$SPY, $FXI, $VIX Option Activity, SPY Chart Analysis (S&P, China and Volatility Futures)

Watch VIX, FXI and SPY option alerts courtesy of optionMONSTER TV (Volatility Sonar Report and RMBrenna). To your left (click for larger view) I put up a 6-month chart of $SPY. There was big red volume today on the 1.7% sell off. The riots in Egypt, earnings, economic data or market exhaustion all could have been catalysts. SPY's Relative Strength Index (RSI) took a sharp fall on Friday, closing at 52.88. The RSI was above 70 for a month. Watch the uptrend line and 50 day moving average for potential support or violations. Maybe the trader believes SPY will find support at the 50DMA like it did in November, before February expiration. Lastly, on 1/26/2011 Tom Demark (DeMark Indicators) told CNBC that the market could fall by 11%. The S&P lost 1.79% today. Seems like yellow lights are flashing. We shall see.

Marc Faber Breaks Down U.S./Emerging Markets, Gold, Treasuries and Economy (1/25/2011)

Marc Faber (Gloom Boom Doom Report) on BloombergTV 1/25/2011 (video after the quotes).

U.S./Emerging Markets: "And now we have a change, where I think for a while the U.S. may outperform, may not go up, but it may go down less than emerging markets."

"In the longer run, for sure, U.S. Treasuries and most Government bonds are a suicidal investment. But there's a shorter term time frame. And I think for the next 3 months or so we have a situation where stock markets have become way overbought and emerging markets in January, most of them failed to make a new high above the November/December highs. And that is a negative sign."

Chart Updates: UUP/SPY Ratio and UUP/SPY Versus US Dollar Index

UUP/SPY (US Dollar ETF/S&P 500 ETF) is very close to testing the May 2008 low of 0.167. It is currently at 0.17. Also check out the relationship between UUP/SPY and $USD (US Dollar Index) since May 2008.  (UUP/SPY)/$USD started to decouple in the beginning of 2010, just before the Euro Zone crisis hit (UUP volume in 12/09). It's interesting that the US Dollar Index has made two (or for the time being 3) higher highs since May 2008, while $UUP tested the May lows twice (see last chart). $UUP is based on the "Deutsche Bank Long US Dollar Index (USDX®) Futures Index™" (link). I thought these relationships were interesting. I'd say that UUP/SPY support level is important to hold, as well as UUP support in general. The UUP/SPY chart only goes back 3 years.

David Stockman and Moody's Warn About U.S. Budget Deficit, National Debt

David Stockman, former Budget Director under the Reagan administration, thinks the U.S. is "borderline" bankrupt and bond vigilantes are "just around the corner". The national debt hit $14 trillion in January and we're running a "$100 billion deficit" a month, he said. The national debt is expected to hit the debt ceiling in a few months. Watch the Bloomberg clip after the jump.
"One of these the days the global bond market or currency market is going to have a huge upset, a Greek moment, and then it will be too late because of the massive scale of what we're doing."

"It's not a matter of defaulting, it's a matter of what we have to pay to the global bond market in order to carry and add to this huge debt we already have."

Also from Reuters today: "Moody's Investors Service warned on Thursday that lack of U.S. government action on the budget deficit increases the likelihood of a negative outlook on the country's top AAA credit rating".

Borders To Get $550 Million Refinancing From GE Under Certain Conditions (BGP)

Borders could get a $550 million senior secured credit facility from GE Capital, Restructuring Finance if they meet certain conditions. The stock was up 34% at $1.08 in after hours trading. Publishers have by February 1, 2011 to "exchange missed payments for notes" (1 2 PublishersWeekly).
"ANN ARBOR, Mich., Jan. 27, 2011 /PRNewswire via COMTEX/ -- Borders Group, Inc. (NYSE: BGP) today announced that it has received a commitment from GE Capital, Restructuring Finance to provide a $550 million senior secured credit facility that, upon completion, including the obtaining of $125 million of additional junior debt financing via the conversion of vendor payables and/or external sources, will provide Borders with the financial flexibility and an appropriate level of liquidity to move forward with its strategy to reposition its business model and the Borders brand. GE Capital provided its financing commitment following a comprehensive review of the company's strategic plan to restructure its business model by focusing on core business areas in order to improve profitability and cash flow".

Conditions.
"The new $550 million senior secured credit facility, once funded, will mature in 2014, and will replace the company's existing revolving senior credit and term loan facilities.

The commitment provided by GE Capital is subject to certain conditions, including:


Peter Schiff On Inflation, Oil, Gold/Euro and U.S. Markets (1/24/2010)

Peter Schiff on Tech Ticker

Fed: Progress Toward Objectives Has Been Disappointingly Slow

FOMC Statement 1/26/2010: "Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow."

Release Date: January 26, 2011

For immediate release

Information received since the Federal Open Market Committee met in December confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions. Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, while investment in nonresidential structures is still weak. Employers remain reluctant to add to payrolls. The housing sector continues to be depressed. Although commodity prices have risen, longer-term inflation expectations have remained stable, and measures of underlying inflation have been trending downward.

Tepper: Dean Foods Undervalued, Cautious and Optimistic on Stocks (DF, SPY)

David Tepper, who runs the $15 billion hedge fund Appaloosa Management, was back on CNBC on January 21. On September 24, 2010, Tepper correctly predicted the stock market would rise on better economic data or Fed support (QE2). Both ended up happening.

Tepper is still optimistic on the U.S. market through 2012 based on earnings estimates. If 2012 S&P EPS hits 100+ with a 14-15 multiple, that's 1,400+ on the S&P. We are at 1,300. However, Tepper thinks there are downside risks:

President Obama's State of the Union Video (1/25/2011)

Watch the State of the Union video via Whitehouse.gov (1/25/2011)

Read: Ambac vs. EMC, St. Joe Squeeze?, John Paulson Makes Money, Cotton, Domino's, Post Office Closures, Market Pullback

Headlines for 1/25/2011

JP Morgan Sold Investors MBS Covered By "SACK OF SHIT" Loans... Then Shorted All Those With Exposure: A Goldman-AIG Redux (Zero Hedge) *Lawsuit: Ambac vs. EMC Mortgage (formerly part of Bear Stearns who's now part of JP Morgan)

E-mails Suggest Bear Stearns Cheated Clients Out of Billions (The Atlantic)

Bank of America Sued for Countrywide's Mortgage Sins, Again (Daily Finance) *New York Insurance Company, TIAA-CREF vs. Countrywide (now part of Bank of America)

No Audit At All: Deloitte and Bear Stearn (Francine McKenna at Forbes.com)

Cotton Is Pulled to Another High $1.6789 (WSJ)

Paulson Posts More Than $1 Billion in Citi Gains (Financial Times)

Interesting posts regarding a potential St. Joe short squeeze. In the end, does JOE need to take impairment charges or not? Einhorn thinks the company is worth $7-10 per share!.

Fairholme, Brookfield, GGP and St. Joe’s (Valueplays.net)

St. Joe ($JOE) May Be Ripe for a Short Squeeze in 2011 (Morningstar)
SAC acquired a 5.3 percent stake in Domino’s Pizza ($DPZ) (New York Times/DealBook)

S&P, Treasury Yields Rising In Tandem, 30-Year Yield Testing Descending Channel Resistance

Since August 2010, the S&P and 30y Treasury yield have been rising in tandem. TNX was a little late to the party. QE2 (Federal Reserve buying Treasuries) was the catalyst for higher yields and equities. So the goal was to get everyone to sell their bonds and buy equities? Although borrowing costs are now higher, at least household net worth is up from the equity rally.

The second chart is of the 30-Year Treasury Yield Index (TYX). It is bumping up against resistance in a descending channel that goes back 25 years. Watch the Yield/SPX relationship going forward. I also threw up a snapshot of the Fed's Treasury buying schedule from January 24 to February 10, 2011. Good day.

Robots Are The Next Tech Revolution (See Videos)

Will Robots powered by Google (or Qwiki?) be the next technological revolution? Look at these humanoid robots. These robots are future household and company assistants. Videos below:

1. HRP-4" Humanoid Platform for Robotics
2. Honda ASIMO
3. ACTROID-F in AIST Open Lab 2010 02
4. Telenoid Robot
5. DIRK the homeless roboter - ARS Electronica 2010 - repairTV

Qwiki TechCrunch Disrupt Presentation, Founder Interviews, Looks Like The Future

The Qwiki "information experience" looks interesting (http://www.qwiki.com/). They take static information and turn it into a multimedia rich, interactive experience. I embedded the 2010 TechCrunch Disrupt presentation (they won), Mashable interview with CEO/Founder Doug Imbruce and a YammerInc interview with CTO/Co-Founder Louis Monier (who also founded Alta Vista in 1995). From their website:

"Qwiki's goal is to forever improve the way people experience information.

"Whether you’re planning a vacation on the web, evaluating restaurants on your phone, or helping with homework in front of the family AppleTV, Qwiki is working to deliver information in a format that's quintessentially human – via storytelling instead of search."

"We've all seen science fiction films (or read novels) where computers are able to collect data on behalf of humans, and present the most important details. This is our goal at Qwiki – to advance information technology to the point it acts human."

They have samples out. Here are popular topics, natural wonders, artists and cities (check out a Black hole). This looks like the future, in a way. I like it. One day robonauts powered by Qwiki and Google will be personal assistants imo.

QE2 Explained, Fed Buys Treasuries From Banks (Marketplace Video)

To prep ya'll for the potential of QE3. Paddy Hirsch, Senior Editor at Marketplace, explained how QE2 (quantitative easing part 2) works in the video below (from 10/07/2010). In summary: The Fed buys Treasury bonds from the banks which, in turn, gives banks a fresh wad of cash reserves to lend. As money gets lent out, it's supposed to stimulate the economy. I'd like to see a video explaining how QE2 makes stocks rally. I'm posting a chart comparing Treasury yields and the S&P next.