Thursday, June 30, 2011

30 June 2011

 At 50%.
 Overbought in the short term.
If Greece were to default today, their entire history of borrowing equals the above amount created by the Fed Reserve the past year.  Considering their GDP, a worthless economic indicator because it is measured in currency units, is less than their total debt, this makes the above chart even more amazing.


Wednesday, June 29, 2011

29 June 2011

 TSV has some room to travel still.  Solid move today on the index itself.
 Broken increasing trend of hold short in the medium term.
Hold long at 71% in the short term.

Interesting video:

Tuesday, June 28, 2011

28 June 2011

Working back to neutral in the medium term.  It looks like there was somewhat of a trendline connecting the valleys of my index as 'Hold Short' rallied.  We are close to breaking down through that.
 Not overbought in the short term, but close.
TSV positive and already heading for neutral in the shortest term configuration I use.

Sunday, June 26, 2011

26 June 2011

 Dow from 1977 - 1999.  A great bull market.
Gold from 2005 - 2011.  Notice the tightening lately and my trendline that seemed to broken last week beneath it.  Also notice how far it is above its 200 week moving average.  During the Dow's bull market above, the 200 week moving average served as support a couple times - 1987 and 1990.  In 1990 it was about a 25% decline. 

If my predicted cycles are true for both gold (mimicking the stock bull market from 82 - 99), gold could very well decline 25% from here where it would find support around 1200 which I'm guessing is where the 200 week moving average would be at that time.  However, it is unlikely if the bailout bonanza (borrow till we're rich mentality) continues.

Sorry about stocks on Friday, but as my indicator said, they were overbought in the short-term.

Thursday, June 23, 2011

23 June 2011

I may pretend that I know why things happen, but I am certain that I don't know why in most cases.

When I saw the Dow was down 200+ points, I started to doubt my theory and feel like a jackass because if things were getting better, the strength shouldn't be followed by that much weakness.  But, then I remembered that there is usually that day that makes all stocks look like they are breaking their W pattern to make new lows on the right side, and they some how climb back because there aren't many sellers left.

The market has declined 7% as it has digested a lot of that stuff for a long time - the end of QE, Greece, and the possibility of a double-dip.  The market has a huge turning radius - except for fall 2008 and 1987.  Plus, with Bernanke creating more debt money than has ever been created, the illusion of nominal GDP growth can be maintained for some time especially with Obama using EMERGENCY oil reserves during non-emergency times.  Unless there is an emergency, and I don't know about it.

I came home from work to make my decisions - bail longs and open shorts? 

I only evaluate the market once a day for about 30 minutes during a late lunch so I only check a few things.  The end of the day is the best time.  I noticed SMH had bounced hard on good volume to be back above long term support.  Then I noticed the Nasdaq was only down 3.  I saw that the Mc Oscillator was nowhere near last week's lows.  I saw that my short-term indicator had declined quite a bit (7%) and then climbed back to actually being up on the day.
 This was down, but finished up on the day.  (Un)fortunately, it can still be considered nearly overbought.

Markets are irrational.  Just like most humans, including myself.  I don't know why they don't seem to care about Greece any more, but they don't.  Maybe it is because countries have been going bankrupt for hundreds of years and yet we all still managed to survive.  Don't get me wrong:  a lot of stuff is terrible and those in charge have put forward very little solutions to fixing the world's economic imbalances.  But, it seems the stock market can run on liquidity fumes for some time.  See 2006 - 2007 charts as the Fed Fund interest rates were increasing, yet it went up.
 I did not move my line.  VIX closed below it.
Medium term's decline slowed a bit today. 

Gold showed a lot of weakness today and broke one of my trendlines.  It is still above the 50 day EMA.

"The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson. History depicts Andrew Jackson as the last truly honorable and incorruptible American president."
Franklin D. Roosevelt (1882-1945), 32nd US President, Date: November 21, 1933, Source: in a letter written to Colonel E. Mandell House

"One... with courage makes a majority."
-- Andrew Jackson

Wednesday, June 22, 2011

Tuesday, June 21, 2011

21 June 2011

 I expect the Dow to encounter resistance at this downward trending line.  If it breaks through with ease, it will then likely become support.
 Considering the McClellan Oscillator, we are not yet overbought in the short-term.  Today's reading was quite high though.
 Still oversold in the medium term.
Nearing overbought in the short term.

I have noticed that I receive a lot more hits when I become bearish and a lot less when I become "bullish."  When I started saying things were oversold about a week and a half ago, it could have been perceived as bullishness (and that isn't acceptable on "bear" blogs) or that I was wrong.  But guess what?  We are higher now than we were when I said that.  But, people have already stopped coming.  Thank you to the faithful.

Considering my current pride with calling this short-term turning point so far, I am going to remain cautious.  Pride cometh before a fall. 

It is very hard to convince the mind to do what seems like the exact wrong thing.  Therefore, I like to think trading is like picking fruit or driving on the highway.  You want to pick fruit that will look good in a few days - you don't care that it is green or hard right now.  It doesn't always work out, but your odds are a lot better if you think this way.

On the highway, if you see a red light in the distance, you should accelerate because the odds are that the light will change before you get there.  If you see a green light in the distance, you should throw your car in neutral and start coasting to save gas because it will likely be red by the time you get there.  It doesn't always work out because each highway is different, but the odds are better of what I described happening than the opposite.

I am frequently amazed at how few people think like this, and they stay full speed up until they are within 200 meters of the light and then slam on the brakes.  Whatever.. each person is blessed with the ability to think whether they want to or not.

Best of luck - and remember, my current pride is making me cautious along with the descending trendline of the major indices.

"The mark of your ignorance is the depth of your belief in injustice and tragedy. What the caterpillar calls the end of the world, the Master calls the butterfly."
Richard Bach

Sunday, June 19, 2011

19 June 2011

If Greece defaults and no one cares, will it make a "Lehman?"

For about a year, I've thought that Greece and many other countries with insurmountable debt should just default.

Granted, from a Libertarian standpoint, this doesn't pass the "every man shall do as he says he will" test. However, the money lent was created out of thin air to be lent to the Greek government. It was not truly "Capital" that belonged to someone else - well maybe 1/8th or up to 1/40th of it was. It was merely a ledger entry allowed by fractional reserve banking. How can any person, any government or any corporation pay back money that never existed until it was lent and spent?

Anyways, the slow motion train wreck of Greece has allowed most of the passengers to bail. NBG is already 1.34 a share. I'm not sure, but I'd assume most people/banks that owned the debt have already tried to sell it for whatever they can get - probably the reason new auctions are fetching 25%+.

Lehman, for most of the world, was a huge surprise - it slowly crept up and them bam, the whole world changed over night. However, a few of the people that paid a lot of attention to bank balance sheets knew it was coming and predicted such - especially one of my mentors who also predicted the BSC implosion.

Greece has now given us almost a year and a half. Slightly like Argentina from 1999 - 2002.  Make sure you notice the "poverty levels" before and after the default.  Also, pay attention to the statement that the gap between the top 10% and bottom 10% widened between 2001 and 2005 despite a default.  I was in high school in 2002 so I really paid no attention to this.  I'm sure some people reading this remember it. Keep in mind the tech bubble was also actively imploding at this time. 

 They defaulted in mid January from what I can find.  Note how the market actually bottomed around that time and headed up for a few months.  Another case of "buy (sell) the rumor, sell (buy) the news?"  The market just isn't as simple as reacting to events after they happen.  However, I'm not bullish.  I don't think things are good, and I do think that Spain will be the surprise of the summer.  I'm just trying to be realistic that nothing goes in a straight line.

 Medium term - Oversold
 Short term - working off Oversold condition.  The market has tried to get a foothold and it has been coming up short lately.
I circled instances since 2007 where the McClellan has declined for more points than it has now.  It has currently declined around 2500 points (2000 to -500).  Also, notice the white line on my medium term TSV marking previous extremes.

Best of luck. Trade with caution to both sides, and remain nimble.  VIX still remains spiked out of my descending triangle.

"The ideas which now pass for brilliant innovations and advances are in fact mere revivals of ancient errors, and a further proof of the dictum that those who are ignorant of the past are condemned to repeat it."
Henry Hazlitt

Thursday, June 16, 2011

16 June 2011

Well, I imagine my followers are falling off faster than Wikileaks'. 

Look, I've been wrong recently - about for a week and two percent now.  I don't feel good about it, but I must keep updating my charts and providing information.  I apologize if you went long and lost some money - to be fair, I never advocate buying when I'm closing shorts because I generally close early.  I apologize if you refused to short last week because of my information.

 Shortest term TSV (middle) at very low levels.  I drew lines aligning previous bottoms to the index itself.
 You can see that the Nasdaq fought back to hold its long term support line (2009, 2010, and now)
 Same as above, but longer term and this is the NYSE.
 Hold long short term went up today.

Hold long medium term went down today.

VIX went up again today, but seemed to run out of steam somewhat.  If this contagion really continues to spread quickly over the next week or so, then all bets are off for the VIX continuing to be contained by my trend line.

This video is unreal. I can't wait to vote in another "election" with no one to vote for.

"Democracy is a pathetic belief in the collective wisdom of individual ignorance."
H.L Mencken

Wednesday, June 15, 2011

15 June 2011

I received an email from a well-respected friend today telling me he bailed out of all of his stocks (and I needed to as well) because the market is going to crash.

I laughed a bit because the time to sell was 7% ago.  Granted, in terms of years or months, he will probably end up being right.  I am a perfectionist, and one thing I always avoid is chasing a mature trend for pennies only to regret it two days later. 

VIX broke my trendline today and closed above its upper Bollinger Band.  This really could explode now - especially if other signals weren't so oversold. Note that my trendline gives some room for overshooting.  This is definitely earlier than I thought it would happen, but as I always say, anything can happen.  RBS and STD both lost the long-term support I talked about last week, but we can maybe get a better entry on those.
 Medium term extended.
McClellan Oscillator closed substantially higher than its last low despite the indexes making new lows.  Bullish divergence.
A bounce in the short term hold short.  Looks like a retrace to me.

Some silver equities are maintaining strength - see GPL.  GDX also didn't close at new lows today.

Dollar has broken long term resistance line.

"Bankruptcies of governments have, on the whole, done less harm to mankind than their ability to raise loans."
R. H. Tawney

He might have underestimated the size and influence modern governments would end up having.

Tuesday, June 14, 2011

14 June 2011

 VIX seems to have been rejected by my trendline and the 200 day EMA.
 Medium term might be finally rolling over.
Today did substantial work to eliminating the oversold condition in the short term.  There is still a ways to go back to the positive side though.

Notice that I was three days early.  However, I still can't take credit because the indexes still aren't above where they were when I said that.  Tomorrow could be interesting because of the Greek vote - pending its delay to July or not as well.

One of my favorites:
"If you owe your banker a thousand pounds, you are at his mercy. If you owe your banker a million pounds, he is at your mercy."
John Maynard Keynes

I guess the problem comes when you've promised other people a million pounds and the bank will no longer loan the money into existence unless you play by their rules.

Monday, June 13, 2011

13 June 2011

For some reason I have been dumping my brain on the web tonight - turning into former self again.  I apologize.

I don't like to talk much on this site because I have found most knowledge transient.  I'll think I know something and then it turns out wrong.  The game almost always changes before knowledge can make me wise.  I guess wisdom could be admitting that change is the only constant.  That way I can continue learning. 

 Well, this new indicator has been quite successful for us recently.  It isn't telling us much now though.
 Medium term hold short went up a bit more today.
Short term hold short went up a bit again today. 

VIX closed outside its 2 std dev bollinger band today.  Usually a bearish signal.  It does have some momentum heading for my long-term resistance trend line.  I previously concluded that it would not break this resistance until it thoroughly tightened through July.  In the event of a failed Greek bailout, I could be eating my words.  I would say I'm sorry, but I have been bearish since February so it is not like I led you that far astray with this one prediction.
The McClellan Summation Index got destroyed today again.  Notice that the rate of change (orange) is outside its two std dev line.  I circled the peaks and current spot of the index itself because it is hard to see with the lines all over the place.  The first circle on the left is where I started getting really bearish - I'm surprised all my followers didn't stop coming as the thin indexes kept marching up for a few more months.

Oh yeah, I put together industry performance information over the weekend.  Pretty much all the leaders are medical, wholesale, or major discount chains.  This tells me we are nearing the end of the third phase and into the fourth phase (late) of economic expansion.  Every situation is different, but the odds can help give us some certainty.

Best of luck.


"A society of sheep must in time beget a government of wolves."
 Bertrand de Jouvenel

Thursday, June 9, 2011

9 June 2011

Of course the Greek bailout would come on 6/9/11 - and it was $130B where 13 is one of 3's vibrations.  Four of the "big" numbers according to   whether you think it is BS or not, this guy has made some solid predictions the past few years and his free reports are very good reading.

I like unconventional things.  That is probably why I bother to make my own indicators. 

 McClellan Oscillator seems ready to head upward.
 New lows seems to be heading down again.
 This barely went up today.  Will likely turn soon.
This obviously went down today from extremes.

Considering all of these things today and yesterday, it was very difficult to close most of my short sales.  VIX seemed to want to rally, but it just failed time after time.  I don't have any position in RBS any longer - it broke down, but rallied back above my line.  I do think that it might bounce back up to my top trendline and continue sideways (like the VIX) before it falls out of that range.  STD has a similar pattern.  I expect that what sets those off will be a Spanish debt crisis later this summer.  They could break upwards, and I will report that as hell is freezing over, but with markets you really never know.

I am concerned that a few more shake out days might happen because I don't like being wrong even in the shortest term.  However, the odds are just too high that it will head up or at least go sideways for sometime considering the conditions and the presently "placated" Greece situation.  I'm sure some scares of that bailout will come from political action, but we all know who really runs politics, the banks.

I still am, of course, a precious metals bull.  I will be looking for miners who remained above their 200 day moving average that look like they want to take another shot at their highs. I will consider small cap energy as well because I believe we are late in this expansion phase.  Staples will start becoming good again as well.

"Bernanke is a disaster"
Jim Rogers