Sunday, July 29, 2012


It is always tough after a week like last week to come out and say we should be selling here, but that is what I am saying. If you look at the above chart, we are into the bands on the high side I mentioned a few weeks ago. This was a spot I was hoping to get to. You can also see both the Commercials and the LW Commercial Proxy Index ( which works better in the indexes ), are indicating heavy selling into this rally. We are also seeing Sentiment really bullish. Sentiment has not been a great indicator of when to sell in the indexes the last few years, and there is one big reason for that. In a normal market environment, legitimate natural buying and selling create ebbs and flows that spark huge rallies and then big falls when things get over done. In those instances we can tell when things are likely to swing in the opposite direction. It is just natural physics. However, in the environment we live in now, and have for a few years now, there is one trader and one trader only that matters. This is of course the US Federal Reserve. They are essentially a buy side trader with unlimited position size allowances, and unlimited margin.

They just buy this every time it is on the verge of turning down. I think it is beyond politics at this point. The bigger picture is they are trying to stop the economy from falling off a cliff. I fail to see how artificially creating bubbles like they always do, and are doing now, will save the economy. However, it is all about perception. As I have said many times, if you took every single thing in the world and left it exactly the same and took the 12 off the front of the Dow Average and replaced it with a 6, we would have panic across the world. These guys are well aware of this, so they are inflating things hoping to buy time. The problem of course is what they are doing to inflate things artificially, is going to result in them going down more at some point.

I was in a very insulated position from this until all my money was stolen by PFG, so I am as vulnerable to this now as most readers of this blog. There is nothing we can really do about any of this but put our nose to the grind stone and plow ahead. I am back into trading this coming week, assuming I can get my log in problems resolved with Fintec. This has been a royal pain in the ass. For what it is worth, I am dividing my money between Straits Financial and Knight, both of whom have not one single blemish of any kind with the NFA. Of course as we know the NFA knows jack shit, but there were some minor things with PFG they had filed, so had we looked at that we might have moved our money. I am now going to require a spotless record wherever my money is even if it has to be moved every 45 days. I found something minor with the NFA with the one place I had put some of my remaining money, so without naming them, I am moving it. The violation had nothing to do with seg funds, but I don't care. If it is a parking ticket, I am gone, PERIOD.

It is starting to look to me like the comment by the CCC lawyers about no money this year from the PFG trustee is most likely accurate. In my opinion, the only reason things are this quiet, is that they are not good, and they are desperately trying to find some money. They don't want the first distribution to be 30% or less, but that is what it is going to be. In my mind I am planning on only getting 30% total back, anything beyond that is going to be fortunate. If the situation were better, we would be on the verge of getting something now, which we are not. For now it is all gone anyway. My plan is to build my little account back up to beyond the heights I achieved before, then once I do and get some liquidity, become predator with that cool laser he had with all the regulators. Until that time I will be a good citizen. Unfortunately, as I learned last week in several conversations with people on some software problems, you just have to get nasty sometimes to get what is rightfully yours. I always try to be nice as long as I can, but at some point you have to get after it. I took an HP printer back to Best Buy a couple of weeks ago, the Officejet Pro 8600. I am now on my third one in less than a year. I love this machine, but they constantly break so I took out the extended warranty for $25, and boy has that paid off in spades.

However, the last time I took it back they starting giving me the run around on the USB connector to the computer. They told me it no longer comes with one, and once I turned mine in with the chord I was SOL. I think most of you can imagine my response to that. I did walk out of there with a chord after I "convinced" the kid in front of me it was in his best interest to go get me one. I took it, went home, and found out it was half the length of the one I turned in. Now I was really pissed off. I put on a tank top so they could see my physique just in case any one of them might think about not taking me seriously if push came to shove, and went back to the store. Once I got there they told me again, I could not have the longer chord. I purposely calmed myself before going in hoping things would be easily resolved. When they told me that I said point out the person in this store that you think can stop me from going and taking a chord of the proper length and leaving with it? I then went back into the shelves, grabbed the chord and walked it to the counter and told them to ring it up for free, which they did without making a sound.

This might seem like an off beat story which it is, and I wish it had not happened. The point is I was very nice until I saw it was getting me the run around, then I wasn't nice. Folks, there is going to be a time in this PFG process for us victims to get really nasty I suspect. That time is not now it is in the future. I will be ready at that time to fight for all current and future victims. This is getting almost no press, which just goes to show how quiet they are trying to keep this. In the mean time Corzine has still not been charged with a single thing as far as I know. We can only hope they are building a case against him. I don't think getting nasty will get us more money, we are going to get screwed in this. However, we have to fight to make sure the solution becomes something that really protects people from this type of thing. Funds can not be held at FCM's PERIOD. It needs to be physically impossible, not just illegal for the Corzine's and the Wassendorfs to get to our money.

I have read they are investigating one person at US Bank whose signatures repeatedly appear on the documents, and that investigation is incredibly tight lipped. I suppose this guy could have forged that signature, but it seems he had to have had some contact with someone else at the bank, to get the money. It seems hard to believe he could have gotten away with it without someone at the bank being involved. Maybe that is why things are so quiet, they are squeezing the bank. We just don't know.

Some of the cyclical work I use has forecast down moves in many markets starting at the beginning of August. As a result, I am looking for sell signals this coming week. The energies in particular intrigue me here on the short side. The Bond System gets launched on the first to those who have expressed interest. If you have any interest and have not contacted me, you need to do so in the next day, or it will roll to next month. I am having to do this in a unsophisticated manner initially for the reasons previously explained.

I should be back in business now for regular blog posts going forward.

Good Luck to everyone this week


Vikas said...

Chris, glad you posted this, because I took home some SPY short end of the day on Friday :). I'm not sure where to cover here though, whats the next support level where you think its best to cover shorts in the ES_F? Thanks :).

Steve said...

Too bad Interactive Brokers didn't make your cut

HT said...

CJ - Thank you for shining light on the direction of the stock market. I am also looking for sell signals up here. Hoping to ride a sharp and sweet trend down and I hope you make all your money back with this crash. Best of luck with trading on your first week back! Trade safe.

John M said...

Great Best Buy story, cracked me up. How are the dogs doing during all this? Next post, give them a mention and an update. Thanks.

And on the bond system you're letting folks buy into...how do people pay for that? I'm intrigued, but must have missed that post when on vacation.

Thanks, Chris.

Anonymous said...

Corzine probably will never be prosecuted. According to Breitbart.com Corzine and MF Global were clients of Eric Holder's (a fraud if evere there was one)old law firm coupled with the fact that Corzine does $35,000 per plate fundraiser dinners for Obama. Now that is a threesome for the ages - all frauds and liars.

Chris Johnston said...

Don I think you are right but the PFG situation is going to bring more heat on him, he may not be able to dodge it now.

Steve, IB might be fine nowadays but they stole about 25k from me many years ago basically and I got tired of dealing with Helen in Russia etc.. trying to chase it down.

John, I don't recall what day I started talking about the Bond System if you email me I will send you out the letter I sent those who expressed interest which explains everything. FYI there was one today that I gave everyone a free heads up on that is up about a grand as I type this. I am pretty sure one of the subs took it so he has more than covered a years worth of the fee already before he has even officially started. It is month to month, $60 per just fyi


Chris Johnston said...

John, thanks for asking about the dogs, I will give that update tomorrow.

Chris Johnston said...

Vikas, on the short I am not sure, I don't have sells yet I just think we are in a zone to look for them. I am not trying to be coy, but I need to know what you based it on technically, to tell you how to manage it. You need to know exits before you enter every trade that you do. This takes away the dilemma of the emotion of the action influencing you in the heat of battle.

Vikas said...

I shorted because we had 2 50% gap up days, and the day ended at $TRIN at 0.28, so I expected selling early this week. Also, looks like there's a MACD crossover on the hourly chart today for $SPY. You're right though, I should be more disciplined about targets before I enter trades.

Anonymous said...

I would like to hear how you lost 25k at interactive brokers, they got nasty when I withdrew all my funds in 09, suddenly I needed to jump many hoops, about 60k was the amount involved, as the Norwegians figured out, they offset your orders, basic bucket shop, they market to newbies via sites like elitetrader

Chris Johnston said...

I had a huge ES position that had a limit order where price traded way past it on big volume and they did not fill it then price crashed and they had deleted my protective stop since it was an OCO order withoutfilling the other side.

I had the exact same orders filled correctly at another brokerage firm who confirmed via time and sales there was a ton of volume where my orders were. I fought for 2 weeks with Helen in the Ukraine then finally gave up and just vowed never to use them again.

Vikas, based on all of that you chose essentially a zone in price to short, so you should have a stop comfortably on the other side of that zone I supposed. I trade differently than that with more rules, so I can't really tell you where to put it. I always have a predefined stop for exit when I enter a trade, no exceptions.