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Tuesday, August 30, 2011

Drawing board again

Past week I mentioned that I was expecting that the equity market could drop first, then start going up like screaming and reverse back to cause confusion among market participants.Then by Aug 29-30 make it or break it expecting that started going up in a similar fashion like late June with very few corrections.

The drop appeared but very small, just couldn't pierced the range downwards. It touched the bottom and effectively started going up like screaming just to reverse Thursday morning and dropped like 5% in less than 24 hours.

Friday started the reversal, the one that I was expecting yesterday so I just keep waiting outside to see if it was going to do some funny thing but no, the structure of the move was like I imagine so today I went long SPY and kept going up in a way that resembles the June move up.

So the two "surprises" were that the drop didn't get below the current range (the up and down moves were fine) but the end of the month move (the 4th leg) started one trading day before, which doesn't look too big of a deal when studying a complex formation but exit the risk to throw someone off balance because it started Friday instead of Monday so is hard to know if it's going to produce a different kind of tape or it just came earlier.

Is much better to see something and expect a nice multimonth move in one direction but it didn't happen that's why I'm trying to get more creative and trying to spot this complex formations with four movements that don't change dramatically the price values, maybe a 7% but are good for getting better timing. And trying to see if I can get the different "legs" with some accuracy.

Not too bad but not that good. Maybe I'm becoming a glutton pig but I would like more accuracy in the timing and if possible a better idea about the drop (first move) percentagewise.

Back to the drawing board

The current up movement should keep the correctionless structure till early Thursday morning before facing the first obstacle (which I don't know how strong could be) with chances to generate a nice correction or create a push down more important.

I still don't know but at leat till early Thursday I favored going up withouth too much of a challenge.

Will see if it works that way.

Dan

Tuesday, August 23, 2011

Wiretapping

Still waiting outside and like I mentioned past week I started to pay more attention at the price action.

Just one day was enough to demolish the s&p bringing it back to the previous week levels. The most probable move would be to consider the upside from a common sense standpoint, that’s why I don’t expect it inmediately.

What I expect is more like a repeat of the Aug 9-Aug 22 cycle. I mean a type of move that starts going up to stop and drop again causing more confusion about what direction is going to take.But this could be at a lower level than it is today.

So falling first, then look like is going to go up screaming but reverse back and then by the end of August a snap rally that in structure can resemble the late June rally, where corrections were rare for entire days.

Astrologically speaking Aug 29-30 looks like make it or break it. I’m still thinking that at that moment a rallly is going to start again instead of disaster.

There’s a lot of negative information and negative mood out there for causing an intense move down taking people by surprise.

The surprise will be that with bad news, let’s say Bernanke saying: no mas help (even though is not true, as a matter of perception will look like the market lost the Bernanke put reassurance) and the market goes up anyway. That will be surprising.

The recession is closer to an end than to start a second one. The recession was only one and continuos and the first hints that things are going to improve is when some banks finally get restructured or collapse in an “orderly way”.

I mentioned it three weeks ago, but still nothing happened about the banks. If it plays out the way I think it should be really soon.

In the past three years nothing substantive was done to improve the economic situation, only time was bought but the economic gauge is in the hands of the middle class, and until the root causes are faced about that group the economy is not going to move. The households are in recession not banks or multinationals.

And to finish just a jewel from Bloomberg.

http://www.bloomberg.com/news/2011-08-21/wall-street-aristocracy-got-1-2-trillion-in-fed-s-secret-loans.html

“Wall Street aristocracy got $1.2 trillion in Fed’s secret loans”.

Please read carefully that article because that was supposed to be kept as secret stuff, so it offers a peak at the way they operate, and then consider if +/- 1.2 trillion cannot materially alter the course of a market if 20 banksters decide to do so.

And go back to 1907 and check if it was just the anonymous forces of the market reverting their opinions about market prices only or if J.P. Morgan was one of the hands altering the course of the market.

Now you probably realize why I’m trying to hone my skills applying Astrology.

I’m never going to be in that kind of meetings but no matter how secret they keep their talks I think there’s a way to listen to what their plans are.

Dan

Tuesday, August 16, 2011

Aug 9-12

Hello everybody

I was expecting a rally Aug 9-12 or at least a consolidation to stop the downward movement that started July 22.

Few minutes into Aug 9 started going up from 1080 (+/-) to reach 1180 18 hours later.Then retrace most of the advance and started going up again reaching s&p 1200 yesterday. Up 11%, not bad at all.

So we got the rally. It’s very encouraging to me that kind of results because tells me to trust more and more the method that I’m trying to develop with less and less input from the “outside world” so to speak. Which means less variables to pay attention to. Or less holes that need to be filled with exogenous causes.

Can the rally last? After two good calls the most common mistake to me is hubris, so I’m going to try to shut up and try some humble pie, and let the market tell us what to do.

The retracement happened at -20% (where technically a bear starts) and it jumped.

Because of that I keep the bullish view. Only if we broke the 1000 level clearly and very fast I’ll change my mind. I’m a trend follower so I stick with the trend until it tells me something different, even though from a rational standpoint I look stupid.

The point is that I don’t consider everyday rationality to be particularly insightful analyzing market action, so I don’t care.

The stock market is a game, and when we think we got the rules “logically” in the bag they change, that’s why I prefer Astrology.

With all that shit going on for weeks: debt collapse, Europe, economic slowdown that MSM is feeding the masses it’s just hard for me to believe we go down hard now because basically, we already did that.

Been busy with work fortunately, so not to much time to study.

But I want to research more this weekend some potential events that I laid eyes on and get it clearer by Sunday or Monday night to share.

Thank you and good luck.

Dan

Wednesday, August 10, 2011

The Perfect Storm

Dastro may have a good call yesterday. If we continue to see this chop throughout this Wednes day, we may be starting a bottoming process.

A bottoming process makes sense from a look at volumes. Comparing with the Bear-Sterns fall of 2008, the volumes were higher the last few days, so this market correction means to me a number of funds are lowering their positions at the current pricepoints and sitting on the sideline again. We saw the market capitulate, then back to low volumes again. Comnpletely different pattern from 2008.

The question is, why did this happen now? Is this a result of the foresight of institution managers, as it seems we are still in recession and they’re expecting a weakening of earnings? Or is it the result of HFT vigilantes causing enough movement on the market for some of the boys to get margin calls?

Although not being an insider with insider information I have a guess. I think the trigger was the reduction of the US GDP, which, coupled with the political situation, triggered of the lowering of the rating of the Treasuries by S&P. I think that caused the selling of equities by institutions holding T’s for reserves. The logic for that is you need more reserves, you can’t buy China treasuries, nobody except the ECB wants European T’s, so people are still moving to US T’s as the safest bet. And dollars. So selling Equities gives you dollars, and maybe you buy T’’s. And, as we know, US T’s have the highest reserve factor, next to the dollar (We did see some buying of the dollar the last few days, as well as T’s)

Thus entereth the HFT’s which can smell weakness or strength, and start their fishing, this time finding and reinforcing a weakening trend. Then it’s logical that we would see margin calls for heavily leveraged funds, which could explain yesterday's volumes.

What does the near-term future hold? I think it’s back to the usual low-volume, and I think we’ll see some more leverage bringing in money to the market, albeit slowly. There’s not real good reason to move forcefully into an investment position right now. So a trickle up makes sense to me.

We saw a double-top of the VXX at 36. The VXX at 36 might be a good place to start a small short. We could see that drop 10 points quite quickly.

But I think we'll go through this with time and price. Dastro's timeframe of a rally mid-month makes sense to me.

I've started to go long again, looking for those W formations and getting started.

Tuesday, August 9, 2011

Where's the party?

Hello everybody

Well I don't have too much to say because I said it in advance the past two weeks.

The giddiness that unnerved me I think it was solved.If any remained, yesterday at the close, it was smack out of people's faces for sure. The panic mode was palpable.

Regarding my mentioning two weeks ago about a 1931-32 kind of move (but not that drastic) well I think that this two weeks were a really good primer about what the greater generation endured.

And we are now at August 9th so between today and Friday we can have a rally or at least a bottoming process which I'm going to follow closer than the past weeks movements. Still out and in no rush at all.

On a political-financial note I have to admit that this standard & poor's dudes did a good hit job, like they did in 2007 luring lots and lots of foreign investors in their racket.

Now, remaining true to their very core principles it's time to attack USA. Did they got help in this sad outcome?

Of course there were a lot of sinister actors involved, but I always remember fondly the inestimable help that George W Bush provided (some democrats too for sure) who took the debt from 4.1 trillion in 2000 to 9.1 trillion when he left office. To me he is the epitome of a traitor.

Why?

Because you have to badly weaken and corner a strong and proud nation before the ransacking goes full steam.Using for almost doubling the debt, the Irak war. A "preemptive war", which means we attack just in case, but there's not a relevant cause whatsoever.

So they succeded augmenting the debt, and a nation this indebted starts to only expect less and less. Just not being badly mistreated, or beaten up too much starts becoming the good outcome for the population.

Doubling the debt burden put her on her knees, and once proud it just fucking stop complaining and now is starting to open her mouth to entertain the creditors.

I'm sick to my stomach but that is probably the great legacy of "The Uniter".



Dan

Friday, August 5, 2011

Friday Open Thread


Dedicated To Rock - Welcome Home Buddy!

Wednesday, August 3, 2011

No Herds Update

I was hoping to give a herds update with a positive view, but after reviewing the charts, there’s nothing I can recommend except to wait for the downtrend to break.

Or short the market...

Rock’s been short since the handle formed in the S&P cup-and-handle on the 25th, and I’ve given a comment identifying weakness possibilities.

From a relative strength point of view, you could hide in IAU or GLD. They look like the only thing that “looks like up to me”. There are a few others, like MOS, the foods, and the oils that have good relative strength, but there is no herd on my herd list that is trading up (except golds).

Yesterday, we broke below the cup low of 1261 we got on 6/19. I ws only able to trade the morning pop, and did well, but I sure wish I was around in the afternoon to take the plunge on the short side. Remember, if you’re playing the short side, everybody is against you, so be very very careful.

I have 2 other comments to make. First, the Bernank is brilliant. He has lowered the dollar’s value so our market went up nearing the point we were at before the Great Capitualization of 2008. But, no matter how he played QE2, he couldn’t stop the Great European Weakness. Good try, Bernank. And it’s almost funny, so many people don’t get it. The president of Brazil said he was waiting for Obama to ask him for a loan. Clueless.

The second comment is that countries like Greece, who are about to default, are equally brilliant. They have figured out how to tax other countries and their people for things they don’t have money of their own to buy. The ultimate use of OPM. And, like the US, whose spending cuts amount to a mere pittance, the only ones who will suffer are not the ones making the profits, but the talking heads: the incumbent politicians.

I wish I could give an update for when I think the market will turn, like Dastro, but I can’t. I just let the market tell me by the price and volume action. When the trend changes, I’ll change. In my investment accounts I’ve been stopped out and simply went into GLD and IAU. So they’re doing OK, not great. In my trading account, I’m just following the short-term trend, so it too is doing well. It’s doing much better now that I don’t stay in overnight.

So to summarize, I’ve moved into the golds, I’m selling the rips, and I’m watching the chemicals and foods for signs of a turn.

Tuesday, August 2, 2011

Chess game

Past week I mentioned that what unnerved me about the stock market was the giddy assumption that because we are not going to default the market was going to go up. It didn't.

It fell around 5% in a week due to the bullishness that still permeated around waiting for big brother or even dad coming to the rescue, that kind of emotional certaintiy tends to increase the chance to get fleeced, in the short term, even though the rationality of the argument looks solid.

No final agreement yet but the wheels in Washington started turning again to solve one big problem so the first hint of some kind of accord would have set the market rallying.

Astrology at this point tells me that things don't look that easy.

Anyway the first chance for a turning point albeit small was Saturday 30th.Of course with the market closed I checked Sunday and yesterday and no meaningfull reversal.

So what now?

Probably a bottoming process. Maybe we have a fake move up a couple days and a turn back down sounding like crap is going to hit the fan and by August 9-12th we are rescued and we have a rally.

This is my preferred view right now. I doubt a multimonth continuation to the downside right now.

Of course the second option lurking is that we don't do anything meaningfull for an entire week and then big drop ensues. It very well could be the case but still I don't see that a multimonth top is already in.I think we need to get first to a point of luring a lot more people that everything is this time seriously going to go fine; at that point chances of a bigger drop will be more solid in my view. But to convince people things have to improve noticeably, and is not too probable now.

Is a conundrum.

Right now Obama just won.So the debt solution is going to spur the market maybe after the 9th.

Why I did say Obama won? Am I crazy? Such weak display from the president "throwing under the bus" a lot of cherished programs for the middle class and the poor can be seen as a victory? Why not say the Tea Partiers won through persistence about their approach to solve the debt problem?

Because our dear leader ended up aligned with 72% of the population, who in one of the last polls supported tax increases (or restored the historical mean 18% of GDP) and everything solved.

Instead, and regrettably he couldn't regaled us with a better feast for the eyes because he unfortunately got against the ropes and even though he fought bravely for America's main street interests, sweating heavily in trying to conquer what this 72% of the population wanted withouth pause, he unfortunately got subdued and defeated by a group of radicals with the help of some Republicans that don't want tax increases for the rich.

What this means?

That in order to win you have to know how to lose, or more accurately, don't being too narcisistic in any lose. Now the 72% of the population will have to avenge this threat to remove the safety net and yes we can, we can win in one and one way only, in just 15 months we can restart our way to prosperity because we got the numbers, we got the power of our votes, yayyy!!!...about the rest I think you get the picture.

He ended up with the 72% and radicals ended up with 1% (the rich guys) and above all, wanting to hurt the 72% for the fun of it and reckless about collapse.

For that reason I think he won. People are going to be very occupied trying to prevent benefits being cut or denied, to pay attention to some other Democrat contender. So he probably averted a Democrat challenger.

Will see what happen.

Dan