PLAY IT AGAIN SAM
At one point I was one of the few publicly talking about the PPT and how they manipulated the stock market. Although those in the know that taught me about this were way ahead of me on this, I was still in a minority a few years ago. Now as I listen to the speculation about Comrade Ben and his speech tomorrow the following shocking consensus is out there. The question is will he decide to raise the stock market again or not. It has become publicly accepted, and it should be the facts are there, that the FED created and maintained this whole rally. How sad is it to listen to a money manager who is going to decide to buy or sell stocks on Friday based on whether Ben says he is going to raise the market again or not?
What the hell ever happened to free markets? Have things deteriorated so badly that we can only rely on the FED printing more money to raise stock prices? Had you put me in a time machine 10 years ago and forwarded me to today I would have just never believed this. One man is going to decide whether the stock market rises or falls. I do believe long term cycles are what really determine direction, but in the short term there is no question this type of manipulation does effect magnitude. I would argue that you turn off the news and study technicals. Here is what they are telling me right here. Overall, we are without question in a down trend on both daily and weekly charts. The larger moves should then be down not up as long as this condition persists. Cycles and Seasonal patterns say it should last into the fall. On a short term basis, the real timing tools I use do not have sell signals right here. It appears the way they move that probably another week or so possibly more will have to go by before they could move into sell positions. They are closer to buys than sells right here.
Since I require the two to be in sync, that leaves me without a trade for the indexes tomorrow other than day trading them which I will do. There is no question when Ben gives his speech we will see some movement intra day. I do find it interesting that I have not really seen one suspicious buy or sell program for quite awhile now. They are trying to make a point, they want us to come begging. I don't think there is quite enough public concern over this yet for the majority to beg the FED to save the stock market yet. If we were to roll down in line with what the cycles and seasonals call for, we could get to a level where the public will cry uncle. This could very well be in the fall, when the cycles will likely generate a rally anyway without going through all the brain damage this analysis causes. That could very well be a great scenario for a big rally, QE3 coming in right at the end of October right when the seasonal low normally occurs. Who is to say? We could have the natural cycles in price pointing up along with government manipulation accelerating it in that direction. This combo could bring a very big rally.
For me I do not have an index trade for tomorrow, so that is that. Hopefully I can get my apples lined up correctly when he starts popping off, and make some money intra day. You can see in the above chart that my COT index is in limbo and it was also in limbo a year ago when QE was announced. It is no help here, onward.
I do not really have much for tomorrow. Lets look at the Dollar Index, and Rice.
The Dollar Index has completely decoupled from the stock market, and what a coincidence, that happened right when QE2 ended. This is how it should be, the stock market moves should not determine where the dollar goes, that is absurd. To be clear, there obviously is a relationship there, but it should not be tick for tick inversely the way it has been. This is a good development, but unfortunately this chart is just a mess to me. We are just consolidating in very choppy range bound action. We will break out of this at some point, and I think the boundaries I have drawn are about where the critical areas are. My strategy is likely to be wait for the break and play the first pullback, but that could change. I just do not see a trade here right at the moment.
The next chart is a thin market, Rice. If you look at the huge divergence in the POIV at the highs, it is very much like what the Aussie Dollar looked like before it plummeted recently. I think this market is a sell here and have indicated about where a break could be shorted. This is one I am watching closely.
I am still looking for a short in Bonds as I mentioned the other day, but have not shorted it yet. The strong seasonal pattern still says up but there are some divergences creeping in telling me we are going down here. The Aussie also appears to be setup for a rally as well.
Enjoy the show tomorrow.