Just Another Day.

If you have seen even a little bit of Jamie Dimon’s testimony before the Senate Banking Committee you should be able understand why we are destined to doom. These are the people who are supposed to safeguard America’s wealth. Instead these people were just about rolling before the almighty king and were severely apologetic about the inconvenience they have caused to the” Demon”. Most of the so called Joe Six-packs are so enthralled with Kim Kardahsian’s  sex tape and nude picture that they have no time to think about the real issues. But however much I may dislike JPM and other TBTF banks, come August, I am going to buy the shares of JPM. It is the best house in a bad neighbourhood.

So yesterday it was a sucker’s rally after all. Today it gave back half of the gains of yesterday. Tomorrow it might gain another few points and this up-down dance will continue for a while. If 1.2550 holds in Euro, we may see a bounce tomorrow. For the last 5 trading days we are moving in the following range.

Although I am not a great fan of IHS pattern, it does look like one forming and if we hold the lows of June 4, we may be due for good bounce.  With Greek election due this Sunday and FOMC on June 20, which I think will be kind of disappointing for most; I think we will hit a bottom by June 22^nd. Till then I expect the market to move sideways in a range. Some are expecting a huge bounce on Monday, June 18^th but I am doubtful and would not put a wager on it. With so much headline driven movement, why would you want to risk your capital either way? I keep repeating, we are not going to miss anything and it is better to give up few points in order to identify the true trend.

Gold appears to be holding the line for now and I am holding my GLD. But when the QE comes, Silver is expected to outshine Gold by many miles. I would not be surprised if Silver is able to cross $ 50 landmark this time. We have to be patient because the corrections are not over yet.  But we are getting there.

For the next seven trading days, I would keep repeating myself that be in cash and cushy. Identify stocks or sectors which you think have held up well during this downturn / correction and which logically will do well in the next up-move. Because with his re-election in November, Obama will do everything to ensure that stock markets are up before that. And if you have any favourite stock or sector in mind, please share it with us. I am not a stock picker and I generally go with sector specific ETFs but sometimes a well selected stock will give higher return. One sector I am looking with great interest is the Bio-tech sector. Let us know what your pick is.

Thanks for reading http://bbfinance.blogspot.com/. Please forward / re-tweet / post it on your wall and join me in twitter. (Twitter @ BBFinanceblog)(Stocktwits: Worldoffinance) Lets have the conversation going.

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Sucker's Rally?

Nothing much to say today. Yesterday SPX dropped 41 points and today it recovered 20 points. Looks like a dead cat bounce and more like a sucker’s rally. It was a gift to those who were long yesterday morning, a chance to get out. Now, I am talking very short term for the next few days or till the end of the week and I expect SPX to test its low of June 4 by then.

I think the Greek election is on Sunday, June 17 and most traders will reduce their holding before that.  That is one unknown factor no one has any control. Wolf Richter has following to say:

On June 17, when Greeks try once again to choose their next government, they may decide their country’s fate—or not. One thing is for sure, whichever parties will be able to form a coalition government, they will push for more bailout billions, but this time, forget the conditions, the structural reforms, the austerity. Just give us the money. And however much we want. They’d watched how Spanish Prime Minister Mariano Rajoy had asked for a bailout ... after reassuring everyone with utmost sincerity and for the longest time that neither Spain nor its banks would need one.

Not a detail escaped the Greeks when, after the bailout meeting on Saturday, Rajoy proclaimed victory, saying he’d been offered €100 billion, no strings attached. That’s what Greek politicians wanted to hear—and they jubilated; the yoke of German-imposed structural reforms and austerity had been broken. It didn’t matter to them how much German, Finnish, and EU officials protested that that’s not how they understood the agreement; there were, in fact, lots of strings attached, they said, which makes you wonder if there was even an agreement.

And so Greece’s election may not decide the country's future in the Eurozone, but may simply prolong the extortion racket to keep the money flowing, freely this time, and in liberal quantities—efforts that the Troika may consider distasteful and brush off with disdain. But it’s not even certain that the winning party will have enough votes to form a governing coalition or that any parties could agree to form one. In which case, a third election would be required, a possibility that Antonis Samaras, leader of the conservative New Democracy, called “suicidal.”

How long Germany and other Northern European countries will put up with this extortion racket is to be seen. The pink elephant in the room is Italy and no one is talking about France. But I think we will have to wait for another six months to see it all unravel.

Even if Europe survives through money printing, USA may not. If you think you cannot trust the Bankers, what do you think about the politicians? Who do you think has fu**ed up America more, Bush or Obama?  But this is not the place for political discussion and yet our financial security is intricately linked with what these crooks do. Unfortunate but true.

Coming back to market, for the past four trading sessions we have moved in a range while the Bollinger Band is getting narrow.  Up one day, down the next. But those of us are in cash, have nothing to worry about because as and when the opportunity comes, we will be ready.

That’s it for today. Thanks for reading http://bbfinance.blogspot.com/

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Monday Madness.

Sometimes you can win just by following the simple and obvious path. Looking back at today’s price action, my call for closing the long position on last Friday afternoon and get the hell out was absolutely correct and spot on. The euphoria of Spain bailout did not last long. I took a short trade on Euro yesterday when it spiked open (I wrote this exact thing on last Friday ) and closed it in the afternoon today. May be I closed it little early but with sentiments at extreme, I do not want to take any chances. Take the money that is on the table and run. No need to be greedy. Other than that, I have no skin in the market madness.

While it was the widest range day in SPX futures, I do not think going forward the selling will be too deep or heavy. But the best way to find that out is to wait it out and see where it goes. The reason I think the selling will not be very deep is: there are lots of bad shorts out there. What I mean is that when SPX broke 1284 last time, many folks who trade by technical analysis, shorted the market because the 200 DMA was broken. Now these folks are trapped and they will cover their short position around 1290. This means there will be lots of buying around that area. I also think that market will reverse in the area of SPY $129.50. That was the gap up area and I expect the reversal to take place by Wednesday or Thursday.

Sentiments are as bearish as I have seen in many years. It seems everyone is convinced that Europe is going to explode. The last Cot report is stunning in the sense that while the commercials are super long in Euro, the non-commercials (Large Speculators) and retails are super short.

I have never seen such extreme positions in my life. If history is any guide, the commercials have always been right in calling the turns.

And do not forget the stimulus God-Fathers, who are getting ready to unleash their powers and this time, nothing but the shock and awe will work.  I am not sure if we will see it this 20^th June, but I am very sure of its coming by 1^stof August. Coordinated actions by all the central bankers of the world to kick start the world economy! More like kick the can down event but that will help us to retire rich, hopefully.

Trading wise, we are happy to be in cash and wait for good opportunities.

Hope you are enjoying my banter filled market calls without too much TA or EW or Analog or any other kind of voodoo.  If you are, please pass it along to your friends and circle and join me in Twitter (@BBFinanceblog). Thanks for reading http://bbfinance.blogspot.com/ .

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Let The Circus Begin.

The Ringmasters Pet by Ben Boling

Europe has been saved. Again! The rescue package worked out for Spain shows that when it comes to giving free money to Banksters, the real masters of the universe, the Politicians will find out new and ingenious methods. The EU went out on limbs to provide money to Spain without demanding  any conditions associated with bailout.That is the beauty of the MMT. You just have to write cheque to yourself. In any case, the modern money, which is not backed by any real asset, is an illusion, a figment of imagination, which the politicians and TPTB (The Powers That Be) can create out of thin air and make the sheeples dance and sing and do their bidding. As I say, never underestimate the powers of the CBs( Central Bankers) and now ZH can take a hike for next six months.

So are we going to see a repeat of January when the equities will keep going up and up to another galaxy? I would rather wait till the bearded one shows up with money here at home. What has happened in Europe has just put a band-aid on the bleeding banks and will help restore the calm in the market. More likely we will see a pop on Monday morning but I had other reasons for the pop. I do not think we are at the moment ready for new bull phase but I think at this point we are going to deviate from the last year’s script. We will have a correction soon and I now think that we will not have a lower low. In that case we have seen the bottom.  It is still too early for safe investing and trend has not yet developed but more and more it looks like we will follow the Presidential year cycle pattern.

There is still risk of whipsaw in the market and this bottom is not going to be an event but a process.  Last Monday I wrote “Muppets Beware”. http://bbfinance.blogspot.ca/2012/06/muppets-beware.html  When CNBC, Crammer, GS, every one of those tries to scare the hell out of investors, we would be aware that something is in works. It is going to be choppy few weeks for sure and not yet conducive for sustained bull run. “O” needs good August till October. 

I quote the following from The Reformed Broker:

“ John McCain was running steadily ahead of Obama in 2008 - with a message that "the fundamentals of the economy are sound" no less! - until the September meltdown of Lehman Brothers.  That event was the trigger that shot Obama ahead of McCain and essentially ended his campaign.  Contrary to Hollywood's take, it wasn't Palin's idiocy or McCain's age or anything else - simply his defending of the Bush Economy in the midst of this hundred year's storm.  He looked ridiculous and out of touch, his optimism juxtaposed with the apocalyptic headlines that had jumped from the business section to the front page.  By the time he was "suspending his campaign" to try and fix everything, it was already over."

As long as we understand that markets are rigged by these honourable folks, and we get an idea as to how it is rigged, we can place our bets accordingly. Nothing else matters.  After election will be a different ball game altogether. We are watching the last hurrah and while we are at it, why not enjoy the show.

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Week Of Hope and Helium.

Pardon me for referring my older posts to bring home the points because mostly we read selectively and remember what confirms our belief. This is called “Confirmation Bias”. Yesterday I wrote: “Is the rally over? Somehow I do not think so. I think it still has few more days of fuel left and we may see the uptrend resumed tomorrow.”  So we have had today. I wish all my calls would be always so correct!

But the overnight action was not very convincing and in the morning I decided that I will not hold positions over the weekend. In a headline driven market, where the market acts in a schizophrenic manner, it is too risky to leave open positions in a counter trend rally. In any case the bounce has been weak so far.  I expected 1340 would be taken out by now but we are still struggling to get past the high of May 29^th. So in the morning I sent out tweets that I plan to exit all positions during the day on a bounce. It is better to take profit when you just had a 500 point pop in DOW over hope and helium. I still have GLD which I will hold for now.

So now we are in cash and cushy.  No tension going over the weekend and worrying whether Spain will be able to save its crappy banks and kick the can down for few more months. If Spain does ask for bailout, it may either start a new wave of selling or start a relief rally. I do not know and I do not want to take any chances.  If you have noticed carefully, today the big boyz were totally absent and the volume was almost half of normal. No wonder we had a melt-up in the afternoon. But unless Uncle Ben shows up with the money bag, I have no intention of going long. I may play between support and resistance in a very small scale, but that is not investing. That is gambling and you have to be very clear that you are risking your capital in the hope of finding space between elephant’s toes. And I do not recommend it to regular folks looking for safe investing. Now is not the time yet.

So what’s next going forward? I am conflicted whether we will follow plan “A” which is to follow the script of last year or plan “B” which is to follow the Presidential election year cycle.  It is quite possible that we have seen the bottom on June 4^th. But it is also possible that more selling is to come given all the uncertainty. More the reason to be careful and not commit to any particular position. As I have said before, I am sure we will have a test of the lows but I am not sure of lower lows. If that is the case, then I have a nice Elliott Wave chart to share with you.

It has been made by Jamie Seattele, who is a currency technical analyst by profession and does this for living. I respect Jamie’s work and I thought it is worth sharing with the readers. But it does not mean I agree with him. It’s just another possibility.

If 1267 was the low for SPX then this plan plays out. But we do not know. Either way, the point A in the chart coincides with my call for bounce and we are almost done there. May be little bit more on the upside on Monday. Why do I think we will have some more bounce on Monday? Mainly because of the price action of Euro.

From this hourly chart of Euro you can see that Euro broke the trend-line and is now re-testing the lower part of the line. In all likelihood, it will go up to test 1.2550-1.2600 level and fall back. That can happen on Monday.  When that happens, it will be a good place to short. Another potential short candidate is Crude if it reaches $ 88 and fails there. In the afternoon, while SPX and Nasdaq flat lined, Crude started going up and I hope it goes up a whole lot more.

But McClellan Oscillator is at a level from where market cannot go up much higher and the logical route is down.

So now we wait for the correction and see where it ends.  That will give us an idea which plan we are going to follow. There is no rush and we are not going to miss anything worthwhile by being careful. End of the day, hopefully you are going to thank me for my relentless call for safety and cash. When we are playing with our future and retirement funds, it pays to have a cautious coach.

Enjoy the beautiful weekend with your loved ones. Thanks for reading http://bbfinance.blogspot.com/. Please forward / re-tweet / post it on your wall and join me in twitter. (Twitter @ BBFinanceblog)(Stocktwits: Worldoffinance)

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Bi-Polar Disorder of 1st Order.

Today’s post will be quick and short. The market displayed its bi-polar nature today and ended the day with something like a bearish reversal candle. This is the reason I keep telling that if you are in investor and not a day trader, you are well advised to give the rally a miss. Again, this behavior is completely expected because this is a counter trend rally and it is bound to fail anytime. It reached my 1^st target which is 1330 and reversed from there. Is the rally over? Somehow I do not think so. I think it still has few more days of fuel left and we may see the uptrend resumed tomorrow.

I am holding QQQ, Crude and Gold ETFs and I do not like the price action in Gold one little bit. As I wrote yesterday, I will see how it goes for few more days and then go out of it. However, intraday, it touched $ 1580 and bounced from there. On a weekly chart of GLD, we see that while it is below the long term trend line, for last three weeks it has touched 3 standard deviation on the lower end. The rubber band is too much stretched on one side and it may as well snap back.

So I will hold it till early next week to see where it goes. I have a longer term target of $ 2500/oz for gold but a good entry will be very helpful.

Crude on the other hand is a different story. My longer term target for Crude is $ 70 and so this is just a counter trend play from oversold position. It reached $ 87 intraday today and I should have gone out of it then. Let us see what happens tomorrow.

Euro and SPX is moving hand in hand like a love struck teenage couple.

But the short position in Euro is humongous and is a contrarian indicator. The Speculative Sentiment Index (SSI) of FXCM shows that crowed remains net short in Euro/ USD and further gain in Euro is likely.

That is one reason I think we will see more highs in the equities, at least in the short term.

That’s all I have time for today. Thanks for reading http://bbfinance.blogspot.com/. Please forward / re-tweet / post it on your wall and join me in twitter. (Twitter @ BBFinanceblog)(Stocktwits: Worldoffinance)

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Rip The Face Off Rally.

That was some monster rally! It was special in many ways. This was the biggest SPX rally since 12/20, biggest VIX Drop since 5/21 and biggest 10 year yield jump since 3/14. But we are not surprised because we knew it would come. I have been writing about it since: gosh, I even forget myself. This is the reason I did not short the market even when SPX broke 1284. I am afraid I keep repeating myself so very often that you might find it un-exciting. But on the other hand, I have called most of the major turns and bounces correctly without being dramatic. Now that the rally is here, what do we do with it? That depends what is your goal. Are you able to follow the futures overnight and be ready to pounce on the keyboard of your computer the moment the market opens? Do you consider yourself a nimble trader? If so, then you are ready to play. But if you have a regular job with kids and family, you have to go to office in the morning and do hundred other things besides being glued to the computer, you might give it a pass. For those regular folks, cash is king.

There is nothing fundamental in this rally. I have been showing this chart from the age of Adam.

This is a weekly chart. So let us see where it reaches by the end of the week.

What I am sure off is that we will test the lows but I am not sure whether we will have new lows. Like the Elliot wave guys, I have two possible counts. The preferred count is that we go up this week or early part of next week and selling resumes from June 20 when Bernanke extends Operation Twist and does not come up with real free money. The alternate count is, this being a presidential election year cycle, we deviate from earlier script and keep going up if Bernanke starts QE 3 on June 20.

 (Actual not updated)

 For now though I will stick with my preferred count.

In the morning before the market opened I sent out Tweets that I plan to go long on Nasdaq, Crude and Gold. If you have joined me in Twitter you would have got the actionable twitter even before the market opened (8.30 AM Eastern) and you would have been ready to take part in this spectacular rally.  The model portfolio has been updated with the positions. But I am not really happy with Gold and I might dump it in a day or two depending on its price action. It is signaling that there will not be any QE on June 20^th. Euro on the other hand declared that the world is not going to end just yet. I know it is a false hope but if that gives the bounce, I will take it.

Let us see how the market digest this rally and what is in store tomorrow. I would be happy with 1330 and surprised if we reach 1360, although that has been my range. But market is the boss. We just want to be in the good books and on the right side of boss.

Thanks for reading http://bbfinance.blogspot.com/. Please forward / re-tweet / post it on your wall and join me in twitter to get those actionable tweets. (Twitter @ BBFinanceblog)(Stocktwits: Worldoffinance)

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