NOT SOLD YET
One of the many great story lines out there that is constantly kicked back to us is the notion that China is the world's savior. We are going to get rid of the dollar and the Yuan will be the standard. They are buying all these commodities because of their booming economy, blah blah blah... The above is the weekly chart of their stock index. Does this look like boom time to you? This to me looks like something in quite a bit of trouble, hardly something I would want to bank my future investment bias on. This country has runaway inflation, and real estate and construction comprising almost 70% of their economy. In my opinion it is the greatest house of cards ever built. Even in our heyday of bubbles, we never approached those levels of disproportionate weightings in our economy.
If you are basing your investment plan on buying commodities because of all this "international" demand, you might want to rethink that thesis. Here is by comparison thow the Bernanke 500 previously known as the SP 500 looks on a weekly basis. This helps to reinforce what I have said all along, as we go so goes the world. Do not get caught up in all this nonsense about how we can fall out of bed, and everything else will boom. If we go down, we will take everyone with us. This is why The FED is doing what they are. They know full well the whole ball of wax is on us.
Just look at how much stronger our market has been than that of China. The older I get the more angry I get at all the BS that is out there in the media. It is so hard to find someone who will tell you the truth. It seems everyone has an agenda, and the opinions they have are all crafted to help to mold behavior in the masses that perpetuates their own interests. These people throwing out all this crap are not idiots, just listen to how they speak. Do they sound like they are not intelligent?
The point of all this is that you have to tune out the noise and do your own research, make your own decisions. I am not sold on this idea for the above reasons, I am also not sold on the big stock sell off yet based on yesterday.
Thinks look very weak at the moment, and I am expecting a significant top right about now. However, when I ran about 100 of these pattern forecasts on stocks last night, most of them looked like this or a bit more bullish for the next week. This makes me wonder if this is a good spot to get heavily short or not. I have decided that it is not and am waiting now for a bounce to do so. These forecasts are nothing to wager your house on, they are hit and miss at times. However, when I see them consistently telling me up across this many stocks, it makes me think the situation is more bullish than bearish. I guess we will see in a few days, since I am talking in the near term here.
One trade I do have orders in for a long position today is Cocoa, that market is down a good bit so it seems unlikely those orders will get filled.
Keep your powder dry, our big short is lurking just not quite yet.
4 comments:
I thought you would be all over this dump in the Bernanke 500 today! As you said earlier you were looking to a bounce to short after ES dropped to 1302. I thought the bounce to 1347 was the one!
However the Euro has been suspicously strong during this selloff. It really hesitated quite a bit before it finally went down yesterday and it rallied pretty strongly overnight- not what I'd expect when the market drops 2%.
Hey - I read you pretty frequently. I always appreciate your point of view. Totally agree with your take on physical PMs (I do trade the paper). I am waiting on the big short you mention, but I'm worried now that it might sneak up and be 10% gone before I realize it is here and hop on board. What general conditions are you looking for to tell you that the time to strike has arrived?
That is a very good question. Much of what I use to actually trigger my entries I do not display here just to keep some things to myself. In that regard I am just looking for my trend indicators to turn down, then once that happens I will trade the first reaction against that new down trend. Since my indicators are more aggressive then the traditional ones, they will usually turn in advance of the obvious change, but it is possible they will not. I don't worry about "missing" a move because this is a very strong trend and it is also being driven by the US Government. Short sellers have been cleaned out time and time again during the last 2 years. If I miss it I know there will be retracements and I will just trade those. If that is 10% lower that is actually better because the trades would then be with a confirmed new downward trend. We are likely talking about thousands of Dow points to the downside, so there should be plenty of room to get a piece of it.
"Let the downtrend develop, then trade the retracement... it's safer anyway since the downtrend is then confirmed" is such good advice. It's just hard to miss opportunites in order to let other opportunites come to you. I got spanked shorting a couple times last fall before I got on board with a trend I did not trust. Now I don't trust any trends... not the 9 month up-trend and I'm afraid I won't trust the downtrend when I see it enough to pull the trigger. So here's to the discipline to wait and the discipline to act when the waiting is over. See you on the other side of those thousands of points to the downside. I hope.
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