Tuesday, April 19, 2011


Another "late day save" took place yesterday which has to be the 500th in a row it seems. I cannot recall a day where we were down a good bit and actually closed on the lows. This is beyond absurd at this point, and far beyond any historical statistics. This market is being completely controlled by the government, a day like yesterday has to remove all doubt from even the most naive people. The S & P story breaks and things crater. Then of course Barry and his minions dispute the move by S & P. What the hell is there to dispute, the numbers are what they are?

When I first read of the writings of people that compared where we are to the fall of all the historical empires I thought it was just patently absurd. However, when I start reading some of these things, I am not so sure now that it is such a far fetched theory after all. It seems that extending control over things increases as the slides have begun in the prior failures of empires, and we are certainly seeing that now everywhere.

It is just beyond belief or any reasonable explanation why these people refuse to cut spending. At this point they appear to be bringing us down intentionally which is a horrible thought to even ponder. Nobody could be this stupid, so there has to be intent now. The utter refusal of the government to even allow any type of correction in these markets is going to result in a wipe out at some point. I have maintained that for the last year and I am more and more sure of that as the days go by. Yesterday was just a small taste of a bigger move that is going to happen at some point due to all of this.

I have a close friend that has a business that sells blood to hemophiliacs. He recently received a letter from the governor that unless the state of California agrees to raise taxes, he is going to cut reimbursements to these andd other home care providers of other things by 10%. This carries over to other home care illnesses as well not just his patients. He just knows the numbers in his specialty. Here is the rub, providers from him to the big Caremarks of the world have about just under 10% margins. A 10% cut puts them all out of the business! Not even a huge conglomerate like Caremark is going to stay in a business where they have to finance receivables for 90 days since the state pays late, on a balance that has no profit. They now have money losing businesses taking into account any finance carrying charges no matter how small. Guess what, they will all leave the business obviously. So, he is trying to bully people into voting for a tax increase. The worst part about this is that even hospitals who will take on the patients initially, also lose money providing this under the proposed change. They will also exit the business. These patients will potentially have no way of getting what they need to stay alive.

If you work this through he is essentially threatening to kill people if we don't vote to raise taxes. This is how far it is has gone. Instead of cutting back on the unions who put him in office, he is taking this tactic. We all know California is toast financially, but this story as I was listening to him the other day was shocking. I told him to get this to Fox news immediately but he is nervous about the bullying that might be done to him if his name gets out. I told him he has nothing to lose because his business is going away anyway. Just think about this and the other types of home care ailments that will be effected by this. Things are unraveling folks wake up. It is only a matter of time before the financial markets inoculations to everything else will lose their efficacy.

Back to the present. You can see on the weekly S & P 500 chart, that we recently hit 70 on the ADX, most tops are formed at 60 or so. This is being accompanied by a rollover in the Larry Williams POIV indicator. You can see the purple line is far weaker than price as I have indicated with the arrows. My Synthetic is not flashing a sell signal at all, but you don't always have everything. This is a situation that now bears watching. We certainly don't have anything screaming at us to sell but everyone saw the impact if only for a couple of hours yesterday, of what the debt problem is ultimately going to bring to a theatre near you. I hope they do raise taxes now because that will likely be the greatest short signal in the history of the stock indexes. It will be a trade to hold for a 50% plus move when they do it. It will be our ultimate way to profit from Barry for being such a moron. However, at this point all the significant structure points on the chart are still clearly intact, so until the low of the week of 3/18 gets taken out, we are still in a good uptrend situation. Most of the chatter I threw out above is bigger picture stuff.

Next is the dollar index, and once again this showed that it is a flight to quality in times of strife. Today it is moving back down again after the PPT reversed the index futures yesterday at the end of the day. This has a clearly defined down trend in price as indicated by the trend line I have drawn in. I am looking for a buy signal to show up here but do not see one yet. The other thing that is interesting about this chart is that the ADX is not rising. Generally in a strong trend ADX will rise along with the price move. This was happening until the last couple of months.

I know there are better traders than I who are already long here. I do not see an entry by my rules yet but am watching to see if something shows up here in the next few days.

The next chart is the conclusion of my Soybean short I talked about in here. Yesterday I talked about looking for a rally based on weekly stuff in this market, and we may have gotten the beginning of it yesterday. Once we took out the prior bars low I tightened up my stop quite a bit and got taken out. You can see the entry and exit points. I have no opinion on this at all. I traded this perfectly in my view, it just was not to be anything other than a marginal trade. Often things do not work out like we hope, that is trading and life as well. It still was a profit so it is what it is. There might be a buy tomorrow setting up today depending on how we close here today.

That is all I have today other than I had mentioned recently looking for shorts in the energies, and those entries have triggered. We also seem to have an interesting sell pattern that could be developing for the SP 500 tomorrow if we close up for today by day's end.

I am ending today's post with what I thought was a funny story yesterday. I hooked up with a good buddy for lunch and we talked about the normal things, chicks, fighting and sports. After we worked through all of that for about an hour. I could tell he wanted dessert and we decided on a chocolate chip cookie with ice cream. Just the fact that we even had a discussion about what to order for dessert is bad enough. Now picture this, two guys who think they are macho, splitting a dessert like that. Here is the worst part, I did not finish my half! When I asked the waitress if she had ever seen anything more gay than this she said NO!!! I texted him later in the day telling him there was a rumor going around that two dudes who thought they were bad asses were rumored to have split a chocolate chip cookie and not finished it. He almost crashed his car when he read it.

Good luck today

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