LOL, ROFL... This is no laughing matter

The Committee will maintain the target range for the federal funds rate at zero to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.


These are words out of Bernanke's speech yesterday that ought to scare the daylights out of you if you have any common sense at all. He is referencing subdued inflation trends? Does this look like a subdued inflation trend below in the chart of Unleaded Gas? Oh that's right we exclude that from our measurements since obviously it is not important nobody really buys gasoline anyway.

You can look at almost any market and the story is the same. I do have to admit now that I am finally getting pretty worried about things. We have lousy GDP and unemployment numbers come out this morning, and here we are with the boys buying S&P futures once again on top of a speech basically telling us everything is fine. I know I am beating a dead drum here and it is actually starting to get embarrassing, but I just feel obligated to try and tell people this is not real. The up trends are real, and real money is being made on the long side, that is real. Shorting virtually anything is suicide, that is real. What is not real is the whole premise this is being built on. We have an unprecedented time during our history where our officials are embarking on a mission to deliberately devalue our currency so they can add more debt and are basically saying f you to anyone who objects. This is all going to end terribly at some point, I wish I could tell my readers when, but I do not know. These people are deliberately creating runaway inflation and telling us it is not happening.

One thing you and I should both be doing which is almost always the answer to what to do, is to trade with the trends. As much as they are rigging the markets to go one way in perpetuity, as long as you just go with it and not fight it you are good to go. For people like me that like to trade in both directions, you just have to turn off the sell button, put a piece of tape over it. There will come a day when sells will work, but that day is not now. Yesterday I showed a chart of the Canadian Dollar and went through some logic as to why I thought it was a short. I did get filled on that trade and here is what I did afterwards. First, I took the trade with very small size due to it being counter trend, in hindsight a very good move. Second, when I saw it trade through the price and get filled then immediately reverse when the PPT showed up to move up the stock indexes after they took a hit, I bailed the trade for a small loss. It went on to go all the way back up to where I would have been stopped out, so I saved myself quite a bit of money there. I did decide to watch the markets intra-day yesterday just because I sensed this setup was a trap and the plan was to bail the minute I saw confirmation of that.

I can't pat myself on the back too much here, shorting anything is ridiculous right now so this is a trade I never should have done. However, when I get really strong divergences I take shots against the trends with small size and at times get big wins even though the win loss percentage on those trades is low. Without getting into too much detail on things, this was one I probably should not have done with the DX just free falling now, and actually being pushed down on top of dropping on it's own weight. Oh well it is done now. One of the things you always expose yourself to in a forum like this is looking like a fool.

I mentioned in here a upcoming long in Cocoa, that has been triggered as of yesterday. I also mentioned Sugar on the long side, which has rolled over so there is nothing on the buy side there. The other market I mentioned is Heating Oil. I did not go long this market even though had I done so the trade would have worked out so far. Below is the chart, and look at it compared to the above chart of Unleaded Gas.

The third chart in the energy complex of course is Crude Oil which is showing a bit more strength than Heating Oil and less the the RB chart above. It is just mental baggage I suppose, but buying the weakest member of a complex is something I rarely do. I do not subscribe to the catch up theory at all. I would be more likely to short this if it broke down due to it's relative weakness. Since Chairman Ben has eliminated shorts for now though it leaves me with nothing to do with this one for the moment.

I have been looking at the long side of the Bean complex as well for the next few days, so that is where I am looking to trade today.