Sunday, March 31, 2013


APRIL FOOLS!!!!!!!!!!!!!!!!!

I did it again, whored myself out for blog traffic!!!!! I know if I just put a solid positive headline nobody will come here, so sad but true. I thought for April Fools I would try the ole' bait and switch move. If you are mad you got duped hang tight, I am going to cover the ES today, just not first.

Regular readers can see the familiar pattern I often show here. The commercials have become heavy buyers of this market after a big down move. This in and of itself does not necessarily mean we should be buyers here. I have a video that is going to be in the new web site that covers this type of thing. However, in this case there are some things I use that are not shown that lead me to conclude this is a buy setup. Newsletter readers should have picked this out it is in last months Trading School section that has been so popular in terms of the feedback I have gotten.

 I also warned not to go Hog wild no pun intended with that setup just stand alone. Here we have a basing pattern happening that accompanies it so this has a bit more going for it. My wish list has this consolidating a little bit more first before I will try to buy it but who knows that may or may not happen. I try to remain patient and not force things. I don't always accomplish that but I try to anyway. This one is on my radar.

There is a noteworthy "expert" calling for a major sell signal in the stock indexes right now and I am going to cover what I think is the basis for that reason. I can't stomach reading his details because he specializes in revisionist history in his claims on his signals. Nonetheless, he has had some good sell signals over the years he just happened to have blown the whole rally off the 2009 lows telling subs including me prices were going to 5500. The revisionist chart he markets shows him with a buy signal at the lows which is a complete lie, he had no such buy signal in his writings at that time. In any event, here is a chart that is likely to have some commonality with his call.

The net commercial short position has really gotten large here with the ES. You can see it has been clearly declining sharply during this whole rally since October of 2011 so knowing that has been of no value. I talk about this all the time that using this is an art not a science. We have now gotten to a pretty extreme level and it has increased sharply lately. The real trick with this market in particular is that we don't know how the unprecedented manipulation by the FED of this index specifically is being categorized in the report. I think it is showing up in the Large Speculator category because you can see there was a huge net long at the major low back in 2009 and Large Speculators do not trade that way, they scale in and scale out. As a result it is highly unlikely the normal Large Specs would have had major longs down there. All else being equal they would have had major shorts, just study some charts.

What I think is likely is that the FED is not actually making the trades, they are instigating them through intermediaries who they are giving a pass to in the way of no position limits. We know they tell anyone to piss off when they are asked for their books, so we have no way of checking any of these things. As a result what we are most likely seeing is the Large Spec big long being the FED and the normal hedger types being the commercials. The Large Specs are able to fight off the commercials because they are being allowed to have unlimited size to keep the game going.

This makes this a tricky call as to how much credence to give this situation. My feeling at this point is that if we get a price pattern that is a sell it is worth a shot because of all of this. However, I don't consider it to be as high a probability trade as it would have been a few years ago before this manipulation got really out of the barn on us.

This is all conjecture on my part based on experience of reading this report. I am making some assumptions that could be incorrect. However, I think the world has accepted as common knowledge that the FED is manipulating the stock market and nobody cares because the average Joe is benefiting. Remember what we have learned through Cyprus, nobody cares about bad things until they themselves are hurt by them. As long as it is someone else who is getting screwed it is ok and it is for the greater good.

Here is another example of misguided logic with good intent.

Here is our newest free agent signee Gus "The Bus." The name comes from his sheer size which does not really show in this picture, he is 180 lbs. If you keep in mind that the opening he is guarding is a double door dining room you can get an idea of how big he is. The opening he is covering is about 8 feet wide and he basically covers it all the way across. He is a retired champion show dog that my wife drove 26 hours in total to get from the Breeder who was retiring him. Since he was a show dog he is used to an environment where the female that is being bred is kept separate in a caged off type of environment. In our house that he arrived at we had one of our dogs Leo ( a dude ) is in this pen area because he just had knee surgery and has to be confined while he recovers. Gus the bus assumes Leo is a female so he is protecting him from the rest of the crew like he is his girl friend. What he doesn't realize is his girl friend is a 170 lb dude! His heart is in the right place but the plan is actually flawed. This reminds me of some things economically that are going on right now.

I hope you are enjoying your Easter for those US readers.

Friday, March 29, 2013



Since I seem to be alone in my forum here about my views on the Cyprus situation, I thought the dissenters might want to rethink their views based on reading this above article.This is the exact point I was making, there are plenty of regular people getting hurt including this business that was shut down. In the end this is so similar to PFG and you people need to wake up. In fact the numbers in this are not too far off from mine from PFG. At this point I have only 30% of my money and it appears no more is coming for at least a year or more from now. I was already affected this dramatically, but ironically this pushed me into a business offering the services, and that has worked out very well for clients so far with them being very profitable. The saddest part of all of this and also the brilliance of those who are doing this makeover of the US is this. They have been able to create a small majority who relish in someone like this being ruined. Now it is a bad thing to have had $800k in a business bank account. That money should be taken from him anyway and given to others less fortunate. How dare he have a business and employees? It is unfair that he had 800K and we need to take some of that from him. After all if we are bus boys we are hard workers too why shouldn't we have some of his money? The reality is he will take his jobs elsewhere as he should. I think even though I don't like it at all, that this plan to makeover the US into this type of collective thinking is brilliant. This is why I maintain that the last election told us the collective will of the US has been changed for a very very long time. Reversing this type of thinking is almost impossible.

It is a far cry here in the US as compared to Cyprus in terms of something like this coming ashore, but let me throw out something else that is going on here I found out about yesterday. I had lunch with a friend of mine who has a close friend who owns many things among them a gun store in Arizona. A funny thing happened with the gun store owner and our precious government. The government came in and bought all of their ammo, every last bit of it. They gave them $1.6 Million and told them just to store it. I had heard something about his on the news the other night and just brushed it off and I should not have. Since they cannot get guns outlawed they are going to use tax payer money to buy all the ammo. This type of thing should scare the you know what out of all of us. It is starting to appear that people who were labeled as extremists who have been talking about the government take over of our lives are nothing of the sort. They are telling the truth. I guess I have been naive, I did not realize the level to which they are going to transform us. There is one guy that is a bit goofy, but he has gotten virtually everything right in advance, Glenn Beck. It is amazing that a guy with his background would be this dead on accurate about things. I am not sure his solution which seems to be just pray to God is really going to work, but I am starting to listen to him now. He talked about the gum ammo thing a long time ago, as well as many other things. I am not saying I subscribe to everything he says the point is just that he has called in advance virtually all of the bad things that are happening, and he has been kicked to the curb by the main stream. The last part is the reason to listen to him. I know liberal readers will go ballistic over this but I am not so sure this is that much about politics any more. This government take over is about power more than ideology. I listen to left leaning people all the time trying to understand their views, if you lean left listen to the right, you already know what you think so you don't learn anything listening to the same views. I am the same way, I get annoyed some times listening to the conservatives, it is just blah blah, stuff I already know. I want to hear the opposing views, maybe I am wrong? At times I have changed my views from doing this.

How does this tie into Cyprus? When you look at governments around the world if you throw out the dictatorships ( although that could almost throw us out now ) you see that most of them are doing the same types of things. Do you really think banking is done that much different there than it is anywhere else? If you look at the ratios in US Banks, the real ratios, you will see that the reserves they have measured against the exposure in bad loans, is almost nothing. If even a small percentage of the bad loans go bad, they do not not enough money to cover it. In the end where might they go to get it? When you are delivering bad news to people it is always best to ease them into it, that is what is happening here. We are being eased into thinking all sorts of things, including it being ok to steal people's money in a bank, is an acceptable option. I think you are kidding yourself if you really are not concerned about this.

I think the best plan is to spread things way out, cut your exposure to any one place. Try and find banks that do not have much real estate exposure, and be prepared to take a hit of a 100% loss in any one place or perhaps more than one, and have it not be a game changer. If you think about it, these people had no reason to believe this was on the verge of happening. If it came to us here neither would we. We would be lied to until the day it poofed. The CFTC lied to us about PFG and the other FCM's but that is okay apparently. I have no idea if this could happen here but I have learned the hard way never say never.

I want to address the Trading School portion of the Newsletter for a bit here. I know from the feedback that a lot of you are excited about some of the things we have been writing about which is great. This is the whole intent of that section. However, I want to tell you what not to do with this techniques.

When I first started out trading and even to this day, I have one bad tendency that I am aware of. When I find a technique that works really well I tend to overdo it. One of my favorite phrases in life which is a quote from my wife's brother is " anything worth doing is worth over doing." Unfortunately he uses it to justify being a drunk, and it is an equally bad idea in trading. I just like the phrase because I think it is funny. Most of us are very passionate about trading and it is why we grind out the process day after day. The techniques we taught over the last two months with ADX are seemingly very popular, and they should be. These are valuable tools. What you don't want to do with these is go crazy trying to fade every trend move when these reversal indications start to develop. I am going to eventually do webinars on these types of things but there is only so much I can do each day, so it may be a while before I can get to that.

The single best trade to make is the first one you can catch once a trend has changed, it is what I call the lowest common denominator. Here is a chart that shows this basic idea.

What that last phrase means is basically your lowest risk trade. You can see in the Crude chart here that the best trades were right where I have the green highlight bars or red after they have changed from the opposing color. These are proprietary trend change indicators we use, they don't all work this well. However, in the service we knew when we got stopped out on the short in Crude we had a trend change happening so we definitely wanted to reverse and go long knowing this was the lowest common denominator for a long position. It was the first possible entry. There was one losing trade that would have occurred at the lows before the first arrow where you can see we shifted from long to short and got whipsawed. So this idea got 3 out of the 4, not bad by my way of looking at things. 

Do not bother asking what these highlight markers are we are not going to divulge those at this point. Blogger is striking again it won't let me left justify here so I am going to cut off this post here. The main point I want to make is that use the tools we teach, but don't go crazy with them. The ADX techniques work great but they work best when combined with some other type of indication in the price that the trend has changed. I do not just blindly fade market moves just because those patterns are developing.

Happy Easter Holiday to everyone

Wednesday, March 27, 2013


I am fairly sure I was one of the first but not the first to start openly talking about the PPT and their manipulation of the Stock Indexes. I was made aware of this by one of my original teachers and once I learned about it seeing the patterns and the buy programs that made no sense became pretty easy.

It used to be that the discount and premium to the cash market was monitored closely by the big funds and they would launch programs to take advantage of displacements when they got out of whack from one another. They happened at regular times usually 10:30, 11:00 and sometimes 11:30 am PST. You could often see them coming and could front run them once you got the hang of it. The first major change I remember seeing was during the Bush/Gore fiasco in the courts when the stories came out. It has been the function of the PPT since long before that to show up on big down days to try to do late day saves. Often these attempts succeeded. Back in these days volume would give them away. This has changed.

The strategy now appears to be to wait for very light volume times where the price can be moved while spending less money to do it. Ironically the government is finally cutting spending, who would have thought it would be here? They let the moves drift until the volume dries up then out of the blue it moves. These moves often come with no meaningful displacement between cash and futures which tells us it is not the normal suspects and some other "unknown" buyer. It is interesting for someone who has been watching intra day price action for so long, to see this play out this way.

In the 5 minute chart above I see no obvious manipulation by the way I would normally spot it yet I do suspect that during these days it has gone on because of the big dips that were reversed. To be clear not every dip that ever happens in stocks is reversed by manipulation, that is not true. There is an upward bias to the stock market in general. We also currently have a very strong trend, so buying dips is the normal prudent approach to take during times like this. It does not matter what causes the trend, the trend is there and you need to be in sync with it. I will never forget reading an article several years ago that was written about short sellers in a big bull market and how they were actually right and the market was wrong. Really? I beg to differ. The markets are always right and it is we who are wrong when we are not in sync with it.

Shorting markets like this is very tough. There is most likely a sharp break out there that would be very lucrative to be involved with when it comes. However, it is not a great probability play to try day after day to fade a trend this strong. Pick your poison.

I would like to see a bounce in Cotton for a short just as a heads up for one market I am watching. I do have short term sell indications in the indexes but the chart pattern here is unclear to me.


For those Newsletter readers you can see the ADX pattern we have written about on this chart, some of you probably caught this better than we did. We actually shorted the false break then reversed to long once the trade failed. How did we know to do this?

You never "know" to do anything in this business and one of the hardest things to do is to immediately reverse after you have taken a loss like we did here. This is especially true in the trading services where we have to tell folks in advance to do it. My logic here was that we had formed a tight congestion pattern and I thought the breakout would have some travel room to it. We just played it both ways, reversing when the first breakout failed. There are some inner workings to this as to why I thought this congestion would result in a breakout that are a bit more complex. However, the net net is just we were trying to trap the market and we were successful.

Often when there is a really strong short term burst like this for a few days markets pause. Since this trade got us back to a good spot I decided to exit after the burst. We were in a hole in the Swing service this month until this trade and now we are in a much better spot. That equity position would not in and of itself been a reason to exit had the short term expansion pattern not been there. You have to trade the trades for their individual merit.

This trade leads me to something I was going to wait for months end to discuss but have decided to do so today. We have made a few tweaks to the Swing trades and this Crude long was the first one that was done with the tweaks. As I have written many times in the past, I don't jump around from technique to technique trying to always be perfect. I have used the same basic trading tools for a long time with a few minor changes. I recently discovered a better way of using the same tools to stay in trades longer. We are going to be employing it now going forward. Ironically, the first trade in this sequence the short, would not have been a trade with this minor change, but the long was. That is the main reason we stated in the orders to reverse. Since the variation will catch larger moves we felt it was prudent to reverse the short trade if it failed.

At times in the trading services we have had some good trades that have been stopped out and then gone on to make pretty good moves in the direction we were looking to begin with. Some of this has been due to some gamesmanship by someone as I have discussed, but it is also due to the stops being too close which is on me. I have been trying to figure out how to best handle this situation which is what led me to this little change which will make a major difference. Be prepared we are going to sit in some trades for a long time now compared to what we have been doing. We will do a quick sharp volatility expansion exit like we did here at times, but often we don't get these so we will sit in trades for a month or more occasionally.

I have to thank everyone because running this service is what led me to this conclusion, had I not been doing that I may not have made this discovery. It was right in front of me for quite some time and I had been considering it, but making the service run the best way I could make it run is what led me to this. Doing it the way we have had made us money, but we have missed some larger moves that I should have caught and we are going to go get some of those now.

I twitted this morning that I think there are some short term things in the stock market that are bearish. Once again the ADX pattern is there, so something to begin to watch now for sells.

It looks like it is official now after going through another computer, I am just going to notebooks now and connecting them to my big monitor for viewing. I have so many issues with tower computers on my ranch and I have worn out the path the the Geek Squad just to find out my mother board is trashed and I am just done. My wife complains to me all the time about our computer issues which gets in the way of her facebook! You married guys get this one I am sure. She did not want her own notebook because she likes the big screen, so I gave her both.

You may have seen the PFG story that Chumpenstein went for the statutory max on the fees because he has done such a good job getting us 30% of our money back. What an asshole. I guess he just did what any other attorney would do, saw a chance to make millions off innocent victims. I would love just once, one time, to be able to hit one of these guys with a jump spinning back kick, JUST ONCE! Alas it will never happen. I still think Dana White should have a UFC version of Perps vs Victims.

Good Trading

Monday, March 25, 2013


I have written about the alleged safe haven status of Gold now for a couple of years and maybe just maybe I am finally reaching some people. I am sure the Gold bugs will bash me or roll their eye brows labeling me a doubting Thomas, a traitor, a dumb ass. He is someone who knows nothing about economics. Perhaps I am all of these perhaps I am none. Perhaps I am someone who just studies history and has no agenda. There is one reason and only one reason why I say this whole alleged relationship is a fraud, it is not in the data, AT ALL.

Does that mean things can't change and at some point in the future it will become a place where everyone goes for safety? Of course not. All I am saying now is all I have ever said, there is no historical basis of any kind to support this supposed safe haven status alleged to accompany Gold.

Gold is a commodity and as a result it moves up and down and mean reverts. The next snot nose brat that tells me other wise I just might back fist. I will envision him as Wasendorf or that common theif Bodenstein ( see todays news on his fees for PFG ). Look at the chart above during the crisis of 2008, Gold went up and down in direct correlation to the cash S&P 500. It was no safe haven. If you think you should have money in Gold by all means put some there, but it is no lock for a rally during a bad economic period, never has been and never will be. It has gone up and down historically independently of crisis periods. At times it has risen and at times it has fallen. Sorry folks those are the facts just look at some charts after you back fist the snot nose kid who is running his mouth.

I bring this up today because I came across a couple of articles that were remarking about how surprising it was that Gold was down today when all hell was breaking loose in the Euro. It was not a surprise to me at all. I did not expect it to go down or up. I just did not expect it to react to that news and it did not. I am seeing the short term trend as up in Gold, so I have been looking for a buying spot recently. I have not seen one yet. It has nothing to do with the economy at all.

I still maintain a state of shock over the comments that have come to me over Cyprus, but they in and of themselves tell me what I need to know and why what I am going to do with my money is the right thing to do. It apparently is ok for people with more money to have it confiscated as long as it is not yours. After all we have to do something! There was an article that was referred in a post from yesterday that I read and it was another person saying it was essentially ok for people with over 100K in the local currency ( I think about 130k US equivalent ) to have 40% of their money confiscated and the rest frozen indefinitely making it essentially a 100% loss for the time being. You pinheads who have not been through a PFG type of thing have no idea how hard it is to live when you have mouths to feed and bills to pay, when your money is just gone the next day when you wake up. For these people in Cyprus it is no different AT ALL than it was for victims of PFG types of things. They woke up one day with their money frozen indefinitely and wondering if and when they will ever get any back. They have people and families relying upon them and now what are they to do. Don't give me that rich people garbage, grow up! I was rich until PFG too. Trust me B of A or Wells Fargo don't give a damn why you can't pay them, they want their money now or else. Someday it could be you and it would serve you right if nobody cared. This is not directed specifically at any of the posters. Most of you I know and you are nice people who perhaps don't quite understand the devastating effect these things can have on you because you have not experienced them. Trust me you don't want to. If we all give in and accept these types of things as ok it just makes the landscape for doing the wrong thing that much more conducive to doing it. At the end of the day if you have had all your money taken whether or not it is by a criminal or a bank it does not matter to your creditors, they still have to be paid.

Those of you that think this is ok ought to be ashamed of your selves. Those of you who think this is an isolated incident that means nothing for any other place should also be ashamed of your selves. I know what I am going to do and I am taking action now. This is a shot across the bow and there will not likely be someone with a bull horn on the corner telling you to do something next time this type of thing happens. Hint: Gold is not the answer. This is a rap on this topic we are not going to discuss it any more and I may have already covered it too much.

I am getting some short term indications of a possible selling spot in stocks. I do not have any triggers. We were trying to short the ES in the trading service today but were not filled. For those who want a experienced stock traders views on things I suggest reading Trading Markets.com articles by Kevin Haggerty. He is one of my early mentors and about the best there is for stock market swings. He has kids who work on the floor and he also advises major funds on stock trading. He only posts an article about once a week or so. He has an interesting long term view of things.

Good Trading and I will take deep breaths after taking a few swings tonight. I apologize if I offended anyone but I felt these things needed to be stated. I think Newsletter readers are going to like this months edition, I have been working on it the last couple of days.

Saturday, March 23, 2013


One of my problems which I don't really consider to be a problem, it that I care about others a great deal.

I am fairly sure a business advisor would tell me not to discuss what I am going to cover today but I don't care. It has been and always will be my goal to deal with the public and any clients I have honestly and in a straight forward manner. I think the following I do have albeit it not very large, is mostly comprised of people who find me different from the typical person on the web. I hope there will always be room for me.

We have had a lousy month thus far being down in both trading services. This is not lost upon me, I make the trades that are in there myself. The trades are directly from my personal trading log I write every night. The Bond system is a mechanical system so those are what they are. However, one thing I constantly do with it is to monitor certain portions of it to see how they are doing. If I see something in one of them that is out of line with what it should be doing I make changes to it in order to adapt to the current market conditions. It is rare that these types of things are necessary but about once a year they typically have to be done.

The way the system is designed, it has a multitude of entry combinations based on all sorts of things from our experience trading this market for so many years. There is a layer on top of that which is a filter designed to catch some of the entries that are not as good as others. I monitor this layer constantly to make sure it is catching bad trades and kicking them out and letting the good ones through. If there is one challenge with the system that is it. As I stated an adjustment to that is rarely needed, but there was one I write about in the web site that I made many years ago when we were transitioning from the pit to the electronic markets that was a life saver. This is what trading is all about, dealing with adversity. I remember words from my High School wrestling coach when he reviewed tournaments or matches going through each member of the team. I was the captain and a very accomplished wrestler, one of the best in the country my senior year. He said once I am not sure why Chris is the only one whoever wins once he gets behind? I did not get behind often but when I did there was hell to pay. I went months without losing a single match, but was behind in several of them at one point or another.

This is how I feel about the Bond system right now. Although we are still way ahead for those who started at the beginning, anyone who started last month has taken a hit this month. I started the auto trade stuff at Robbins this month, of course missing all the great trades we had in Jan and Feb, and the net results without those for the year suck. What I have done is re institute a filter that I had taken out because I did not think it was necessary. We went months without it doing anything at all, then all of the sudden we had that losing streak and this filter would have eliminated all but one of those trades. It will not filter many trades but there are certain situations when there is huge momentum in one direction and our system triggers trades against that momentum, that this  filter will help us eliminate. So far I am glad to report it kicked out two trades that were lousy and let the last two through which were both wins for us. There is nothing that is perfect, but this is pretty good and if you think about it, if you eliminate just one or two bad trades a year it can make a huge difference in draw downs. That is what this will do and has already done.

There is a trader far more accomplished than I am who is selling a bond system, and the most recent draw down in it was over $12,000! Ours has been $4200, so about one third of the other one. It is more expensive than ours as well. All in all I still feel good about this and I personally use it in multiple accounts as I have stated before. I even began trading it in one I had not used it in before because I felt it was a good time to start in with it since there had been a draw down. We also had a few people sign up at Robbins to trade it for that same reason, and they have been lucky enough to start and catch the last two wins as the first trades they got.

What I hope to do once the web site is done is have some explanations of what is behind some of these things which should help people understand how they work in general and possibly have more faith in the methods. I am going to list in the members section the markets each week that are setup in the direction we are looking to trade them. I am hopeful this may help people and perhaps you will be able to trade them better than we do. I just think having this back drop will be helpful so you understand why we are doing what. The site should be up within two weeks. here is how it will look.

How it looks does not matter, it is results that matter. One thing to keep in mind, we were on new equity highs in both services coming into this month. We are having a crappy month but it is not a disaster. For those who have left, thank you for giving us a shot if you are still reading here. Those of you who are hanging with us, thank you. It is amazing to me that you can't have one bad month, I always have a bad month here and there. Each month my trading techniques give me about 35 trades for the Swing Service. That is way too many trades and volatility for most people so I have to pare down the list some. This month I have done a poor job of narrowing down the list. I don't take all 35 of them either, I don't want to trade that much.


I think what is getting lost here in those who cheer the trashing of rich people and possibly criminals for social justice as they call it, is that they are missing the bigger picture. If you think that once a precedent is set for this it won't grow and creep down to others you are fooling yourself. How many cocaine addicts can do just one line of it? There are 10,000 depositors it appears now are the target and there are numbers flying around as high as a 70% hit! I am sure they are going to lock the money so these people can't take the 30% they have left out. Is that something everyone who hates rich people really thinks is a good idea? When PFG happened and I needed a job to survive there was not a single poor person who offered me one, imagine that! That god an evil rich person came along and offered me one.

When the precedent is set for this type of thing the barn door is going to be open and anyone with a brain who has money is going to take it out of the system. This is going to cause a huge problem in Europe, HUGE! The next time they need money they will just start lowering the level of deposits the penalties apply to. I read in Spain they are levying a very small tax on all deposits now. This is the beginning of something very bad, now they governments can spend even more knowing they can always just take the money directly from bank depositers. Get your plan ready folks, you are a crazy if you don't think this is a big problem potentially in the making. Rich people are smart, that is why they are rich. They will figure out a way to protect themselves and in doing so will take money out of the economy and then everyone who wants to get back at them will wind up paying the price. The world has to have some better off than others, we cannot all be equal. It is not up to you to determine how much of some one else's money you will take. Look at what has happened with taxes. BO promised no new taxes on people under 200k yet he has done exactly what he said he would not do, raised taxes on them as well. Once they start taking the barn door is open. Now he wants to take more and more and more, and the level of income is going to continue to decline where they start penalizing you. Maybe douchefett will finally give up his years old fight with the IRS and pay them the billion dollars he has owed them in taxes for years, oh wait uh er... he wants to pay more? He could start by paying what he has already owed for years to get current. However, he would rather have you pay more he himself does not want to.


Michael mentioned to me yesterday that there were some Newsletter writers that were calling for monster stock market rallies right from this point almost immediately, and asked me what I thought. Everyone who reads the Newsletter knows that I have continued to tell everyone to stay long even though there are a couple of potential flies in the ointment. I don't really know if we will go up a huge amount straight from here or not. It is clear you should be long and should stay long. I always have a hard time personally pressing a bet with new money after a market has more than doubled. That does not mean it is not the right thing to do, it means I don't do it. We do know that there is a huge up bias in the stock market and that we want to be long most of the time. However, I like to buy dips so I don't personally feel it is prudent to add new longs right here.

I think once we get to the fall we have to get long and if that means adding to a current position at that time than that is what needs to be done. I would prefer it to be on a pull back but we will have to see what is going on at the time. We do know the sell in May and go away adage does in general work and we are getting close to that time of the year. One of these writers Michael mentioned that was bullish was very bearish on stocks at the beginning of the year and has changed his tune now that new highs have been made. Forecasting in advance is so difficult. What we are seeing now is many cyclical forecasts be way off calling for decline at the beginning of the year which did not happen since we have gone straight up. Now we have the potential inversion of cycles since many of them called for March low points. The next graphic shows the tendency for the first year of the second term of a president which has been a perfect road map so far this year. It is calling for a top to be made now or a week ago.

My short term Oscillators are showing some underlying weakness as I showed yesterday. One of the challenges of the stock market now is the unprecedented stimulus being provided to it by low interest rates. Since we don't think any significant posture changes by the FED are coming it is hard to imagine a big down turn coming. I think retracements are going to be buying opportunities for now. When I read all the stories at Zero Hedge which I can't help but do for some reason, there are some really bad things seemingly going on. However, what everyone needs to keep in mind is what drives stock prices: INTEREST RATES.

This is why we can have this huge disparity between the economy and the stock market that is going on right now and can continue believe it or not. If rates were to rise sharply, you would see the stock market come into line with the economy very quickly. For now enjoy the bull run who knows how far it could go.

My closing thought for this post is a quote or pseudo one since I may have this wrong, "In the end once a man has given something all he has there is nothing more he can do." I do give this all I have. Thanks for reading.

Good Trading

Friday, March 22, 2013


Here is a link to a story that is an example of why the governments always lying to the public about things is not cute or ok but dangerous. It is also why it is not enough for officials to just be smooth charismatic and charming. At some point they also have to be competent and not corrupt. 


I think most people know at this point not to trust these types of reports that come up but I am guilty. I trusted the CFTC and NFA when they came out after MF's implosion and told us they had audited all the other FCM's and everything was fine. I left my money where it was due to that report and almost had my life ruined because I trusted them. It is forever altered without a doubt. I will ultimately recover but the time lost in the process cannot get regained. I for one want the truth and don't determine for me in advance that I can't handle it. Let me decide how to handle it. Most of us won't panic we will act rationally.

I think the real lesson learned at this point is that you had better have your money spread out. We are guaranteed more PFG/MF Globals and more bank failures. You just cannot put all your eggs in one basket. As much as in my mind I have identified TD Ameritrade as the safest place in the US Futures brokerage community to have money, I still won't ever put all my eggs in one basket ever again. Spread your trading and savings money out. I also think you should do it with IRA's. My whole life long IRA was at PFG among my multiple accounts there. You don't want to have that whole thing taken away believe me that is emotionally very taxing.

I don't think it is ok for us to be told over and over everything is fine when it is not because we might panic if we thought the truth was not so rosy. Life has cycles good and bad we can handle it. The fact that we all have gotten used to accepting all the lies in these reports and don't complain enough is on us. We are letting them get away with this.

To the markets

Here is the Bernanke 500 and for the first time in a while I think we are getting a tad top heavy.

I  have two different things on this chart. The purple line is an accumulation indicator and the blue line is a momentum indicator. They are both showing weakness as opposed to the price. The purple line is more stable and a better indicator of whether or not underlying weakness is developing. The blue line is kind of volatile and moves all over the place, so it can be ignored for the time being. We still are holding all the relevant trend measures as far as moving averages go. However, I think if we were to break down below the lows of the last few days we could have some problems. Will we? Who knows.

I don't think the FED is in any mood to allow much of a decline and this is where the cyclical forecasts have gone astray this year. All of them are based on history and we have never had a time when our government has taken over the stock market like this. The natural forces have been over powered by the FED's activities so the cycles have been artificially removed so to speak. There is no sign of that changing any time soon so trading the ES is very very tricky. If you look at the average for the first year in office of a presidents second term, on average a high was made in mid March. So far that has been the case so perhaps that is some ammunition for short sellers.

What I would prefer is a sharper break down and bounce for a short entry but I have no idea if that will happen. For now I am thinking we are going to move sideways.

Good Trading

Thursday, March 21, 2013

Going to War

You think you got it bad now what if our armed forces had me behind the guns on a Super Cobra Helicopter?

This picture above is exactly that scenario yesterday out at Camp Pendelton. I had a friend who is a colonel take me out there and this is a shot from where we were talking with some pilots and mechanics for these cool attack choppers with me in the main gunny position. One thing I can tell you, if I were given the green light in one of these bad boys to start firing a lot of bad people would be in some serious trouble! These machines are amazing and to see all that goes into the maintenance of them. Every single time they go up in air they do a complete mechanical checkup in the hangars afterward. What is really amazing to me about our armed forces is that when you meet anyone in them they are so incredibly polite and respectful it makes you very proud to be an American. I thanked every one of them for keeping us safe like I always do when I meet military people. I really love our troops.

I needed this break yesterday I was in a bad mood and had to walk away for a day. The link below is a summary of a guesstimate for PFG distributions from Attain Capital who covers the topic about as well as anyone has. The 30.7 people are going to get 100% it appears, us 4d's are going to get screwed. The numbers are in the ranges I have discussed of between 50% and 60% for 4d. The bad debt guys are offering 42.5% now on 4d and 83% on 30.7. It might not be a bad idea now for some to take that and the court docket shows a lot of people selling their claims now. You get the money now versus waiting a year for another 10% or so. If my claim was small I would take it and be done with it but it is not so I am probably going to hold out. In my mind I have written it all off now anyway so even a penny more that comes is a bonus. Who knows maybe something will happen with the bank law suits and in 2023 another chunk will show up. 


To the markets

Here is the Cotton market which I have been talking about as a potential selling situation. Here I have mapped out what would be ideal for this market. Will this happen? Who knows. However, if we get a break down and bounce here when I see the weekly picture with the COT data, it is an opportunity for a short.

That is it for today, Good Trading!

Tuesday, March 19, 2013


Before I get to the above chart let's wrap up the discussion on the Cyprus situation. I have been surprised by some of the reactions I have gotten on this. I think some people are trying to make this political and I don't think it is for one minute. I am going to draw a parallel to something that in my mind is similar even if it is not readily apparent on the surface. GM.

GM is a prime example of a problem that has been made worse. It is hailed as a success yet they owe the tax payers around $35 Billion which will never be paid back. The real dark secret is that they have an unfunded pension obligation of $100 Billion, you read that right. It is possible that has changed some but those were the numbers a few months back and if they have changed it is on the negative side.

The reason I see them the same is that they are both situations that are big unsolved problems that seemingly are not a concern to most people. I really don't think either should be political. They are both outgrowths of economic models that don't work. They can't be made to work, and won't ever work. You can choose to penalize people to buy you time to try and make something that by definition can't ever work. The question is what is the point? Both are economic models that are going to implode again.

I am pretty sure if we ever reached a point in the US where people that were poor had their $2000 bank account balance penalized $140 there would be a violent revolt. Never say never. For now it appears they voted down the tax so who knows what is next, another bailout of a failed business with borrowed money that can't be repaid. Sounds like an even par round in this day and age.

I have had a preponderance of computer problems over the last several days. My favorite has been my screen just turning off on it's own. I had to do a system restore which still failed to solve the problem so then a new video card etc.. I was trying to make the Swing signals while my screen was literally showing the chart for a second then disappearing. Then reboot see it for 3 seconds POOF! Etc.. I had not done the daily download on my backup laptops and the time the orders needed to be placed was approaching. I apologize for having all the revisions but now you know why and also why I ultimately cancelled all of them for tomorrow. I have a commitment tomorrow so the orders won't be out until about 3 hours after the normal time, my apologies, especially for those who live in other countries with big time zone differences.

The above chart was one of the trades I had put in the Swing Service that was cancelled. The logic behind this should be familiar to Newsletter readers as to why this is labeled a buy zone even though it won't seem to make sense to some others. It was a buy on a weekly setup and some of my short term indicators were on the verge of turning up, which is why I had a buy order in for this market. Once I finally got my screen to show the actual chart for more than 3 seconds I noticed one of my rules was not in place so the trade was actually a no go. That does not mean anything about my opinion as to whether or not I think this will rally Wednesday or not. What it means is that it does not follow my rules for entry.

I have been off my game a bit this month and if there is one thing I hope some people have learned is that I don't press my hands when I am not on my game. I am in no hurry to trade and don't force things. If I have a bad stretch I am not in a hurry to "get it back" etc.. Those have been famous last words of too many people. PFG has taken away my cushion and that is a good thing. It forces me not to piss money away pushing a marginal trade.

If you find yourself dying to get some money back after a bad trade, resist that urge. The markets will be here tomorrow as long as Douchefett does not get his way.

Good Trading

Monday, March 18, 2013


Blogger strikes again with this paragraph glad to almost be done with it I can't get the left justify to work, my apologies for the poor aesthetics.

This is something I rarely do but I am going to do it tonight, I told you so! I mentioned that it was more important to determine how the FED would react to the situation over seas than whether or not it had any larger economic consequences or not. We have to keep in mind this is not the normal free market we are all used to having. This market is completely controlled by the US Fed and it's minions. They are always going to stay in front of any crisis they see developing and today was certainly no different. You can see when you look at this market from this perspective today was a non-event completely.

There has been a lot of talk about how this situation in Cyprus is not a big deal because of all the illegal tax dodgers that supposedly have money in the banks there. I am going to assume that everyone who makes that point has names of specific account holders and how much illegal money they have there. Otherwise that is nothing more than conjecture. It may well be right but consider this, what if half the account holders are criminals which would be an astounding percentage. That would still leave half the customers who woke up to a smothering tax. I am going to also assume that anyone making those points would also be fine if they woke up tomorrow morning and either 7% or 10% of their money in their bank accounts had been arbitrarily confiscated. If you are ok with taking a hit like that than you are right to make those points. However, I doubt very seriously virtually anyone would be willing to take that hit. It seems the vote has failed so the tax for the moment is dead but the problem is still there.

"Don't worry this can never happen here in the US." Really? There are prior instances of bank holidays ( not presidents birthday's ). There have been days where banks have been closed to slow down runs on them in this country. I am not predicting anything. What I am saying is that never say never. We had periods where our own government confiscated Gold has everyone forgotten that already?

The point to be made here is that it things get bad enough all bets are going to be off. We are already seeing liberties being attacked like never before, is it really such a stretch to imagine our government just taking money out of your bank accounts? There has been talk already of forcing portions of retirement plans into government bonds, folks the ground work is being layed for all sorts of sinister things that could follow. It is also possible everything will be completely fine and there is nothing to worry about. I just know I am going to put a plan in place and nobody is going to know what it is other than my wife. It is not a panic plan by any stretch. It is essentially the equivalent of a stop loss on the situation.

One other thing, in a situation like this, do you really think Gold is worth anything? If we get to a point where money is just taken by the government they are also going to take anything else they think might be of value. If by chance Gold happens to be that asset they will take it to. They already have once before for god sakes!

Enough on this now back to the markets. I am struggling to find really good setups this week so far to trade from. The Grains seem to be somewhat in between. The metals are a mess pattern wise to me. I also see nothing in the Currencies other than the Dollar Index is in the zone for a potential double top with COT selling. I don't see a daily trade in that market.

The Bond market has gotten itself back up into a potential sell zone area but my short term indicators are pretty bullish right at the moment.

I have been recording videos for my web site and I think I have some good things if the darn thing is ever done. At this point I have almost stopped asking. I think the problem has been that the people we are using do web sites for big companies with huge budgets and are squeezing us in during the odd spaces of time they have in between big projects. As a result we are getting good quality but poor response time. Oh well I guess I deserve it so it is what it is.

Let's stay patient, when I lose my patience I lose my money generally.

Sunday, March 17, 2013


When the news broke over the weekend that there was going to be a wealth tax on deposits I think all the BS the politicians have been pedaling about how everything is fine got exposed. I normally would not do a post just to react to something like this, but I figured some people might check in to get my thoughts on this.

Ironically we were trying to buy the Euro tonight in the Swing service at a limit price below the close from Friday, but we opened so low that it cancelled the trade because the open was under the exit stop price. Obviously, I did not see this huge sell off coming. However, I did suspect something might happen when the news broke over the weekend about the wealth tax that we were proposing to apply to bank deposits. It is shocking to say the least that they can just essentially steal almost 10% of your money if you had over 100 large in those banks. If it were me I would take the hit, take the money out and move it out of the country immediately. I have always suspected that at some point when we do hit the wall on this whole situation that things like this would happen.

The question becomes what does this mean for all of us as traders?

One thing we have to keep in mind when news stories like this break is what will the FED do? They are the de facto commercials now. Whether they outright buy the ES or orchestrate the buys of it through intermediaries we will never know. However, what we have to assess in situations like this is whether they will let a short term pullback happen then pounce when the volume dries up, or buy like fiends to try and contain it. I am not sure to be honest, I wish I was. I think we all know the stock rally has been completely created by the FED so deteriorating fundamentals are not necessarily a killer of the rally. If fundamentals mattered the rally would have never happened in the first place. I don't think traditional fundamentals matter.

We were long Bonds in the Bond System from Friday so we got a nice windfall on that trade. By the time I could even click the mouse after making sure we had a profitable opening, prices had already moved up quite a bit from the opening. We are going to be reporting the fills from the Robbins auto trade system for the official results of the system going forward. I trade those signals in 4 accounts and I think the worst fill I got was 142'15 in any of them.

I think the way to play the ES is to wait for a bounce now while maintaining a stop below the last significant pivot for longer term positions in case we don't bounce and we plunge. So far we have not broken anything significant. However, we do know based on recent comments by the President that he sees no problems with our debt or any reason to cut spending. As a result unless he changes his stance what we are seeing in Cyprus is coming here before his second term ends. I wish I knew exactly when but I don't.

I do think it makes sense to get some money into a spot where it is safe and that would mean out of banks. There is no reason to completely panic, that never does anyone any good. However, what we are seeing here is what I think so many people fear.  In a severe crisis all bets are going to be off and your money is not going to be safe in a bank. Having it in T Bills is probably the safest bet. The problem there is whether or not they would be liquid in a severe crisis. I do not know.

For now what we have is a local problem that might ignite an awareness that this could be a bigger problem in other places. There have been historic times of bank runs and they have not been pleasant. I suggest that people create some type of big picture plan, put it in place and then go about your life. You can't go hide in a cave for the rest of your life. Maybe set aside in some secret place, a few months of bills in cash then call it a day. I have always thought this was prudent even before any of this crap over the last several years, so I have not changed my mind about that.

I don't think Gold is the answer but I would be willing to bet we are about to be told that it is once again. The key with Monday is going to be volume, if it is heavy the FED won't be able to stop the initial decline. If it stays light they will probably be able to contain it pretty well. Must see TV tomorrow.

For those who read the Newsletter, you know how to interpret the ADX that is displayed above.

Stay calm

Saturday, March 16, 2013


It is hard to find something that gets more favorable bias from the media than our beloved President, but there is one place still left to go.... GOLD. Can anyone remember or cite an example of some flat belly telling us to sell our GOLD? It is always buy buy buy and then buy more. Is this good advice right now?

Keep in mind one of the old adages is never listen to a man's opinion when his income depends on it. So it is with this market. The people presenting themselves as experts are affiliated with companies that sell Gold to you. Might there be a conflict or interest? Of course. I also love the spin in the reporting each day when it drops $20 is the the fault of Apple stock declining and people having to sell gold to cover margins ( my all time favorite idiotic excuse ). That is labeled a small decline. A rally of $10 is a huge rally, yet half of the amount labeled a small decline. Just keep this bias in mind. It is no different than anything else in life. When everyone agrees on something name one example where everyone got rich? Since most of the world is not rich it is generally not wise to do what everyone else is doing financially. It is wise to be with the trends in the middle but dangerous to be with them at the end and unfortunately that is when most people feel it is finally "safe" to wade into something.

My big picture bias is down in this market and has been for a couple of years. I do not trade off that bias, it has nothing to do with determining trades, but I wanted to state that just for the record. I am not a Gold bug. I am also not biased against Gold either. I just look at it like any other market, that is all it is to me. It will not make me rich or poor, it will not become the standard by which money is measured. It is just a commodity to trade. Commodities have a historical tendency to mean revert and it is more than a tendency. It occurs 100% of the time. In spite of all the brain surgeons with these new ideas of why it is different this time and why it will not ever revert and will soar to the moon, I see no evidence of that likelihood. They could be right you never know but I base all of my views on what has happened historically not what could happen for the first time ever. With that having been stated, let's look at how things look right now.

The chart shows strong Commercial buying along with a large Small Speculator short position. By COT rules this is a buy setup. It is also happening at a level that is clearly trying to be defended by the big players, this matters. We see this from time to time, the Commercials trying to defend a level that for whatever their reasons are is important to them. They are doing this now. What generally happens in these cases is a bounce occurs, but here is a chart of a similar situation where they tried to defend a level and that level broke.

The Yen above is an even more extreme example of the Commercials trying to hold a level. If you look at the level of the line on the chart you can see below that the Commercials had gone well beyond the level of net longs they had and the Small Specs well below the recent short levels. Clearly there was an effort being made to hold this level. When it broke you see what happened, the Yen fell off a cliff. This is why I have been saying I think this current level for Gold is so important. If we do break it I think we will see this same type of price movement. I cannot tell you what the probabilities are of a hold versus a break through of this level. What I can tell you is that fundamentally the COT data at this moment is bullish. The price action is not. If you are a Gold bug every dip is a buy so you certainly should be looking to the long side. It might not be a bad play to get long and just have a stop below this level for your exit and see if it holds. Often trading is about probing spots where you think movement will take place from. I follow rules in my trading just because I feel out of place just randomly buying and selling on intuitions.

I do not have any signals either way on the daily chart right at this exact moment. We did have a buy in this market in our Swing signals this past week that was basically a scratch making only a few hundred dollars. It initially moved up for us but then came back down. That pattern is now no longer setup.

In the basic rules of technical analysis they teach that triple tops and bottoms typically don't hold on the 4th attempt. I think this is true but have never specifically studied it. I just don't find many 4 point highs or lows when I peruse charts. What I am hoping for is for us to move sideways to up over the next couple of weeks setting up a short that could be a humdinger if the lows break. One thing I am sure of in this market is that the exits are going to be incredibly crowded when the break down happens. People have been lulled into thinking this can not do anything but rise and they are going to find out at some point, this market can go up or down just like anything else. As Dr. Evil would say, it will "be quite breath taking." 

Good Trading

Friday, March 15, 2013

Stock Crash surely it has to happen!

Ok I admit it I want the extra 300 readers the word Crash will bring, guilty as charged. I have had more upbeat normal topics the last few days and readership fell off.

I will get into some thoughts on this in the post after I cover the recent trade we just did in Bean Oil in the Swing Signals. I think some may wonder why we got out so fast, so here is the explanation. I have three different ways of entering trades and all three have the goal of trying to catch a move for a longer period of time than just a couple of days like this one. These techniques all have different rules for entries and exits. I follow them PERIOD. At times they are just dead on. At times they get me out incorrectly. That is trading, nothing is perfect. However, over a period of time they wind up working pretty well.

In this particular pattern, the rules say after two days in the trade if the close is not strong in our direction on the second day, and price is better ( profitable ) compared to the entry price, the trade is exited. This is pretty simple and easy to follow. The reasoning behind this particular entry is that it is a very short term break out pattern that I have found tends to reverse when it does not just blast out strongly in the direction I am looking right away. I use just a basic close near the lows of the 2nd bar as a measure of that. In this case we closed in the middle of the second bars range but lower than where the initial short entry was taken. As a result the trade was exited. Had we closed really weakly on Thursday the trade would have been held. What we will look for now is whether any one of the entries will come up again on a bounce. It is not perfect but it has worked for me and us since we started offering these signals.

I just wanted to cover why we do this at times in these trades. The goal is always to stay longer but I follow the rules and in this case they said to get out so I did.

I want to discuss this whole situation with the Stock Market.

There is a reason I have told everyone in the Newsletter so far to stay long the stock market even though there are a few flies in the ointment. This market has one very simple thing going for it and it has nothing to do with opinions, economic forecasts, cyclical patterns, neighbors stock tips, stock buy back programs, short interest, non-farm payrolls, the F You Administration, Congress, child pornography or the new Pope.

The reason is WE ARE IN AN UP TREND. It really is that simple. Do not get tied up in all of this nonsense. It is true there are all sorts of funny things going on with numbers from the government, the Economy is not doing what is being advertised, etc.. Why do you care? The FED has inflated another bubble and that is how you get rich, riding these bubble waves. The beauty of this is that it is so easy to get out when it pops. It is not like Real Estate which is very illiquid and you have to sell way in advance of the slow down to get a decent price. Most of you are not large fund managers, so you don't have to worry about moving size on short notice. You don't have to get the exact high when you exit. Just ride the trend and look for the break, when it happens get out. I will be sending out special notice emails to Newsletter readers when this break has happened, until then don't sweat it. Here is what it will most likely look like.

This is back from 2010 where we had the same slow creeping move up relentlessly making new high after new high. Then all of the sudden we started to chop around a bit and made a break of the last pivot marked with a horizontal line. Once that happened we got a bounce of a few days, then bam. There are times when highs can be spikes but that usually requires a spike into that high. What we have now is just a slow creep which means that most likely the transition will be a little slower and not just one day where we have the highest high then 1000 points down.

There is no question that there are shenanigans going on and I don't like it any better than the next guy, but what I am trying to do with the commentaries is get focused on what matters. All of that "stuff" does not matter from a trading perspective. Do not get too negative it will not help your returns.

Have a great weekend