Here is how I feel about the YAHOO news through my public tweets…

Eleven seperate tweets. Am I pissed? I hate that my patience has been wasted.

Wow. $YHOO First the rebuff of Microsoft and now losing AliPay. Another great job by the board. So glad to be a shareholder.

Their board has proven, once again, that all the doubters are correct. This is why it is the cheapest internet stock, extant.

It’s not Bartz or any management structure. Its the Board of Directors. They lost AliPay months ago and are disclosing it now.

$YHOO. You got me. I’m done if it breaks 15

$YHOO: incompetence of the highest order. The Board of Directors should be relieved. The company should commit ritualistic suicide.

$YHOO how could a company of this magnitude get so hoodwinked?

$YHOO: separate out Yahoo Finance and blow the rest up or flush it into oblivion.

$YHOO: I am flabbergasted

Don’t worry, $YHOO won’t die. It’s like the Frankenstein monster.

Nobody is arguing about the parts. Just the sum of the parts. And the Board of Directors

They were beginning to manage better. But the Board screwed the company over once again with its incompetence .

Last year, 2010,  witnessed a ribald stock and commodity run into the month of April, when the $1.75 trillion QEI ended. It coincided with an indictment against Goldman Sachs and began a summer-long correction, where green-shoots died and the prevailing perception was that the market “just had to crash” when summer ended. Obviously that is not the way things turned out.

Uncle Ben rode to the rescue with QEII and both equities and commodities were off to the races. It was one of the greatest one-way six months in market history. Every one’s 401k’s were up 20-30% almost regardless of what they owned, as long as it wasn’t short. He wanted asset price inflation and it was bought and paid for with a $7B injection of funds almost each and every trading day.

We are now at the tail-end of the second market/asset rescue package and prices of many non-real estate assets have run significantly higher. The fact is that Wall Street and small speculators are conducting themselves in exactly the way Uncle Ben wants us to; to keep bidding up prices until confidence comes back. It has been the plan all along. But it has gone too far in price to the point of demand destruction in virtually all soft or consumable commodities and has spilled over to everything except real estate, with silver being the most exciting. Its volatility is breathtaking and stealing most traders attention.

Regardless of commodity prices, we have been told (with confidence) that inflationary forces from skyrocketing prices are “transitory”. How do they know this? Because without slowing the stimulus in any way, “they’ve” simply upped the margin requirements for commodity products in order to flush highly-margined and vulnerable speculators. Though you need 50% margin to buy a stock, it is much, much lower for most every commodity. Silver margin has been raised five times, yet it is only at 12.5%. And you wonder why commodity traders make more than anyone, or flame out quickly? Massive leverage. 

Over the past two weeks there has been firey tumult in the commodities markets as the most speculated-on products, silver and oil, have moved sometimes 10% in one trading session. And most other soft commodities have been selling off in a significant percentage. Some of the bobble heads on  TV will tell you that it is all linked to the economy and future events. That is a huge load of bullshit. Almost zero of the market moves are linked to the economy. Virtually all market moves are linked to the markets and nothing else. Commodities wild rise does not mean that the economy is on fire and its subsequent fall does not mean that economic activity is slowing. No, you can infer nothing but stimulus, liquidity, and position posturing in almost every market move. Fundamentals play only the smallest role in the big picture. Same as last year. And just like last year, Goldman Sachs is the target of the government. Coincidence?     

The experiment of stimulus will not fully end when QEII is over. The game will not end so quickly and that is what the current “adjustment” is all about. Even with the commodity correction and a pause in the equity market, we could sprint to test the yearly high and get everyone leaning the wrong way. But certainly there has been damage done to the major indices and most certainly the commodity complex. The trade was so easy, that everyone is “in”. It is time for all markets to chop into the usual summer slowdown just like last year.

Some say the economy is on the mend. That is not really true. It is as warped and twisted as the financial marketplace, thanks to our Central Planners who operate the strings to the puppet markets.

With all the action–especially in commodities–over the past week, something feels amiss. Up 5%, down 5%, up 10%, down 10%. All in a day. Day after day. Is it demand? Is it purely speculative? And what does it all mean?

The deal is that leverage requirements are still too low because levered speculative traders continue to bring big volatility to the wild-swinging products like silver and oil. Sure, there remains a delivery problem for silver, but the commodity flash-crash last week could happen again at any time. And the specs who buy the dip may get burned. If that happens, watch out as prices will go back, in silver, to where it all began. Sure, today looked fine and dandy but you had better pay attention.

As far as stocks are concerned, they are simply treading water. Some exhibit higher than normal levels of volatility but other than silver stocks, things are range bound if you can believe that.

As an update to our February 17 warning on copper, here is a follow-up. It began to fall that day and has been slowly declining, down about 13% during the past three months. It may not have the trading-volitility of silver, but is far more important to the China/Industrial Complex. Take a careful look at major support and resistance.

The “powers that be” were unusually busy this week. They had to turn things quickly while maintaining the status quo. And their success is based solely on our lemming-like desire to keep the game going.

Everyone knows that the equity and commodity markets have been levitated by QE, POMO, etc. Just look at JPMorgans perfect quarter. Every dip has been bought because of the implicit guarantee of money pumping liquidity, period.

But commodity prices threatened the whole ball of wax. With most every commodity doubling since the start of QE last year, demand destruction was hurting everyone. So “they” tinkered with the structure of trading through liquidity and leverage in order to take some of the speculative edge off prices. They were successful with several of the “hot” trading vehicles losing upwards of 10% in one day. Do you think that markets react this way “naturally”? Unprecedented.

This dulling of the speculative ferver, if allowed for more than a very short period of time, would soon bleed into the equity market as the margined and speculative players raised cash to cover the change in the game. And if the stock market dropped for more than a few days, confidence would get hit, the recovery would die a quick death and deflation would take hold of asset prices. Newly confident individuals and other investors would be bagged. Spending, hiring, investing would stop and anger would seethe from downtown Manhattan to the Upper West Side. Everyone knows this cannot happen, yet.

So here we are. We’ve made back almost all that was lost in the equity market during the week yet we remain near multi-year highs. And the “edge” has come off of the hot commodity prices. Once again, the major indices held above their latest breakout levels, just like almost every pullback in the past two years. Virtually all primary trends remain intact. We are back to the same old big pre-market run and then low-volume levitation in the stock market.

It has been an emotional week for the market with chest thumping on all sides. But the warning shots have been fired.

So, the best “news” the free world has received in the past decade, the death of OBL, was the trigger for a vicious sell off in the market’s leading sectors. Sure, silver was parabolic, margin requirements were raised five times, etc. But look at the entire commodity complex. Do you think leveraged speculators are responsible for insane prices not related to supply/demand or are we simply Bernankes puppets just doing as we’re told?  Think about that for a second. 

After last weeks Bernanke presser, everyone was convinced that the primary trends that were underway would continue past the extremes they were already reaching. But clearly prices were at demand destruction levels and the momentum buyers/chasers were the bagholders. When something goes parabolic, no matter how awesome it looks, it is time to sell, not to buy. Try and remember that the next time nasdaq/housing/commodities/anything moves straight up. 

The conspiracy theorist in me wants to say that the powers that be decided to put on their “Whip Inflation Now” pins and manipulate prices lower. While a bit of that may be true, I bet some truly smart money has been liquidating throughout the latest extension of the parabola in prices as they are unsustainable. Of course, the change in trend brought everyones trigger finger to bear and this weeks selling is as historic as the previous weeks upside party. To find major support, simply calculate one-third to one-half of the recent gains as your first and second buy/cover level if you are a “roulette” trader.

On the equity front, the major indices broke above a double top and has appeared to have broken out. But it may very well be a “Wyckoff Spring” (look it up) when everyone leans the wrong way before a vicious reversal. Interestingly, almost every reversal and pullback over the past two years has stopped at the latest primary breakout and the uptrend has resumed. A major top or bottom is made when the index/equity/commodity in question moves briskly and in a substantial percentage away from the top or bottom. So far that has not happened yet but what makes this pullback different is the broad draw-down of most leadership stocks. That is clearly a warning for the future performance of the overall indices.

Our strategy has been to be long mostly boring stocks. While most folks are now walking around like zombies because they are down  30% in silver in a week, my Intel (long at 18) is doing just fine, thank you very much. As the market corrects I will have a few more of those low-risk, boring stocks to buy and look to quietly make 30% over the next several months. My one and only prediction for this year is that it will closely resemble last year in its technical picture. So far, so good.