Friday, April 29, 2011


There was a question asked about the 10 Year and why it was going up, I will get to that in a second. You can see above what I call QE2, since that is what it is really intended to do. The whole point of the smoke screen era we live in is to fool people into thinking something and to mold their behavior in accordance with an illusion. This keeps the masses in order so to speak. Panic equity selling is the last thing we need right now. It would expose what we all know is really going on underneath. However, it would solve one huge problem, dollar weakness. Now that the PPT has maneuvered us into this corner by undertaking the quiet elevation of equity prices into the biggest bubble of all time ( yes bigger than 2007 by far ), they have a real dilemma on their hands. They have created this huge inflation wave and absolutely clobbered the Dollar.

Ironically, the minute they stop playing their games we will have a commodities crash, a stock crash, and a huge rally in the dollar. They do not want any of these 3 things to happen. The problem is the US public and for that matter the world is now wise to their deliberate attempt to do all of these things, and they are coming under a tremendous amount of "scrutiny." Of course that is somewhat of an oxy moron, since all their activities are kept secret, so how closely can we scrutinize them anyway?

Most people say that QE2 will end in June, etc.. I am not so sure about that. The minute the QE is pulled away completely the above 3 events are going to happen almost instantly. They know this as well as we do. So, if their goal is to not have that happen, why would they stop? If you read the words from his speech I posted yesterday, you see that he is admitting that economic conditions are so poor that keeping rates low for quite some time is going to be necessary. That is setting the stage for QE3, QE4 etc.. One idea that has been thrown out there that does make some sense is that they agree to let QE end on the stated date, they will let everything start to crash, then they will argue that is proof that we need more, hence QE3 begins. This would certainly get some people off their back but of course solves none of the underlying problems at all.

The problem with that theory and we saw it during the 07-09 crash, is that once volume selling shows up, the PPT cannot stop those down moves, it just requires too much money. If you take a big down day of 250 points, you are talking hundreds of billions of dollars in that day to reverse that move. This is why that ploy will not work, they cannot let this cat out of the bag. I do not know what they will do but I suspect as I have stated in here repeatedly, the obvious short everything when QE2 ends trade is not going to work. I have no idea what they will do but I suspect they will not back away from this manipulation game they have mastered any time soon.

One could argue that the 10 Year note should not be rallying in the face of the ending of this crap. First of all we still have another month minimum of it, so there is no reason for a decline based on that now. However, if you look at the weekly chart above we can see why we have had this rally. Overall we are still in a major uptrend as you can see on the chart, and during the decline off the highs we had substantial commercial buying, this is a buy signal. Timing the entry is another matter but just from a fundamental standpoint, this is a good combination for a rally to take place. Once we moved off that low, we then made a higher short term low on the chart and while that was happening, the Small Speculators were selling with both hands. They reached their highest short level in history, of course right before the market took off on the upside. Although in GOLD this type of setup has completely failed, it has been a great recipe for declines for decades and still is in other markets other than the metals. It used to be in the metals also just FYI.

This is the true reason why this market is rallying. The speculation about QE and what it will or want do, whether it will end etc.. is not something you can ever trade with. You have to have an approach that analyzes what is actually happening. Yes that is actually happening, but none of us know exactly what they are doing to manipulate price. We know on the surface they are buying treasuries, but there is much more going on than that believe me. You can also see that we are now nearing the time of year when this market typically rallies as indicated on the seasonal down below. Normally we decline into this time of year, so maybe we will invert this year, or maybe we will accelerate. We are in a zone here where a sell signal could be taken. There are some things I look at on these weekly charts that are not shown, that indicate we are in a resistance zone right here. If we were to break out of here strongly, the sky could be the limit. However, if I get a good short term sell signal on daily charts I will go short up here now. I will short the 30 year and not the 10 year since it is weaker on the charts. There is no sell here now at all, so maybe one will not develop.

I do not have anything new for today for setups in any other markets. Just another day another up close.

Ho Hum

Thursday, April 28, 2011

LOL, ROFL... This is no laughing matter

The Committee will maintain the target range for the federal funds rate at zero to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

These are words out of Bernanke's speech yesterday that ought to scare the daylights out of you if you have any common sense at all. He is referencing subdued inflation trends? Does this look like a subdued inflation trend below in the chart of Unleaded Gas? Oh that's right we exclude that from our measurements since obviously it is not important nobody really buys gasoline anyway.

You can look at almost any market and the story is the same. I do have to admit now that I am finally getting pretty worried about things. We have lousy GDP and unemployment numbers come out this morning, and here we are with the boys buying S&P futures once again on top of a speech basically telling us everything is fine. I know I am beating a dead drum here and it is actually starting to get embarrassing, but I just feel obligated to try and tell people this is not real. The up trends are real, and real money is being made on the long side, that is real. Shorting virtually anything is suicide, that is real. What is not real is the whole premise this is being built on. We have an unprecedented time during our history where our officials are embarking on a mission to deliberately devalue our currency so they can add more debt and are basically saying f you to anyone who objects. This is all going to end terribly at some point, I wish I could tell my readers when, but I do not know. These people are deliberately creating runaway inflation and telling us it is not happening.

One thing you and I should both be doing which is almost always the answer to what to do, is to trade with the trends. As much as they are rigging the markets to go one way in perpetuity, as long as you just go with it and not fight it you are good to go. For people like me that like to trade in both directions, you just have to turn off the sell button, put a piece of tape over it. There will come a day when sells will work, but that day is not now. Yesterday I showed a chart of the Canadian Dollar and went through some logic as to why I thought it was a short. I did get filled on that trade and here is what I did afterwards. First, I took the trade with very small size due to it being counter trend, in hindsight a very good move. Second, when I saw it trade through the price and get filled then immediately reverse when the PPT showed up to move up the stock indexes after they took a hit, I bailed the trade for a small loss. It went on to go all the way back up to where I would have been stopped out, so I saved myself quite a bit of money there. I did decide to watch the markets intra-day yesterday just because I sensed this setup was a trap and the plan was to bail the minute I saw confirmation of that.

I can't pat myself on the back too much here, shorting anything is ridiculous right now so this is a trade I never should have done. However, when I get really strong divergences I take shots against the trends with small size and at times get big wins even though the win loss percentage on those trades is low. Without getting into too much detail on things, this was one I probably should not have done with the DX just free falling now, and actually being pushed down on top of dropping on it's own weight. Oh well it is done now. One of the things you always expose yourself to in a forum like this is looking like a fool.

I mentioned in here a upcoming long in Cocoa, that has been triggered as of yesterday. I also mentioned Sugar on the long side, which has rolled over so there is nothing on the buy side there. The other market I mentioned is Heating Oil. I did not go long this market even though had I done so the trade would have worked out so far. Below is the chart, and look at it compared to the above chart of Unleaded Gas.

The third chart in the energy complex of course is Crude Oil which is showing a bit more strength than Heating Oil and less the the RB chart above. It is just mental baggage I suppose, but buying the weakest member of a complex is something I rarely do. I do not subscribe to the catch up theory at all. I would be more likely to short this if it broke down due to it's relative weakness. Since Chairman Ben has eliminated shorts for now though it leaves me with nothing to do with this one for the moment.

I have been looking at the long side of the Bean complex as well for the next few days, so that is where I am looking to trade today.

Wednesday, April 27, 2011


I did not read the article since I would never read the NY TIMES due to their socialist agenda they push, but there was some commentary today by a supposed " Pulitzer prize winning Economist" about the FED. The gist of the article according to what I have been told was that it was time for the FED to put their foot on the gas pedal, and that they had been too TEPID! This guy is a political hack, he is no economist. I am sure most people have heard this joke, but here it is. There was a group of interns at a hospital going through the rounds with a resident. At each stop the resident went to each intern and asked them for their diagnosis of each patients condition. When they were done with the rounds the resident turned to one of the aspiring doctors and said, "in all my years I have never seen anyone get every single diagnosis wrong, have you ever thought of becoming an economist?"

As a trader very few things surprise me since I have seen so many out of the blue unexpected things in my life with the markets, but this did. This guy is either a complete MORON, or he is a liar. Not even one of my Saint Bernards ( I have 5 ) is dumb enough to buy that thesis. I will let this writer pick his own label if he does not like me calling him a moron. I think even the most uneducated person has at least a general idea that the Federal Reserve is controlling the whole financial world right now. You can see in the chart that although in general the dollar has moved down only slightly from it's low in 2008 net, it has had a very large decline since the March 09 stock market bottom. This is not a coincidence and this pinhead knows this full well. It is time for political agendas to get put aside and for people to all rally around fixing what is really wrong. It is time to pick a side, you are either a liberal who wants more of what we are seeing, or you want free markets, the time is here for this whole thing to go one way or the other. You would think that most people know now that we are out of money and this just cannot continue, but there are a surprising number of people just with their heads in the sand who just think everything will work out fine on it's own. It won't!

For someone like this to write something along these lines shows a complete level of irresponsibility that just has to stop. Policy decisions by the intern are made from listening to people like this. The government and the FED have deliberately driven down the dollar and now we have this inflation scenario that a lot of people feared would develop. Putting 50 to 80 Billion into the market every day to drive up equity prices is being too TEPID. What these dingbats don't realize because they are so lost in trying to further their political agendas, is that what they wish for is going to hurt them. They will make less money, be taxed more, and have less freedom in the Nanny state they are trying to create.

As for the Dollar, I think we have now traded enough below the low of 2008, that the idea of a trap is close to being out the door, and we just have a free fall happening. We have to close on a weekly basis back above the level I have indicated on the chart to get serious at all about a rally. This will not happen as long as the FED keeps doing what they are doing every day. We still have a loaded dealer deck where for the most part we know the card count is in our favor to bet on the long side of most things due to all of this. June will be an interesting time. As I have stated, since it is the most obvious short of all time, I don't think it necessarily is one. The FED not only has our whole economy now on it's back, it basically has the world tagging along with us. They will crash other countries stock markets if they stop now as well as ours, so that is the slippery slope they have created. I have no advice for how they solve this problem, they created it and actions have consequences.

I do think we all need to keep our eyes open for the "big trade" on the downside, but at the same time not get too carried away fighting this. The next big move is going to be down in most things, but I cannot tell you exactly when that is going to start. I doubt it starts before June. Silver ironically is taking my post into account and right on cue seems to be starting something but we will have to see. I looked at some of my things there the other day and said out loud, well it looks like this is setting up a pullback buy, then I just laughed out loud. I am not going to touch that market in either direction here.

I did exit the Hogs short yesterday, and got a bit lucky. I went to the market just a little before the close thinking I was going to exit at the close anyway, and wound up getting out better, very close to the low of the day. Sometimes you get lucky. There is no reason to think this won't continue down, but I hit one of my exit techniques parameters yesterday, and this was a nice trade with quite a few contracts on, so out I went.

At the moment I am flat, here is one trade I have orders in for today, the Canadian Dollar.

This market has lagged the other currencies here in the last week. My PNJ oscillator has not reached the sell zone yet but as I have stated, that is just one tool and an experimental one at that right now. In general I do not like to trade against trends like this, but since yesterday was an outside bar up, my logic is that if we then get an outside bar back down today, that is telling me the short term momentum is rolling over. I also have some patterns in a few other things I use that support this trade. Will it be any good, or will it even trigger, who knows? You can see on the chart I have an alert set where my entry orders are. This way I can go about my business of not death gripping over every tick during the day.

I think alot of beginners or readers of this blog do that and I would suggest not doing so. I can tell you that once you come to grips with the fact that prices are going where they are going to go without you rooting for or against them, stepping back and not babysitting price movements becomes a lot easier.


Tuesday, April 26, 2011


I read something this morning from someone who has been promoting Gold and Silver for quite some time. He is claiming there is not a Mania going on and when there is that is when we know the top is here. Are you fr.....ing kidding me?

I have friends calling me constantly who have never even studied investing for a single moment asking about Gold and Silver. I have one friend whose psychic is telling her about it. There are stories about a billion and even on trillion dollar transaction that is rumored to be coming, on the long side of these markets. This has anecdotal top written all over it backwards and forwards.

I have no idea what price level will be the back breaker here, only Bernanke knows the answer to that ( or at least the time ), but as I said the other day, when you get into a market phase like what you can see on this chart, this is not a BUY! For Gold sakes people use some common sense. This Weekly chart of Silver looks unlike anything I have ever seen, and that is EVER. Maybe a goofy Internet stock that went bust might have looked like this on a daily chart for a period of time, but this is a weekly chart! Buying something like this here is absolute suicide, and it is a technique that if there is anyone telling you to do so, should be immediately ignored.

It is not a SHORT either, unless you wanted to buy some deep out of the money put options and hope you get lucky. There is no telling what the climax will be, but this sure is one in the making without a doubt. These markets are totally untradeable for short term traders, so I have no way of even considering a trade other than to say that if you are looking to short this, COPPER is the weakest by far, with GOLD being the runner up. We are going to read about some hedge fund someday that made a billion dollars shorting this when it went down just like in Real Estate, but this is a much much bigger bubble than that now. It is going to take more people out trying to short it, than will survive picking this top correctly. I can only hope that somehow I am short this market when this top happens, it is a once in a lifetime money making opportunity but it is going to be near impossible to pull that off.

With all that aside, my hat is off to the GOLD BUGS they have been dead on balls accurate about this market. I never in a million years thought we would see this and I was wrong, dead wrong. Ironically I have made money in these markets even being wrong, so I do not feel so bad, but I have not gotten the meat out of the long side that I should have, not even close.


Here is a trade I got into recently in the Hog market. You can see where I shorted this last Friday. My Synthetic indicator was in the sell zone, which got me interested so I began looking at some other things and thought this was worth a play. At the moment I am trailing a stop above and have a few targets in mind, one of course is the March low. I have other ways of exiting as well so we will just have to see where this goes.

The Euro and DX are interesting to me here again, due to what is becoming big time divergence with some of my indicators. Fading trends as we have seen this year is a quick way to bankruptcy, so I urge caution, but I am going to take another shot here soon, on the long side of the DX and short side of the currencies. I will do it with smaller size due to the counter trend nature of the trades.

I just put the basic Stochastic down at the bottom here to show how many oscillators are diverging now in this market. I do not trade off this indicator, I have my own. However, mine does have a similar look at this point to this although not exactly the same. I have put a line projecting price above today's high tomorrow, and you can see the Stochastic turns up if we take out today's high. That is a confirmation for those of you with big ones, to wade in here if you dare on the long side. Obviously, without a stock decline, this market is not going to rally, but stocks are in an area where a dip could happen again now so you just never know.

That's all folks

Sunday, April 24, 2011


I noticed something a bit unusual this past week when reviewing the COT data. You can see in the above chart in the Dollar Index that on the last bar that made a new low for the last couple of years, we have had a spike up in Small Spec longs. This is a bit unusual, normally individual investors are selling heavily at lows like this and buying at multi-year highs. Generally, we want to be opposite the little guys in trading, so this on the surface just plain vanilla, is a sell signal. However, generally these types of things occur opposite a move in the market with the Commercials and with the trend with the small fries. This is the opposite of what normally occurs. We would all be hard pressed to find someone bullish on the dollar right now, which generally is a reason to be bullish, this is a CONUNDRUM.

If we look back historically for other instances where this has happened, there have been a few.

Here is one that is interesting, and this is what I think is going to happen here. You can see we were tanking in this instance, we broke down to new multi-year lows. Initially the Small Spec longs increased, but then you can see they quickly got scared and covered those positions selling right into what became a big low. We then had a more normal pattern, where the small fries were selling heavily, and boom the market went up. Since we have several cyclical things telling us to look for a June/July top in stocks, it would logically follow that a low point will be made in the Dollar at that same time. These two markets are inversely correlated and tied at the hip for the time being. This does not mean I am looking to buy this market at this point, I am not. However, I am a big believer in traps, and I think one is being set here. Our fearless leader Ben has made many of the normal rules of trading invalid by the artificial manipulation he has orchestrated. It is his doing that has made the Dollar this weak and I am sure glad that no inflation has occurred as a result of this crap, ...oops, uh well....., there is no inflation if you just take out all the things that have gone up out of the inflation report.

Here is another example.

This chart for the most part shows the more normal pattern you see in most markets. You can see the Small Specs buying and being wrong as the trend keeps going and they get wiped out. The first example is the only one that shows some heavy buying right at a low, but it is still not really what we have going on here today. In summary, it is hard to know exactly what this means, but it is my thinking that it will result in a sharp move down that scares these newcomers out, and that will result in a sharp rally. This will take place over the next few weeks if it plays out that way. We would need to get a sharp enough run down first to scare these folks.

The Silver market is going parabolic at this point. I have to tell you I don't know anyone who is trading this market at these levels in either direction. To say this is dangerous is the say that Barry the intern is an idiot. It is the biggest understatement I could ever make. When markets get into these phases they are untradeable. The ADX has now reached about 80. Keep in mind most market tops occur in the 50 to 60 area with ADX, so this is extended so far beyond that it is incredible. When I go back and look for prior times when we have had these readings, it is a mixed bag. Some have just absolutely cratered, like the 1980 top. There are others that have continued on for a couple more months before crashing. They all crashed that is one thing they have in common. I think even the Metals bulls are worried about this now.

There is no doubt that for the man/woman, who picks the top correctly in this market, it is literally a billion dollar trade if they have size when this collapses. However, who in the world knows when that will be. The problem with this type of move, is there is not even a reasonable spot to have a stop underneath to protect your long is you are long. Please do not buy this market here. It could very well keep going, but if you look at history, there is not a single move that has ever happened that looks like this that has not formed a major multi-year top and imploded eventually. I cannot even say I wish I was long this market now, it is far too dangerous to be involved with something like this unless you have been long for a couple of years. This is not a time to initiate a position.

Here is the 1980 top, but there are other charts I could show that show the market continuing on for a bit with this same condition. I have no idea at all who is buying this market here, or for that matter who would be selling it. I suspect this is just being driven by the funds at this point even though it is not completely clear in the COT report who is doing this.

For this week coming up I have noticed there is a huge Small Spec short position in 10 Year notes, so longs should be considered there. I am also looking at longs in Cocoa and Sugar and a few other things. I don't expect any major downside in the stock indexes this week, they will likely be flat to higher.

Thursday, April 21, 2011


Normally the above phrase is used in Real Estate, but I would argue that it applies to all walks of life. There is no question it applies to our little venue here of trading. If you look at the third signal on the above chart, which is a buy, you will notice what a great move that was. These are the trades that actually kill us.

Why in the world would I say that, it is the best trade on the chart?

The reason why it is terrible to catch a trade like that is that it ingrains a bad habit in us.

If you look at all the other Buy signals marked on the chart, they are all lousy. Trying to buy this market you would have had to buy it on that one signal and hold it for a long time, to catch every last little breath out of it to have come out ahead overall on buy signals here. In the real world, not many of us could have done that, I know I would not have. I was long during part of that run, and I did not get as much of it as I should have.

We are in an era where we have the largest up trends in history right now. Many of the rules of trading are being re-written. However, there is one rule that will not ever be revised. If you trade with the trend, that is where the majority of profits come from. That is especially true nowadays. Whatever time frame you choose to trade be it 5 minute charts or weekly, trading in the direction of the main trend is where you are going to find the most success. You often have seen me make counter trend trades, and overall I have done ok doing it, but it is not what most people should be doing. It is also not what I should be doing. I have had a very sub par couple of weeks, and yesterday I just about imploded. I decided to just go flat everything and walk away for a bit. I then went on to pound out and log every trade by my signals in several markets whether I took them or not. I had to find out what the hell I was getting myself into.

I found without exception that all my bad trades were against the trends in those markets. The good trades were with the trends. I often find myself trying to refine something like my indicator on the chart above, to just make them perfect. That is actually misguided logic. Once you have techniques for trading it is how you apply them that is the key to whether you have success or not. You can have the best setup logic in the world but if you apply it constantly opposite the price trends, you are not going to have success. You cannot make an indicator perfect enough to do well using it fighting trends, it is impossible. It is mental masturbation.

It is just obvious looking at the above chart of the Dollar Index that had you just traded the signals as they occurred in the direction of the trends, you would have done much better. There are rare times to trade reversals, but as I have stated in here before, you must have a monster divergence or something just so obvious that it jumps off the chart at you. If you do not have that, just play the first pullbacks. Catching a major high or low, and I have caught my share, it actually the worst thing you can ever do. Trust me on this one, you do not need to go verify that. Some things you can take other people's word for.

Konrad, your comments on the DX are similar to what I have experienced. I have been playing mostly the long side of this market. Look at the chart above, if we knew nothing at all about trading would that seem to make sense? I do agree with you that when the turn in that market does come, it will be a large move. However, it will also give us pullback entry opportunities. We do have at the moment what appears to be a pretty large divergence setting up there, so that may be enough for me to try and counter trend trade this one more time. However, if I do it it is going to be on smaller size, and I will look to get more aggressively long on the first pullback. Had you just had that logic in the above chart, you still would have caught about half that move off the lows when it did reverse after the third signal on the indicator at the bottom.

As to whether or not this stuff is coming to an end any time soon, let's look at the next chart, the Bernanke 500.

It is clear to me when you look at this chart, where you could have considered selling and where you should not have. I will admit, this market has been the toughest market to trade I have ever seen in my lifetime during the last 2 years. I have been wrong often on where we were headed next here. We do have a large scale megaphone pattern which is now in play since we made a new yearly high this morning. This looks very much like March of 2000 in the Bernanke 100 if you go look at it. What you will also notice when you look at that was how many shorting opportunities we got before we really got going on the down side. I would expect that the same will happen here. We will get an initial break, then when we bounce that will be our opportunity.

It is quite odd to see the world imploding financially like we see now, and have stocks be this strong I will grant you that. Of course we know that the real reason they are strong is government manipulation, so that explains some of this without question. We could get a top at any time, but I would suggest not fishing for it. Trust me again, my fishing expeditions in this in many other markets have cost me dearly during the last 6 months. Learn from me and do not do it.

Wednesday, April 20, 2011


I have adjusted the price bar from Monday to show the new signal that has revealed itself. What you need to do is just pick any market anywhere and look for this situation and just blindly buy it. This goes contra to my 28 years of studying the markets, but it is absolutely what you have to do now. We have had yet another overnight explosion up in everything and crunching of the Dollar, and there is not really any reason to believe this is going to end any time soon. We have the strongest bull markets ever and I think now it is prudent to just plain ignore any sell signal of any type in any market. It does not matter how many decades your signals might have worked, they will not now.

Yes I got lucky making some money being short Soybeans recently but I just have to call that a fluke. I have tried sells in other markets and none of them have worked. It is strictly a long side market everywhere so that is what you have to be geared towards. The reasons do not matter, this is what it is. I will not post any more commentary at all on any reason why I think there might actually be a decline anywhere. Even though I have studied some of the things I talk about in here for many many years, they are all ineffective right now. Of course the one exception is the Dollar which trades opposite the stock and commodity markets now, so it is going down.

I strongly suggest now just waiting for minor pullbacks in any market you trade and just buying them. There will come a point at some time when this will change, but now is not a time to try and trade both sides of the markets the trends are just too strong. There is no short side.

I was looking at longs in the Euro, RB, Aussie and Swiss for today, but one of my filters was just not giving me the go ahead unfortunately. As a result I sit here watching another horse leaving the barn, oh well. The good news is that I can now re-launch my stand up comedy career with my one joke, "THE MARKETS WILL HAVE A DOWN DAY ONCE." This is sure to garner huge laughs again and also heckling from the back of the room. If you are the village idiot you should be laughed at. I have been the village idiot this week who did not read the memo. I did not realize you just blindly buy markets that are free falling.

Here is how the Dollar Index looks now and what I find interesting is that my Synthetic indicator is not moving up at all even on this huge down move we are having today. This is one of the reasons I like this work in progress, it just does not blindly go up every time price goes down. It is why it has so much potential. However, I still have not studied it enough to use it to make trades yet. I would normally look that this as a potential trap if it were to reverse tomorrow but this market is just in a free fall now that it recently took out the 2008 lows, so there is really no telling where it will stop. The government is deliberately devaluing this and as we all know they have quite a bit of power to do what they want. I see no reason to buy this here now at all.

I do not have much more to say today than this. My trading has just been awful the last couple of weeks, and I have missed this explosion again to the upside. You always get the honest answers from me and that is why I feel I set myself apart from most people. I don't come on every day and tell you how great I am and how I caught every move and never lost on anything. I am sure some of my readers are trading better than I am right now. I am not trading these markets well at the moment so I am not doing much trading today.

Tuesday, April 19, 2011


Another "late day save" took place yesterday which has to be the 500th in a row it seems. I cannot recall a day where we were down a good bit and actually closed on the lows. This is beyond absurd at this point, and far beyond any historical statistics. This market is being completely controlled by the government, a day like yesterday has to remove all doubt from even the most naive people. The S & P story breaks and things crater. Then of course Barry and his minions dispute the move by S & P. What the hell is there to dispute, the numbers are what they are?

When I first read of the writings of people that compared where we are to the fall of all the historical empires I thought it was just patently absurd. However, when I start reading some of these things, I am not so sure now that it is such a far fetched theory after all. It seems that extending control over things increases as the slides have begun in the prior failures of empires, and we are certainly seeing that now everywhere.

It is just beyond belief or any reasonable explanation why these people refuse to cut spending. At this point they appear to be bringing us down intentionally which is a horrible thought to even ponder. Nobody could be this stupid, so there has to be intent now. The utter refusal of the government to even allow any type of correction in these markets is going to result in a wipe out at some point. I have maintained that for the last year and I am more and more sure of that as the days go by. Yesterday was just a small taste of a bigger move that is going to happen at some point due to all of this.

I have a close friend that has a business that sells blood to hemophiliacs. He recently received a letter from the governor that unless the state of California agrees to raise taxes, he is going to cut reimbursements to these andd other home care providers of other things by 10%. This carries over to other home care illnesses as well not just his patients. He just knows the numbers in his specialty. Here is the rub, providers from him to the big Caremarks of the world have about just under 10% margins. A 10% cut puts them all out of the business! Not even a huge conglomerate like Caremark is going to stay in a business where they have to finance receivables for 90 days since the state pays late, on a balance that has no profit. They now have money losing businesses taking into account any finance carrying charges no matter how small. Guess what, they will all leave the business obviously. So, he is trying to bully people into voting for a tax increase. The worst part about this is that even hospitals who will take on the patients initially, also lose money providing this under the proposed change. They will also exit the business. These patients will potentially have no way of getting what they need to stay alive.

If you work this through he is essentially threatening to kill people if we don't vote to raise taxes. This is how far it is has gone. Instead of cutting back on the unions who put him in office, he is taking this tactic. We all know California is toast financially, but this story as I was listening to him the other day was shocking. I told him to get this to Fox news immediately but he is nervous about the bullying that might be done to him if his name gets out. I told him he has nothing to lose because his business is going away anyway. Just think about this and the other types of home care ailments that will be effected by this. Things are unraveling folks wake up. It is only a matter of time before the financial markets inoculations to everything else will lose their efficacy.

Back to the present. You can see on the weekly S & P 500 chart, that we recently hit 70 on the ADX, most tops are formed at 60 or so. This is being accompanied by a rollover in the Larry Williams POIV indicator. You can see the purple line is far weaker than price as I have indicated with the arrows. My Synthetic is not flashing a sell signal at all, but you don't always have everything. This is a situation that now bears watching. We certainly don't have anything screaming at us to sell but everyone saw the impact if only for a couple of hours yesterday, of what the debt problem is ultimately going to bring to a theatre near you. I hope they do raise taxes now because that will likely be the greatest short signal in the history of the stock indexes. It will be a trade to hold for a 50% plus move when they do it. It will be our ultimate way to profit from Barry for being such a moron. However, at this point all the significant structure points on the chart are still clearly intact, so until the low of the week of 3/18 gets taken out, we are still in a good uptrend situation. Most of the chatter I threw out above is bigger picture stuff.

Next is the dollar index, and once again this showed that it is a flight to quality in times of strife. Today it is moving back down again after the PPT reversed the index futures yesterday at the end of the day. This has a clearly defined down trend in price as indicated by the trend line I have drawn in. I am looking for a buy signal to show up here but do not see one yet. The other thing that is interesting about this chart is that the ADX is not rising. Generally in a strong trend ADX will rise along with the price move. This was happening until the last couple of months.

I know there are better traders than I who are already long here. I do not see an entry by my rules yet but am watching to see if something shows up here in the next few days.

The next chart is the conclusion of my Soybean short I talked about in here. Yesterday I talked about looking for a rally based on weekly stuff in this market, and we may have gotten the beginning of it yesterday. Once we took out the prior bars low I tightened up my stop quite a bit and got taken out. You can see the entry and exit points. I have no opinion on this at all. I traded this perfectly in my view, it just was not to be anything other than a marginal trade. Often things do not work out like we hope, that is trading and life as well. It still was a profit so it is what it is. There might be a buy tomorrow setting up today depending on how we close here today.

That is all I have today other than I had mentioned recently looking for shorts in the energies, and those entries have triggered. We also seem to have an interesting sell pattern that could be developing for the SP 500 tomorrow if we close up for today by day's end.

I am ending today's post with what I thought was a funny story yesterday. I hooked up with a good buddy for lunch and we talked about the normal things, chicks, fighting and sports. After we worked through all of that for about an hour. I could tell he wanted dessert and we decided on a chocolate chip cookie with ice cream. Just the fact that we even had a discussion about what to order for dessert is bad enough. Now picture this, two guys who think they are macho, splitting a dessert like that. Here is the worst part, I did not finish my half! When I asked the waitress if she had ever seen anything more gay than this she said NO!!! I texted him later in the day telling him there was a rumor going around that two dudes who thought they were bad asses were rumored to have split a chocolate chip cookie and not finished it. He almost crashed his car when he read it.

Good luck today

Sunday, April 17, 2011


As I watch the NBA playoffs this weekend I am reminded alot about opinions. What is it they say everyone has one? I often get to the point where I don't want to offer my own and if I hear another one from somebody else on politics, religion or sports I might just start go into radio silence mode. We constantly are exposed to everyone telling us things are different than what we can see with our very own eyes. These people are 'experts" so what they say supposedly means something. I have heard every expert in the world of Basketball including one of my very best friends who is the manager of an NBA team, tell me how good the Lakers are and how New Orleans is no threat to beating them. I have watched them play all year and one thing I am sure of in spite of any experts opinion, they could lose to any team any time including probably a good college team.

What is it about all these people, are they so tied up in their own opinions that they truly think they can convince some dumb ass casual observer like me that what I can see for my own eyes is not happening? The Lakers are just simply not any good, losing a game to New Orleans or any other team is not a monumental upset. They lost 5 or their last 7 games, hello!!!

This is the same in the financial markets. You always need to operate with a trust but verify approach. Do not read my words or any one else's for that matter and just blindly accept them. Observe for yourself what is happening. This all leads me to the above chart which shows a fairly consistent large Small Speculator long position accompanied by a heavy Commercial short position. This is supposedly according to the COT experts, a very bearish situation and should lead to large price declines. However, as you can clearly see in the chart at the top, the projection going forward for this condition is actually a continued price rise. How can this be? All the experts say it is not so? Well we have seen one market after another with this condition just soar in recent months.

I will grant the experts one thing. For the most part historically this has been a reason to look for declines, but the rules are being re-written now and all you have to do is look at a chart and tune out all the noise. One market after another is ramping to historic heights. Whether or not they "should "or "should not be," is irrelevant. Just like the Lakers. They should not be as bad as they are but they are bad that is all that matters. Our opinions about whether a market should go up or down or a sports team should win or lose, do not matter. It is what actually happens that does.

This is another example of this condition that occurred in the past, and you can see it is not really all so bearish after all. This should be easy to accept since we are now seeing recent examples regularly of the Small Specs being right for extended periods of time. It is not really anything to be overly concerned about if you are positioned on the opposite side of the commercials and with the individual investors as we have all been led to believe.

One thing you can see in the above chart is that when the Small Specs start to sell and Commercials buy on dips against trends like this, it is time to look to get aboard the freight train for another move up. We just saw this happen in the Yen recently and currently the Soy Complex has this condition. As a result, that should be one market to watch for a buy setup, Soybeans. This does not mean just go out an go long Soybeans. First off you should verify what I just told you. Second, you need to look for an actual buy entry on a daily chart. The COT setups are on weekly charts and do not always move markets right away, although at times they do. You all have to do your own research with these types of patterns to see what will work best for you. I just wanted to point out that it is on you to do this. You should not take my word or anyone else's for that matter, on what causes what in trading. It will be your money on the line, so get your money's worth by studying these types of things for yourself.

Friday, April 15, 2011


It is Friday and we have seasonal up biases for today in the stock indexes after recent declines, so I doubt we are going to see downside action today. However, in case we do, here is one trade above I am looking to enter, Crude Oil. I have orders to short below yesterday's low today. I doubt we will travel down there unless we get a stock decline. However, in the event we do I have orders sitting down here for an entry. It seems like a dumb comment even making that type of remark, but that is the world we are living in right now. US stocks are driving almost every single market in the world. When they go down, many other things decline, when they rise most other boats get lifted with the tide. This relationship has diminished in recent weeks from what it has been, but the influence is still there if you watch intraday price action. Also keep in mind seasonals are biases not absolutes. It is always nice to have them backing a trade but at times markets go opposite of them so they are just a tool.

This market correlation is not and never has been a reason to take a trade. It never will be. What it is useful for is keeping a handle on your risk. I have talked about this in here many times, so you can go back and read old posts for more on that. This market is setup via the COT data to decline on a weekly basis, and we have a type of right shoulder pattern here, so that is the basic logic behind this trade. There is always more to them than that, but that is the core reason. We all enter trades using different tools, so I will leave that up to everyone on their own.

Here is the update on the Soybean short I showed the other day I entered.

You can see where I entered, and I do have a trailing stop not displayed. I also have the general target area for this trade on the chart. Obviously we are not in danger of going there today, and most of the time trades do not hit targets anyway. However, you need to have some plan of where you are getting out when you get into a trade, so that is my plan here. I will trail a stop and exit in the target area if we get there and I have not been picked off before that time, which I probably will be. You can see with my COT Synthetic we are in the buy zone now, and the last 3 times we got there we rallied, so a rally should be coming here. You may ask "if that is the case why are you short?"

That would be a good logical question. My answer is simply that the indicator is a setup to look for an entry pattern, it is not an entry pattern. In the meantime the price trend is down, so if it reverses to up while I have a buy signal in my indicator, I will reverse to long. I know some people get confused at times with Larry Williams videos about market setups. You have to understand that a weekly COT setup is a larger frame time view of things based on fundamentals. We have had bearish setups in currencies via that route for long periods of time over the last two years. However, we never got very many short term sell patterns. You have to enter trades on daily charts, and at times they will not line up with the fundamental setups on weekly charts. Do not get confused on this. Just because there is a weekly COT bearish setup, that does not mean you cannot go long on a daily chart pattern, you can and should.

These setups can be dead wrong and we have seen that time and time again with the COT data the last 2 years. It is why I pay far less attention to it. I do watch it and am aware of what it is saying, but if that was all you studied and traded off, you would have been wiped out the last 2 years. I think in general it has jumped the shark. There are still uses for it as I have explained, but do not get blinded by it.

I am not expecting much to happen today unless the PPT decides they want to run this up. I doubt we will see much downside action today. I think most likely flat to higher in stocks and not alot of action elsewhere.

Have a nice weekend.

Thursday, April 14, 2011


After hearing highlights of the speech yesterday I realized how fortunate we all are to have him. It is so rare to see anyone publicly just expose so completely all of the flaws that makes us all human. It is also rare to see someone in such an important position just be so incompetent to the point where if they were to work at any job other than President, they would have been "so fired" a long time ago, yet still be employed. One of the things that is a truism of life and gets magnified in trading, is that if you do the wrong thing, you will pay the price eventually. In the above example, he does the wrong thing virtually every time he speaks. Think about him as a trader and how he would approach it. First off he would clearly have a very strong conviction of what he wanted to do, as he does at times in his current job. Next, he would then flip flop back and forth with equal conviction, changing his mind over and over. He would be what we call a Nintendo trader. It is going lower, now it is going higher, translated it is going down, oops now it is going up.

Next he would lash out at those that are having success and ask them to give him some of their money because he could not do it himself. He would resent the success of profitable traders and would want to regulate them to the point where they could not succeed, hence bringing them back down to his level of mediocrity. Translated, SOCIALISM. Next he would cry out that we need to stop doing what he is, instead of looking at himself as the culprit. If he were OJ Simpson, he would be yelling at people for murdering their ex wives. It is just incredible to me that he is a compulsive spender then appoints a commission to investigate spending! Of course he then ignores the advice because it is along the lines of cutting back spending. He then goes on national TV again and says we have to cut spending. Well then just do it and shut up, you are the one who is doing the spending not us. This is just so insane. Stop selling 30 day lows in an uptrend if there is an uptrend, etcc. That would be a good analogy.

All of these blunders serve as a very teachable moment for me. He epitomizes doing the same thing over and over and expecting a different result. We as traders have certain core things we need to do correctly and no matter what else we do properly, if we get the core wrong, we are doomed. I think the basic thing most of us have to do in order to trade successfully is get in tune with the underlying momentum of a market. Most of the time that is just with the trend that is in place. At other times it might be underlying things that are about to change the current trend. It is not an easy task to do this, but I can tell you that if you constantly fight a trend, you will constantly lose. I have been down that road at times in my career and it is incredibly frustrating. You get it in your mind that for whatever reason be it an oscillator diverging, or a belief in some fundamental influence, that the current trend has to change. I have a close friend who is just always short everything, he almost never takes a long position. He has his moments and is having one now that we are having some declines occurring, but he inevitably gets run over because he is always trying to fight the trends.

He is aware of this problem, yet keeps doing it because he is comfortable in his approach. You have to get out of your comfort zone to have success. Barry is not comfortable with Democracy and he wants Socialism, however, the US public does not. Every time he makes a small move toward Democracy, which would be akin to my friend taking a long position in something, he immediately goes right back to Socialism, my friend going back to shorting. In our current environment we are witnessing what will likely be the greatest trend moves we will see for a decade maybe more. This is a momentum traders market, don't fight these moves.

I mentioned recently that one thing that was bothering me about the current stock market situation is how weak COPPER was on a relative basis. This market is a reasonably good bell whether for stock prices. It is no surprise that stocks have declined some here with this markets current condition being considered. It is a good idea for those of you trying to get a gauge on what will likely happen next to watch this market. I do not see anything definitive other than just it being relatively weaker. I do not see a short entry in COPPER at this moment, if anything a long might be setting up here. However, just as an overall gauge on things this says to not be too bullish on stocks here.

The net comment for today using our fearless leader as our guide is, if you do the wrong thing over and over expect bad results. If you are having bad results, change what you are doing, do not just walk off a cliff following what you are comfortable with.

Get out of your comfort zone.

Wednesday, April 13, 2011


Above is our current and unfortunately closing account statement and balance in the trading contest. My partner has run into some personal issues and we are going to have to dissolve the PNJ Advisors business as a result. I am going to attempt to switch over to another contest account but I doubt they are going to let me continue on. Most likely I will have to enter mid year, alone starting from scratch. I have not decided if I want to do that or not yet but I probably will. I have nothing to lose, but let's face it I will be a long ways behind starting off. It would be a true underdog story if I were to win.

We have done ok but not great this year in this contest account. I felt it was important to show the actual account statement just for credibility purposes. You can see there was one outstanding trade still on but it was liquidated last night at the same price as it closed, so the balance is exactly the same on a closed out basis as what you see above. People can talk all they want but showing actual proof of a return is what walks the walk. Admittedly this account only started with $40,000 but you have to keep in mind most entrants start off with less since it is a percentage return contest, not gross dollars won. We chose a moderate amount to try and have enough to do what we wanted but not so much as to hamper the return percentage. So there you have it, up 22% January through April 12th.

Since PNJ is formed in another state, and I do not reside in that state, I cannot just carry on with it as is even if I were to buy out my partner. As a result, we are just splitting this in half and shutting it down. California is so onerous with it's regulations, that I doubt I will form a business here so if I re-enter it will likely be as an individual. I will let readers know what I do in this regard. I wanted to make sure everyone did not think we lost all our money when our name disappeared from the leader board all of the sudden. This is of course the second year in a row I have been involved in a mid year withdrawal which is really a bummer. Last year I told everyone about the software problem I had with Genesis that caused me so many problems entering orders that I had to close some of my accounts. That was a fluke, and I was having a decent year as I told everyone at the time I had to withdraw. Now this year I have this happen, which came upon me fast. We tried to explore alternative solutions to avoid having to do this, but there are just not any we or our attorneys could come up with.

I guess net net with the two consecutive years with problems, I have basically proven I can make between 20% and 35% in the first quarter every time! Most people can't do that in a year. Anyway, enough on that and time to move forward. Maybe I should call me new company First Quarter Trading Advisors!

I showed everyone my Bernanke 100 short and it was stopped out last night for a measely 6.25 point gain. The chart is below.

You can see that once we had that day yesterday where we appeared to be breaking down, I tightened up the stop on this and got picked off last night. No regrets, I followed my rules and will look for the next trade. It does appear to me from what I am currently looking at that if we were to close here, I will short this again below the low today tomorrow. Of course alot can change between now and the close, but if the range were to remain the same and we closed up for today, that is likely what I will do. I know there are a couple of you that are going to want to ask about why I did what I did with the stop. I can just tell you this, stops are a judgement call, there are not absolute etched in stone rules that I follow. I try to keep them back as much as I can, and at times I tighten them as in this instance. I will say this, in this instance I would always have tightened this stop down to where I did. This should have gone right from here if it was going.  If it breaks down again, I will short it again.

Here is another trade I have going right now, Soybeans.

You can see I shorted this Monday night. It traded through the prior day's low then bounced and I got it on a limit a few cents better than the real entry level. This is why the arrow is above the low and not at it. As with any other trade, I have no idea if this is any good or not. It has been good for one day so far, but many trades like this with how volatile things have been, have reversed the next day so who knows what will happen here. I do not have my stop displayed because I am going to keep that to myself. I don't want too many people knowing where they are just in case some wise ass wants to gun for them. I doubt that would happen but you never know.

Here is one market on my wish list, Crude Oil. I have drawn in where I hope price moves to in order to give an entry on the short side. I see this at the moment as having broken the short term uptrend, and now I am looking for a bounce to sell. It may not happen, but if we do trade up for a day or two from here, I will be looking. It does not appear my indicator here will be on board by then in the sell zone, but that is not an absolute at all for me at this point as I have explained in here repeatedly.

That huge day at the top is ominous to me until it gets taken out. When you look back at charts you often see major highs have a bar like that.

On a separate note, I read something interesting this morning that makes me realize everyone has a take on things. I read some Gold bugs talking about how they now have proof that there is a conspiracy by the government to keep the price of Gold down!!!!  I would imagine they think it should be $10,000 an ounce? That is by far one of the stupidest things I have ever heard. I actually think if there is any manipulation it is going on in the opposite direction as a bubble they are inflating for people to place their money. In all seriousness, I also doubt that, but if I had to bet on one side or the other if there were a conspiracy, it is up not down. These people cite the reports that the government is reporting they are selling Gold. If you look at the COT reports, it is a fact that the largest players are selling gold hand over fist. That is actually a fact, not a bogus statement.

The only way this could be true would be if the COT reports have data that is inaccurate. I have brought this up before as one possible explanation as to why the COT has been so far off in predicting correctly where Gold prices are going. We are just never going to know this, but to suggest that there is a conspiracy to keep the price down on something that has had the highest percentage increase in it's history is just insulting. They are just trying to further their agenda. Whether we go up or down in this market means nothing to me, but this theory is just a furthering of a lie to make money.

I bet these same people thought there was a move to keep pet rock prices down or Mazda Miata prices in check when they zoomed way up. These of course where rampant speculative runs in things that imploded. I would also speculate that they owned pet rocks and Miatas at the highs and got their ass kicked when the prices rolled over.

Tuesday, April 12, 2011


My post yesterday that showed Crude and pointed out that my indicator was telling us to look for a sell could not have been much better could it? The Sun did apparently shine on my ass yesterday!

One of the reasons I do this blog is selfish I must admit. It is an attempt by me to establish somewhat of a transparent record that proves I know what I am doing. Even though at times I have made some blunders admittedly, regular readers know that by and large I get things right. This is not a coincidence, I have been at this for a very long time, and I work at this incredibly hard. This is a very challenging business and even the most gifted and skilled people have their off days. If you stick with it and study and just grind grind grind, you can be successful. If you think it is a get rich quick industry, you will find it is also a get poor quick industry.

At this point if you are not already short, you need to look to sell bounces here. This market could drop $80 a barrel in a 6 month period once it gets going. This whole move has been driven by speculators just as many of the commodity bull markets have. When the bear market shows up, there is going to be some fireworks show believe you me!

Is this that point? I have no idea, we won't know that until an obvious break happens. So far this is just a trap above a blow off day, last Friday's move. The one perplexing complex is that of the metals. I am dead convinced these markets are being manipulated on a grand scale since the COT stuff is the exact same as Crude. That is what has led me to not be a believer in the metals markets up here, and I have been wrong. However, when this does come down, it is going to wipe out alot of people. It is by far the most crowded trade in the history of the world. History has not been kind to crowded trades. If it were, everyone would be rich not poor. All you would have to do is wait for an idea to get so popular that your gardener who speaks no English indicates to you in an impossible to understand conversation, that he just bought some Silver. Then you could go out and hock everything you own buying Silver. Then all you would have to do is sit back and get rich with everyone else. Unfortunately, although we all know life does not work this way, it has in the metals markets.

Might there be someone important who knows the world is heavily in this trade and does not want it to go south just yet? I suspect so, but I do not know who that might be. I do know that I have never seen anything like this, and it will be a lesson for history as to how to know when a major top is forming, once it is over. For now, I still maintain that just in the near term, Silver is not a market to be buying up here.

The next chart is that of the Bernanke 500 and you can see something that jumped out at me a few days ago. There is a huge divergence in the POIV indicator that Larry Williams created several years ago. This does not often speak this loudly, when it does we need to listen. It typically just moves along with price.

This certainly does setup the possibility that we are making a big top here, now that in the near term we have failed the old highs, and had a huge divergence in the POIV indicator. As I told readers yesterday, I shorted the Bernanke 100 a few days ago ( The Naz ), due to it's relative weakness in comparison to this. Yes my COT indicator is climbing up into the buy zone here, so who knows if this is as far as we go. The problem with this indicator and why I am not staking more on it so far, is that it tends to move into the opposite zone too fast at times like this. There is no way of knowing if it is doing that here or not and that is why this is a work in progress and probably will be for awhile. I have so many damn goofy ideas that I get pulled in a million directions and become a multi tasker that never finishes any of these research projects.

As for the guy who just tried to get a penis enlargement comment through, you don't get it. I am a commodities trader otherwise known as a Big Swinging Dick. I don't need one!

Monday, April 11, 2011


As spectacular as what is going on is right now, don't get caught asleep at the wheel or as Gene Hackman said above in Hoosiers, watching the paint dry. Every day is followed by another incredible ramp up in prices and it seems like it will never end. I spent the whole weekend working on a variation to my trading approach, that more closely conforms to what has been happening since Bernanke took over the world financial markets. I do have to admit it is tempting to change everything you have always done to try and cater to this insanity. I think it is the right thing to do provided you have an exit strategy for when things get back to normal. This is no easy task, we have no idea when that might be. For all we know he carries on with this for a few more years and by then you will have made millions just buying every 5 minute decline in virtually any market. However, it is likely to change out of the blue and you had better be on your toes for when it does.

There is going to come a day when $1.00 in Silver actually means something again and is not a 15 minute bar. What  history does tell us emphatically with all commodities, is that these huge runs in price in either direction to get reversed to an equally large one in the other direction. What this means in the current context is that there is a deflation wave waiting out there somewhere over the rainbow, that will match this inflation wave. I am not sure which is worse quite frankly. I think it bears watching closely in the obvious time frame of June for reasons I have stated before in here.

The above chart is that of Crude Oil, which has been on a gargantuan roll. We now have reached a zero reading in my modified COT index, which in the past has signaled declines most of the time. However, this is a fundamental setup, and is not a reason to run out and short something. It is a reason to look for a sell signal to develop telling us the most likely large move is down. This is frighteningly similar to the last run up of Crude to $140 from a COT perspective. What we don't know is whether the CFTC has blown a categorization like they did last time. We had what we call commercial capitulation where they ran the price so far by allowing non commercial players unlimited position sizes and the commercials were forced to capitulate and cover their shorts right at the highs. This is rare indeed, and there is no sign of that yet. If they do start buying look for this to accelerate upward into a crescendo, then come catipulting down at light speed. That type of thing is so rare that I doubt we are going to see the same thing in the same market that soon after the last occurence. The take from this should just be that this is not a green light at this point for new longs here. We exited our long position at the end of last week in this market.

Here is a trade I did just dinking around with smaller than my usual size experimenting with my new indicator with live money. We did not do this one in our contest account.

I am not bearish on the Nazdaq right now, this is just a trade based on a methodology trying to trade off my synthetic indicator. Those who have been watching this on the charts recently have seen how well it has been doing at picking peaks and valleys. I thought I would take a shot and see what happens here. I do know this is the weakest index of the 3 Bernanke stock indexes, so that is why I shorted here.

As for overall expectations this week. I expect to see the ascents of these markets take a pause here. When you watch markets for as long as I have, I get worried not tempted to buy when I see these boat race moves. Yes they can continue, but buying up here requires massive stops, and the air is getting awfully thin. The one asterisk though is that we know our government is in the air manufacturing business right now so maybe it is not as thin as I think.

Thursday, April 07, 2011


As our fearless leader uncle Ben puts 6 to 8 Billion a day into our beloved markets, of course another day and another dollar and another rally. I was reading something today from Jeff Clark of the Stansberry Advisory service that was somewhat of an interesting take on this whole situation. He was suggesting that people consider that Uncle Ben might not be feeling the love. Let's face it I have bashed him and so has just about everyone else, yet he has delivered the greatest stock market rally of all time and enriched many people. He has also allegedly averted the greatest collapse of all time. Is this someone who should be receiving all this criticism. Ben certainly knows that in the absence of the QE stuff the stock market would be thousands of points lower than where it is now basis the Dow. Jeff was suggesting with all the heat coming his way about a possible QE 3 campaign, that maybe he will pull the rug out for a brief period and let things rollover just to say I told you so. After this he would then come back in and save the day again and find the love he is looking for by launching QE 3.

This is certainly an interesting idea, but s slippery slope to say the least. He would certainly then be blamed for the decline, and it would also take a massive amount of money to reverse it. It is much easier to keep shoving it along like he is doing than to do the heavy lifting they attempted during the crash of 80 - 09. The above chart is that of Copper. You can see where we went long this market recently. For you chart junkies, you can see the head and shoulders pattern that is there. This had nothing to do with why we went long here, but it was so obvious I thought I would label it. You can see there was some buying going on indicated by my little toy at the bottom, and we were making a higher low than the lowest low. Also, it is imperative for this market to come along for the ride due to it's correlation with the stock indexes. This market has a long entrenched relationship with stock prices unlike Gold and Silver who are Johnny come lately players here. This is an industrial metal that of course is used in construction. As a result, it has more of a logical fundamental tie to stock prices. It is still lagging quite a bit which is troubling overall. This market does need to catch up if we are going to keep steaming along.

There is so much political pressure on the Benster here that I can't imagine he would pull the "I told you so" skit. If he were to let this get started down, he might not be able to stop it so I do not advise this. I think we should just hock ourselves into oblivion. Why not take the DOW to 20k? Nobody seems to want to even be willing to cut a pet rock funding project, yet they all say they want to cut spending. We have a storm here that is going to be written about someday in the future, and I do worry about the context within which history will view this. I suspect it is going to be what do never do ever again. However, we do repeat our mistakes over and over and it does seem that we are doing so here. I still stick by what I said before that the short the end of QE 2 trade is just too obvious for my taste even if Jeff is right. Jeff has an excellent record and really knows what he is doing, so this theory might be worth considering.

The next chart is that of the Bernanke 100. I find myself wanting to look for shorts here just simply because of how much this is lagging the Bernanke 500 and Bernanke 2000. We see that we are getting allegedly some insider buying on this move now which should suggest a rally is coming. However to me the price structure suggests at this exact moment a sell. My other indicators for today are going down so I do have sell orders under yesterdays low. We could justify playing this either way, but for me longs are in the other two indexes due to how much more relative strength is present in them.

I don't see that much else out there today. We are kind of see sawing back and forth in our Robbins Contest account between + 25% and + 30% for the year. Although frustrating, I would still pose the question, how many people do you know that are up this amount YTD that can prove it with account statement? Clearly there are some, but there are also alot of posers who are not.

Good Trading to Everyone

Wednesday, April 06, 2011


Once again the reality nature of this blog is proven, I do talk the talk and walk the walk. Of course when you do this you need to be prepared to be humiliated like this. This is why I constantly stress how honest and straight forward I am about how I approach things. This is not false hype, techniques that never lose etc.. This is real trading. As I had detailed, my analysis was telling me that the DX was ready to make a rebound and I was looking to get long this market. Monday I showed where I was going to go long if we traded there, and we did so. That order was filled on Tuesday. I had my stop at the 3 day low and that was picked off last night, so a loss. As is the case with most losing trades, this looks like a stupid trade and perhaps it was. Trading against the trends is never a high percentage thing to do. I did this more because I felt the risk to reward on the trade was very high if we got going on the upside.

In terms of trying to critique this trade, I probably should have waited for a few things to turn up first. It can be as simple as waiting for a moving average to flatten out which this has not. Then we can go to price structure to guide us. I would say that is the take away from this one. It is behind me now so be it, it won't be the last losing trade of the year, that is one guarantee I can make. We have to see now if this does consolidate or just craters. We are at a critical level for this market being back to where we were 2 years ago now.

I am sticking to my guns that I think we are due for a setback in the stock indexes even if that means a small one setting up a buy entry. Next is the Bernanke 100 previously known as the Nasdaq 100. It is lagging both the Bernanke 500 previously known as the S & P 500 and the Bernanke 2000 previously known as the Russell 2000. This market is technically still in a down trend.

The way this market is lagging I find interesting and it is not a dire development, it just tells me we are about to have a retracement. I know the FED wants about 70% of the days to close higher, that seems to be their mantra, but that still leaves a few days they will allow down closes for congestion periods. I think we are going to see that right now. This should setup a buying opp which should be done in the Bernanke 2000 which is by far the strongest index. Those inclined to short should short the Bernanke 100 which is the weakest.

The one other market I want to review today is the Swiss Franc. We have a bullish COT situation here and this has been probably the strongest currency overall for awhile now. However, on a daily chart it is in a middle position that could very well lead to a sell situation. You can see on the chart my indicator is working it's way down into the sell position. It is not there yet. We also have the moving average beginning to roll over here. I tend to like these rollovers in the 20 period moving average where the price comes up from underneath and kisses it. That might be developing here. Based on just highs and lows traders should be long from a short term perspective today when yesterday's high went, but it is not a trade I am in. This market just bears watching over the next few days.

It may or may not setup the way I like it for a short but it is on the watch list.

Good Trading to everyone, Captain Nemo Out!