TRUST BUT VERIFY
Here we have the Bernanke 500 free fall pictured, with the Chairman himself having his hand on the trigger for QE3. He has his ammo now, a I told you so moment at hand. He has stopped artificially propping things up, and now they are rolling over. We all knew this would happen, so do not be surprised if any day now they decide to intervene again. They cannot let this thing rollover here, and we are once again at the critical levels in the neighborhood of the 200 day averages in many indexes. Some have broken it. You can see my COT indicator is not surprisingly in the buy zone. It has been pretty good in this market but not perfect as you can see by the labels on the chart. As readers know I am waiting for a bounce to sell with both hands.
However, there is now a potential fly in the ointment. This has gotten so incredibly oversold during this panic, that a sharp snap back is becoming increasingly more likely due to what Comrade Ben might be looking at. We all know if the stock market crashes, Barry is done. The only thing that has happened positively economically during his regimes reign is the stock market has risen. If you take that away it will be clear to many dumb asses, who for some inexplicable reason have not discovered what a terrible idea this experiment with him has been, that he needs to go. They are well aware of this, so do not be surprised at some point to see a full court press to raise stock prices back up by the PPT.
In case you are wondering, I just ran a quick test for the last time we had 7 consecutive down closes in the data base for the SP 500 and it showed this as the third time, with the prior two showing rallies off these oversold levels. Since there are a small number of occurrences I don't think it means much, but in general the odds of shorting into these levels of oversold pricing are not good. As per the title of this post, Trust but Verify. That means verify what I just told you in your own way.
I know that some readers are fellow Larry Williams students and he just put out his report which showed a decline here in stocks, but that does not mean you just blindly go out and sell at the market. His actual date in the original forecast which was dead on, was last month. That was where if someone were inclined to just blindly sell on his dates that it should have been done. I would not do that EVER. You have to have some entry techniques based on solid technical principles. He has dates also right now for Corn and look, limit up yesterday and those dates were for sells. You can see that there has to be more to how to use cycles than just blindly acting on the dates. I am watching Corn myself for a sell as I mentioned in a prior post, and it just not has setup the way my entry techniques require, so I am waiting. So it is with Wheat on the long side. I have no buy signals there yet, even though the cycles call for rallies which appear to have begun.
I urge all readers regardless of what their level of experience is to make trading their own. All of us supposed "experts" make plenty of blunders. Nobody is exempt from this. Do not ever just take a guru's advice blindly, always verify it. Net net here, we are in sell mode now, so I am looking for rallies to short, I would never short any market after it has already declined 7 days in a row. If that becomes the way to trade I will go do something else.
Here is the Copper market which is primed for a meltdown, and I am hoping it gives me a way in.
We have already had one potential entry when that huge outside bar at the high broke the low of the day before it, but that was not verified for me by one filter I use, so I passed on that. Now what I am looking for to get in is what I have diagrammed. Maybe we just crash here and I get left behind. If that happens I will go somewhere else to trade. I do not chase things that do not meet my rules. I used to and paid dearly for it and will never do it again. We could have an across the board crash on our hands there is no doubt about it but don't get too emotional with this. There are usually little ups and downs that give us a way onto the train.
Bigger picture what is a possibility here is what I have been talking about for a very long time. The way the market was artificially manipulated to levels well beyond where it would have been on it's own, is going to have consequences at some point. Market manipulations always end the same way, see housing and Gold will have this happen eventually also. The reversion I have warned was going to be ugly. I also suggested that the Fed would allow this to happen to help sell it's argument that QE3 is needed. We may be seeing both of these scenarios begin to play out right now. What is unknown, is whether the PPT can turn this around on a dime, I doubt it. When big volume selling comes in as we saw in the 2007 - 2009 decline, the PPT gets run over. If they decide to intervene which is becoming more and more likely, they are not going to be able to quickly reverse this. The interesting argument to me is how they can justify publicly how the stock market needs them to prop it up. Does that really make any sense, why not just send people money directly?
Must see TV the way I see it right now.