Saturday, December 08, 2012

Stock Market Rally or Decline Next Week

I decided to take the microphone at the Comedy and Magic Club Friday night because I knew I had a joke that would bring the house down. I started off by thanking everyone for coming and it was a pleasure for me to be here etc.. Next I just said I would like to talk about the Unemployment report and before I could even finish the second word everyone was laughing so uncontrollably loud I was not able to speak another word. I walked off the stage to a standing ovation.

First we heard all the rhetoric about how many people were put out of work due to Sandy and how unfair it would be to judge this report due to the effect that was going to have. All the weekly reports supported this contention. They showed a very large change in filings. However, something funny happened during that day between when the BLS gives the data to the officials, and it gets released. All of the sudden we now have a gangbusters report on our hand, Sandy had no effect and we added a bunch of jobs? HUH!

The best part was listening to all the liberals on CNBC who are always homing for one side of the political arena, one after another exclaiming that the report does not make sense. Of course it does not make sense the numbers are doctored. What is peculiar to me is the strategy behind this. As much as I have now become a political atheist the strategy behind all the lying that goes on is fascinating. One thing that has become very clear is the Democrats are far more skilled and intelligent than the Republicans. They out maneuver them at seemingly every possible juncture. I don't know why people assume politicians don't lie when we see one examples of it every day on both sides of the aisle. Neither side has the franchise on lying. Often the strategy is really clear but this one is escaping me.

They had a chance to let the number go back closer to where it really was and had a built in excuse that everyone would have bought, yet they did not do it. They actually even threw in a couple of footnotes that did not make any sense at all and made it blatantly obvious even to their own homers that the numbers were not correct. I have no idea why they did this, not a clue. The only thing I can come up with here is that they wanted to be able to argue that things are going well in the recovery and use that as leverage in the negotiations on the year end fiscal cliff situation. If the premise is true that BO actually has planned all along to take us over that cliff this would make sense. Once it were to happen they could let the numbers in the ensuing NFP reports go back to where they really are and argue it was caused by the House. I think this is an argument that would work so perhaps that is the strategy. Everything we were doing was great until "you" messed it up by protecting the rich people. The worst part is that a lot of people are dumb enough to believe that. I have to admit I can't even listen to the TV any more when it comes to all the political talk. I am just too disgusted with all of  it.

The take away from all of this is just completely ignore this report in the future. It is now to the point where there are so many doctored numbers in it there is no way to make any sense of it at all. I have no idea what the real numbers are but I would bet my life they are not in the same atmosphere of what is being reported. It is in every one's best interest for things to get better and I hope they do, but I don't want them to lie to us if they are not. Tell us the truth and let us deal with it we can handle it. The problem is going to be if they ever decide to report it correctly having to unwind all the fake numbers in all the subtle places they put them is going to be a mathematical nightmare.

We are at a very interesting juncture right now in the Stock Market. It you look at the weekly chart at the top you can see we have red objects on it which are sell indications, and there are green objects underneath that are buy indications. We have bounced some indicating the buys at the lows were correct and now we are into sell zones. Which is correct? Is the buy at the lows going to continue to work or is the sell now being indicated the way to play this?

That is the big question isn't it? I really wish our Euro chart and the seasonal were not in direct conflict it wold make this a lot easier. If we dial down to the daily chart below you can see where I have outlined a sideways price congestion that has formed. I am not sure which way we will break out of this, but as I have indicated I think the breakout of this in either direction will determine where we are going. Once we get clear of this I think the market will keep going in that same direction. The only possible exception to that would be if we had one bar that cleared it on the upside that was immediately reversed the next day. Those type of trap patterns often form powerful reversals. I don't think a false break down and reverse would mean a buy. There are intricacies to trap patterns and the way to trade them better fits a sell than it does a buy here.

Net net I think the next few days are really important, we are going to have a big move either way when this breaks out of this. We have the accumulation indicator flying higher here as marked. I have not found this to be particularly valuable when it looks like this so I am not giving that any weight either way. As of today I am just not sure which way this breakout is headed I can argue it from either side. One thing I won't do is come back in a few days and brag about how I told you so.

The comment below I thought was hysterical but mostly for the part I cut off. I have been getting a lot of SPAM in the comments area and this one went on to say my site looked just like his kiddie porn site! Seriously, does this really look like a porn site? I just love that! Of course I cut off the link attempt to that other site, I just thought this was a funny one for some reason. Maybe I need to spice things up a bit in this joint?

Incredible! This blog looks exactly like my old one! It's on a totally different topic but it has pretty much the same page layout and design. Great choice of colors! My blog :

Our trades have been lousy the last couple of weeks but that is part of trading. Next week should be a good one for trading, enjoy your weekend.


John M said...

One thing about the employment numbers--whether anyone believes them or not or thinks they're being manipulated for some nefarious reason or not or thinks they're simply the product of lifelong bureaucrats who don't really give two goat hairs about politics or who's in power...or not...you can't really just ignore them if you're a short-term trader. Because it doesn't matter whether they are real or made up or accurate or crazy, what matters is how the market reacts to the number that's released.

There's an old saying about that, isn't there? Something about how the news doesn't matter, it's the market reaction to the news that matters. And like it or not, the market reacts to this stuff just like it reacts to Bam-bam and Boner making pronouncements about the fictional 'negotiations', or has gone nuts when someone in Europe said they were thinking of maybe doing something if they can get the rest of the zoned-out eurozoners to do it, too. The fact that they did nothing at all and just kept yapping about maybe doing something didn't seem to bother the market one bit.

It reminds me of how, in the late 90s, a stock would go up 10% because a rumor about the company got 'reported' on CNBC. I haven't watched those clowns in years now. Have they become liberals? Used to have a decided Republican bent at one time, even with one or two obvious lefties popping up sometimes.

What's next? Hannity wearing a 'Clinton in '16' button? lol

Vikas said...

Chris, on the daily chart, the stochastic below seems to have made a bull cross of sorts, and earlier instances of this in your chart hint to a upward move ahead?

Also, going back to corelations, tech seems to be weak here, while financials are strong. Thoughts on that?

Tom McCllellan in his Friday's report also said EURJPY seems to be turning down here, which he says is a sign of things to come in the near term for the S & P.

Chris Johnston said...


There are mixed signals right here which is why I am unsure which way we will go. The SMH has been a lot stronger than the SPX which is bullish. We have the EURO chart calling for a top. I think the COT data and my sentiment stuff is negative. I am leaning down but not sure on this one. I think the breakout here will tell the tale.

John CNBC has all liberals except Joe Kernan, they have been that way for a very long time. I only watch CNBC when that report comes out just to get all the details of it without having to search the web for it.

Clinton was a good president I wish we had him instead of who we have now.

I do ignore all reports in my trading

Joel Donovan said...

I have been buying paper trading buying monday at 4:am and selling at 8:30am. You talked about it a couple of weeks ago. Amazing