ONE FOR ALL AND ALL FOR ONE!
This morning we have another across the board liftoff taking place. If it were not simply impossible for the government to be behind these correlations I would swear they were. It is too much for them to undertake even in a F you I won adminstration slogan world. Literally everything in the world is up along with stocks this morning, and until this changes, I suggest all trades be filtered with stock market direction. I have mentioned this in the past, and it amazingly still holds true. There was a recent period a couple of months ago where some decoupling began to occur, but things have fallen back into line again.
I think there are two reasons for this. First, alot of the true problems are being masked by the artificial propping up of the markets by the futures buy programs the US Government is behind. It is keeping stocks high, and optimisim from falling off a cliff. Second, I think the big power in the hedge fund world has their models dialed in to these correlations, so when stocks go buy orders fly in from everywhere in all commodities markets. As a result, when one goes so do all the others. The only thing you can do is take it into account when determining position sizes. Just remember, buying crude is the same as buying stocks, which is also the same as buying soybeans etc.. They are all the same trade. If you are long 4 different markets and risking 2% on each, you are really risking 8% in one trade. They are all the same.
Next I have the seasonal pattern for stocks which shows a rally here for a few more weeks, then sharply down. I do still feel this is a house of cards and as you can see from the chart above, some of the things I use to measure trend strength are not on board with this at this point. They are in fact lagging quite a bit, which is a huge caution flag for me. Notice how the Larry Williams proprietary oscillator has a much lower peak than price and is not even moving up on a day where we are up 175 Dow points as I type this. This is very unusual, but has me looking for shorts not longs.
I think it is interesting to see how closely we have followed the seasonal patterns this year, almost exactly to the day it seems. This would indicate a couple more weeks up, then down into the fall buy zone. Seasonals are not always this accurate, but when we are tracking them the way we are this year, you have to be aware of them. Until we veer off course, I expect we will follow this. I am sure another email about Dow 4000 by the end of the year has arrived from Bob Prechter while I am composing this, but I do not think we are going to see that. Things are looking good for the fall rally I think at this point. We may have a sharp decline into it, which if it occurs will make it that much better.
I am being told that the charts cannot be enlarged anymore and I apologize if that is true. Blogger jumped the shark a few weeks ago, and there is nothing I can do about it until they fix the problems. There is nobody I can call, customer service etc..