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ES Morning Update September 26th 2016

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Good Monday Morning everyone.  The futures are down a little this morning but they seem to be finding support at the horizontal trendline from the prior tops in the 2145 area.  If they lose that level today the next good support is around 2130 from the lower rising trendline, which happens to be the bottoms back on the 19th and 20th.  Considering that it's a Monday, which usually means light volume as traders get back to work from the weekend, I'd lean toward the 2145 support holding today... but I do think the market wants to go lower, like closer to that 2130 rising trendline.  Why?  Because there's not much support in the SPX/SPY at this current level.  For example, when you look at the SPY the best support is about 1 point lower (10 points lower on the SPX cash and ES futures) in the 214 area.  I think at some point it will be hit.

Ok, for the upside it looks like the MACD's are trying to turn up here this morning but I'm not so sure they will so... at least not right at the open.  Maybe late in the day I guess but they might drift lower early on.  The question then will be... is the price level of the futures going to drift lower and break current support or just chop around the 2145 level above until late today?  I'm leaning toward chop from the 2145 support up to the horizontal resistance (previously support last week) around 2156... which now you can see a new falling trendline that's pointing right at the same level.  If we bounce between that zone today and end up closer to the resistance the MACD's could turn up and be overbought at that point, leaving the futures ready to rollover again.  If that scenario happens then we could see that drop to the 2130 area on Tuesday, which should put the SPY in the 214 area where's there's a lot of support.

So that's it for today, I'm keeping it simple.  The futures should bounce around from about 2145 to 2156 today from what I see.  If the MACD's get overbought at/near the close and we are hitting resistance around the falling trendline in the 2156 area, it looks like a nice short into Tuesday.  If for some reason we fail to hold the 2145 support and drop to the 2130 level today by the close then it's likely a long into Tuesday as the MACD's should be quite oversold by then.

ES Morning Update September 23rd 2016

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The futures are pulling back some this Friday morning but so far they are finding support at the higher rising trendline I mentioned yesterday.  If they lose that support then the next level down is the 2156 horizontal area where the bulls must hold the line if they plan on rallying up next week to make another new all time high.  There's a second rising trendline that's pointing to around the 2150 right now at the close but should rising into that 2156 horizontal level by next Monday I'd guess.

Over the last week or I speculated that we'd go up and make a slightly higher high of 10-20 points as this period looked similar to the Aug/Sept period in 2014 where the market pulled back briefly after a long sideways narrow trading range broke-down.  It then ran up over the magnetic 2000 level to top at 2019, and of course take out all the bears that were shorting thinking there was too much resistance at that 2000 level.  The same thing could happen here but it doesn't meant we'll see it go straight up.  Pullbacks are still expected and today we should see that happen.

Now, the big question will be... will the market repeat the 2014 pattern and make a slightly higher high or is the top in and the next 50-100 SPX points are to the down side?  It's too early to answer that as first we need to see the 2156 support tested I think.  That should be the line in the sand where the next move up from that level will either take out yesterday's high and make a run to new all time highs or fail and rollover to drop back down to test that level again, and more then likely break it on that move down.

The worry for the bulls is based on seasonality I think as September and October can be scary months for the market, usually producing corrections and crashes.  But we have also keep in mind that weird things have been happening in the market this year as crazy mini-crashes come out of nowhere and then get completed reversed in the weeks that follow.  This must be the only way they can keep the market from crashing I guess?  Just drop it hard and get it extremely oversold so you can reset the charts back to bullish again after exhausting the bulls over the prior weeks and months in front of those mini-crashes.

Then there's the Hillary card... which as we all know is who the elite want to be elected as their next puppet.  She is fully under their control and takes orders well, while Donald does whatever he wants.  We all know the elections are rigged but I guess they still have to play the game of trying to make the public like Hillary, even-though they already have her setup to win regardless of fact that Trump will likely get more votes.  It's all just an illusion for us sheep to have something to talk about so we can be distracted as they steal our money through a dozen different methods.

Anyway, for the market today it's all about that higher rising trendline breaking or holding I think.  A failure to break keeps the bulls in full control and should lead to a sideways to slightly up day (chop mostly), but if it breaks the bears get ball back.  However, it's on their own 10 yard line... it's long ways to go to score a victory.  They need to take out that 2156 level I think or else they'll just give the bulls back the ball on the bears 20 yard line... not good in my view.  If I were a bear here and already short from yesterday I'd exit at the open as my gut says the bulls are going to hold that line today.

I don't see some big rally as that looks done now.  Yesterday and the day before were the biggest moves I think.  Today should be chop or a breakdown (with a goal of hitting the 2156 level... for the bears I mean).  Just keep your eyes on that rising trendline as it's the key to the next move I think.  Late in the day it might fail, but early this morning looks to be bull controlled.

ES Morning Update September 22nd 2016

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Looks like the "WV" pattern worked out after all as the futures held the rising trendline to make the bottom point of the "A" and then rip up after the FOMC meeting toward that 2160 target.  They've hit 2166.50 this morning so far and look like they want a double top or new all time high.  Considering that we had a nasty drop on 9/9 to clear out a lot of the overbought conditions popping through the all time high should be easier this time around.  But they are overextended today and should pullback in the afternoon session and erase some of this mornings' gap up.

Support is at the higher rising trendline pointing to about 2162 by the close, then the horizontal trendline around 2156 where the market stalled out at last night afterhours and chopped sideways putting in a bull flag.  Upside resistance... well, we are at it right now and banging hard on the door.  This looks like some kind of 5th wave up to end the rally but it's hard to know for sure as counting waves to forecast the future has rarely worked for me.  There are just too many alternate counts I guess.

Anyway, what I think is happening right now is that all the bears' stops are being hit... which when it's finish leaves no more fuel for this rally.  This is why I think we'll drop back after this mornings' exhaustion move tires out.  I'm looking for a "topping tail" candle pattern on a daily close today.  We are in a tough range here as that magically 2200 level is just within the bulls reach again and they could get it this time around.  It's just that this the month of September and near the end of it too... which is usually a bearish month.  If the market was making a run for this 2200 level back in June or July I'd give it higher odds as those months are usually more bullish months.

Yesterday near the close of the day I said that there was high odds of down day today and a possibility of a gap up first.  We'll are getting the gap up but I have to second guess my call now for a red close.  I think the best way to play this today is to let this rally exhaust itself and look for it to rollover and break the higher rising trendline pointing to around 2162 right now.  If that happens later in the day then we might get our topping tail candle, which should lead to more downside on Friday.

For now I just want to give this market some time to figure out if it wants a new all time high, double top, or lower close before shorting it.  I thought about it yesterday as I was expecting a down day today, but I decided to wait as I knew there was a possibility of a gap up like this first... then a pullback into the close.  So again, this is a tough call here... I'd just sit on my hands and see where it stops today.  We had a good run up yesterday as that "WV" pattern worked out great, so hopefully everyone made some money on that call.  But today I might be getting this call wrong.

WARREN BUFFETT: I won’t comment on the Wells Fargo scandal until November

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Warren Buffett is waiting until after the election to weigh in on Wells Fargo.

Buffett told Fox Business' Liz Claman that he will not comment on the bank's scandal until November. Buffett is the largest shareholder of Wells Fargo and recently petitioned the Federal Reserve to increase his ownership stake above 10%.

"If I start commenting on that or anything else, it will lead down too many paths so I will wait until November to speak about it, the election or any other subject," Buffett told Claman.

Wells Fargo recently settled with regulators for $185 million after it came to light that employees had opened around 2 million accounts without the knowledge of customers. About 5,300 of the bank's employees were fired as a result of the scandal.

This has led to a Senate hearing and calls for the resignation of CEO John Stumpf, most notably by Sen. Elizabeth Warren.

Despite the growing scandal, Buffett will remain silent for now.

Wells Fargo has one heck of a scandal on its hands

wells fargo john stumpfWells Fargo CEO John Stumpf endured a nearly three-hour questioning from the US Senate banking committee on Tuesday.

Stumpf was constantly taken to task by senators, both Democratic and Republican, for the scandal in which Wells Fargo employees opened roughly 2 million checking and credit accounts without customers' knowledge.

During the financial crisis, Wells Fargo was generally thought of as the bank that got off looking the cleanest.

The bank had few bad loans, as it managed to maintain comparatively strong lending standards that kept it out of the worst of the crisis and allowed it to acquire the troubled Wachovia.

In 2016, however, Wells Fargo and CEO John Stumpf find themselves in the middle of the perfect storm of Wall Street scandals. After Tuesday's Senate hearing, it has become clear that with an easy-to-understand issue, a political firestorm, and missteps by the bank that exemplify Americans' worst notions of Wall Street, everything that could go wrong for Wells Fargo did.

It's an easy-to-understand scandal

Since the financial crisis, which focused America's microscope squarely on Wall Street, there have been a number of scandals, but Wells Fargo's is different. For Wells, the transgressions are simple, and its an easy line for Americans to draw directly to their own financial situations.

For instance, it may be hard for people without a reasonably intimate knowledge of the financial system to understand JPMorgan's "London Whale" trading scandal in 2012 or the Barclays Libor-rigging scandal in 2014. Even the most popular explainer in recent years of the financial crisis — "The Big Short" — had to employ non sequiturs with celebrities explaining ideas like mortgage-backed securities and credit default swaps to communicate how it happened.

On the other hand, Wells Fargo's scandal deals with checking accounts and credit cards — financial instruments that nearly every American has. When people understand how the scandal affects them, it makes them less likely to ignore the problem.

Millions of people in the US have had to get a credit check for a mortgage, so when senators suggest that Wells Fargo employees opening and closing a credit card without a customer's knowledge may affect a credit score and lead to a higher interest rate, it's simple to understand the direct ramification.

It's a Main Street scandal with a Wall Street face.

Caught in the middle of politics

Not only is the Wells Fargo scandal easy to grasp for the average American — it's a slam-dunk issue for politicians as well.

In an election season marked by increasing partisanship, it was certainly an odd sight to see senators from both sides of the aisle agreeing with colleagues from the other party and attacking Stumpf relentlessly.

Democrats like Elizabeth Warren, who called for Stumpf to be criminally investigated, and Republicans like Richard Shelby, who said that the bank has seriously broken the public's trust, both seemed to be in agreement (to varying degrees) that there was significant wrongdoing at Wells.

Senators also spent a significant amount of time reading letters from constituents about the effects of the scandal on their own lives, which not only looks bad for Stumpf and Wells Fargo, but also allows the politicians an easy opportunity to prove that they are working for the people who elect them.

So you have an easy case for politicians from both parties to look tough and bipartisan, and as though they're working for their constituents. Given all of these dynamics, it's simple to see why Stumpf was so thoroughly raked through the coals.

A tough tightrope

Stumpf also has a difficult task before him: showing that he is accountable without bearing the brunt of the blame.

Essentially, Stumpf's argument is that he accepts responsibility for the scandal, but that senior executives did not create a culture that encouraged the type of behavior that led to employees opening 2 million false accounts.

Part of Wells Fargo's success over the years has been its ability to get existing customers to sign up for new products — a practice called cross-selling. Stumpf has long lauded cross-selling as a reason the bank had been so successful (as Warren brutally pointed out by reading transcripts of earnings calls in which Stumpf touted the tactic).

Included in this cross-selling, however, were incentives for lower-level employees to sign people up for new products. Throughout the hearings, senators described a "pressure cooker" environment in which employees were forced to meet sales targets or face discipline.

Stumpf has said that the culture was not to blame and that employees were not pushed to oversell, but the bank also suspended these incentives for employees following its $185 million settlement with regulators.

Wells Fargo

It's a tough line to walk, especially while testifying for hours at a time, and Stumpf certainly stumbled a few times, saying that the actions weren't "random." It also opened Stumpf up to tough lines of attack from senators — that he was laying the blame on struggling employees who were trying to make aggressive sales targets to get by.

Thus Stumpf has to defend the bank's overall culture while explaining how over 5,000 employees violated that culture over multiple years.

By having to accept responsibility while not implicating himself directly, Stumpf has created a nearly impossible situation.

An easy target

Finally, Wells and Stumpf have to defend the entire pay structure of Wall Street.

Carrie Tolstedt, the head of the community banking division, was the executive directly responsible for overseeing the retail banking sector of the company, where the fake accounts were created.

In July, Tolstedt retired from Wells Fargo, holding roughly $96.6 million in various stock awards. Numerous times during the testimony on Tuesday, Stumpf was asked why Tolstedt wasn't fired and whether the bank would use its clawback provision to take back some of that compensation.

To be fair, stock-based compensation isn't new — and it's used in many industries like banking, tech, and media — so it's not as if how Tolstedt was paid is out of the ordinary. Additionally, the level of compensation is in line with the ordinary for a senior banking executive.

But in an environment in which income inequality is becoming an important issue, and when Stumpf talks about the 5,300 employees who were fired from "good-paying jobs" were making $37,000 to $60,000 a year, the size of Tolstedt's compensation raises eyebrows.

It looks terrible for the bank, and, as Warren said, it appears to her as though "a giant bank cheats the little guys, and the executives line their own pockets." Even if the stock-based compensation is a standard for many industries, the compensation is a public relations nightmare and another headache for a bank that already has plenty of them.

So you've got an easy-to-understand scandal that directly affected hundred of thousands of Americans, a slam-dunk political target in an election season, and a poster child for frustration about Wall Street's pay.

ES Morning Update September 21st 2016

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The futures went back up to retest that 2145 horizontal trendline of resistance last night and this morning it seems.  But they failed to get over it and have since pulled back some.  It looks like a "W" to me, which usually makes a "WV" pattern (which is bullish), and that's the opposite of an "MA" pattern (which bearish).  The left side of the "V" appears to be forming now on this pullback.  If it finds support at the new rising trendline I just drew this morning, and doesn't take the 2130's double bottoms (which make the bottom points of the "W") then the next move up should be to make the right side of the "V", and this pattern suggests a move up equal to the move down to make the "WV" pattern.

Basically from the 2145 high on Monday to the 2130 area lows we have about 15 points, which would be added to 2145 to get about 2160 as the projected move on this pattern.  However, if the 2130 area lows are taken out on some wild swing low (possibly from something the Fed's say or don't say?) then the pattern is invalid.

As far as the technical analysis part there's no clues there as again the MACD's aren't showing anything that could forecast the next directional move.  From a wave count (Elliottwave) there's no clear count that I can see.  So patterns, past history and gut is about all you can work with today.  The past history part tells us that most Fed day's close green and usually near the high of the day.  This is more accurate when the market is going down into a meeting, but it's been mixed into this meeting... not really up, nor down, just choppy.

The polls out there are saying there's a low chance that the Fed's will raise interest rates, but that really doesn't mean anything.  We all know they are trying to hold the market up until the election because they want Hillary to win and that's the only reason it hasn't fell off a cliff already.  But it is what is and we have to play the hand dealt to us.

So let's keep it simple and look for that rising trendline of support to hold today and watch the WV pattern play out with a rally into the close to around the 2160 area (notice that's just a hair over the 2155 prior high?... SkyNet taking out those stops!).  If the pattern fails then there's just no play that I can see until things settle down either Thursday or Friday as today's close will be important to see first.

A panic move down that takes out the recent 2130 area lows could go low enough to turn the market back up Thurs/Fri for another attempt at making a new all time high.  I don't feel like that will be the case here but it's possible.  Naturally this assumes no interest rate hike or and surprise comments, as either of those could cause nasty drop for several weeks.  Right now I'm just watching closely to see if they can take out some overhead stops on a rally into the close to end this bounce from the 9/9 low.

Donald Trump: The Federal Reserve Is Rigged!

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After an economic speech in New York, the GOP nominee said for the second time this week that the Federal Reserve is a tool of the Obama administration—a claim economists have widely panned.

NEW YORK — It was classic Jekyll & Hyde Donald Trump.

After delivering an economic speech from a teleprompter promising a lofty 25 million new jobs in the next decade, Trump sat down for a brief Q&A at the ritzy grand ballroom in the Waldorf Astoria, during which he made a peculiar unscripted observation.

“I think the Fed is being totally controlled,” Trump said in response to a question about interest rates. “They’re not raising rates. And they’re being controlled politically.”

His suggestion, that the Federal Reserve System, which operates as an independent agency, was rigged by the Obama administration to allow the president to look successful as he leaves office this year, is as strange as it is false.

“It seems to me that Mr. Trump is trying to bend the narrative about the economy in a way that will promote conspiracy theories,” Peter Conti-Brown, a professor of legal studies and business ethics at the Wharton School of Business (Trump’s alma mater), told The Daily Beast.

And, as with many Trump’s outlandish statements, it’s not the first time he’s made the claim. But given the crowd he was speaking to—The Economic Club of New York, a who’s who of top business and finance executives—it was particularly puzzling.

In a phone interview with CNBC earlier this week, Trump said that U.S. Federal Reserve Chair Janet Yellen should be “ashamed” of what she’s doing to the country financially and that “she’s obviously political and she’s doing what Obama wants her to do.” He has not provided any evidence as to how the president could be putting pressure on her to do this. What’s more is that in May, he told CNBC that he was “for low interest rates, and I think we keep them low,” adding to the utter confusion surrounding these remarks.

The U.S. central bank has only raised interest rates once since cutting them to zero in response to the 2008 financial crisis. It has indicated that there might be a rise of .25 percent but that the rate of growth would be slow in the future.

In the immediate aftermath of his remarks on CNBC, Harvard professor and former Treasury secretary Larry Summers said Trump had absolutely no idea what he was talking about.

“I have my differences with aspects of Fed policy. But Trump is talking nonsense,” Summers told Politico. “Janet Yellen is the least political person in Washington. The Fed has been driven in its decision making by the reality that we have been below target inflation for eight years and inflation expectations are falling. That, not politics, explains the Fed’s choices.”

Conti-Brown, who wrote a book entitled The Power and Independence of the Federal Reserve, added that skepticism about the functioning of the institution is a good thing but that Trump’s remarks amounted to blind guesswork. But the danger is that it could be an effective argument.

“If Donald Trump purports to identify a villain responsible for economic hardship and you are somebody who experiences economic hardship, his message resonates with you,” Conti-Brown said.

A key facet of Trump’s rhetoric overall is hinged on sowing distrust in major institutions and in turn saying that he alone can fix them. He peddles conspiracies with ease and frequency and even proudly took credit for a recent poll indicating that the public trust’s of media was at an all-time low. Trump has also often suggested that the election will be rigged, a mantra that has led many of his supporters in recent polling to believe that a Hillary Clinton victory is in fact false.

The freewheeling nature of Trump’s response to these questions undermines his ability to remain on message when teleprompters are no longer around.

And once again, as has been his role in the past, vice presidential candidate Indiana Gov. Mike Pence attempted to clean up the controversial statement during an appearance on CNN later in the day.

But he fell short of agreeing with the unfounded claim that Yellen was manipulating the system to benefit the Obama administration.

“I think it’s hard to understand why the Fed continues to advance policies that really work for hedge fund managers on Wall Street, here in New York City, but really aren’t working for working families on Main Street,” Pence said. “I think Donald Trump is saying that it’s time that we brought forward the kind of economic policies that will allow interest rates to return to a rational point.”

Trump’s stance on the issue, outside of recent assertions of a political conspiracy, are confusing at best.

As recently as April, Trump asserted that low interest rates were a good thing.

“The best thing we have going for us is that interest rates are so low,” he told Fortune just five months ago.

This kind of waffling on key issues underscores the freewheeling, and sometimes hollow nature, of Trump’s campaign.

And even as he can hold his own as a candidate with a script in front of him, the true Trump comes out when the teleprompter disappears.

Federal Reserve Meeting This Week: No Action Expected

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Analysts and investors are generally not expecting the Federal Reserve to raise its policy rate of interest this week.

The latest speech by a Federal Reserve Governor, Governor Lael Brainard called for prudence in considering any interest rate increase at this time.

Review of the Fed's balance sheet seems to indicate that Fed officials have not been preparing the banking system for such an increase as it did before the December move.

The Federal Open Market Committee of the Federal Reserve System meets on Tuesday and Wednesday of this week to determine the future path of monetary policy. The meeting has garnered lots and lots of attention as analysts and investors await the decision about whether or not the FOMC will raise the Fed's policy interest rate this week.

The betting seems to be that the Fed will keep its policy rate where it is. The final piece of evidence supporting this feeling was the speech given by Fed Governor Lael Brainard about a week ago. Ms. Brainard recommended "prudence" at this time.

Since then the "data driven" Federal Reserve has received additional "soft" economic data that provided no support to the officials that want to raise the rate. The additional evidence that supports the view that the Fed will not raise its policy rate at this week's meeting comes from the Fed's balance sheet.

As readers of this blog know, I look for signs of Fed actions in the way the Fed is managing its balance sheet. In my last post on this issue, I could find no evidence that the Fed was preparing the market for a rise in its policy rate.

In the Fed's last interest rate move, the Fed seemed to have been working for about two months to quietly remove excess reserves from the banking system so as to make markets a little bit tighter so as to support the rise in the rate.

After the increase took place in the middle of December, the Fed then backed-off to avoid any excess tightness in liquidity that might disrupt the banking system. In the current situation, there is no similar evidence that the Federal Reserve is making an effort to prepare the markets for another increase.

Deutsche Bank’s Low Capital Makes It No. 1 for Risk in Study

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Deutsche Bank AG’s status as the riskiest among its peers is worsening, based on a U.S. regulator’s measure of leverage, adding to the lender’s woes as it braces for a settlement over mortgage securities.

Leverage ratio -- a lender’s capital measured against its assets -- at Deutsche Bank lags behind the rest of the world’s major banks, according to data released Tuesday by Federal Deposit Insurance Corp. Vice Chairman Thomas Hoenig. A lower ratio means the German bank has less of a cushion if a crisis arises. The figure was 2.68 percent as of June 30, down from a year earlier and about half the average of the eight biggest U.S.-based firms including JPMorgan Chase & Co. and Citigroup Inc.

Hoenig -- among the loudest advocates for stronger bank-capital requirements -- every six months releases a tally of capital levels at more than two dozen of the largest banks doing business in the U.S. While it’s not an official scoring by the FDIC, Hoenig’s calculations put more emphasis on derivatives exposure, which he’s said is the best way to figure out the riskiness of each institution. The regulator has said before that Deutsche Bank’s capital ratio is too low.

“As markets have recovered and as central banks around the world continue quantitative easing programs, the incentives for increasing financial leverage have intensified,” Hoenig said in a statement.

Renee Calabro, a spokeswoman for Deutsche Bank, declined to comment.

Headlines that the Justice Department might seek as much as $14 billion in sanctions against the bank’s mortgage-backed securities business sparked analyst comments that the lender could become significantly under-capitalized in the event of a big settlement and may need to raise capital.

The bank’s investors welcomed recent indications that the Frankfurt-based firm was considering the sale of some of its asset management operations. Chief Executive Officer John Cryan earlier this month told staff that the asset-management business will remain an “essential part” of the firm.

Hoenig’s tally of leverage uses the International Financial Reporting Standards, which he has said weighs derivatives in a “more complete” way than calculations used by the banking agencies.

His report notes that another measure of leverage -- the one used in existing capital rules -- has Deutsche Bank at 3.4 percent, though that’s still lowest among its peers. The bank said in a document released this month that it’s aiming for 5 percent by 2020.

ES Morning Update September 20th 2016

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The futures are up again this morning after losing their move up yesterday morning around midday as they failed to get through horizontal resistance in the 2145 area and fell back down to the rising support in the 2130 zone.

As you can see now they have been riding that rising trendline up all night and this morning, and are almost back to that horizontal trendline again.  This is a series of higher lows from the 2100 area low on 9/9 and will be the 3rd hit of the 2145 resistance area today.  Will it get through it today, chop around until the APEX is hit at the close, or break that rising support and drop again to retest the 2130 area (or deeper)?  That's a tough question but I'll speculate on it.

The market is clearly waiting on the results of the FOMC meeting, which is tomorrow.  The market worked off a lot of the extremely overbought conditions with the big drop on Friday, September 9th.  Most FOMC days are positive as the Fed's don't want to be the evil villain but instead want to be the hero.  The MACD's are no help as they have both higher lows below zero for positive divergence and lower highs above zero for negative divergence.  Chart patterns show a triangle or some kind of inverted head and shoulders pattern.  Wave counts suggest we are in one of the smaller waves inside a C wave, that could be a C up or C down.

All these thing make me just go with my gut and say... which tells me we are going up on FOMC day but today will likely chop around today, most likely continue to ride that rising trendline up all day and possibly pierce through the horizontal resistance again, but shouldn't go too much higher.  There's more horizontal resistance around 2155 with another prior high.  I don't see that today but I guess it's possible if this turns out to be some kind of C wave up.  Overall it's still mixed on the charts but I lean bullish here because of the history of the FOMC meetings being positive and because this pattern looks similar to the Aug/Sept 2014 period where a brief squeeze up to a higher high of 2019 SPX took out all the bears' stop's over the 2000 SPX trading range before a real correction started.  It still feels like they want to do the same here by taking out all the bears' stops in the 2200 area, and then they can tank it.

So, for today I'd just look for the market to continue to grind higher and not lose that rising trendline of support.  I'm 50/50 on it breaking through the 2145 horizontal trendline.  If it does I'd put the odds of getting through the 2155 horizontal resistance at about 20% or so (for today only of course).  On the downside there's a falling trendline coming in around 2130 where yesterday's low area came in at... which would be the first support.  The best support will be from the rising trendline from the 9/9 low that points to just under 2120 by the close today.

If we do drop there I think it will setup a nice long into Wednesday, but I really don't think that's what will happen today.  I'm thinking we'll either chop all day inside the rising triangle to close near the APEX, which again is around 2145 or so, or push up through it a little but not take out the 2155 area.  High lows on every pullback is bullish and until that rising trendline of support is busted clearly I wouldn't get too excited on the downside.  Tomorrow is what the market is really waiting on so today should be another quiet day.

Hacked Colin Powell Email: Bohemian Grove Attendees Will Vote Against Trump, Some Support Third Party Candidate

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NEW YORK – Conspiracy theorists are going to have a field day with this one.

Chip Somodevilla/Getty Images

An email hacked from Colin Powell’s Gmail account has him writing that he had just returned from the famed Bohemian Grove — a place the Washington Post once described as “where the rich and powerful go to misbehave” — and that most attendees there will not vote for Donald Trump and find him to be a “disaster.” Powell further reported that “quite a few will not vote for Hillary and will vote for a third party candidate.”

Here is Powell’s full July 24, 2016 email, which was hacked by DCLeaks and accessed by Breitbart News via a password provided to this reporter by the hacking group:

Peter, I am back from the Bohemian Grove. Surprise, surprise, I sat next
to Stephen Harper a couple of times and had a nice discussion.  Grove
attendees know that Trump is a disaster. Most will vote against, but quite
a few will not vote for Hillary and will vote for a third party candidate.
Strange doings down here. Otherwise all is well with the Powells. We’ll
sneak away for a few days in August. Of course I’d love to see you. Let me
know your dates.  I told Stephen that you seemed quite content in your new
place in life.

All the best, Colin

The email was addressed to Canadian politician and lawyer Peter Gordon MacKay, a former Canadian Member of Parliament, who also served as Minister of Justice and Attorney General, Minister of National Defense, and Minister of Foreign Affairs

Stephen Harper, referenced in the email, served as Canada’s prime minister from February 6, 2006 to November 4, 2015.

Bohemian Grove is a 2,700-acre campground in Monte Rio, Calif that has served as a meeting place for top politicians and businessmen.  The site’s major annual secretive meeting takes place for two weeks in July, with Powell writing that he was present at last July’s event.

In a previous email to MacKay, Powell wrote about the policy of not bringing communication devices to Bohemian Grove.

“I am racing out of town to the California Redwoods for the weekend,” Powell wrote, referring to the Grove. “No phones, email or even Kindles.”

In a 2011 profile, the Washington Post reported thusly on the annual July event:

Every July, some of the richest and most powerful men in the world gather at a 2,700 acre campground in Monte Rio, Calif., for two weeks of heavy drinking, super-secret talks, druid worship (the group insists they are simply “revering the Redwoods”), and other rituals.

Their purpose: to escape the “frontier culture,” or uncivilized interests, of common men.

The people that gather at Bohemian Grove — who have included prominent business leaders, former U.S. presidents, musicians, and oil barons — are told that “Weaving Spiders Come Not Here,” meaning business deals are to be left outside. One exception was in 1942, when a planning for the Manhattan Project took place at the grove, leading to the creation of the atom bomb.

Aaron Klein is Breitbart’s Jerusalem bureau chief and senior investigative reporter. He is a New York Times bestselling author and hosts the popular weekend talk radio program, “Aaron Klein Investigative Radio.” Follow him on Twitter @AaronKleinShow. Follow him on Facebook.

ES Morning Update September 19th 2016

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Good Monday Morning to everyone.  The futures so bright I gotta wear shades!  (all you 80's kids will remember that verse of a "otherwise" silly song).  We are now on the December Futures contract, not the September as it expired last week with a 2191 all time whereas this contract shows a 2184 all time high.  I say that so you don't get those confused going forward.

Ok, so it's looking good for the bulls this morning as the upward sloping "Inverted Head and Shoulders" might be in play today?  (Note: It's not a perfect IH&S but close)  They broke-through the falling trendline of resistance and are now knocking on horizontal resistance in the 2145 zone from the 9/15 recent high.  From a wave count we could (should) be in some kind of C wave up from the 2107 low on 9/14 and it should breakdown into 5-7 smaller waves.  The projected high of this C wave depends on how many waves it morphs into but it could be a double top or extends 10-20 points over that... which was something I've been suggesting as possible for awhile now.

Several times in the past I've compared this crazy period of July/August and early September to the August/September period of 2014 where the market was trading sideways for a long time, then broke-down briefly only to be followed by a bear squeeze rally that went up 10-20 higher then the prior topping area and then rolled over for a nice month long correction.  The "topping zone" back then was around the 2000 SPX level and the dip and final rip was up to the 2019 high on 9/19/2014.

History repeats a lot folks, but never exact.  You'll notice the move down we recently had on 9/9/2016 (a 999 date) was much deeper then the pullback back in September of 2014, and faster.  You'll also notice that the sideways topping period was much long here in 2016 then back then in 2014 as well.  In fact the recent chop zone of 1.75% or less for over 40 days straight has never happened going back to the year 1928... so the down move on 9/9/2016 was certainly well deserved and should have been expected to be much deeper then in 2014.

So, here we are again it seems with a dip and a possible "rip" coming to take out all the bears that shorting the 2200 zone before a (should be bigger then 2014) correction to follow.   And what could cause a rip to some slightly higher high (another "all time high") of 10-20 points over the current high you ask?  How about something said by Janet Yellen this week at the Wednesday FOMC meeting?  While I don't know how to check in the past for old FOMC meetings I'd bet you there was one back on Wednesday, 9/17/2014... which produced the final rally into the 19th to hit a 2019 final high on the SPX Cash.  If anyone can find out that information and let me know I would appreciate it.

Since today is Monday and the FOMC isn't until Wednesday at 2pm I'd expect some chop in front of it but if Yellen says something viewed by the market as positive we could have some kind of strong wave 3 up inside a wave C up on that day, then a 4 down and final 5 up on Thursday or Friday to end the C wave... which again, could be a new all time high (like the 9/15/2014 high did) or some double top.  Either way, this week (while normally a bearish week) could produce a strong "fake out" move up with the meeting on Wednesday.  I don't know the exact way it could happen but this is the move I'd do to wipeout the bears before a nice correction if I were SkyNet.

For today I see mixed charts with some early weakness as the futures pullback from the horizontal resistance around 2145, but there's support right below from the falling trendline that points into around the 2133 area by the close today.  So if it doesn't turn back up later today then I'd expect a slow drift down into that area to reset the charts for a possible move up again (over the 2145 horizontal resistance) on Tuesday.  All in all I'm short term bullish for this week as I just feel in my gut that SkyNet is going to use something said at the FOMC meeting to stage a squeeze on the bears.  How high it goes is unknown but the typical pattern is for 10-20 points over the most recent all time high.

ES Morning Update September 16th 2016

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Yesterday I pointed out that there was a "possible" FP on the SPY from Tuesday showing 216.42 and we didn't quite make it up there hitting a high of only 215.73, but we did indeed rally instead of rolling over (which I thought the charts looked very bearish at the open yesterday).  So I'm not sure if that's a failed FP or it will be hit later, like today or early next week?  But right before the close Thursday we got another downside FP on the SPY of 213.16 and this morning in the pre-market we already hit it.  However, I believe this is just a "re-balance" of the ETF so it can be deceiving.

Into the close yesterday we hit many resistance levels and trendlines on the SPY, SPX Cash and E-mini Futures... as well as some stocks like Facebook, Google, Apple and Amazon.  That was a good sign to short going into Friday but the Quad Witching this week and monthly options expiration expiring today had me sitting on my hands and passing as the manipulation on expiration days gives me pause on trading it.

For today it looks like we'll have some early weakness as the MACD's are pointing down from rolling over last night, but I suspect they will turn back up after a few hours and erase a lot of the down move.  Now whether it goes green and rallies up past the 2151 high yesterday and the 2162 high on Monday is hard too say.  The various time frames of the charts (including the SPX Cash) are a little mixed and don't really support a big rally, nor a big sell off.  But if a rally gets going I'd look for those two targets as resistance where any longs taken could be exited.  Personally I don't see any good setups for a long or short this morning.  Maybe they will appear later in the day?

Now one other thing to remember is the Fed's have another FOMC meeting next Tuesday/Wednesday and the market currently puts the odds of a rate hike as very low.  However, that doesn't mean the market is going to get all excited and rally huge in front of the meeting, but instead suggests it won't sell off too much in front it because there's little fear of that interest rate hike.  More then likely it will be choppy in front the meeting with a downward bias as few traders will want to be buying new longs until the meeting is over and they know what is said about rate hikes.  Doesn't mean traders will sell heavy in front of the meeting either... just means it will be a "pause" period, where charts and technicals might actually be allowed to work?

Support on the downside is the rising trendline connecting the low on Monday of 2107 to the higher low on Wednesday of 2114, which comes in around the close today of 2120.  There's also horizontal support in the 2132-2135 area.  Upside resistance is from 2150 to 2145 from a falling trendline I just drew today.  Get through that and you have the 2152 prior top as well as another falling trendline (in blue/purple) and then the 2161 high on Monday.  Looks more like a triangle play for today where the ES Futures stays within the upper resistance down to the lower support.  Feels like it wants to rally (doesn't it always... LOL) so lets see what happens.

ES Morning Update September 15th 2016

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Yesterday I proposed the idea that we'll make a positive divergence on the MACD's of this 2 hours ES Futures chart.  And again, while we should make a lower low on the futures actual price while making a higher low on the MACD's, I said that the futures will likely be manipulated so they have a higher low or possibly a double bottom.  So here we are this morning with just that... a higher low on the MACD's to make the positive divergence and a higher low on the futures.

This manipulation of technical analysis, patterns, wave counts, etc... isn't healthy for the market.  The whole reason for the lower low is to clear out the bulls that went long at Mondays' low by hitting their stops just below that 2107 area, and then a healthy rally can start.  When you don't do that you have bulls still on board that will sell on the way limiting the move, and you won't have as many bears to squeeze either as you didn't fulling load the boat with them by making a second lower low where they would have likely piled on short looking for a crash.

So here we are this morning with a small rally that has at least pushed through the falling trendline of resistance.  From what I see this rally up won't make it past the prior high on Mondays' bounce at 2162, and that assumes today's move up will be some strong C wave.  If it's anything less then a C wave the bulls are in trouble, as even-though there's a positive divergence on the MACD's it's not a very strong looking one... and the futures didn't make a lower low to validate that divergence either.

All in all it's not looking like a very bullish day this morning.  The falling trendline could be redrew to include the long topping tails and then the futures would NOT have pushed through it.  So that trendline is just a rough estimate and if you just "eyeball it" it looks like there's NO breakout of the trendline.  I get the feeling we'll rollover and make that lower low today.  Could be wrong of course I'm going against the Fed's manipulation... which is why I won't actually trade it short.  I'll just watch and hope that "possible" FP yesterday on the SPY plays out to the upside where I'll be interested more in a short.

My thoughts for today... toss a coin, it's 50/50 in the direction.  It looks more like a triangle pattern and the futures appear to be near the APEX of it (the end or point).  So it should breakdown (from a technical point of view) but with heavy interference from the Fed it just as easily could bust up... especially if that FP on the SPY is real.  The bottom-line is... it's a crap shoot today with no clear direction.

Dodd-Frank reversal bill has something for everyone, even progressive reformers

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The House Financial Service Committee met Tuesday to debate Jeb Hensarling’s Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs Act, a bill unlikely to become law, but one that gives almost everyone, including reformers on both sides of the aisle, something to think about after the November election.

Although not a complete rewrite of Dodd-Frank, the legislation advocates for significant revisions or outright reversals of many of the financial crisis reform law’s most contentious provisions.

K& L Gates partner Dan Crowley says the so-called Financial Choice Act is, instead, a “political exercise” that sets the stage for potential financial reform legislation before the election and for discussions that will occur in the next Congress. “If Donald Trump is elected president, those discussions will happen pretty fast.”

In June, K&L Gates wrote clients that the proposal is not expected to advance as stand-alone legislation this year, but “it is likely to inform Dodd-Frank Act reform efforts going forward.”

Crowley said the most important reform contained in Dodd-Frank was Title 7, the section that creates a framework for the regulation of swap markets and limits counterparty risk by imposing centralized clearing on swaps. “This bill attempts to revise or reverse almost everything but Dodd-Frank’s swaps regulation.”

The bill will please behemoth banks by repealing the Volcker Rule, which restricts trading activities at banks. Plans to substitute simple leverage ratios for the Basel risk-weighted assets method for determining bank capital requirements has strong bipartisan political support from everyone but the banks.

“The banking lobby,” the Cato Institute’s Kevin Dowd wrote in May, “hate the leverage ratio because it is less easy to game” than Basel-based capital rules.

The House committee says that the Basel regime is “a highly politicized, deeply unreliable risk-based approach to measuring capital adequacy” with an almost mind-numbing level of complexity” that has resulted in the largest banks becoming “almost entirely opaque to their investors, creditors, and regulators.”

Leverage ratios measure funds available to absorb losses against the total balance sheet and some off-balance sheet assets. An election by a bank to take the “off-ramp” from the Dodd-Frank risk-based regulatory requirements would be available under the bill to financial institutions that maintain a leverage ratio of at least 10% and have a composite CAMELS rating, the regulatory measure based on inspections, of 1 or 2.

Dowd’s Cato colleague Mark Calabria, a former staffer to Sen Richard Shelby, a Republican of Alabama and ranking member of the Committee on Banking, Housing, and Urban Affairs, told MarketWatch in an interview that support for higher equity capital for banks has gained momentum. “In practice the risk-weighted Basel approach has not gone well,” said Calabria. “If you got rid of all the safety nets the biggest banks enjoy, the market would demand closer to 20% equity capital.”

The opportunity to use leverage ratios to measure capital adequacy in exchange for higher equity capital plays into the hands of reformers whose politics cross party lines, such as Stanford University’s Anat Admati. Admati has been pushing this approach since a 2010 letter to the Financial Times signed by her and 19 others that suggested a minimum required leverage ratio of at least 15% — at least five times greater than what’s required under Basel III.

Starting January 1, 2018, the Federal Reserve will impose a 5% minimum leverage ratio requirement on the 8 U.S. globally systemically important banks, or G-SIBs, and a 6% minimum leverage ratio on their federally insured subsidiaries.

The bill also eliminates the authority of the Financial Stability Oversight Council to designate risky non-banks and “financial market utilities” such as clearinghouses as “systemically important financial institutions”. The FSOC was created by the Dodd-Frank Act to review the systemic risk to the capital markets presented by large, global financial institutions. This provision is also popular with the financial services community and may have staying power after the November election.

MetLife Inc. MET, +0.09% recently beat federal regulators in court who sought to classify the insurer as too “systemically important” to fail. The designation would have subjected the organization to closer scrutiny by regulators and also give it access to the Federal Reserve discount window in case of financial stress. The bill retroactively repeals any previous SiFi designations of non-bank financial companies like MetLife. The Wall Street Journal reported that MetLife’s two main rivals, Prudential Financial Inc. PRU, +0.46% and American International Group Inc. AIG, +0.36% , which have also been designated systemically important, are expected to consider challenging their designation.

The bill also repeals the FSOC’s authority to break up a large financial institution if the Federal Reserve finds that the firm “poses a grave threat to the financial stability of the United States.” The Treasury’s Office of Financial Research, created by Dodd-Frank to support the FSOC, would also disappear.

Hensarling wants to restructure the Consumer Financial Protection Bureau and other agencies as bipartisan commissions and subject them to congressional appropriations. The CFPB would also be required to have a cost-benefit analysis performed by the Office of Economic Analysis to support all new rules. Although the CFPB has been the target of unrelenting criticism from the Republicans in the House and Senate, its recent largest ever fine against Wells Fargo & Co. for creating fraudulent bank and credit card accounts could generate the support it needs to withstand this latest challenge.

The bill also steps on recent rule-making by the Department of Labor regarding fiduciary standards of conduct for brokers-dealers who advise retirees. The Clinton Administration is expected to continue to strongly support this rule, if elected, and the Securities and Exchange Commission is readying its version of the rules that go beyond protection for retirees.

Hensarling’s bill also shuts down what the committee’s summary calls “two of the most misguided” Dodd-Frank provisions — regulations regarding limits of bank incentive-based compensation and public company CEO-to-worker pay ratio disclosures. Although the SEC has proposed final rules in both cases, they have yet to be approved and are vulnerable, especially if still pending after the election.

The bill’s most controversial provision is a reversal of the Durbin Amendment to Dodd-Frank that imposed a cap on “interchange fees”, the fees charged by a customer’s bank to a merchant’s bank when the customer uses a debit card. The banking lobby is strongly for going back to unrestricted fees, but consumer groups and the industry group representing convenience and fuel retailers says repealing debit fee reform “would allow the credit card Goliaths to resume price-fixing of debit-card fees and block smaller card networks from competing with them for business.

The Financial Choice Act also reaches back to the Sarbanes-Oxley Act of 2002 when it repeals provisions of that law that deny Congress access to information and keep disciplinary proceedings against auditors secret. That secrecy was built into the rules governing the Public Company Accounting Oversight Board, the audit regulator established by the law after the Enron scandal. Attempts to repeal these secrecy provisions of the Sarbanes-Oxley Act regarding auditors will continue to be proposed by those pushing for accountability and transparency, despite having been introduced jointly in 2011, 2013, and again in 2015 by Democrats and Republicans and subsequently dying after lobbying pressure from the accounting industry giants.

New CFTC proposal could jeopardize the IP lifeblood of many businesses

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Countless companies around the world have developed and perfected sophisticated and multifaceted algorithms which are the intellectual property (IP) lifeblood of their business. Imagination and innovation have enabled thousands of these companies to conquer the free market and be prosperous. In the US, however, that extremely valuable commodity—intellectual property—could be jeopardized if a government agency (ironically, the Commodity Futures Trading Commission—CFTC) succeeds in doing what they propose.

Just think about how our world has changed with technology making our lives more efficient and effective due to sophisticated technological IP used every single day. Things we take for granted like a simple Google search use these proprietary algorithms—the underlying heart which is based upon something called “source code”. It is that source code (developed, many times, over years and costing millions of dollars) which makes things like weather forecasting and traffic predictions possible. It makes on-line shopping more convenient and expedient, and it provides health and safety protection to our citizens. Going into the future, source code will be utilized in digital currencies and block chain applications, drones, self-driving cars and many other facets of contemporary life.

Source code is also used in financial markets, which is where this little commodity agency that not many people know, comes into play. The CFTC has proposed that proprietary source code (even if protected by intellectual property and trade secret rights) be given to the government upon request as part of the regular books and records available for inspection. Source code is not only used by traders, banks and others to implement their many market methodologies, but by trading venues like the Chicago Mercantile Exchange (CME) and the New York Stock Exchange (NYSE) which provide the intensely intricate and important backbone fundamentals of our modern financial system.

The major problem with the government getting a hold of this highly-sensitive, proprietary source code IP is that it could be stolen or otherwise compromised in some fashion. Such a risky policy prescription could place at precarious peril the essence and basic existence of a company.

Why should companies trust government with such sensitive source code IP data? They should not. We have witnessed many cyber-attacks, hacks and the outright stealing of sensitive information from our government.

Even after repeated warnings of persistent system vulnerabilities and/or failings, last year the US Office of Personnel Management (OPM) was hacked and the criminals accessed 21.5 million records. I am, unfortunately, one of them. And, it wasn’t just simple DOB and Social Security data that was accessed. Those in highly-sensitive and national security-related jobs (like the one I had) file a Standard Form (SF)-86. The hackers had access to the SF-86s which include deets about financial holdings, family members and friends. No matter, the government offered a free credit score checking service (how nice!).

The OPM hack wasn’t the only security breach, of course. In fact, even the very Agency—the CFTC—which seeks to have access to source code was hacked in 2012. I was lucky, yet again. As a CFTC Commissioner at the time, criminals had access to my personal and sensitive private deets. At the time, we believed the data breach was limited to the roughly 700 CFTC employees, but we all knew that it would not have been a far fetch for the hackers to gain data and details on traders or exchanges. That is exactly why the CFTC’s current source code proposal is fundamentally fatally flawed.

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Oh, and by the way, in recent months the Federal Reserve, Federal Deposit Insurance Corporation and even the Internal Revenue Service were all hacked. Can government keep data safe and secure? Sure. Not!

The adoption of the CFTC regulation would set a horrendous precedent for all company IP. After 30 years in government, one thing I know for sure is that if one department or agency institutes a policy (like having access to source code IP)…watch the heck out! Another, and another and another…will soon follow.

If companies want to ensure their source code IP is protected, they may take notice of this seemingly small, innocuous proposal. If there is an opportunity (which there might be) they may seek to have their voices heard.

ES Morning Update September 14th 2016

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Falling trendline holding futures  in tack... not good for bulls.

MACD's could rollover here and drop to maybe the -10 area to make a higher low here but lower low on the market

Not looking good for the bulls this morning (not that I personally care as they've been over fed for months) as they failed to get over the falling trendline last night or this morning.  The MACD's on this 2 hour chart have risen up from almost -18 to -3 right now, and while they should continue up further to reach some positive number before topping out the market again it doesn't mean they have to do it from Monday's low.  Meaning we could rollover today and go back down to make a lower low on the market while making a higher low on the MACD's.  That would setup a nice positive divergence and support a much stronger rally (from whatever that new lower low ends up being?).

However, if they manage to push through the falling trendline today then that's good for the bears who want a longer duration and deep move down.  Whereas a move down first to make a lower low would setup a strong rally the opposite is true if a move up first happens, as it will setup a weaker rally that has low odds of taking out the all time high of 2191... and the next move down should go deeper then the next major support of 2070-2090.  It should a move down to at minimum retest the 1980 prior low, if not deeper?

So, if you are a bear you want a rally here as it will likely be weak and shouldn't last past this Friday at the most.  While that first move up on Monday after the early low was straight up and strong the moves up from here are likely be choppy.

Some possible hope for the bulls here is a print of 216.42 on the SPY that should up after the 4pm close yesterday.  It might be a real FP target, which would be around the 2160 area on the ES Futures, or simply a retest of the Monday highs.  I wouldn't get too excited on it though as it could have just been a late fill and not some FP upside target.  But we've seen these prints play out many times in the past so I won't discount it either.  Possibly it's for later in the week and not today as I have to say that unless the futures push through that falling trendline early this morning they will likely rollover and head lower with a lower low (or at least a retest of Monday's low) expected.

This week is a Quad Witching week and has some Fed's speak too... which could (certainly has so far... LOL) make for a wild swinging market.  We seem to be in the middle of that range right now so lets see if the bulls push through the falling trendline or they tire out and rollover to retest the lows yesterday.

Senators urge ‘immediate’ hearings on Wells Fargo sales practices

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Wells Fargo is taking more heat over revelations its employees opened millions of fraudulent customer accounts to meet sales goals, with a group of U.S. senators calling Monday for “immediate” hearings to investigate the matter.

ES Morning Update September 13th 2016

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Ok, yesterday we had a nice strong bounce off of the opening low, which I thought we'd get today but the bulls don't wait around much it seems and come charging hard early on Monday.  So far it looks like an A wave up with the B wave down happening right now before the open.  I think the key here for the bulls is to hold the 2140 area where it was support for so long, but was lost on Friday and regained on Monday.

If they lose that level by too much they risk another big drop to take out yesterdays' low and will be headed for the next support level in the 2070-2090 zone.  It would then change the wave label of course as then yesterdays' rally wouldn't be some A wave inside a larger ABC but instead it would be a fully completed wave structure and we'd then start looking at the bigger picture from the 2191 all time high for the wave counts.  The big drop on Friday could have been a fully completed pattern at the Monday low or it might be just some big A wave down of a even bigger move down, whereas the move up yesterday was its' bigger B wave and therefore we'd see a bigger C wave down today that would again find support in the 2070-2090 zone.

While I do think we'll see that level at some point I'm think it won't happen this week (at least not today) as this move up from yesterday just doesn't feel complete to me.  I think it breakdown into several waves going up and down but holding Mondays' low and eventually topping out later this week... which normally would suggest a 2170-2180 high but with the bulls wanting that 2200 level so bad I would not be surprised to see another all time high in the 2210-2220 area.  Then I think we'll drop the rest of this month some.

My thoughts for today are that we'll hold the 2140 zone and turn back up at some point today.  I'm not sure on how high we go but if the bulls can take out yesterdays' high then 2200+ has much better odds.  If they fail to take it out by the close today then they risk another drop on Wednesday... which could be deeper then today as by then the short term charts will likely be overbought.  Meaning it could get ugly tomorrow, but again I won't have a feel for that until the close today to see where the charts are aligned and what happens today.

Wells Fargo Exec Who Headed Phony Accounts Unit Collected $125 Million

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Months ago, CEO John Stumpf praised the executive in hot water as “a standard-bearer” for the bank.

Wells Fargo & Co’s WFC -0.37% “sandbagger”-in-chief is leaving the giant bank with an enormous pay day—$124.6 million.

In fact, despite beefed-up “clawback” provisions instituted by the bank shortly after the financial crisis, and the recent revelations of massive misconduct, it does not appear that Wells Fargo is requiring Carrie Tolstedt, the Wells Fargo executive who was in charge of the unit where employees opened more than 2 million largely unauthorized customer accounts—a seemingly routine practice that employees internally referred to as “sandbagging”—to give back any of her nine-figure pay.

On Thursday, Wells Fargo WFC -0.37% agreed to pay $185 million, including the largest penalty ever imposed by the Consumer Financial Protection Bureau, to settle claims that that it defrauded its customers. The bank’s shareholders will ultimately have to swallow the cost of that settlement. The bank also said it had fired 5,300 employees over five years related to the bad behavior.

Tolstedt, however, is walking away from Wells Fargo with a very full bank account—and praise. In the July announcement of her exit, which made no mention of the soon-to-be-settled case, Wells Fargo’s CEO John Stumpf said Tolstedt had been one of the bank’s most important leaders and “a standard-bearer of our culture” and “a champion for our customers.”

On Thursday, Richard Cordray, the head of the CFPB, had a different take, “It is quite clear that [the actions of Tolstedt’s unit] are unfair and abusive practices under federal law,” said Cordray. “They are a violation of trust and an abuse of trust.”

A spokesperson for Wells Fargo said that the timing of Tolstedt’s exit was the result of a “personal decision to retire after 27 years” with the bank. The spokesperson declined to comment on whether the bank was considering clawing back Tolstedt’s back pay.

In a statement following the settlement, Wells Fargo said, “Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us. Wells Fargo is committed to putting our customers’ interests first 100% of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.”

Shortly after the financial crisis, big banks in the nation, including Wells Fargo, promised that their top bankers would not be able to keep large paydays if it was found that those rewards were gained through harmful conduct. It was supposed to be the stick to the carrot of Wall Street bonuses. But the latest example of fraud at Wells Fargo shows that the big banks are unwilling to wield those sticks, especially when it comes to their top executives.

It is not clear how closely, or at all, Tolstedt was responsible for or even aware of the widespread abusive tactics at the bank. Neither the CFPB nor the Los Angeles City Attorney’s office, which sued the bank, named Tolstedt directly. Wells Fargo said the 5,300 firings happened over five years, and included managers as well as employees. It’s likely that Tolstedt managed as least part of that purge. But in bringing the charges, an official from the CFPB said Wells Fargo was aware of the behavior for longer than it should have, without putting a stop to it.

What’s more, Tolstedt ran the community banking division of the bank, which included its retail banking and credit card divisions, during the entire period in which the customer abuse was alleged, which goes back to 2011. The CFPB said about three quarters of the unauthorized accounts opened by employees of Wells Fargo were bank deposit accounts. Another 565,000 were unauthorized credit card applications. Tolstedt took over the division in 2008, after Wells Fargo merged with Wachovia during the financial crisis.

Tolstedt was a regular on Fortune‘s Most Powerful Women list. She was replaced on this year’s list by Mary Mack, who is taking over her job at the bank.

Tolstedt was regularly praised for her unit’s ability to get customers to open numerous accounts. For a number of years, Wells Fargo’s proxy statement, which details executive pay, cited high “cross-selling ratios” as a reason that Tolstedt had earned her roughly $9 million in annual pay. For instance, in Wells Fargo’s 2015 proxy statement, the company said that its compensation committee had authorized Tolstedt’s $7.3 million stock and cash bonus that year, because “under her leadership, Community Banking achieved a number of strategic objectives, including continued strong cross-sell ratios, record deposit levels, and continued success of mobile banking initiatives.”

Later that year, the L.A. City Attorney’s office sued the bank because of its sales tactics, saying that many of the abusive practices came from intense pressure on Wells Fargo’s employees to get customers to open up numerous accounts. A separate class action of former employees alleges they were fired for not meeting cross-selling goals, or going along with the aggressive sales tactics.

Earlier this year when Wells Fargo released its annual proxy statement, it once again said that in order to justify her multimillion dollar bonus, Tolstedt’s division had “achieved a number of strategic objectives.” But this time, for the first time in years, cross-selling wasn’t listed as one of them.

When Tolstedt leaves Wells Fargo later this year, on top of the $1.7 million in salary she has received over the past few years, she will be walking away with $124.6 million in stock, options, and restricted Wells Fargo shares. Some of that hasn’t vested yet. But Tolstedt gets to keep all of it because she technically retired. Had she been fired, Tolstedt would have had to forfeit at least $45 million of that exit payday, and possibly more.

Wells Fargo’s proxy statement says that the bank has “strong recoupment and clawback policies,” and that the bank will revoke bonus pay if it is found that the conduct of an executive resulted in representational harm to the bank, or that the executive was not able to “identify or manage” risks in his or her division. But there is no sign that Wells Fargo is going to ask Tolstedt to return even a sliver of her stock jackpot.

“This appears to be exactly the situation that clawback provisions were created for,” says Dennis Kelleher, president of Better Markets, a group that lobbies for more regulation of the big banks. “If they don’t apply here, when will they apply.”

On Wall Street, the carrots are still widely handed out. The sticks, however, remain out of sight.


And how does the public feel about this you ask?  I'd say this photo says it all..

wells-fargo-shit

Red

ES Morning Update September 12th 2016

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Last weeks' "Fall off a Cliff Friday" move really should be expected now with all the extreme manipulation on super light volume but I have to say I didn't see dropping that far all in one day.  But, times have changed now as algorithmic trading makes up 84% of each days' move.  Gone are days of normal ebb's and flows where the market went up and down with some kind of wave patterns that trades a shot at catching a move.  Now it's sideways, range-bound moves for a couple months and then a mini crash in one... followed by more sideways to up chop I guess?

This week is the monthly option expiration week, which in the old days was a bullish week I'd guess 80-90% of the time.  This was of course before the introduction of the weekly options that have came onto the scene in the last few years and gotten more and more popular.  The reason for the bullish pattern on the week of the 3rd Friday of every month (the monthly option expiration) was so the market makers, insiders and those that rule the market, could steal all the premium on the put options they sold to the retail traders the weeks prior.  That's way it was also common to see a nice move down late in the week of the 2nd Friday of the month so they could lure in some more bears and sell them puts knowing full well that they will expire worthless the next Friday as they manipulate the market back up with some rally out of no where.

Yes, it's crooked, but it's been going on as long as they had monthly options I believe.  It's just the way things are.  Those that rule the market find way to exploited it so they can legally steal from the less connected and informed.  Remember, the stock was invented for the sole purpose of stealing money from the average working person.  They can't have these people saving their money and over time getting wealthy like they are, so they trick them into "investing" in the rigged market where every 5-10 years they will wipe them out with a small mini crash.  Think about all the hard work those working people did for years to have it all stolen in just a few weeks on months with some mini-crash planned by the elite.  Yeah, it's criminal but it's the way the market works.  That's why you should never become an investor in my opinion but just trade it in and out.

As for the market today and this week I'd expect some chop today for sure with later in the week being the best chance for a nice rally back up.  But they have already tricked us once with the BREXIT massive rally to all time new highs... therefore I wouldn't expect a repeat.  At this point I don't see much more then a normal (if that exist anymore?) retrace-ment back up to some Fibonacci level like 50% or 61.8%, but I'd be shocked if they do a repeat of BREXIT and go make another all time new high (I will add that I've been shocked a lot lately).

For support and resistance levels... we hit a major support zone in the 2110-2120 area already so that should hold today I'd expect.  Looking at resistance the 2140 area is the first one.  Let's see what Monday brings us before getting all technical.  My thoughts are simple... if we dip back down at the open it's a buy for a move up today, but it's a day trade only I think as I see the big picture as bearish, so longer term players will be looking to short this pig again later this week when the rally tires out.

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