THE WORLD IS TRULY UPSIDE DOWN
Only in a world like we have today could a another bailout of a country after a failed first one, spark a rally in the currencies of the countries loaning more money to a junky. I know liberals think this is always the way it should be as long as there are people with more money ( as long as it is not them ), to take from to give to people to piss it away. As frustrating as all of this is to many people, and as sure as we know in the end this will be a disaster, we cannot get too carried away with the macro issue here. The bottom line is that we have to go with the flow. There is no sense in fighting a rally that you think is on a false pretense, who cares? A rally is a rally and you need to trade in sync with what is happening not what "should be." After all maybe we are wrong about our opinions about what should be?
One of the things that has become pretty clear with the little exchange I had here with a couple of Gold Bugs, is that many people are so fixed in their opinions that they have no alternate plan if they happen to be wrong. In as much as I think Gold is a bubble, I have been trading the long side of it because I accept that price is not in agreement with my view, and I am not going to fight a bubble just to try and win a cocktail party argument. Bubble's are where fortunes are made. I made quite a bit of money from the Real Estate Bubble, well into 7 figures. I love bubbles, you just have to know when to get out. People who have inflexible views often are right but don't get out in time. A Microsoft example was cited as to why I was wrong, lets look at that chart compared to GOLD and see if in fact that supports my side or the opposing view.
If you look back at the Internet bubble you can see that at the end we had a 2 year almost vertical rise, this is what I call a pattern. It is a distinctive occurrence that we can visually clearly see. Price had been rising steadily, then it went vertical. In the next chart you see the exact same duration, both markets were rising steadily then entered a 2 year almost vertical rise that we are in the midst of right now. These two patterns are nearly identical. It is yet to be seen if GOLD will suffer the same fate, but if history is any guide like this or any other pattern like this you can find, these movies all have the same ending. This is where people who get so tied up and married to a view of one side only, miss the boat. Everyone alive was bullish at the top in 2000 ( yours truly exempted I went flat at the end of December 1999). Getting into a percentage argument is missing the point here, that is irrelevant. You have to look at the pattern in price when it becomes irregular ( distinctive). It is the pattern which mirrors collective human emotions, that leads me to my conclusion.
There are people really bearish in the EURO thinking it ultimately has to crash, but the fact of the matter is that it is not "cooperating" at the moment. I don't really have an opinion on that either way, but that view is generally shared by those who also think the Dollar is doomed. The may be right, I have no idea and don't care. I do not need to know that to make money trading, and a fixed view on something is not going to do me any good. All of this leads to today's discussion of the Bernanke's.
This is a daily chart of the Bernanke 500, and the way I see it we are at a crucial spot now. Some of the custom things I use not shown, will turn back down on the daily chart tomorrow if today's range were to stay about the same, then it's low gets taken out. We may just take off here, my gut is telling me a lift off is happening, but I don't trade on gut ever. The next chart shows we are still in the weekly sell zone with my bands. If I get a daily sell indication where the weekly is also indicating a sell, that is a green light special. ironically when I look through individual stocks I see all different sorts of looks, not a consistent overall direction collectively. As a result, I am flat other than day trading today, as this is unclear. If we do close up where we are at press time here, up 12 Bernanke's in the 500, I will be looking to short weakness Friday if it develops. As I have said before, if we keep rallying and make new highs, I will be looking at longs on pullbacks most likely.
Following up on a couple of other things I have mentioned recently, the Sugar trade on the short side also appears to be setup nicely now if we get a downward break. The Bond market I had orders to buy above the current prices today, but I just cancelled them because it is too far of a travel range to get filled now and a retracement if we went that far would be likely. Rice is still developing, I do not see anything immediate there at the moment.
For now it "feels" like a cowabunga rally is at hand.