S&P Volume Over 50% Below Average

Sometimes a picture is worth a thousand words, in this case, the magic number is 1.9 million shares below average.

On average for the month of August, the New York Stock Exchange(NYSE) had a daily volume of 6.03 billion shares traded, yesterday it was 3.4 billion. Not only did we have low volume, but the companies that are in the worst shape (ie. banks) led the rally that started Friday from the FED. As we predicted last week, the FED held off on officially announcing QE3, but did make sure to inject plenty of hope into the markets letting them know that the FED is ready to step in if things start falling apart. So the markets have already begun to price in a QE3 announcement later in September. believes that we will see QE3, but not until a crisis has overtaken the markets. This way the FED will have a mandate from the entire world to print to infinity.

We should note that rallies with light volume are very typical of a bear market rally. The fact that 99% of analysts are still up in the air about a recession is just plain silly to us, the U.S. is absolutely in a recession. Are we being propped up? Yes! The true question that should be asked is how long can things remain propped up until the illusion of normal implodes? The only people dumber than the analysts who are up in the air about a downturn are the ones that say we are NOT going into a downturn. We are swimming neck deep in the downturn, if it wasn’t for millions not paying their mortgages and using their ‘surplus’ to go to Chili’s and TGIF Fridays, we would already have Dow 5,000.

With the S&P closing above 1,200 for the first time in two weeks, this will be a huge case for the bulls to get back in especially with Bernanke saying he has their back. The only problem is that the U.S. is in a depression, the S&P closed up on light volume (no conviction), and the European crisis could blow up any day. In our opinion, investors should be very careful, sticking with long term trends, or fast breakout trades that are in the covering of a longer term trend in case a short term idea turns into a bad one. Either way, will be watching this market closely to bring our members any new updates that the media refuses to cover. We have two gold companies that we are dying to present to our members, but have decided to hold off for a few more weeks in order to see what the likely direction of the market is, we believe both these profiles have the potential to be major breakout plays that could have huge upside potential.

Economic Wheels Coming Off

Last Friday second quarter GDP was revised downward to 1%, keep in mind that the White House is depending on a growth rate of 4% in order to make due on all those big spending cuts planned for this year and years to follow.

More bad news for Bank of America! The FDIC has objected to their mortgage-bond accord due to a lack of information to evaluate the settlement. broke the story last night, however, the main stream media has been reluctant to cover any negative news regarding Bank of America, especially after the big Buffet news last week. No doubt Bank of America is debt man walking and is sure to be on the front pages very soon looking for a taxpayer bailout.

Ron Paul
The only presidential candidate who supports restoring a constitutional government, free market, and personal property rights asked if our mission in Libya has now been accomplished. From Ron Paul:

[su_quote] Are we better off as a nation by ignoring and debasing our Constitution? Are we better off having spent more than a billion dollars attacking a country thousands of miles away that had not threatened us? Are we more financially sound having expanded the empire to include yet another protectorate and probable long-term military occupation? Are we more admired throughout the world for getting involved in yet another war? [/su_quote]

Ron Paul is not only the only politician who predicted the current crisis we are in, but he continues to offer up solutions that most Americans can live with. America can save trillions if we stop policing the world, plain and simple. No matter what your beliefs are when it comes to entitlements and other government programs, not one penny needs to be cut from anything else until we stop blowing trillions in overseas entanglements that only lead to more ‘blow back.