Tuesday, March 10, 2009
(Cont'd from above)...

Jim:       Now, before I get into this analysis, I just want to point out that he made the call about Bank of America Monday… before the market opened today… before the huge moves… but it is based on the technicals… now he does think that you could get a pull back between $3.95 and $4.25, okay… I just want to tell you that I think Rick is really telling you to buy… so far, he has been right about the rally… but even after today’s 28% move in Bank of America… this is still a pretty bold call, to stick with it…. aren’t we lurching towards nationalization of the banks because the administration can’t take control of things from the shorts… isn’t Bank of America the worst of them after Citigroup… aren’t all the banks going down in the flames… that is not what the charts say… not at all… the charts are flashing bullish… according to Bensignor.

Look at Bank of America’s weekly chart, okay… now, Rick’s stuff is the hardest… the hardest that I have seen of the technicians… we are going to try to make some sense of it… what makes him think that Bank of America is going higher… okay, normally chartists spend their time trying to identify trends… once they find a trend they then try to make money by following it until it breaks down… that is now what Bensignor is doing… he uses something that he calls the Demark Models, it is very mathematically complicated… but the long and short of it is that technicians use them to figure out when a trend is going to break down… Bank of America has obviously had a huge trend down, but these models say the trend down is over… how does it work… the horizontal lines are the lowest low from the green colored number nines… I know this is really hard stuff… these are used as a bench mark to define a trend… the nines pop up on the charts when you get nine consecutive price bars that are above the close from four bars prior… as you can see… the stock often turns when that point is reached… when ever the stock exceed those nines then a new count called the count down starts in red, alright… I caution that this is hard, but it produced a win so we are going to go over it.

When it gets to thirteen by closing thirteen times above the highs from two bars before, that is another time when you will see another trend change… right now Bank of America’s chart is showing both a thirteen down, which indicates that Bensignor thinks the down side is exhausted… coupled with a green nine down, which means that it is a potential turning point… all which leads Bensignor to think that Bank of America could go back to the double digits… which is the take away… the only reason that I went thru all of this is that he thinks it is going to double… if you are confused, Bensignor, well let’s just say that it may not make any sense to you but it sure makes dollars for hedge fund managers… that is why I wanted to clue you in… a lot of you have asked for the most technical stuff in the emails… this is the hardest, like I said, but I wanted to give it to you.

Alright, how about the broader market… let’s look at the broader market alright…. the S&P 500... how did Bensignor know that we would rally today, and why does he think that it will continue… here even the people who follow these complicated Demark models have been throwing in the towel… as the daily charts keep throwing up buy signals based on the moves down, and instead of working the market just went down again the next day… this is what Bensignor wants to see, because so many professions on the street look at these models they needed to copulate before we could get this major move… how legitimate how are models… the bear market in 2002 happened in nine down on this chart… it predicated the trend downturn would end, and that is what happened… we still haven’t reached the same levels based on these models that we did in 2002... so we are not talking about a long term bottom… and that is important… but based on the chart Bensignor thinks that we are likely within 10% to 15% of the lows… and he thinks this rally in the S&P could take us to the upper 700’s… remember the real take away to this is that he thinks Bank of America could double and that the S&P has a big move ahead of it… these are pretty bold calls based on the technicals, even after today’s moves.

What do I think of them…. alright, the market is in the hands of the banks, and the banks are in the hands of Washington… the charts are saying that Geithner and Obama will suspend mark to market accounting… they are not necessarily suspend it though, what I think they will do is massage it, make it not as severe… and there is a big hearing in the House on Thursday… and I think that they can end the terany of the shorts, by bringing back the Uptick Rule… that means that regulations will loosen, and banks won’t be prisoners of the shorts anymore… and don’t forget the shorts shoot prisoners… if that happens then Bank of America should take it to the big mark to market show… it is definitely the best way to play it… although I would much rather buy it on a pullback rather than on today’s big move… but if the stock could go to $6 or higher, if they just kind of shave mark to market, make it mark to market light… that’s been killing the banks… and show them some forbearance, you have got a big move… this means more to Bank of America than any of the others… and don’t even talk about how high this one could go if they bring back the Uptick Rule and ban malicious short selling and the SKF… so if Geithner and company could craft a plan that gives the banks the time they need to work things out… if they stop the raiding agencies silliness… if they hand the banks a full faith in credit note for capital they need in return for a note promising to pay it back, as per the forbearance plan… so that the stocks aren’t worthless… then Bensignor is going to be so right… he is going to be so right… but this is a big but… if instead we get the Geithner that we saw on Saturday Night Live, the indecisive one that changes his mind every second… then I think that Bensignor is going to be dead wrong… and Bank of America will end up looking more like Citigroup.

Now, given how important the bank stocks are to the whole market… we can’t rally without them… this means that everything is riding on Washington, and not on Wall Street… so Bensignor’s market call depends on the same things as his Bank of America call… he will be right if Obama changes his mind on demonizing the bank policies and Geithner does the right thing… and he will be dead wrong if the administration stays the course, and Geithner continues he is from the Waffle house, not the White House.

Bottom line…

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