Bimbos and Window Dressings.

Do you know her? You should because as per US Govt. she is a “Genius” worthy of special visa for individuals with extra-ordinary ability.

I am not joking. So far her “extraordinary ability” seems to be limited to appearing in the Playboy magazine as their Miss November 2010. Her name is Shera Bechard, the Canadian-born former girlfriend of Playboy Enterprises founder Hugh Hefner. Now you know that America is in trouble.  

And if we get time to look around, we may find “Fast and Furious” that I wrote about yesterday is here on schedule. Did someone say that there is no proof of month end window dressing? May be not but there is enough proof of quarter ending window dressing. After the disappoint of no QE 3, it was least they could do to goose up the books, so that the report to the investors would not be that bad. And of course we have to recover the $5 billion that “Whale” lost sometimes back. Or is it $ 9 Billion. What do the small differences matter anyway? It’s all free.

Somehow, we had advance information of these shenanigans and we are not surprised. The 1365 level in the 1^st week of July, which I wrote about 15 days back, is almost here. In fact I would love to see it reach 1380 by the end of the week. Because we also know what is next. Don’t be surprised to see that mood has suddenly turned positive and folks start talking about technical indicators giving buy signals. Although you cannot fool all the people all the time, but when Government is on your side, rather when you own the Government, you can come pretty close to that.

So let us enjoy this nice weekend in the grandeur of delusion that we live in free democracy. At least we are lucky enough to buy drinks and gamble as we wish with the food stamps. Isn’t it a great country or what!

Thanks for sharing my take on the end game. Be safe out there.

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Patriotic Rally?

All the noise for less than three points? Definitely not worth it. If you jumped on the short side during the day, you must be very disappointed today.  May be one more attempt to the downside will be made tomorrow. But so far 1300 level have held throughout the week and depending up what happens tomorrow, I think we have a tradable base for the next patriotic rally. I better give a nice name to the coming rip. How about “Fast and Furious”?  Congress and Holders both should be happy.

What caused today’s massive “U” turn, only the manipulators know. Rumour is, someone purchased $ 3 billion worth of emini contracts and that caused the stampede. Whatever it is, it is not a definite trend. Just stupid gyration of momentum chasing bots.  And while we will get another rip soon, selling is by no means over. I keep writing, there is no panic in the market and as such no bottom yet. May be the bottom will come around 1230 or so and it will come by end of July.

Whatever it is, this guy cannot stop smiling today. Although the Court said the Obamacare is a tax on American people but the congress has constitutional right to tax Americans. It was a funny kind of day when FIX news and largely irrelevant CNN came out shouting that Obamacare has been repelled by US Supreme Court and then the stock market revert back up on some other rumour.  But Gold and crude did not recover much. Crude is over sold by a mile and is due for a bounce. May be it will bounce along with the equities next week.

The real news was that Barclays Bank has been caught with its hand in the cookie jar. The fine it has been asked to pay, $ 450 million + is just a slap on the wrist and is nothing compared to the tsunami of legal challenges facing it. I think it will have to make provisions for billions of dollars of legal settlements.  Who might be the losers in this rigging? One group that comes to mind are the investors who purchased short term bonds from the banks linked to LIBOR rate. The name of the guy looking over it is Bob Diamond. Kind of rimes with Dimon, whose bank now appears to be sitting over a loss of over $ 5 billion. And when they are caught red handed in wrong doing, they blame the small fishes in the food chain. The boss gives tacit approval for the wrong and illegal acts and collects millions of dollars of bonuses. Just what Barclays did between 2005 and 2009. And it is not just Barclays, HSBC, RBC, CITI, UBS and many others are involved. Is it any wonder that the Bankers are vilified and called Banksters? There is “Systemic Dishonesty” in everything that these TBTF Banks do. But nothing will happen to the big bosses. Didn’t we just see that during the Senate hearing of Jamie Dimon?

Tomorrow there will be photo-ops from the Euro leaders and some sort of statement. While for the sake of market, I think they say something soothing, personally I hope Germany tells them all to drop dead. Now the Euro cup final will be played between Spain and Italy. This is what is called “Battle of two losers”. ECB must be very proud that both its sponsored countries have made it to final.

Anyway, the last day of June is mostly bearish. Dow down 15 of the last 20 and Nasdaq down 6 straight. I think it will be down day tomorrow and that fits well with the pattern of 2011. Last July there were 5 red days before it made the final top. So far we have 4 red days. So one more red day is in order. Tomorrow will tell the story.

That’s it for today. Thanks for reading http://bbfinance.blogspot.com/ . Please join me in Twitter (@BBFinanceblog) and do re-tweet the post if you agree with it.

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In No Man's Land.

We are in that zone again, that 30 point up or down move day after day from middle of May onward.

By and large there is not much action really in the market and it is as if folks are going though the motion for the benefit of day traders. Or is this the calm before the storm? And already the hourly charts have moved from over- sold to over- bought.

Today everything was up. Equities, gold, crude, bond and US $. The divergence between equities and FX is quite big.

So who will catch up? If there is some good news from the four wise leaders of Europe, may be Euro will go up and equities will reach moon.  We will have to wait and see. If on the other hand, nothing comes out of the 913^th Euro meeting, we may see bit of selling. Tomorrow is going to another important (impotent?) day for the market. The fate of Obamacare will be decided and then news from Euro summit. As you all know, I hate to take or even suggest to take any position before uncertainty. 

I am still debating whether to take any long position in the coming rip-fest. It will be like what I wrote yesterday: picking up pennies in front of a steam roller. There is nothing in the market except central bank liquidity which can move the market higher. Either the Fed or ECB or someone from somewhere will have to feed the junkies. Till that happens, the road is pointing down.  

I think the best trade now would be to wait for the market to reach either resistance or support and see if they hold. It is not necessary to force a trade here or take a trade just because we are bored. In the mean time,let me share with you a nugget of gold, an Analog which is not silly.

(Hat Tip: ED Matts)

Thanks for reading http://bbfinance.blogspot.com/. Please do re-tweet if you think it is useful.

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Bear Flag and Unfilled Gap.

I am not an expert in TA, not by a long shot. More of an arm chair technical analyst. But it looks like a bear flag to me. What do you think?

Also there is this area of unfilled gap which I have been writing about for a while and that is my target area before any bounce. Well, if the market decides to ignore that gap, I cannot argue with it but I think chances are high that tomorrow we will see another down day and maybe we will get a chance to fill that gap. That is also the area of strong support. All in all, not yet right time to play for the bounce.

If you look at the chart of yesterday, we were due for this green day. Should I call this an Analog? Nah! I don’t have much faith on Analogs. They are fun to watch when they happen, but it is suicidal to take action based on Analogs. We better have some other edge in trading or investing.

Nothing changed fundamentally in the world today. Despite the tension in Middle East, Crude did not budge much. Gold is hanging there by a thread. Euro land remained front and centre of the market. And no one is talking about the bigger mess that is America. But this constant up and down without a clear direction is draining for both the bulls and bears. You really have to be super smart to win in this market or luck or both. The last sell-off which took SPX from 1358 to 1314 has severely discouraged the bulls. Today it gained a mere 6 points which it may give back tomorrow and some more. If the plan is to discourage retail and then jack up the whole thing on super light volume, then it is successful. We will soon know. Even if we want to play for a bounce, it has to be super quick and for a very short time.

Every world leader is talking of growth and austerity. The leaders of the failed states like Greece or Spain are blaming Austerity for the ills of their country. But where is this “Austerity” that they keep talking about? They have not reduced spending. Per latest report, Greece did not reduce the number of its public sector employees that it agreed when it took the bailout. Why I am not surprised. What austerity measures Spain took or for that matter France or Britain? What % of GDP they saved through Austerity? What these countries have been doing all these years if they are talking about Growth only now? Politicians are same everywhere be it Spain or Uganda. May be now-a-days they are less corrupt in Uganda.

But these things will run its own course and nothing will change however we may shout. We just want to eke out a living and survive from these crooks. That’s it for today. Thanks for reading http://bbfinance.blogspot.com/ . Please do re-tweet of you think it is useful.

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Calvin Economics.

So far things are going as anticipated. No major surprise yet. The 1300 line held in SPX and the gap in SPY has not yet been tested. It is as if the last 15 trading seasons did not happen. Why last 15, we are back to where we were on January 31^st of this year. All the euphoria of March now seems like a distant dream. The moods are as gloomy as it can get and yet folks are so conditioned with the Bernanke tonic that there is no real fear or panic in the market. Here in North America, we have found a good scapegoat to blame, that is Europe and particularly Germany. Why Germany is refusing to wallow in the mud like the rest of the PIIGS? Why it is refusing to do the same thing that others have done, i.e. borrow and spend what they do not have. Yes, the poor Greeks may have lied and cheated and extorted and spent money which was not their in the first place but so what. After all, you can print money out of thin air. Hasn’t the great super power America done that over and over again? Nothing has happened to America, yet.  But do not despair, even if Germany is not ready to walk to path of destruction, the great nation of American is committed to kick the can down the road. Till the road ends. And all roads end somewhere sometime. But I do not know much. To understand it better, ask Calvin how it works.

Enough of macro economic nonsense. There are smarter people than me, like Bernanke or Kurgman, who know what is best for America. I am just concerned how I do save what little I have from these gentlemen and their brothers. This weakness / sell-off in market was well anticipated and  I wrote that there will one more bounce in the 1^st week of July. In the very short term, the question is, when does that bounce starts and when does it end.  I think it is possible that we will see little more selling. Then on Thursday the honorable manipulators will have something to hang their coats on from Europe. The last two days of window dressing can start in earnest whereby they can suck in the fresh 401K money coming in the market in the beginning of July. So I would expect bounce from Wednesday or Thursday till about the 1^stweek of July. Do we play this bounce? It all depends. Are we investors? If so, stay away. Are we nimble traders? Then give it a shot. But remember, it is like picking up pennies in front of a turbo charged steam roller and the steam roller has aids. (Hat tip: Josh Brown). Short term, one hour charts are bit oversold and a bounce can happen.

The pattern is looking so similar to last year.

No need to match 2011 SPX with 2012 AUD and then match 2012 AUD with 2012 SPX. If you like analogs, simply match 2011 SPX with 2012 SPX. Such a rally is a selling opportunity but be aware of the levels.

I think July will be very exciting for the bears. Because unless there is pain and panic, Bernanke will not be able to hand out money. I am repeating myself 461 times now but so far my theory has proved right. There is only so much wiggle room left for these bright folks. It is like playing chess and anticipating the next move of your opponent. Only we are playing against those who want to fool us forever. With its ZRIP policy, the Fed is forcing Pension funds and ordinary investors to take unnecessary risk while on the other hand it provides free money to the TBTF banks to bet against. With no growth in income, job or economy, you can easily guess the direction of the market, no need for a PHD.

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

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Another Weekend Rambling.

Everywhere you look today there is a mention of how Chinese data is fake. Yawnnn! Have they discovered God in the laboratory? Of course almost everything that comes out of any Government is false. China may be faking 90% of what is reported but look closer at home. I think almost everything that USA reports are blatantly false. Be it BLS job data, GDP data, Housing data, Loan data or even serious things like WMD. Colin Powel even lied before the UN and US went to a false war on false pretext. So I fail to understand what the big deal about the false data out of China. Whoever believed it in the 1^st place please raise your hand. You must believe in tooth fairy as well!

Europe has been the front and centre of our life for the last few months. But so it had been in these very months of 2010 and 2011. Every June, from 2010, we feel that Europe is coming to an end. The fact is, America will falter before Europe. If Europe is struggling because of its massive debt, if Japan is in depression because of its 200% + Debt:GDP ratio, just wait when the chickens come home to roost in USA. With its $100 Trillion unfunded liability, many more trillions of dollars of Muni Bonds, almost 100% official debt to GDP ratio, destruction is staring at the face of USA. Many of my American friends think that USA is the best house in the bad neighbourhood. Actually, it is the best camouflaged booby-trap in a jungle.   

In a ZIRP environment, the only solution left to the Fed and politicians is to print more money. Already the money supply is running at 9% and yet we see deflation all around. The 10 year yield at the height of the economic crisis in 2008 was 2.10 % and now it is 1.67 %. So the bond market thinks that we are closer to a disaster now than we were at 2008. Every successive QE has demonstrated the law of diminishing return and just to get back to 1400 level of SPX, Bernanke will have to pump another trillion dollar. Even if he does that, nothing will change. And yet he will do it because his political master wants him to do so. The long term 30 year cycle of bond yield has topped now and in a matter of weeks and months, we will see yields rising.  Time to scale in TBT.

The short term target remains as we discussed and nothing has changed. We might see a lower low on Monday before we shoot up one more time. If I think there is a trade worth taking, I will send the information through Twitter. The real damage will come after that which will force the hands of Bernanke. Barring one day, June 4^th, there has been no panic in the market so far and just for this reason, I think selling is not over.

Those of you who swear by TA I have a nice article for you from Brian Shannon. Brian wrote a book on Technical Analysis:

The market is tricky, and it seems so even more lately. Technical analysis is often misinterpreted as an exact science, it is merely a tool which allows us to determine potential price based scenarios before we commit our money to a position.

Lately we have seen a lot of technical analysis misused. From a couple of closes below the 200 day moving average being interpreted as bearish, to a couple closes above the 50 day moving average being interpreted as bullish, or believing that one can buy the break above the “neckline” if the inverted head and shoulder pattern and then kick back and wait for the price objective to be met. These examples of ‘failed technical analysis’ are “proof” by doubters that technical analysis is useless. If you are going to succeed in the markets, risk management should be your first priority, regardless of what your timeframe is. I consider technical analysis to be the finest risk management tool that anyone can use if they really understand the psychology of the formation of patterns rather than focusing on pattern recognition alone.

Also from Tuesday’s post — As I often point out, moving averages should not be used as a stand alone tool, but they give us a great reference point to compare price to. We want to objectively observe how price acts around those levels on shorter term timeframes The same goes for trendlines, price patterns, oscillators, Fibonacci, etc We want to be aware of these key levels which motivate others to take action so we can ANTICIPATE the likely scenarios, but wait for price confirmation before we PARTICIPATE and put our money at risk.

Price is objective, we often we are not.

So let us be objective and be aware of the bigger picture. Time is running out.

Hope you are having fun in this beautiful weekend. Stay sharp and filter the noise. 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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Markets Hit By BullS--t.

For the better part of last seven days I am writing about a day like today.  From “ BullS**t Ad Infinitum” on June 14^th till yesterday, I have been urging readers not to get caught up in the meaningless gyration of the stock market and for those of you who cared to listen, congrats for being in cash and safe. This is my two pence service to the ordinary investors who are regularly taken to cleaners by the Wall St. Pandits and various talking heads.

I have written on last Monday that if SPX holds 1300-1320 level by this weekend, we will see a higher high. It was a bold statement at that time, when indexes were ripping higher to talk about a lower level. And yet we are almost there now. Yesterday I wrote about 1365 by 1^stweek of July and a reader asked me if I meant 1265. I really meant 1365. May be even higher, up-to 1380. So it is a bold statement even now but  1^st we wait to  see where it ends in a day or two. Tomorrow we might see a dead cat bounce before some more selling. Ideally I would like it to fill the gap on the way up which I have circled below.

As much as the up move was a fake move, you cannot trust this down move either. Basically we have been in a range for quite a while as highlighted by the rectangle.

How the folks are going to react to today’s selling? Till yesterday, there were talks of end of correction, start of new bull phase because the market did not sell off after the QE disappointment. Will they short the market again now that GS has recommended its clients to short the market with a target of 1285? If GS has recommended a short trade I would rather take the opposite route, more so when short term cycle is indicating a bottom tomorrow. Let’s keep in mind that cycles are not an exact science and the bottom may well come next week. But taken everything together, I do not expect a huge sell from here immediately. As I said yesterday, there is still Quarter end window dressing to be done and beginning of the month 401K money to be stolen.

I am holding to the GLD for now to see where it goes till the 1^st week of July. I kept it as insurance, just in case Bernanke went crazy and declared QE. I do not expect it to do much till August but if gold falls below $1530, I will get out of it. On the other hand, I am thinking of taking a short position in Bond through TBT. That is going to be another long term play. Despite every effort Bernanke is making to keep the interest rate low, it will soon get out of control. Either interest rate goes up or inflation goes up. Bearded one has painted himself in a corner and may have only six more months. You see, I am more generous than Soros. He gave three months to the Europeans. I am giving six months to the Fed. I think it is going to far worse than what we have seen in 2008. This time there will be no country in the world to print and save.

I got quite a few response / email to my last night’s trivia and I must confess, you guys know your history. To sharpen your understanding of history, you may want to read the book” This time is different” .

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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