WELL THAT SURE DID NOT TAKE LONG DID IT?
Here is a picture of the greatest stock trader who has ever lived. Stevie Cohen cannot shine this guys shoes. Of course he is only a long side trader, but after all aren't short sellers the cause of all of life's problems? Here we are just 4 days off the highest close of the year in some of the indexes, and they have fallen now that QE2 is gone. Now this guy in just that brief stint is already talking about QE3!
If I had not read this with my own eyes there is no way I would have believed it. We have circled the drain ever since he became a stock trader, yet he thinks his trading helped all of us? It is true the manipulation that has occurred by what they have done has made most people whole in the 401k accounts, but it has also kick started a firestorm that is going to bring us all down. If one more person lies about no inflation I am going postal. It is ok to be wrong it is not ok to lie to us. It is time this guy is removed as the Fed chairman before he does any more harm.,
Bernanke needs to be fired immediately
He did not even give us a brief period of pain so that he could say I told you so, he waited for only 4 bad stock days, just beyond words. Assuming he goes through with this at some point, there will be no question that we have to play the long side regardless of what else might be going on. Although we have no proof as to whether they actually make any trades themselves, they might as well by what they do anyway. The difference is really semantics. What we are going to have to decide is whether he allows a bad period to occur before he pulls the trigger again. If he does to prove a point, which he might well do, we still could have our gangbusters sell setup. The difference will be that it will provide a fantastic buy signal afterwards, once he gets to the point where everyone says ok you were right go ahead.
That will likely be a March of 09 type of buying spot. He has layed the groundwork for the move now so he can later come back and say I told you so and launch QE3. I think the probability of that is very high, what I am unsure about is how bad he will allow it to get before he does it. Only he knows the answer to that. We should get some good volatility either way so opportunities abound for short term traders. It is going to be a stomach turner for buy and holders.
What he is doing with this cheap money policy is creating essentially a free carry trade, so the profits companies are making are real, but I just do not see how they have taken it upon themselves to have in their mandate, ensuring high stock prices. How do they ever in the future now back out of that role without causing a huge implosion? They can't! We know how the movie ends it is just a question of when and from what level, and that is unknown. I think the poker game will be resolved in the direction of just piling on debt indefinitely, as the conservatives roll over, so this bubble can keep inflating. Timing bubble's popping is very very difficult as we have seen in recent years in so many places.
Enough on this, how do we trade now? No differently other than just being aware that if we do get into free fall mode, be aware the Fed will be lurking at all times and ready to come in and reverse it quickly when they deem they need to. This will make being short tough sledding at times so just have your plan in place so you don't get caught in an emotional quandary when a 50 point SP 500 up open follows a huge down day due to their intervention. It will happen I can guarantee it. For now they are going to stay out at least for a couple of weeks it appears, so we should have free markets for a bit. That is kind of a strange statement isn't it? An expectation that here in the US we might have free markets for a couple of weeks! Isn't this the land of the free? Oh how things have changed under Barry and Co.
Here you can see with the Bernanke 500 above, that we are now again in a buy zone with my hybrid COT indicator. All of the recent visits except one into this zone resulted in rallies, so I am looking for a bounce here. Once we get that bounce then we will see whether or not it sets up a sell, I think it will.
The next market is one that could be a trade in either direction the way I see it, Copper. It tends to track the stock market more closely than the other metals.
I was looking a buying strength today but it was just not right on some of the things I watch, yet also not right for the short. I am going to be watching this one closely over the next few days to see if some clarification for me shows up.
I am also still watching Natural Gas for a long entry. We are getting a pullback today so maybe one is finally setting up.
In Ben we believe should be emblazoned on the new currency.