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Tuesday, May 15, 2012

To QE3 or not to QE3 that is the question?




It is that time again, we are getting a stock market decline and the worlds largest long only hedge fund the FED, has it's finger on the trigger.

QE is designed to do just one thing and one thing only

Raise stock market prices so the President will get re-elected


Whatever long term ramifications these actions might have are not even considered. The main focus is power and control, plain and simple. Manipulating public opinion is all politics is at it's core. They want to get you to go along with the changes they want to make, so they throw you a bone here and there along the way.

The above chart shows the ES and we are drifting down here slowly, not doing too much damage. Underneath the price is a model I have created for buy and sell signals in the stock market. I have the black arrows marking the buy zones, the sell zones which are not marked are when the blue line is under the red line. There have not been many of those as you can see but there was a timely one at the high. If you think about it, the FED does not want to boost prices when they are already rallying, there is no political gain to be had there. They will launch this when prices are heading down and close to getting into some trouble. I think this will be soon, but not immediate. We need more of a crisis for them to save us from it. Yesterday I did not detail the California budget situation, and I will not get into more detail on this either. The bottom line is what I stated above in red, and we are in the zone where I expect this to happen again. It is just too good to be true to see Romney leading the polls, some be good sized margins. They know what there tools are to change that, and they will use them at the right times. They need to "save us" on last time to "prove" that what they are doing is the right path to go down.

I am not going to explain what the components of that graph are, it has taken me way too long to figure it out. I can assure you this, you will not figure it out so don't bother trying, it is very different from what anyone would think it might be. It does not matter, there is no magic elixir to any of this stuff. All you can do is try and find some things that give you an edge, and then try to take advantage of that edge as best you can. This model is a little rough in that at times it pinpoints things to the day and others it takes a week or two for the turns to come about. It is really nothing more than a "we have entered an area where a rally should take place soon."

There was no trade in the Blind Man's Bonds System for today.

Good Trading

7 comments:

Anonymous said...

Hello Chris,

Ive been reading your Blogs now for some time and I would like to say what a delight! I love to read them out loud so i get a better grasp of what to do in the markets.Im on my own in my office so its easy for me to figure it all out.Also Its beautiful you care for the animals as not enough people bother nowadays.Its a shame you dont have a TV station we could watch or maybe a utube video.It would make it easier on us to blend it all together....Keep up all the good work .Magic !!

John O Brien

Michael Tredr said...

can't believe I wasn't on this ride. but moreso, in reference to your last post regarding the bonds, i have a strong feeling that this last month/month and a half move will set the move of the year. i think you picked a great time to bring back, what i personally feel is, a great system. hope your week is going well so far!

Marcus said...

I agree that they want to pump the market, and that first it has to fall farther, but I'm not convinced that it's to throw the election one way or another. One, I assume Romney's an inside man as much as Obama; and two, I don't have much confidence that voting results are untampered with. What will the Fed or the PTB lose if Romney's elected?

My guess is that the trigger finger will be pulled simply for the sake of more easing. The euro has fallen quite a bit; now it's the dollar's turn on the monetary see-saw.

Are you short currently? I'm short financials, and when QEx is announced, I'll short long bonds and buy energy, metals.

Chris Johnston said...

Marcus there is no doubt it is to get the Dems to stay in power. If a Repub was in power and had ruined things like this, they would do the same thing to attempt to trick people and stay in power. If the economy were good there would be no need for this type of crap obviously. I would think the Repubs probably want things as bad as they can be so there is nowhere to go but up if they win. This is a two way street it is just simply that the DEMS are in control now so the manipulations are being done by them. The PPT was formed by Reagan after all, so it is a tool for both sides.

John, there will at least be an interview from Chicago of me that I should have the video on any day now. I don't even recall what the questions were now for some reason. I could always do a U Tube Video I suppose, I am just not sure how much demand there really is for that.

Vikas said...

Definitely post the youtube video of the interview Chris ! :-)

Matej Marek said...

I would also welcome your youtube video or TV if you have ever decided to do one. I look forward to your Chicago interview video!

I am reading now a book Fooled by Randomness from Nassim Taleb and I'm only at the beginning but it's seems like a great read for traders. Maybe you have already read it. I was wondering if you have any favourite trading books that you would like to recommend.

Greetings!

Chris Johnston said...

I have read many but I am at the point where I am not going to read anything anyone else is writing either on the web or in print. Ultimately it falls upon an individual to find his way and after having seen one of my mentors have that awful period, it makes me realize my own ideas and research are as good or better than anything I am going to read from someone else. The best part is I only have myself to blame if things don't work that I use.

I like Larry Connors books, he has a different approach than most with what he writes.