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Tuesday, April 25, 2017


“Beware the wolves in sheep clothing!”

Some days, it’s almost more than I can handle; and I knew getting up today and reading the financial press, that I was going to find more than just a little complaining about 1) the French Fry elections and what they mean [which is nothing, cuz nothing will change with France’s Obama], and 2) the distinct lack of trading action, not only in the stock indices, but every market on the MT4.

And sure enough, while I haven’t even got the coffee made yet, here’s our old buddy Richie Breslow over on Zero Hedge [ZH] via his gig at Bloomberg, bitching, moaning, and complaining about “price discovery”. As I said, some days …

Let me boil this down for you: “hey, I got expenses … wife/mistress/girlfriend/boyfriend/whatever … and they got expenses … we need to make money down here, and those a-holes over at the Fed with their near maniacal penchant for wanting to kill volatility … hell, yesterday ‘they’ killed the VIX, sending it to a 10 handle … we got to have some movement OK? … it doesn’t matter up or down … how the hell am I supposed to afford summer school for Buffy in Geneva, Switzerland in a couple of months if the Dow30 is stuck in a 20 point range all frickin’ day”?

To which my response is the following: “Why should you be exempt from what the rest of the country is experiencing in everyday, normal life? Tell Buffy to get up off her privileged teenage ass and mow lawns this summer and save the money; show her that getting up at 6 A.M. and working until it’s dark is what a lot of people do. You and your Libtard buds down on the trading floor and/or in the hallowed halls of Bloomberg, where everybody makes 6 figures cuz it’s basically minimum wage for the wannabes, can take solace in the fact you most likely voted for the nutjobs that have decimated 1) the ‘baby boomers’ retirement savings, and 2) the entire middle class of the country between both coasts. So while you bitch & moan, you’re not some ‘island’ somewhere where your actions had nothing to do with the outcomes you now don’t like. Ma & Pa used to trade stocks, but they don’t anymore cuz “the Street” & government screwed them over; while all your buddies at the TBTF banks got bailed out, got their bonus on time, and then got free money from the FED from QE to play futures, and all the while Obama made sure the middle class got the shaft and picked up the bill … and now listening to you complain about ‘price discovery’, like you’re some innocent bystander that just suddenly noticed it, well … excuse me while I puke”.

And what Richie and his ilk are now discovering is what real traders, not those that sit behind a desk at Bloomberg and wax eloquent, have known for a long while; namely, in a world that has gone 24/5, how the hell do you have any idea where action is gonna come from so you can be there to capture it? Anybody that has attempted to trade anything in the FX arena [including XAUUSD] can tell you it’s damn near impossible to consistently be in the trading session [Asian, European, or U.S.] where the day’s action is gonna be; in essence it’s become a random crap shoot. And the dirty little secret is what the manipulators in the precious metals and FX pairs have known for years; namely, pick the point in time where action & liquidity are lowest, and then come in like a “bull in a china shop” and wreck havoc in the direction you want; find out from the dealer banks [who you take care of very well] where the large stops are and then clean out whatever stops have accumulated from the retail Sheeple crowd along with any/all institutions playing as well. Go to another bank and place the corresponding opposite order to buy/sell to be on the other side of the stops; when you’re finished now come in immediately and bring the market back to where it was 10 minutes ago before you started. EASY PEEZEE.

You get up in the morning [wherever morning is] and you look at a chart and more than likely your first reaction is, “WTF was that 3 hours ago”? And from there it’s … crickets! And the beauty now is, Ritchie and his brethren have now finally discovered “speed of light … crickets” trading; “oh, won’t the days/weeks/months ahead of us be a hoot, cuz this isn’t the last of the complaining or the wails of anguish & gnashing of teeth as the Hamptons crowd discovers what a drop in revenue means”.

Make absolutely no mistake, trading conditions over the last few years especially, have taken a turn for the worse; not just in stock indices, but everything that is traded. Central banks around the world hold trillions of dollars of every asset class imaginable, all for the sake of completely managing volatility and desiring preferred outcomes for their policy objectives. Ten years ago, before the financial crisis [“you know, the one the Fed said wasn’t a problem and was completely under control, all the while the Bush administration stood there like a deer in headlights? Yea, that one”.], when both the Dow30 & the SP500 were HALF THE LEVEL THEY ARE BOTH AT NOW, daily ranges, intraday volatility, and both big down as well as up days were the norm and not the exception, there was a “trading flow” to the market; today that’s gone, and you can place the blame squarely at the feet of the most worthless, counter productive, globalist, screw the middle class, wealth stealing & currency debasing Federal Reserve System. “You think “The Wizard of Oz’ is about Dorothy & Toto? Guess again; while there are many interpretations, the book as well as the movie were meant for adult audiences and wasn’t meant to be a children’s story as many would have you believe today. The evils of the ‘Fed’ very much at play here”.

Turning to today’s trading … already we see it … another mini melt up on nothing, in thin conditions, and before anybody gets to their screens … this is the “stealth” rally I was referring to yesterday, the “preferred” way the elites at the FED and around Wall Street want to see asset prices increase in value … “so much preferable to that hand-to-hand combat style of those … icky! … floor trader types who still infest the world and bring nothing but unwanted volatility to the party … can’t we just all agree it’s better that markets are ‘planned’ by us so that prices can rise easily and painlessly over time and everybody can be happy”?

And the sad thing is, there’s more than a few Chuckleheads that would shake their head in agreement to everything I said in the last paragraph; where all of life, not just markets, can be “smoothed over” by the friendly hands of a liberal & progressive, all knowing, all caring government that will control and run your entire life without any pain whatsoever. “Government as religion; what could possibly go wrong”?

Well, an hour before the New York open and it’s “mission accomplished” for the planners, as “somebody” shoved the Dow30 up 100 points on “nothing”; “oh wait, round up the usual suspects of 1) President Trump’s tax plan, 2) health care back on the table, and 3) no gov’t shutdown [why exactly would that be bad?].” So essentially, we’re up 370 points on the opens of the last 2 days on what exactly? Which of course begs the question Richie Breslow asked this morning on ZH, “So, now what”? [“Psst! It’s CAT & MICKY D’s earnings don’tchaknow”?]

And the only answer I got that makes any sense is, “we won’t see a top until Gartman goes long S&P’s with one of his standard ‘the sky’s the limit’ to the upside recommendations … and then 10 minutes later the market rolls over and heads for wherever his sell stop is placed”. Look for a post on ZH coming soon.

Little over a half hour into this melt up, and I’m really not likin’ what I’m seein’ here; and the reason I don’t have a “thrill up my leg”, is cuz I know how, in a heart beat, how this is gonna end, and it ain’t gonna be pretty. First trade of the day, and I’m stretching the definition of a “signal” here simply because it’s a bullish engulfing pattern off of a correction for about 19 minutes that went totally nowhere in price.

And while I’m in this thing at a disadvantageous level, the SP500 keeps rallying while the Dow30 stalls a few points above my entry; when the SP500 stalls, I liquidate, meaning of course it’s now time for the Dow30 to punch up immediately 10 points in another bat of the eyelids. “Meh, it is what it is”. And what becomes immediately apparent is that the Dow30 in approximately 36 hours of trading since it opened Sunday night, has taken out 35 DAYS of price action ON THE DOWN SIDE since the March 1 all time high. “Sure, by all means, buy the rally up; and if you’re lookin’ for me to tell you where the top is in this stuff, fugetaboutit”! You wait, somebody somewhere will come along and say that new bear markets are 4 M1 candles in a row down.

And surveying the financial trading horizon, here at mid morning in New York, I can’t help but notice that maybe … just maybe … some of this indices bullishness is a direct result of some serious, long term EURJPY short unwinds taking place; add to that the rotation into the Dax30, and it starts to make perfect sense when viewed through the rose colored glasses of Europe’s elite financial managers, that they can get a “double play” being in European stocks. “I think they’re nuts, but what do I know … I’m just a trader … they’re ‘financial managers’ (snark snark)”!

And here we are at that point, where if the indices were still trading in a physical “pit”, you’d start to see the cries of “this shit ain’t ever going down … ever! … EVER! … again! And guys who normally trade 1 or 2 contracts now find themselves long 5 or 7 contracts, up a couple of ticks and feeling all smug about there ‘soon to be’ new found riches, if it can only go up a few dozen more ticks don’tchaknow”. Yup, seen this “train wreck” before … nothing is gonna be any different this time around, nor will it be in the future “X” days/weeks/months/years into the future as well … “I trade the past, and these types of emotions are part of the trading condition … learn it, love it, live it … you’ll know when it ends”.

I have written lately of Sokyu Honma & Gann; directly below one of their favorite chart patterns to get short; I have no idea if the Dow30 holds the top or not today on the M1. What I do know is both men loved this “triple top” formation with a thrust down [bearish engulfing pattern] making up the third leg and the start of the down move. Of course, this candle formation has more power the longer the time frame, and would be a powerful top if seen on the daily or weekly candle chart.

 [Update: It didn’t hold.]
Here’s another reason for the mini melt ups the last 2 days; short option gamma exposure that was rumored to have been behind the February melt up; cuz when you’re short a shipload of calls to capture that premium, and the market ain’t cooperating by staying even or down, your only option [pun intended] is to buy futures for protection. And as we all know by now, that can get quite ugly the closer we get to May or June expiration. Just another in a long list of reasons why you might want to rethink that “I make my living by mostly being short stock indices” meme [when they go up 80% of the time].

Ok, here at midday [Noon in New York], and from the open in New York, it’s a familiar theme at play; namely, bounce somewhere and then … die! For the last 2 hours the Dow30 has fluctuated by about 20 points top to bottom. Again, signals don’t mean a whole lot in chop; it’s simply a flip of a coin.

Here in the Chicago Noon hour, things have really slowed down; trade flow totally absent, and I’m wondering if anybody is looking to take profits into the P.M. from being long, or if they’re just going to let things ride? I’m not sure with another leg up [if it were to come] that I’d want to stay long overnight; I’m not sayin’ look for a any kind of sizable correction, just that I wouldn’t want to have a sell stop below the market get hit off on a move down. At this point, though, market is getting support from earnings, the sizable unwind in EURJPY, and constant rumors of hedge funds stuck yet again short gamma; this stuff really does need some mild profit taking to appear, but exactly who that is that goes “first”, is a mystery to me going into the close.

Here at 12:13 Chicago time [17:13 Turnkey server time], the market makes a new high, powering into some buy stops; from a bullish standpoint, this is one of the worse things that can happen, as now there is approximately a 90% probability the market sees no new high after 1 P.M. Chicago time. Of course, the way this stuff has acted the last 48 hours, the other 10% might certainly be in play with a moon launch later. Market seems to be in a “feeding frenzy” at the moment.

About an hour to the close, and it feels like maybe … maybe … this stuff might be running on empty a little. That’s not to say things can’t change quickly, but I don’t see any buying bursts, and at some point longs have got to start unwinding some … more than likely overnight into the morning … most bullish thing that can happen going forward are lower openings that go higher the rest of the day.

Take away the minutes ± from the opening of New York trading, and these last 2 days have some of the worst trading action you will ever see in stock indices; just more of the same I’ve been writing about for months, which is “speed of light … crickets” and not a damn thing in between. Tomorrow sees more “fun & games”, and I’ll be here to capture some it … that is, if it moves.

PAMM/MAM spreadsheet directly below.

Time for the beach! … I’m outta here … until tomorrow.

Have a great day everybody!



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