CRASH MONKEYS ARE RELENTLESS

Two more of these the world is about to end videos hit my door step again today.

One of them was from the ever present Weiss Research Group and was once again disguised as something you would never hear anywhere else. These kids have not changed their tune it is still buy Gold, the dollar will get killed, and oh by the way, pay us for the real secret tips of how to survive the coming crisis.

First of all, it might very well be that the ultimate outcome of Barry's plan will be what these doomsayers are writing about. It is fairly clear he has absolutely no intention of cutting back spending at all. What is interesting to me and I have never heard one person say this so perhaps I am the first, is that what he is doing is patently obvious if you have ever been an athlete. When he answers questions like he did about the deficit in that ham and egg interview recently with one of his groupies, he puzzled most observers.

HE IS SMACK TALKING

This is why he has always been an F You I won guy, he is just smack talking like hoops players do. He is a basketball guy so I fail to see why these pinheads don't get this. He has been a smack talker ever since he won the first election. I would suggest not trying to read more into what he says, he is simply saying "Scoreboard" which for those who don't know this is an infamous way of telling your opponent to look at the score because they are losing. It is that simple don't get caught up in this being any more than that. He is winning in converting the country to a European socialist model and he is not going to change. Further, he puts it in everyone's face because he knows he is winning and he is "running it."

Does he "want" an Armageddon scenario? I have no idea. Are we guaranteed one like guys like the group above, Zero Hedge, and a number of other places are calling for? Possibly. However, if you are a short term trader none of this stuff matters. I think it will be clear if and when the big break starts. We are going to have to be prepared to probe a bit and take a few losses trying to catch it if we are trading the ES.

What are some possible stopping points?

You can go to a Fibonacci guy and look at one of his Galileo maps and have him tell you. What concerns me the most is the picture above. This is a pattern with sharply rising Stock prices and sharply declining Bond prices. This pattern has led to many of the infamous stock declines in history. I have written about this in the Newsletter so I will keep it brief here. This is a problem for the bull case and it is getting close to a critical mass divergence in my opinion.

There are an absolute ton of things going on that have created a remarkable divergence between the economy and stock prices. How long this can go on is anyone's guess, perhaps late April is a time we will see something to take action with. However, for now there is no reason to try and short this market.

I have had an avalanche of computer problems so I have to keep it short tonight.

Good Trading

UNLEADED GAS SELL SETUP

Here we have a setup with COT data telling us to be looking to the short side in RB. We had a textbook big short position with Commercials and a corresponding big long position with the Small Specs at the high point. Of course they were also in place well before the top so that information was not much good from a timing stand point. These positions have abated a bit during the initial decline off the highs. There is no doubt this still could be a pullback in the uptrend. Which way we break from here will tell the tale. You can see over on the right I have an alarm on the screen at a price level. I want to be alerted if that price level is broken. It may not be and we could sail back up again.

We have not had aggressive enough buying by the Commercials on the dip yet to indicate a strong buy setup is at hand. As a result I am still looking to favor the down side here. We have had a bit of wild action here the last couple of days so it might be best to consolidate a little bit more before a break out of this area, but it may not happen.

We seem to have independent markets again, with the FED just choosing to control the ES, so that is very exciting for all of us. The risk on risk off trade is gone. It may return if we were to get a big roll over from here, but until that happens I don't think we are going to see it again for a bit.

ES

I want to talk about this market just in general because there is an important point to make.

If you take a close look at this chart how exactly would you make money trading this other than having been a buy and holder? All these little small range low volume days provide no swings for short term trading. You did have a couple of occasional sharp jolts down that would have worked out well had you bought them. However, you also would have been smoked when they happened because you would have been in buy every little dip mode when they came around. Most likely you would have been licking your wounds and thinking a trend change was happening and as a result would not have bought those dips.

This is far and away the world's most manipulated market so why do people become so hell bent on taking this on? I think the main reason is you can day trade it and risk a few hundred bucks at a time while learning. Unfortunately what you learn is just how to lose $250 over and over. If you find a guy who teaches you how to trade this make sure he is taking the trades himself that he is teaching you to take. If he or she is and they have something that works, more power to them. I know there are a lot of people out there who claim they have mastered this but I don't know of any who actually have. Perhaps Don Miller is one who has.

Be careful what you ask for. If you day trade with small stops you are going to wind up with a lot of small losses which is good. The problem is you probably won't wind up with many big wins to offset them. My system is basically treading water in this market this year. It has been attempting since it is a balanced system, to trade both sides of the market and is currently short and upside down a few ticks. Obviously the sell signals that have worked have been very small wins and the buys have been the better ones. I am continuing to monitor the system to see how it does but so far not so good. I do give it a bit of a pass because nothing will make money in a market that is trading like this other than buying it and holding it.

Of course the other possibility is the FED late day save trades. I am sure there is some sweet spot on POMO days time wise but I am not going to take the time to try and find them. If you are hell bent on trading this market, that is research you should be doing.

Good Trading

THE YIELD CURVE - IS ONE BETTER THAN THE OTHER?

Above are charts of the 10 Year and 30 Year debt instruments of the US Government. Since the launch of the Bond System last August many people have asked if the system works in the 10 Year Notes. I have responded that it does not. However, I have been studying this and I stand partially corrected.

On the two charts above we have the identical system applied with one exception, the stop is $800 on the Notes since they tend to move about half as much as the Bonds do on an average day. One thing to note, the trades trigger at different times and also in different directions occasionally as well. You can see in the recent period where we had a couple of bad Bond buys the Notes did not have those signals and as a result did better last week. What we are going to do shortly is publish the signals for both each day at no extra charge, and we will then monitor the trades in the Notes outside of sample ( test period without real trades ).

What we hope to accomplish by doing this is to make a concrete assessment in real time of which is better. What I suspect is going to be true is the Notes are going to be a tad more accurate and the Bonds are going to make more money. We will see if that is true. The reason I suspect that is that the volume has dramatically shifted towards the shorter end into the 10 Year Notes and away from the 30 Year Bond. It is not inconceivable that at some point there will be no 30 Year Instrument, so we always have to be prepared. We are going to start sending both starting next week. Keep in mind you have a smaller stop but the market also moves less. What we may wind up doing if the 10 Year winds up consistently out performing the 30 Year, is that we will just trade 2 for every 1 of the Bonds. For now we will track the results on a one contract basis.

I am sure some of you are wondering why the results are not the same. This is pretty simple, if you look at the charts closely, the patterns in the price movement are a little different. Generally one leads the other and it changes. Many of our trades are based on intricacies and it is these little differences that trigger the trades. When little differences are there, it will make one trigger when the other does not. What you cannot do and this is what I have told those of you who asked, is take a buy or sell signal in the 30 Year, and trade it in the 10 Year.

THIS DOES NOT WORK

This chart above has the 10 Year in Green on top of the price bars of the 30 Year Bonds. I have labeled three prominent divergences so you can see that they don't always trade the same. In each of these cases you can see the 10 Year has been relatively stronger than the 30 Year, in some cases there has been a huge difference. Look at the high point on the left, the 10 Year made a significantly higher high when the 30 Year made one that was quite a bit lower. That should be enough to convince you that you can't take signals from one and apply then to another. In time we may convert completely to the 10 Year or we may run them together which will give people with smaller accounts a chance to trade this system. You will be able to do it with half the size that is required on the 30 Year. Next week begins the roll out.

PAY PAL

If anyone has either cancelled something and is still getting the emails, or has paid and is not getting them, please email me at cj@wearefuturestraders.com.

We have had some glitches with Pay Pal. There have just been a few here and there and I apologize for this. Overall the integration with Aweber works pretty well but there does seem to be a gremlin loose causing an occasional problem.

WEBSITE UPDATE

I guess I should have bet on the over and not the under on the time line with this. It was 6 weeks and we are in week 12 at this point. I have finally figured out how to get videos made correctly for the Instructional Videos section. I think it is always helpful to hear someone explain something as opposed to reading it in print in a venue like this. Now the trick is to get past me having to listen to my annoying voice over and over as I record these darn things to make them sound good. I hate listening to myself talk for minutes at a time, then find one clumsy sequence and have to start all over again.

For those interested in doing videos let me tell you what I have learned in case it might help. The free programs are a pain in the ass and often don't create them in a format that is up loadable to You Tube. You can try and get free conversion programs and they are triple pains in the ass. They often take 30 minutes to convert a file and then once done the quality is too grainy and has to be tweaked. I have found that the Camtasia program from Tech Smith is by far the best of any of them I have tried. It is kind of expensive, but I think it is worth it just from a time saving and quality stand point. I love the concept of free open forum development of software, but time matters to me. I remember a chat I had with a Genesis technician, my favorite one of their group, Ross. He is a great guy and very on his game with their program. I was having printing problems and he gave me a work around that did actually produce a far better quality chart than the standard procedure which would not work.

The problem was it took so darn long to do it for each chart, 2 minutes or more, that if I printed out 50 charts it was going to take an hour and a half! This was not exactly practical and neither are the free video creation programs. Man up and pay, you will be glad you did.

A PROBLEM AND REALITY

One of the things that has bothered me the most about the PFG situation is the way victims are so quickly forgotten about. It is the case in all types of financial scandals as well as personal tragedies. I don't know what the solution is, but as a society we have to find a way to be more compassionate for those who befall bad fortune. On one had you can't sit around crying in your corn flakes, that does nobody any good. However, for us to always just move on with our lives and forget those who need help is a harsh reality that I don't like. I guess this is why people who form these foundations to help people should really be commended. They are trying to do something to help and I tip my cap to anyone who is involved in anything along these lines.

I was talking to a close friend of mine Friday who knows the chunk I had wiped out, and he made a comment that struck me as so pertinent to this topic. We were discussing some of the things I have had to do to survive this and his attitude was like enough already you have been saying that for months. I finally asked him how he would be if he had $....... stolen from him, just 8 months later? He was silent on the other end of the phone. Things are slowly improving for me but the recovery is going to take some time. The point is it takes people time to recover from things. If you have a friend who has lost a family member or had identity theft, or some other type of difficulty, find a way to help them even if it is just being a good friend. I was just shocked that this guy just assumed everything in my life would be as it nothing happened when 70% of the money is still missing. He had just moved on and I could not blame him but it made me realize I have done this too and will not do it again with friends or family that need me.

We took a hit last week so hang in there, I took it too and probably bigger than any of you. 

Good Trading

STOCK RALLY IS A STUDY IN FOCUS

For those of us who study the markets each day something is becoming crystal clear during this record setting rally. The FED has focused it's buying/influencing specifically on the S&P 500 Index. If you perused the board during the last 3 years most of the time you would see almost every stock pacing the 5 min chart of the ES, they all went up and down directly in sync with each other. This is not happening anymore.

Readers have seen this chart of the SMH from me before. I have the ES over layed on top of it in green so you can see the divergences. At point #1 the ES sailed merrily along for a couple of months making new highs while the SMH started to roll over, wham the ES followed. If we go forward to point #2 and the lows we see the ES was going sharply down and had been for 3 months. The SMH did also make a new low but barely, it was showing a considerable amount of relative strength. The ES followed. Now we are at point 3 and once again we have the ES sailing along to new highs and yet the SMH has failed to make a new high from where it was about a month ago. What we see is about a two month lag that has been triggering reversals. That would take us into about May 1st, hmmm what a coincidence that is. That is also a time when much of the cyclical analysis tells us to look for a turn and also when the typical seasonal high takes place. We certainly have a major red light developing starting about mid April.

What we will need to do is take a look at technical things come mid April to see if anything might be brewing there. It is too soon to tell now. However, one thing is pretty clear. The FED whether they are outright buying futures through their secret accounts with some of the big firms, or just calling the banks and telling them to front run monetary actions they are doing, they seem to have zeroed in their focus on just the S&P 500. All you have to do is look at the prop trading records of banks to see that something illegal is likely going one between the FED and their trading rooms. Nobody is as good as these traders, they go weeks without a single loss at times. There is nobody who has ever been that good, EVER. If they were they would be running their own hedge funds and making ungodly amounts of money instead of $100k working for a bank. Of course at the hedge funds they would not be getting these "timely" phone calls or whatever other means of communicating might be going on to front run. In any event, it is clear the focus is right on the ES at this point.

I don't think any of us like this kind of stuff but it is what it is. We have certainly learned in the last 4 years that laws mean nothing to the current government and they do what they want in spite of what anyone thinks or wants. Here is how I plan on using this information. As we look at many individual stocks now we are seeing several in weak positions unlike what we have seen in the last few years. When we get a break down in the ES, I plan on really pressing bets on the short side in individual stocks that are relatively weaker than the ES. Once the back drop of this rally is removed, the tide should go out quickly on the weaker boats. We don't see any obvious signs of this yet but we do have a time zone established now to be ready. What might be an interesting study and I would love some reader who is more web savvy than me to do is the following. Analyze prior May's POMO actions. Have the number of POMO days been lower during May than other months? I wonder if this year since there is a lot at stake in keeping this going, if they will have a lot of POMO days in May to try and keep this from rolling over?

We need to keep in mind the huge overall up bias in stocks over time and just look to dodge the big dips if we can when they come along. It is too soon to tell now if we have one coming or not, but we do have some internal signs that things are weakening a little bit.

B of A Update

I think we all got a kick out of my announced mission against B of A last year. Just to review I had stated I was angry enough at them that I was going to try and make $1 Million dollars shorting the stock and then write a book about how I did it. Alas, PFG came along and almost wiped me off the map, so that whole mission went south. In fact it was only having money set aside for that mission that saved my family from complete ruin when PFG collapsed. That money has allowed me to still trade and start to recover albeit slowly since the hit was very big. As a result in some ass backwards way I owe B of A a debt of gratitude. I would have been ruined if I did not hate them so much, BIZARRE! The world works in strange ways at times and no stranger thing has ever happened to me than this.

As I have thought about the PFG situation and talked to a former manager at US Bank about PFG, I have come to a new mission. He told me that when large amounts are withdrawn from a segregated account, at least two signatures of managers are required and at times more than that. Since the bank investigation has only mentioned one low level person, it is clear to me that once again something funny is going on with a bank being protected. The general feeling is the bank law suits are not going to go anywhere. If that is true it means that US Bank on some level according to my interview of this guy, was likely complicit and is going to walk. It is time for me to focus on them in my shorting mission. I think some day it may come out what was going on during this period of time as to why the banks are being so tightly protected by the Federal government, but for now all we can do is speculate as to why it is taking place. It does not matter to me, it is happening and the reasons do not really matter. Here is the chart of USB.

There is nothing here at the moment. I will keep showing this chart over time and update people on my progress. I am not going to be a fool and just short this to short it. However, at times I get much more focused on futures and lose sight of individual stocks. In this case I am going to stay on top of this one and see if I can clobber it a few times. This is going to take some time but it is time to start now. For now I see no reason to short this but hopefully in mid April things will change. I also don't have anywhere near the capital base I had a year ago due to PFG so making big money shorting this stock is going to take time if I can pull it off.

This coming week a small pull back would not be a surprise in stocks but trying to step in front of this and short it is crazy in my view. If you happen to be lucky enough to catch the top in the ES good for you, but trying to top pick is not something I do. I did try to short the ES on that one break we had last month that was false and the trade lost money. I looks like a dumb trade now and perhaps it was, but it did break some support levels. At this point in time we are in new high ground so there has not been any sign of a break down. I want to see some short term weakness when looking for a reversal as opposed to just selling new highs hoping I guess right. I have been there and done that and that is the reason I no longer try it. Newsletter readers, ADX is speaking here still.

Good Trading

SPECIAL REPORT - BONDS

Here is the equity chart of the Bond System going back several years. We have just had a good sized draw down this week with consecutive losing trades. The way we monitor this is what is displayed above, a moving average of the equity. Once we have a pull back against it that exceeds a certain amount we make considerations about what to do. As you can see we are nowhere near that level yet and you can also see that the largest draw down over the last 10 years came in 2007 and it was about $800 more than we have just had. What does this mean?

It is business as usual. Trust me I trade these signals myself in several accounts so chances are this bad streak this week hurt me more than you. However, I know from experience and I have been stating this in here for as long as this has been available that there would be bad periods. We ended last month as you can see on a new equity high and I stated this in the prior month summary. You can see the last time the biggest draw down happened we were also at a new equity high. This will often be the case, the biggest set backs will happen from the high points. That is the way I prefer it as opposed to having it occur after we have already had a pull back.

From a probability stand point this is one of the best times of the last several years to start trading this so I won't miss the next trade no matter what happens. It is likely we will have a good run from this point, but of course not guaranteed. We have drawn down $4219 which is less than three full stop out losses, so as frustrating as this has been, it is not a disaster. It is points like this where the men get separated from the boys ( no offense gals just a cliche ). Any trader can just sail merrily along when we are making new equity highs every month. It is those who can stick with what they are doing during bad periods, that will succeed over the long haul. I have been through many draw downs in my career and they are not easy when they happen and neither is this one. However, they are part of the business. You should not love me for the last two months or hate me for this one. This streak takes us to only down about $500 for the year with all the trades, so keep that in mind.

The next few trades are now pretty important so let's see what happens. As to the NFP report, let's hope things are really gangbusters like they are reporting. If socialism is going to make us all prosper then I am all in with it. I have my doubts that the solution to everything is just raising taxes time and time again. However, if the jobs report is real which is unclear, things are getting dramatically better. For those who get my Newsletter, the single most important aspect of it has been me telling everyone to stay long the Stock Market. That recommendation alone is worth many times what it costs for an annual subscription. In the face of all the gloom and doom it has been clear to me that you should stay long the stock market and now I am on record for several consecutive months with that call.

If the FED can pull off what they have been doing and then back out slowly and have it stick, it will be a historic feat that has never been done in any country in history. I hope it works. I don't get caught up in all the water cooler talk about debt monetization etc. It does seem problematic to me but I don't trade based on that. I guess this week I might have been better off guessing!

We have not had any new Swing trade signals this week due to the markets mostly running in one direction. I have been developing a twist to how to catch moves and will be incorporating that soon into these signals. I have been trading it with real money first in my own accounts to make sure it stays consistent and it has. I will be incorporating it starting next month as I give it the balance of this month to continue to prove itself. It is really a minor variation of what I have done for a long time, but I figured out a way to make it a little more mechanical and also to stay in trades a bit longer. It is exciting. It it the best method I have ever developed it appears. I don't jump from one idea to the next, I focus on working with my core tools and how to best use them. This represents a way of syncronizing them that I guess I should have thought of a long time ago, but for some reason did not until a few months ago. That always seems to be the way it is with me. The best ideas come out of the blue and then I think "why didn't I think of this before?" Sound familiar?

Have a nice weekend

NFP Report: Groundhog Day

I remember back in the good ole days when this report was actually real and it was fun trying to trade during the immediate minutes after it's release. The strategy used to be what I am showing below. I would wait for a big move above the prior days high or low, then place a stop order on the opposite end of the range in case a big reversal took place. There are a couple of ways I used to do this.

On the first chart I would wait to see if we went way past the prior days high or low. If we did I would place a stop at that high or low in case price quickly reversed and traded back through that break out point. My logic was that if is reversed quickly the move was a trap. For the most part the strategy worked like a charm, with occasional whip saws where I got stopped out. I just did this trade on the NFP release days only.

The other strategy I used is that if the high or low went by a little or was just tested and quickly reversed, I placed the order at the opposite end of the day's range and entered once it became an outside bar or a very large range bar that had reversed. This required larger stops and did work pretty well. I tried to hold these an extra day or two. Where the first strategy I tried to hold for longer since my entry had a smaller stop. One of the things everyone learns eventually is that you have to catch big winning trades to make a lot of money trading. If your wins are always small you will just tread water at best. One of the things I hope people are learning with the Swing signals is this exact concept. We are averaging a good bit more on the wins than we are on the losses. This is by design.

Here is an example of where we ran way up but did not go past the prior days high, so the entry was at the prior days low if we were to come all the way back down. Had we gone way up above the high on this day the entry for the short would have been at the high as it came back down. This is a complete judgement call type of approach and it is volatile. I do not use this anymore because I don't like death watching charts during the day. It might be a worth while study for those of you who are glued to the screen and are looking for action. I am looking for profits which is not the same as action.

This report as I have stated in here frequently has just become a tool for political narratives and agendas, it has long since jumped the shark. Put faith in it if you choose but I have no confidence that this number which is very important, is anywhere near the truth statistically. To advance the socialist narrative it is likely to show improvement tomorrow whether the real numbers are improved or not we will never now.

PFG Update

It appears that the lawsuit by the Forex people is going to cost all of us millions and delay any future distributions by months. This really ticks me off. That damn attorney says they are not adversarial to the Seg holders and that could not be further from the truth. They signed a damn form that told them they did not have the same protections, yet like everything else in life nobody is ever responsible for their own actions. Now they are screwing all of us as well as themselves by dragging this on to the tune of several million more dollars in fees that will be taken off the top. It has been known forever that FOREX is the wild west and is very risky, why didn't they get the memo. It is amazing to me when people choose to ignore clear risks and get burned that it is everybody else's fault but theirs. It is this lack of responsibility that is ruining this formerly great nation. It is too bad this happened to all of us, but what you signed is what you signed. You should not have signed it, and it is not the rest of our fault that you did. I have known for years to stay clear of FOREX for several reasons but the main one is the lack or regulations. If I know it why doesn't everyone else.

Sorry to end this on that not but I felt that needed to be stated. Now the rest of us wait until at least October to get any more money due directly to this lawsuit only.

Good Trading

SOROS PREDICTING A BIG DECLINE?

http://www.moneynews.com/Outbrain/billionaires-dump-economist-stock/2012/08/29/id/450265?PROMO_CODE=FE8A-1

I am not sure if this link will work you might have to copy and paste it. It does not have any quotes from Soros about a direct prediction for a stock decline but it covers all the insider selling that is going on by billionaires including Soros and Douchefett. If there is a bigger hypocrite on earth than Douchefett I would like someone to point him or her out to me.

The gist of this article is the same as so many others at it's core. It predicts a huge inflation wave that will cause interest rates to sky rocket and then create a stock market melt down. Could this happen? Of course it could. Will it happen? I think the answer to that is at some point it might. Let me explain.

I covered this in one edition of the Newsletter so I can't give all that away, but the brief summary is as follows. In spite of all the "liquidity" that has been "created" most if not all of us still cannot go to a bank and get a loan. Why? The banks are hoarding the money. Inflation cannot happen until this money gets released and circulates with velocity, which will drive prices upward. At the time being we have the opposite, a deflationary environment. There are cycles to everything in life and this is no different. At some point it is likely the pendulum will swing to inflation from deflation, but it is not anywhere near happening yet. Keep in mind when you are selling millions of shares of things that has to be done when times are good. You don't want to be trying to sell a million shares of something on a day the market drops 200 points, you won't be able to get filled. If you are someone holding huge positions you have to try to front run market turns to be able to get decent prices.

There is something called VWAP which is talked about in many sites and I think the people mostly try to throw it out there to sound smart. VWAP stands for Volume Weighted Average Price, and it is basically used by large funds as a target to achieve during a day when they are buying a stock. On large up days it is almost impossible for a fund to get that average price on their purchases which is why at times you see price really get driven on big up days. Large buyers can't risk getting left out in the cold when they have to buy something. Further, they have to have certain stock names in their portfolios so when people peruse holdings, they have all the "right" stocks to attract investors. It really is a huge shell game in my opinion.

As this relates to these big players, they are almost like funds themselves, so they have to get out when the getting is good. Selling by these folks does not mean crash tomorrow. It means from a broader perspective they see a turn coming at some point in the future. For us as shorter term traders and investors we can be a bit more nimble and trail our exit orders upward, and let the market take us out without having to be concerned about liquidity on huge positions. Net net, it is a different decision than what these guys make.

The wall of worry is always built on stock rallies like this and this is why I urge people not to get too tied up in reading all these negative things all the time. My friend I talk about all the time is an example of what not to do in this regard. He follows a very well known trader who holds positions for weeks and months, and is a very prominent grain trader. He gets his Newsletter and winds up very opinionated about huge moves coming. He then goes on to try and trade them on a 60 minute chart! Keep in mind this trader might hold a Soybean short through a $1.00 rally if his big picture analysis says he should still be short. Can you imagine trying to short all the rallies that take place on a 60 minute chart during a $1.00 rally? Ughh! The point is do not mix your time frames. If you are a short term trader it does not matter if these billionaires are dead on balls accurate with these macro calls. If you are not trading the same time frame why does that matter to you?

Don't mix your time frames is the moral of this whole story. I don't know if these guys are right or wrong other than I think in the near term they are wrong. They are not attempting to be right in the near term, they trade a much longer time frame. However, I know I can react very quickly when I see a major market turn start and so you can you, so don't sweat this stuff every day as you make your trades.

Sorry no fancy pictures today

Good Trading

SOYBEANS - A HILL OF BEANS?

There are very strong cyclical influences indicating a big rally is coming in the Grains in a couple of months. At this point there is no way of knowing whether or not those cycles will be accurate. We have seen the value of cycles in recent years but also seen how they can be completely wrong like what has happened to the Euro mystery chart.

For the time being we have a market getting pinched, Soybeans. I could make an argument in either direction. As per my bands that are described in the Newsletter we are in a sell zone right here. These are typically strong zones to pay attention to. They are also not infallible. We could also have argued that there was heavy commercial buying at the recent lows that coincided with the Seasonal low and that would have merit.

As a result, we have a setup in both directions. The daily chart also shows a flat type of situation. What this means for me is that I want to play a breakout in either direction. I am not sure which way this is going and I am not into guessing. The orders in the Swing Service tonight indicate how I am going to play this market and it's counter parts. Until some of those parameters are hit I don't see any reason to make a guess.

We got our new highs in the DOW today and do your research and compare the volume to the last time we were here and it speaks for itself. I have gone into this previously so no sense in re-hashing it over and over. There is certainly no reason to fight this move, NONE. For you drones who are looking for any reason to sell any rally there is a possible trap pattern in the ES if Tuesday's low were taken out on Wednesday. Good luck trading it.

I don't use the MACD but many people do, it does have a big divergence here and there is also a megaphone pattern. As a result there are several justifications for taking a short trade here and one reason not to, Comrade Ben. Place your bets! I will cover megaphones in a future Newsletter edition, they can be very powerful patterns. I am not sure how all you spammers finally found me but holy smokes are you persistent. You should try trading you have the diligence needed to be traders.

Good Trading

POMO RULES NOTHING ELSE MATTERS

In this unique day and age we live in now where the Government completely controls the Stock Market, it is unclear whether or not what I have displayed above means anything. What this should mean is that the strength of the trend is weakening and a reversal is due. HOWEVER....

Virtually nothing like this matters. As long as the FED is on the POMO program it is unlikely we are going to get any meaningful decline. It is in my DNA to pay attention to things like this so I will not ignore it. I did make a mistake and try to short this a week or so ago and that was a mistake. It was a legitimate pattern and just did not work beyond the first day of the trade which was dynamite. I suspect most sell signals will befall the same fate for now.

We also have now seen the Will Trend indicator shift to a down trend which has not happened for a while as you can see clearly on the chart. I think the outcome of all of this is going to be more of a sideways move than a rally. The other markets have now separated from this as it seems the FED is mostly content now to let them go and just keep the stock averages high to maintain the illusion of the economy being sound.  I have mentioned before that it might be a good idea to study the POMO days and the relationship of them to rallies in the ES. I think you will find that quite interesting.

I am an old school type but at the same time I acknowledge you have to adapt to what is happening now and the FED has completely taken over the US Stock Market. Do not fight this unless you do it with small size so you keep some powder dry for when we get a real decline. We will get one and it is going to be a biggy when it arrives, you don't want to be out of money when it gets here.

The net point today is don't short on POMO days or if you do keep a short leash on the trades. It is the new COT report and it is given in advance. They are basically saying we will launch aggressive buy programs in the ES on the days they state POMO is going on. What more could you want? Look for buy signals on those days. They put out a report in advance, so it is out there for you to find.

Good Trading

FEBRUARY TRADING RESULTS

The machines turned off at the end of the month and here is where we wound up:

Bond System - + $1,157

Swing Signals - + $2,456

Keep in mind the goal each month is to make a profit first, we are doing that consistently. This is a difficult thing to do and I am very pleased we are consistently making money. Most people lose money trading and then tell you afterwards how good their signals were and how much money you would have made. We are giving signals in advance that are making a profit.

Here is what I can do better than what I have been doing and have started to implement it. We have had some trouble with stops in the thinner markets and it has made me a bit jumpy on some of the exits we have done. Typically I have two exit methods and they have fixed rules. However, there is some wiggle room in them as well as to which one to employ. Once a trade is on and the decision is made it is not changed, I don't jump around all over the place. I believe in being disciplined and I hope that is a lesson some people are learning by following our services.

We narrowly missed a few big moves this past month and that is on me. Stops were too close and that problem has been corrected, we are staying in trades longer and that is going to continue going forward.

Here is a harsh statement but if this is you own up to it. If the above results are not good to you think about doing something different for a living. This does not mean this is the greatest thing out there it may be far from it. The point is trading is about grinding it out. There is no holy grail. There is no system you can buy that will make you millions in a few months. This does not mean it cannot be done. To be able to get access like this to methods for a couple hundred dollars a month that make profits is a very good deal. There are rare individuals in any walk of life that can perform at levels far beyond others. Michael Jordan to name one. What you see up above are real life results of profitable trades. Some of those trades were terrible, some were dynamite, and a few were mediocre. Trading is about staying the course and that is what I do come hell or high water, and it is hell at times believe me.

THAT IS TRADING!

Our Bond System this month started off with a full stop out loss so we went right into a hole then it spit out 5 consecutive wins. This is pretty much how that system is designed. It wins with a high level of accuracy and does go on runs where it hits several wins consecutively at times. It is at another new equity high since we first launched it so that is all we can ask, to keep moving forward. We had one really big winning trade and I was fortunate to have more contracts than normal on that trade as per my blog post from the other day where I explained why. If you just annualized the above returns they are awfully good considering how inexpensive these signals are. I am thrilled we are doing well. Below is an image of the new home page and how it is going to look with one thing being different. The First thing on the top left will be the daily blog post, which will then take you to the blog section. It will be labeled Daily commentary and will be in the place where I have written Blog post for the day. The rest of the layout is accurate. The hand shake will have the stock photo removed, but I like that image so it is going to stay.

I am going to be loading some videos which will give you some more in depth analysis of things. As I have said this will build over time.

I really like the way this looks. It could change slightly before game time. It was supposed to be done mid February so we are already way behind, of course. I hope to have this completely done soon. I don't know how long the videos will take.

Now to the markets for this coming week. 

It does appear to me that if we were to take out Friday's low on Monday in the Russell that would be a good sell signal. It also looks to me like Bonds are going to continue the rally they have started unless we break sharply down Monday. I am watching Cotton for a sell signal, and watching Grains which in my world are setup in both directions, so a trade either way could show up.

I know some of you are enjoying that new setup I introduced in the Newsletter from the emails. I think you will find it very helpful. As it is with anything, so it is with this, don't go hog wild with it and look for it on a 75 tick chart. Look for it in the way I showed it.

Good Trading this week

COTTON PICKIN - COTTON TO DECLINE?

Here is a market that is setup about as well as something can be for a decline - COTTON

First off we are right at the time of the year where the seasonal pattern calls for a top and that is especially significant considering that we have been following the seasonal very very tightly for months now. Next, we have our good friends to fade the small speculators heavily bullish in a big long position. This is also happening with the commercials heavily short. In the world of COT analysis it does not get much better than this.

This is a very thin market so we have to be careful how we get into this trade. I do not see a daily entry setup yet, the above is a weekly chart. It is time to start looking for a short position in this market.

I do not have any divine wisdom to bestow upon stock market folks, the trend is up and that is that. We are in an area where a short term turn could be setting up. I am teaching a pattern in the Newsletter this month that is setup right now. I think readers will enjoy this one. It is a setup like the above but not related to COT data. It is a setup in the sense that it is not an immediate entry situation, it is a setup to begin looking for one from. It is not infallible, neither is anything else. I also cover a setup in the Bond Market right now.

I think what I am going to do is have featured setups in the members section of the new site, with some explanations of what they are and why they are setups.

PFG UPDATE

There is no real new news here. Offers from bad debt buyers are .40 for 4d and .10 for Forex. Now the pissing contest begins over how to divy up the remaining assets which are far less than what is needed. Nobody is going to come out well in this, it will be the biggest loss in history on a percentage basis of all of these situations. In perusing the court docket section I notice there are many duplicate claims which are being backed out. As a result the total claim amount vs what is there is going to improve some as far as distributions go. It is anybody's guess when another distribution might occur but my gut tells me no sooner than June and perhaps much longer. I have no inside information and have stopped following it for the most part except when this one idiot from a bad debt company keeps calling me forgetting he has already called 10 times.

If you are a victim like me I would suggest just forgetting about this it does us no good to worry about it. We got screwed and it is what it is. Others will befall the same fate so maybe when the next one happens and it will, we can do something to help them. I don't know what it might be but it is good to focus on something positive. The money is gone and it is not coming back other than some small next distribution that won't be much.

Good Trading

IS THE EURO DOOMED?

Over lunch today with my friend who likes to dabble in trading but is really a deal maker in everything else but trading, he asked me about the EURO. What do you think will happen to the EURO? Hmmm

My first answer was just straight from the gut and it was "I don't see how it can't go down with the house of cards that is Europe." As I thought about my initial response afterward I think I got it basically right. How in the world this whole thing can ultimately stay together with all that is going on is beyond me. That does not mean it will fall apart tomorrow, but over the long term there is going to have to be something that gives. All these countries are so upside down and they are only where they are because of the world wide central bank interventions. Without those I think we would have already seen things unravel. They can delay all they want but they can't prevent what is ultimately going to happen.

The challenge before all of the central banks now is to see if they learned from Greenspan the art of rotating bubbles? Have they figured out how to inflate one thing while another deflates like he was able to do? It does not appear they have to me. Perhaps the game has changed in that rates are already so low that lowering them further has diminishing effects. That is my feeling overall of this effect and if you look at Japan we see the model for extended periods of zero interest rates and how stagnation just sets in. I think that would be a best case scenario if we could pull off what Japan has had, it could be much much worse than that eventually.

The news today of this release of all these criminals orders by DHS is about as shocking as anything I have ever seen. Essentially they are trying to scare people to voting for more tax increases. They are letting convicted criminals free because we can't afford them just because we are spending less than we would have spent, but more than we spent last year. What business lays off all it's people during a year where they spend more than they did the prior year? 51% voted for these tactics, that they will release criminals to intimidate people who are rationally saying no more tax increases, to vote for them. The Repubs should dig their heels in for all that it is worth now IT IS ON. If they don't the rich are heading into the 70's in tax rates before this jerk is done. If he pulls that off he will leave a mess even bigger than the one he has already created as hard as that might be to believe. This guy signed the bill he is now saying will cripple the country if we don't do something to override what he signed off on? HUH?

I veered off into this dialogue because this is going on around the world. The powers that be want to pay off the majority by stealing from a minority group. It is incredible that people don't understand why this won't work. Getting back to the EURO, how can this currency remain long term when most of the members are essentially bankrupt and are being supported by basically one country, Germany?

The chart above shows a near term bearish scenario but potential short term support due to Sentiment being overly bearish at the moment. If you look at the overall chart you can see for the last few years we have been in a down trend. If we were to start to roll back down here, all bets are off. For now over the next week or so I think it is sell the rallies in the EURO, which means nothing for the big picture but it means a lot for how I am looking to trade this. In summary, I think from a large view stand point over the next 5 years, I don't see how anything good can come out of what is happening in Europe without significant pain first to wash out everything. This deleveraging has not thus far been allowed to happen either there or here in the US. It needs to happen. I am not rooting for it but I am stating what I think will ultimately have to happen.

I had an email exchange with a good client today regarding the Bond trade I showed yesterday. I want to make it clear that was a trade from the Bond Trading System and was not in the Swing Service. These two approaches are completely different as I state in the web site. At times there can be a Bond trade in both and at times they could even be opposite of one another which has happened. It needs to be understood that these services are different and have completely different parameters for the trades. I was commenting in the post on why I felt that the mechanical bond trade looked good but that had nothing to do with the signal. That system is automated and spits out trades when it spits them out. At times if they line up with something else I watch, I may at times take more contracts on the trade. It is a judgement call and I discussed that to make a point so I apologize if I created any confusion with that. I look for trades to last for more than a day in the Swing Trades, that Bond trade was entered and exited in one day. It was obviously a great trade and not all of them work out that well.

We are short the ES right now and I am not sure if we will bounce but if we do another nice sell setup for a short term trade could present itself. The spammers have been killing me with comments that I have had to moderate so I apologize if I mistakenly deleted anyone's comment. Sometimes when I check in there are just pages of spam comments and I am deleting them all. Yikes! Maybe I will let the Swedish Penis Enlarger messages through for a chuckle!

Good Trading

STOCKS FINALLY CRASH - BLIND SOW FINDS AN ACORN, READ ALL ABOUT IT!

For those that have been talking about a sell off all year they were finally rewarded today. The question is whether or not they have any money left by now? Oh they will tell you they called it you can bet on that. I can see the email blasts and blog posts right now. We did get short in the Swing Service today where indicated, so we spoke with orders not BS arcane stories that mean nothing. We had no talk about the Sequester, politics, or any of that. Also, we did not apologize for metals declining we left that to others. Further, we don't really know whether or not this is going anywhere or not, this was one day with a wild reversal. One thing you should take note of, look at all the OUTSIDE bars on this chart. This is what I would call a market change that is happening.

More than a third of the days this year in the E Mini have been outside bars, this is very unusual. For those who keep stops close this has been deadly and I think this is going to continue. We have some very irregular activity around many of our orders as well. I think there are a lot of fancy programs designed around trading short term. When you get this you also get all kinds of stops bunched up. If you combine that with people giving away signals to funds or brokers, chat rooms, and all sorts of other things, and all of the sudden you get huge bunch areas where resting stops are sitting. This is why we are going to be moving our stops back some. We got picked off in our Euro short today with an order that I thought I had back far enough but it was not. Days like this are what they are. We did ok in some other things like our booming winning trade on the long side of Bonds, one of the best we have had. I did something unusual with this one, which I will explain.

You can see where the original entry was on the opening of Sunday's night session. I had noticed coming into this trade that there was a huge amount of upward momentum that had not yet been reflected in the price, that was in one of my proprietary indicators in blue. As a result if this mechanical trade went against me my plan was to add on to it, I don't often do this and it is a complete judgement call. During the night I had someone cancel the Bond service, most likely during the middle of the dip when the trade was going against us. To me the market was speaking. If the weak hands were selling I wanted to be buying. If someone who had likely taken the trade and panicked because it was down enough to cancel, that was a buy signal in the subjective world of trading.

Of course this could have been a credit card problem with the subscriber or a coincidence you never know, but to me it was the final kicker to get aggressive on this trade. This could have really gone against me and if it had I would have taken a larger percentage loss than normal, but it was a judgement call I made that was pretty obvious. When momentum is going up that strong it is usually a good idea to buy into weakness. The mechanical entry had nothing to do with that logic at all. Just doing that one stand alone worked out very very well making about $1750 by itself.

I don't mean to pick on this person but there is a point to be made here. I have seen people come and go at the worst possible times in and out and back in and even back out again in the Bond System. This is a system that has consistently made money since it's introduction. If there has been a better one available for public consumption I would like to have someone tell me what it is. Yet people go in and out etc.. This is why most people don't make money trading. Folks this is not an easy business, it is difficult. You have to do what others do not or cannot or are not comfortable doing. Panicking in trading is going to give you immediate relief when you get out, then long term pain when you realize you have done the wrong thing. This negative feedback loop is a tough one to break.

I have made these exact mistakes in my life more than once and it is why I constantly harp on this. "Don't be that guy." This is stressful and it is even more stressful if you stay glued to a screen all day long. Today I had my live quotes turned off after I added on to the Bonds last night. I watched the ES at the open for a minute because of a new method I have been messing around with that bought the open today and was stopped out at Friday's low had I done the trade which I did not. I am watching the trades live out of sample to see how they work. It is a trend based method so it is going to lose when trends change like this appears to be doing. This year so far it has had 11 trades with 9 wins and two losses with today being the second one. I am continuing to monitor it, today was lousy but just one trade so not a big deal.

I will review a few other trades in the next few days including the Euro where we appeared to have a gangbusters trade going and got picked off today for about a $900 win instead of much much more we could have had. That is trading.

THE AUTO TRADE PROGRAM WITH ROBBINS FOR BONDS IS FINALLY TESTED AND READY TO ROLL.

I spent a couple of hours on the phone testing this today with some tech guys and it is working well so we are ready to go now on the next trade. As a wise gentleman by the name of Murphy who has a law named after him would predict, following a monster winning trade like this, the next one will probably be lousy! We will plow forward regardless. If you are interested it is ready, call Ryan at Robbins Trading.

Good Trading

TRADING WITH THE TREND

This may seem to be a very simple chart and it is by design. I want readers to notice that the big money was made trading in conjunction with the trends. I think many of us myself included look at a chart and are immediately drawn to the peaks and troughs. If we could only sell at the peaks and buy at the troughs life would be good. We then dedicate years to trying to find ways of doing this effectively. At the end of the those years we have nothing to show for our hard work.

This is not to say that you can't ever trade against a trend, but it does show that for the most part the big money is made trading in sync with it. In the Newsletter we have shown some good simple techniques for trend identification that work quite well. In general the more fancy you make things the more you run the risk of data mining the technique and condemning it to fail in real time. I have made that mistake countless times over the years. Newsletter readers, stick by those techniques, they do work.

Over the weekend people tend to find a few hours here and there to surf the web and catch up on what happened during the week, I also tend to do this. Whenever I do this I always come across in depth articles of theories on why something should go up or down. I cannot for the life of me imagine trying to trade Gold by trying to assess whether or not central banks are messing around with the values, propping or depressing it illegally. I also can't imagine creating these convoluted streams of logic as to what is going to happen with the dollar, the deficit, etcc.. If you are a trader do not read this stuff. If you are just perusing and don't care about being right or wrong but want to be able to combat the local snot nose punk at the company water cooler, have at it. On the other hand you could read a book on back fist techniques and just give him one, up to you I suppose. I think readers know which way I would go on this one.

The point is that the real driver of price is the trend. The implosion in the metals is no surprise because the trend is down and has been. The big moves happen in direction of the underlying trend. Yes we do have crashes out of the blue and it is nice to be able to catch them. However, have you ever considered how many moves you miss trying to catch big reversals? I personally have missed a ton of them by doing that and I bet you have too.

The lesson, don't do it. Trade with the trends and use stops to protect you against the big crashes. Let the wise guys like me try and do that stuff.

The new web site is getting close, now it is a matter of what I can manage time wise to put in it. I am deciding this right now. As much as I would love to do a chat room, it is a complex under taking and probably not going to happen initially. We are going to have a members section which is going to be separate from the services, that will have good new content. It will probably be $10 a month or something cheap like that to get access to that area. Within that area is where a chat and or trading room will eventually spring up. If anyone has any suggestions of what would help them the most on a daily basis please email me.

Good Trading

NATURAL GAS VERY UNNATURAL

Once again we have unusual price action in one of our trades and folks this is getting very very tiring. We seem to be having this once a week now and it is costing us. Here is what I propose to do next.

I am offering a $500 cash payment and 6 free months of either one of our trading services to anyone who can give me information on who is doing this to us. If you have someone else you know who is a subscriber to our services that you suspect please contact me. I will guarantee anonymity to you and will pay you once the person is caught. I will pursue legal action against them once they are caught, but will pay the reward once they are identified. Don't be a wise guy and turn yourself in for $500 etc.. this offer only applies to those who are not the unsub ( unknown subject for those who don't get that ).

For now we are going to have to eliminate trades in markets like this and I will trade them on my own. I cannot afford to have my trades screwed up like this by some greedy bastard who is selling us all out for whatever they might be getting from it. I won't bother asking nicely anymore for this person to stop this, it is time for more than that. I may have to send out a one page document requiring everyone's signature to continue using our services. This is a serious matter and I am not taking it lightly. This should not be a problem for anyone except the person who is acting inappropriately. It is already in the disclaimer that you are not allowed to do this, but the language is going to be stepped up and a fine added.

 I cannot for the life of me understand human nature sometimes. Why in the world would anyone do this, our services are so cheap? I try to conduct myself in a straight forward and professional manner and would never dream of doing something like this to someone else.

There are still plenty of markets for us to trade where this jerk off can't effect us so that is where we will play. We have net lost money in these small markets anyway due to this ongoing problem, so we are better off without them.

The world's favorite market is in play once again, GOLD. The apologists are everywhere right now, manipulation they cry! I won't bother even dignifying that garbage. In all fairness when you don't trade and try to be an analyst you can get caught up in stuff like this.

Here we are approaching the triple bottom that is very well defined. Basic technical analysis teaches us that the fourth test typically breaks through. From a long term perspective life is still good for Gold Bugs until a breach of this level occurs. If a breach of that level occurs trying to establish a support level would be meaningless, the trend would be decidedly down on all time frames. With support and resistance you want to use them in conjunction with the trend, if this level breaks it will be the resistance levels for shorting that will be what need to be determined.

My thoughts on this market are well documented so my long term bias is well known. However, I trade off technical tools. I have made a good amount of money on the long side of the Gold market during this spectacular historic rally off the lows over the last 10 years. I am not sure if this level will hold or not. If I had to guess I would say no based on how sharply we are approaching it. Also with the apologists starting to come out and claim the market is being manipulated down, it is starting to feel like Real Estate and Stocks when they started to come down and the bulls tried to talk them back up.

At some point in life I think you need to make things as simple as you can. The water cooler economists that are virtually everywhere, are so tied up in their underwear over all this convoluted logic with no historical basis, that they have lost sight of something very important. When the price of a commodity gets over extended by multiple standard deviations in either direction, history has shown that 100% of the time a significant reversion takes place, 100% of the time!

100% OF THE TIME

Gold at it's peak was 4 standard deviations to the upside, the same as Real Estate was at it's peak. Of course it is always possible that it could be different this time. Things in life do change and at times things do happen for the very first time. However, when betting it is a much higher probability to bet on what has typically happened, not what never has. It will be entertaining if history proves itself out again, watching how crowded the exits get. As Dr. Evil would say "it could be quite breath taking." For those with big ones and who are perma bulls, you could make the argument the commercials are starting to buy here to support this low and go long. I am obviously not in that camp.

Good Trading