Rebel Traders – Analysis Without The Hype

As I described in the video update from last evening the futures fell below the hourly channel and have since held inside the region I pointed out (red lines).

Weak resistance in the area of 1108 to 1110 (dashed line) with much stronger resistance at the upper range which is now the underside of the channel (resistance).

A break below 1101 on confirming volume will bring the lower trend line into play ( ~ 1088 at this time). A break above the upper range (1113 to 1114) will bring upper resistance at 1121 into play. Chart shown at the bottom of this post.

A lot of bad economic data this morning set the market into a rather bad mood thus far today :

Credit Card Problems

During this entire economic crisis I have seen many stupid and/or irresponsible actions taken by the banks and investment firms. But this one from CitiBank is so stupid and irresponsible that it leaves me astonished that anyone that is a customer is willing to sit back and take this.

If you are a CitiBank credit card customer you are already well aware of your interest rates going up significantly, or you have had CitiBank cut your credit limits, and in some cases had your account held for ransom by telling you to pay the 29.99% interest rate or they will cancel your card altogether leaving you ’stranded for credit’.

CitiBank has repeatly abused and taken advantage of its customers. Now what I am about to tell you amounts to CitiBank holding a gun to your face and robbing you.

CitiBank says that they will soon be offering ‘rebates’ that will help offset some of the interest rate hikes. But how does one get this ‘rebate’? You have to spend more money by charging more purchases to your CitiBank credit card.

From the Associated Press:

For Citibank credit card holders, there is one way to escape the bank’s rate hikes currently under way: Meet a monthly spending requirement.

Those who meet the spending minimum — in some cases $750 a month — will be able to get a rebate on their total interest charges for that month. The rebate could cover some or all of the interest rate hike. Customers also need to make payments on time to qualify for the rebate.[...]

The change by Citi comes as the industry rushes to adjust to sweeping reforms to start in February that will limit when and how much card issuers can hike interest rates. In a statement, Citi said the actions were necessary given elevated losses from souring loans and “regulatory changes that eliminate repricing for that risk.” [...]

[...] Citi’s move is just the latest in a series of rate hikes, lowered limits and other term changes credit card customers have seen in the past year. [...]

So if you spend at least $750.00 per month then you can get a rebate applied to your account of some amount to help offset the costs of the higher interest rates and higher fees. On the surface that may sound wonderful (if you are naive). But what you are really doing is putting yourself further into debt with the illusion of having a lower interest rate.

What CitiBank is doing is no different than a drug dealer who threatens his junkie by telling him that he can get his drugs cheaper if he buys even more.

If you are still a customer of CitiBank after all they have done to you so far and have taken your tax dollars (tens of billions worth in bailouts), then I must tell you that you need to WAKE UP!

Face the facts people. CitiBank is still in financial trouble, otherwise they would have not needed billions of dollars in financial aid (tax payer money). They got themselves into the mess they are faced with and are forcing YOU to bail them out.

Tell them you have had enough. Cancel your checking account, cancel your credit card, eliminate any business ties with CitiBank. Don’t let them take advantage of you any longer.

CitiBank through its own devices dug its own grave, now they want YOU to be the one that occupies it. It is way past the time for this zombie bank to occupy its own grave.

The economy is doing just great… well so says the banks (sarcasm).

The Associated Press reports tonight that bankruptcies are surging. And that is with the new bankruptcy law that was passed in 2005 which makes it much more difficult for individuals to file bankruptcy.

The number of U.S. businesses and individuals declaring bankruptcy is rising with a vengeance amid the recession, despite a three-year-old federal law that made it much tougher for Americans to escape their debts, an Associated Press analysis found.

“There’s no end in sight,” said bankruptcy lawyer Bryan Elliott of Hickory, N.C., who is working seven days a week and scheduling prospective clients a month in advance. “To be doing this well and having this much business, it is depressing. It’s not a laugh-a-minute job.”[...]

[...]Nearly 1.2 million debtors filed for bankruptcy in the past 12 months, according to federal court records collected and analyzed by the AP. Last month, 130,831 sought bankruptcy protection — an increase of 46 percent over March 2008 and 81 percent over the same month in 2007.[...]

[...]Congress voted in 2005 to make bankruptcy more cumbersome after years of intense lobbying from the nation’s lenders, who complained that people were abusing the system. Before the move to change the law, bankruptcies were running at what was then an all-time high of about 1.6 million per year.

The tighter requirements initially appeared to work, with bankruptcies plummeting from a record-shattering 2 million cases in 2005 — a total that reflected a rush to file before the new law took effect — to 600,000 in 2006. But now bankruptcies are booming again.[...]

[...]“You wouldn’t get this large of a rise without serious problems in the economy,” said Lynn LoPucki, a UCLA law professor who researches bankruptcy.[...]

In 2005 the banks and financial institutions lobbied congress to make it more difficult for individuals to file bankruptcy. Now those very same banks are increasing interest rates to 29, 30, and even 34%, cutting credit limits by significant amounts, and even changing terms in the ‘card member’ agreements in some cases to now include the following:

“We may consider you in default if we obtain information that causes us to believe that you may be unwilling or unable to pay your debts to us or others on time.”

“If we consider your account to be in default, we may close your account without notice and require you to pay your unpaid balance immediately.”

The above excerpt is reportedly now included in the JP Morgan / Chase Credit Card agreements. So even if you are paying your bills, Chase can decide that you ‘might‘ someday not pay and decide to put your account into default without even telling you and then demand full payment immediately.

(warning: soapbox statement coming)

Just who the hell runs this Country? I think the answer is clear: The banks run the country and the tax payers have been bent over the railing many times; from the bailouts, executive pay, raising credit card interest rates to levels that make it impossible for people to pay off, and then we have to give them more money from our hard earned salaries.

This is madness!

Have a credit card? Stop using it, pay it off and get rid of it for good. Use a debit card/check card for making purchases. But don’t give one more cent to these banks and financial institutions, not one cent.

… Just don’t shop where dead beats have been before you…

Well, that is the impression I take away from this news story that appeared in today’s Atlanta Journal-Constitution

[...]Johnson’s mood soured when he got to a letter from American Express, saying it had slashed the credit limit on his account.

Johnson was surprised, since he has a perfect payment history and a high credit score. And he was floored by one of the reasons American Express cited: It didn’t like where he shopped.

“Other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express,” the letter said.[...]

[...]American Express declined to discuss Johnson’s account. But it confirmed that it examines spending patterns. It’s just one of many tactics that credit card companies are using to try to keep default rates from growing higher. Along with studying shopping habits, American Express considers which mortgage lender a customer uses and whether the customer owns a home in an area where housing prices are declining.

(read more…)