"I DEMAND AN INVESTIGATION"
My favorite movie of course is TRADING PLACES, and that was a line from one of the Duke Brothers at the end of the movie. It was spoken after their attempt to Corner the Orange Juice market failed. They were upset that someone else discovered their attempt to rig the market and made money off of it. How ironic is it that Barry our fearless leader uttered those same words after his adminstrations attempt to rig the stock market got undone on Thursday. I would love it if an investigator would have the nerve to report back to him that the size limitations they have on the buy programs executed by the Federal Government in the Index futures, precluded them from being able to buy enough to stop this. Further, he would go on to recommend that they be given "Commercial" designation, so they could have unlimited position size. This would allow them to make every single day an up close if they wanted it to be. As I have told people repeatedly, heavy volume selling cannot be stopped by the PPT and they have set the table for this inevitable outcome by doing what they have done the last year.
They have rigged the market for about a year now, and now he is ticked off that finally it stopped working? We are seeing things that I just thought I would never see in my lifetime. They literally want to control when we take a pee I think. God only knows what the outcome of this "investigation" will be but you can be sure of one thing, it will remain rigged and only one "rigger" will be allowed to remain, the PPT. I am sure there are very extreme threats in place to keep the people that execute these transactions quiet, so expect them to continue to be in place. However, as we have seen, they can only do what they do when the volume remains light.
Even if you were a believer that the PPT is an urban myth and does not exist, and the last hour rallies virtually every day out of the blue are just a coincidence, the chart pattern itself is problematic. This chart above leading up to the high looks more like a lightly traded commodity like OATS than a stock market. Those types of markets just creep along on light volume then all of the sudden have huge price spikes up or down. There are no prior major pivots that are obvious support points, so when you get a selloff going, there are not any obvious buy the weakness entry points. Hence, you get the vaccuum move like this. It the government had just allowed normal corrections, the structure of the market would be much stronger. They were so busy manipulating it to drive their socialist policies that they built a house of cards.
STATE OF THE UNION
With all that aside, we are now down into a very interesting area. The 200 Day moving average is an area where the funds love to buy stocks, and we are basically right on it here. We should get a bounce here and I am hoping it will be sharp for a couple of days possibly three. If we can get back up to the area where I have marked as a sell area, you can see it will be a first reaction sell against a rolling over momentum line. I personally love these types of trades, especially after the move down is very sharp like this. One adage in trading is when you get a sharp move like this you always fade the first retracement. This is what I plan on doing with both barrels if we get this move in the next few days. If we just blow through the 200 here the game is over, and we will likely get a very large move down and it will be time to run for the hills is you are a long term holder.
As sharp as this move has been the weekly trend is still up so it is possible this could be a great spot to buy if you are bullish. I am not bullish since although I have commented on the strength of the trend, the highs were right into the lower area of the major price zone I have mentioned here for months, so I think this could be the top. I would prefer a rally into false breakouts to new highs that immediately reverse forming one of those megaphone patterns at the high, for it to be the ultimate top. Who knows if we will get that or not.
From a short term trading perspective, I am looking to sell a bounce if my patterns are there when it happens but will not go short right here into all of this support. I will also be looking for individual stock longs to play this bounce the next couple of days.
ANOTHER WAY TO PLAY THIS
Here is the YEN which became the flight to quality vehicle along with Bonds this week. If you are bearish in stocks you might want to look at the long side here. On the daily chart I will be looking for a dip to buy into here. However, from a bigger perspective here on the weekly chart, this is setup as a pretty good sell. You can see the Momentum rollover that is happening and both the trend oscillators and indicating a down trend. We also have a rally into my bands. As a result, sell patterns should work up here. If they do that probably tells us stocks will bounce. If we just blow through these levels, it will be a definite buy the dips situation. For now I will be looking to short this rally or buy a dip, so a two way trade possibly.
GOLD BUGS REJOICE
This market is humming along nicely now and although the theories of why people have gone to this are not correct by historical precedent, the market continues upward. I just say that because there is no consistent correlation of a flight to quality in this market. Sometimes during crisis periods it has risen and other times it has declined. Further, there is virtually no instances where we had a major dollar rally and major gold rally at the same time. They typically have moved in inverse fashion as has gold with inflation. So what is happening has never happened before.
Nonetheless, if that is the reason you have parked your money here it has payed off even though I think it is an incorrect premise. As we have seen with bubbles, stocks this past week most recently, they can be inflated for longer and gain in price much more than anyone can guess before they finally burst. The end of this will be just like stocks thursday and just like Real Estate, and it will pummel millions of people causing billions of dollars of losses. However, it is anyone's guess as to what level that will happen from. Maybe it will be a drop from $3000 to $1000, who knows. Just know this, it will happen so have an exit plan especially if you are sitting fat on a big gain.
I was able to catch the last top due to spotting the huge spike in Small Spec buying. That is not really happening here yet. They are buying again, and their position is moving up close to it's max position, but it is not there yet. One very interesting thing is happening in the metals right now, Silver is lagging Gold by a large amount now like it did at the last top. One trade I am looking to make this week is to short Silver if it gets above it's recent highs then quickly reverses. I may also short it if fails when it tests those highs. I have to watch the daily patterns to see if it is setup. For now it appears that it will but time will tell. Since Silver in general is the more speculative of the two, it is a negative divergence when it is weaker. In summary, we do have something historically unique happening here in Gold, and for those who predicted it and are long term investors, good for you. I just don't bet on the once in a lifetime occurences happening, so I never get these types of things correct. I play high probability things and pass on the long shots.
I have been wrong about this market, although I have made six figures shorting it so it is not a total disaster. I just did that by being able to pick the short term tops pretty well, which in general is not a good way to trade even though it is what I have done here. I just did it mostly based on the COT report, being bullish on the Dollar ( which has been correct ), and what I perceive to be a bubble. In reality, I have also had an incorrect premise also. It is better to do something for the wrong reason and be right than vice versa. Certainly, the greater money by far has been made on the long side. My patterns in general for buys just have not been there, although I have had a couple of nice long trades in Gold that I have posted here. None of them in the recent move up.
Summary - I am looking to buy stocks early in the week and hopefully ride a short sharp retracement back up where I intend to load the boat on the short side. I will be looking to buy dips and sell rallies in the Yen assuming patterns form up correctly. Also, I am looking to short Silver on a rally if we get it. There are some other things I am looking at also including shorting Lean Hogs but I have to keep some things to myself.
Good trading to everyone