I know saying Trouble is Brewing might seem like a ridiculous take at this point. The bulls certainly would just label me another gloom and doomer, and the bears never saw a point they did not think was a looming catastrophe, so I can't win.
I mentioned in here recently that I felt the weekly trend had changed and I pointed to the area marked on the chart above as the reason why. Interestingly now we also have a sharp move back up in Sentiment, the blue line at the bottom. I also have an indicator I use that is proprietary that I am not going to show, that is going to cross back to the down side on Monday even if we close higher. As a result, I am now going to be looking for sells in the coming days in both individual stocks and the Bernanke's. All the Fed sponsored stock indexes look basically the same, I don't see one that is that much weaker than the others. The one thing I will point out is that the Naz appears to be the strongest, and also the sentiment readings are the highest at 90 in the Russell. The way I look at trend is a bit different so even if we make a new high, my bands here may not necessarily switch back to up unless we make that high and stay there. If we were to make a nominal new high and reverse, that could very well be the trade of the year, and one I will be looking for if we keep moving up. I like trap patterns and have shown many trades in here I have done with them. They don't always work, but when they do like the Hogs trade I showed last month, they can be dynamite.
I would imagine that this whole poker game going on with Barry and the Congress on the debt ceiling is most likely going to be too blame by the media if we decline here, but that will not be the real reason. Stocks have risen due to the Feds activities, not Congress or Comrade Obama. I hope I am alive when it is written what has really gone on behind the scenes to move these markets up like this. At some point someone will talk and the story will get out.
Here is one thing that shocked me when I read it today. Apparently now the speculation is that the parties are falling back to a 2.5 trillion dollar cut scenario since neither is willing to budge on their ideological positions on taxes and spending. However, that deal is not a cut at all. The word cut is an out right lie! They are apparently referring to cutting the % of gdp that the the spending is. All of these deals still involve net spending increases. So with all that we are faced with, these jerk offs are still not willing to net decrease spending, they are only willing to slow down the rate of increases.
Apparently they have these overly optimistic economic forecasts that show revenue increasing, so if they have a lessor increase in spending than what these rosy forecasts show as increased activity, they come out and call it a cut. HUH? It is pretty clear now to me that we are in fact heading into an abyss, and I plan on making quite a bit of money on our government sponsored demise. I have never in my life been a doom and gloomer, but this conclusion is inescapable at this point in my view. l think the strategy we should employ now is to make sure and vote in all the spenders and just build our short positions in the process. Once they do what their ideologies compel them to do and we crash, we will all profit handsomely. I suppose the Gold bugs will say that means buy Gold and maybe they are right. Gold does now seem to be rallying on bad stock days which it was not doing before. I personally plan on doing it by shorting the indexes after I cast my next vote for Pelosi, and email her a thank you in advance for her 90 IQ bringing me riches.
Yes we are going to have to pay higher tax rates with this strategy, but we will also be able to make enough to move out of here and dodge that anyway. That is a bigger picture strategy that we can't really implement until the next election unfortunately. We just have to hope this whole thing does not roll over before then to get the best trade location on the positions. In the mean time, I have cut back my spending by about 5k per month, real dollars not a percentage of my estimate of future profits, the formula the government uses.
It also looks to me like we are going to see some downside in the currencies this week. The next couple of charts of the Aussie and Canadian Dollar show why I am looking for this.
You can see how the recent breakout above the prior highs was not accompanied by a new high in the POIV indicator. That indicator has been declining over the last few weeks while price has been rising. I did have a long trade here that I did not take for this reason this past week. There are times when this condition is present and it catches up then the price takes off so nothing is perfect. However, I have a hard time getting really bullish on something when the divergence is this prominent. The next chart which is the Canadian Dollar, shows a junior version of this same condition.
Since the world is essentially one trade, risk on risk off as some are calling it now, I think this confirms likely near term weakness in the Bernanke's. We are seeing some markets dance to their own tune a bit now away from the indexes, but I suspect if we have a big down draft everything will go with it once again.
In looking through stock charts I have seen one moonshot after another during this recent rally like AAPL for example. However, there are stocks that have lagged this whole move quite a bit. If you are looking for short candidates, pick on the slackers not the leaders.
I don't have much in the way of new positions to discuss, I do not see any setups for new trades for Monday here. I am long the Grains currently for the last couple of days, and that is all I have going right now. I apologize for the typos, I noticed a few in the last post. I hate that because it makes me seem like a dumb ass and my mom if she were still here would be ashamed of me. I just run out of time to babysit these posts like I should. Most of the mistakes are just wrong words that spellcheck does not catch, so I sound like a dumb athlete trying to be smart behind a microphone.