Now Reading
Do You Feel Lucky, Punk?

Do You Feel Lucky, Punk?

by The MoleOctober 22, 2010

If you’ve bothered to drop by here on a regular basis for whatever mysterious reason then you know that I rarely talk about gold. As a matter of fact in the past year I can recall only two occasions when I had a strong opinion about the shiny stuff. The first time was this May after I made a lot of new friends (cough cough) over on the SOH by announcing an imminent drop in precious metals and the other time was a week ago when I told everyone to get out of long positions.

The arrows mark those two occasions. Thing is – I don’t even care about gold – it’s a pain in the ass to trade and everyone I know doing it has been burned (either short or long). Maybe that’s why I have an easier time calling it – I don’t give a flying rectum about where it’s going. And neither do I care if all you lemmings drop over a cliff tomorrow Wiley Coyote style after having chased an exponential curve to the upside. The Mole will be doing just fine sipping a glass of Cristal and enjoying lap dances by smoking hot girls the likes of you only see in magazines (which you are hiding from your nagging wife).

In any case – maybe some of you over critical wankers want to take the Mole’s work more serious next time (yes, I’m doing third person today). Otherwise have fun on the other side of my trade.

Yes, I’m in a feisty mood today – do you feel lucky, punk?

The Mole will now accept offerings of obsequious praise, free German beer, and preferably Spearmont Rhino gift cards.

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 the usual social media waterholes.
Enjoyed this post? Consider a small donation to keep those evil deeds coming!

BTC: 1MwMJifeBU3YziDoLLu8S54Vg4cbnJxvpL
BCH: qqxflhnr0jcfj4nejw75klmpcsfsp68exukcr0a29e
ETH: 0x9D0824b9553346df7EFB6B76DBAd1E2763bE6Ef1
LTC: LUuoD6sDWgbqSgnpo5hceYPnTD9MAvxi6c

  • BobbyLow

    “A mans got to know his limitations”.

    Dirty Harry

  • springheel_jack

    “Opinions are like assholes, everyone's got one”

    Dirty Harry

    Great post Mole. Nice wedge on silver BTW. Have a look:

  • BobbyLow

    “When a naked man is chasing a woman through an alley with a butcher's knife and a hard-on, I figure he isn't out collecting for the Red Cross! “

    Dirty Harry

  • BobbyLow

    With most Bears Dead, the Bots only have to work at 1/2 speed today.

    We might not even hit 100 Million Shares of SPY on the 4th Friday of October.

    What a market. 🙂

  • red_clay

    Love the comment about the nagging wife Mol. Been there – done that. Worst trades ever! In Calif, family law is like POMO for woman – the virtually can't lose.

  • molecool

    LMAO 🙂

    Tip – marry a foreign woman. I recommend Russians or Croatians – among the most beautiful women in the world…

  • red_clay

    Yeah, married a French woman for my first try and while it was exotic at first, it didn't work out too well.

    I think I have a better tip – Lease, don't buy! In the U.S. (and particularly in Calif), marriage is the most one-sided contract known to man. Most guys don't understand what they are getting into legally until it is too late.

  • JDWM

    Danny Glover!

  • springheel_jack

    “Listen, punk, to me you're nothing but dogshit, do ya understand? And a lot of things can happen to dogshit. It can be scraped up with a shovel off the ground, it can dry up and blow away in the wind, or it can be stepped on and squashed. So take my advice- be careful where the dog shits ya!”

    Dirty Harry

    Dirty Harry for President. 🙂

  • springheel_jack

    Yes, that high cheekbones thing on some of the eastern european and russian women is very appealing.

  • BobbyLow

    Beautiful women are well – Beautiful. Unfortunately, Outer Beauty tends to fade with time but some of the fading can be fixed.

    But as Ron White said “You can't fix Stupid”.

  • convictscott

    Feeling pretty good waking up after a full nights sleep instead of watching that tape. Most boring.tape.ever!

  • Fearless

    My big winner: AXP. I shorted it based on the descending resistance line back on September 30 and went on my mini-vacation. I came back on October 4 to find it breaking down on huge volume (related to a federal lawsuit – remember Goldman Sachs?). I covered at $37.50 because that was the floor built since February. I shorted it again at $40.25 yesterday on the low volume back-test of that triangle support it broke through on October 5. Guess what? It's still making new lows for the day after its earnings report yesterday. I will monitor how AXP reacts at the floor ($37.60 next week). If it breaks this down on heavy volume, I will short even more on the back-test of that floor-turned-ceiling.

  • molecool

    POMO no worky today…

  • ds2

    Maybe they r saving the $ for next week?

  • molecool


    …marriage is the most one-sided contract known to WOMAN.

  • molecool

    Maybe they all cashed out a long time ago and don't give a shit anymore…

  • BobbyLow

    This action is remarkable to say the least.

    It looks like we are going to be right around the same volume on SPY that occurred on New Years Eve Day December 31, 2009. On that day 90,637,900 Shares Traded.

    At this moment we are at 88,335,000 with 23 Minutes to go. We'll probably beat New Years Eve but not by much.

  • convictscott

    Very small range inside day's have a high probability of being a decent move in either direction.

  • convictscott

    Sorry i mean decent move on Monday

  • 99er
  • AlohaBear

    Mole thanks for another freat week at your site as always. Rammstein Du hast Live from Volkerball

  • funkypenguin

    POMO going to Semi's today (and a bit to small cap).

    Never short a POMO day, but gains may be negligible

  • Fearless

    I shorted AXP prior to POMO day, how's that looking?

  • gsavli

    NQ up 1.11. this POS just going higher.

  • gsavli

    check out NDX/NQ/COMP for example.

  • JDWM

    So why AAPL down .7%

  • gsavli

    it's full moon + pomo = retarded market.

  • gsavli

    lol @ how shorts capitulated in last 15 minutes.

  • Tronacate

    What a waste of a day……

  • molecool

    Only if you were watching this shit – I wasn't much…

  • catracho

    Gold's rally lures sellers
    Gold's steep run-up suggests it's time to bet against it — and buy stocks, HighMark Capital Management's David Goerz tells Laura Mandaro.

    HAHAHAHAHA…another “reason” for stocks to be pumped higher….LOL

  • LosGatosCA

    ES indicators – 6 timeframes at End of Day, End of Week:

    Good weekend to all!!!

  • ricebowl

    ^VIX is pointing to more rally. We touched the daily 20-SMA and are heading back for the lower BB.

  • alexdg

    Good tips for some profiting taking, all we need now are good tips when to get back in. 😉

  • alexdg

    I thought you were quoting an interview from CNBC….everything is an excuse to buy stocks!

  • JDWM

    $ rose a tiny bit and MACD HIST +ve for 4th consec day

  • molecool

    Well, when the time comes I may just talk about it 😉

  • amokta

    i closed out my spx long at breakeven at close. was tempted to hold, but one of my new rules is day-trade only. why take a risk? Whatever monday brings, its a new day, with new opportunities, whay carry over fridays baggage?

  • JDWM

    LAst 6 sessions on GLD – down days almost 2 x vol of up days incl today

  • molecool

    Yup, that's what happens when a trade gets crowded…

  • 99er

    Chart: Dollar
    So who here would like to explain this?
    Where is that substitute teacher when you really need her?

  • Tooncez

    Which reminds me: If currency Y is pegged to D, then the users of currency D shouldn't notice any price change during hyper inflation when buying things that were made in a country that uses currency Y, right?

  • Tooncez

    No, wait I didn't say that right. Nevermind.

  • grednfer

    That is called an AH ambush! They tagged teamed DX and UUP – Look at UUP chart.

    Now the range is set for the machines to trade.

    The same thing happened to ES the night before the flash crash.

    Now when they lean on it on Sunday & Monday…..the machines will have a target.

    Don't be caught short when they lean on the USD.

  • 99er

    As the central banksters enjoyed their BBQ dog meat in Korea, someone may have given Ben and Timmy a “Fat Finger”–the middle one.

    (Reuters) – Finance leaders from the Group of 20 economies will pledge on Saturday to commit themselves to pursue market-determined exchange rates and refrain from “competitive devaluation” of their currencies, a U.S. official said.

  • Wave_Surfer

    I have been having some thoughts and have been making some observations that seem scary to my perma-bear soul lately.

    Although, the market has not really been strongly up, it seems like there have been some hints that the market is not ready to go down hard.

    I believe that the market measures the mood of people as a whole.
    While there have been several negative things, (hence some reasons why I thought the market might go down), it is also true that once the populace becomes aware of the negativity of the last move down in the market, and has fully embraced it, then the market seems to climb a wall of worry.

    Just as in now, if you were to ask people during the last half of the 80's and the 90's they would say they FEEL like there is a lot to be negative and fearful about, but in context of the century, it ended up not being a real fear, but just a wall of worry to climb up. Saturday Night Live still had plenty of material to talk about all the ways in which people were against each other. Us and them, liberal and conservatives, repubs and democrats, rich and poor, colored and white. They were all there during the 2nd half of the 80s or the 90s or so they felt at the time. There was angry rock music, bearish movies, etc.

    But to really look at the forest we saw that it was a time when “The Fresh Prince of Bellaire” and “Family Ties” and later “Friends” were popular. Shows that were light entertainment for people that had gotten tired of being too negative and were willing to non-offensively tease the problems we were coming out of.

    Today, I look at TV and I wonder why I was so committed to a bearish stance. It is not just one show, but a fairly large trend. In the past when people were more interested in watching 'tougher' shows like various CSIs, Law and Order: Special Victims Unit. Sure those and Dexter are still playing, but let's look at the recent changes in TV and what people are wanting to watch.

    People are getting tired of the heavy and the dark. Sure some of it is still there, but they are becoming less popular, while also becoming less dark and after 5 or 10 years they are no longer shocking. What are the recently added shows that are being released that point to the mood of what the populace wants to watch?
    We are drowned in kind, gentle, light hearted Sit-Coms. Gone are the hour long brutal shows where everyone was getting raped, killed, cannibalized, etc. And now we have shows that are cute and easy to watch and sometimes giggle to. Shows that point to a more “us” attitude and less of an “us versus them” attitude.
    Last night on NBC it was Community, then 30 Rock, then The Office, then Outsourced. Or you could have watched CBS or Fox for more light hearted stuff to relax to: The Big Bang Theory, S#*! my Dad says, My Name is Earl. Tonight during the more adult hours (10-11pm PST) what is our hard hitting adult, serious, hardcore TV? Blue Bloods. That is not exactly taking Dexter to the next level.

    In addition to that, other newish shows that are popular: No Ordinary Family, Parenthood, Modern Family, Running Wilde, Melissa and Joey, The Middle and Chuck is back. If you want to watch something really rough and dark and heavy hitting, there is The Event, but it doesn't seem to be as popular. I guess people are not as interested in watching hard to watch stuff like that. The days where serial murders and rapists have their torture dungeons seem to be a bit more numbered.

    True. Not EVERY person likes Justin Bieber, but then in the 90s not EVERY person liked Michael Jackson or Brittany Spears (back when she was a supposedly clean virgin). And Michael Jackson in the 90's (as opposed to the freak show he became later) was a lot less light and fluffy then Justin Bieber. Maybe 100% of the people reading this hate Justin's music, but when it comes to “The Mob” there are countless millions that adore him, evidently.

    Primetime has a LOT less of people sodomizing 8 year old boys and a LOT more light hearted stuff to relax to and feel good about.

    Maybe these are signs of a medium term peak, but with this level of pervasiveness of people saying with their actions that they are 'tired' of paying attention to the meanie things in life together with what the market has done in the last 18 months and there is at least a possibility that this may be a more extended move up, regardless of things like truth or reason or reality.

    Until there is some openness to change in mood, we might be climbing a wall of worry, no matter how impossible or unreasonable that idea might be.

    Elvis and the happy Beatles gave way to Hendrix and Pink Floyd.
    The Bee Gees gave way to AC/DC.
    Michael Jackson and mousekeeter Brittany Spears gave way to Rammstein and slutty Britany Spears.

    When things that are supposed to be staples of horror, like Vampires and Werewolves end up being cute, non-threatening boy toys who are most concerned with hearing about the feelings of their girlfriends are extremely popular, then it will be exceedingly difficult for a large move down in the market to happen.

    When “I want to hold your hand” was replaced – as far as what was popular – with “Dark Side of the Moon” (matter of fact it is ALL dark), then the world populace showed that its mood was ready to produce an extended bear market.

    Sure, people should not like Justin's music, just as the market 'should' not be going up, but until his popularity is replaced with the next bear market force, I don't see a Significant and Sustained move down happening.

    Regardless of 'should' and 'ought'

  • grednfer

    Its all about greed……….


  • Battlezone

    “Michael Jackson and mousekeeter Brittany Spears gave way to Rammstein and slutty Britany Spears.”

    +1 lmao

  • randomtrader

    so your suggesting a flash crash on monday in the dollar and consequently a flash crash up in equities right?

  • Fearless

    Statistics-wise, betting on a crash now is betting against the odds. Historically, there had not been another crash within two years of the end of a mega-crash. I suppose if you count 1929 a mega crash (which it could be counted as such, 50% drop is pretty darn big), then there is only one case where the market crashed within two years.

    We had a crash this year, so odds are that we will not see another crash in the next two months. Like Mole said, crap can take a lot longer to hit the fan. I am shorting stocks that hit resistance and have high chance of dropping (like AXP), but it will not cloud my judgment when I see the 1120/1130 level holding up as support in three weeks. If I see evidence of that on the Zero, I will go all in long. We might be at 1350 in 2011 before any meaningful correction takes place.

  • randomtrader

    so your suggesting when justin bieber goes out of vogue P3 will begin?

  • Clint

    I'll be quite surprised if we even get to the 1120/1130 area soon. We'll see what happens in the next 2 weeks, but it appears they really have the southern gates locked tightly. That and basically no 'net' selling.

  • Fearless

    NYMO divergence still must be played out somehow. I beg to differ on “no net selling”. I shorted AXP yesterday near the close based on the chart patterns, knowing today is a POMO day, and I won. I am not closing that trade yet, I have to see how it does at the $37.60 floor. If it plows through this level on heavy volume, then I'd say the days are numbered for the DJIA (still, crap takes a long time to hit the fan, so I will still give it 6 – 7 months).

  • Wave_Surfer

    I am saying that I think it will be excessively difficult for any Primary wave 3 down (P3) to happen when Justin Bieber is still popular.

    I am hinting that because such a strong bull (hehe… I might be meaning in more than 1 way) symbol is as popular as he is, it might call into question even longer term Elliott wave counts.

    I remember when I used to be 100% absolutely certain that P3 (meaning primary wave 3 down – 18 to 24 month brutal bear market movement) was going to happen.

    I am saying that since some of these bullish indicators are so strong, there is at least a possibility that the next primary sized wave 3, MIGHT be an up wave and not a down wave.

    If you can rest well knowing for sure that I am wrong and can not possibly be right, then you are where I was a couple months ago.

    I KNEW for SURE that we were sitting at 1930, but now I fear what if we are at 1985? There was lots of fear and division in our society in 1985.

    What if crash was A and 2003 to mid 2007 was wave B and the credit crisis was wave C? Impossible? Is it 100% impossible?

    Now, if the above count is true, then I see 2 scenarios.
    1) It could mean that a large sized 4 ended 18 months ago and we are still at the beginning of a bull market that will last for over a decade. Again, the 2nd half of the 80s and the 90s were not without their problems, divisions, wars, but the market still rocketed up.
    2) The A,B,C that I just mentioned could be wave A of a very large 30 to 65+ year bear market. We would be climbing in a wave B that could go back to the heights before the bear market started. Dow might go from 6,000 to 12,000, 14,000 or maybe a bit over 15,000 (heck it has already done most of that move up) before doing another big wave C down, whose bottom will probably be at least a little lower than March 2009.

    In order for the P3 that we all talk about to happen, we would need for the 5 wave Credit crisis be be wave 1 of a larger 5 wave. I fully believed that for many years. I guess the question we all have to ask ourselves is at what point do we start to question that the only possibility is that we are in a wave 2 bounce from a credit crisis and that a wave 3 will carry us so low that when wave 4 bounce comes takes 1 or 2 years but wave 4 won't bounce above Dow 6,500? Do we wait until Dow reaches 15,000 before considering the A,B,C count I just mentioned above?

    If P3 happens, it will take, I think closer to 24 months than 18, and I have not said it is impossible, so P3 won't be able to sneak by me without me noticing.

    But if we are going to 13,000 to 15,000 Dow or (horror of horrors) if we started a 12 to 16 year bull market in 2009. I doubt any of us could survive shorting the market from 1984 to 2000.

    Said another way, I want so desperately to be profitable, that I am willing to consider that I am wrong, grievously wrong.

    And each of us Elliott wave bears needs to pick a number. At what point will you say your long term wave count is wrong? 11,000? 12? 14? 15?

  • juju2

    The idea of Picking actual Targets
    Picking tops and bottoms
    by “Gut Feelings”.
    While record is not 100%.
    you decide which is more effective.
    Click on my pic to see history of no speeches, and very firm targets.

    While the Euro downside targets were NOT hit.

    Swiss Frank hit first downside target today.
    And the
    2nd VXX target was hit today. (hand-grenades)

    on All Eyes On The Dollar 4 days ago
    I am going to short the SWISS FRANK as well.
    short if it trip 1.0361
    1st target 1.023

    on Talk Nerdy To Me! 1 week ago
    VXX hit first target
    Looking for a dollar bounce

    VXX: juju2 2 days ago
    1st target 14.12
    Possible 2nd extended target 12.68
    I swore I would not do this again.
    Oh well.

    on Symbolz! 2 months ago
    with a pullback of sugar to the $17.56 ish area. I will take a large and long position. This could shape up to have an explosive upside. Buy the dip and go long

    I promise not to post targets again.

  • grednfer

    As early as Sunday night……..

    The HF ambush program accomplishes several things……in less that 1

    minute….and very economical in low volume.

    1. It dictates the near term direction, as the USD had support and inverse

    (equities & commodities) have stalled or were reversing.

    2. It clears any potential resistance, like bids and other orders…

    more of a free fall can occur.

    3. It sets next session parameters for the machines….ever notice that..

    how ES tends to cover all the ground from the night before?

    I didn't know DX traded after 2pm on Friday……..and the UUP move may have

    been just the MMs auto-shorts from the DX.? I know during the week they shut

    down at 1:15 and don't open till 5pst.

    Somebody wants equities to go higher real bad. That’s potentially currency

    manipulation and if you didn't have a really good story, the SEC could throw

    you in jail……if they were paying attention…..which they seldom

    are… the risk/reward is good.

    Should be a good show though.


  • Biowolf

    as usual I totally agree with you, Maulwurf. I never read anything about gold. Its total bullshit. It is also the only one of my investments that is up.

  • Clint

    You've made some very good points in there. – I don't think hard core bears,EW or otherwise, can survive a long trek thousands of points higher…but “that” is quite possible unless there is some sea-change shift for some reason soon. The stock market and the commodities markets are trillions of dollars more valuable than they were just two months ago and it's going to be very hard to reverse all that now unless something really changes.

  • Fearless

    Prechter was wrong from 1995 onwards until 2000. After he hit it right in 2000, he continued to call for lower lows ahead, only to be proven a complete idiot since 2003 until 2007. After he hit it right again in 2007 and called the bottom in 2009, he continued to call for lower lows ahead. He pretty much started with the thesis DOW 400 and works backwards to try and fit that conclusion to all the waves he sees. I do not use EW, I subscribe to the Zero and use it in conjunction with my other TA tools. For those who trade based on EWT, just ask this question: “Can I afford to be wrong for 5 years?” I completely agree with Mole, trade the tape you see, not what you want to see.

    My answer to that question is no, I cannot afford to be wrong even for two months. I cannot trade long term because I found my long term positions going nowhere. The reason is simple – we still don't know whether we're headed down or up in the next 5 years. What I am best at is trading in the 1 – 2 month time frame or 3 – 5 days explosive swings, so I will just stick with that and say 'never' to EW. Good 'ol TA combined with the Zero gives me a perfect indicators for picking the BOTTOMS. Floors are relatively easier to spot, while the tops are always elusive.

  • Scrillhound

    Haven't seen you pop up in a long while grednfer… Hope things are well – always enjoy your thoughts on the various options plays.

  • gagelle

    “Here We Go: Fitch Places Bank Of America, All US Banks On Rating Watch Negative.”
    [Open in new window]

  • OldChicago

    I have to say that I agree with you on P3 here. When the day FED loses credibility, P3 will show up. Last time around, it was a collection of banks that caused credit panic, ala P1. FED is the mother of all banks. It will take a failure of FED to kick start P3. So, perhaps, after election and next FED meeting, we might see some selling the news?

    I've been watching the money flow. So far, every support that held, I see another $1B flows into the market, at the close. We have many 90% up day, but only 1 90% down days. This feels like some wave 5 is still at work. The money manager/traders are gunning for year-end bonuses. Why not, scratching each other's back with FED's money. The only question I have is this “With all the buying, who is selling?”

    Have a great weekend.

  • OldChicago

    Check out Zero Hedge on this topic. It appears that EUR/USD, EUR/CHF all affected.

    What do you mean by “lean on the USD”? I don't understand why EUR/USD and DX will crash at the same time AH. Also, what is the logic to crash USD? This will only cause more pain on other currency. The only currency we want higher, but stayed low is Yuan.

  • convictscott

    Thats the most intelligent thing I've read here in a while 🙂

  • grednfer

    I lurk sometimes…..but haven't posted in many moons.

    Spent the past 6 months converting from manual trading to automated.

    You learn a lot about the markets when you have to tell a computer how to

    trade it.

    But it’s the only way to keep up…….was feeling like a dinosaur.

    I saw the drop on the dollar and it reminded me of the ES crash the night

    before. Most of sites noticed it the USD drop.

    So they could be staging an ambush Sunday night and wanted to remove any


    I still love ES options and wish NQ's were as liquid. and YM's aren't even


    The indices which are all correlated to the USD (almost bar for bar) have

    stalled. The DOW is about where is was before the flash crash,

    but can't go any further unless they drop the USD more. But it had support

    until after hours today………

    So we'll see…….my machines are still long mode.

    Good luck……have fun and be careful.


  • grednfer

    By lean on the USD I mean short, short and more short…..constant

    unrelenting short….until it crashes.

    They want the USD to go lower so everything else goes higher, except for the

    payments on US debt.


  • JDWM

    I;m totally confused (so what's new?) how can the $ flash crash AT SAME TIME AS € and CHF and £ v $? Er…

  • ultra

    FWIW, my brother's kids have got bored of the Bieber album already…

    [Deutschfakt: Bi[e]ber translates to beaver]

  • ultra
  • JDWM

    In case anyone is in any doubt Oz $ v US$ is exactly the same as Oz $ v HK$ – or at least until China freely (or more freely) floats.

  • JDWM


  • ultra
  • ultra

    I see you answered your own question!

    Man, soooo hungover today – and fearing I may have to do it all over again tonight in a different city – eep…

  • JDWM

    I did, thank you. Sorry for not putting my glasses on first time.

    Just watching Ron Walker's vids Very very interesting

  • ultra

    I see he's talking about it too. Not sure I like the fact that everyone's looking at the same thing! Still, a signal's a signal…

  • ultra
  • ultra

    Haha – and again

    I nearly posted this the other night…$NYAD&p=D&b=5&g=0&id=p06057918951&a=205133487&listNum=2

  • JDWM

    He's been wrong for around 4 weeks now. However, the charts have finally apprently caught up with him

  • ultra


  • JDWM $ commentary at Bloomberg

  • Gary_UK

    I've copied some text directly from the G20 finance meeting's communique below:

    move towards more market determined exchange rate systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies. 'Advanced economies, including those with reserve currencies, will be vigilant against excess volatility and disorderly movements in exchange rates. These actions will help mitigate the risk of excessive volatility in capital flows facing some emerging countries'. Together, we will reinvigorate our efforts to promote a stable and well-functioning international monetary system and call on the IMF to deepen its work in these areas. We welcome the IMF’s work to conduct spillover assessments of the wider impact of systemic economies’ policies;


    The sentence beginning 'Advanced economies, including those with reserve currencies….' is absolutely key, and potentialluy exposive as far as the US dollar is concerned. Firstly, it is the only reserve currency!

    One possible take on what went on behind the scenes: We know China has been flexing it's muscles recently,with rare earth minerals , and also they have not been afraid to tighten policy to try to stop the US importing an asset bubble. But they know a weaker dollar will cause their bubble to grow and eventually burst catastrophically.

    So, my thinking is that China, Japan, Brazil and plenty of others have issued Geithner/Obama with a little ultimatum. If the US procees with vast QE2, and tank the dollar, the US will pay dearly, I'm betting a mass dumping of existing US treasuries, and ZERO new purchases by the Chinese for sure, maybe Japan too. It would literally be the end of the road for the US. China has no option, it will lose a shedfull on its treasuries either way, but it can't afford to have higher inflation and asset bubbles (or it will simply end up like Japan eventually when it busts).

    So, I reckon the dollar starts to take off next week (in fact it already has bottomed), and then Bernanke disappoints with either NO QE2, or very little.

    The market's days are numbered, it may already be over, watch for some more 'language' in the week ahead to start to massage down expectations of QE2.

    Well, that's my speculation, I may be wrong, wouldn't be the first time!

  • Gary_UK

    Plenty of chat on other blogs about the dollar futures flash crashing after hours on Friday? Any thoughts here?

  • ultra

    Ok, check THIS out for a bearish socionomic sign-of-the-times – mens'…. skirts & dresses?

  • JDWM

    Again, referring to the Zero Hedge article on it, how can $ flash crash AT THE SAME TIME as €, CHF and £ flash crash v $? I just don't understand.

    Loved your analysis of G19.5 (UK surely doesnt get a whole point!). ” 'Advanced economies, including those with reserve currencies” US is the only one. Great point.

    Sure hope you're right. I know I know – hope shouldn't come into it. Still.

  • 99er

    IMF Hits A BRIC Wall

    That deal will make China the third most powerful member of the IMF, up from six as it overtakes traditional powerhouses Germany, France and Britain. India moves to eighth place from 11th.

  • ultra

    Stop run.

  • 99er

    Reserve currencies include the Euro and the Yen, in addition to the Dollar, and are all included within “foreign exchange reserves” by most countries. Special Drawing Rights (SDR) at the IMF also count. [ I'll post a link later.]

    I think the “Fat Finger” was the middle one, perhaps from the Middle Kingdom, as a warning shot: “You want to manipulate the Dollar? Let me show you how it's done.” Despite the propaganda to the contrary, it is Timmy and Ben–through their incessant talk of QE2–which results in the downward bias of the Dollar. Foreign countries realize that the result is the export of inflation and rise of bubbles in their own economies and, worse still, is a slow but effective default on America's debt. Both are unacceptable to the BRICs and even the Europeans. In the currency wars, America stands alone: it's US against Them.

  • Fearless

    A follow-up post to EWI's bearish P3: it's been almost 19 months since the market bottomed on March 6 2009, longer than the mega crash from 2007 to 2009. The trend is still up, and the supposed “retracement” is taking longer time than the primary trend? I posed this question to many EWT traders, and NONE can answer the question. One of my friend who was a die-hard EWT believer finally put traditional TA as the primary tool for his trading now, more than 16 months after I first told him not to use EWT for his style of trading (longer term). Don't get me wrong, there may be merits in using EWI for short term swing trading, but on a much longer time scale, at what point do you say your count is wrong? More than 16 months or 5000 DOW points later?

    Here is an article by Mark Hulbert, who tracked Prechter's performance for more than 25 years. The statistics at the bottom of the article will have you speechless, stunned, shocked, disgusted, etc. Here is the link:

    Prechter's DOW 400 thesis began prior to the 1990s, so adjusting for the reduction of the dollar's purchasing power, you probably get DOW 6500.

  • OldChicago

    Thanks for the hat tip.

  • OldChicago

    I was too. But check out Zero Hedge's blog on this topic.

  • raised_by_wolves

    Traditional technical analysis paints a potentially very bullish picture for the next couple years, doesn't it? Look, if that multi-year inverse head and shoulders on $NDX plays out. . . .

  • baitnswitch

    Congratulations on the timing of your gold calls.

    But the better advice in May would have been to begin to stake out a position. Since your May post to leave the shiny stuff, it's went on to advance 30+%.

  • Wave_Surfer

    >>// easy to find contrary evidence anyway…

    Yep. Sentiment indicators even when they are extreme don't go to 100%. Humans refuse to every fully agree on ANYTHING!
    If a sentiment extreme reaches 95%, that leaves 5% that are different. Now multiply that 5% by 200 Million or 6,000 Million people and that is a pretty large number. If you want to see negative sentiment, look at the last 18 months of bearish blogs, including my own posts. <grin> Yet what has the market done for the last 18 months. The question is not as much are there 2 opinions, but what direction is the general consensus moving. When talking about the general overall trend i

    When trying to understand the mood of the general populace, you also need to remember that there will be some people that liked Rammstein during the 1990s when we were in the biggest bull market and liked them during the dot com crash, and during the 4 or 5 year correction and during the credit crisis and during this extreme 'correction'

    So, again, if I started seeing men's skirts and dresses on men walking down main street America and in board rooms in conservative states, then it would mean a great deal! If soccer Moms were happy when their husbands wore them to the soccer game, then it would mean a LOT.

    Also, it should be explicitly said, that attempting to understand where the general mood is now and what direction it is currently heading is sort of an Art. It is a right brained activity, much more than a left brained activity. So, if you excel at math and logic and talking in 'glittering generalities' is irritating to you, then you probably won't enjoy such a right brained activity.

    Since we are talking about the overall direction of the mood trend of society in general there will always bee tens of thousands or tens of millions of people going in the other direction. Also, you really don't want to look at 1) intelligent people 2) mature people 3) self controlled people 4) self aware people or 5) independent thinkers. Now since not all of the above people will always be in agreement, almost definitionally some of them will be following the trend, but if you really want to see what direction the herd is going, it is more productive to look more at people that have a real herd mentality.

    I will say up front, that there are many hundreds of thousands if not millions of intelligent, mature teen age girls that have a strong mind and think for themselves, but…
    Also, there are a large number of teen age girls that, especially during bull markets will clearly express their optimistic and energetic feelings. First, how they responded to Elvis, then Beetlemania, then Harry Potter, Backstreet Boys. The level of energy and the amount of money that is being poured into gentle, caring about girl's feelings, boy toy vampires and werewolves and the studio manufactured, auto-tune using Bieber, I think is a stronger indication of what direction the people that are the most un-thinking, the most mob-following elements of our society.

    I think there is a really powerful point in that the SAME channel that used to do tons and tons of Law and Order during prime time have replaced it with material that is specifically and explicitly (I heard some actors of some of these shows specifically say it was the reason for their show) the reason for their show is to give levity and light and easy entertainment to balance out all the negativity that people are experiencing in their life.

    >>check out the first 2 comments! the negativity is out there…

    There are always people around that will be speaking negatively and positively, but the direction of the overall herd is what we are looking for.

    Also, another question to ask ourselves when we see negativity is….
    Is this negativity that I am observing a case of a negativity because it is the powerful, moving trend or is it just the left over residue still hanging around from the last bear market, aka, is it just a wall of worry that we will ascend through.

    Now that is a really hard question to answer. Or I would like to say that it is a hard question to answer since my answering that wrong has caused me to lose money for the last half year!

    During the late 80s and the entire 90s decade, it would be easy to find MILLIONS of people that would be giving all kinds of negative expression and yet those things are not what it would have been profitable to hang on to.
    Did all the liberals love Reagan and support his trickle down economics?
    Did all the conservatives love Clinton and his economic policies?
    Were there no people that were bothered by Iran/Contra weapon deals, or the problems with the war on drugs?
    Were no people troubled by the Monica Lewinsky scandal?

    But those ended up being part of the wall of worry that we rocketed through!

    The correct and profitable things to focus on during those times were…
    The Berlin Wall came down.
    Communistic and Authoritarian regimes were declining both in power an with the intensity that they ruled over their people.
    Although there were always plenty of wars, democratic and egalitarian forces were increasing in power and influence.
    That after a President was actually convicted of Perjury and actually formally impeach him, that he still kept his job and things kept moving on. Don't try to guess my political views from the above sentence. The POINT of it is simply that was a powerful indicator that there was not a strong “make him pay” spirit and there was more of a spirit of unity. True there were many people that were trying to kick Clinton out of office and there were millions of people that said they wanted him out, BUT – and this is the more important point – even with all of that kicking Clinton out of office was not an acceptable solution for the overall population of America at the time.

    On a smaller scale, Tiger Woods is another great example. I found it fascinating that although what he had been doing for many, many years came out then. Finally, his wife decided to take action and look at his phone, after all those years. The discovery and the first days following the car accident happened during a down move and it was interesting that there was such a consensus that he was toast. His sponsors dropped him like a hot potato and there was so much rage and indignation. Then after a couple weeks of down move in the market, the market moved up and I found it fascinating how the Mob was calling for his blood one week and then 2 weeks later there was almost no call for his blood. It was like Clinton “Look, we all make mistakes. He has already suffered enough. Just leave the poor guy alone.” And the energy that was focused on retribution had essentially all evaporated away.

    Again, because it is not a left brained exercise with a definite, one correct answer and it is more like looking at a large painting and trying to determine the mood of the artist, there will be no provable answer and so for some, it will be a 100% pointless and fruitless exercise.

    However, for me, I think I have some of the right brained (mixed with some left brained analysis) abilities that I believe it can be of value for longer term analysis.

    There is still a lot to be negative and worried about, and therefore there is still plenty of room for a 2 week or 4 week hard down move, but, as long as the most mindless and herd-like people among us are clearly saying, “We are tired of being angry and we want to just relax and chill for a bit.” then I think the chances of 18 to 24+ month decline are – well if I am right – it simply won't happen.

    One last point about negativity.
    Remember wars come out basically exclusively during bull markets. It uses first the maximum negativity of the bottom of the bear market together with the fact that the populace has a growing energy level and a “let's take care of this problem!” (problem solving / can do attitude of bull market versus the inactivity of embraced hopelessness of a bear market) is what enables wars.

    So, again, the negativity that comes AFTER a bear market and can last for many years into a bull market which is the anger of the bear market expressed with the energy of a bull market is what makes wars. It also shows that the negativity that can exist during bull markets can be quite extreme.

    How much negativity and 'problems' were there in America from 1932 to 1936?
    Think of it like we caught the virus from 1929 to 1932, and although it caused so much pain and suffering for the next decade, almost all of that pain and suffering and anger and consequences came AFTER the market was finished falling. DURING the actual Great Depression with all the unemployment and suffering, the market was rocketing up! World War II and The Great Depression contained so much anger, fear, suffering and misery that 80 years later we are still making movies talking about it and yet during World War II and The Great Depression – other than a couple years of correction – was almost entirely a bull market! Still expressing the consequences of the infection of 1929-32.

    I will agree that it appears that the market has a bit of complacency and lack of fear when it comes to looking at what the money that is actually in the market is saying. I guess the question to ask is, “Is this complacency a sign of a long-term top or is it more like a Wave 3 up, where the lack of fear is right.”

    Think of it this way, we know that if we were in the middle of P3 down, there would be great fear and yet fear would still be the correct bet.

    The question is, “Is the mood more like 1934, years after the bottom, with so much misery and suffering and unemployment for years left for our future even though the market has been up for over a year and many more years up to go or is the mood more like 1930, where there is complacency and relief that our troubles are over with a residue of fear 'Are we really out of it now?'.”

    The more I think, the more I am convinced we are like 1934. Yes, there will be a 1936 coming. Or maybe that 1936 correction won't just be a 30% or 45% drop, maybe this is all a wave B and a wave C will take Dow well below 6000. But for right now, it feels like 1934. People are recognizing what 1929-32 has done and there world is awash in fear, anger, division and other negative emotions.

    But as bad as the world was from 1934 to 1936, it was not a good time to short.</grin>

  • Wave_Surfer

    Sorry for the huge wall of texts I posted on this page.
    I went silent for a few weeks. I figured, “If I don't have anything to say…”
    So I have been spending the last several weeks working hard at listening, thinking, watching, thinking, reading, thinking.

    I finally felt like I had something worth saying, but by the time I decided to share, I had quite a lot of thinking stockpiled. I apologize that it ended up being several walls of text, but I hope that some of my thoughts might be of some value to some of you.

    Of course, none of my other friends would want to hear (or be able to understand) what I shared and I don't know of any other blog that has the quality of people on it that this blog has, so this is the only place I know of where I can share my thoughts.

    I will try to go back to a more normal type of posting.
    Thanks for your patience and thanks for your feedback.

  • convictscott

    My thoughts. If we were talking about the same move in gold and the front month gold futures, it would be significant. Same deal if we were talking about es.

    But DX future volume is 30000 contracts a day, in a market turning over 25 trillion + a day. In otherwords, its not even enough to show up on a rounding error. The big ass down candle showed volume 410 contracts for the 5 minutes, which is not significant at all.

    Means nothing at all, its not a flash crash, its not manipulation, its not a sign of things to come, its not anything. Its simply a small fund or medium sized private trader being roasted by a broker who got him out at the market, instead of working it. 400 contracts in dx is not a lot, its a small contract.

  • convictscott

    And the zerohedge article is incorrect in saying that the “crash” was caused by a big move in euro. It wasnt, I checked multiple sources of data.

  • raised_by_wolves

    Have you thought how to build a Justin Bieber indicators? In addition to measuring his popularity, you will want to measure the change in his popularity. Also, you may want to a Justin Bieber versus someone darker/harder indicator.

  • raised_by_wolves

    Is there a way to filter out the sentiment of people without jobs to track only the sentiment of people with jobs?

  • OldChicago

    I noticed the same thing. Naz can't fly on its own forever. The divergence among the index will have to resolve one way or the other. DJT is also rather bullish looking at weekly chart as well.

  • Clint

    Don't worry about it…you made some valid points that need to be considered by all traders. Especially one's that are just adamant that we are at or near a top and just 'have' to be on the cusp of another major downturn.

  • convictscott

    Keep posting 🙂

  • convictscott

    Thats not the point. Trading is about when the reward of further gains are not outweighed by further risk. That was the case in May, it was also the case a week ago.

    Nobody has a crystal ball, and in May gold looked top heavy and suspect. To me if I was trading it (its a whore slut of a market which is washed around by central bank purchasing, Indian seasonal jewellry demand, USD devaluing, making technicals of limited use, and fundamentals devilishly tricky to figure out) I would have been out of longs in May, and obviously the correct thing to do would have been to reenter after its pullback. If I was long now, I'd already be out, the risk of losing profit is not outweighed by the upside at this point.

  • randomtrader
  • Wave_Surfer

    Not that I know of, but…
    If you want to look at the sentiment of people that not only have jobs but also have the ability to participate in the market (and only those people change the market!) then you could look at all the standard sentiment indicators.

    VIX, P/C ratio, AAII, and other stuff that Mole looks at.

  • raised_by_wolves

    Hehe, good point and another good example of me making things more complicated than they need to be.

  • Wave_Surfer

    Interesting! I didn't know that Indonesia and the Philippines were far more into Bieber than US and Canada.

    If you look at the American market
    it peaked in May 2010 and has been going flat to down since then (mostly flat) but even as Beiber has been losing momentum, look at what the market has done.
    Also notice that the lower graph shows the news references and that has not broken an upward trend line.

    I will be keeping my ear to the ground for signs of Bieber noticing that no one cares about him anymore and he desperately tries some stunt, just to get any kind of notice and still only gets crickets. However, I think it will be a while before that happens.

    I have to say that I am very interested in seeing a graph of a market that tracks most of Indonesia's companies. Brazil and Mexico might be interesting to look at as well.

  • Wave_Surfer

    Although Bieber has been floating down for several months, his current lows are still way ABOVE his PEAK in November 2009.

  • Wave_Surfer

    In the last week and a half I notice that Russell (IWM) has formed kind of a triple top at around 71.15 and a double bottom at 69.
    It looks, to me, like it might be a flat downward correction. If so, then IWM may soon pop above 71.15 and what was resistance will become support. This also appears to be the pattern for Russell for the last several months. Spike up, mild, flat-ish correction as it bounces off of resistance and then POP! above to a new range where it bounces around range bound for a while.

    Or will all these divergences and weakening of momentum finally make IWM turn down for a real correction?

    Ideas? thoughts?

  • kea11

    So from my reading of the preceding posts; technically, from sentiment and various indicators and fundamentally, from earnings data and Central Bank intervention; the World is in a Bull Market continuation, or a V shaped recovery. See here for a considered and convincing argument for the long side:

    Of course, I wonder what China was willing to bargain away to achieve it's elevated position on the IMF Board, or put another way – what concessions other countries who are being squeezed by a manipulated Yuan, and a shrinking $US sought from China at this weekends G20 prelim?

  • convictscott

    I dont think China needs to make concessions at all. If they stop buying T-Bonds with their trade surplus the US cannot finance QE1 let alone consider QE2. In that situation the USD either hyperinflates out of existence or defaults – either way has drastic real world concequences for every US citizen.

    They literally hold a gun to the USA.

    The US doesnt have a deficit problem as much as China has a surplus problem

  • convictscott

    There is an excellent paid site – they have a bunch of non-standard sentiment indicators, very useful stuff

  • convictscott

    As for caldaro.wordpress there are some technical holes in the argument, the biggest one being that elliott wave is useless for long term forecasting.

  • kea11

    Ah but it's not just about the USA. There are other countries including Japan who are century old enemies of China who are hurting with a controlled Yuan. The US needs these economies to cooperate if it is to maintain the tenuous Global recovery; they can't afford to lose the solidarity among countries that has existed over the last three years.

  • raised_by_wolves

    Interestingly, the first and largest spike for the google search “buy stocks” roughly coincided with the $VIX high and the wave three down during the financial crisis. The second spike for “buy stocks” roughly coincided with the $SPX low and the wave five down that concluded the downtrend. It appears that the crowd was early the first time there was significant interest in buying stocks but more or less correct the second time.

    As for google searches for “recession” and “unemployment benefits,” the latter obviously lags the latter, which is consistent with the traditional notion that unemployment is a lagging indicator. The question is whether the recession is over since the google searches for “recession” have dropped off or whether this is just the first cycle. Even if this is the first recessionary cycle in a depression, I'm not sure that there is any reason to get long-term short until there is a more substantial spike for “recession.” As long as one would be okay with missing the beginning of a wave one down, you could probably get confirmation from Google Trends that another recessionary cycle was beginning. So far there is no confirmation so I personally wouldn't bet long-term short.

    If anyone has different/better ideas for search terms, then let me know.

    In the media, we've heard a little about double dip recession fears but I would say that doesn't mean much while the news reference volume for “recession” is continuing to drop. Based on my preliminary analysis of search terms using Google Trends, I would say that either bears are too early shorting the double dip or there isn't going to be one because the Federal Reserve has bought more time before the day of reckoning.

  • raised_by_wolves
  • kea11

    My real point here is that no matter where you turn and what technique you employ to make forward projections, there is evidence being convincingly argued all over the blogisphere that supports a continuation of an 18 month old V shaped recovery.

    It seems so easy doesn't it; a sentiment shared by a Stock Picking group I attend under duress, from time to time. This group is particularly bullish as most of them have retired and have recouped many of their losses sustained in 2008/09 over the past 18 months; this has reinforced their faith in the buy and hold mantra.

    In fact one of the younger members even took out a margin loan in an effort to extricate herself from the losses she experienced in the 2008 plunge, unbeknown to her husband. She has been particularly well rewarded and by all accounts the many forecasts being liberally bandied about at the moment support the view that she will continue on an upward trajectory.

    Perhaps a World of people who ignore the negative and accentuate the positive through manifestation is in fact the answer. Don't fight the Fed.

    I prefer to remain in the “Slope of Hope” (The phrase meaning not TK's Blog) camp but thats just because I'm a negative sort of Dude – because thats the way I was born – so the World tells me. In a different World I would be considered positive – don't you just love QT!

  • raised_by_wolves

    Wise Elven, I think your phrase, “tenuous global recovery,” is a perfect descriptor for the current situation. The recovery is not only weak and slight but also questionable. For the time being though, let's call it a recovery and trade it as if it were. As I like to say, borrowing a quote from The Lord of the Rings, “The quest [for a global recovery] stands upon the edge of a knife. Stray but a little and it will fail. But hope remains, if friends [nations] stay true [coordinating interest rate changes and monetary policy shit, refraining from competitive currency devaluation, and bowing down to the International Monetary Fund].” A double-dip recession . . . cough, depression, cough, cough . . . may be diverted for now. Who knows? Ultimately, and most likely sometime in my lifetime, the US will have to default, hyperinflate debt away, or change the rules with the backing of military force. There is a fourth option, but it seems unlikely to me: become the world leader in GDP growth, which would require something as significant as getting off foreign oil while running an energy surplus; the odds aren't good in my estimation. But fuck it hell, let's long $NDX or EEM in anticipation of $SPX confirming this bullishness with a new high. However, if $SPX does not make a new high, let's short the shit out of something. How does that sound? Aggressive and nimble.

  • raised_by_wolves

    Forgive my US-centric point of view (even though I'm Canadian).

  • raised_by_wolves

    My subjective trend lines indicate that there is at least temporary support for GLD. I think gold moving up while outperforming stocks would be a possible signal to long again. Any failed long might be the best short though.

  • raised_by_wolves

    If there were one currency, there could still be such a thing as hyperinflation, right?

  • raised_by_wolves

    I'm not going to pay for anything, but if that free extreme pessimism/optimism indicator is accurate, there is slightly more optimism than pessimism among those with a short-term outlook and even a bit more optimism than pessimism among those with a long-term outlook. This probably isn't multi-year market top territory, eh?

  • raised_by_wolves

    Maybe the simple test is whether $SPX makes new high or not.

  • raised_by_wolves

    Most likely random noise.

  • raised_by_wolves

    Why is it that you guys on the other side of the world (down under) have the same schedule as me? 🙂

  • kea11

    RBW there does appear to be some overlap in our waking hours, where do you live – East Coast of Canada did you say? Shocking I think you did tell me some time in the past?

    I love your use of the LOTR to explain the G20 posturing; very romantic and animating, but for this new era of inter-country co-operation to succeed in Global Politics for very much longer; now that would be something to Toast with a bottle of Sauvignon Blanc, from the Marlborough region of NZ of course.

    I also like your google search indicator approach. Worth refining.

  • 99er
  • JDWM

    Just 'doodling' here. Went onto Yahoo and looked at big banks over the last year. Eg They're all significantly down on April. GS, this one, is the highest (closest to April). I looked at HSBC (UK), JPM and Citi. (GS lost 1% on Friday). How caan the continue to rise when banks are not joining in (and that also is the case for SOX)?

  • molecool

    For some reason I have not received a single Spearmond Rhino gift card – my wrath will not be merciful.

  • Fearless

    Like Mole said, crap can take a long time to hit the fan. It depends on what kind of crap it is, I guess.

  • Grainman

    anyone know if Europe trades any kind of futures on euro stocks overnight like the US does on Sunday evening?

    just trying to get an indication of what it looks like.

  • JDWM

    Also, check out Far East ie Aus in a while.

  • 99er

    IMF Deal

    China will leapfrog Germany, France and Britain in the Fund's power rankings, with its quota share rising to 6.19 percent from 3.65 percent.

    India will be in 8th spot, Russia in 9th and Brazil in 10th, according to the Russian finance ministry. Together, the four — known by the acronym BRICs — will have 14.18 percent of IMF quotas.

    Emerging markets as a whole will have a 42.29 percent share, which the G20 said was likely to rise further following a comprehensive review of the quota formula due by January 2013.

  • springheel_jack

    Zero Hedge's blog on this topic is bull. If USD crashed down then EURUSD, GBPUSD etc would move very sharply up, not down. They'd also move up a lot. The USD figures on Friday were equivalent to a move on EURUSD from 1.395 to 1.45 and back again, not the relatively small moves (in the wrong direction) shown at Zero Hedge.

  • jacksoo

    Hi Jack : what's your take on the FX move – – vol seemed genuine, someone rebalancing/margin maybe?

  • steveo77

    Using raw data from here

    I noticed an interesting trend — the rich get richer, the middle class and poor get chased out of their houses at low prices.

    The richest home buyers were the only segment that saw year over year gains. The rich get richer. Are they smart? Locking their money into hard “assets”, or just stupid because they don't see just how bad things are? Time will tell, but in reality a house is a highly illiquid investment that could easily fall 50% from here.

    Check it out – orig chart by Hawaii Trading

  • convictscott

    First market to open in the new week is New Zealand, of all places. Surprisingly for such an insignificant market, the early session can have clues as to early capitulation of one side or the other, particularly the currency markets.

  • convictscott

    You make an interesting and very valid point. While it is possible to argue both bullish and bearish views, neither side is likely to capitulate totally. Hence the range traded market of the last year.

    It hasnt been a very good year to be a bull either, basically a woodchipper market.

    P3 is another way of saying, the bulls capitulate totally, and give up. Thats just not going to happen while you can make a technical and fundamental case that we are in the nascent stages of a powerful USD devaluing driven wave 3 in stocks.

    I dont buy the argument one little bit, it doesnt smell like that to me at all, but you cant really rule it out

  • catracho

    YES John Mauldin covers this in his letter…

  • convictscott

    Not true. The US doesnt need Japanese cooperation to help force China to revalue its currency.

    The US has one and one only priority, to keep China buying TBonds to finance the QE deficit. Without it the US is bankrupt TODAY. In that instance there would be a panic rush on bonds, the USD would devalue to wiemar republic status, the world economy would be thrown into chaos.

    China is quite happy to hurt the Japanese (or any other) economy until its middle class has enough purchasisng power that it is no longer reliant on the US domestic market for economic growth.

    You forget that the greatest period of wealth creation in human history, was the industrialization following WW2 when the US consumer could purchase the goods which the US made, fridges, cars, TV's. It was a golden age for US prosperity. Compare exactly what happens with China's 1 billion consumers compared to the US 100 million (at the time) consumers, and it would create economic expansion and wealth the likes of which the world has never seen, and likely a wave 5 bubble in commoddities that would have the “this time its different” mantra sung from the heavens.

    Of course since the bulk of the Chinese population live below the poverty line, there isnt much chance of them buying any new cars just yet. So China is in a race against time, to bootstrap its economy to self-sustaining stage, at which point it can shoot the US hostage, destroy the US economy, inflate its currency to a real level, send its low cost manufacturing offshore to indonesia, vietnam and africa, and assume global hegemony.

  • convictscott

    Depends if its a very deep wave 2. Comparing the sentiment levels with the tops of wave 2 of primary 1 sentiment levels they are just about right across the board.

  • convictscott

    In early thin volume currency trade both AUD and EUR have broken their daily highs.

  • convictscott

    From Mark Minervini, a stock picker par excellence who I respect greatly, he doesnt post market commentary very often, but when he does its worth reading.

    “The overall market picture has steadily improved over the past eight weeks with the DJIA rallying approximately 12%. The rally has put the market in overbought territory which has caused many traders to remain cautious as they wait for a pullback.

    The fact that the market has refused to pullback in the face of an overbought condition is a positive. In fact, as a result, this has recently led to a rare event.

    On October 13, 2010 the percentage of NYSE stocks trading above their respective 50-day (10-week) moving averages reached a level above 90%. In the past, this has had bullish implications 3, 6, 9 and 12-months forward.

    Since September of 1970, every time this 90% milestone has been reached, the market went even higher; the S&P 500 Index posted positive returns 3, 6, 9 and 12-months later. This was the case in the 1970s, 1980s & 1990s and as recent as 2003 and 2009.

    Mark Minervini”

  • JDWM

    He started his short piece with “Over the past several days we nailed down some profits. We reduced our portfolio exposure from 25 long positions down to 13 longs and we added 2 short positions. “

  • baitnswitch

    Markets are going much higher…Goldman is predicting the FED will do a 4 Trillion QE2.

    Long Gold
    Long USO

  • JDWM

    Yes, we should all immediately and for ever believe GS.

  • baitnswitch

    From Zero Hedge:

    Turns out, even we were optimistic. A brand new analysis by Jan Hatzius, which performs a top down look at how much monetary stimulus is needed to fill the estimated 300 bps hole between the -7% Taylor Implied Funds Rate (of which, Hatzius believes, various other Federal interventions have already filled roughly 400 bps of differential) and the existing 0.2% FF rate. Using some back of the envelope math, the Goldman strategist concludes that every $1 trillion in new LSAP (large scale asset purchases) is the equivalent of a 75 bps rate cut (much less than comparable estimates by Dudley, 100-150bps, and Rudebusch, 130bps). In other words: the Fed will need to print $4 trillion in new money to close the Taylor gap. And here we were thinking the economy is in shambles. Incidentally, $4 trillion in crisp new dollar bills (stores in bank excess reserve vaults) will create just a tad of buying interest in commodities such as gold and oil…

  • JDWM

    So, if $4Trn is needed – and I do not doubt it – and they 'only' do 0.5 or 1 that will be woefully lower than needed. Thus, mkt collapses. What do I know?

  • baitnswitch

    Goldman's Hatzius pretty much says it all- suddenly the market will be “forced” to price in up to 4 times as much in additional monetary loosening from the “convention wisdom accepted” $1 trillion. We have just one thing do add. If Goldman has underestimated the impact of existing fiscal and monetary intervention, and instead of closing 4% of the Taylor gap, the actual impact has been far less negligible (and if Ferguson is right in assuming that all this excess money has in fact gone to chasing emerging market and commodity bubbles), it means that, assuming 75bps of impact per trillion, the Fed will not stop until it prints nearly ten trillion in incremental money beginning on November 3. That's almost more than M1 and M2 combined.

    Is the case for $10,000 gold becoming clearer?

  • JDWM

    And $ up v JPY. Wierd!

  • kea11

    OK Sorry Dad. To infinity….and beyond!

    China is more than happy to hurt the Japanese, in fact they are probably rubbing their hands in glee; even so the US will try to keep it's allies new and old from scuttling the ship through increasing protectionism. The mechanism – a devaluing of the Yen against the dollar.

    Brazilian President Luiz Inacio Lula da Silva, who has regularly boasted that his country escaped a general economic chill in the wake of the 2008-2009 global financial crisis, said on Wednesday, Brazil's export sector was being buffeted by other countries devaluing their currencies.

    His government, he said, would take “whatever measures are necessary to ensure the real (Brazil's money) doesn't become overvalued against the dollar.”

    He added: “You have to note the problem doesn't come from Brazil. The problem is that all the world's currencies are rising against the dollar because the United States needs to find a way to restart its economy,” he said.

    The real has risen another 3.6 percent against the dollar this year, adding to a 30-percent hike last year and a 110-percent increase seen over Lula's eight years in power.

    An official in Brazil's finance ministry did not say why Mantega would not attend the G20 meeting this week, even as Brazil railed against a perceived currency discounting.

  • convictscott

    Makes sense to me, a cautious trader banking some profits in a very overbought market. FWIW he tweets his trades with stops, and take profits in real time, I follow him, and he does very well, with a sound, rational, consistent, and objective method that he sticks to no matter what.

    If I had to be a stock picker (I'm not very good at it historically) I'd be using a big part of this method as a basis for a system. Triple digit gains every year for over 10 years, and a chapter in stock market wizards. He dumped his entire long portfolio and went to cash at the April highs.

    My opinion is that if I was a stock trader (im not a very good one – far better on the futures) I couldnt really justify getting long here, but I'd wait for a pullback without deciding to get long. If the pullback (which must come) is weak, decreasing in breadth on the way down, and choppy, that would be a sign to me that the market has much more upside in it, and I'd want to get long some leading names as they pull back.

    If the pullback is crap-tacular to the downside, as it should be after such an extended rally on bullshit technicals, then I'd change my view, and start thinking about shorts after a bounce.

    To me for stock traders its one of those frustrating times where its smarter to be out of the market and watching from the sidelines.

  • convictscott

    Goldman has a *long* history of fucking each and every one of their clients with reccomendations. Do some historical searches, their predictions make Jim Cramer look like Warren Buffet.

  • convictscott

    I can make both a long and a short case in AUDJPY… JPY looks to be carving out a bottom (its strength actually, but a low on the chart), but could have one more low to go. Same deal with AUD, I can make either case.

    AUD stopped and found support at its 20 EMA (which it should), then upday, downday, upday, with each range smaller than the range before, and the last day an inside day.

    What that is saying to me is the power between buyers and sellers is roughly equal at this point, and that aud is coiling for a big move in either direction. My natural tendency to look at it as a reversal is certainly bias in the form of “the lure of the counter trend”, you would have to say that with the break of the daily highs the odds favour the AUD bulls.

  • convictscott

    We can verbally masturbate all day about what will or wont happen in terms of government intervention. Fact is we dont know. And second fact, even if we did know, there is an enormous chance the market could tank on the announcement of qe2 news in a “buy the rumor sell the fact” scenario.

    There are many many things that can go wrong with the fed's strategy, namely that it is almost out of bullets. Multiply the price of gasoline by 2 (yes thats what dollar destruction does) for Americans, and you have a real world increase in the price of every single good and service that people use every day.

    Start inflation that way, it introduces a political element which cannot be predicted.

    In economic terms once inflation goes much above 20% its pretty much impossible to restrain, in this scenario your $10000 gold would be a reality. However since that would coincide with real world poverty for most Americans, you can safely assume that whichever government wants to continue policies which send the US down this path wont last.

    In technical terms the DX is holding at its trendline for now. If that trendline fails I'd say odds favour a capitulation to the downside and some kind of bullish move in stocks/aud/commodities/gold. To me this price action now has the characteristics of an ending move rather than a starting one, but certainly more upside is plausible.

    While the scenario you present is possible, its certainly one of the lower probabilities of all the outcomes, and there are insufficient facts to base it on.

  • Grainman

    how do i get quotes off their mkt? or do i have to paddle all the way to New Zealand?….. thx

  • Tooncez

    Yes. I shouldn't have brought up inflation at all. I was typing while my

    brain was disconnected. I will try to keep that from happening again.

  • springheel_jack

    Friday's move was bogus but last night's much smaller move was real enough.

  • raised_by_wolves

    Never heard or it. Besides gift cards are the easy way out. How about some Danner Pronghorn Heavyweight socks, moisture-wicking merino wool, soft, and itch-free? Are you medium, large, or extra large?

  • raised_by_wolves

    Although I don't have an answer for you, this interesting data that you've scrounged. I noticed that you did make a typo. Your chart is labeled Aug 2009 to Aug 2009 instead of to Aug 2010.

  • steveo77

    Thanks, been doing sick 70 to 80 hour weeks…..looking forward to no work….ouch….but no union job or unemployment avail. No pension, no worries about lack of pension. How is your gig?

  • raised_by_wolves

    The furthest East I've ever been is Toronto. That's where I, uh, “acquired for free” a pair of Gucci sunglasses. My best steal in Toronto, however, was a World War I era U.S. Air Force jacket. I have kept that jacket instead of pawning it off. As for my current whereabouts, I am now on the West Coast. The summers are nicer here; they don't get too hot so I can wear that jacket a lot of the time.

  • raised_by_wolves

    No one wants to hire a sociopath like me. I've just filed my weekly unemployment claim again. I have $6000 left. I've improved my intraday trading recently as well as my chess game. I like TOS, but I'm realizing the commissions are too high.

  • alexdg

    Looking at todays close, I'd say this punk is feeling definitly lucky, be it Gold or Silver. Hope that Cristal wasnt bought on margin. 😉

  • Anonymous


    I’d like to add you to my professional network on LinkedIn.

    – Michael

    Michael Faulhaber
    Telecommunications Professional
    Greater Chicago Area

    Confirm that you know Michael Faulhaber:

    You are receiving Invitation to Connect emails. Click to unsubscribe:
    (c) 2012 LinkedIn Corporation. 2029 Stierlin Ct, Mountain View, CA 94043, USA.

  • Anonymous


    This is a reminder that on February 7, Michael Faulhaber sent you an invitation to become part of their professional network at LinkedIn.
    Accept Michael Faulhaber’s Invitation


  • Anonymous


    This is a reminder that on February 7, Michael Faulhaber sent you an invitation to become part of their professional network at LinkedIn.
    Accept Michael Faulhaber’s Invitation