Friday, July 08, 2011


" I am in shock"

"The ADP report is a better gauge of the employment situation"

"Do you want teachers for your kids or not?"

"This means more stimulus is coming"

These are quotes from CNBC this morning after the DNFP report was released with "weaker than expected" results.

The top chart is the Bernanke 500 and the next chart it the 30 Year Bond. You can see the sharp moves we had when the report came out at 9.2%. The whole point of what I want to talk about today is the complete loss of ethics and morals in the media. Somehow we have moved away from reporting the facts to story telling. Personally, I watch a movie if I want to have a story told to me that is fantasy, I do not turn on a news channel. There is obviously this assumption that none of us can handle the truth, so one story after another is concocted to make us feel better. This whole "recovery" skit is so tired at this point. They must assume in the meetings they have before going public, be it a public official, a corporate executive, or a media member, they we are just so stupid that we will believe what they tell us. It apparently is their job to take care of us and make sure we are ok.

I suppose I am guilty as well in that I throw out my commentary here and I guess I am trying to influence people's opinions as well, but it is certainly not a concerted effort. I just throw out my views, but I really do not care if people agree with them or not. I have no agenda other than convincing people I make a profit trading and show some of the ways I do it. I actually would prefer that people not follow what I do because it would likely make it less effective anyway.

Let's examine the above comments that came from the panel of experts one at a time. Here is a quote from one of my favorite guys who I have mentioned before in here Kevin Haggerty. The trivia buffs “who quote them but don`t trade them” said it was the biggest weekly SPX advance in two years. This was his comment about the recent rally and all the balloons being released due to it being so large. I am still laughing over this quote, but if you know Kevin, which I do personally, this is how he is. He is a great trader and has dealt with these clowns in the media for so long that he does not have much respect for them. He is also an ex marine and calls things like he sees em, kinda like me!

"I am in shock"

How in the world could any economist be in shock that the rate edged up .1%? Is he the dude from the Geico commercial that is living under the rock? All the metrics you can look at tell you were are just plodding along at the same pace, whatever that truly is. You have to have an agenda to look at these numbers and think otherwise, or, you have to be incompetent. It does us no good to have a bunch of cry babies on there whining over a bad report, but this is not much help either. People actually rely on economists predictions to help plan for their businesses. This guy could not get arrested in Watts! Please tell me CNBC is not paying these people appearance fees!

"The ADP report is a better gauge of the employment situation"

Of course a comment like this comes out because that report shows a brighter picture. I have heard this one argued both ways on this show, always bashing it when it is worse or crediting it when it is better. Some of the people on this panel need to get out of their offices and go talk to people. Maybe they would get a better overall gauge of what is going on. Coming on and trying to make us all feel better is not their job. You could argue that their job is to give us their opinions based on their education and experience forecasting, as to what to expect, but when you are wrong virtually every single time, what is that really worth? In my world, zero. If I am wrong half the time life is difficult as a trader, if I were wrong every time I would have a different occupation as would most of us.

"Do you want teachers for your kids or not?"

This was in response to a comment by one person about how he was happy to have seen the number of government jobs reduced so that the money that is being spent would go into the private sector. This is a typical liberal response, and I for one have had enough on this one. Do we need to spend ourselves into bankruptcy so that all the teachers can be paid what Kobe Bryant is? How many trillions is enough to spend on schools. I know when I drive on the Ted Williams parkway here in San Diego I drive by a school that is so big it rivals the Pentagon, and I always wonder how much bigger it might be if we spent more money on schools? I say fine take all the teachers away, then we will all be dumb enough to believe what you pinheads throw out at us every day. Isn't that what they want anyway? Where exactly is the line drawn by these wackos on spending?

"This means more stimulus is coming"

And of course he it is the coup de gras, batting in the cleanup spot. We all knew this was coming and Bernanke is probably smoking a cigarette like he just had sex hearing these types of things. This is the vindication he needs for the ridicule has been getting, and it is also what he needs to support QE3. Of course all of us who are too dumb to understand, have observed the QE1 and QE2 have done nothing at all but build government and enrich a few. We are just too stupid to understand why QE3 will work, so he will show us.

Here is a quote you can take from me elsewhere and it is one I have made previously in here


Now lets get to how this will effect the markets. We see the intraday reaction and of course it is negative, but... Like it or not we have a major bull market on our hands, so I would expect that in general this effect will be short lived, however we just never know. We can argue more of this will lead to QE3 which would be very bullish etc.. What a stupid world it is where we can speculate that more deficit spending digging a deeper hole is bullish. However, that is all opinion, let's just look at charts. You are all aware that I said on my weekly chart we were at an inflection point and we were likely to get a move of decent size in either direction. I also said I felt the trend had turned down with one of my weekly techniques, so rallies should be sold from this price zone.

None of this has changed, and I still have not gotten a sell signal on the daily index charts in any of the 3 major indexes, so I am not short. I am not long because as I mentioned we are into a zone in price that I think is a sell zone. As a result, I am flat in stocks and the indexes right here. I mentioned I have some long grain positions and have been dinking around in the currencies a bit. The jury is still out on those trades, but in general when stocks go down so does just about everything else, so I may have some trouble on my hands in those we will have to see. I also mentioned that even though I had been leaning to short the bonds, the setup was not quite right and I was not going to force anything that did not meet my rules. That decision has proven to be a good one, as the Bond rally would have whacked me had I been in that trade.

All of this takes us back to the same place. There is always noise, and even more when you tune in to these numbskulls on the news stations. The key is still the same, stick to your discipline and follow your rules. They will lead you through all the BS. Joe Kernan who I like said today, "I hope everyone did not get too long" when he watched the futures get clocked. The truth is if you were heavily buying into this report you need to change your rules. This market was really over extended to the upside, so even though these types of move can always carry on, the probabilities are in favor of reversions. Do not buy into media hype as Kevin Haggerty says above, they are more trivia buffs than traders.

Have a great weekend

1 comment:

Anonymous said...

why not:)