Wednesday, August 31, 2011

31 Aug 2011

Mostly ran out of steam today despite a good open.  This is as expected considering my short term indicator.
Remains overbought.  However, remember that we like to look for divergences in consecutive peaks before taking large action.  As was the case last fall, this remained in positive territory for a long time.  Personally, I got out of the positions that showed profits of only 0 - 4% to keep them from falling and taking MY money away.  I may be premature, but I don't care. Remember, paper profits can slip away at times, but it is far worse to lose your own money.
No longer oversold in the medium term.  Like last summer, I'd expect this to flatten out and try again at the hold short peak, but no two times are the exactly the same.

"Speculators in stock markets have lost money. But I believe that it is a safe statement that the money lost by speculators alone is small compared with the gigantic sums lost by so-called investors who have let their investments ride."
Jesse Livermore

Tuesday, August 30, 2011

30 Aug 2011

 Getting near normal levels for medium term.
As overbought in the short term as we have been for the last two years.

Anyone else notice how that during the last stock market panic sell off that the dollar did not rise?  Is this troubling to anyone else?

29 Aug 2011 (Night)

 Still oversold in medium term.
Overbought in short term, but I think everyone with a brain figured that out.

Likely oversold in the long term.  Not much data here - seems we are flattening out.
There is a positive divergence (although there was a negative divergence in the bottom) from the previous (most recent) "peak" in the McClellan Summation Index.  Please note that TSV in the shortest term is getting quite high, but doesn't appear to have topped yet.  TSV actually has nothing to do with this as its a volume indicator, but it does seem to give a "timing" aspect to these cycles.

Monday, August 29, 2011

29 Aug 2011

Sorry for no post last night.  As of Friday, my short term indicator is not yet overbought at 75% hold long.  It looks as though we'll gap up today so I'm guessing we will reach overbought status in the short term today.

In the medium term, we are still at 82% hold short which is considered oversold based on the short amount of time I have kept this data.

Thursday, August 25, 2011

25 Aug 2011

 This slowed and hold long is around 55% today.
Hold short decreased today slightly.

I don't have any clue about what will happen tomorrow.  I do know a few things:  my short term indicator has slowed and seemingly peaked out.  Maybe it will head negative again.  GDX held my support of 60 so far.  Gold sell off could have come in time for a large announcement to give some cushion to prevent it reaching 2000.  Looks somewhat like indexes want to challenge lows.  Considering how oversold a lot of stuff is, I would be surprised if they broke substantially lower than that.

Best of luck.

Tuesday, August 23, 2011

23 Aug 2011

 Positive divergence from previous bottom.
 Hold short medium term decreased today.
Hold short short term decreased today.

Sorry I was overly excited about GDX last night.  It should probably test the resistance line that it broke if it is truly going to have enough momentum to break out of this range.   This will occur around 60.  This also makes it look like the cup with handle pattern.  If the facts change, I will change my opinion.

Monday, August 22, 2011

22 Aug 2011

 Appears to be an unsuccessful challenge.  This will still take time though.  See last summer.
Still oversold in the short term.  Appears to be slowing.

 New lows at an extreme divergence from the last peak.
Hold long long term still falling.  Unfortunately, don't have much historical data for this.  I'm going to guess
 extremes are probably 70% and up.

There are some indicators that some stocks are starting to have less violent declines (not necessarily strengthen).  I don't anticipate our economic woes to be solved at all any time soon, and we still aren't at extremely cheap levels.  Therefore, if we buy anything, we are mainly looking for medium term profits.

This is a big surprise to me:$BDI&p=D&b=5&g=0&id=p59175130721

GDX has decisively broken out of the trendline that was forming a head and shoulders.  The bearish pattern which has seemingly turned into a bullish launching pattern.  Pay no attention to the black box on the left...
As hard as it may seem to believe in buying here, even if gold reaches the plateau I predicted of $2000 before a consolidation, these miners will start producing more of the higher grade reserves at higher prices causing their earnings to increase greatly.

RJA has also broken out of its negative trendline.

"…the United States has experienced high rates of inflation in the past and appears to be running the same type of fiscal policies that engendered hyperinflations in 20 countries over the past century."
-- Laurance Kotlikoff, Federal Reserve Bank of St Louis "Review", July/Aug 2006

"Bankruptcies of governments have, on the whole, done less harm to mankind than their ability to raise loans."
-- R. H. Tawney, Religion and the Rise of Capitalism, 1926

Thursday, August 18, 2011

17 Aug 2011

Like a broken record, the medium term remains oversold.  After such a sell off, i would be surprised that this doesn't try again (hold short) at highs before descending back to 50%, but who knows with the market.
Still overbought in the short term.

I thought I posted this post last night, but here I see it is still in editor.  I would buy if hold short short term went back for new highs and it reached a lower height along with the medium term.  GDX is having trouble with one of my resistance lines.

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K."
-- Eddie George, Governor Bank of England, in a conversation with Nicholas J. Morrell, CEO of Lonmin, September 1999

Tuesday, August 16, 2011

16 Aug 2011

As the hold longs went up today somehow, this also went up as technical indicators have not caught up with the move.
 Medium term oversold.
 Short term overbought - more than yesterday.

"The Central Intelligence Agency owns everyone of any significance in the major media."
-- William Colby, (1920-1996) former Director of the CIA. Source: in Derailing Democracy: The America the Media Don’t Want You to See (2000), by Dave McGowan

"The conscious and intelligent manipulation of the organized habits and opinions of the [public] is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country."
-- Edward Bernays (1891-1995) "Father" of modern public relations (PR) and director of the U.S. Committee on Public Information during World War I, on government propaganda. Source: writing in "Propaganda" from "Food & Water Journal'' (1928)

Why is the power structure so afraid of Ron Paul?  Because he is right?

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Monday, August 15, 2011

15 August 2011

 McClellan summation index posted a green candle today.  Its acceleration (green) line is clearly off the charts.  This shows that the velocity (orange line) likely will not continue to increase at this rate.
 My contrarian hold long / hold short indicator is based on the shortest period (below) and is designed to show when price has out run technical indicators.  It works sometimes at catching whipsaws.  Other times it can occur right at the bottom (mainly 2009).
 Still oversold in medium term.
Near overbought in short term.

Looks like a nasty whip saw is possible, but there may be some more room to the upside.  Aren't you glad I kept you from opening new shorts last week.  I closed the few longs I had (RIC, NSU) opened at Friday close so I missed out on the gains today.

"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've read a lot of the deflationist anti-gold blogs.  This quote reminds me of them.  I don't understand why those people think the debt will ever be paid back in present value dollars or at all.  It is a huge circle of debt that everyone owes one another.  Why would someone scramble for cash to pay another back that also owes them?  How will citizens pay it back? They won't.  When central banks can loan money into existence ad infinitum, why would they allow their croney buddies to go belly up through debt deflation? 

I'm no economics expert, but seems that they all know the charade is up and they are scrambling for real assets like gold.  I guess Orwell was right, to see what is right in front of one's face requires constant effort.  In the book Popular Delusions and the Madness of Crowds, all the wealthy smart people recognized that all the paper they had accumulated via a credit bubble wasn't real and they always started to convert it into something real to get out of dodge before politicians go on a witch hunt after the speculative bubble crashes.  This isn't a new thing, and this process has been happening since 2001.  It has been in slow motion.

Thursday, August 11, 2011

11 Aug 2011

 I like to let this one challenge a previous value before I trade off of it.  You miss the beginning of the move, but you get whipsawed less.
Shows that the weakness has been getting more prevalent since Sept 21, 2009.  No idea what happened that day it peaked.
Despite what it seems, the McClellan Oscillator has actually climbed most of the last few trading days.  I'd like to see a positive divergence on this bottom as well before heavily investing in the move.

The decision to ban short selling in Europe is absolutely idiotic.  But, what else can we expect?  Short sellers are the only people that buy in the face of panic.  For example, I was buying to cover at the close of Monday and the close Wednesday.  They also aid rallies as they are squeezed and close at losses.  You could say people like me caused the crash in the first place, but I shorted this crap months ago when the market kept going up, and I stayed patient.  I didn't complain about the long that I sold shares to that was immediately up after I sold them to them.

"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls . . . become 'profiteers', who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished not less than the proletariat. As the inflation proceeds . . . all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless."
-- John Maynard Keynes, "The Economic Consequences of the Peace", pages 220-223 (1919).

Wednesday, August 10, 2011

10 Aug 2011

Dow closed at new lows.  VIX did not close at new highs.  Mc Oscillator did not close at new lows, and obviously my short term hold short  indicator also did not close at new highs.  I still expect violent moves to both sides, and this won't resolve itself until it calms down some.  If you cannot tolerate short term pain, now is not the time to be taking new positions to either side, and from a purely odds perspective, I'd avoid opening new shorts here.

Markets are irrational because humans are.  They will do odd things.

Gold is getting quite high.  I do think it will hit 2000 before it enters a serious correction.  GDX looks to be consolidating.

Quite a few stocks 2 standard deviations below their 200 day moving average.

"We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power."
Alan Greenspan (Chairman of the Federal Reserve US Central Bank), appearing before the Senate Banking Committee on February 15, 2005, in response to Democratic Senator Jack Reed of Rhode Island on the topic of funding Social Security

Monday, August 8, 2011

8 Aug 2011

 Long decline from the peak around November of last year.  Remember when I always said that the indexes don't really matter because they will end up catching up to the breadth.  These past few weeks have been the catching up.  TSV is very low, but can go lower.  See white line.
 Despite the meltdown in risk, the dollar can't get any traction as both it and the Euro are in a race to the bottom.  The Swiss Franc is essentially going vertical. 
 Gold has been marching upwards.  Nearing fourth standard deviation and my red trendline.  If this is not in Log (see bottom right corner of price chart) then it has already broken through the trend line.  Pick one.
 VIX is actually hitting its 500 day 4 std Bollinger band. Insane.  Remember 3 std is 99.7% of the time.  Yes, it turns out that I did predict shit hitting the fan.  It seems a lot of other people did too.
 Still more stocks in long term hold long (50 ema over 200 ema) patterns.  I imagine that won't last much longer. 
 Hold short short term very high.  Highest ever.
Hold short medium highest ever too.

Now that I post pretty much only charts I do want to bring this up.  Remember when my alter-ego ran this blog in late 2009 and 2010, and I would complain that pumping stock prices and manipulating the economy higher through things like low interest rates, QE, TARP, Cash for Clunkers and the Home Buyers Tax Credit would only raise the cost structure, encourage capital flight and eventually in a lack of bids when people realized the economy, congress, and Bernanke have no pants and stuff would fall extremely fast.  It appears that is happening.  But the flight to safety isn't to the US dollar which we at least had happen in 2008. 

Tomorrow, the Fed minutes are released.  I don't really know many options he has because he has painted himself into a corner.  Instead of dealing with pain from a lower level, we are now dealing with it at a higher level.  Remember that it is easier to "manipulate" Dow at 5K than it is at 10K.  The dollar can't rally against the Euro in the face of extreme risk-weakness and tons of bad economic news out of Europe.  Fortunately, treasuries have rallied so the government can auction off tons of debt at low interest rates - this paves the way for more monetization.  However, gold is calling the bluff of the govt and central bankers.  Maybe gold is just rising in anticipation of QE3 and it will be a sell on the news event.  Who knows?  What options does he have?  Negative interest rates?

I'm glad that my clients and I are out of the market and have been since mid July (and mostly out in April) when I rode the last relief rally.

"You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets."
Peter Lynch

Good luck.

Thursday, August 4, 2011

4 Aug 2011

Well.  If you stuck with me, you should at least not have been invested during today's rout - maybe you still had some residual shorts as I did on FREE and HTZ.

Yeah, I am guilty of always closing positions early.  I was short almost all the Europe banks (LYG, RBS, ING, STD, NBG, AIB, BCS) and know that I said BAC and C looked like shorts (in Feb) from Feb to June and disclosed some of those positions.  At one point, I was 200% short.  Turns out I closed way too early!  But whatever, this is a learning process.  Keeping profits is nice on shorts, but longs are where we need to get rich because of the math.  Max gain on short = 100% and the rate of return decays.  Max gain on long = Infinite (in the case of gold in about five years).  Always do today what everyone else will do tomorrow.

Anyways, enough of that garbage, where are we at compared to historical precedents.

 Hold short medium not at an all time high yet.
Hold short short term is quite high and passed the most recent high, but only slightly despite the indexes being 5% lower.

 Notice that this has only hit its Bollinger Band (200 day, 3 std) and not bounced once in the past four years.

New lows are jumping up.  Notice that the Dow is substantially higher than during the first Greek crisis, but we are making more yearly lows than we were then.  This shows substantial underlying weakness in case it isn't obvious.

And the chart that told us things might get bad around the end of July.  No, I don't have a revisionist history, that is the same line.  Currently the VIX is hitting its fourth standard deviation.  This looks similar to August 2007 where my cursor is.  It COULD get substantially worse before it gets better. 

My posts about VIX breaking out of that trendline that I talked about for months, and all hell breaking loose were quite clairvoyant.  Here is one of my recent "Get the F*ck Out post.  Yes, pounding my chest even though I didn't profit much from it.

So what does this all tell you? 
a) that this move is getting historically extreme. 
b) no, that doesn't mean it is time to buy.
c) that shit is really bad.
d) that if and only if, things calm down and McClellan flattens and heads upwards as well as if we get divergences on my indicators that it MIGHT be time to buy for medium term trades.  I will try to post actual tickers that I'm buying when that time comes. 

I personally won't be initiating new shorts here, but may if we bounce some. 

"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works".
John Stuart Mill

Wednesday, August 3, 2011

3 Aug 2011

 Hold long short term still bouncing.  Remember I like to buy (or sell) when this challenges a recent low (high) and stops above (below) it - not during the first low (high).  Oversold (overbought) conditions can persist for longer than one can remain comfortable.
Hold short medium term continues to rally.$NASI&p=D&yr=3&mn=0&dy=0&id=p10664371281
This is interesting.  As you can see, it is still substantially above recent lows. 

The NYSI doesn't exhibit the same behavior, but it is similar.$NYSI&p=D&yr=3&mn=0&dy=0&id=p76347066662

To summarize, I wouldn't be buying ... yet.  I wouldn't be continuing to open new short sales either.  I know that is fence sitting, and boring, but it is safe.

Tuesday, August 2, 2011

2 Aug 2011

Oddly enough.  Hold long in the short term increased today.  I'm guessing it was mostly gold and silver stocks.
Hold short increased in the medium term.  3% away from overbought levels.  The only time higher would be the first Greek crisis.

VIX did not make a new high today despite indexes making new lows.