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                    BANKERS' "PUMP AND DUMP" =
          WATCH OUT, SMALL INVESTORS!

       

TIGERSOFT/PEERLESS HOTLINES:
                            SAMPLES FROM THIS WEEK

                    Tiger Index of Low Priced Stocks: 2008-2009


     BE WARY OF BANKERS' DUMPING STOCKS
           THEY BID UP WITH YOUR MONEY

    by William Schmidt, Ph.D. (Columbia University)

    Since March 2009, many low-priced stocks have risen 1000% or more.  This always
         ends badly.  See the Blog I wrote in June: The Great 2009 Bull Market.  At that point
         50 stocks were up more than 400% from the bottom.   Now these "pump and dump"
         low-priced stocks are breaking down.   Mayber, there's another rally still for them.
         But considering the size of their advance and how much money the Fed and Treasury
         have already given banks, I seriously doubt if the rally is sustainable.  The evidence
         is too strong that the banks have used the money to play the stock market and
         not make loans to Main Street.

         These binges always end bandly.  The 1999-2000 net and biotech bubble is still in
         most traders'  memories.    Oil stocks are particularly susceptible and vulnerable to
         wild swings up and then DOWN.    I was weaned on the 1968 speculative market "
         in low priced and tech stocks.    Investors should not fall in love with high-fliers.
         But they do.  Just as economic power is subject to an iron law than destroys
         competition and creates monopolies, so to there is an iron law that produces
         speculative booms and busts.  Both of these iron laws reinforce each other unless
         the government aggressively intervenes.   Conservative free-trade promoters have
         not figured this out.

Hot Tech Stocks of 1968

                          Tulips, Anyone?

           UNDISCLOSED SPECULATING WITH OTHER
                   PEOPLE'S MONEY IS CRIMINAL

                     Theodore Dreiser wrote a novel, "The FInancier", more 70 years ago in
        which a banker uses his connections to borrow big sums from a city government
        to buy stock with an interest rate of 0%.   He takes the stock he buys and uses
        it as collateral to buy more stock, thereby pushing up his stocks' prices.   As prices
        rise, his collateral rises.  So he borrows more and invests more.   When a financial
        panic comes, he loses everything.  He cannot pay the city back and actually goes to jail. 
        The only difference now is that no one from Goldman Sachs will ever go to jail, even
        though they are using the money they have borrowed from taxpayers and the US
        Federal Reserve to trade in and out of stocks electronically. 

                   One of the lessons of the stock market collapse of 87% from September 1929
        to July 1932, should have been that banks not not be allowed to buy stocks and sell
        stocks and bonds.  When banks become brokerages, you get the situation
        where their mortgages are packaged with "AAA" ratings and sold to the innocent
        and unsuspecting.  Particularly galling, Goldman knew it was selling junk when
        it sold $40 billion in mortgages in 2006 and 2007.  Why else would it simultaneously
        buy $14 billion in CDS from AIG and set up a $10 short-selling hedge? 
                       "The Securities and Exchange Commission should be very interested
                 in any financial company that secretly decides a financial product is a loser
                 and then goes out and actively markets that product or very similar products
                 to unsuspecting customers without disclosing its true opinion," said
                 Laurence Kotlikoff, a Boston University economics professor who's proposed
                 a massive overhaul of the nation's banks. "This is fraud and should be prosecuted."
                ( Source )

              Such leverage, power and fraud are always very dangerous to the overall economy,
        which depends on confidence, and disastrous to politcal democracy.   Fraud, corruption,
       booms and busts were bound to follow banking de-regulation.  But the hard fought
       Glass Steagall 1930s' legislation that  denied banks the right to become stock
       brokerages and investment banks was torn down.  American regulators, Congressmen,
       Fed Chairmen and Presidents all ignored the lessons of history, just as now. Now we
       must be prepared again to pay for their well-rewarded, convenient and venial amnesia. 
       ( Sources )

                  A year ago, it was obvious to me and millions of Americans that giving a trillion
       dollars unconditionally to the biggest, most corrupt bank monopilies was just
       yet another plan, like the Iraq War, to rob the exhausted US Treasury utterly bare. 
       We predicted the banks would not use the money to make new loans or cut homeowners
       a break.   Banking executives feel a bewildering sense of sense of entitlement
       considering how badly thgeir decisons laid low the world economy in 2008.

               Now, we are about to see what will happen when the reality of economic
        stagnation and widespread depresion conditions on Main Street overtake the
        schemes and machinations of the Wall Street wizzards that have artificially
        bid stocks up so much so quickly on such light volume.

             Goldman admited it manipulates market when the compute program it used to do this
        was strolen.  And until recently, the NYSE and NASDAQ reported how extensively
        member firms were trading for their own account.  Goldman Sachs' share of principal
        NYSE trading has gone from 27 percent at the end of 2008 to fully 50 percent of trades
        in the second quarter.  This is 20% of all NYSE trading.  Eliot Spitzer and Blogs such
        as Zero Hedge have been using  NYSE data to argue that Goldman Sachs now has an
        almost unfettered ability to control stock prices.  IIn July, the NYSE bowed to Goldman.
        It now refused to publish this information any longer.

        See also
        Goldman Sachs: "Engineering Every Major Market Manipulation Since The Great Depression" (GreenLightAdvisor Views, 6/26/09)
         Goldman Sachs: Manipulation Kings of the Market? (Market folly, 6/25/09)
         Goldman Sachs Trading Source Code Stolen (The Swamp Report, 7/6/09)
         Taibbi v. Goldman - round 2 (The Swamp Report, 6/30/09)
         McClatchy:   http://www.mcclatchydc.com/227/story/77791.html
                How Moody's sold its ratings — and sold out investors
                Firms are getting billions, but homeowners still in trouble
                Watchdog: Obama's mortgage relief efforts aren't good enough
                Where did that bank bailout go? Watchdogs aren't sure
                Worse than subprime? Other mortgages imploding slowly
                Banks fight to kill proposed consumer protection agency
                Why haven't any Wall Street tycoons been sent to the slammer?

                                

                  Nothing good will come out of the enrichment of each Goldman Sachs employees
        to the tune of an average 2009 bonus of $700,000.  American home-owners are still
        defaulting in record numbers, real unemployment is over 15% and the only light at the
        end of the tunnel is the train of Depression coming closer and closer.  Ordinary
        consumer buying power is hardly making a recovery, except where the Government
        has offered temporary tax subsidies.   Without a national job program and guarantee
        and without a much more equal distribution of wealth, it sure looks like we are
        doomed to re-live the 1930s, at worst, or the 1970s, at best.  Both eras were
        dismal.  For investors, they put a premium on market timing, as stock prices
        periodically rose and then collapsed (1929-1932, 1937-1938, 1966, 1969-1970, 1971,
        1973-1975, 1977-1978, 1978, 1979, 1980, 1981-1982).  For workers, there were lay-offs,
        hiring freezes and chronically high unemployment.  For seniors, the collapsing Dollar
        meant harder and harder choices as their depreciated savings ceased to cover their
        rent, food and medicines.

                The Federal Reserve under Bernanle has pumped into banks much, much more
        liquidity than we have ever seen.  Such Fed infusions also took place from October
        1999 to January 2000 (laying the basis for an even bigger internet bubble and bust);
        after the September terrorist attack on New York (which resulted in a 7 month
        bear market rally that ended in April 2002 and was followed by a big decline until
        March 2003.   "Up until the day Lehman Brothers collapsed in September of last year,
         it took the Fed a total 5,012 days — 13 years and 8 months — to double the cash
         currency and reserves in the coffers of U.S. banks. In contrast, after the Lehman
         Brothers collapse, it took Bernanke’s Fed only 112 days to  double the size of U.S.
         bank reserves. He accelerated the pace of bank reserve expansion by a factor of 45 to 1.

                                           

                                                 http://www.marketoracle.co.uk/Article13574.html            

                MAJOR SELL "S12" FROM PEERLESS

                              

               10/31/2009 TIGERSOFT/PEERLESS HOTLINES:
                            SAMPLES FROM THIS WEEK
                        
      (C) 2009 www.tigersoft.com          Call 858-273-5900.       Email us: william_schmidt@hotmail.com       About Us 

                                                                                                                                               MAJOR SELL


            We recommend using Peerless Stock Market Timing to judge the
   trend of the general market.  That will also tell you the likely direction
   of your stock, because most stocks rise and fall with the general market.
   Here is the current Peerless chart of 10/30/2009.  You can see the most
   recent signal is a Sell.  We do a Hotline each night, to tell users and subscribers
   what we take to be the direction of the market and where it is apt to go
   on an intermediate-term basis.  It shows the current chart and then gives
   the perspective we have on the market after considering Peerless, TigerSoft,
   chart patterns, historical parallels, seasonality and internal strength indicators.
   The Hotline also makes occasional specific recommendations. 

10/29/2009 Sell S12 Operating.   Only A Technical Bounce. 
   QQQQ Is Still below Resistance of Its 21-Day.    
              I probably should have awaited for the DJI and QQQQ to break their 50-day ma
     before becoming to Haloweenish last night.  The fact is that though volume has been weak and
    the S12 shows distribution, breadth has been constructive,      There was no Sell S9 signal. 
    And it is possible if the P-Indicator does not deteriorate much, we may get a Buy B9 in a week
    or two.  None can occur for two weeks after a Sell S12.

            I came across an interetsing chart today.  It shows that the 6 month advance in
    the DJI is the highest of any new bull market on the lowest and most negative volume.
    Breadth has saved the rally thus far.  Perhaps, it will still.     The shallower uptrend
    of the NYSE has not yet been violated.  The creator of the chart below states that
    "if you think of volume as fuel for any sustainable market rally, then we’ve been
     running on fumes for a few months."

                     6 Month Gain and 6 Month Change in Volume

              The DJI rebounded 100 today as it turned up from a little above its rising 50-day ma.
     The ratio yesterday of NYSE advances to declines was 1 to 9.     Today's ratio was 4.8 to 1.
     Volume was lower than yesterday.  The QQQQ (chart below) was typical of the long general market
     ETFs.  After four staight down days, it rose today and gave a red optimized Stochastic Buy based
     on the short-term 14-day Stochastic.  The bounce occurred just where one might look for
     one, up from the rising 50-day ma.  How far will it advance.     It is still below the resistance
     of its now flat red 21-day ma.  Most important,  all its key internals are rated "negative' by
     the Tiger program.   I

                    QQQQ Internals:
                            1.          The Blue Closing Power is below its falling 21-day ma.
                            2.          The Magenta OBV is below its falling 21-day ma.
                            3.          The Brown Relative Strength Quotient is below its falling 21-day ma.
                            4.          The Accumulation Index is Red (negative) and below its fall 21-dma.
                            5.          The Tiger Dat Traders' Tool is below its falling 21-dma.



           Gold (GLD) rembounded from the 100 breakout point.  The Dollar Fell back from its falling 50-day ma
    I would say GLD is at a good buy point again.  See the chart below.

           DJI rebounds like we saw today (10/29/2009) from a rising 50-day ma are normal. 
  But they do not mean a big recovery.  Below are the historical cases most resembling
  the current S12. I have posted in immediately below what the DJI did after the S12 upon
  first reaching the rising 50-day ma.  Brief bounces do occur.  But they are meaningless
  from an intermediate-term perspective because the lower band was always soon hit.

           10/28/200   Sell S12 Operating.  Bankers' Pump and Dump.

         The lower band at 9500 is the first downside target for the DJIA.  Today's DOW closing
         below the support of its 21-day ma invites such a test after the SELL S12.  As I showed
         yesterday, a deeper decline is more typical after a bull market S12 with negative OPCT
         readings on the last peak.      Confirming that prognosis, the DJI fell 120 today and the rest
         of the market dropped even harder.     Downside volume on the NYSE was 10 times
         Upside volume.  It's been six months since the number of NYSE advancers was this
         low.  The number of new lows on the NYSE was only 11 and on the NASDAQ was only 33. 
         So, at this stage, what is happening is that a great many stocks are viciously and quickly
         breaking down below their 50-day ma.     They are slicing through this usual support as though
         it was non-existent.  And, in fact, it may not be.  That is what happens in a classic "pump and
         dump".  The stock is mostly dumped on the way down to investors who think that they
         are gtting a bargain.

          Dumping like this is dangerous.     It reminds me of the classic  "Pump and Dump" manipulation.  
          This time it is being done by the likes of Goldman Sachs. JP Mortgan and Bank of America. 
          So, not only did these banks "steal" (in my opinion, that is the only word that applies) trillions
          from the general public with the help of Paulson, Geitner and Bernanke, now they are
          dumping the over-priced stocks they recklessly bid up onto the very same people who bailed them
          out.  What gratitude!  No wonder Glass-Steagall forbad commercial banks for 80 uears from
          being investment banks and brokerages.   If I am right, when the whole story comes out about
          this "Bankers' Pump and Dump", buy the stock in the company that makes pitch-forks!

                                  Reading about Pump, Dump and Bankers:
                              Coming Soon: More Scandals.  Dec. 1, 2005 
                              Criminal Environment Is Created by US Government     Jan. 12, 2005.
                              Does Goldman Manipulate The Stock Market?
                              About that stock manipulation software Goldman Sachs owns ...
                              Manipulation is rife on stock markets « melange
                              Goldman Sachs Market Manipulation Dominance at Risk by Theft

                                       

                                THE RISKS OF HOLDING SEEM QUITE HIGH

         Technically, the rapid falling below the 50-day ma on very high volume is a clear warning.
         Normally, it can be taken as just a warning unless the stock's Accumulation
         Index readings are negative.  Then it must be taken as a SELL, especially when
         market conditions look artificial and over-extended, as now.  I think the low volume rallies
         and the NYSE own statistics show that the advance has been pushed up artificially by
         banks with public funds.  But just given how far the market has risen, how there has not
         been a double-bottom and the history of the type of Sell S12s we just had, I believe such breaks
         in particular stocks make then necessary and reasonable Sells.  There is too much risk not to sell. 
         A closing below their 65-day ma is more emphatically a Sell. Use that if you want to be surer.
         I think that is what is coming.     

         If selling is too hard emotionally to do or because you want profits to be postponed for tax
         purposes, then buy some of the leveraged ETF puts I mentioned last night.  This is the approach
         I have taken on our Stocks' Hotline.

         I want to show some typical NASDAQ-100 stocks back in 2002 after the 7 month's uptrending
         A/D Line then was broken.  See how quickly these stocks caved in when the NYSE Advance-
         Decline-Line was broken then.  So far, only the steeper Advance-Decline Line has been broken. 
         But with prices and the A/D Line up so much and so over-extended, it is usually best to employ
         the steeper uptrend. 

                    FIRST, NOTE HOW THE BREAK IN THE A/D LINE UPTREND ON 5/22/2002
                    CHNAGED THE TECHNICAL PICTURE OF THE MARKET DRAMATICALLY.

               SECOND, SEE HOW THESE STOCKS COLLAPSED AFTER 5/22/2002.
            Not shown here, QQQQ fell from 31.40 to a low of 20 five months later.

                             AAPLE fell from 12 to 7 in 3-4 MONTHS
                             ADOBE FELL FROM 18 to 9...
                             CSCO FELL FROM 16 to 9.

   






                10/27/200   Sell S12 Operating.  
                The Peerless Current Sell S12 is made more bearish by the fact that as the
         Sell S12 was occurring, the OPCT was negative.  Since 1928, there have only been six cases
         of an independent Sell S12 with a negative OPCT while the DJI had been in a sustained
         uptrend and was above a rising 65-day ma.    The average decline was 12.7%.  If you are
         bullish still, it is important that the DJI now NOT drop below the lower 3.5%-4.0% lower
         band.   We can hope that the bullish period after the third week of November prevents a
         bigger decline, for the sake of all those that are already jobless.  

                 The research I did tonight on the HOTLINE suggests a 13% decline in the DJI if past
         volatility applies. This past year's volatility has been twice to three times greater.   We do not want
         to be in stocks that will eventually sell off as confidence erodes.  In additon to selling thinner
         stocks that have run up a long ways, look at the ETFs that allow aggressive leveraged short
         selling,  Two criteria can be used: 1) high levels of Accumulation and 2) the surpassing the 50-day
         ma.   TigerSoft Data permits downloading the large number of leveraged short ETFs.
         Here are the ones that look the most interesting as purchases, either to hedge portfolios
         or to be aggressively short:  RWM 47.86, SBB 42.37,  EFZ  60.16 - IP21= + .34 and
         EWV 52.74 and SSG  24.28     

           Parallel SELL S12s' Statistics

                Cases since 1928 Most Resembling Current Sell S12 with negative OPCT.
.
                  Formula:       (On-Balance-Volume Pct = 21 days' OBV/Volume for 21 days)

         Cases Most Resembling Current S12 with negative OPCT.
         Here they are:                Outcome:     
         1.    8/24/38     143.50  Fell immediately, reaching  129.90 below lower band a month later.  OP= -.174
                                              10% decline.
         2.     7/11/1968 922.82   Fell immediately, reaching   870.37 and lower band 3 weeks later.  OP= -.008
                                               10% decline.
          3.      4/1/1981    1014.14   Rose to 1024.05 and fell to the lower band in a month, 963.33      -.052
                                                  This started the 1981-1982 bear market.
                                              20% decline.
          4.      1/6/1983       1070.92    Rose to 1083.79 and fell to the lower band in 3 weeks, 1030.17     -.134
                                              6% decline.
          5.      1/6/1984    1286.64    Immediately declined below lower band to 1134.63 on 2/23/1984   OP= -.154
                                               16% decline.
          6.      12/8/2000    10712.91 Fell immediately to lower band, 10487.29,  on 12/21/2000  
                                                    and then below lower band to 9389.48, on 3/22/2000  OP= -.156
                                                 14% decline.

         Rallies after, and paper losses from, these Sell S12s occurred only in 2 of the 6 cases
          and were  by less than 1.5%.    In these cases, no clinching is needed apparently.  What
         is more to the point  now is that in 5 of 6 cases the DJI eventually fell substantially
         below the lower band.    The lower band support is very important.  You can see this
         in the 1981 chart below.

                                                               1981 Sell S12

Completed S12 Statistics: 1928-2009

         Rising Markets:(above 65-dma): S12s with no Near-By S4,S6, S9  
             ------------------------------------------------------------------------------------
         6/12/35    117.1     Reversal loss -8.7%  OP= +.072    Avoided using A/D Line trend-break clinching.
         6/24/35    120.    Reversal loss -6.1%  OP= +.067    Avoided using A/D Line trend-break clinching.
         7/27/38    140.20     fell directly to 136.90 and lower band. OP= +.014
         8/5/38        144.50  fell directly to 136.90 and lower band.  OP= +.028
  1.  8/24/38        143.50  Fell immediately, reaching  129.90 below lower band a month later.  OP= -.174
       
          3/16/1967  868.49     fell directly to 842.43 .025 lower band in 3 weeks. OP= +.017
         4/21/1967  883.18      Rallied to 899.89 and fell below lower band in a month, 899.89. OP= +.179
         9/14/1967 929.44   Rallied to 937.18 and   fell below lower band in 6 weeks to 850. OP= +.109
         1/9/1968   908.29      Rallied to 900.24 and  fell below lower band in 19 weeks to 825. OP= +.158
   2.  7/11/1968 922.82  Fell immediately, reaching  870.37 and lower band 3 weeks later.  OP= -.008
        
         10/21/1975   846.82  Rallied to 860.67 and then fell slightly below lower band, 793.80, on 9/30/75 .OP= +.125 
         7/17/1978        839.05    Fell only to 21-dma immedately and then rallied  OP= +.051
         9/11/1978     907.74       Declined to lower band at 857.16 in 7 trading days and rallied  OP= +.187
  3.   4/1/1981       1014.14   Rose to 1024.05 and fell to the lower band in a month, 963.33     -.052
   4.      1/6/1983     1070.92    Rose to 1083.79 and fell to the lower band in 3 weeks, 1030.17       -.134
       
   5.   1/6/1984     1286.64    Immediately declined below lower band to 1134.63 on 2/23/1984   OP= -.154
         10/7/1997   8178.31  Immediately declined below lower band to 7161.15 on 10/27/1997 OP= +.118  
         6/18/1999  10855.55     DJI rallied to 11300 in 2 months before falling to 10019.71 on 10/15/1999   OP= +.046 
         7/17/2000  10804.27 Fell immediately to 10511.17 on 7/28/2000, then rallied to 11259.87 on 9/7/2000 and
                                   then fell to 9975.02 on 10/18/2000      OP= +.193  and  OP= +.12 on 2nd S12 two days later.
   6.      12/8/2000  10712.91 Fell immediately to lower band, 10487.29,  on 12/21/2000  
                                    and then to 9389.48, on 3/22/2000  OP= -.156
  
          10/15/2009 10062.94 (Dial Data corrected data)  OP= -.07
          10/21/2009 9949.36  (Dial Data uncorrected data)  OP= -.208

                     10/26/200   Sell S12Clinched... Be Wary of Trap-Door Declines.     

              We have an "Isolated Sell 12" in a rising market.   How bearish are these?  We have to also
              consider the values of the OPct.  At the time of the recent Sell S12 on 10/21/2009, the OPCT
              was -.20. and IP21=.004.  It will take some effort to put all the data together.  This will appear
              in the next day.  Early returns suggest the S12 and a negative Opct are a reliably bearish
              combination.     While there is always a chance for a recovery now that the DJI is back to its
              21-day ma, S12s usually produce deeper declines, especially when the volume indicators
              are bearish, too.
 

              Watch the Dollar.  If it rises and breaks its downtrend, it probably means that the FED will
              raise interest rates a point or two.  Banks might then sell the stocks they speculated with
              so cheaply at tax payer expense, rather than make loans.  Such expectations go a long way
              in explaining the mix of profit-taking, shorting and the the faltering breadth on the NYSE.
              The same message is being signalled by the way some gold and silver stocks now show
              unusually high distribution and are now falling.  See NEM and SSRI.  There was a reason
              they could not make new highs when the Gold ETF did.  If a stock can't make a new high
              with    such background fan-fare, it usually has to decline to recharge.  I remind you that
              advances    by gold are very often followed by a swooning stock market.

              Another thing to watch is how well stocks that show a lot of Blue Accumulation
              do as their prices fall to the key 50-day ma.  If many of these stocks sell off like
             NWK just did, wouldn't this suggest that big money is very skittish.  And that would
              not be a good sign.  They probably fear that a deeper retest of the lows will be needed.
              Indeed, "V" bottoms are relatively scarce.

              Price Pot-Holes Point To Problems in The Market

   Serious Break Downs In High Accumulation Stocks Are Worrisome. 

             If these high Accumulation stocks don't hold up, is big money getting nervous again. 
             Were these stocks just pumped up only to be dumped on the unspuspecting public on the way down.
             Here are some high Accumulation stocks to watch that have broken their 50-day ma:
             AMCS, ATRI, ATSI, BAMM, CAVM, CRED, MEDQ, SMRT

             Some interesting shorts are AAI, ARQL, ASFI, AYR, BAC, CAL. CSFG, LNET, SMRT

             10/23/200   Sell S12 --- WATCH THE A/D LINE OF THE NYSE.

             The excellent breadth has kept the 7 month 2009 rally going long beyond
             where a simple study of daily volume might have thought possible, so low was
             the volume on much of the rally since March.  

             But now we should ask: "What will happen if the good breadth ends?" 
             The growing investor optimism and the stock market's direction and apparent
             safety may change rather sharply.  To see this,  I suggest looking at the reversal
             upon the occurrence of a clinched Sell S12 in early 2002.  The break in the long
             NYSE A/D Line uptrend was the light switch!  That was also when interest rates were
             kept artificially low after the 9/11 attack.  Of course, 2002 saw the run-up to a new war. 
             Had Bush,    Cheney or the CIA Director been of a different mind, my guess is the
             2002 DJI decline would have been much more shallow.

                                                     2002 Top and Clinched Sell S12.

                                    A PICTURE IS WORTH A THOUSAND WORDS