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Thursday, November 17, 2011


WHIPSAWS AND GURUS



Yesterday showed us once again what happens when a little bit of the truth sneaks through the wall of BS Wall Street constructs. It was revealed late in the day that there is some exposure in US banks to the sovereign debt situation. DO YOU THINK SO?

If you don't think that you are out of your mind. When this broke the market dropped 250 points in a flash, just creating another huge whip saw situation. As I have been saying, this is a battle between the truth and BS, and the governments trying to manipulate the truth. I don't sit in their chairs so I have to be careful about standing in judgement about whether or not they should be doing what they are. I don't think anyone can truly stand in someone else's shoes until they actually do it. It seems every time we turn around someone is telling someone else what they should be doing. I love the talk show hosts on the Penn State situation.

My question I would ask these experts is, " With the last team you coached how did you handle tough situations?" Oh you never coached a team? Hmmm, what exactly is it then that makes you qualified to tell someone who is a coach what to do? I am no Penn State fan, in fact I hate Penn State. I have rooted against them for years. However, I don't know what Paterno did or did not know, so I am not qualified at this point to be critical of him. It does appear that he did not handle this correctly, but we are drawing that conclusion through selective releasing of information by the media, who as we know always has an agenda and does not often just report the news any more. The only criticism I have of him is that I can be sure of is that he stayed on too long as the coach just to get his name on the all time wins list, at the expense of his program. The quality of his teams has fallen off dramatically in the last decade. As bad as this story appears to be, we have to wait for the facts to come out.

I also can't believe nobody has ever kicked the crap out of this guy who has allegedly committed these horrible acts. I took a few swings at coaches in my time, and I can guarantee readers, had I played for Bobby Knight and he had pulled the crap he pulled on some of his players, we would have found out if he could have overcome my considerable wrestling skills. These were young kids but they are grown up now and I just would have thought that one or more of them might have been laying in wait for this guy. As they say payback is a bitch. Where am I going with this?

There are a couple of points. First, titles are titles, and I have never been one to give someone respect just because of a title. When I was a senior in college I wound up in a courtroom for a parking ticket of all things and was confronted with a judge who was a jerk. He proceeded to give me this ridiculous dressing down about having forgotten to pay a ticket. I was a college kid who forgot to pay a minor traffic ticket! To me he was just some blow hard being a jerk, and I said as much. We actually got into a big argument and I told him I could care less who he thought he was, his attitude was terrible and he could kiss my ...... As I walked out of the courtroom to the side the bailiff gave me this unbelievable look then told me in the next room I was lucky. I turned to him and told him the judge was lucky someone hadn't kicked his ass. The cashier then when I paid the ticket was kind of laughing and told me he had never seen anyone talk to that judge like that and that I had some nerve. My point was and I told him, since I had calmed down a little at that point, that I did not see any reason that he should be able to treat people like that just because he had the title of judge. I could tell the cashier was glad I told the judge off. We have now seen the judges are probably the single biggest problem with our legal system, and it is their arrogant attitudes and politics that are driving their decisions, not the law.

Here is the point. Just because someone of authority such as an official, or even a trading "expert" says something, it really does not mean anything at all. Trust but verify. There are all sorts of conflicts of interest, and we never know how they might be influencing people's views on things. This can be overt fraud, or it can just be human nature and be innocent. The one question yesterday about who I follow, I think is typical of many beginning traders. They justifiably want to find someone who knows what they are doing, and follow it. This makes sense, it is what I did starting off. However, you ultimately are going to have to think and execute for yourself unless you just turn your money over to someone to manage it for you. I just advise not getting too hung up on every word a guru says. We have plenty of times we are wrong, believe me. I think you should always be respectful of others, but when they earn that respect through good actions. Do not just blindly follow any one's words until first establishing it is the right course for a reason other than their title or who they hold themselves out to be.

The biggest reason I don't follow anyone else is that I want to be responsible for my own money and whether I make more or lose what I have. It is not that I think I know more than the next person. I just know that it is up to me not someone else, to get myself where I want to go. I don't want to be influenced by other people's opinions. As it was with the Penn State analogy above so it is with this stuff about the sovereign debt crisis. I don't need someone telling me anything about that. I can figure out for myself via Braille, that people who have no money lending people money who cannot ever repay it, just to kick the can down the road, is not a plan that is likely to work. I don't care what official comes out and tells me otherwise. Look at the scandal that is now breaking about the insider trading by congressmen and senators. They have re-written the laws to make themselves exempt from prosecution for this. Are those people who really deserve respect? Do not listen to what any of them say, if is just one lie after another.

The stock market is kind of one lie after another right here. We have these 200 up 200 down back and forth action days. It does look like a downside move is at hand, but you better have iron guts to ride out these huge retracements that are taking place, if you are shorting this. I mentioned one better way to play this than the indexes was Copper yesterday, and you can see how this has again broken down more than the indexes. For those who took that play, you are having a more smooth ride thus far. You can see as I have marked up the chart, how much weaker this market has been than the SP 500 which is below it. If the indexes to happen to break, this market is likely to really roll over more. I am not sure about the indexes here just because of all the accumulation that has been happening in them that shows in the A/D line and the POIV indicator. I just don't expect a big break down due to that.

One market that might be in a mode for a rally is the Euro. I do not have anything on the daily chart in terms of an entry setup here, but look at how closely we have followed the seasonal here, and we are right at a seasonal buy point. Perhaps it is time to look for a long entry here?




Unfortunately, the world is taking it's cue's from the US stock market as are most other commodity markets. Just be aware of this as I keep saying, with your risk management. I guess if I happen to have any judges reading I have probably lost them after today! Some times it is hard to day after day, create posts that have earth shattering new information, so I get sidetracked a bit.

Good Trading




1 comment:

John M said...

Cripes, what a good post.

It's not a rant if it's all true.