Larry Levin’s Larry Levin’s Blog: Rally TimeBlog: Rally Time

Understanding that besides Understanding that besides day trading techniquesday trading techniques, we need , we need

supportive information which helps guide supportive information which helps guide our trading, I just keep sharing with you our trading, I just keep sharing with you

guys who care about day trading the daily guys who care about day trading the daily blogs of blogs of Larry LevinLarry Levin – a big name in the – a big name in the

floor traders. As you see the topic we will floor traders. As you see the topic we will discuss this time is “Rally Time”.discuss this time is “Rally Time”.

Today there was quite a rally Today there was quite a rally in the markets. The Dow in the markets. The Dow

closed up over 300-points, closed up over 300-points, with all the other indices up with all the other indices up an equivalent percentage. an equivalent percentage. The news must have been The news must have been

great so without further ado, great so without further ado, just have a look!just have a look!

The first economic data that The first economic data that hit the tape was the New hit the tape was the New Home Sales report and it Home Sales report and it

wasn’t good. It stunk. wasn’t good. It stunk. Bloomberg said that the Bloomberg said that the following “Bad news is following “Bad news is

building out of the housing building out of the housing sector”. sector”.

The report on existing home The report on existing home sales last week showed sales last week showed

surprising contraction as surprising contraction as does today’s report on new does today’s report on new

home sales where the annual home sales where the annual sales rate fell to 298,000 sales rate fell to 298,000 units, down 0.7 percent in units, down 0.7 percent in

the month.the month.

There is some news we should There is some news we should take note from the report which take note from the report which includes significant downward includes significant downward

revisions of 12,000 to June, now revisions of 12,000 to June, now at 300,000, and of 6,000 to at 300,000, and of 6,000 to

May, now at 315,000. Prices of May, now at 315,000. Prices of existing homes contracted in existing homes contracted in

July as they did for the median July as they did for the median price on new homes, down a price on new homes, down a

steep 6.3 percent in the month steep 6.3 percent in the month to $222,000. to $222,000.

““The outlook for the new home The outlook for the new home market and for home builders market and for home builders

remains so difficult. Low remains so difficult. Low interest rates may be a big plus, interest rates may be a big plus, but are being more than offset but are being more than offset by heavy supply of low priced by heavy supply of low priced existing homes, by appraisal existing homes, by appraisal

uncertainties, and by continuing uncertainties, and by continuing tightness in the credit market.” tightness in the credit market.”

Let’s have a look at The Let’s have a look at The Richmond Fed data. THAT Richmond Fed data. THAT

report didn’t go well.report didn’t go well.

The Richmond Fed’s report The Richmond Fed’s report said that “In August, the said that “In August, the

seasonally adjusted seasonally adjusted composite index of composite index of

manufacturing activity — our manufacturing activity — our broadest measure of broadest measure of

manufacturing — declined manufacturing — declined nine points to -10 from July’s nine points to -10 from July’s

reading of -1. reading of -1.

Among the index’s Among the index’s components, shipments lost components, shipments lost

sixteen points to -17, and new sixteen points to -17, and new orders dropped six points to orders dropped six points to finish at -11, while the jobs finish at -11, while the jobs index inched down three index inched down three

points to 1”.points to 1”.

Also other indicators suggested Also other indicators suggested additional softening. The index additional softening. The index for capacity utilization declined for capacity utilization declined

eight points to -14 and the eight points to -14 and the backlogs of orders fell seven backlogs of orders fell seven

points to end at -25. points to end at -25.

Additionally, while our Additionally, while our gauges for inventories were gauges for inventories were

virtually unchanged in virtually unchanged in August, the delivery times August, the delivery times index moved down twelve index moved down twelve

points to end at -4. The points to end at -4. The finished goods inventory finished goods inventory

index held steady at 17 in index held steady at 17 in August, while the raw August, while the raw

materials inventories index materials inventories index added one point to finish at added one point to finish at

19.” 19.”

Since the incompetent Fraud Since the incompetent Fraud Street economists missed both Street economists missed both reports by a wide margin, with reports by a wide margin, with the latter report being 100% the latter report being 100% worse than expected and the worse than expected and the worst data since 2009, one worst data since 2009, one

would expect a negative would expect a negative reaction in equities. Ohhh, but reaction in equities. Ohhh, but

this is Fraud Street, not the Wall this is Fraud Street, not the Wall Street hype of supply and Street hype of supply and

demand that you have been told demand that you have been told about over the decades. about over the decades.

Apparently the news was so bad Apparently the news was so bad that the hyenas of Fraud Street that the hyenas of Fraud Street

went into a feeding frenzy – went into a feeding frenzy – eating as many short sellers as eating as many short sellers as the pack could tear apart. Why the pack could tear apart. Why would the nasty hyenas do such would the nasty hyenas do such

a thing? The answer lies with a thing? The answer lies with Ben S. Bernanke and the J-Hole Ben S. Bernanke and the J-Hole

symposium of the central symposium of the central banking mafia.banking mafia.

““What’s not to like in these What’s not to like in these reports?” says the banking reports?” says the banking

mafia. “This now cinches the mafia. “This now cinches the response we want from our response we want from our puppet Bernanke: more free puppet Bernanke: more free

money for us via QE3.”money for us via QE3.”Boo-YA, baby! More horrific Boo-YA, baby! More horrific

economic data and the markets economic data and the markets take off like a rocket shot.take off like a rocket shot.

Trade well and follow the trend, Trade well and follow the trend, not the so-called “experts.”not the so-called “experts.”

Behold the age of infinite moral Behold the age of infinite moral hazard! On April 2nd, 2009 hazard! On April 2nd, 2009

CONgress forced FASB to suspend CONgress forced FASB to suspend rule 157 in favor of deceitful rule 157 in favor of deceitful

accounting for the TBTF accounting for the TBTF banksters.banksters.