End of the Week - S&P 500's Daily and Weekly Charts + A Recap of Important News:

http://stockmarketchartanalyst.blogspot.com/

This article agrees with everything I've been saying about the rally that started in September...That it's totally BOGUS, rallying on mostly bad news, and is nothing more than manipulation by the government's economic reports so that the Fed must intervene again with another round of Quantitative Easing (QE2), because they claim that the economy remains to be weak, and the recovery needs another jump start...It didn't work last time...What makes them think it will this time?...

We all know that this recent stock market rally that began on August 25th, 2010 has been manufactured by the Federal Reserve Bank and the prospect of QE2 (quantitative easing). Since that time the stock market has rallied higher by nearly 13 percent. However, the U.S. Dollar Index has declined by nearly 13.0 percent since its June 7th, 2010 high. This tell us that quantitative easing has already been going on.

If the U.S. Dollar has lost 13 percent and the stock indexes have rallied 13.0 percent what have investors really gained as stocks are denominated in dollar terms? It has really been a zero sum game, and many people are hopefully realizing that.

Read more of this article here: http://www.inthemoneystocks.com/n_rant_and_rave_blog_single.php?id=10192

Due to all of the negative news about Mortgages and Foreclosures, the banks were much weaker than the overall market this week...And things could go from bad to worse very quickly, since all fifty states are investigating improper handling of mortgages and foreclosures...

The proposed fine in one state for each robo-signed mortgage is $25,000. and there are MILLIONS of them nationwide!...

After watching this interview titled "$45 TRILLION LOSS", even the non-believers will have a hard time arguing that the massively corrupt banking system can avoid the crash...

http://www.roadtoroota.com/public/410.cfm

And since the banks have been underperforming the overall market lately like this article shows, what do you think will happen when the $hit starts hitting the fan over the real estate debacles of Sub-Prime lending, attempting to figure out who really owns Mortgages, Robo-Signing of Mortgages, and Foreclosure-Gate?...The Financial Sector will take a HUGE hit, and drag the rest of the market down with it...

http://blogs.stockcharts.com/chartwatchers/2010/10/a-look-at-the-financials.html

This article also explains the risks to stocks in the Financial Sector:

Bank stocks keep falling as mortgage fears mount...Fears about depth of mortgage losses ripple through markets; no one knows what loans are worth...

http://finance.yahoo.com/news/Bank-stocks-keep-falling

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Here is a look at the daily and weekly charts of the S&P 500 at the end of the week:

The daily chart appears strong, with neither one of my Sell Signals given yet, but there is still a Bearish divergence on the MACD and it's Histogram...The CCI is starting to look a bit toppy too...Volume this week was way above average, and may be a sign that a top is near since tops and bottoms are usually set on above average Volume...If a pullback happens, Support Levels are at the 15 Moving Average at 1157. and then a big one at 1130. IF it pulls back past 1120. there is no major level of Support all the way down to a minor one at 1090. and then NONE below that to where the market bottomed in late August...



The weekly chart is still very Bullish, but a near-term top may be coming soon, since I expect a huge amount of resistance at the 200 day moving average, that currently sits at 1196.52 Stochastics reading 95 for both the fast and slow line shows that the market is very Overbought at this time, and the fast line has just crossed down through the slow line for the first time in many months...Look what follows when this has occured in the past...It has historically been at the beginning of a major pullback...

I mentioned a while ago that the weekly chart is looking a lot like it did just before the big crash that started in late April of this year...It's moved up "too far - too fast", without any pullbacks to setup any levels of Support...And look what happens when this type of thing occurs...The market can take back ALL of it's gains TWICE as fast as it gave them...



Third Quarter earnings season is in full force next week, with too many S&P 500 companies reporting to name them all...The Economic Calendar for next week is fairly light, with the important reports of: Industrial Production at 9:15am ET on Monday...Housing Starts at 8:30am on Tuesday...And Weekly Jobless Claims at 8:30am, plus the Philadelphia Fed Survey at 10am on Thursday...Seven Fed Presidents also speak throughout next week...



If I were Long the SPY or SSO at the end of last week, I would've been locking in profits because of the huge amount of uncertainty about the Mortgage and Foreclosure issues that are just now becoming a leading area of concern...And all hell could break loose at any moment as these investigations move forward, taking the Financial Sector down fast and furious...

IF that happens, my favorite trading vehicle will be the Inverse ETF for the Financial Sector - (FAZ)...The Inverse ETF for the S&P 500 - (SDS) - will also be in play...

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Here are what I consider to be the most important news articles put out this week:

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Many of them try to answer the question - will Quantitative Easing 2 be successful this time, or not?...The consensus appears to be that QE2 will not be effective this time around...The market has been rallying on bad economic news the past few weeks, because that increased the likelihood the Fed will have to implement QE2, or in other words, manipulate the market again...

The other major topic of discussion this week has been about the Attorney Generals of all fifty states starting investigations into the way mortgages were handled SINCE THE 1980's!...This may end up affecting all of the major banks and a lot of other types of companies in a negative way if widespread wrongdoing can be proved...

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Fed Minutes show support builds for Treasury bond purchases and higher target for inflation

The Federal Reserve is leaning toward taking two steps to boost the economy: Buying more Treasury bonds to drive down loan rates, and signaling an openness to higher prices later to encourage more spending now.

http://finance.yahoo.com/news/Fed-leans-toward-twostep-plan-apf-18814925.html?x=0

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Fed President Hoenig - More Fed easing likely won't help economy:

Kansas City Federal Reserve President Thomas Hoenig, who all year has steadfastly opposed the Fed's super-easy monetary policy, fleshed out his stance against further easing on Tuesday, saying it would do little to aid recovery and could spark inflation.

http://finance.yahoo.com/news/More-Fed-easing-likely-wont-rb-1191732964.html?x=0

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Time Loves A Hero:

Markets are praying that time will tell us … that Ben Bernanke was a monetary legend from heaven, and a hero to the masses who are starving for a macro-reflation, specifically as it relates to the housing and labor markets. But, if the ‘cost’ of creating jobs is a price-inflation spiral … then there could be ‘hell-to-pay’ in the markets, particularly in the fixed-income arena, and Boom-Boom’s legacy could be one of the ‘anti-hero’. Of course, there is a decent chance that even the most heroic of efforts by the Federal Reserve could FAIL to generate the ‘desired’ outcome, leading to an increasingly ‘devilish’ debt-deflation.

http://www.ritholtz.com/blog/2010/10/time-loves-a-hero/

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The Fed's New Plan To Save The Economy Could Lead To "Titanic Trouble", Says Westwood's Alpert

The stock and bond markets have soared in recent weeks on the expectation that the Federal Reserve will soon embark on "QE2"--a new "quantitative easing" plan in which the Fed buys debts like Treasury bonds and mortgage bonds in an attempt to inject more cash into the banking system and restart the economy. But this QE2 voyage could "set a course towards Titanic trouble," says Daniel Alpert, managing partner at Westwood Capital.

http://finance.yahoo.com/tech-ticker/the-feds-new-plan-to-save-the-economy-could-lead-to-titanic-trouble

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Bernanke's QE2 Heading for the Shoals

Quantitative Easing 2 will fail, for the economy has been desensitized to liquidity and cheap credit.

http://www.oftwominds.com/blogoct10/Bernanke-QE210-10.html

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Don't Expect Miracles from QE2: Minton Beddoes Sees "Years of Very Slow Growth"

"I don't expect the quantitative easing to work miracles," says Zanny Minton Beddoes, economics editor at The Economist, which recently issued a special report, How to Grow. "If you look ahead, you see years of very slow growth, possibly stagnation, in a lot of the rich world."

http://finance.yahoo.com/tech-ticker/dont-expect-miracles-from-qe2-minton-beddoes

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Would QE2 Have a Significant Effect on Economic Growth, Employment, or Inflation?

Recent speculation that the Federal Open Market Committee (FOMC) may purchase an additional large quantity of government debt to stimulate economic growth, increase employment, and prevent deflation has prompted considerable debate over the effectiveness of additional quantitative easing (QE2). This synopsis analyzes some of the central issues in this debate.

http://research.stlouisfed.org/publications/es/10/ES1029.pdf

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The Futility of QE2: What Bernanke SHOULD Do -- Daniel Gross

Federal Reserve Chairman Ben Bernanke, speaking at a conference on Friday morning, says that the high unemployment rate and low inflation signal a need for further easing, but the Fed is still weighing just how aggressive that easing should be. The most likely scenario is that the Fed would purchase hundreds of billions of dollars worth of government bonds.

http://finance.yahoo.com/banking-budgeting/article/111037/the-futility-of-qe2

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Krugman: The Reason Government Spending Hasn't Saved The Economy Is That There Hasn't Been Any Government Spending

Paul Krugman goes back on the attack, arguing that the reason the economy is sputtering despite the stimulus is that the stimulus didn't actually include a big surge in government spending.

http://finance.yahoo.com/tech-ticker/krugman-the-reason-government-spending-hasnt-saved-the-economy-is-that-there-hasnt-been-any-government-spending

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Here are some articles about the Mortgage Mess and ForeclosureGate...

The MERS Edifice Quavers....

In the mid-1990s mortgage bankers decided they did not want to pay recording fees for assigning mortgages anymore. This decision was driven by securitization—a process of pooling many mortgages into a trust and selling income from the trust to investors on Wall Street. Securitization, also sometimes called structured finance, usually required several successive mortgage assignments to different companies. To avoid paying county recording fees, mortgage bankers formed a plan to create one shell company that would pretend to own all the mortgages in the country—that way, the mortgage bankers would never have to record assignments since the same company would always “own” all the mortgages.

http://market-ticker.org/akcs-www?post=168845

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Bank Shot

The banking authorities were shocked - shocked - to discover last week that an awful lot of mortgage paper in this country is not quite in order... appears to contain, er, irregularities... seems less than kosher... frankly, exudes an odor like unto dead carp or, shall we say, a heap of dead carp the size of the building at 3900 Wisconsin Avenue, N.W., Washington, D.C. Any day now we will hear that... mistakes... were... made.

http://www.zerohedge.com/article/guest-post-bank-shot

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Freeze on questionable foreclosures could undermine fragile recovery in housing market

Allegations of possible mortgage fraud against financial giants GMAC, JPMorgan Chase and Bank of America read like a corporate thriller: forged documents, faked Social Security numbers, phantom titles, disappearing paper trails, "robo-signers" and mortgages sliced and diced so many times that nobody really knows who owns them.

http://finance.yahoo.com/news/Foreclosure-freeze-could-apf-3924319053.html?x=0

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The Great Mortgage Mystery

The big question from the mortgage meltdown isn't why so many distressed homeowners are defaulting on their loans. It's why any of them are still making payments.

http://finance.yahoo.com/news/The-Great-Mortgage-wallstreet-3947452112.html?x=0

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CLOUDED TITLES … IT IS AS OMINOUS AS IT SOUNDS!

“Over the course of 12+ years, Mortgage Electronic Registration Systems, Inc. (MERS) has thoroughly unleashed a confusing mess of concealed electronic data, supplied by virtually all of the major players in the American financial arena…coupled with an intricate network of document preparers, it has virtually caused clouds on over 62,000,000 titles to property in every state in the United States.”

http://cloudedtitles.com/

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And here is an assortment of interesting news items that came out this week:

On The Coming Middle-Class Anarchy (Caution!...Contains very colorful language...)

Brian and Ilsa—the nice upper-middle-class retired couple, who always follow the rules, and never ever break the law—who don’t even cheat on their golf scores—even when they’re playing alone (“Because if you cheat at golf, you’re only cheating yourself”)—have decided to give their bank the middle finger.

http://www.zerohedge.com/article/guest-post-coming-middle-class-anarchy

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Poll: Economists lower expectations for growth through 2011, saying economy still 'sensitive'

Top forecasters say the economy will grow this year and next at a slower pace than previously thought, weakened by governments and consumers spending less so they can pay down debt.

http://finance.yahoo.com/news/Poll-Weak-economic-growth-apf-126103023.html?x=0

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Government Prepares To Seize Private Pensions

The government is preparing to seize the private 401(k) pensions of millions of Americans while enforcing an additional 5 per cent payroll tax as part of a new bailout program that will empower the Social Security Administration to redistribute pension funds in a frightening example of big government gone wild.

http://www.infowars.com/government-prepares-to-seize-private-pensions/

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How to Prepare for the Bond Market Bust

The biggest thing this past decade should have taught retail investors is to beware when everybody piles into any one asset class. When this happens, the chances are pretty good that a bubble has developed, and recent history shows that sooner or later, bubbles burst.

http://finance.yahoo.com/news/How-to-Prepare-for-the-Bond-usnews-3480704538.html?x=0

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Chris Whalen Predicts Death Of The Fed - And The Banks

As we have said before and we'll say again, the FOMC's zero rate policies imply that the dollar and all assets denominated in dollars have no value. Stocks, bonds and other financial assets depend upon income to make these obligations money good. Without a positive return, there is no reason to hold dollar assets.

http://market-ticker.org/post=168962

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Is The Stock Market Rigged?

A video featuring Dylan Ratigan of MSNBC...One of my favorite financial news reporters...

http://revolutionarypolitics.tv/video/viewVideo.php?video_id=12859&title=is-the-stock-market-rigged

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Consumer Deleveraging = Commercial Real Estate Collapse:

There is a Part 2 to the story of Consumer Deleveraging that will play out over the next decade. Consumers will deleverage because they must. They have no choice. Boomers have come to the shocking realization that you can’t get wealthy or retire by borrowing and spending. As consumers buy $500 billion less stuff per year, retailers across the land will suffer. To give some perspective on our consumer society, here are a few facts:

http://www.financialsense.com/contributors/james-quinn/consumer-deleveraging-commercial-real-estate-collapse

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Soros: Global Economic Downturn Coming in 2011

George Soros, one of the few investment gurus who actually predicted the credit crisis, now believes the global economy is at substantial risk of a downturn in 2011. Soros believes the stagnant economy will result in continued low employment, but an increase in corporate M&A. Soros also discusses the China FX situation as well as the euro crisis.

http://seekingalpha.com/article/229511-soros-global-economic-downturn-coming-in-2011?source=email

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How Hank Paulson's inaction helped Goldman Sachs

Henry Paulson has received widespread acclaim for his bare-knuckled decision-making as the treasury secretary at the peak of the 2008 financial crisis, but former federal regulators say he missed multiple chances to contain the disaster.

http://www.mcclatchydc.com/2010/10/10/101753/inaction-by-treasurys-paulson

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US Debt on the Shoulders of 90 Million People

Now that the federal government’s fiscal year ended on September 30 and they had to “square up” their accounting, we find some very interesting thing...

http://dailyreckoning.com/us-debt-on-the-shoulders-of-90-million-people/

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Global Currency Meltdown

As the recession and resultant stimulus packages add to higher unemployment and increasing public-sector deficits, the government is seeking to boost the value of overseas earnings that are accrued by US corporations. To aid in this effort, the Fed is being pressured to erode the value of the US dollar, thereby making foreign sales more lucrative in nominal terms. But this form of stealth protectionism will fail just as surely as more overt trade barriers.

http://seekingalpha.com/article/230180-global-currency-meltdown?source=email

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Another Perfect Storm Brewing for Markets and the Economy

It's been a textbook case of "bad news is good news" in the past few weeks, entirely driven by QE2 expectations. The expectations are so high that inflation is finally being priced in (see 30-yr bonds, commodities, and gold), and Bernanke would have to do it even if he had a change of religion tonight, or else.

http://seekingalpha.com/article/230278-another-perfect-storm-brewing-for-markets-and-the-economy

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Concrete Market-Based Evidence That the US’ AAA-Debt Rating is Unraveling

Traders in the credit default swaps market are no longer showing the same faith in the USA that major credit rating agencies show. This past quarter, the price paid to insure against a US sovereign debt default recently jumped up nearly 30 percent. That spike in cost made the US the third worst performing nation in the derivatives market, after only Ireland and Portugal. Not exactly good company to be in.

http://dailyreckoning.com/concrete-market-based-evidence-that-the-us-aaa-debt-rating-is-unraveling/

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Biggest bank failure of year closes Premier Bank

Regulators shutter 3 banks in Kansas, Missouri to bring US bank failures this year to 132...Missouri’s largest bank failure of the year brings the closure of Premier Bank, a billion-dollar bank headquartered in Jefferson City with branches in Osage Beach, Chesterfield, Lake St. Louis, St. Charles and St. Peters as well as in Grapevine, Tx.

http://www.missourinet.com/2010/10/15/biggest-bank-failure-of-year-closes-premier-bank/

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And now for some GOOD News!...

Solar-Power Breakthrough

Researchers have made a major advance in inorganic chemistry that could lead to a cheap way to store energy from the sun. In so doing, they have solved one of the key problems in making solar energy a dominant source of electricity.

http://www.technologyreview.com/energy/21155/

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Have a great weekend everyone!...
zigzagman
Tom

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Update - The End of the Week News + The S&P 500's Daily & Weekly Charts:

http://stockmarketchartanalyst.blogspot.com/

The $SPX had another up week, up 18.91 points, up 1.65%...The breakout into blue sky territory on high volume on Tuesday was due to the much better than expected ISM Non-Manufacturing report, and surprise move by the Bank of Japan to cut its key interest rate to virtually zero also lifted stocks worldwide...

The Institute for Supply Management reported that its index of business activity at U.S. service companies expanded again last month, and far faster than analysts were expecting. The ISM's measure of service companies encompasses a wide range of industries including finance, health care and trade.

It was the ninth-straight month of expansion in service businesses, which have been growing at a slower pace in the U.S. relative to the much smaller manufacturing sector. Service providers account for about 83 percent of all private employment in the U.S.

http://finance.yahoo.com/news/Gain-in-services-powers-apf-4070653078.html?x=0

On Monday, the index was in danger of breaking below support at 1130, and the Parabolic SAR showed up as negative for the first time since the beginning of September...IF the ISM number had been bad on Tuesday, I believe the market would've started a fairly serious correction, but again, it was "saved" by another government report (which I put very little faith in, so watch to see if this number is downgraded the next time this report is released)...

Friday's up move into blue sky territory on low volume was totally bogus IMO...The Jobs Report for the month of September came in a LOT weaker than expected, yet the market rallied because that opened the door for more Fed intervention in the way of Quantatative Easing (QE2)...

The U.S. lost more jobs than forecast in September, reflecting a decline in government payrolls that shows the damage being done by rising fiscal deficits.

Employers cut staffing by 95,000 workers after a revised 57,000 decrease in August, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a 5,000 drop. The unemployment rate unexpectedly held at 9.6 percent...

(Oh Really?...and just how did that happen with such a huge loss of jobs?...That's our government and their made up statistics!...lol...See this article that shows the real number according to Gallup is 10.1% unemployment these days...)

Private payrolls that exclude government agencies climbed 64,000, less than forecast, underscoring the concern expressed by some Federal Reserve policy makers that the rebound from the worst recession since the 1930s has been too slow and may require easier monetary policy. Economists surveyed by Bloomberg project unemployment will average at least 9 percent through 2011, which may restrain consumer spending, the biggest part of the economy.

http://finance.yahoo.com/news/Employers-in-US-Cut-More-Jobs-bloomberg-126013039.html?x=0

Now let's think about this for a moment...Wasn't the first round of QE and the TARP totally ineffective in helping the economy to recover last time?...And now they think another round will be helpful?...That, is VERY doubtful IMO...So WHY did the market rally to set new highs on Friday?...That doesn't make a bit of sense to me, but here is an article just out on Barron's that tries to make some sense of it...

When Bad News Brings Good Times

http://online.barrons.com/article/when-bad-economic-news-brings-good-times-to-the-stock-market

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The most important things I see on the daily chart are the negative divergences in the RSI, CCI, and MACD...When the market was rallying hard in September, these three indicators refused to go higher, and actually dropped as the price was rising...This is usually not a good sign...



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The weekly chart has Bullishness written all over it...The Elliot Wave enthusiasts are calling this the beginning of Wave III, and say it should top out at around 1450 or so...I think there will be a massive amount of resistance at 1220, which was the top back in late April of this year...But it looks like there is NO resistance up to 1220 now that it has risen above the resistance level of 1150 set it January of this year...

Since the correction I was calling for the last half of September never happened (because the index rose "too far, too fast"), watch the market begin this reversal soon...Pay particular attention to the article below that talks about Insider Selling...

One thing I notice is that the rally that started in September looks very much like the rally we saw from February until late April of this year...up, Up, UP!!!...With NO pullbacks to setup any levels of support...And you can see how that turned out, as the market crashed just as fast as it had gone up...All it takes is the right catalyst to start another freefall again...

Trying to "predict" what the market will do used to be a piece of cake a few years ago...These days, it's nearly impossible to do because of all of the government intervention, and their ability to skew economic reports and then revise them back down a month or two later...

We are in an especially hard time for making predictions because the third Quarter reporting season kicked off in full force last Tuesday when Alcoa reported their numbers...Add to that all of the important Economic Reports due out in the second half of next week, and it will be a combination of earnings and economic data that will MOVE the market...Charts don't move the market...It's the other way around...The Fundamentals (USA/world news, earnings, and economic data) is what moves the Charts!...There are too many S&P 500 companies reporting this week to mention, but here is the Economic Calendar for next week...

http://online.barrons.com/public/page/barrons_econoday.html



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Here are a number of articles I found to be very interesting from last week, and many of them tell us what's REALLY going on in the world and in America...You won't find these types of articles in the mainstream media...

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IMF Admits that the West is Stuck in Near Depression:

If you strip away the political correctness, Chapter Three of the IMF's World Economic Outlook more or less condemns Southern Europe to death by slow suffocation and leaves little doubt that fiscal tightening will trap North Europe, Britain and America in slump for a long time.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8039789/IMF-admits-that-the-West-is-stuck-in-near-depression.html

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The Fiat Currencies Are Headed into Crisis

It's important to recognize what's actually going on with the price of gold, which has broken into new record territory again today – to $1,331 as I write. It is not that there has been a change in gold's fundamentals, because there hasn't. To recap those fundamentals:

http://www.caseyresearch.com/displayCdd.php?id=553

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The Fed is Dead, Maybe by 2012

It’s inevitable: Wall Street banks control the Federal Reserve system , it’s their personal piggy bank. They’ve already done so much damage, yet have more control than ever. Warning: That’s a set-up. They will eventually destroy capitalism, democracy, and the dollar’s global reserve-currency status. They will self-destruct before 2035 … maybe as early as 2012 … most likely by 2020.

http://www.marketwatch.com/story/the-fed-is-dead-maybe-by-2012-2010-10-05?pagenumber=1

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Insider Selling To Buying: 2,341 To 1

Sorry kids, we just report the news... as ugly as they may be. After last week saw an insider selling to buying ratio of 1,411 to 1, this week the ratio has nearly doubled, hitting a ridiculous 2,341 to 1. And while Wall Street's liars and CNBC's clowns will have you throw all your money into "leading" techs like Oracle and Google, insiders in these names sold a combined $200 million in stock in the last week alone (following Oracle insider sales of $223 million in the prior week). Insiders can not wait to get out fast enough!

http://www.zerohedge.com/article/insider-selling-buying-2341-1

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Is the Fed Better…as the Devil You Know?

If Dr. Ron Paul is one of few voices of reason in Congress, then Thomas Hoenig may be the Fed’s Ron Paul. As president of the Federal Reserve Bank of Kansas City and voting member of the Federal Open Market Committee, he’s been the lone vote of dissent against the Fed’s ultra low-interest rates –six times.

http://dailyreckoning.com/is-the-fed-better-as-the-devil-you-know/

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ObamaCare Kicks In - Taxes Sure to Rise

Phase I of the Patient Protection & Affordable Care Act of 2010, better known as “ObamaCare,” officially kicked in on September 23, six months after it was signed into law. This week, we look at the main provisions that went into effect late last month, and what they may mean for health insurers, healthcare providers and you.

http://investorsinsight.com/blogs/forecasts_trends/archive/2010/10/05/obamacare-kicks-in-taxes-sure-to-rise.aspx

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How the Housing Crisis Will End the USA As We Know It

I know that a lot of fans of my writings are expecting another “get in yur bunker and clutch them thar guns and Bibles” type of story but this is, in my humble opinion, a reasonably well thought out picture of America just one to two years from now unless a massive if not tectonic shift in government and the apathy of the citizens occurs within the next ninety days.

http://johngaltfla.com/blog3/2010/10/05/how-the-housing-crisis-will-end-the-u-s-a-as-we-know-it/

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88% of US Stocks Are Now OverBought

As of yesterday’s close 88% of all stocks traded on the NYSE were above their 50 day moving average. We have seen these levels just twice in 2010. In early June the % of NYSE stocks above their 50 day moving average reached 86.27%. In the ensuing month stocks sold off 8.5%. In April the % of stocks above their 50 day moving average reached 88.8% – just a tad higher than yesterday’s closing level of 88.11%. We all know what followed in May. In 2009 the index reached the 88% range twice and remained overbought and the market continued to rally, however, I think it’s safe to argue that 2009 was a bit anomalous. While the economic environment certainly appears to be less dreary than it was just one month ago it also appears that equities have priced in this “better than expected” environment.

http://pragcap.com/88-of-nyse-stocks-now-overbought

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Bernanke Tells the Truth: The United States is on the Brink of Financial Disaster

Yesterday, Federal Reserve Chairman Ben Bernanke delivered a speech before the the Annual Meeting of the Rhode Island Public Expenditure Council in Providence, Rhode Island. In the speech, he warned about the current state of the government finances. His conclusion, the situation is dire and “unsustainable”.

http://www.infowars.com/bernanke-tells-the-truth-the-united-states-is-on-the-brink-of-financial-disaster/

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Welcome to the Parabolic Blowoff Reversal Stock Market

When you review the charts with me tonight, you’ll understand why I am concerned about what is going to happen next. The Dow Jones Industrial Average shall be first and the vivid display of the parabolic 10%+ move:

http://johngaltfla.com/blog3/2010/10/05/welcome-to-the-p-b-r-stock-market/

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The Incredible Two-Day Jump in US Treasure Debt

To show you that I am not over-reacting like the hyper-excitable, gun-nut, gold-bug, Austrian school of economics kind of weird guy that I actually am, here is an example of the corrupt, game-playing crap going on with the Federal Reserve and the Treasury: On Wednesday, 9/29/10, the national debt was $13.466 trillion. The next day, 9/30, it goes to $13.561 trillion. Again, “the next day,” 10/1, the start of the new federal fiscal year, it rises to $13.610 trillion!

http://dailyreckoning.com/the-incredible-two-day-jump-in-us-treasure-debt/

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Has the Consumer Recovered From the Last Bust?

There are more than a handful of notable economists and investors who believe that the current credit crisis is really just an extension of a much larger bust that was set in motion more than a decade ago. In essence, the 90′s created a mentality that everything was different. American net worth exploded and the world appeared to be permanently altered for the better.

http://seekingalpha.com/article/228840-has-the-consumer-recovered-from-the-last-bust?source=email

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And finally, for those that may have missed my favorite article from last week's post...

Warning Signs...

Anyone following the markets knows the drill by now...A bad economic report comes out (e.g. consumer confidence) and the market plunges 1%. An hour later, there's a magical reversal and suddenly, we go to new highs for the day, which "sticks" until the close.

When the market starts to act like this - when there's this "invisible hand" that magically levitates things, when people resort to disseminating outright lies about the market or specific companies and do so to counteract actual bad news that would otherwise result in moves down, it is a sign of desperation - there are people with money and power who are on the wrong side of the bet and they are willing to deceive you and rip you off outright to avoid being the one with the bag.

http://market-ticker.org/akcs-www?post=167824

--------------------------------------------------------

On a final note, one of my Facebook Friends asked me "is it time to Invest in the Stock Market?"...My answer is the same as it's been for the past few years...I don't "Invest" anymore...Ten years of gains wiped out in 2008-2009...I ONLY Day Trade these days, and NEVER hold anything overnight...That's because I believe a HUGE selloff is going to happen in the near future...There's no telling what will be the catalyst for this selloff, or when it will happen, but from what I can see from reading news articles like the ones I've posted above, it IS inevitable...The only thing I'm "invested" in these days is physical Gold and Silver coins, and I have them buried in the ground in a few safe locations, both in and outside of the country...

Have a great week trading everyone!...

zigzagman
Tom

Update - The End of the Week - S&P 500's Daily & Weekly Charts:

http://stockmarketchartanalyst.blogspot.com/

What a weird week it was...Jiggy is the way I would describe it...A lot of wild intraday swings, without any actual movement by the end of the week...Many of the daily candlesticks were Doji's, which can signal a lot of indecision, or signal the beginning of a reversal of trend...Anyone that bought the top of the spike on Thursday thinking the market was going to run up some more because it was breaking out above the old Resistance Level was in for an unpleasant surprise, since it looks to me like it was just another Pump Before The Dump which was used for some profit taking...

Basically, the $SPX is consolidating in an uptrend after a huge rally the entire month of September...This is usually Bullish chart pattern, and looks like an Ascending Triangle, but the divergences I see in the CCI and the MACD Histogram tell another story...A break below the 1130 level of Support would make the chart pattern a Bearish Double-Top, which should yield down to about the 200MA at 1118...If it closes below the closing price from seven sessions ago (when it dropped for three days in a row), the potential yield down would take it to about the 50MA at 1105...



The "Money Indicators" I use are Chaikin Money Flow (CMF), On Balance Volume (OBV), and Accumulation/Distribution (A/D)...The first two are showing signs of weakness...



The weekly chart shows a perfectly formed Doji candlestick for the week...That can mean a period of indecision, or the beginning of a reversal of the uptrend...



My weekly chart shows that the three Money Indicators (CMF, OBV, A/D) all showed downticks this week...The price is bumping it's head up against the upper Bollinger Band, so any more progress to the upside (if there is any) will be much more difficult...It did close above the 5 Moving Average this week, but if it ever closes below it, this rally will officially be over IMO...Stochastics (STO) is in Overbought territory, and if the fast line crosses down through the slow line, that would be Bearish...All three parts of the MACD look Bullish, but the ADX (black line) is showing the uptrend is losing strength...The DI's of the ADX are converging in a Bullish manner, but the Relative Strength Index (RSI) downticked this week...(more comments below this chart)...



October is historically the weakest month of the year...If I had made some good profits in September, I'd be taking them right about now, and getting ready to go Short again...If the $SPX closed above the close from last week (9/24), that Short position would be a mistake, and I'd Cover it and go Long again...

If I had no position right now, I surely wouldn't be going Long here after such a big move up with only one pullback that set up a single major Support Level at 1125 during the entire month of September...It's because of such a vertical move up the whole month that sets the stage for a very hard fall in October...If 1125 fails to hold Support, watch out below!...IMO

But...The mid-term elections are about a month away, and the market has been propped up by the powers that be so that they don't look so bad before the election...I call the rally during September the "teflon rally", because the market let a lot of bad news slip right off it's back, and rallied hard on the slightest hint of good news, which wasn't that great IMHO...

This article offers a very good explanation for why the market reacted the way it did during the month of September.

And this article and my perceptions are in complete agreement...Here is the concluding paragraph:

When the market starts to act like this - when there's this "invisible hand" that magically levitates things, when people resort to disseminating outright lies about the market or specific companies and do so to counteract actual bad news that would otherwise result in moves down, it is a sign of desperation - there are people with money and power who are on the wrong side of the bet and they are willing to deceive you and rip you off outright to avoid being the one with the bag.

I don't have time to look to see if any important 3rd Quarter Earnings Reports are due out next week, since it's that time of year again soon...We're all packed up, and it's time for a quick vacation to New Orleans for the weekend...Alcoa officially kicks off earnings season when they report on October 7th which is next Thursday...If I have time on Sunday, I'll edit this post to show any Earnings and Economic Reports of importance coming up next week...

Have a Great weekend everyone...
zigzagman
Tom

Update - The S&P 500's Daily Chart - Old Resistance Did NOT Become a Level of Support...

Hello Traders...Here is Thursday's $SPX daily chart...

http://stockmarketchartanalyst.blogspot.com/

As I mentioned yesterday, the big question I had was since the $SPX finally broke above an old level of resistance recently, would it pull back and bounce up off the old resistance level and make it a level of support, which is quite common...

Today's action showed that did not happen, and is a fairly bearish development...



And since the index closed very close to the low of the day as this five-minute chart shows, that is also somewhat bearish...



Tomorrow's big economic reports will be Durable Goods Orders an hour before the opening bell, and New Home Sales at 10am ET...Plus, two Fed Presidents speak in the afternoon...

Happy Trading on Friday!...
zigzagman

Update - The S&P 500's Daily Chart:

Hello Traders...from the zigzagman showing today's $SPX daily chart...

http://stockmarketchartanalyst.blogspot.com/

The annotations on the chart speak for themselves, but the big question in my mind is will the old resistance level now become a level of Support, or will it fail to do so and we get the pullback I've been expecting for a while now...

A close below the old resistance line, a close below the 5 Moving Average, Stochastics breaking below the 80 line, on high Volume will signal to me that the pullback has begun...Pay attention to the Weekly Jobless Claims numbers out an hour before the opening bell (not that I believe a word the Bureau of Labor Statistics ever says)...Leading Indicators and Existing Home Sales both come out at 10am ET...

Happy Trading tomorrow...
zigzagman

The Folly Of Investing Today...

http://stockmarketchartanalyst.blogspot.com/

by Karl Denninger - Posted 2010-09-21 20:45

Investing is all about trying to determine a longer-term direction for the market such that risk and reward align in some meaningful way.

Yesterday, on Blogtalk, I stated that I was pulling all of my long-term investments that were market-related, and for an indeterminate time forward I would be only short-term trading this market.

That deserves an explanation, and toward this end, I would like to present the following 10 year weekly chart.



The regular "trace" is the S&P 500 price. The white trace is the 10 year Treasury yield as a comparative.

You need to pay attention to this.

"This time it's different" is often said.

It is almost always wrong, and believing in it will almost always make you broke.

Here's reality folks. Over the previous 10 years the TNX has never declined meaningfully without the S&P 500 following it, and declining to near or below it on a comparative basis.

The TNX almost always leads on declines too, sometimes by as much as six months.

Well, it's been six months.

In 2007, the TNX peaked in late June, after which it began a dive. The market peaked in the middle of October of that year at 1576. The decline essentially reached the comparative bottom.

Now the TNX has peaked the first week of April of this year, and is quite close to the March 2009 lows. Yet the S&P, after it took a swoon, has recovered.

Exactly as it did in 2007.

We all know what came next.

The same thing happened in 2000, when the market peaked and fell apart. Again, the TNX led. It in fact peaked almost exactly at the end of the year in 1999. Three months later "it" began.

Continued at: http://market-ticker.org/akcs-www?post=167162

Update - The S&P 500's Daily Chart - A Doji Candlestick for Today...

http://stockmarketchartanalyst.blogspot.com/

Hello Traders...the zigzagman here with another update of the $SPX daily chart...

Today's candlestick was a doji, which can mean one of two things...It can signal a reversal about to happen, or it can signal a moment of indecision, where the bulls and bears came out even on the day for the most part, even though it closed slightly down on the session...

As usual, there wasn't much activity until after the FOMC Announcement at 2:15pm ET, and then there was a quick spike up for half an hour, and then it gave it ALL back and then some over the next hour...It appears traders were pleased with the Fed decision, and then they weren't...Talk about a "moment of indecision"!...lol...

Here's a five-minute chart of today's action:



The title of this daily chart is: Where's My Pullback???...

Really!...Where the heck IS it?...This reminds me of the weekly chart the few months leading up to the highs set in late April of this year...It was like the Energizer Bunny...up, Up, UP!...No levels of support were set on the way up, and that's why it fell fast and furious back to where it all began when it FINALLY decided to go back down...

That's exactly what I see here on this daily chart...The move UP since the beginning of September is waaayyyyyyy too far, too fast and much too vertical to be sustainable, with only ONE tiny pullback on the 7th, which set up the ONLY level of support on this entire run...I wouldn't be surprised to see it fall twice as hard as it went up with the right catalyst, which is usually the case...The market usually goes down a LOT faster than it goes up...The PPT goes Long AND Short, you know?...

Today's Fed announcement needs to be digested better by traders overnight, and the surprising Housing Starts report out today showed gains in condos and apartments, not single family homes...Like we really need any more of either built, with the glut of empty units on the market already...We are spared any bogus, market moving economic reports from the government tomorrow, but Thursday has a few potentially market moving reports due out, with Weekly Jobless Claims an hour before the opening bell, Leading Indicators, and Existing Home Sales both out at 10am ET...

Friday's Durable Goods Orders is one of the most important reports due out this week, and it arrives an hour before the opening bell...With New Home Sales numbers release half an hour later...

I'm not a buyer just because the market finally got above the old resistance level at 1130...Sometimes they do this to sucker people into buying...Just before they pull the rug out from under everyones feet...

Pay particular attention to my comments on the chart about Volume, and the two bearish divergences I see on the CCI and the MACD Histogram...

On More Stimulus Spending – by Dr. Ron Paul

http://stockmarketchartanalyst.blogspot.com/



Faced with continuing economic decline and an impending election, the administration, predictably, is entertaining the idea of another stimulus package. To explain why the last one didn't work, adherents to the Keynesian economic philosophy are claiming that they actually did work – it just looks like they didn't because we don't realize how much worse off we would be right now without trillions of dollars of public spending. The last administration bought into Keynesianism just as much as this one does, unfortunately. Until we have leaders who understand that debt is not the way to prosperity, there will be no stopping runaway government spending.

While it is nice to hear about business tax breaks, the positive results of these tax cuts will be dwarfed by its negative effects. First of all, $200 billion or so in temporary tax cuts and credits to businesses are nothing compared to the $3.8 trillion in tax hikes that will hit the economy like a ton of bricks on January 1, 2011 if the Bush tax cuts are not extended by Congress.

Second of all, businesses are reluctant to hire and invest, not because they are looking for temporary credits, but because of future uncertainty; they simply don't know what the government is going to do next and how future government policies will affect decisions they make now. What new costs and regulations will be placed on them with healthcare reform and financial services reform? Will Congress convene a lame-duck session this winter to pass cap-and-trade and other destructive legislation? What will the cost of compliance be for hiring new employees, and will that force them to simply lay off anyone they hire now? Worse, will the government come up with fines or additional costs if businesses have to lay people off in the future? Right now, the safest thing for businesses to do is nothing. Until we regain respect for the rule of law and remove some of this uncertainty, I'm afraid none of these temporary promises, made right before an election, will do much towards any economic improvement.

The other glaring problem with this proposed stimulus package is that it couples tax cuts with spending increases, which makes no sense when we are already heavily indebted to foreign countries. We should be cutting taxes and slashing government spending dramatically. The private sector simply cannot bear the burden of our engorged public sector. In fact, one reason earlier stimulus programs did not result in any private sector growth is because large amounts went to the public sector. Indeed, the spending that the administration is now proposing arguably constitutes a bailout of the public sector and various union allies of the administration.

This administration is falling into the same dangerous trap we fell into during the Great Depression, as did the Germans leading into their hyperinflation of the 1920's. The temptation is to do something, anything, proactive to attempt to stimulate the economy, but history has shown us that governments cannot spend their way into prosperity. The best thing government could do is get back to its Constitutional limitations and let the economy stabilize, heal and recover without the crushing burden of government holding it back.

http://www.thedailybell.com/1375/Ron-Paul-On-More-Stimulus-Spending.html

Update - The S&P 500's Daily Chart at the End of the Week:

http://stockmarketchartanalyst.blogspot.com/

The S&P 500 closed up 1.45% last week...

IMO, it has moved up "too far, too fast" since the bottom set in early September...There was only one minor pullback on the 7th of September that set the only level of support for it to fall back to...Going up too far, too fast creates a situation where it can fall just as fast (if not faster) than it went up...Just like it has a few times in the recent past...

Of course, that all depends on what kind of bogus economic reports the government puts out again next week...This has been called the "teflon rally" by some, because the market went up a number of times even though there were negative economic reports released...It appears that the market is letting bad news slide off it's back again these days...Probably because the PPT is hard at work making the market look better than it should due to the upcoming mid-term election on November the 2nd...

Basically, the market has been trapped in a trading range between 1020 to 1120 since the beginning of June, with two failed attempts to break above the 200 day moving average (not shown on this chart, but the current reading is 1116.16)...It is again at the upper end of the trading range, and I feel it's time for a pullback...But of course, it's not up to me...

IF the $SPX can convincingly break above the two levels of resistance it's had in the past at this level it's at, that would be Bullish...IF it pulls back and closes below the September 7th level of support, there's a good chance it will fall fast and furious back to the lower end of the trading range again...

http://images.investorshub.advfn.com/images/uploads/2010/9/18/kktkv1SPX-CCI.JPG



Here is the Economic Calendar for next week...There is a lot of housing data due out this week - which will most likely remain weak, plus the FOMC Meeting announcement is on Tuesday at 2:15pm...Durable Goods Orders is another one of the more important reports due out on Friday an hour before the opening bell, and keep an eye on the weekly Jobless Claims numbers due out on Thursday an hour before the opening bell...

Happy Trading next week!...
zigzagman

http://images.investorshub.advfn.com/images/uploads/2010/9/18/esivs1ecocal.JPG

Stocks Surge To Celebrate Unprecedented 19th Sequential Equity Outflow - $10 Billion In September Redemptions:

http://stockmarketchartanalyst.blogspot.com/

It is beyond a joke now:

ICI's latest data discloses that in the week ended September 8, domestic funds saw outflows of $2.2 billion, following last week's massive $7.7 billion. And yes, ETFs experienced outflows as well.

So far September has experienced nearly $10 billion in outflows, even as the market has ramped by over 6%. Who is buying this $hit? Just ask The New York Fed and Citadel: they may have a few pointers (wink wink).

This is the 19th sequential outflow from US stocks, and amounts to $65 billion in redemptions for the year.

With the market pretty much unchanged YTD, it means that mutual funds can not resort to capital appreciation as a substitute to outflows, and most are on their last breath (Janus: blink twice if you are still alive please).

The kicker: the S&P is at the level it was when the outflows began back during the flash crash.

If that doesn't restore all your confidence that Uncle Sam will be so good at managing the market (just like he has done with everything else), nothing else will. Throw in a little HFT, a little subpennying, a little Flash trading, a little DMA trading, a little quote stuffing, a little hedge fund clubbing, a little specialist front running, a little daily flash crash in big caps like Nucor Steel, and you can see why next week we will most certainly have our first inflow in 20 weeks. Or not.

It doesn't matter. Nobody that is made of carbon, or who doesn't already have direct access to the Fed for zero cost funding, is trading stocks anymore.





(If you are having a hard time seeing these two charts, click on the link below, and then click on the charts in the original article to expand them to full-size...)

http://www.zerohedge.com/article/stocks-surge-celebreate-unprecedented-19th-sequential-equity-outflow-10-billion-september-re

An Election Year Bounce?

http://stockmarketchartanalyst.blogspot.com/

This article is from the Casey Research website. Read the second article down from the top:

It’s safe to say that most of the Casey Research team are contrarian by nature and in practice. The reason is simple. Once everyone comes to believe that something is going to happen, then they’ll act in accordance with that belief. In investment terms, that means placing bets. For a while, the outcome becomes something of a self-fulfilling prophecy, until the point where pretty much everyone who is going to invest, has invested. At which time there’s little juice left in the trade.

That’s where the contrarian steps in with his opposing view and investment. That’s because, with everyone all in, the most likely next move will be a reversal that ultimately triggers a scramble to disinvest – once again resulting in a self-fulfilling prophecy, but one that provides the contrarian with outsized profits.

When viewed through that lens, the case for gold these days is interesting. Despite a lot of chatter and interest in the yellow metal within the community of what might be termed hard-asset investors, the broader investing universe knows little of gold and owns even less. I suspect that if you polled your ten closest friends and colleagues, you’d find that nine of them own no physical gold, no gold ETFs, and no gold stocks. “Too risky,” they might add with a harrumph.

Thus, while the price of gold has marched upwards relatively steadily over the past eight years and is breaking to new highs as I write, it would be a gross misstatement to say that it’s overbought.

Which brings me to the question of the U.S. stock market.

As readers of more than a few days will know, I don’t put a lot of stock in the institutions of our degraded democracy. What’s going on in Washington today is akin to a warped game where one team does everything it can to undermine the other, based on no real principles other than getting elected. The cost of the game is borne by none of the players, but by the people they are supposed to be serving. That cost can be seen in the insane levels of debt and the seemingly permanent state of war this country has been in for most of the 50-plus years I’ve been alive.

Now, that may seem off the topic of the outlook for the U.S. stock market, but I can assure you it’s not. For the Democrats to avoid being soundly thrashed in the inning scheduled for this November, they must first and foremost avoid any further bad news for the economy between now and then. And nothing shouts bad news louder than a stock market crash.

Yet, there is strong sentiment among the professional trading community that a stock market crash is just what’s coming – and a big one. On that topic, there was this out of Bloomberg yesterday.

Futures on the Chicago Board Options Exchange Volatility Index are pricing in a three-month gain of 31 percent and contracts based on swings in Europe and emerging-market equities have risen to near records, data compiled by Bloomberg show.

Translated, futures and options traders are expecting a lot of volatility in the near term.

Today’s gold price action, which has now decisively broken out on the upside – to over $1,270 per ounce – is also signaling a run for safer harbors. The underlying causes were an unexpected stumble in the German manufacturing sector – the only real lantern of hope in the eurozone – as well as increasing expectations that the Fed will buy up another $1 trillion in Treasuries.

Adding a few sticks to the fire, a persistent inflation has taken hold in the UK, running ahead of the government’s 3% target for the sixth month in a row.

“Wait a minute, chappie,” you might hear some old member mumble down at the club, “I thought it was deflation we were supposed to be worrying about?”

But I digress.

Given the highly politicized nature of U.S. economy and investment markets, we have to expect the Democrats will take desperate measures to try and prop up the stock market through the November elections.

Now, I’m not going to go on record as suggesting that those measures will include anything so devious as the sub rosa existence of a plunge protection team. I have no direct proof of it, though the Teflon-covered stock market of recent weeks – a market that bad news simply slides off, which is the case again today – does give one pause.

More overtly, however, we are able to see the latest political play unfold, in which the Democrats have suddenly decided to reverse themselves on the Bush tax moratorium that they so strongly derided during their presidential electioneering. Sure, if their proposal is passed, the moratorium will be extended only for those who make under $250,000 – but that can only be cheering for stock markets. And they have cleverly invited the Republicans to join them in this initiative, expressing dismay that the Republicans would stand in the way by insisting that America’s fattest cats – those who earn over $250,000 – enjoy the same extension.

That has put the Republicans in the uncomfortable position of having to defend the wealthy (heavens forbid!), while being seen to be obstructionist and penalizing the middle class (voters).

Good move by the Democrats.

In the end, it is almost certain that the Republicans are going to have to roll over on this issue – giving the Democrats the round as champions of said middle class. Or perhaps the Democrats are going to have to give in to the Republicans, saying as they do that at least they fought the good fight.

Either way, the news of the tax relief extension for some, or all, of a significant constituency can only be seen as a positive development for the economy and the stock market.

Though I am sure that the market is already pricing in some sort of an extension – should it be granted, the market could put in a solid surge.

What other moves might the Democrats make?

At this point, I can’t tell – but I do think it’s safe to say that they’ll do whatever they can to prop up the stock market until November. Which makes taking a bearish bet on the market just now a risky proposition. Especially given the large number of net speculative short positions now on against the stock market… you can see the elevated quantity of net short positions in the newspaper clipping just here.




If the market continues to weather the storms or bounces on a tax extension, then a classic short squeeze could occur. In other words, short sellers will be forced to buy in order to cover their positions, sending the market sharply higher, economic realities be damned.

And that added bounce could give the Democrats the cushion they need to make it through the elections.

What happens after the elections? Anyone’s guess, but the Fed’s buying of a trillion dollars worth of Treasuries is certainly in the ballpark. That’s because President Obama, as skilled a political player as has made it to the big game in decades, is almost certainly already laying out dramatic plans to ensure that he doesn’t strike out and get sent home after just one term.

Whatever he’s going to do, he’s going to need to do it with extra vigor, and he’s going to need to do it soon after the November elections.

It should be a wild ride. For the time being, however, if you’re short, be careful.

http://www.caseyresearch.com/displayCdd.php?id=535

CYCC - Cyclacel reaches Agreement with FDA on a Special Protocol Assessment for Pivotal Phase 3 trial of Sapacitabine in AML:

http://stockmarketchartanalyst.blogspot.com/

(CYCC has been my favorite microcap biotech company this year, mostly because they have a Nobel Prize winning scientist that has been working on an oral form of cancer cures for fourteen years. This would eliminate radiation, chemotherapy, and all of the other toxic anti-cancer drugs in use today. Do your own research on this company. I'm sure you will be pleasantly surprised with what you find.

http://www.cyclacel.com/cyc/investors/news/pressreleases/2010/2010-09-13/

BERKELEY HEIGHTS, NJ – September 13, 2010 – Cyclacel Pharmaceuticals, Inc. (NASDAQ - CYCC), a biopharmaceutical company developing oral therapies that target the various phases of cell cycle control for the treatment of cancer and other serious diseases, today announced that it has reached agreement with the U.S. Food and Drug Administration (FDA) regarding a Special Protocol Assessment (SPA) on the design of a pivotal Phase 3 trial for the Company’s sapacitabine oral capsules as a front-line treatment in elderly patients aged 70 years or older with newly diagnosed acute myeloid leukemia (AML) who are not candidates for intensive induction chemotherapy.

“The SPA agreement with FDA represents an important milestone for Cyclacel and provides a clear registration pathway for sapacitabine,” said Spiro Rombotis, President and Chief Executive Officer of Cyclacel. “If it reaches the market, sapacitabine would be the first orally-administered drug to be offered to this patient population with the potential to serve as induction, consolidation and maintenance treatment of this life-threatening disease. In addition to progressing to Phase 3 in AML, we look forward to reporting sapacitabine Phase 2 data in myelodysplastic syndromes (MDS) and non-small cell lung cancer (NSCLC).”

The Phase 3, registration-directed, clinical trial of sapacitabine oral capsules to be conducted under the SPA will be a randomized study against an active control drug with the primary objective of demonstrating an improvement in overall survival. Sapacitabine will be administered as an outpatient treatment. Cyclacel plans to begin patient enrollment in this Phase 3 trial before the end of 2010. Additional information on the design of the trial will be provided after initiation of the study.

“We are pleased to receive the SPA Agreement letter from the FDA stating that the design and planned analysis of the pivotal Phase 3 study adequately address the objectives necessary to support the submission of a New Drug Application (NDA),” said Judy Chiao, M.D., Vice President of Clinical Development and Regulatory Affairs of Cyclacel. “AML in the elderly is a life-threatening disease with high unmet medical need. Patients with AML aged 70 years or older have a poor prognosis as the majority of these patients are not candidates for intensive induction chemotherapy because of poor tolerability to such therapy and a high risk of relapse because of the lack of effective consolidation and maintenance therapy. We will now concentrate our efforts on initiating the Phase 3 study in AML in collaboration with our clinical investigators.”

In addition to the Cyclacel-sponsored trials of sapacitabine, the company has been approached by cooperative groups seeking to conduct, largely at their expense, investigator-initiated studies of sapacitabine with alternative study designs.

About Acute Myeloid Leukemia (AML):

AML is a cancer of the blood cells that progresses rapidly and if not treated, could be fatal in a few months. AML is generally a disease of older people and is uncommon before the age of 40. The average age of a patient with AML is about 67 years. There are more than 12,300 new cases of AML, of which about half are elderly, and nearly 9,000 deaths caused by this cancer each year in the United States. A recently published review of The University of Texas M. D. Anderson Cancer Center’s historical experience with front-line intensive induction chemotherapy for elderly AML patients aged 70 years or older demonstrated that while 45% of patients achieved a complete remission, median overall survival was only 4.6 months and 36% of patients died within the first 8 weeks of treatment, underscoring the unmet need in this patient setting. †

About Special Protocol Assessment (SPA):

A Special Protocol Assessment is a binding written agreement with the FDA that the sponsor’s proposed trial protocol design, clinical endpoints and statistical analyses are acceptable to support regulatory approval. Final marketing approval depends on efficacy results, adverse event profile and an evaluation of the benefit/risk of a treatment as demonstrated in the trial. For further information regarding the SPA process, please visit the FDA website, www.fda.gov.

About Sapacitabine:

Sapacitabine (CYC682), an orally-available nucleoside analogue, is currently being evaluated in Phase 2 trials in patients with hematological malignancies and solid tumors. Sapacitabine acts through a dual mechanism, interfering with DNA synthesis by causing single-strand DNA breaks and inducing arrest of cell cycle progression mainly at G2-Phase. Both sapacitabine and CNDAC, its major metabolite, have demonstrated potent anti-tumor activity in preclinical studies. Over 200 patients have received sapacitabine in Phase 2 studies in AML, MDS, cutaneous T cell lymphoma (CTCL) and non-small cell lung cancer (NSCLC). Sapacitabine has been administered to approximately 170 patients in five Phase 1 studies with both hematologic malignancies and solid tumors. In December 2009 at the 51st Annual Meeting of the American Society of Hematology (ASH), Cyclacel reported data from a randomized Phase 2 study including promising 1-year survival in elderly patients with AML aged 70 years or older. Sapacitabine is part of Cyclacel’s pipeline of small molecule drugs designed to target and stop uncontrolled cell division.

About Cyclacel Pharmaceuticals, Inc.:

Cyclacel is a biopharmaceutical company developing oral therapies that target the various phases of cell cycle control for the treatment of cancer and other serious diseases. Three product candidates are in clinical development: Sapacitabine (CYC682), a cell cycle modulating nucleoside analog, completed Phase 2 studies for the treatment of acute myeloid leukemia in the elderly and is in Phase 2 for myelodysplastic syndromes and lung cancer. Seliciclib (CYC202 or R-roscovitine), a CDK (cyclin dependent kinase) inhibitor, is in Phase 2 studies for the treatment of lung cancer and nasopharyngeal cancer and in a Phase 1 trial in combination with sapacitabine. CYC116, an Aurora kinase and VEGFR2 inhibitor, is in a Phase 1 trial in patients with solid tumors. Cyclacel’s ALIGN Pharmaceuticals subsidiary markets directly in the U.S. Xclair® Cream for radiation dermatitis, Numoisyn® Liquid and Numoisyn® Lozenges for xerostomia. Cyclacel’s strategy is to build a diversified biopharmaceutical business focused in hematology and oncology based on a portfolio of commercial products and a development pipeline of novel drug candidates. For additional information please visit www.cyclacel.com.

Forward-looking Statements:

This news release contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Such forward-looking statements include statements regarding, among other things, the efficacy, safety, and intended utilization of Cyclacel's product candidates, the conduct and results of future clinical trials, plans regarding regulatory filings, future research and clinical trials and plans regarding partnering activities. Factors that may cause actual results to differ materially include the risk that product candidates that appeared promising in early research and clinical trials do not demonstrate safety and/or efficacy in larger-scale or later clinical trials, the risk that Cyclacel will not obtain approval to market its products, the risks associated with reliance on outside financing to meet capital requirements, and the risks associated with reliance on collaborative partners for further clinical trials, development and commercialization of product candidates. You are urged to consider statements that include the words "may," "will," "would," "could," "should," "believes," "estimates," "projects," "potential," "expects," "plans," "anticipates," "intends," "continues," "forecast," "designed," "goal," or the negative of those words or other comparable words to be uncertain and forward-looking. For a further list and description of the risks and uncertainties the Company faces, please refer to our most recent Annual Report on Form 10-K and other periodic and current filings that have been filed with the Securities and Exchange Commission and are available at www.sec.gov. Such forward-looking statements are current only as of the date they are made, and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact for Cyclacel Pharmaceuticals, Inc.:

Investors/Media:
Corey Sohmer, (908) 517-7330
csohmer@cyclacel.com

Dangerous Economic Misconceptions:

http://stockmarketchartanalyst.blogspot.com/

I won't be posting my usual fundamental and technical analysis of the S&P 500's daily and weekly charts this weekend for a couple of reasons...The first is, we have family visiting from far away, and creating and posting my charts takes many hours...And secondly, what's the point?...

If you've been following my blog lately, I've been harping on how corrupt the market has become lately, and how much more difficult it is to predict near terms movements because of this...The mainstream media/propaganda machine and bogus government economic reports were in full force again this week...So it's no surprise that the market went UP!...Here is just one example of a bogus economic report put out by the gubbermint this week...The weekly jobless claims numbers were "estimated" because numerous states didn't report their numbers to the BLM because of the Labor Day holiday!...So what did the gubbermint do?...They LIED/FUDGED the numbers as usual:

Nine States Did Not File Initial Claims Data Due To Labor Day, Hundreds Of Thousands Of Estimates In Data "Beat"

http://www.zerohedge.com/article/nine-states-did-not-file-initial-claims-data-due-labor-day-hundreds-thousands-estimates-data

So you can see that the powers that be are doing all they can to make the market rally again, even though there is no real reason for it to do so...IMO

And this article backs up everything I've been saying for months now...It took me a number of hours to read the entire story yesterday...And by that, I mean also reading every story included in it, because there are numerous links in this article that verify the paragraph written above it...These are the kinds of TRUTHS you will NOT hear from the mainstream media/gubbermint propaganda machine!...

In my humble opinion, this has to be one of the top ten articles I've read so far this YEAR!...And I highly encourage you to take the time and read the whole article, and also follow every link below every paragraph so you can verify that what the author has written is the TRUTH...

http://neithercorp.us/npress/?p=748

Please! SHARE this to all you Friends on numerous Social Media sites, using the "Bookmark" button below...

And also...Take a few moments out of your day to remember the thousands of lives lost in the attack on the World Trade Center that happened nine years ago today...September 11, 2001

NEWS - From "Alternative" Sources - NOT the Mainstream Propaganda Machine...

http://stockmarketchartanalyst.blogspot.com/

Here are a number of articles I read this morning, from my favorite "alternative" news sources:

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Shadow Government Statistics:
Analysis Behind and Beyond Government Economic Reporting

http://www.shadowstats.com/

If you've watched my last few updates on the market, you'll notice that I'm quite cynical when it comes to any economic report put out by the government (and I'm also very skeptical that earnings reports aren't continually being fudged. Just look at the recent SEC case against Dell as an example). This site gives you the REAL scoop when it comes to the government's reports of economic data...

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Show Me the Recovery:
While second-quarter sales increases are encouraging, weak cash generation is worrisome.

http://www.cfo.com/article.cfm/14522495

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Claims of Recovery But Results Nowhere To Be Found:
A weekly excerpt from the subscription issue of The International Forecaster, taken from Bob Chapman's weekly publication.

http://theinternationalforecaster.com/International_Forecaster_Weekly/Claims_of_Recovery_But_Results_Nowhere_To_Be_Found

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Economists Cut U.S. Growth Forecast - AGAIN!:
Projected U.S. economic growth for the rest of this year and next was revised down for a third month in a row by a panel of about 50 economists.

http://finance.yahoo.com/news/Economists-cut-US-growth-rb-1119878296.html?x=0

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Hell Yes It’s Class Warfare! Part 1:
There is an intentional misconception out there in the market place of talking points and political discussion – it is that liberals are waging class warfare on the wealthy.

http://cons-lie.com/2010/09/07/hell-yes-its-class-warfare-part-1/

Hell Yes It’s Class Warfare! Part 2:

http://cons-lie.com/2010/09/08/hell-yes-its-class-warfare-part-2/

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The Wholly Fallible Ben Bernanke:
Despite three crucial errors at the Federal Reserve, its chairman is still revered as if he is the pope – while we pay the price.

http://www.guardian.co.uk/commentisfree/cifamerica/2010/sep/08/ben-bernanke-federal-reserve

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Rome is Burning:
There is a critical point that I fear the commentariat is just not getting.

http://modeledbehavior.com/2010/09/07/rome-is-burning/

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In The Headlights:
The toils of summer are bygone now. The days grow shorter and America stands in the darkling road of its own prospects like a dumb animal frozen in the blinding light of approaching fury.

http://www.kunstler.com/blog/2010/09/in-the-headlights.html#more

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Death By Globalism:
Have economists made themselves irrelevant? If you have any doubts, have a look at the current issue of themagazine, International Economy, a slick publication endorsed by former Federal Reserve chairmen Paul Volcker and Alan Greenspan, by Jean-Claude Trichet, president of the European Central Bank, by former Secretary of State George Shultz, and by the New York Times and Washington Post, both of which declare the magazine to be “ahead of the curve.”

http://www.counterpunch.org/roberts09012010.html

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And finally, the winner of the "Doom and Gloom Award" goes to this piece, which I found to be a fascinating read...

Doomsdayers Not Cynical Enough:
[Like your editor, Rick’s Picks forum regular Wayne Razzi (aka “Red Will”) is a veteran floor-trader who grew up in South Jersey. When I asked him if he would like to contribute a guest commentary, I was not expecting the provocative tour de force that unfolds, step by step, below. In the essay, Will asserts nothing less that that the impending collapse of our economic system was meticulously engineered by financial and political sociopaths. Let me attest that his is not some whack-o conspiracy theory; rather, it is the closely-reasoned argument of a highly intelligent person who values truth sufficiently to have searched for it, in the form of an answer to a profoundly disturbing question, for many years. Judge for yourself whether his conclusions tally with your own thoughts as to why the American Dream is about to go bust. RA]

http://news.goldseek.com/RickAckerman/1284012060.php

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That's it for today...
I hope you enjoy reading these articles as much as I did!

Happy Trading!...
the zigzagman