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New SEC Charges Against Martha Stewart
Martha Stewart is fighting charges of insider's trading from the Securities and Exchange Commission. According to SEC lawyer, Alexander Vasilescu, while ex-broker Peter Bacanovic, who was Stewart's co-defendant at her 2004 criminal trial, reached an agreement with the SEC, Stewart still maintains her innocence.

Stewart, 63, was convicted of lying to federal authorities about the now infamous sale of ImClone Systems Inc. stock, yet the time she spent in prison was irrelevant to the SEC's charges against her. The SEC suit seeks to bar Stewart from being an officer or a director of a public company as well as the disgorgement of any ill-gotten gains from the stock sales.
All Headline News, May 27, 2006


 


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The Bell Rings For Round II of Martha Vs. The Bear Market
By: Pete Kendall, June 1, 2006
"Even though she’s been in jail, Stewart’s star is soaring, with the landing of roles in two TV shows and a company stock that has soared back to heavenly heights. But Stewart’s smiling visage on the cover of the March 7 Newsweek suggests that another peak is near."

According to the New York Times, Martha  Stewart “status as America's most popular taste maker” has reached “new heights” since she got out of the Big House in 2005. But the Times notes that the stakes are high because Stewart’s decision to fight the charges rather than settle the SEC’s civil suit “could rattle investors and encourage lawsuits.” Stewart probably figures things can’t get any worse than her initial indictment in October 2002 and five months served at Alderson Prison in West Virginia. Apparently, any publicity is good publicity. But, here again, Martha’s great weakness is on display: she has absolutely no feel for the one true source of her public stature, a bull market in social mood.

martha

Just as she failed to see attitudes toward insider trading shift toward punitive with the onset of the bear market in social mood, she is now totally unaware of the storm brewing beneath her restored public persona. If she was at all cognizant of the potential for decline and her vulnerability to it, she’d surely settle.

Stewart is sticking her neck out at the worst possible moment. Given her experience in the first half of the decade, she ought to know better. Her company’s failure to confirm the Dow Industrial’s high earlier this month, is exactly what happened in 2000.

In fact, the chart shows that Martha Stewart Omnimedia shares peaked all the way back in February 2005. Stewart’s failed prime time TV effort (The Apprentice: Martha Stewart bombed late last year) is another sign of exhaustion. Martha’s wants desperately “to clear her name,” but, as we noted in our discussion of the Enron verdict May 27, this is not the time. The up-down-up tone of Martha’s magazine coverage coincident with the rise-fall-rise of the S&P hints at the next down-phase in the Martha/market cycle. Everything suggests that it should be anything but “happily ever after” for the doyenne of domesticity.

EWFF originally discussed the bull market influence over Martha Stewart’s public image in the October and November 1999 issues. At that time, Stewart was literally “equitized” through the issuance of Martha Stewart Omnimedia stock. To get more recent Martha updates, please see the Additional References and this February 22 Sociotimes entry. For a film clip that explains what’s behind the wave of corporate scandals that have carried Martha and so many others off to prison in recent years, check out this excerpt from History's Hidden Engine, a recently completed documentary on socionomics.

EWFF originally discussed the bull market influence over Martha Stewart’s public image in the October and November 1999 issues. At that time, Stewart was literally “equitized” through the issuance of Martha Stewart Omnimedia stock. To get more recent Martha updates, please see the Additional References and this February 22 Sociotimes entry. For a film clip that explains what’s behind the wave of corporate scandals that have carried Martha and so many others off to prison in recent years, check out this excerpt from History's Hidden Engine, a recently completed documentary on socionomics.

Additional References

November 2005, EWFF
Blame It On Martha
In March, when Martha Stewart’s stock was soaring to a countertrend high with the Dow Industrials, The Elliott Wave Financial Forecast offered this forecast:
“Stewart’s star is soaring, with the landing of roles in two TV shows and a company stock that has soared back to heavenly heights. Stewart’s smiling visage on the cover of the March 7 Newsweek suggests that another peak is near. As the bear market reasserts itself, Stewart will find her return to the business world a lot less accommodating than her jail cell.”
 
Eight months later, the Industrials are down 7%, her stock is off more than 50%, while ratings for her prime time version of The Apprentice: Martha Stewart started lower than expected and fell from there. “The doyenne of domesticity’s carefully constructed TV comeback has met with a chilly reception from viewers.” One problem is that reality/survival shows are popular in the transition to a declining phase, and Martha’s public image has always thrived on the more purely positive vibe of a rising trend.
As the November 2004 EWFF explained, Donald Trump, on the other hand, thrives right at peaks in mood, which explains the higher ratings for his version of The Apprentice, which first appeared on the left side of the countertrend rally’s peaking process in January 2004. But now, even Trump is sinking. Trump’s audience is down to 9 million, a 50% drop from its peak in 2004. In recent days, he became the target of a mini-media firestorm when he blamed Martha Stewart for his show’s decline saying, “I never thought it was a good idea.” One critic called him a “hypocrite” and “a pretentious, self-absorbed narcissist with an acute inability to admit mistakes.” The New York Times reflects a souring public mood with a recent story about Trump’s negative net worth back in the early 1990s. The story contends that Trump took out a loan from his father’s estate to stay solvent. Trump called the story “a pile of crap.” Maybe so, but Trump and other luminaries of the old bull market should take it as their cue to beat a fast retreat. Society is moving on to the phase of the cycle when its members derive pleasure from the misfortunes of once-exalted stars. It’s going to be a tough crowd.

July 2002, EWFF
From Bad to Worse
This week’s Time magazine cover focuses on the end of the world while Newsweek digs into the Martha Stewart insider trading debacle with a front-page story on “Martha’s Mess.” According to yesterday’s Washington Post, “The exploding scope and volume of these still-unfolding corporate and accounting scandals have begun to weigh heavily on the stock market.” Subscribers know the truth, a declining social mood, as reflected by the stock market, has produced attacks on the leaders, companies and social units that were the focus of the advance. These are the results of the trend change that were forecast in past issues. Their scope is indicative of the degree of the decline.

Can the scandals and end-of-the-world rhetoric get any worse? Since these are the lagging effects of falling stock prices and stocks have just fallen close to their bear market lows, they surely will. The important point now is that the recriminations have expanded through the decline of 2002. In March, right before the Dow peaked, EWFF pointed to an unprecedented level of fear and anger among investors and said, “This month the river of recriminations broke its banks.” Despite this negative news environment, EWFF turned bearish because the “market is in full reversal of a mania in which the public enjoyed a rare, extended fulfillment of its wildest expectations.” Just as the market rose through the “best of all possible worlds” in the mid-1990s, EWFF said it should descend through a cloud of gloom. By falling through an intensifying cycle of negative news, the market has confirmed that this is no ordinary bear market.

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ARTICLE COMMENTS
Once you have answered the question about social mood causing events, do you then need an answer that tells you what causes social mood? I am thinking that Planetary events affect social mood. The Grand Trine, May 7th, would be an example of when the stock market which was going straight up, turned on that date, and began a significant decline. The Bradley Cycle is another example of Planetary effect on social mood, perhaps better stated economic mood, investor mood, fear and greed. Jim Peeke
Posted by: Jim Peeke
June 1, 2006 11:36 AM



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