THE STARS ARE LINING UP
Here is something that was sent to me in an email that graphically shows the complete carefree attitude at hand on wall street right now. Notice how we are now in the same zone as we were at the infamous 2007 top. There has been one thing after another lining up that is telling us to lookout below. Of course in the era of the Fed controlled market none of the prior ominous developments resulted in anything happening at all. However, now that we have these levels of risk at hand, it feels like good ole' America once again. Just let er rip and blame someone else when your lack of caution burns you. As long as Barry is there he may even steal the money from the wealthy people to reimburse average Joe's when this thing implodes.
The above chart is not a timing tool, but it does tell us we are in a danger zone. Let's face it this whole thing would have tipped over a long time ago had Uncle Ben not become an S&P 500 futures day trader with unlimited position size rules. The saves they have made have been incredible, and I think they are about to make their last one. Since we are supposedly going to see the end of QE in June, the next market projection is very interesting to me. It has nothing at all to do with the government manipulation, it is based on indicators.
I have cut off this screen because there are proprietary indicators I will not expose in this blog that generated this forecast. It is very bullish for the next couple of weeks. After this up move, I think problems are going to develop. Maybe we will not even move up at all. This has been the hardest stock market to predict that I have ever seen, so I may be dead wrong on this forecast. At times this software is incredibly accurate and at other times it is way off, so it is not enough to trade on stand alone. However, it does indicate that the things I look at are turning up even if we close down tomorrow. As a result, I have gone flat everything I was short on the Sunday night down moves. It is not correct to focus on the magnitude of this up move, just the direction. It is pretty definitive to the up side. Ironically so is the DX. Since we know these two
move opposite one another in recent times, it is contradictory information.
There was a question in another post about why I say the stocks move the dollar and not the other way around which is the popular view. All you have to do is watch a 5 minute chart, the ES moves first, then the currencies follow. This has been consistent for months now. The currencies never move first, it is always the stock indexes. This makes perfect sense because that is what the Fed is manipulating the SP 500 futures, and indirectly as a by product, the dollar.
You can see in the 3 instances I have labeled in the above 5 minute chart, how the Sp 500 futures move first, then the Dollar follows. It is just a matter of a few minutes, but this relationship has been consistent. In my opinion this is the one thing the Fed has done that is smart. We know they really want to devalue to dollar but if their trading transactions ever get exposed it will show that they were trading the stock indexes and not the dollar. The good ole' plausible deniability skit is in play. "Oh we did not know it would devalue the dollar... etc " " We just acted to support the stock market at a time when the general public really needed our help." "We headed off the second great depression" Yada Yada Yada.
The bottom line is that they have gotten done what they wanted thus far except for that small little detail, big inflation. Only they know for sure if they will pull the plug in June. If they do, it is beginning to line up as a must do trade, even though it is the most obvious trade of all time, to get short with everything you have. The metals have been the most crowded trade in the history of the markets for a couple of years now and continued to work, so that does not mean just because it is an obvious trade you don't do it. We are seeing in Silver what always eventually happens to these crowded trades, but look at the incredible run that market has had. Even if you are stopped out now or are about to be, you could have made a kings ransom holding this trade for the last few years.
I am hoping the VIX will tip us off come next month as to when the exact day is to short this sucker. The VIX needs to take out 14.27 for us to really be in business on the short sale bet the farm trade. We still have a couple of weeks it appears but who knows. We are on fumes big time right here now.