Wednesday, December 12, 2012

Raising Taxes.... That is ok except if you do it to me!

Now you know why I call him Douchefett. 

The link below is the action the king of hypocrisy himself is taking to avoid paying more taxes. 


I only recommend that site for news stories, the trading comments are not very accurate. Seemingly every post predicts a decline that never happens. It is always bearish. However, I think the reporting of news stories there is just great. I don't know how he gets all the stories in such a timely fashion, but he does one heckuva job. This story is more proof of why all this talk in politics is all just a bunch of BS. Nobody in their right mind wants to pay more taxes, those who pop off want others to do it, while they find loopholes to duck the increases. It is socialism at it's finest. Take other's money not mine. Everyone should pay very close attention to what happened in Michigan yesterday. Keep in mind that a state official threatened violence if the legislation was passed, he said there would "be blood in the streets." If you also go back a few months to the Wisconsin situation there is one common theme that should worry everyone. Whenever unions or other "entitled" groups don't get their way they resort to violence. We have seen this play out in Greece and other places. I can tell you this first hand, I grew up in the Detroit area so I have very intimate knowledge of what goes on with the auto unions. There is no reason at all to believe that what happened in Greece cannot happen here. People are people. It is going to happen here and this was a preview. What will happen when a broad scale austerity program gets implemented? One way or another one is going to happen be it due to a bankruptcy or a governmental decision. This can't go on forever. Please no emails from lifeguards telling me how you deserve 90k per year pension payments starting at age 50.

This is very much like the bully at the playground who has gotten over on everyone for so long, talking with him never solves the problem. You have to kick his ass. That bully won't acknowledge that his behavior has effected so many others negatively no matter how you try to reason with him. This is the same with the way unions have jacked up the cost of producing products all across the country. After a while companies just go somewhere else to have the manufacturing plant. As a business owner why would you do anything other than that? You are a fool if you do. You can try to force people to pay more to produce a product through regulations and the like, but you then have to be able to force consumers to pay more for the product to support that model. In the end the money will go to where it can be put to work the most efficiently and that is never going to be in a union based company in the US in today's economy. If you have a significant cost disadvantage in today's world you will get "arbed" out. The world is done supporting this nonsense and it could not be more clear.

I also heard a rant the other day that really threw me for a loop. I heard some commentator hammering Fannie Mae and Freddy for loaning money to rich people! HUH! The loans they do are conforming loans,  they are not for the rich people. They are to middle class on down, the very people this guy is supporting. What an idiot. This is how they got into trouble, being forced by Congress to back loans to people who had no money, not backing wealthy people. It should be illegal to be that stupid.

There are some interesting ideas out there I have read, two in particular that warrant discussion. First that when looking at Silver and Gold, one could rise a lot while the other fell..... HMMMMM. This has been thrown out by someone not to be taken lightly, who has had numerous brilliant market calls.

The second one is that the long end of the yield curve could rise way up while the short end rates stay basically at zero.

Gold and Silver

I was not one who predicted the monster Metals rally off the 2002 low. I also won't be the one who predicts the next massive rally on a 10 minute Gold chart, I operate in between.

This is a long time chart of Gold and Silver and until recently they have moved completely in sync with one another. This has gone on for decades yet now we do seem to have Silver with a very significant negative divergence to Gold. This is interesting to me. When we look at daily charts the reverse is true, Gold has been weaker in recent months. There is no conclusion to draw at this point but this one bears watching. I had never considered that these two could move differently from one another. However, I stated in a post the other day that I keep an open mind on things and I am doing so with this. There are some very peculiar things going on in the markets at the moment so maybe this will be another one. I think it is pretty obvious why I think this type of move cannot be sustained forever. How many charts have you looked at where a 10 year period of time looked like this where the next 10 years was a repeat performance? NONE, it has never happened in the history of the world.

We saw a sharp ES decline intraday at the same time a sharp decline occurred in 30 Year Bonds, which has been a very rare occurrence in recent times. It was also interesting to me that on the announcement of more FED intervention for the next 4 years, Bonds prices declined. Is it possible that the market is finally reaching a point where even it knows this is all BS and it has no reason for being up here? Could it be that where we are headed, the long end rates go way up while the short rates supported by the FED stay low? It seems to me that will be too much money playing the spreads to allow that but who knows, never say never. We are at a unique time in history right here. I wonder if this level of manipulation could overcome the natural forces that would work to keep the spread between these two within a range?

The biggest problem with everything that has been done in the last 3 years to artificially prop up the Stock Market, is that the tools that would normally be available to stop a huge decline are already being used. The tank is going to be empty when it is really needed. I suspect that this means that behind the scenes they know how bad things really are underneath all and that is worrisome to me. I still maintain that this whole thing is a huge house of cards that is going to fall at some point very very sharply. I do not know when but I am beginning to think it will happen within the next year. Maybe it will begin in January where the right shoulder of the EURO forecast chart is? It just feels like the PPT efforts are requiring more and more effort to get less and less done. It is almost like a roller coaster where we are climbing to the steepest point and slowly losing steam here. I wish they had just allowed the Stock Market to find it's own natural low in 2009. It might not have been that much lower and we would not be up where we are now, but we would be on firmer footing than we are.

We still do not have anything on a larger time frame that tells us we are in deep trouble from a charting stand point. Until we see some type of significant break this is all just banter by yours truly. However, when I see the division amongst classes that is very dangerous occurring in this country, and the FED doing all this stuff just to keep stocks elevated, it makes me wonder who is going to be naked when the tide finally goes out? It is because of this fear that I do not have any money not $1 invested in something on the long side in the stock market with a long time horizon. I may miss a rally because even in a deflationary cycle prices do not just go straight down all the time, sharp rallies can and do happen.

We have to get clear of the next couple of days in stocks to be sure we have not had a trap in the breakout yesterday. If we do I think we have clear sailing for the last two weeks. After that I am not so sure. If we do happen to break down in the next couple of days confirming the trap pattern, I think we have some significant problems in stocks ahead. I think the next two days are very important. I am still thinking we are going to get a year end rally now but I trade what my patterns and tools tell me and not what I think. These tools tell me the next days need to get us clear of this short term area. I think many of you get too tied up in pre-conceived notions of what a report will say or a holiday will do and lose sight of what your indicators are telling you. They are all that should matter including what I say.

It is very easy to let your opinion get in your way, don't. I have made this mistake many times when I was younger. If you have a strong opinion, wait for the market to confirm it then take action.


I keep looking at this market now in a major double bottom area with heavy commercial buying and I think we are in a general area where a significant low could be made. It has not happened yet but this is one I am watching even though I have not made any trades there yet.

Good Trading

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