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Wednesday, May 3, 2017


“I’m about 110% certain she is right!”

Oh, another glorious day of waiting for more financial & economic statistics … “like the last 957 of ‘em gave us any clue”? … the only things I’m sure of are 1) “Apple” is a religion [right up there with global warming] and it doesn’t matter what the facts are, and 2) the FED will find a way today to “please” everybody … “it’s what future government Apparatchiks do when they’re at indoctrination camp [a/k/a college in some quarters], which is to learn to think & speak bullshit all the while sounding ‘learned, sophisticated, & all knowing’ what’s best for you; and when they’re done everyone walks away with something but nobody can say for sure what that something is”.

So again, we sit and wait … for what exactly I’m not sure of … if the past is any guide, look for something President Trump says between 9:30 and 10:00 to move the market somewhere, if only for 20 seconds … that’s long enough to force somebody to puke …ADP at 8:30, now all of a sudden in the last few months this employment indicator has taken on fans and has started to move markets … why I don’t know since they use the same “fairy dust” the math whizzes over at “Unicorns & Fairy Tales” use for NFP, stripping out the infamous birth/death ratio. “So, adding a few more bartenders & waitresses at Mel’s Diner is going to mean the economy is roaring and the Dow30 can be up 130 points in 15 seconds? Yea, this seems like pure certainty to me too”!

Then at 2:00, the “Oracles of the Eccles Building” will come down from the Mount Olympus cafeteria and give us the latest musings from having consulted with the “spirits”, and tell everybody who has 2 functioning brain cells left in their head that they haven’t a clue … not now, not next month, not anytime soon … but that’s OK cuz … Everything Is F-ing Awesome BABY!! … And by now, since you’ve been numbed with bullshit your entire adult life from Pols everywhere, you happily accept at face value what your brain says makes no f-ing sense, but upon further examination it isn’t worth the effort to think about cuz it might lead you down a road you don’t want to go down … and besides, my stocks are going up so who cares?

And with that firmly in mind, we sit and wait, cuz sure [100% certainty] as I’m sitting here, at 8:15 when the ADP numbers are released, somebody is gonna have a bad case of “butt hurt” as the SP500 & Dow30 indices go “spastic” for 2 minutes before we go into … most likely but let’s hope not … crickets … where we can all wait now until 2 P.M. for ChairSatan Yellen & Crew’s “Hopetastic … awesome BABY” bullshit. Show any 6th grade class in America the FED’s policy statement tomorrow, and ask them to interpret, and be ready for a rush to the school nurse with symptoms of headache, nausea, & symptoms of early dementia.

Well, that escalated quickly, didn’t it? … NOT! ADP comes in right at consensus and everybody yawns … “OK, thanks for showing up … see you at 2 … if anything happens let me know, cuz I’ll be at the club playing 18 today with Skippy, Chatsworth, & Winthorpe … or drinking, playing cards, or all of the above”. PMI at 10, but who’s gonna care?

And suddenly, I’m thinking about Nick Leeson, the indices trader who brought down the Queen of England’s bank, Baring Brothers [having been in business for over 300 hundred years], by losing over 50 million £ [Yup; Pounds] in one day; “maybe it’s just me, but I’m thinking the bathroom scene below is a tad understated, after he adds it all up and heads to the can to ‘pause & refresh’ after a really tough day in the pit”. Directly below the link from “You Tube” from the movie “Rogue Trader”.

Ok, here we are at the open and … “official crickets”! … “Nick, old buddy old pal, can you get in there and create some havoc PLEASE”! … Maybe at 10 with PMI we get some movement before the FED at 2, but don’t count on it. “Come on Donny, say something”! This is the 8th straight day the SP500 is finding support at 2385; the longer it hangs in here, and the longer they [the FED central planners] try and keep it from going lower, the worse it will be when it breaks to the downside. “And what will happen like it always does because these people never, ever learn, is that the more you try and control something, in the end you lose complete control over it and send volatility to the moon. Oh wait … I forgot; this time it’s different”. And the dirty little open secret is that there are plenty of traders that would love to sell the indices; problem is that the ones who have over the last “you pick the number” weeks have arrows sticking out of there chests and backs and aren’t particularly keen on losing more blood [a/k/a money]. “Ok, you go first, I’ll be right behind you”! So, where’s the line forming to sell? And I can guarantee you one thing, with the day’s range being so small as it is right now, that both sides [longs & shorts] are gonna get beat around the ears badly before 2 P.M. … it’s the nature of the beast.

Two things of interest to me today makes me shake my head, and not in a good way either. First up is our old buddy Richie Breslow, from Bloomberg, whining and complaining again about lack of volatility in the U.S. equities markets; my comments from an earlier blog post still stand, whoch basically can be summed up as, “if stocks don’t move and I can’t make money, what’s gonna fund Buffy’s summer vacation trip to Switzerland”? [Link at ZH: ]

The second is more interesting, cuz it looks like the boys over at ‘Force Shares’ got the SEC to give them permission to offer to the public a 4X leveraged SP500 ETF, both from the long side and the short side. Besides having 1) no experience whatsoever in trading futures [“wait… what?], 2) conflicts of interest cuz principals can take the other side of trades [“but don’t worry cuz we would never do that … (much)”], 3) no staff that has a clue how to implement the funds strategies [“please see item #1 above”], and 4) you could lose all you money, all this courtesy of the prospectus, what could possibly go wrong? [The link at ZH: ]

Not “if” volatility returns but “when”, it will be a hoot to follow purchases & redemptions of this ETF as [lemmings] momentum investors chase this thing up and down like a kid trying to catch a chicken for the nights supper out on the farm; add to this the larded up fees, commissions, front end loads [if any], and of course slippage on fills when whoever they use for trade execution gets the slightest clue what they’ll be doing tonight on the close or in the morning on the open, and you have an “all out frickin’ trading disaster” on your hands.

Of course, what they doing in reality is copying me … kinda in theory … they will expose themselves [both ETF’s] to overnight and weekend risk events that will diminish returns over time, as well as expose their investors to redemption risk because the share price of the ETF will NOT match the NAV [net asset value] of the underlying securities; “so, if you’re an investor in this and you buy shares in the “Long” ETF, if you go to redeem your shares someday, what do you do when the ETF shares are bid with a 17% discount to cash? You’re redeeming, they got to sell, there isn’t any other choice”. Obviously, PAMM clients don’t have these problems, nor any of the other myriad headaches ETF shareholders are going to find out after they are in this stuff … and believe me, the problems listed above are only the “tip of the iceberg”.

One of the biggest problems in these types of ETF’s are their “passive” nature; the managers have no clue, but only serve to be “middlemen” [for a very fat fee of course] in a process that will rob you blind. Like I said before, you get on either side of one of these bad boys and the market decides to go 30% in the other direction, and you and every other person who’ve invested in this thing will be on the phone to redeem shares that are getting clobbered. So these guys have a couple of billion dollars in redemptions some day and the SP500 is set to open 75 handles lower [or more] on the next mornings open; and you somehow think the fills are gonna be anything less than a complete “Nightmare on Elm Street”? Seriously, like the ‘Great Winfield’ said after losing $30 million trading cocoa futures, when asked if he had advice to others who wanted to trade cocoa, “Go lie down somewhere until the feeling goes away”!

And off of new lows on a classic stop hunt for retail specs [no M1 buy signal], it’s straight up to new highs for the day with nary a backing off more than a point or two; “ahh, just like old times, only with no volume and still a crap range for the day”. And of course, no follow through to the upside once a new high is put in, cuz the only reason for a new high was to set off buy stops … mission accomplished Gents!

An hour before the FED treats us to their collective cluelessness; trading action is abysmal; ranges are so small nothing means anything. In the SP500 especially, having a 1 to 1 ½ index point range over hours is about as bad as it can be and still be open … it’s like Richie Breslow says, “nobody has a clue what’s going on or where anything is headed”. I’m wondering how the FED, whose voting members wouldn’t know livestock from preferred stock if they had pictures, is going to clear that thesis up exactly? Apparently, @ 17:25 server time, somebody else thought the same thing … cuz remember that wonderful rally? … yea well, they took it away, and now we’re back to where we were 2 – 3 hours ago … the “Flying Wedge of Death” appearing yet again for the 4th or 5th day in a row right alongside its partner the daily “doji” … if you’re a FED Apparatchik holed up in the Eccles building with the other clueless Ivy League Twits, this kind of action is pure heaven; you’re thinkin’ this is what proper central planning looks like.

Ok, Fed does what Fed does … and for the effort, I got chopped to pieces up at the top getting long 3 times and getting it rammed up my … well, you know … everything that should have worked didn’t and add it all up and I’m down  a hundred bucks and change … again … and this calls for a major “rethink” on my part on exactly how I want to use the signals going forward. The Turnkey LP didn’t help, what with slippage being “off the wall” horrible with my worst fill 7 index points off the market; “hey guys, get somebody else to recommend you for trading with your “best liquidity” in the business my ass”. I don’t know folks … some days … I’m really getting tired of getting jerked around by these LP assholes, no matter the brokerage house, no matter the market, no matter their lame ass excuses. The screen says one thing and I get filled somewhere else.

I’d post the charts, but who wants to be depressed; and while I’m not particularly thrilled at losing a hundred bucks and change for the PAMM, it’s not the money per se that bothers me; what bothers me is the slippage and action … both just really terrible. I have a very good idea how to defeat this … didn’t think I would need to do this in Dow30 … but hey, they want to play like this OK … stick with me here folks, I know it’s been a rough ride, although we’re only down a few tenths of a percent overall trading the stock indices since the start of April … going forward I’ll explain the “macro” and “micro” play at work as I do the trades.

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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