PTPer's

As Dick Vitale labeled Prime Time Performers many years ago, I of course thought of the greatest of all time, and the PPT is certainly in the conversation. The above is a 5 minute chart of the SP 500 yesterday with another "coincidence" rally in the last 30 minutes. You just have to admit that they are really good at what they do. Friday's late the volume drops off, and they pounce. When they have been doing this it has been too late in the day to get prices all the way back to unchanged, but they certainly mitigated the damage here big time yesterday. I do not know if they are so good that this was the only buy program they executed, and it happened to be at the perfect time, or they tried a few during the day and this one finally worked. I suspect the former just because this is the time zone they have been typically the most active.

These "coincidences" are tradeable if you are inclined to do so. I would suggest just waiting for the first higher short term low to form in the last hour of each day, and just trading the breakout of the high of it. This would have worked probably for an 80% win rate in the last year. Rarely do intraday strategies work with that high a level of accuracy. I remember my fade Barry trade when he was first elected working at an even higher clip for awhile. Unfortunately alot of people eventually figured that trade out, so it stopped working. That trade was just to fade the market every time that idiot made a live speech. It worked so well it was funny. This one is based on a little more history, so I think it will continue to work due to it being an insider deal with a couple huge institutions. They won't stop doing it for a variety of reasons, and you are also going in the direction of the fix.

WHERE DO WE GO NEXT?

Here is a chart that shows a proprietary indicator that I use for divergences at standard deviations. It is no surprise we hit the 3.0 standard deviation band on that meltdown Thursday. What I look for here is a new low which in this case would be under 1050 where this indicator makes a higher low. When that also occurs at a 3.0 standard deviation band, we have a good recipe for a big reversal. Will we get down there or will it diverge when we do? I have no idea. However, if it does, it will be both hands on the long side for me. This is just something to watch, and could be a good re-entry point for the long side for those who want to hold for awhile. If it does trigger at the time, I will post it here.

The next chart shows where we are right now, and a possible case for why we won't go back down there.

This is a weekly chart of the SP 500 with my bands that contain price. Without divulging all the rules, you basically look for entries in the direction of the trend when the red line is hit ( sells ) and the green line is hit ( buys ). The way the trend is defined is a secret which I will not give up because it is very unique. However, it is up at the moment, so that says we are in a buy zone right here. Some of the very best trades come when these lines get penetrated by a large amount, yet the trend stays intact. This might be happening right here since we have penetrated the lines by alot and the trend has remained up. This gives you huge snapback moves. The markets are difficult reads right here, alot of cross currents. Bigger picture, we went into a very important price area in the 1235 zone, and we have already seen a huge reaction down from that. It then went right to the 200 day average, which also happened to be in the above buy zone, and now we have bounced quite a bit.

I am planning on playing this in the following fashion. If we get a lower short term high than the high of this past week, or a false breakout of it that quickly reverses, I will looking to short aggressively. If we go down and take out 1050 I will be looking for longs initially down there. If we break through there decisively, I will then shift to the short side because the weekly trend will have changed. As a result, the next couple of days do not likely have a trade for me here. I do think there is more weighing on the side of this rolling over and the trend changing to down, but not enough to just take a one sided stand on this right now. Trading is about reading what is happening and adjusting accordingly. At this juncture, I do not have consistent enough readings in everything to take a trade Monday.

I did mention the only way I would short Friday was on a mid day bounce. I did do that trade for chump change on a tick chart. I had some technical problems with Genesis which happens every day and it happened right when I entered the trade of course. There is nothing like entering a day trade then having your data go offline the second you enter! As a result, I had to bail out of it after about 10 minutes. This was lucky, I wound up getting almost the exact low on my exit. The trade was a profit, but not worth posting here. Make no mistake, I love Genesis, but the live data feeds suck with them. The people are fantastic and the overnight analysis abilities are second to none with them. Trading with live data is not at the same level. I also have lousy internet speeds due to where I live, so it is challenging along those lines as well.

Tradestation is the best if you have slow internet. It is by far the most stable at slow speeds. I never have a date issue intraday with them. If you have Satellite internet like I do I would suggest Tradestation. They are the only data feed I have found that is stable at these slow speeds.

Alot of other markets are kind of messed up due to the huge stock move, so it may take another week or two to get good reads on everything. I hope not.

Good Trading to Everyone

CASH IS A POSITION

For those of us who were bullish on the dollar at the end of last year, we have been proven correct. I have maintained for quite some time that there would be strength coming here, and that holding cash would actually be a position that would gain in value not lose. Ironically, doing nothing is doing something. Since I try and use my funds aggressively on a daily basis, making a decision to be flat during periods where I am uncertain is actually a position. I do know that when my regular patterns show up and I trade them, I consistently make money. Every trade does not profit, but over almost any group of 6 or 7 trades collectively, I wind up with net gains. Often, I require even a much smaller set of trades than that to guarantee a net gain. When I stray from my basic core principles trying to force things, I do not get the consistent results I desire.

It is for this reason that I am flat in all the markets, not having one single position in anything. The Yen order I had placed yesterday did not get filled and left me with a reversal bar in that market coming into today. There were also reversal bars in the indexes in the reverse direction on the downside. I personally hate reversal bars other than trading in the opposite direction of what they indicate. This dates back to a way of trading I tried to learn many years ago, that was based on looking for reversal bar entries at Fib levels. It was one of the most frustrating periods of my career and left scars. I do know from researching them mechanically that in general they do not work. However, some of them do, so I do not always pass just because one shows up. I will take them if everything else is perfect.

Coming into today in the indexes with the down reversal bars from yesterday, I was very tempted to short the market today. As I type this the market does have the look of a possible crash today. Friday's can be big down days, and if you study history you will see that there have been alot of them on Friday's. The problem I had coming into today is that some of the short term momentum indicators have now gone back into up trends, even though the longer term ones still show down trends. It is the correct view to more heavily weight the longer term than the shorter term, so as a result I was still looking for shorts. Then a reversal bar had to show up..... Great!!!! Since I often like the wait for a 2 day low to go when trading reversal bars, the stops wind up getting really big, and hence size on the trade small.

This is not a huge problem, because it keeps the risk in reality the same as anything else, but the reward is not as large. This is why I am so demanding on these setups. What I have learned the hard way is to accept that I am not going to catch all the moves, even all the ones that are in the direction I am looking. I would rather miss a move being too picky, than piss away 10 or 20k chasing a marginal trade. One rule I always follow:

WHEN I LOOK BACK AT A PRINTOUT OF ALL MY TRADES I ALWAYS WANT THEM TO BE OBVIOUS NO BRAINER TRADES BY MY RULES AT A QUICK GLANCE

If this cannot be said when reviewing a setup I pass on the trade. I would be in violation of this rule at the moment with the indexes, so I will not short this market today except in one circumstance. If we take out the two day low and bounce, and I get an intraday setup on the tick charts, I might go in that way. I still feel what I have stated recently to be true, this could rollover big at any moment. We have built a house of cards here and the legs are not that sturdy. I am rooting for the PPT today who I am sure is going to make an appearance to try and stablize this. The question is will they be successful? The market is taking on a different tone right now, and there is volume on this selling, so I have my doubts if the PPT can save this. Heavy volume as I have repeatedly stated, cannot generally be stopped by them as we have seen recently.

YEN AND YANG

For the time being the Yen has become a flight to safety vehicle for stock market drops, hence the title of today's post. It is now the Yin for stocks Yang. This market is setup very nicely for a rally and I have buy orders resting in the markets for it today where indicated. You can see several things on the chart above, every single one of them indicates a pullback against upward momentum. We also have the Pro Go accumulation/distribution line in GREEN indicating a ton of bullish divergence. This is a very good setup however, it is unlikely to trigger unless we get a sharp stock selloff. It appears the bulls have this back under control now, so I am not expecting a stock decline.

We never know in spite of how convinced we can be what will happen next, so I am prepared to short the indexes if we break down today. I just am not expecting it to happen. We know from last week in spite of all the BS coming out of Congress, that this whole house of cards is an accident waiting to happen that almost did last week. Due to this, if we do happen to break down, we could see another very sharp acceleration downward. Only in the world we live in now could lending money to someone who cannot possibly ever pay it back GREECE/General Motors, would it be bullish news. Hooray we just loaned a bunch of money to someone who is bankrupt, buy, buy, buy!!!

I was listening to Gretta Van Susteren on Fox news last night for a brief moment before I got annoyed with her ass kissing which I always do. She was adamant when talking to Steve Moore from the Wall Street Journal who is against bailouts, that we had to do it or things would get way worse. It it this mentality that will bring us down. A puny little financial fly on everyone's ass ( Greece ) cannot be allowed to fail because of their socialist policies. Why? As long as this mentality pervades the thinking of everyone, we will just be kicking the can down the road until ultimately the next wave down happens. Guess what, it will be worse than the first one due to what we have done to prolong it.

Some ideas fail, some businesses go out of business. It is the natural way of the world. Why does every idea have to be great? What Greece has done even though Barry obviously wants us to emulate it, has been an awful, unsustainable business model, and it has failed. So we all step in and support it. If you think what happened there cannot happen here, think again. Look at what is already happening with the great divider presiding over things. We now have states trying to dictate to other states what they should be doing, ala this immigration issue in AZ. Trust me, if we do get another very big economic psunami, this country could very easily reach the riot stage Greece is in.

I just veered into this to make people realize that even though we have a very strong stock uptrend, it is not built on the solid foundation these types of things typically are. As a result, it is vulnerable to shocks. We have essentially done with the stock market what the world did with Greece. It has been arificially propped up to a level it probably should not be at, with last hour buy programs sponsored by Uncle Sam. In summary, it does look like for the time being this thing has been saved, but we are not completely clear yet.

Here is something I found very interesting and it is a good sign for Gold Bugs. Due to the unusual upmove in GOLD and  the Dollar at the same time, the Gold market is not over valued yet.

When we value it against the US Dollar as this does above, we are still not at an extended valuation level. As long as the Dollar continues to rally along side this, we could continue to climb here. This does not change my opinion on the bubble aspect of this, but I am not stupid and do not make it a habit of fighting trends that are this strong. I can argue all I want about this being a bubble but the fact of the matter is, until we get a valuation level that is extended like the price, I do not expect to see much of a decline.

TO BE OR NOT TO BE?

Here we have the VIX which as I have said many times before, is the single best barometer of what to expect next in the stock market. This is strictly a short term timing tool, I do not believe it is of that much use for longer term analysis.

You can see on the meltdown day we went past the 3 Standard Deviation Band, which with the VIX is a buy signal for stocks. Remember this is volatility, so in general high readings are buy signals because they reflect panic and low readings are sells because they represent complacency. Those are just general rules, you don't just sell every time it goes down or buy stocks every time it goes up. The point is you look for extremes here and it is a contra indicator.

Now that we have had the dramatic upswing in price off the lows of last week as I thought we would, you can see the trend indicator buy setups( sell for stocks ) This is just a reaction down against and underlying up trend. Once that trend resumes we have a buy here which would in theory be a sell in stocks. The question here then is which is the greater signal, the move off the standard deviation band which was a buy for stocks or this which is a sell for stocks? The answer is that I do not know. My gut here is that this sell setup is not going to develop the way I wanted it to. The reason for that is that the momentum indicator on the SP 500 charts is going up very sharply even though it is still under what could be argued to be a downtrend line. There is some interpretation in how I choose my trades. Usually when there is a conflict I stand aside. There is always another trade.

The problem with all of this is that to have taken advantage of the buy signal in stocks here with the VIX, you would have had to buy intraday when we were down 1000 points in the DOW. That would have been a very difficult thing to do even for me. Even if you had done it there is a good likelihood the exchange would have busted your trades. As a result in reality, that buy signal was not tradeable. If you had waited to the next day the stops would have been immense. Occasionally there are times where even though there are big moves they are impossible to trade, it is what it is.

As I was scrolling through individual stocks last night I found this same pattern, very sharp short term up momentum against a longer term downtrend of that momentum. Once again, that is not really a pattern I look for so I am unsure what I am going to do here. I do know this, at least for today, I am not going to short anything. I just do not have a consistent enough read on things to put money at risk right here. I don't like sitting on my hands, but I do it when it is prudent. I do think overall we saw the sign of coming attractions last week, but it does appear to me the day has been saved for the time being.

Currencies are kind of choppy here the last few days, so I do not see much there. I had been looking to short the Pound, but the setup is marginal. Gold and Silver are flying once again, no opp on either side there that I see. The Yen might be setting up a long entry, that is something I am watching very closely here.

Good Trading to everyone

LETS PUT THIS TO BED

Here is a weekly chart of Cash Gold with a 3 standard deviation band above the pricing. It is my contention that from a big picture stand point this is a bubble. You can see we just recently again hit the deviation band. We did have a little reaction down, but nothing to write home about. Most of these "touches" have resulted in dips which is why I claim this market is extended. Am I shorting this market here? No. My Silver setup I was hoping for this week has been invalidated, so other than Copper, I see no shorting opps in the metals here.

This trend is solidly up so from a trading standpoint especially short term, there are no sell signals here. The point I have been making here for awhile now is that it is just a market from a historical perspective that is completely devoid of it's fundamentals up here. It has accelerated in the face of very low inflation and also with a rising dollar. Historically, those are the 2 correlations that have always deteremined the fate of this market. Since they are ignoring those signals that tells us this is a pure speculative move. These types of situations all end the same way, the only variables are how long it takes for them to peak. My comments are mostly just to get people to have an exit plan. I know when things go up like this you think it will last forever and all the sky high predictions for how far price will go and why they are justified come out. This happened in Real Estate, it happened in stocks in 2000. It was also happening recently in stocks when the 1500 calls for the SP 500 came out. Look at who is making the predictions and their track records. Have they been accurate in the past, or have they missed one major market peak or trough after another?

I will just leave you with this thought on this topic. Does that chart above look sustainable? If you think it does just tune me out. If you do not, develop a protective exit strategy in case I am right. Enough on this I am tired of this topic. I will post any trades I do in either direction here when they are done.

NOW TO MY CURRENT DILEMMA

We have the bounce going on I mentioned this past weekend. I have today's action so far on the screen as a projection. It is currently an inside bar with down close. Looking below we have 2 things that indicate a sell and one showing the extended downmove, and a possible buy. What to do? Based on looking at the VIX it appears to me the top is in, it has a very similar look to the most recent big tops we have seen. It features an explosion up for a few days far beyond any standard deviation bands. The normal gyrations in trends generally do not do that. Next, the extended buy I have labeled at the bottom often also picks major turns and it would indicate a low. Since it also occurred at the 200 day moving average, it is certainly possible that the whole correction has already occurred in that brief period. I normally like to have a divergence in that bottom indicator, which we do not have yet to pick a low but it is not always required.

The middle panel showing a rollover in Momentum tilts this back to the bearish side, these can often be very powerful patterns for big moves, and it is indicating sell entries right here. The top panel shows a momentum downtrend, and now a reaction to it upward. Essentially it is mirroring price. I am watching this momentum line very closely to see how it reacts on this bounce. If it begins to curl back down that will be confirmation of a sell.

Net net here, I am looking to short this rally, but am not "all in" in terms of things I look at mentally. There is an outside chance the whole correction ended already, but I am leaning toward it not being over yet. The next couple of days are critical in my world.

ALL ELSE BEING EQUAL

I know generally when this phrase is used to talk about something it usually means that all else is not equal. Here is a prime example of that. The QID which is an inverse ETF should essentially sky rocket on a day like we had last Thursday, yet we see a death spike down intraday. How can this be? Isn't this a vehicle designed to protect against downside movement? If we had the foresight to have seen this coming shouldn't we have been able to profit from it?

First of all, I would agree that in this instance the trades executed on the dip should have been busted by the exchange. For this to trade way down should be impossible and nobody should have been able to buy this that low during a monster down day. The price should have traded straight up all day long. Electronic death spikes are a problem in the markets and we are seeing more and more of them. In the old days where people executed the transactions, these types of things did not happen. I see no way of this type of trading being completely unwound. ETF's are in general liquid if you look at the total volume in a day many of them trade, but they do not trade intraday in a very liquid fashion. This is especially true during a volatile period like last week.

One thing we do want to keep in mind, and it is now more true now than it has ever been. The powers that be do not want people to be able to make money of declines in general. Remember that blockhead from Michigan grilling the Goldman Sachs guy. For the most part they want to rig everything to always increase in price. Unfortunately, it it this very "fixing" of the game that causes huge imbalances which create these big vacuum moves where values revert to the mean. Artificially lifting the market almost every day with last hour buy programs like the PPT has been doing pushes values way beyond where they should be. The rubber band can only stretch so far before it reacts.

Yes they have given us these vehicles to trade that should allow us to profit if we use them properly, but they are inferior to futures. I know alot of people want to avoid futures because they think they are more risky. This is just false. Risk comes from liquidity, and there are not many things more liquid than index futures. ETF's are not even in the same conversation as far as that goes. How can something that is more liquid be more dangerous?

If you insist on playing the vehicle that is less liquid, you have to take the good with the bad. There are limitations and you have to deal with them. In this above case, in the end the right thing was done which is a rare case nowadays with our government. This ETF ultimately rose and the erroneous trades that should never have occurred were invalidated by the exchanges. This is a good thing not a bad thing. The best thing you can do is adjust your size accordingly when playing these ETF's. They have limited trading hours, and often things happen outside of when they are open, so you will have both bigger wins and bigger losses. If you look through the stats over the last several years, you will find that the majority of the net moves in the indexes have occurred during non-us trading hours. As a result, relying on vehicles that trade primarily during the hours other than those where the moves are happening, is very risky to me.

I take half the size in these trades as a result of that due to knowing they are in reality not very liquid vehicles. For those who wish to avoid futures, that is the best thing for you to do. Also, mentally accept the limitations that are here. If you don't like them, open a futures account.

Just like Ackroyd said in Trading Places just before they went into the pits to whack the Duke Brothers, "Fear, that is the other guys problem."

"I DEMAND AN INVESTIGATION"

My favorite movie of course is TRADING PLACES, and that was a line from one of the Duke Brothers at the end of the movie. It was spoken after their attempt to Corner the Orange Juice market failed. They were upset that someone else discovered their attempt to rig the market and made money off of it. How ironic is it that Barry our fearless leader uttered those same words after his adminstrations attempt to rig the stock market got undone on Thursday. I would love it if an investigator would have the nerve to report back to him that the size limitations they have on the buy programs executed by the Federal Government in the Index futures, precluded them from being able to buy enough to stop this. Further, he would go on to recommend that they be given "Commercial" designation, so they could have unlimited position size. This would allow them to make every single day an up close if they wanted it to be.  As I have told people repeatedly, heavy volume selling cannot be stopped by the PPT and they have set the table for this inevitable outcome by doing what they have done the last year.

They have rigged the market for about a year now, and now he is ticked off that finally it stopped working? We are seeing things that I just thought I would never see in my lifetime. They literally want to control when we take a pee I think. God only knows what the outcome of this "investigation" will be but you can be sure of one thing, it will remain rigged and only one "rigger" will be allowed to remain, the PPT. I am sure there are very extreme threats in place to keep the people that execute these transactions quiet, so expect them to continue to be in place. However, as we have seen, they can only do what they do when the volume remains light.

Even if you were a believer that the PPT is an urban myth and does not exist, and the last hour rallies virtually every day out of the blue are just a coincidence, the chart pattern itself is problematic. This chart above leading up to the high looks more like a lightly traded commodity like OATS than a stock market. Those types of markets just creep along on light volume then all of the sudden have huge price spikes up or down. There are no prior major pivots that are obvious support points, so when you get a selloff going, there are not any obvious buy the weakness entry points. Hence, you get the vaccuum move like this. It the government had just allowed normal corrections, the structure of the market would be much stronger. They were so busy manipulating it to drive their socialist policies that they built a house of cards.

STATE OF THE UNION

With all that aside, we are now down into a very interesting area. The 200 Day moving average is an area where the funds love to buy stocks, and we are basically right on it here. We should get a bounce here and I am hoping it will be sharp for a couple of days possibly three. If we can get back up to the area where I have marked as a sell area, you can see it will be a first reaction sell against a rolling over momentum line. I personally love these types of trades, especially after the move down is very sharp like this. One adage in trading is when you get a sharp move like this you always fade the first retracement. This is what I plan on doing with both barrels if we get this move in the next few days. If we just blow through the 200 here the game is over, and we will likely get a very large move down and it will be time to run for the hills is you are a long term holder.

As sharp as this move has been the weekly trend is still up so it is possible this could be a great spot to buy if you are bullish. I am not bullish since although I have commented on the strength of the trend, the highs were right into the lower area of the major price zone I have mentioned here for months, so I think this could be the top. I would prefer a rally into false breakouts to new highs that immediately reverse forming one of those megaphone patterns at the high, for it to be the ultimate top. Who knows if we will get that or not.

From a short term trading perspective, I am looking to sell a bounce if my patterns are there when it happens but will not go short right here into all of this support. I will also be looking for individual stock longs to play this bounce the next couple of days.

ANOTHER WAY TO PLAY THIS

Here is the YEN which became the flight to quality vehicle along with Bonds this week. If you are bearish in stocks you might want to look at the long side here. On the daily chart I will be looking for a dip to buy into here. However, from a bigger perspective here on the weekly chart, this is setup as a pretty good sell. You can see the Momentum rollover that is happening and both the trend oscillators and indicating a down trend. We also have a rally into my bands. As a result, sell patterns should work up here. If they do that probably tells us stocks will bounce. If we just blow through these levels, it will be a definite buy the dips situation. For now I will be looking to short this rally or buy a dip, so a two way trade possibly.

GOLD BUGS REJOICE

This market is humming along nicely now and although the theories of why people have gone to this are not correct by historical precedent, the market continues upward. I just say that because there is no consistent correlation of a flight to quality in this market. Sometimes during crisis periods it has risen and other times it has declined. Further, there is virtually no instances where we had a major dollar rally and major gold rally at the same time. They typically have moved in inverse fashion as has gold with inflation. So what is happening has never happened before.

Nonetheless, if that is the reason you have parked your money here it has payed off even though I think it is an incorrect premise. As we have seen with bubbles, stocks this past week most recently, they can be inflated for longer and gain in price much more than anyone can guess before they finally burst. The end of this will be just like stocks thursday and just like Real Estate, and it will pummel millions of people causing billions of dollars of losses. However, it is anyone's guess as to what level that will happen from. Maybe it will be a drop from $3000 to $1000, who knows. Just know this, it will happen so have an exit plan especially if you are sitting fat on a big gain.

I was able to catch the last top due to spotting the huge spike in Small Spec buying. That is not really happening here yet. They are buying again, and their position is moving up close to it's max position, but it is not there yet. One very interesting thing is happening in the metals right now, Silver is lagging Gold by a large amount now like it did at the last top. One trade I am looking to make this week is to short Silver if it gets above it's recent highs then quickly reverses. I may also short it if fails when it tests those highs. I have to watch the daily patterns to see if it is setup. For now it appears that it will but time will tell. Since Silver in general is the more speculative of the two, it is a negative divergence when it is weaker. In summary, we do have something historically unique happening here in Gold, and for those who predicted it and are long term investors, good for you. I just don't bet on the once in a lifetime occurences happening, so I never get these types of things correct. I play high probability things and pass on the long shots.

I have been wrong about this market, although I have made six figures shorting it so it is not a total disaster. I just did that by being able to pick the short term tops pretty well, which in general is not a good way to trade even though it is what I have done here. I just did it mostly based on the COT report, being bullish on the Dollar ( which has been correct ), and what I perceive to be a bubble. In reality, I have also had an incorrect premise also. It is better to do something for the wrong reason and be right than vice versa. Certainly, the greater money by far has been made on the long side. My patterns in general for buys just have not been there, although I have had a couple of nice long trades in Gold that I have posted here. None of them in the recent move up.

Summary - I am looking to buy stocks early in the week and hopefully ride a short sharp retracement back up where I intend to load the boat on the short side. I will be looking to buy dips and sell rallies in the Yen assuming patterns form up correctly. Also, I am looking to short Silver on a rally if we get it. There are some other things I am looking at also including shorting Lean Hogs but I have to keep some things to myself.

Good trading to everyone

AUSTIN POWERS WOULD BE PROUD

Yesterday was the greatest "How's Your Father" of all time.

There is alot for me to talk about today so let's dig into all aspects of what just happened.

First of all let's talk about the issue of the electronic markets. The story going around is that was a keypunch error in a Dow stock with a "b" instead of an "m" which effectively locked up that stock. Once that happens there are a ton of arbitrage related programs which automatically kick in and generate sell orders elsewhere, so we got the vacuum effect that took place. I am sure the poster who attempted to tell people in here recently there is no risk in arbitrage got wiped out yesterday. However, he does not really trade anyway and is a fraud, so in reality he lost no money. However, people who do arbitrage surely were annihilated yesterday. There is no way to make the minute to minute adjustments needed doing that type of trading when markets become illiquid. This is why whenever anyone tells you there is no risk, run don't walk from what they are pitching.

Now on top of this we have the pissing contest between the exchanges this morning about who is to blame for all of this, the NYSE or the NASDAQ? The answer is neither. I have been writing in here for months that when markets are artificially manipulated to the degree that this one has been by the PPT, not allowing virtually any pullbacks of any kind by their last hour buy programs literally every single day, monster air pockets are created. When all of the sudden a huge volume spike happens there are no support points in the market, hence you get this type of thing which was very similar to 1987 if you look back at the charts. The market was already down 250 points or so before the error even occurred and rolling over fast. The mustard was already off the hotdog. In reality we would have been down more yesterday had the error not happened. The reason is that programs also kicked in for the opposite direction long trade when we extended so far down. Had that not happened and we had just gradually sold off, we probably had a 500 + day on our hands. In reality we should thank the clerk who mistyped the order.

Now we know that the PPT has done this because they are trying to create the false illusion that Barrys programs are saving the economy when in reality they are ruining it. Everyone feels better about things with the stock market rising so much. They are more inclined to spend thinking all is well and good again. However for those of us who follow things very closely, we know that is a Traveshamockery. This is the whole problem with having an intern in the White House during a time of turmoil. It is like trusting a 25 handicap to make a 6 foot putt to win the Masters, it is just not gonna happen other than pure luck.

On top of all of this we have that idiot in Oregon trying to push a trader tax. Let's think about that. What a trader tax will do is make the exchanges very illiquid like what we saw in that one single stock yesterday, because the traders are going to leave the country. As I have said when you put in a sell order, it will get filled electronically and the closest bid which could be $15 a share less even in a Dow stock like we saw yesterday. When you take away specialists you take away market liquidity. Now this moron wants to penalize traders for things like this when his actions will actually exacerbate the problem. That is the biggest problem we have. We have the dumbest group of decision makers from the oval office on down in the history of this country. If this trader tax goes through days like this will become very common in the stock market. What they will have to do is outlaw trading basically meaning they would put in rules that if you bought a stock you could not sell it other than through a government exchange, which would regulate prices. It would be the only way to avoid this problem.

Now let's look at the SEC skit with Goldman Sachs. How could you trade against the product you were selling that idiot Levin asked? Of course that poor kid does not understand that to have markets there have to be two sides of the trade. To buy you have to have a seller. When he buys his twinkies every day something is selling them to him. Yesterday when the people walk away from one side of the trade there is no market. This is exactly what happened when the stock was offered $12 lower, no specialist was going to touch it there so nobody could sell their stock. Liquidity is important, not something to be targeted and eliminated. If these dumb f's would have just let the markets go to where they wanted to go during 08 we probably would have some more stability by now but instead they created another bubble to stop the reckoning, so we get a day like yesterday.

To make matters worse, today we get that "great" employment report. Does anyone really believe that magically an extra 100,000 jobs were created than anyone was estimating? What a coincidence that is after a day like yesterday. We should just throw all these people in jail and start over. Anyone in the private sector so blatantly altering the reports a few hours before their release to the public would be incarcerated. I would bet my life that number was altered by at least 100k last night due to a "phone call." Just report the facts to us and let us deal with them for god sakes! Constantly lying does nobody any good and just makes things like yesterday continue to happen.

Now let's forget about all of that and just look at where we are. We now have a trend break obviously so it is a sell the rally mode if we even get one. I hope we do but even that doctored report is not rallying the market so far today so another rollover could easily happen. In the past these sharp drops have been followed by sharp 2 to 3 day rallies which are shorting opportunities. Below is an example of one prior setup like this.

You can see the sharp drop, then a sharp 2 day rally, follwed by a dynamite short for 2 days that moved big. This is on my wish list. However, it is also possible we could get very quiet after this and go sideways, I hope not. After the 1987 crash that is what happened and it was a major low. Those are the two scenarios I see as possibilities. For me I am still bored meaning, just not great setups for me. Had I just held all the shorts I had on yesterday probably would have been a 100k day for me, but I have no regrets. Trading during a day like that is a no win situation for anyone, and you are always subject to trades being busted the next day which I am hearing is happening. As a result some of your profits will be taken away by the exchanges once they label the trade prices invalid.

I would suggest as a longer term investor now that if we get that sharp bounce for a couple of days, you exit. The mustard is now finally off the hot dog.

BORED

The one thing you have to master in trading is knowing when to play and when to step back. I love periods now of no trades like I will have today. Why you ask would that be, don't you have to make money every day?

The answer to that is NO and that idea has lead to the death of many a fine aspring traders. You have to know when the odds are the most favorable for you and when they are not. Moves most always go further than you think they will and you will always leave money on the table. Get used to that and get over yourself. We are extending down now early this morning and may completely just rollover. We could fall thousands of points in the Dow at any time just simply because this whole move has been bogus. However, the odds of pressing shorts when we are deep into a retracement in an uptrend is not a good probability play. Could we be beginning another panic selloff? Yes we could but even then there were bounces to enter on. Chasing momentum down against a trend is a slippery slope and I do not recommend it unless you are very nimble or a day trader.

Even if we have topped, we are going to get a very sharp bounce here that could come at any moment especially since we are now into some general support zones on the weekly charts. Had we been with the trend, I would have held all my shorts longer. My plan though due to the strength of this trend was to be pretty nimble on them once I got some decent moves. I followed my plan, made some good profits, now it is time to sit and be patient and wait to see if a bounce happens. You can argue that we have many of the same issues that Greece has and that is actually correct. However, that does not mean stock prices will go down more. We have seen the disconnect between stocks and economics that can at times take place in the last year. Do not assume stock prices will follow economic stories, they rarely track them how you think they logically should.

One of my favorite things to do even when I have taken losses is to take a few days and step back from the markets to see what is really going on and take a fresh look. Sometimes when you just stare charts to death all day long every day, you will actually press too hard, make bad trades forcing things. That will also lead to getting ticked off and missing a few you should not have. At times it helps me to try and run this like I would any other business in spite of how different it is from anything else. You pursue the practices that work and do them over and over. You eliminate the practices that yield bad results. You stay focused on the goals of the business. You create a plan and you follow it.

Do not get tied up in emotion, it will kill you in this business.

Looking at the chart above, here is what I see. The two trend indicators are going down sharply confirming the short term trend down. They are ahead of price indicating a "possible" exhaustion move is here. The longer term trend indicator still shows this as a buy on a pullback. I used to just buy these pullbacks on the close once the %R went into the buy zone where it is now, but I don't do that anymore. I wait for the market to start moving back in my desired direction before doing that. It helps dodge the waterfall moves that this could be.

Short term what I am hoping for is a bounce of a couple of days that I hope will result in the longer term trend indicator at the top rolling over some which would confirm all three measures being together. For this to happen we are going to have to go down more before bouncing. All three of these rarely come together like that but it is on my wish list. If this happens I will load the boat on the short side of things. If this does not happen I will look for this move down to setup some divergences to get long. Either way this means I will be sitting on my hands today and probably tommorrow. Sometimes this is what you have to do. I have made good money this week so if nothing else happens that is ok even though I would certainly like to add to that if I could. No hurry, let the game come to you  ( annoying cliche but it does apply ).

TAKE THE MONEY AND RUN

I hate the Steve Miller Band but for some reason that song popped into my head today after I went flat across the board early this morning.

You can see the Tradestation Chart here which is one of the places I trade. I have accounts in multiple places for several reasons. First and foremost, I have a backup in case something screwy happens at one of them I can offset positions in the other if need be. Second, I trade different methods in different places. Third, some are IRA accounts. Usually when I take a trade in futures I take the same trade it at least 3 different accounts.

I had established a short term target of 1060.50 and had a resting limit order to exit if we hit that price which we did this morning. I had mentioned I was keeping a short leash on this trade due to it being against the trend. As a result, this is where I got out. I also had 9 individual stock trades on top of the EUO etf trade which mirrored my Euro short trade. Below is just a snapshot of the screen that has the trades, you can click on it and get a better view of them. I had established individual price targets for the stocks as well and several of them went right to them this morning. A few did not so I just did what I call the CASH REGISTER exit on them. This means I just went to the register and took the profits across the board. I am thinking we bounce is here or coming and we are against the primary trend.

All told about 36k in profits this week so not too bad for a couple days work. One thing that had bothered me about this group of stocks is that they are not normally ones you would expect to move alot. They are not high fliers like AAPL for example. DIS ( Disney ) for example, is not generally a stock that is the ideal candidate for a quick 3 day profit move. Also combined with that the stops were a little larger than normal so I wound up with stocks that generally don't move much and smaller size in them due to the large stops. I selected them because they conformed the best to the patterns I look for and the high fliers did not. This is not a great combination for a big windfall, so when I got a decent move in the futures I thought it best to take the money.

Yes a judgement call, what can I say I am guilty as charged.

Here is the window showing the individual trades in stocks

The next chart is where I made a good trade money wise, but exited incorrectly and it cost me alot of additonal profits.

This is the EURO and you can see where I shorted it and where I exited. Although the profit money was alot here, I should have held for a bigger target since being with the trend. I think in general you go for more profit with the trend and be more nimble against it. I violated that rule here and it cost me an additional 7 or 8k in profits I should have had. Oh well, a blunder I make em too!

Yesterday I had said that what I thought would happen was a mid day PPT rally attempt that would fail and we get get a plunge at the close. This was pretty close to what happened. Where it was off was the last 10 minutes we got a good bounce which was just short covering. I do not believe that was the PPT. It is awfully hard to predict intraday price swings like I tried especially when you have a market that is artificially being pushed in one direction. Any call for end of day weakness is a best dicey now since we have probably rallied in the last hour of the day over 80% of the time this year. I took a shot.

NOW WHAT?

Has the bubble we have so steadfastly inflated here popped? In spite of the commentary that we have one of the greatest economic recoveries of all time underway, we know that under the surface there are still several very big problems. What is going on in Greece is of course Barry's plan for us. Why wouldn't you want to model an economy after that? Can anyone honestly say that could never happen here? Of course not, people are people and when it comes down to surviving they will do whatever they have to including taking to the streets or crime to survive. The more entitlements there are the bigger problems there are. Since it is our nature to just inflate one asset class after another, and we have done so once again in stocks, can we keep them up here in the face of some of these brewing problems?

In spite of the economic issues, the trend is still decidedly up, so these dips are buying opportunities for now. Whether or not this Greece situation is a catalyst strong enough to put this top in that we know is coming is anyone's guess. For now I am going to say that I do not think so and after some downside we are going to march along again. For the near term I am hoping for a sharp 2 day bounce to get short again.

DID I HEAR THAT RIGHT?

I think Roger Clemons would say I misheard that?

CNBC the ultimate cheerleaders for the stock market just had a guy on who said some people were bracing for a major selloff. Well what a typical comment from someone in reaction to a very weak opening today. However, all weak opens are not created equal, and this one might be telling us something.

In discussions with a few colleagues yesterday we all agreed that even though we had a big bounce, this short trade still looked good if yesterdays low was taken out today. Since we gapped below the low, that obviously happened. As per what I said in prior posts, I did load up the boat with individual stock shorts. I did exit my Canadian Dollar short just for the record this morning just because it is into a support zone on the weekly chart and is one of the strongest currencies. I am still short the Euro, Soybeans, the SP 500 as well as several individual stocks and also long the EUO the inverse ETF for the Euro. Below is the Canadian Dollar trade.

This might continue to decline due to the overall market weakness, but I always want to be short the weak and long the strong. From the get go this was a quickie in my plan. I apologize that this chart is hard to see I am once again having problems with the Genesis program with live data so I just shut it down and launched it on another computer.

Now back to the indexes and why I feel that this open might be a bit different at least from a short term perspective. Below is a chart with a move below today's low projected with some of my indicators. What you will see is an acceleration to the downside would occur in one of my trend indicators if today we traded below yesterday's low.

You can see here how the trend is confirmed by a move below Monday's low which has occurred. We are also breaking the obvious trend line that could be drawn in here. As a result we could have a decent move on our hands. We have to expect the PPT to try and intervene here but these heavy volume moves are tough for them to stop and they usually do not succeed in doing so. It is too early to tell if this is something bigger or just another pullback that is a buying opporuntity. It is most likely the latter but we will have to see. It is exciting to see big moves be they up or down, but other than short term trading profits, you cannot necessarily make more out of them from a long term perspective.

At this point we are down over 70 points in the NAZ which is not chump change, so maybe by days end things will have changed. I would expect to see the following for the rest of the day. A volume fall off where the PPT shows up with buy programs to boost things mid day. I think it will be met with a heavier wave of selling that will take us back down to new lows at the end of the day. As much as I know the blog readership always picks way up on these big down days, there is not really anything else to say but sit back and watch and stay out of your own way. Hopefully some of you are positioned in a way to benefit from this. If you followed what I was doing you should be.

SOMETHING TO THINK ABOUT

Poor me the professionals were betting against my investment, we should fine them and throw them in jail.

I am so sick and tired of people not owning up to their own actions. I hope I live long enough to see the world return to a state where people are actually responsible for their own actions. Here is a novel thought, every time you buy something there is a professional betting against you on the purchase. Whatever you buy has been bought or produced for less than the sale price. Does everyone want a guarantee that a plant they buy will not depreciate in value?

When you buy a stock there is a professional betting on it going down, he is called a specialist. He would not sell it to you if he did not think he could buy it back for cheaper. I am not a big Buffett fan just because of what a whacky liberal he is, but I sure hope the powers that be listen to him on this Goldman Sachs situation. His comment was that he had 260,000 employees that work for his company. It is certainly impossible for him to know if any of them might be doing something wrong at some point. If you invest in anything there are always professionals betting against you. None of them have 100% win/loss records. Sometimes they are wrong also. Just look at the funds that go out of business, they took the wrong side of a market and lost money.

If nobody was on the other side of the transaction, there would be no market and hence no product for you to invest in to begin with.

Let's get back to business now and look at the dollar trade I mentioned over the weekend.

I have marked the proper entry and the one I indicated on the prior post. I actually played the Euro instead of this which is essentially the inverse of this trade, so I went short there. That multiple point divergence bothered me on the POIV indicator I showed. The Euro did not have that, but in reality it is the same trade. This looks good on alot of fronts, so I do expect this market to move higher. Of course regular readers are probably bored with me saying that since I have been bullish on this market for 6 months. The good news is that I have been right.

As for stocks, I am not so sure. When I look across all the SP 500 stocks which I do every weekend and also the full Naz 100, I do not see a large number of primo sell setups. I scratched a few out today, but overall I think this means we are ultimately going up more. I think we would have alot of divergences starting to show up in individual stocks if this were a top.

Another sector that I think is ripe for a decline is the Grains. Below is a chart of July Soybeans and it shows a short I just put on today.

I argued with a friend over which Grain market to short, who has a completely different way of determining where he wants to trade. Regardless, this sector overall is into resistance and should see some sort of a pullback in prices. I had determined that since we were making lower short term highs in this market over the last week, that this was where I have no idea if I picked the right one or not, time will tell.

What I will say though is that selling the weak and buying the strong is what all the pros do. It does not work in every instance, but neither does anything else that I know of. Over time it will pay off.

SOMETIMES #1 SEEDS LOSE BUT NEVER IN THE FIRST ROUND

The PPT would of course be the #1 seed in any March Madness bracket comprised of market participants. As we all know there has never been a 16 seed who beat a #1 seed in the first round. The PPT will never lose in the first round but that does not mean they win every game, they were just upset yesterday by a hostile crowd and a lower seed. They had won 16 of their last 20 games and many in convincing fashion and were seemingly on pace to keep on winning. However with anything in life and I suppose the PPT qualifies, there are cycles. They cannot win every game. Yesterday after a mid day attempt at a save that was met by heavy volume selling, they essentially cleared the bench, sat down the starters, and then let the underdog run them off the court.

As I have stated repeatedly, they cannot pull their crap when volume stays high which it did yesterday. Recently watching them do what they do, I have to admit to having gotten very aggravated. This should not be allowed. However, you can bet some very strong "incentives" for silence are in place to keep things going. Alot of attention is finally coming toward this, so maybe it will reach a high enough level where something happens. I have noticed that one loud mouth Congressman who was investigating this has all of the sudden gone completely silent. In any event, at least for a day they let one go. If volume stays there this correction will continue but the minute it lightens up you can be sure the buy programs will show up and it will reverse.

I am short this market where I had the order displayed Friday. It is a position against the trend so I will keep a tight leash on it with a target probably about 20 to 25 points below here. There are not enough individual stock sell setups or divergences for me to think that this is a major top yet, but I will continue to watch that and see if it changes.

The other trade I have on is short the Canadian Dollar.

I do expect a dollar rally next week so I wanted to be short one of the currencies and this one was setup with my patterns pretty well. It had a nice day yesterday, but one day does not a trade make. I will be looking to either go long the DX or short the Euro which is basically the same trade next week. Take your pick.

What I don't like about this setup is the 3 point divergence in the POIV indicator marked on the Chart. This is very rare to see this and in fact I cannot ever remember seeing it before. It could trigger a big decline if we do not move back up right now. This will be interesting to watch over the next few days. The Euro is the next chart.

Again we see divergence in the POIV indicator although not as pronounced as with the DX, so I am not sure if I am doing these trades or not. I wanted to put them up here just in case I do them. I do not like to trade against POIV divergences. They do not happen often and usually as a result do result in market reversals. There is one thing that is in favor of this long, Larry Williams road map forecasts show the Euro rising and Dollar falling here.

Again, GOLD rallying on Small Speculator buying and Commercial Selling. This is not what we want to see for GOLD $3000. Think about this, you have two neighbors. One runs a big Mining Company that mines Gold. The other has a 16 yr old kid just beginning to get interested in stocks and investments from a high school business class. He tells dad he wants to buy Gold so dad gives him an increase in his allowance and he buys gold. The other neighbor who runs the mining company is putting hundreds of millions of dollars betting on a Gold decline.

This is exactly what you have here. Small speculators are buying and Commercials are selling at again getting close to record amounts. Now I ask you, who would you want to bet on over the long haul as being correct here? The 16 yr old or the President of a Mining Company? If you have a position leveraged for $3000, you are betting on the 16 yr old. Maybe he is the next whiz kid, but the probabilities are that the President of the mining company has a better handle on the long term supply demand situation than does Jr.

Good trading to everyone this week