Need Leave Of Absence.

Hello Friends,
For some time now, I have been unable to devote time to this blog. For that matter, I am unable to devote time to the market as well. The reason being I am in the middle of the career switch and possible relocation. I tried to do a post on the week-end but could not do anything worthwhile.
I have gained so many friends over the years and I feel bad letting down everyone. But I am helpless for now and I do not think I will be able to do justice to the blog till September 15th, 2012.
Therefore, I request leave of absence till mid-Sept.
I hope you will understand and allow me to take the time off from here to set things in order.
It is time to say " au revoir" at least for now.

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Apologies For My Absence

I am really sorry for not being able to update regularly and in time. Even now I am working but I do keep a check on the pulse of the market.
I think we have an exhaustion bar today and 30 Year is now going to turn.
So lets wait and see. This being an OpEx week, I am not going to attach much importance to whatsoever happening.
In the mean time, be safe out there.
Once again, sorry, and I hope to be there on weekend with you guys.

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The Grind Continues.

So it does. BTFD crowd are unable to push it convincingly to the orbit beyond the gravity and the sellers have gone on strike. Possibly everyone is on vacation and the juniors do not want to rock the boat too much.   In many ways this current rally does seem like the one of March when it just kept grinding higher. But that was then. Conditions are different. Then it was LTRO driven rally. Now it is hope driven. That things are so bad, some one or other, either in China or in Europe, will intervene with money. If none else, then the dragon slayer Ben! Jackson Hole is round the corner and who can forget the QE2, which came out of JH.

It does not matter that things are about to go kaput. O & B team will provide free money to every one in America. O to the voters and B to the Banksters. Then everyone is happy.
We just can't stop salivating.

But we will leave the Economorons with the task of lifting the heavy duty discussion about economics. And just keep the common sense functioning in this mine field. We all have some quantifiable edge in dealing with stock market. Some use TA, some use Elliot wave, I depend mainly on cycle analysis and understanding of the criminal psychology of the TBTF bankers and Oligarchy. In fact if you read history, you will find that the criminal behaviour pattern of this group has not really changed over centuries. Thus a study of the financiers of middle age Venice will give you some behavioural clue of the financiers of modern age. They are more dangerous than a Mexican gang.

Coming back to market, my cycle top was around August 13 -14. So we will see what tomorrow brings. If SPX closes below 1385, I will add to my short positions. The existing short positions are in red but not by much. It was like buying a lottery ticket with higher odds not an investment decision. I still recommend everyone not to front run and manage the risks. The market is not going to move aimlessly like this and a definite trend will soon develop. So lets wait patiently for the definite trend. The movement of AUD is hinting that the storm is brewing and we just have wait a bot longer. My COT indicators are definitely bearish.

I am still tied up with other work and now a days I hardly get time to monitor the market. But that's not a big deal because I am not a day trader anyway. The posts are getting later than usual and not much discussion in depth. So please bear with me for a month or so.

Thanks for sharing my thoughts. Please invite others to join the gang and follow me twitter.( @ BBFinanceblog).

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Some Quick Scribblings.

Hi Friends. I am still working and did not have much time for the market. But I guess nothing much happened anyway. It seems no body wants to sell and VIX is down below 14. My short positions are bleeding red but my position is small and the pain is bearable. Some of you asked about VIX and whether it has bottomed yet. I have the right post for you. Bill Luby is a very smart guy who writes only on VIX. He is a consultant for CBOE and he is long VIX at this time.
http://vixandmore.blogspot.ca/2012/08/how-can-vix-be-14-and-lower-than-vin.html
I see many smart guys are bullish and buying in equities. May be I am dumb to doubt the rally but I still think time is not right yet for going long. I think this is a hope rally where everyone is waiting for Central bank liquidity injection. I think the markets will reach the highs of 2007 by the end of the year but it is still little early for that and we need one correction before the final upswing. And that time is awfully close as per my calculation. So I am not really worried that VIX is down along with SPX. It does not really matter if the SPX goes up a bit tomorrow or day after because the bigger trend is that of a trap. At least that is what I think.
The market action is grinding folks and forcing them to take positions which are risky.
My advice, just don't do anything silly and wait. It is not going to hurt to wait for a definite break out or breakdown.
If you are long, keep your stop loss limits tight. If you are short, keep a close watch and decide when you should cut your losses. Because, despite all indicators, market can remain irrational longer than we can anticipate.
That's it for today. I will have to get back to work. I will try to update with interesting stuff but for now I see just a grind.
Thanks for sharing my thoughts. GLTA.

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Illusion In The Wonderland.

1^st , let me apologies for my absence for the last few days. I was hoping that I will get some respite after 8^thAugust but now it seems my pressure situation will continue till mid-Sept. But that’s life, so no point cribbing.

Coming back to market, I would like to start with some interesting COT data. We would do well to remember that COT report does not result in immediate action. It just shows what smart money is doing well in advance behind the scene while the retail is distracted. The 1^st  chart is the S&P Emini contracts. 

The smart money has gone short from last week while retail is long.

The 2^nd chart is more dramatic and it is a chart of Nasdaq.

The short interest in Nasdaq by the smart money is huge and is a real concern. It seems that at any point of time, retail will be left holding the bag full of crap.

The whole of last week the markets have struggled to move higher and have made multiple tops. It may still make one more break out on Monday or Tuesday, which is also the top as per my cycle analysis. Again, this is not an exact science, but it has proven to be fairly accurate in the past with few days variation. Looking for top is of course a fool’s errand and front running is a bad idea. The reason is not to time the market exactly, but to reduce risk by reducing any long exposure. I am short but in a very limited way and would not increase the short position unless I get the confirmation of the breakdown.

I do not buy the bull logic because I think fundamentally, the world is in a recession and Europe is just taking a rest with everyone in vacation. Nothing has been solved for the stock market to go up. I think the only way it can go up any further is through central bank liquidity, be it Mario or Bernanke. One chart from Mr. Dominic Cimino of PPC tells an interesting story.

The green line is the ratio of XRT to XLP. XRT is the retail sector ETF where as XLP is the consumer staples ETF. When the ratio is rising, it means retail sector is doing well. Retail sector does well when consumers are spending money. And we all know that 70% of American economy runs on consumer spending. When the ratio is going down, it means consumer staples are doing better and retail is going south. Which also means the economy is not really doing well. So when the green line is moving up, SPX should move up and when the green line is moving down, SPX should move down. Simple but powerful concept and it had indicated both the downmove of 2008 and upmove of 2009. Now we see a divergence with green line moving down while SPX moving up. This definitely calls for caution and I do not think there is much to be bullish about unless of course, and again, Ben shows us the colour of the money.

There are many technical divergences which is calling for a top but all these divergences take time to work out. In a way, that’s how the smart money plays with the muppets. While they are busy selling at the top, they create an illusion of new prosperity. And with the markets being manipulated like never before, volume at extreme low level, their job is not that difficult. I think higher the market goes from here, harder it will fall.

Also let us not forget that if the markets continue at this level, there will be no free money coming from Ben. That is not exactly helpful to the Banksters. So be prepared for some action in the coming weeks. In all possibilities, volatility will spike from next week and a crescendo will be reached by end of the Month. It has taken longer than I anticipated but by not front running we have avoided all the whipsaw and mental agony. As I always say, in this present environment, return of capital is more important than return on capital. So be safe out there.

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) 

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All Quite In The Western Front.

Nothing much to say really. Today was a nothing happened kind of day. In the morning when the futures were down about 5 points, I sent out tweets that it is not the real deal. We may still have to wait for few more days to see some action.

I have initiated some short position yesterday and they are almost unmoved or in small red. So that's not all that bad. I cannot expect to hit the nail on head in every attempt but at-least it did not go up huge. There will be couple of false moves before the real one. Have to have patience.

Bulls and bears have their own story to tell and both sides have merits in their argument. But I am following cycles, which says that possible trouble ahead. All the price levels that were to be achieved, have been reached for now. And a cycle top is close by. So let us see which way the wind blows.

The market has been a meat grinder for the last few months and it has been very difficult to make money or invest. The best course of action was no action at all. Hope you guys have kept your fire power dry.  So whichever way the opportunity comes, you will be ready to move.

For now though, I think the opportunity is to the downside.

Thanks for sharing my thoughts. 

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Almost There?

For a change let me share a chart with you.

This funny little chart is actually McClellan Oscillator in Kelter Channel. You will note that when the McOs crosses the upper band, it means a correction is due, when it is below the lower band, it means a bounce is coming. Not 100% right all the time, but close. Again, you have to see it in conjunction with many other things and nothing is 100% right all the time.

Given that bit of information, may be we still have little bit more to go. I am not saying it will, but be mentally prepared. Anyway, it is close to the upper channel. So anything can happen and my XLF cycle topped today.

Going past 1400 serves two purpose. Kills all the weak hands and secondly, convinces everyone else that this rally is for real. Last March, I was reading in the Blogosphere that the rally is not suspect, we who doubt it are. Rather we are crazy to doubt the rally. I am reading exactly the same thing again. Not long after that, the markets topped in April. Will history repeat soon? We will find out.

Yesterday I wrote that I am afraid that they might push it past 1400 mark. Because it is so easy and kind of watermark for many investors, who invest , trade based on TA. That if SPX crosses 1400, we will go long kind of folks. And that's how it happened today. SPX closed just above 1400.

But we cannot afford to get married to one side of the market. If the market decides to go up and up, we are not going to fight it. But since GS recommended to its clients to but EURO, I am hopeful that EURO will now tank soon and will take the risk assets along with it. It may take few days to work out.We have to be sceptical yet opportunistic.

I shorted with few puts and have invested less than 5% of my trading capital. My risk tolerance is 20% of the trade. 20% of 5% is 1%. In other word I am risking 1% of my capital for now and if things do not work out that way I think, I will get out. If things move in my direction, I will add more in stages. So let us see how things play out.

I am unable to devote more time to the market with my other assignments and in any case, I should not worry about every tick. It does not matter what happens in short term so long I get the big picture right. I do not think we are in for a new Bull run but who knows.

Thanks for reading my ramblings and sharing with your friends. Be safe out there whichever way you are going.

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