GOOD THINGS HAPPEN TO THOSE WHO WAIT
Things have cleared up a little bit in the last week or so, for those waiting patiently and experienced enough not to chase the markets. We always have to remember, and I constantly have to remind myself, there is always another trade, so don't get too jumpy. The above chart of the World Market otherwise known as the SP 500, shows just how incredibly powerful this move has been. Since every market in the world with just a couple of exceptions looks almost just like this, you really just have to follow this one to trade anything else. Gold, Soybeans, Sugar, Crude Oil, Aussie Dollar. The charts in all of those markets look almost just like this. As I have been saying for quite some time, the world is one trade. This correlation I think now is obvious to everyone, and I also think it is obvious to most now that it is not a coincidence. The NEW COMMERCIALS are orchestrating this via their various methods, the most recent being QE2.
Since we know this correlation is here, and not likely to go away anytime soon, just keep it in mind when determining position sizes. There are other markets, like the softs, meats, and Natural Gas, that seem to be able to defy this gravity, so those can be used to diversify.
I have outlined what I see to be the two scenarios that could unfold here. First, we are now short term oversold, so longs are probably the play here for the next few days. After that, I have drawn out another possible scenario, which roughly shows the trends rolling over which would dictate shorts. I am fairly sure of the first one, but not so sure on the second one. Since this is being so manipulated by the government, it is hard to imagine them allowing a rollover here. It has become clear that they believe that everyone feels a lot better about the economy when the stock market is over 11,000 than they would if it were at 7,000, even if everything else is basically the same. This false sense of security due to 401k balances increasing is dangerous in my mind, but so be it. I always tell people that the collective psyche of the American public is much better with stocks being higher than lower, and it gives the controllers some room to maneuver that they would not have if stocks were tumbling. What is surprising and unprecedented, is the degree to which they have been able to control this. In my lifetime I have never seen anything like this before.
For the long entry, Friday's highs have to get taken out today, which could happen, but it is a long ways up, still 10 more SP points from where we are trading as I compose this post. Interestingly enough, when I went through the whole SP 500 this weekend, stock by stock, I did not see a preponderance of buy signals. It was really mixed. This tells me that we are not likely to lift off again right from here. However, it also is not screaming top either. Maybe we will trade sideways?
In any event, we do have a pretty clear trading direction here, up in the next few days, then look to see if the shorts are setup.