Sunday, August 12, 2012


It was not the typical pattern we normally see, but I think this was the PPT Friday. It is getting to that point where we normally see a seasonal decline, and there are also some divergences showing up in the POIV indicator. I think the PPT is well aware of this, and they have an election at stake now. It does appear Barry is going to get another 4, the attacking of the success of Romney appears to be working. It is a sad day when you have to be ashamed of having been successful. However, it is what it is and politics is all about perception not reality. Both sides try to persuade the people that their vision is the correct one. Since we are in a difficult period, attacking successful people seems to be in line with what the majority of Americans agree with as sad as that is. I have to admit since I feel both sides are to blame for what has happened to me with PFG, I have completely tuned out to politics now and just don't care. As I listen to both sides bicker about whether or not there should be insurance, it just proves what I have been saying. They want bad things to happen to people because it makes more people reliant on them. I think this is true for both parties as sad as I am to say that. Count me now as someone who no longer cares about politics. I do think the next 4 years are likely to be very very difficult if Barry gets 4 more. If Romney were to win, who knows. I think it would be better, but there is no magic fix for what ails us unfortunately.

I have heard some comments about how well the stock market has done under Barry, so I do not expect a big decline to happen without the fight of a lifetime from the PPT. I think we will see them support the market in the last hour like I think they did on Friday, consistently through the election. My technical stuff still says we are in the sell zone. However, it will change to up unless this week has a decent sized decline. If it changes I will post a thread about it, I won't know until the end of the week close gets here.

Here is a market I have not talked about much lately, Gold.

We are at an interesting spot here. The Seasonal tendency is for a rally here, yet we are right in the sell zone with my bands, and Sentiment is very bullish. This is what is called an inflection point. We have held the critical price levels I have been talking about in here for a long time, so that is good for the bullish case here. Essentially we have overhead supply above and good support below. I think if we break up or down out of this area, the move will be big. I do not know which way it will be. I have more that says down than up. I do not have a position in this market either way at this point. I think this market will go with the stock market as it has been doing for a while now, along with just about everything else.

I know I said a while ago I would not talk much about PFG, and yet I have done so, so guilty as charged on that. It has been such a life changing event for me I can't help it. There are a few new developments. First, in going back through my checks I have gotten from them for withdrawing money and other things, I am finding some came from JPM. This was a surprise to me. I expected at least some of them to have come from US Bank. I am asking for copies of some other ones that I just deposited through my ATM to see where they were drawn from. There are some other class action suits that are going to be filed I suspect against the banks directly. I don't think we know enough now to know whether or not there was malfeasance there or not. It is hard to imagine something funny did not go on there but who knows at this point.

What does worry me is the government intervening on behalf of JPM. They are rumored to be one of the two places where the PPT does it's trading, and we have seen the government help them get an interesting position in the MF Global situation. The publicly jawbone against them, then give them the little cute wink while they are doing it, then help them behind the scenes. I think the legal argument has to be that this pass through situation they have going on is very misleading, and also they should have known something funny was going on here since they are a large FCM themselves. The legal battles will be fought over the next couple of years on this. I think the initial transfer we get is going to be about 20% the way it sounds now. I have said all along this is way worse than MF Global, and it sounds like there is so much fraudulent accounting here that the CFTC does not trust the records at all. I think they are right on this point. How can you believe anything someone who has been this dishonest for this long says. When I look at the one lawsuit that states in 2011 they had $600 Million in Segregated funds, and also that after that $197 came over from MF Global, it certainly does not seem to me there is any way the Segregated Total they should have had would be only $400 Million. As a result, I think this guy stole way more money than he has admitted to. What I can't figure out is how he met the margin calls for so long with this much of a deficit?

In the mean time, make sure your FCM has good ratings in the ratings services. If they don't move your money PERIOD. Do not wait.

I am short the Russell as of Friday with a tight stop on a short term trade. I think if the indexes were to get below Friday's low tomorrow, there is a short entry to be had at that point. If not we may just sail right up again. I don't have much more tomorrow other than looking at the short side of the Aussie. That trade is basically the same trade as the ES, a sell below Friday's low. This seems unlikely, but it would be bearish if we got down there.

Good Trading


Vikas said...

Nice call on the Russell short :). Question, what is a tight stop for you on such a trade, and how did you determine that stop. Thanks.

Chris Johnston said...

I have to keep some things to myself that way I am worth something!

In all seriousness, the Russell trade was a mechanical system trade based on something new I am working on. My feeling on short term trading is that the moves need to go right away or they are no good. As a result I think stops need to be close. This way you lose small when you lose. However, that does not mean intraday stops on minute charts. I keep stops above daily highs and lows most of the time with a few rare exceptions. The Bond System requires more room, hence the wider stops there.

You have to tailor the stops to what your method is, it is somewhat of an art and not a science.

The trade is not closed out yet so we don't know if it is any good or not yet.

Vikas said...

he he :P

I set my stops above/below the high/low as well, or below the moving averages. I'm hesitant to short here now with the bonds in a downtrend and magical end of day recoveries in equities.

Chris Johnston said...

I scratched the trade when it started rallying