PREPONDERANCE OF THE EVIDENCE
I heard this morning that a record number of fund managers are trailing the SP 500 by 500 basis points ( 5% ). That basis point skit always irritates me. Does it really make people think they are smarter than the next person by using this type of jargon to "impress" people? In any event, the discussion went on to say that fund managers are searching for stocks with higher beta's ( correlations with the indexes ).
Your honor I submit this as my final piece of evidence in my case against the PPT. Isn't this suspicious to anyone? These fund managers are no dummies, and have highly technical computerized models to pick these things out, yet they can't even come remotely close to matching the index performance. The reason why this is happening in my opinion, is that this whole move has been manipulated through overnight futures programs. The next morning everyone is playing catch up in the individual stocks to the overnight futures buy programs. How could you ever hope to do that consistently? You can't, and that is being borne out in these numbers. The main reason you can't is because the overnight futures programs create all sorts of gaps between the prior days close and the next days opens. At times they are also gaps completely above the prior days highs. If you are chasing these stocks on the opening, the best you will be ever to do is under perform by those gaps.
I do not have the figures at hand because it would be an incredibly time consuming task to calculate them, but I can assure you that the average change in the day sessions of these stocks, close to open compared to the overall indexes close to the prior close, would show a huge discrepancy in favor of the index close to close. In other words, there has been a much greater movement in the close to the prior days close in the indexes than individual stocks trying to chase that performance, buying on the next days openings instead of the prior days closes. Some of this is the normal way that futures move anyway, so the whole case cannot be constructed based on this. However, if you study this you will see what I am talking about.
With all this in mind, what we need to do next, is disregard all of this! The reason I say that is that we are in an era where the government is manipulating things like never before, and there is absolutely not a single thing any of us can do about it. It is what it is, I just like to pop off about it from time to time to cleanse myself.
At the moment we have a complete dollar wipeout and blowoff going in the currencies upward. When I look at things like the Euro now I do see some buy signals I could have taken but when markets extend this far, taking a one or day continuation entry rarely works as well as it would have in the last few weeks. You cannot tailor your approach to moves like this, because they are the minority of the overall action. If you have the ability to be so flexible that you can trade moves like this as well as the more normal cycles, by all means do it. I personally have a hard time doing that.
The next chart is of the EURO, it is approaching an interesting price zone, Fib fans are probably all over this one.
We are approaching the magic 61.8% retracement zone in this market. It is flying high currently, no doubt about that. Will this zone be a magic stopping point? I have no idea. I tried to trade with these levels many years ago and just never had success doing so. You can see here we plowed right through the first two levels so they obviously had no impact. However, this is an area alot of people are watching, so it will be interesting to see if something happens there. Another 100 points or so and we are there, which is 15 minutes of price action nowadays.
Interestingly enough, there is one currency that is lagging this by quite a bit, and as a result, I am trying to short this market today.
This is the Canadian Dollar, and you can see how much different this looks than the other currencies here. We have not rallied much of the recent lows, you can see where my order is resting for today. This is not very likely to get filled, but you never know. I will try to short it again next Monday.
That is it for today, all I really have going is the short positions I posted yesterday and long the VXX.