BACK TO BUSINESS
For those of us who did not get the memo about Futures Trading, that it should not or cannot be done, we plod onward. Imagine we were put into a time machine 10 years ago and decided to go forward to 2012. We get out of the machine and immediately go to the internet to check up on our favorite topic, prices of the markets. After we settle in a bit and get used to some of the changes most of which are minor, we get back to studying the markets.
As we surf the web we come across some dude who writes about the Futures Markets every day and see the above chart. Our first thought is wow look at how good this guy is, this forecast has picked almost every wiggle right on the nose. What is this? We read some of his older posts and find he has a general idea of what he is doing. Then we come back to the original post and start trying to understand what this forecast is. Imagine the disappointment or bewilderment when we find out that it is the net commercial position of the EURO projected 52 weeks forward. HUH!....SERIOUSLY?
I might as well have been in a time machine when I stumbled across this idea from McClellan. As far as I know he is the one who first wrote about this. Even when I try to logically sound this out it still makes no sense to me. On one level a bullish stand by the commercials on the EURO does make sense as being bullish for the US Stock Market. The world is flat now and good or bad things happening across the pond make a big difference to us. A strong EURO would indicate good economic times so that should be good for US Stocks. However, we also know commercials tend to be very early on moves getting bullish often way before a down trend changes. Here we are projecting forward a bullish forecast by commercials. That does make sense in terms of trying to take into account the problem of being early. The time frame of one year is problematic to me from a logical stand point. However, you cannot dispute how incredibly accurate this has been. It currently shows a clear top 11/30.
Time will tell but I am paying attention.
Outside bar Monday
Yesterday we had another classic day in the modern day markets with Outside bars galore. I wrote about a very specific mechanical technique for trading these types of situations in the newsletter that I sent out yesterday. You could have used that technique yesterday. As with most techniques we will be teaching in that series, that technique also is best used in combination with something else. It is an entry pattern technique. Days like yesterday are very difficult to trade. I made a couple of good trades and one terrible one. We do seem to be seeing more and more outside bars in the markets which is probably due to trading algorithms of big funds. It is amazing how they push price quickly at times. I usually do not like interventions but the HFT is causing some problems and they probably should get rid of it. It creates very illiquid periods and bad fills so it does not really perform any primary market function. I suppose you could argue that anything is fair game in a free society, although we are slowly having some of our liberties quietly being pulled back.
Here is the chart I showed the other day on the VIX updated. We are clearly in a buy zone. I will be writing about how to use the VIX in the newsletter going forward. I suggest readers study this for stock market timing, it is very helpful. It is not just as simple as seeing a reading and go buy or sell. It is in the bullish camp here on a short term basis at the moment which tells me this dip is a buy. How to enter trades is another matter, but it reinforces my thinking that a pre-election big dip is not likely. I dropped in to see my wife in the Political Talk Show War Room last night and was just shaking my head afterwards. I think the whole world has gone wacky. We have the media trying to throw an election which I never thought I would see in my lifetime. The justice department trying to make sure illegal votes are counted not discarded. We have all sorts of advice coming out from people about what should be done by whom. The whole process has gotten to the point where our opinions regardless of what side of the aisle you stand on, are completely ignored.
Each side has an agenda and they don't care who says what about it. Regardless of who wins there will be opportunities for us as traders and that is what really matters. If the Dems win there are some in that party who want to outlaw trading starting with Douchefett. I still think they are going to have a hard time pulling that off but there have been bills in committees trying to dip their toe into this. However, the markets do perform a function and at the end of the day that function needs to continue. The government can't do everything. I monitor it but am not concerned about it. You really only have to worry about the Dems if you become really wealthy. They are going to come for some of your cash if you do that is pretty clear. The wealth tax idea is something that is now coming up. I even heard a conservative talk show host say she was ok with that. GOOD LORD!
The trustee has put up the claim forms at the web site so you need to go fill those out and send them in. They have to be there by mid November, you can check the date yourself. This are for the purpose of distributions beyond the initial one. The first wave hits in about 10 days and the second at the end of the month. This is 30% of your account balance if you are US (4D class) and 40% if your were trading foreign futures (30.7 class).
The issue of the forex money is now coming up. I have written about this in here before. This money is not segregated therefore it is company money and subject to the pecking order of creditors just like a bank account balance of PFG. If you were a forex trader you are an unsecured creditor. This means that you are behind segregated account holders and other people such as US Bank who has some interest in the building. You are not going to get any money until everyone else gets all of theirs back. Since we know there was a substantial short fall your odds of getting anything hinge on lawsuits against the banks. If nothing happens there you are going to have a 100% loss.
There is a group of forex account holders making a stir stating that all of the forex money is intact therefore they should get their money back. The problem with the argument is bankruptcy law. Your money may be there but it is unsecured. It has been stated in the court proceedings by both the judge and the trustee that this is the case. Unfortunately unless the judge decides to ignore the law which can always happen, you are not going to get any of that money. If you can get a bad debt person to buy your claim for a Forex account it might be worth considering. You should at least talk to them if they contact you.
The other issue that is coming out is that Wassendorf apparently pulled this off by creating fictitious accounts with large balances that deposited no money. He then withdrew from the segregated account the money these accounts were supposed to have had in them. Since this came down so quickly I doubt he had time to delete all these fake accounts. He is disputing the total loss saying it is being over stated. I think he is saying that because he knows how he did this and that the total segregated amount is not $400 Million it is less. Once they identify the bogus accounts it appears our percentage could go up a little bit. What is perplexing is why all the statements about him cooperating are coming out are being made. If he truly was it seems they would know all the accounts now that were fake and have these dollars amounts determined. Maybe they do and are not telling us. The communication has just been awful in this case.
I did get some comments warning me about Pay Pal by people and sure enough after about a week in business they have put a hold on withdrawals for 21 days. I have to call them but this is very alarming to me so I think I have to find another solution. Any suggestions would be appreciated. Send them to email@example.com.
If for some reason you are not getting the emails for the orders or the newsletter and have signed up for it please email me at the above email as well.
I have not had much in the way of comments yet so make sure to give them good or bad. The best way to improve things is to understand if there are things that need to be fixed. I can't put everything I want to in just one issue, this is a process like Billy Crystal said in Analysis This.