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

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