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Thursday, May 4, 2017


“Congressional leaders huddle to discuss today’s health care vote.”

All it takes is a few choice words from a Pol, and seconds later … of course, after the close and into the wee hours of New Zealand, after FB disappoints and the shorts are all nice and smug from their higher sells earlier in the day, while longs having been brutalized all day with quick vicious down spikes are wondering what’s next … well, we don’t have to worry about that now do we, cuz here comes the House Repubs announcing a floor vote tomorrow [today] on the repeal of ChalkyCare … never mind it doesn’t have a prayer in the Senate; nope forget that … all it takes is the House vote and boom! … we’re 40 higher back at yesterday’s high before you know it, and after a brief interlude for a nightcap, let’s tack on another 30 or so points for good measure… “Now your talkin’ squeeeeeeeeze” … and you wonder why people are going insane?

Certainly the shorts are, cuz as I’ve told you before, it takes literally nothing to get the Dow30 to rally on “hopium” of any kind, and when it doesn’t come back a lot of people lose an awful lot of money and can’t figure out why. So here we are in the early morning A.M., hours before the New York open and we’re about 65-70 higher in the Dow30 from yesterday’s NY close on “Hopium” that the idiots in the House can pass a health care bill [“Yes, this time we mean it”!] today … meanwhile, FB disappoints on earnings, but who cares? … according to the clueless Twits at the FED, everything is “transitory” so no worries; now move along Sheeple & STFU Ok? … Just as a reminder, “Oceania has always been at war with Eastasia, and chocolate production is at an all-time high”!

If there were actual pits to come into today, I can tell you the wailing & gnashing of teeth would be intense this morning; shorts groaning from the obvious, but longs equally pissed off none of this “phantom rally” has taken place during normal trading hours; “again, like the multitude of days before, everything happens overnight in very thin volume and no liquidity; either it’s Sunday opens cuz “France saved the world” [utter BS], or it’s melt ups in the “wee hours” when nobody is paying attention”.  And so, like so many days before we get to open modestly higher on literally nothing but bad news and “hopium”, only today we get to slug it out from higher levels still, the only question being can the SP500 blast through the 2400 – 2402 level and set off the rally fireworks from the Hedgies who are short gamma. In a normal world, absolutely none of this makes any sense … we left that space a long time ago.

And as if all of this isn’t enough to have to deal with on a day-to-day basis, we also have to claw & fight the scumbag LP banks on the MT4, where no matter the market, they are armed, ready, and totally willing to screw you for a Dollar, with off the market fills whenever you feel like participating. “Nothing pisses me off more than slippage; and yes, I’d like some cheese with my whine”!

I’m reading last night the latest policy statement from the FED, and I have to ask, “what universe of delusion are these people living in, and what “Kool_Aid” are they slipping the financial press that makes them so willing and eager to perpetuate the lies and deceit of this bunch of fools”? And I can’t help but wonder if this whole charade of raising rates in a “falling down” economy [“Rest assured we are data dependent in our analysis”!] is the exact same replay of 1999 when Greenspan raised rates to purposely kill the Nasdaq bubble; only now it isn’t only Nasdaq, it’s the whole enchilada; and seriously, if you think you can “massage & engineer” a soft landing with this, you need professional help in a bad way. There are trillions more in equity assets and the bubble is 10X higher in magnitude; other than that, “Everything is F-ing Awesome BABY”!, just ask them and they’ll tell you.

Turning to today’s market … another day, more bad economic news but hey don’t worry cuz 1) health care vote in the House, 2) everything is “transitional” [thank you clueless Fed Twits], 3) “hopium” is in the air, just ask Nasdaq stocks, and 4) “everything is F-ing Awesome BABY”! Been this way for 35 years, why change now?

An hour into this mess, and it’s straight down from the open to right back where we were at yesterday’s close … “hey, all of you who got hosed by our nighttime activities; yea, sorry about that, nothing personal you understand … but we did sell it down again for you.” And I’m betting the same funds who shoved it up last night and forced the buy stops into action were the same people who sold it down before and at the open … and now we sit right square where we were 24 hours ago. Outside of a couple of days, since the middle of March, nothing but fast moves down and then fast moves up, rinse & repeat and where are we exactly? How about right where it started?

And yet again today, the Dow30 is much weaker than the SP500; while the SP500 pops off of it’s low the Dow30 shrugs and puts in a very weak rally of a few points, but nothing on par that should have been seen; so what happens when the SP500 decides to break again? If you’re long the Dow30 your sell stop will tell you. And as I write, a new low in the Dow30 by a tick or two … thanks for the stop hunt; just a 20 point rip up after the fills are figured out… meanwhile the SP500 sits and most likely laughs at its cousin; the SP500 in a 3 - 4 index point range and not doing Mr. Jack Squat.

An hour and a half into this and trading activity has simply died … quite frankly I have no clue where this stuff is headed cuz there is literally no trading activity I can read to give me a clue … after the stop hunt it’s simply crickets … as I write, the last M1 had a 2 point range; “oh yea, that’s meaningful and tells me what exactly”?... the last 8 M1’s show a range of 4 points; again, I don’t have a clue what it means. But, unless somebody first lights a fire under the SP500 and gets it through 2400, there is real danger to the downside due to complacency in the market as read by the VIX. For sure, I’m not gonna be that first pioneer to step out and start selling the indices; most of those scouting parties got nothing but dead bodies in them. At some point, though, sooner or later volatility is set to explode, and when it does those moves down will be eye watering to say the least.

Here at midday, stops on the downside getting cleaned out; frustratingly, no M1 buy signal at the bottom [again … this is really pissing me off truth be known … every leg down today produced nothing for algo signals] … crude oil is getting crushed lower as rumors float around of China liquidation of everything in the commodity space due to very weak demand. Again, the SP500 finds support at 2382 – 2385 to save the day … wondering how long this can last, cuz if 2380 gives way and stays below, it has the potential to get ugly … real ugly.

Twenty minutes later and it’s welcome to the short squeeze … this is exactly why I don’t like to be short very often … if you're short, you have no idea how far to let it go against you before it changes the mindset of traders that the low has been put in … now you’re like chasing a butterfly in a prairie field trying to catch it before it goes higher still causing more pain. “And just when you think the index is in trouble, it’s you who are in trouble if you’re short … the panic up is intense and painful”. In the SP500, it’s a 5 index point move up straight up with nary a downtick to be seen; in the Dow30 it’s straight up off the low 70 points in 35 minutes and counting. This is your life if you want to be constantly short.

Ok, wasn’t that fun? First the melt down on china related commodity selling, and then immediately melt up as fast on … “hey, it’s stocks, they go up … that’s what they do” … who knows. With tomorrow’s NFP BS, somebody please tell me what the order books look like cuz today they got wiped out on both sides; both shorts and longs then shorts again just to make it special; so where’s the action going to come from tomorrow?

Today was a milestone day; not in the sense that you know of, but that’s why I’m going to tell you now. Starting tomorrow, I’m going to be trading the Dow30 starting with a “macro” theme; namely it goes up 80% of the time so natch I want to be long most of the time. First and foremost, is the New York open where I draw my aqua line; the “macro” theme is to buy any and all breaks above the line, and when the market is below the line to choose the 2nd & 3rd low moves, and any other lows below -150 points that may come up. If the market moves below -200, I won’t be attempting to “pick the bottom”. The “micro” play is the M1; when below the aqua line, “any” turns at the bottom [2nd & 3rd] after a lengthy down move as the next M1 goes green is going to find me getting long; if it’s a “classic” signal from the manual … great … but I have been missing way too many profitable lows for trades waiting for a signal. I’m just giving up way too much money to the market. When above the aqua line, on corrections the “tea cup” handle turn will get me long as well.

In both scenarios, I keep in mind what the range for the day is and where it is most likely going; that becomes a factor in staying long above the aqua line. I’ll still be looking to sell large spikes up, and SDEV hits will automatically see me liquidate.

I’ve been concentrating about a month now in the Dow30, and in that time there have only been 3 days where the market has stayed above the open and gone higher [not counting the French election melt up debacle and the quasi-Easter Monday Holiday]; April 4th, 6th, and 20th ; every other day has been down. Remember what it is I’m doing in the PAMM; I’m basically an ETF that has all of the upside in the Dow30 with none of the overnight risk and very little or zero downside risk on down days; to that end, no matter your investment style, over time I will absolutely crush the averages and their benchmark returns.

Yes, when I was on the floor I used the older version of the floor trading algorithm; but I also used the same “macro” theme I’m going to do now in the Dow30. If we want good to great fills, and if we want the best prices for long positions, then I simply must be able to do what Sokyu Honma advised his students over 250 years ago in Japan to do; namely, attempt to buy the low and attempt to sell the high. We may not always be successful, but over time it is the only way to achieve great pricing on buys and sells. Sounds good to me, and to that end I did do this today in “the Mrs.” account and hit those bottoms in the Dow30 … starting tomorrow I’ll be hitting them for the PAMM. The key is to ignore the first low under the aqua line if the market goes there; that low is either going to be a reversal point to higher prices, or there are more lows in the day ahead. Either way it is most advantageous to skip this low cuz it carries the highest risk.

This was a “screwed up” day from start to finish; it started last night and continued today with Pols driving pretty much all the action … “will they pass it, won’t they pass it”? … and on and on it goes, with both longs and shorts getting crushed before the day is over. Look for higher trade volumes and more trades starting tomorrow as I implement the “macro/micro” theme into the volatility algorithm.

Half hour to the close, and if today teaches you anything it should be this; when the market is lower on the day from the New York open [my aqua horizontal line], it is absolutely imperative to be buying only at the low for the day OR a correction waterfall low on a break from a rally; you absolutely can’t buy the rally. It will spend 20 minutes going up 25 points and take 30 seconds to lose 30; that’s what happens below the aqua line.

Tomorrow sees the NFP at 8:30, and we’ll see what affect it has on the market; my guess is not much after the roller coaster rides the last 2 days of up/down alternating 150 point moves. Looking at the daily candlestick of the Dow30, directly below, take away the big spike days and you got spaghetti thrown up against the wall, with all kinds of “tails” all over the place both red [down] and green [up]. Is it any wonder a ton of hedge funds are going out of business left & right? Take away the “hijinks” of last night into the close [8 PM], and the subsequent melt down into the open today, and what you are looking at is the 6th day in a row of “dojiville” in the Dow30; outside of Christmas Holiday time and the time running up to the election in November, I can’t recall lately [years] of seeing anything like this.

Looking over the complete carnage in other markets, it’s a wonder none of this has affected the Dow30 or the SP500 for more than about 20 minutes; it’s like their immune to anything. “Terrible earnings and guidance going forward? No problem it’s transitory. Terrible soft and hard economic data? No problem, it’s transitory. China going to hell in a hand basket? No problem, it doesn’t affect us. Commodities like gold & oil getting crushed? No problem, I’m in stocks. And the beat goes on’.

As I realized yesterday and test traded today for “the Mrs.” account [no trades for the PAMM today cuz I used today to test run the “macro” theme as I’ve know it from long ago; I wanted to make sure my fills and macro parameters were “spot on” … they were and they worked great. Tomorrow sees the PAMM do the same thing as I did today], the only way to get great pricing is to be at the extremes the other way and on the other side of the order box; anything else the scumbag LP’s look to rip you off and hand out shit fills if they think they can get away with it. Use the “macro rules” I’ve used forever in the stock indices, along with the “micro” M1 signals, and sit back and wait for the spike on the other side. When it’s over you liquidate. “Welcome to the future”.
PAMM/MAM spreadsheet directly below.

Time to hit the beach … I’m outta here … until tomorrow.

Have a great day everybody!

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