Will the Dow hit a record high in 2011?

An even better question would be would record highs in the Dow reflect economic strength as implied in the commentary?

History clearly says no, but this won't stop the public from believing. It’s the unsupported belief that will prevent many from being prepared against the consequences of currency devaluation.

Could the Dow set a record high next year?

That question would have seemed crazy early last year when fear and panic enveloped the stock market and the Dow Jones industrial average plunged to 6,547 on March 9. Many investors thought it would take a decade or longer to get back to the record of 14,165, set on Oct. 9, 2007.

Now we could be on the verge. The Dow has soared 76 percent the past 21 months, and it would have to climb just 23 percent from Thursday's close of 11,499 to set a record

Source: finance.yahoo.com

Little Has Changed with The Execution of Controlled Operations Over Time

The Green Hornet says that the Cabal is working hard, but not making that much headway on the short of the euro play. That is the market saying the Wall Street Cabal covering as they now put their dollar short back on. It is free money when you control communications.

Jim

Jim,

Other than the names pulling the strings, technology used to communicate, very little has changed with the execution of controlled operations over time. Jesse Livermoore often discussed how bear pools controlled or plunged the tape in the days of the ticker tape. Independent thinking remains the only way to ID and defeat controlled operations and trade in sympathy with the secular trends.

This is illustrated by the absolute flushing of the "marks" by the sharks. The operation will weaken and terminate with the consumption of the paper fuel and adaptation to the market conditions by the various trading groups in the coming weeks.

Euro and the Nonreportable Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Eric

Headlines: Moody's Downgrades Ireland's Debt

Moody's Investors Service Inc. downgraded Ireland's debt to Baa1 from Aa2 Friday, warning the government's financial strength could deteriorate further if economic growth were to miss its projections.

The five-notch downgrade was made as "Ireland's sovereign creditworthiness has suffered from the repeated crystallization of bank-related contingent liabilities on the government's balance sheet," said Dietmar Hornung, vice president, senior credit officer at Moody's.

Source: online.wsj.com

Geithner says bailout will cost less than $25B

The hidden cost of currency devaluation, an aspect rarely considered in headline commenatry, will make the final cost far more expensive than any officially recognized number. The price of gold was roughly $750 at the time of bailout. Today, it's approaching $1,400 and heading higher. In other words, the financial bailout represented borrowing on the expensive while repaying on the cheap. From this vantage point, political success at least in terms of final dollar costs was ensured at the onset regardless of the economic results.

The eventual cost to taxpayers for the government's $700 billion financial bailout will be less than the $25 billion price tag put on it in the latest estimate, Treasury Secretary Timothy Geithner said Thursday.

The Congressional Budget Office's most recent estimate is that taxpayers will lose $25 billion on the rescue of automakers, banks and other financial institutions undertaken at the peak of the crisis in the fall of 2008.

Source: finance.yahoo.com

Gold Miners Are Raising Dividends

Agnico has boosted its annual dividend 256%. Of course, huge payoff for investors is met will selling as the options expiration game punishes those foolish enough to hold to maturity. Agnico is but one of growing list of miners increasing their dividends. History, as described by Homestake mining, suggests this trend remains in its infancy.

S&P Gold (Formerly Precious Metals Mining)*
*S&P Gold from 1945, Barron's Gold Stock Index from 1939-1945, 1922-1939 Homestake Mining:


Headline: Agnico boosts dividend; shares sag on cost worries

Gold miner Agnico-Eagle (AEM.N) announced a big dividend increase on Thursday and outlined plans to raise its gold output, but its shares fell on concerns about its higher than expected productions costs.

Analysts noted that Agnico's average production costs of slightly above $430 an ounce over the next five years were higher than expected, sending the shares down more than 4 percent in both Toronto and New York.

Source: reuters.com

Gold's Prospects Rosy in 2011 but Pitfalls Abound

Here’s a good example of the support of gold through the analysis of doubt. In other words, it's all good but watch out its not safe! Those lacking the ability to challenge the flawed assumptions presented as fact will have trouble overcoming the doubt. Meanwhile, the operators quietly pick their pockets with a smile and periodic commercial revealing the long-awaited return of the McRib sandwich. The secular gold bull will be over when the talking heads, numerous ‘experts’, and finally the public at large no longer see any “pitfalls.” If you cannot read the game, you cannot play it.

The second half of the year is harder to predict, with one potential setback coming in the form of surging interest rates in Europe and the U.S., he said. Much higher interest rates would push investors away from gold, which bears no interest, pays no dividends and thus carries an opportunity cost.

Source: finance.yahoo.com

Act Like a Jack Ass and You'll Always Get Treated Like One

Three taps and out on the gold stocks has created a significant breakout in the gold stocks. Rather than galvanizing investors resolve to hold their positions, it's obvious that weak hands can still be easily spooked out of their positions by 'timely' garbage analysis and news flow.

Over the years the markets have taught me this personal message,

"Act like a jack ass and you'll always get treated like one."

The stock operators, fully aware of the technical significance and potential of three taps and out, continue to relieve the weak hands of their positions. They are laughing all the way to the bank in the process.

Amex Gold Bugs Index 'HEUY' (HUI):

Jerry Brown: California Budget Is "Much Worse Than I Thought -- We've Been Living In Fantasy Land"

Europe has exclusive rights to ‘living in a fantasy land’ economics according the unrelenting news flow – apparently not. And, so goes the selective amnesia of the headline feed. I’m sure this news will find adequate coverage in California’s cooking sections of the printed media.

California's troubles represent yet another reason why the "Formulas" are beginning to roll over and Fed initiated QE2. Please review The Timing of QE Was No Accident for further discussion on this topic.

"The Formula" US Fiscal Balance vs US Dollar: Federal Government Budget As A % of GDP, 12 Month Moving Average:

You know it's a bad sign when the outgoing California governor announces a fiscal emergency and everyone ignores him.

Now incoming governor Jerry Brown has realized how screwed the state is and he's announcing his own budget emergency, according to the LAT.

He said last night: "I'm going to try to get the budget agreements done within about 60 days. I don't think we have a lot of time to waste... It will be a very tough budget, but it will be transparent... We've been living in fantasy land. It is much worse than I thought. I'm shocked."

Source: businessinsider.com