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Friday, November 16, 2012

ANOTHER RECESSION COMING?




I wondered both to myself and out loud how the government was going to walk back into the real employment numbers after the election was over, NOW WE KNOW. It has been the posture of this disadminstration to lie and when they can't lie blame everything on something or someone else.... enter SANDY. They have a long ways to go in order to let the data show the real numbers so they have to walk the numbers up. I did not expect them to just let it fly just in one report. However we know key players have said never let a crisis go to waste. Isn't that great, hope for crisis periods and use them to your advantage. Folks this is what you voted for MORE OF THIS so enjoy it. There are consequences to voting and the phrase of be careful what you wish for has never rang more true than it is right at this very moment.

So many people stick their heads in the sand and just assume everything will be okay in the end and usually that turns out to be the case. However, usually is not always. Does anyone reading this really think it is a coincidence that the largest change in a very long time, many years, in this report at this date is merely a coincidence? It is my view now, and has been for a few years, that the recession never ended. The government can doctor all the numbers they want, it cannot take the place of what you experience just day in day out in your every day lives. I know in the other business interests I have outside of trading I have never seen the activity as poor as it is right now, NEVER. This could be California since our economy has absolutely no chance of any kind at all of ever recovering with what is going on here politically. That is where my interests are so I could be unduly influenced by local things. However, I don't see when I start reading about national trends that there is anything gang busters going on anywhere.

I will be fun to watch the charade unfold as to how they get the real numbers on unemployment back up to where they really are just like the Libya fiasco is. Hiring investigators to investigate yourself is always one of my favorite ploys. If I go through a bad trading period I am going to try that and see what happens. Will my subs buy my lies and give me more time while the investigation of myself unfolds over several months? ( LOL - I am laughing right now just typing this ).

The FISCAL CLIFF and stocks.........

There is so much talk about what will happen with the stock market as a result of this stuff being bandied about over the tax rates and spending cuts etc.. 

DO NOT PAY ATTENTION TO THIS GARBAGE!

The whole point of using technical analysis to trade is to get you away from this type of thinking. When you use technical analysis and study patterns in things over time, what you are getting in the results is news events already being taken into account. If you run a strategy for example that tests what happens when Bonds spike up over the last 20 years, those spikes already include news events and all sorts of other extraneous variables. You cannot in the moment then when using a historically proven strategy, over ride the signals because you think "it is different this time." You don't know how many of the prior times in your data that it felt "different this time" at the moment of the entries. Do not study one thing then throw it all away for some arbitrary in the moment opinion.

I am very opinionated but I do not trade with those opinions. Does the Fiscal Cliff have real economic consequences? Yes it does but we never know how markets will react to news so let the charts tell you what to do. If I had my way I would let the whole house of cards come tumbling down just to teach people what a mistake they just made. It will only be through that much pain that behaviors will be changed. Alas, that won't happen and it will likely be more of the same.

The markets are telling us now a couple of things. First, they don't like the prospects of BO for 4 more years. That could not be more obvious. However, this does not mean we can't or won't have big rallies, we will. Second, the trend is on the verge of changing and already has in some of the indexes, the why does not matter. Third, Bonds are staying very strong which should keep a floor under any decline for the time being.




This is a monthly chart of the DOW. I labeled something on here that I have not covered here in quite some time, Megaphone patterns. I have labeled one that was in play at the low of 2009. When we get these expansion types of things of both highs and lows they can lead to huge market reversals. If we were able to get above point 4 it would be a dynamite sell setup for a big decline. For the time being we are still in a pretty clearly defined channel going upward and are heading down into the support zone. If you are a long term player there is not any reason to panic and this dip is a buying opportunity. For us shorter term players who like to maneuver in and out constantly, we wind up surfing the channels like this. Typically we are short going into the bottom of them and long going into the tops. We then look for reversals at the channels.

We are not down to the channel and I don't see any short term buy signals yet so I am not bottom picking. Trying to buy into these declines can be quite lucrative if you catch them right, but trying to pick the low print when we are moving down like this is very difficult to do and I advise against it. Wait for a turn and buy the first pullback.

The megaphone pattern does work on all time frames so study it I think it will be worth your time. However, forget the 75 tick charts, nothing less than 5 minute charts are worth trading no matter what the method you use, the activity is just too random.

Have a great weekend

2 comments:

John M said...

You may be right about absolutely everything, but as of now, there's no evidence. I got this from FOX News so you wouldn't think it's cherry-picked from some liberal site. As far as I know, the BMO Capital guy quoted isn't a shill for Obama.

You know, I had the same worries you have when Bush won a second term. Somehow we survived--although he left some mess for the next guy. That's been my experience since following politics for 45 years: the propaganda about how evil, destructive and anti-American any candidate is tends to sound silly after the fact. But, every man to his own beliefs.

I can tell you with some certainty that the employment situation in the New York City and New Jersey area was hurt badly by Sandy, just as the Gulf's was by Katrina. This stuff is fakery, it's really happening. Many thousands of people are suddenly out of work and their businesses destroyed or badly damaged. Count your lucky stars it's not happening out West.

From FOX, sorry for the length:

'Superstorm Sandy barreled into New York City last month and destroyed homes, upended lives, killed dozens of people and caused havoc for millions of commuters after the transit system was crippled for weeks.

'But one of the worst natural disasters in history also left something else in its wake: it wiped out jobs.

'Unemployment benefits climbed to 439,000 last week – the highest it has been in 18 months. The Labor Department said weekly applications increased by 78,000 mostly because a large number of applications were filed in states damaged by the storm. People can claim unemployment benefits if their workplaces closes and they don't get paid.

'The storm has affected the claims data for the past two weeks and may distort reports for another two weeks, the department has said.

'Sal Guatieri, an economist at BMO Capital Markets, said that a similar jump in applications occurred after Hurricane Katrina in 2005.

'"We should see a full retracement of this increase in coming weeks," he said. Applications were declining before the storm, he added, "though levels are consistent with moderate, rather than strong, job growth."

'The four-week average of applications, a less volatile number, increased to 383,750.
Superstorm Sandy hit the East Coast on Oct. 29 and disrupted businesses from North Carolina to Maine. The storm also cut power to roughly 8.5 million homes and businesses in 10 states. Some are still without power.'

Chris Johnston said...

Are you kidding John, look at the employment situation in California! The liberal policies and agenda have put this state into bankruptcy and it is why I am going to leave.

I guess time will tell if socialism will work in the US we are now going to find out.

If you don't think they doctored the numbers to win the elections you are not studying the data correctly. If it were not for a left biased media it would have been a huge story. You got what you want now let's see what it brings.

Go look back at all the numbers before the election and it jumps off the page the one number that is fake.

I hope socialism works but there has never been one instance in the history of the world where it has. I guess we are going to see if it is different this time.

To think after what has happened to me this year that it is going to be so much harder to get back on top because of socialism it just angers me. Once I start making what I was before again they are going to come and steal it from me to pay a retired lifeguard his $90k per year pension.

That is not a typo that is what they get out here in pensions.