In this election season, there is a rumor going around that the government will enlist Fannie & Freddie to start buying up all the bad real estate debt from banks. This scenario is being given serious consideration in the Democratic-run halls of Congress.

This is a tragic idea and be the epitome of what not to do. This would cost taxpayers trillions, bail out the banks who misallocated their capital and not do anything for underwater homeowners. It would be the “Ultimate Bank Bailout” at the expense of exactly everyone else.

Instead of buying the debt and bailing the banks out at the taxpayers expense, force the banks (the investors) to renegotiate the debt in return for allowing them to “write off” the negotiated loss. This will force banks to end “extend and pretend” and bring forth those who can and will stay in a more affordable house, and who will vacate. It will afford true price discovery and virtually eliminate this problem nationwide.

If the banks don’t want to undertake this effort, they must “Mark to Market”, immediately. They don’t want to do that because most are technically insolvent.

This is the answer. Don’t spend another dime of taxpayers money “helping” the banks who misallocated capital.

Bernanke, Geithner, Obama, are you listening?

Over the past few weeks technology stocks have risen, phoenix-like, from the grave that is tomb-stoned “Here lies the death of the PC”. Analysts were busy downgrading every pc and ancillary tech stock AFTER they all fell 30-50%.

My work said they should be bought, not sold.

Nevertheless, few bought anything because they were going bankrupt, never to sell anything ever again.

Now, just a few weeks later, everyone wants to jump onto AMD and AUO and WDC and LOGI and NVDA etc.(all reco’d by CreateCoin Premium at much lower prices). But in doing so, you will pay up 10-30% or more.

Why did you wait? Is it because you didn’t believe me? Because Dr. Fly didn’t endorse the trade? I’ll tell you why you waited; because you wanted movement first. You wanted action and the potential for immediate gratification. You are a teen-aged, ADHD’d, video game/momentum junkie and you are living in a market environment that hardly exists except in your memory.

Get with it. Extend your time frame. Don’t chase. Buy during weakness or in consolidation. And there is one coming up just ahead…

What are you waiting for now? A Royal  Invitation? CreateCoin Premium

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The breakout is only marginal, so far. But looks like a “sure thing” as the quarter ends and begins anew…

Since the first moment of September’s trading, virtually every equity index and commodity has raced higher. If I knew nothing about anything I would say that a new Bull Market was being birthed. But maybe I know too much…

Anyhoo, the fundamental backdrop of the country,economy and markets remains the same as it was two months ago when the market was on the see-saw. Yet something has happened.

I love to hear the perma-bulls or perma-bears on TV. Most have not a clue as they are mired in indicators that went stale in 1999. Markets have changed a lot since straight-up technical analysis worked as the primary trading tool and mechanism. Take your “Edwards & Magee” and throw it away, because it needs a re-write.

Sentiment readings mean nothing because most every marginal investor is out of the stock market. Speculators have given up. Pimco has their money in safekeeping. The only folks left are the long-holders. the prop-traders and the algos. The long holders must have equity exposure as per their mandate. Even if the sun went Supernova, they would not sell. The prop traders will trade whichever way the wind blows and they will spin on a dime. They don’t give a shit about fundies or anything else for that matter. They are just trading against their customers (just my opinion!). And the algo’s trade off of Forex, period. So who’s left? The doom and gloomers.

They know how miserable everything really is, because they are “realistic”. They know the market is rigged and that prices are unsustainable. It’s all a sick joke and Zero Hedge has them digging their bomb shelters.

Listen, I’m sure we humans will kill ourselves one day. But that day is not today. Nor will it be tomorrow. The stock market has spent six months consolidating and driving out the marginal stock investor who has simply given up.

There are still October hedges out there that must “burn” like September’s. It is the end of the quarter. It is about to be earnings season. It is the historically best time of the year. The election is close. The yearly highs are in sight. The coast is clear.

You should be positioned for this as it has been all we’ve talked about for months. Now that you know, it’s time to begin thinking about how this ends. But we’ll save that for another day…

Sometimes the best winners are the biggest losers…It is all part of “Market Reality”…

Dr. Fly and I will be sharing some lightly salted popcorn today at the opening of Wall Street II. Look for me and you’ll see him too!

I’ll be the one with the Zircon Encrusted Tweezers by my side, ready to pick off any errant bedbug…

See you at the Zigfeld!