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Anti Gravity Equities
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Anti Gravity Equities

by The MoleApril 3, 2011

A very painful lesson the bears had to learn the hard way was that you can not fight the Fed – especially as a retail trader. In the very end – yes – they will get their way – I have no doubt about that. But most likely it will be an hollow victory as none of them will have any skin left in the game. We stainless steel rats however grab the crumbs that slip through the cracks – we don’t have pride and we have long given up on expecting any sense of justice. As the saying goes: don’t hate the player – hate the game.

I don’t have any huge revelations to make today – the main theme for this weekend update is to depict what/who is responsible for $4 gasoline and exploding food prices all over the world. From a trading perspective this is of course secondary but the scope of Banana Ben’s undertaking is so unprecedented that at some point it will produce dislocations across various markets, and that is something I want you all to be aware of.

When do I expect that to happen? Last year if you ask me, so please don’t ask me. Seriously we cannot possibly know as floating this turd is now a concerted effort of the global elite. I’m unfortunately not part of that crowd – maybe some day – and then I wouldn’t be able to tell all you rotten low-lifes 😉

So, in the past two years the name of the game has been to repeatedly flush ole’ bucky down the toilet, which per my SPX:GOLD ratio chart (posted last week) is solely responsible for the S&P trading at 1300. The poor Dollar has now become the official bitch boy of the FX world. Meanwhile neither financial scandals galore, Wikipedia disclosures, earth quakes, tsunamies, nuclear melt down in Japan, etc. have been able to pull the plug from Bennie’s anti gravity device. By the way – I think I know how he does it – let me demonstrate:

Let me walk you through this. A known fact from our experiences is that toast always lands butter side down. We also know that cats always land on their feet. If you put both of those together – voila! A perpetual anti gravity device. This is the same type of financial math Ben Bernanke must be using when expecting continued economic growth and financial stability by devaluing the Dollar like a mad monkey on rabies. Fat chance that any job growth or economic expansion will ever compensate for the printing of Trillions of Dollars in the past two years. If you believe that then I have some beach front property in Arizona you may be interested in.

Anyway, on to the charts – it’s a medley of perspectives focusing on the medium to long term. But I must warn you – it’s not a pretty sight…
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Charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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I guess Dollar bears readings in the upper 90 percentiles do not matter when you have a power drunk Fed chairmonkey running the printing presses. We slipped below that long term support line and where we’re heading from here is anyone’s guess. So far it’s lower lows and lower highs – and as charting purists we would have to see a push back above that line to not expect more of the same.

Silver – long term chart. Quite an eye opener when you realize what this chart really means. I mean almost every chart we look at each day is a ratio between a financial instrument and the Dollar. Does silver really buy you a lot more than it did back in 2000? Maybe by a reasonable margin – but NOT eight times as much, that’s for sure.

If you think the previous chart was bad then you better cover your eyes. I have drawn a line where Banana Ben re-launched the Fed’s POMO auctions and flooded primary dealers with cheap cash. Look what the gold:silver ratio did in response. Coincidence? I think not!

So, what are you saying Mole – we are going to continue upward forever?

No, not really. There will come the day that even POMO cash can’t stem the flow and when that day arrives you will probably want to be on some remote island with gold, bullets, and plenty of sweet water. May be tomorrow – may be five years from now. Just don’t come to mine – my evil lair will be heavily defended.

More medium term I am looking for patterns across my charts and see very few I like. A reasonable one is a possible repeat of the setup we saw last summer. We came out of a much deeper retracement then however and thus were propelled into the 2010 short squeeze from hell – the shorts are still feeling that one. The two rectangles mark a possible setup, and medium term it seems we are positioned for higher highs.

However, if we are to see a little retracement short term – either downward or sideways – then next week is probably the time. My NYA50:NYDNV chart has reached a resistance line – however it’s worth noting that despite the long signals being spot on the short setups have been spotty as of late. But the potential is there if the shorts are willing to take it.

As you all know by now – copper usually calls the shots when it comes to preceding moves in equities. And it has been the one big fly in my bullish ointment. That is what I call a divergence and although it’s possible that copper is going to turn any day now I don’t think equities will be able to ignore this in perpetuity.

Bottom Line:

Long term I am still bullish – still have not seen any evidence that would lead me to change my outlook. Medium term it’s reasonable to expect a little shake out, so I have a hard time being long anything but a few select equities right now. The real fun really is in FX – especially now that we have ZeroFX to guide as along. I also hope that Scott will decide to again post some of his setups (hint hint).

Cheers,

Mole

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About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • convictscott

    Great post Mole :) I'm back in the game this week and have setups to post

  • http://evilspeculator.com molecool

    About damn time, Doc Holiday! 😉

  • http://thebhbgroup.com TheBHBgroup

    great post Mole. I unloaded most of my personal longs on Friday and now I wait and watch for a good setup. If the mkt wants to go higher it will do so without me. But I am not shorting anything until I see some evidence that suggests selling has begun. So far all selling has had more volume than the up moves BUT in this pomo world those kinds of things dont seem to matter. I will comment more as I see things happen this week.

    cheers

    Jamie

  • http://chartsandthat.blogspot.com/ ultra

    Yo – nice post – not fighting anybody these days, let alone the Fed, the Boyz or the global elite.

    Some FX thoughts (repost from previous thread just now – bad timing!)

    Pretty big hammer on the Yen Friday. Pin outside both BBs too.

    http://stockcharts.com/h-sc/ui

    Mean-a-whiles, pretty much the same candle on the Swissie:

    http://stockcharts.com/h-sc/ui

    Ole Bucky failed to break the mid-Bollinger (again) – on guard for possible retrace from here.

    http://stockcharts.com/h-sc/ui

    // short setup brewing right now USDJPY 4 hr…

  • amokta

    Did you fly back or take a boat in the end :-)

  • http://chartsandthat.blogspot.com/ ultra

    Silver – interesting that mainstream interest seems to have peaked:

    http://news.google.com/archive

    [hat-tip for google archivesearch idea to scott's mate barry @ EMW]

    And yet it trundles higher – still embedded on the weekly, although it was an inside week last week – selling purely to the public at this point?

  • amokta

    Diveregence recent (24-48 hrs) price action – silve surges up, gold lags

  • http://chartsandthat.blogspot.com/ ultra

    Hammer there too Friday

    http://stockcharts.com/h-sc/ui

  • http://evilspeculator.com molecool

    That's the problem with equities right now – you can really only get positioned after retracements. After that it can either bubble higher for weeks or take a tumble as short term reversal signals are being ignored. Which is why FX has been a lot more fun in the past few months.

  • amokta

    There's still so called 'fundamental' case for silver / gold rising longterm thoguh

  • http://evilspeculator.com molecool

    PMs are like trains – they do not turn on a dime – takes them a while.

  • http://chartsandthat.blogspot.com/ ultra

    Fuck fundamentals – that's just the bullshit the economists come up with to explain everything after the fact 😉

  • amokta

    Had to throw that in as token counter argument for balance :-)

  • DarthTrader

    Silver tends to have Parabolic or Quasi Parabolic moves followed by sharp selloffs

    2004 – 8.43 to 5.52 in 4 weeks

    2006 – 15.21 to 9.46 in 5 weeks

    2008 – 21.34 to 16.63 in 1 week
    2008 – 19.46 to 8.41 in 15 weeks

    Each time you see the commercials building a large short position and the amateurs getting more and more bullish.

    I still think Silver pushes in 39 and maybe the 40's as well . . . Certainly could happen as things continue to change

  • http://practicalt.blogspot.com/ Gold_Gerb

    interesting, I conjured up this chart, before I saw your train comment.
    freaky.
    http://i53.tinypic.com/2zrdbgm
    must be that Matrix Thing again.

  • ruchiblack

    I appreciate your post. I also wrote that SMS advertising provides a cost effective method of targeting promotions to specific customer profiles. You might want to remind customers of specific events or promotions, but for whatever reasons, SMS allows you to pass information directly to the right customer at very affordable prices and fast delivery.
    stock tips

  • http://evilspeculator.com molecool

    I actually have my own SMS interface and could do this. BUT it's expensive – roughly 5 cents per SMS and email is a lot cheaper.

  • http://evilspeculator.com molecool

    Ahem – you just described my chart – LOL :-)

  • convictscott

    Mole check your email, the zerofx pattern im interested in is playing out now on the 4000t

    Scott

  • convictscott

    Flew a plane made in 1962

  • amokta

    This time its different?
    Silver to $100+?

  • finansreven

    Took a long 1.4214 eurusd based on this divergence. http://bildr.no/view/857235

    And mole, I know you want us to paper trade now when the zero is new, but I am crazy so can't do that. Position sizes are half the regular, though (my three first zero trades where quarter of the regular trades).

  • DarthTrader

    LOL I must be physic lol

    Think I'll resubscribing to Zero so I won't have to rely on my psychic prowess for your Evil Spec Gold re Silver

  • DarthTrader

    Actually most everyone knows the “Fundamental Case” but the problem with it is they doubt it most when they should believe it (at the cycle bottoms) and they believe it most when they should be discounting it (after a parabolic move) at the interim top. Also newsletter writers wax their most creatively bullish about the fundamental case at the interim top and are creatively bearish at the bottom. Unless you read these guys I posted here about 3 weeks ago they tend to be on the money.

    http://www.safehaven.com/artic

    http://www.321gold.com/editori

    http://www.321gold.com/editori

    http://www.safehaven.com/artic

  • amokta

    Thanks DarthVader – good articles from the Dark side!

  • ronebadger

    I haven't seen a comment in 2 hours, is this thing working?

  • DarthTrader

    AAPL has had strong selling volume this morning.

    So the question is . . . has it made a bottom in this 6 day sell off or is this merely a Bear Flag in today's sell off

  • BobbyLow

    Sometimes there is nothing to say especially when the “market” is just drifting.

  • BobbyLow

    OK it's slow. So how about the “market” rallies on this headline. Who says we can't create any “stinkin” jobs. There's a future for all of us out there working the graveyard shift at Mickey D's.

    “McDonald's wants to fill 50K jobs on hiring day”

    http://finance.yahoo.com/news/

  • tradingmom

    Triangle on the 5 min chart now (11:20 eastern)

  • Clint

    The market seems a little lethargic here…but still very dangerous,especially shorting indexes.Always seems to be a couple of stocks nosediving everyday,but it seems to randomly change day to day.Looks like the market wants to trickle up for a while on very selective sector rotation. No matter how good one's trading system is in this environment…you're going to need some luck to bag a winner.In 15 years of trading I don't think I've ever seen it tougher than this to “read”.

  • http://evilspeculator.com molecool

    The rats have been lazy lately – and it's not even summer yet!

  • http://evilspeculator.com molecool

    Sir – I happen to sleep at 2:00am – LOL :-)

  • http://evilspeculator.com molecool

    Hello echo!

  • amokta

    If i know silver, then i think AGQ (3xsilver bull) will hit 250 by end of week (currrently 234)

  • DarthTrader

    Agree on the $250ish That has been my target as it loosely corresponds with my Silver target of 39.84 on the ABC completion.

    However the AGQ is a 2x play on Silver . . .

  • amokta

    Ok! i thought AGQ was 3x play ('behaves' like it, i suppose in view of large moves in underlying). I think SPXU, and UPRO are 3 x etfs (for spx) so got confused

  • BobbyLow

    Chop and Slop – Slice and Dice

    Only 6.5 Billion to 8.5 Billion POMO today. That's not a bad price to pay for the 50,000 new jobs being created by McDonalds. McDonalds wants more stores open 24 Hours Per Day and the Grave Yard Shift looks particularly attractive. This way, I'll be able to keep my day job of trading stocks on the internet while I'm still waiting for P3. :)

    http://finance.yahoo.com/news/

  • skynard

    Dow knocking its head at 12,400

  • 99er

    Heads Up

    Latest forecast has all of California under radiation threat April 6, 7 — Shows levels as high as in Japan (VIDEO)
    April 4th, 2011 at 07:41 AM

  • captainboom

    Got a link to the source?

  • ds2

    Hi Mole. Busy weekend. 5 kids sporting events plus tried to catch up on all the NCAA March Madness games I missed. I expected today to be a little slow. No POMO on Fri.

  • amokta

    Knock knock knockin on 12,400s doo-oor.

  • 99er

    See link “enenews” above: Energy News.

  • amokta

    This site seems a bit alarmist. Not saying it aint true, but things can be made to look worse than the 'original' info source actually suggests

  • captainboom

    Thanks. So, the video shows potential releases? Is this nothing more than a computer model? Is it using hard data on an actual radioactive contamination plume in the atmosphere? If it's a model, it's nice to know, but I do think the site seems a bit alarmist.

    Here's the best site I've found for simple, detailed information. It doesn't have world weather info.

    http://www.jaif.or.jp/english/

  • skynard

    Looking for a drop to 1294-1300 area for potential IHS. See if it plays out?

  • http://chartsandthat.blogspot.com/ ultra

    So, SPX and NQ just sneaked a new low there but ES did not. Hmm. NQ looks to be at the more crucial point to me – support from slow & fast bollingers here on the 60, so if it goes we could get a nice juicy down move. IF.

  • Clint

    Well granted…that's not good news…but is it going to affect the stock market ? Or even certain stocks(?)..and if so…which one's (?) negatively or positively.

  • http://chartsandthat.blogspot.com/ ultra

    I'll repost this link for anyone who is concerned about their nuclear intake and wants to do something about it

    http://tinyurl.com/4ovd37q

  • volar

    that is how I am looking at it… that is a big wedge and wedges are usually 1's which you find in IHS.

    So could be nice swing trade

  • captainboom

    Looking like we'll get an inside day if /ES stays within today's high and low.

  • skynard

    Looking at the STOXX today it had played the same tune and failed.

  • skynard

    Three knocks and your out!;-)

  • http://chartsandthat.blogspot.com/ ultra

    Well today is already a good day – was stopped out of my USDJPY long for >9R – stops already set to neutral on NQ short, past 1R already.

    Dive, dive, dive, hopefully…

  • http://www.reddragonleo.com Red Dragon Leo

    Yep… my thoughts exactly. This puppy is very likely to make new highs before the bear wakes up. I have a target of 138.86 spy (about 1388 spx) for the high… after the brief dip for the right shoulder of course.

  • ds2

    Thanks Ultra – scary stuff!

  • DarthTrader

    Naz Bullish divergence

    /NQ has made a lower low but it's RSI has made a higher low and AAPL has made a higher low

    On 3/29 broke above the 50 day ma now it looks to be retesting.

    On 3/9 broke below 7 month up trend line . . . a rally from would take us up to retest that break.

    Seems there are lots of games to be played yet before anybody gets a satisfying move one way or other

  • Smiddywesson

    Nobody can figure this market out. Ben Bernanke is the ultimate super villain and his powers over technical analysis are like Kryptonite.

  • http://evilspeculator.com molecool

    Did you read my post?

  • raised_by_wolves

    Keep in mind that my Antikythera device is a bit rusted, but it predicts a major top in 2013, 2015, or 2017 like so. . . .

    http://content.screencast.com/

    http://www.themanyfacesofspace

  • Smiddywesson

    Yes it was hilarious!

    This market always floats up…
    Q: And what also always floats up???
    A: Wood!
    Q: And what else floats?
    A: A duck
    Q: And who is in charge of this market?
    A: Ben Bernanke
    Q: Then Ben Bernanke must be…hmmm?
    A: A duck!

    Simple scientific reasoning

  • BobbyLow

    Yep, it's total frigging insanity. He has declared war on Savers and seems to have no problem with +$4.00 Gasoline and Increased Food Prices. But his Chauffeur fills his Limo and Private Cook does his food shopping all while we foot the bill for everything.

  • DarthTrader

    His powers are being dismantled by his fellows on the Federal Reserve board and Jean Claude Trichet.

    Philadelphia Fed President Charles Plosser warned that “monetary policy will have to reverse course in the not-too-distant future and begin to remove the massive amount of accommodation it has supplied to the economy.” He added that “failure to do so in a timely manner could have serious consequences for inflation and economic stability.”

    Dallas Fed President Richard Fisher went even further, telling a European audience that “We’ve done enough” and “we’re at risk of doing too much.” Fisher even went so far as to say the Fed’s dual mandate of controlling inflation and boosting employment should be changed. He wants the Fed to have NO responsibility for employment, and to focus solely on inflation.

    Trichet has indicated that he will raise Euro rates 1 point this Thursday

    Change in the air

    Check back in May . . . see how he is doing

  • BobbyLow

    And it looks like the 3:10 Train to VWAP might have been right on time again.

  • convictscott

    me too mate :) I got 15R out of mine, that was a great trade!

  • Smiddywesson

    I claim the cat as my avatar.

    LOL

  • http://chartsandthat.blogspot.com/ ultra

    Nicely done mate!

  • OllyVaradi

    Good steal. Let's see how it looks on ya then.

  • BobbyLow

    Looks like the Lowest Volume Day for SPY since New Years Eve Day.

  • OllyVaradi

    Looks beautiful Smiddy. Your family should be real proud of you. It's a peach!

  • convictscott
  • BobbyLow

    I'll bet ya that after a bunch of pissing and moaning that they'll raise the limit just like every other time before this. I know it's just further insanity but there's talk about what needs to be done and then there's action upon doing what needs to be done. These two things are mutually exclusive in Washington.

  • raised_by_wolves

    It's six month old news that the legal debt limit would have to be raised by May-ish. The new news is the part about Geithner going from tough to REALLY TOUGH.

    Geithner to Congress: Raise the debt limit (and keep deficit spending) OR ELSE. . . .

  • amokta

    More crucially, if the ceiling isnt raised, i assume this is bad for silver,as every thing deflates/defaults (would be worldwide effect, as US default is not like iceland) ! Dollar would strengthen?

  • http://evilspeculator.com molecool

    Fucking insane – if you let them continue like this we are at 100T by 2015.

  • http://evilspeculator.com molecool

    I like your avatar :-)

  • volar

    I am starting to think the obvious is we default, the black swan would be we pay it off

  • amokta

    “The view was echoed by Jamie Dimon, the chief executive of J.P. Morgan Chase & Co.”
    -clearly a neutral observer

  • http://practicalt.blogspot.com/ Gold_Gerb

    are you going to start talking about panzer tanks?
    😉

  • http://practicalt.blogspot.com/ Gold_Gerb
  • http://practicalt.blogspot.com/ Gold_Gerb

    I'm thinking of selling avatars for profit.
    http://www.oricuss.com/picture

  • volar

    personally i like this one

    http://content.screencast.com/

  • Joe_Jones

    This one made me LOL for a while. Ha! I'll sub for that!