.  You know where I stand on that one.

140 banks were closed in 2009, it looks like that number will be passed sometime in October.  The FDIC’s problem list of banks had 829 on it earlier this summer, almost double the number of a year ago.  The Los Angeles Times carried the AP story on bank closures.

Last week ended with the market recording a gain on the week.  We know how we feel about the market, and don’t want to be confused by the facts!  The facts are the market keeps going higher.  The facts are the EU Central Bank had to intervene in Ireland’s credit market last week.  The fact is the market can go higher, but all I can think about is the game “King of the Mountain.”

My brothers and I used to fight and claw our way higher to the top of the mountain (pile of dirt), then throw dirt clods at each other to hold our high position.  Once we were at the top, where else could we go?  Sounds a lot like the Bulls right now!

They are fighting and clawing their way higher; then they are going to have to defend the high ground.  And, where do they go from there?  My macro timing model laid out a perfect time line of a drop in the market with a rebound going into October.  October would put us closer to the elections and earnings reports would bolster stock prices.

I have to leave early to put more money in the trading account, we want more short ETFs.

To the mailbag:
Tell T.M. that I have tried various techniques and programs, won some, lost some.  I find your plan conservative, which is exactly what a wary investor should be looking for.—paid up subscriber R.A.

Thanks R.A., T.M. already subscribes to our long-term portfolio, she is concerned about all the problems posed by the Fed and other players.

Quote:
Inside every older person is a youngerperson wondering, 'What the hell happened?'---Larry the Cable Guy

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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