THESE GUYS DON'T QUITE HAVE IT RIGHT
The above chart is that of the 30 Year Bonds and the last 4 releases of the Non Farm Payrolls report. You can see that 3 of the 4 bars are basically normal range days. There is one that is larger than normal. In the old days this did used to be a major market moving report, ahh the good ole days! The government takeover of the markets has had alot of significant effects and this is certainly one of them. Here is a quote from a service I recently mentioned I signed up for just to get a daily dose of the gloom and doom view so that I could constantly evaluate it as to it's merits. To give full disclosure, Porter Stansberry is the gentlemen who runs this service and this is one of his associates in a daily email.
"Traders used to stand aside and avoid taking on new positions before the release of a major government report. There was no need to jump in front of a potentially volatile situation. But the biggest reports don't create much volatility anymore. So there really isn't any need to stand aside.
Perhaps Wall Street is finally putting government statistics in their proper place… third in line behind lies and damn lies.
Best regards and good trading,"
I think for the most part he has got this correct, and maybe he is just not saying everything here. What is missing is really the full explanation. I do not represent this guy at all, so take the fill in as a comment from me that he may or may not agree with. The reason why the reports are being ignored, is that everyone in the know is aware that what the FED does controls all the markets now, and any reports effects can easily be erased by a large futures buy program. As a result, why panic, they know the Fed will move the market back up if it declines, so there really is not much risk. We have seen this countless times in recent months. It has now gotten to the point where almost any news regardless of how significant it should be, takes a back seat to the forthcoming FED action to counter it. It is really the days with no POMO that need to be studied. Those are days when actual market forces could move the markets like they used to. I don't watch this everyday because the last time I checked, POMO activities were happening almost every day so it is basically watching MASH re runs over and over, yawn!
I like these guys from the above quote because they are not afraid to call it like they see it. It seems the government has a shark eye on them because I think they have a large enough subscriber base that they can get their views out widely. I am just a little fry trader that nobody knows is alive, so I can pop off for the most part, and remain in relative obscurity. Readers who have been with me for awhile have certainly seen now the merits of what I have been talking about along this front for long enough now, where there cannot be any doubt as to what is going on.
Now back to trading for today. I have been talking about the Energy complex as setting up for a sell signal. Ironically, the best of the bunch as far as the technical signal goes is Unleaded Gas.
It is my feeling that we should never short the strongest member of a trading complex, so even though we have this great looking divergence, we want to try and push over the weakest team member. Why pick a fight with the biggest guy? Why not try and take on the smallest one? Crude Oil at this moment is clearly the weak link in this group. I suppose you could say Natural Gas, but that market is a free spirit and does not trade in sync with the others. I really consider the energy complex to be Crude, Unleaded and Heating Oil. I trade Natural Gas on it's own.
It is clear to see the dramatic difference here in this Crude Oil chart versus the Unleaded Gas. This is where I am going to play if I get a short entry that fills. I do think that tomorrow below today's low is one possible entry point to short this market. As with any setup, this is just that a setup. I would not suggest blindly going to the market and shorting here. We did have a sharp increase in accumulation yesterday. At times this is just a blowoff that marks turning points, but it also could be a forewarning that this is going to rocket out of here. If you are a long side player here, buy the RB since it is the strongest. I would have a difficult time going long here due to the large amount of divergence in the momentum oscillators as well as all the commercial selling that is going on.
I debate this issue of comparative strength and weakness constantly with people. There is nothing that I know of that works every time. If I knew of such a thing I would not reveal it. However, I can tell you that observing this and trading in accordance with it has saved my .... countless times. I also have a friend who likes to buy the weak thinking they catch up, this does not happen, study charts. PG if you read this I am not referring to you.
Good Trading and may the Force ( FED ) be with you