“… between the pit of men’s fears & the summit of his knowledge!”
Wherever that “door” was on Friday, we crossed into it early and never came back out; even after the weekend to reflect upon Friday’s action, it is very hard for me to place Friday into any category of trading I have ever seen in my long career. There were things that took place I have never seen before … things I didn’t think possible in trading … and things that had me checking outside my window to see if the “pod people” had invaded and taken over.
I could probably write for the next month about all of the things that made Friday [hopefully] a “one off”, but 2 stick in my mind as most notable; 1) the complete and total lack of a trading environment in the SP500, and 2) the complete and utter breakdown of correlation between the Dow30 versus the SP500.
Unless the CME numbers are a complete fabrication [“don’t get me started on the Criminals Marketplace Exchange], the emini SP500 is the “de facto” leader in stock indices trading; it has the volume & liquidity that make it the leader; and yet, on my trading screen, it climbed and climbed and never for a second backed off for hours. “Unless this market is 100% manipulated with multiple, extremely large bids [e.g., 50,000 contracts] at every minimum tick, somebody explain to me how this market can go straight up with no trading other than the bid/offer I see on my screen, and then instantly the bid/offer goes up 0.5 index points and stays there … rinse & repeat all the way up about 7 or 8 full SP500 index points? How does this happen at “ALL TIME HIGHS” … no profit taking, no short covering … no nothing except the tortoise climb straight up? How can you explain no trading action … only trades at a given bid/offer?
The second is the correlation between the Dow30 and the SP500; usually, the two correlate very strongly. The exception is when a specific Dow30 stock has market moving news that skews the average; however, even when that happens, the adjustment is made quickly and it’s back to a somewhat regular correlation. Not Friday … it correlates, it doesn’t correlate … the SP500 go up 2 or 3 full index points, the Dow30 sits and does nothing … the SP500 breaks 1.5 index points, the Dow30 breaks 35 points … the SP500 sits and does literally zero for 5 minutes [meaning the exact same bid/offer], the Dow30 rallies 20 points … anybody but me see no pattern here? And on Friday, it went back and forth all day long, which I have rarely seen ever over the course of the entire day.
The only logical explanation is one traders don’t want to hear; markets are heavily manipulated by central banks who haven’t a clue what the hell they are doing and/or the damage they are creating down the road. They move from one crisis to another at the speed of light … one day its gold that gets “monkey hammered” and smashed lower, the next day the “Plunge Protection Team” [PPT] has to put out a fire in the energy complex [crude oil futures], and then they effortlessly move to prop stocks up. At some point, there isn’t a “market” anymore. Welcome to the forever “Central Bank Trading” paradigm; it isn’t ever going to change until there is a revolution and blood flows in the street; these elites will never, ever give up political power and the CNTRL-P machine voluntarily. It’s all you really need to know … everything else is bullshit with cinnamon & spice thrown on it and “marketed” to the masses by the financial MSM and told its really chicken salad … you and I know better.
Up in the header of the website, I’ve changed from NDX100 to DAX30; going forward in the PAMM, there will be times when I will trade the DAX30; therefore, as explained in the version 4 manual [about half way through and making headway], the DAX30 has somewhat different rules for trading simply because it is in that group of stock indices that are closed for 11 hours each day before resuming trading the next day. And while to some this may seem insignificant, believe me, it isn’t … it makes a huge difference.
To that end, I’ll be posting every Sunday night the information traders need going forward into the next week for trading the DAX30; those traders that are interested can tune in Sunday night and get it, and those that don’t care about the DAX30 can ignore the Sunday night post, or read it later by scrolling the webpage. In any event, it’s your call, but the info will be there for you.
Over the weekend, I added a link over in the “Download Links” section of the website in the right hand column; I put the link to “MY ‘SUPER DUPER’ CHESS LIBRARY” for online viewing and/or download [PDF]. It’s my personal 164 book collection of chess books that cover the “A – Z” of chess, with many books very hard to find and a great addition to anybody’s library. I realize some of you aren’t “into” chess … Ok, no problem, simply skip it … but I also know many of you are or at the very least would like to know more, including beginner’s books and various full “chess course” instruction, and it’s all covered in my library. Over a long period of time, I’ve put together this collection, and it’s a fantastic source of 1) new and fresh material, 2) endless entertainment that will take you 20 years to read completely, and 3) a superb resource and research guide hitting practically everything a “Grandmaster to Beginner” could ever want at his/her fingertips. By putting it into the cloud, I make it instantly available at any time, free up disk space on my laptop, and make 100% sure it is always safe from a “hard drive crash” where everything is lost. I can access it with my phone, tablet, or PC, so I can travel and have it available for reading, and it’s in Adobe PDF, which has the free reader for every platform you may have.
In order to make it very easy to navigate, I placed all the books in a directory, with many of these having sub-directories on certain topics; this allows you to easily find what you are looking for without having to scan the entire 164 books to find what you want. You can view any file online, or if you wish, download any/all sub-directories, directories, or the entire file to your hard drive for reading. Cloud storage makes all this possible, of course, with none of the hassles of having it on your PC.
About a year ago, I made the decision to stop watching TV and cable … stop watching mindless sports and other idiotic forms of mass media, and start becoming more productive away from trading. The truth? I’ve never been happier being 99% away from politics, sports [especially the NFL & NBA], and mindless “boob tube” programming, and instead focus most of my time away from trading with reading/studying/learning/playing chess and a more focused intent on studying the Bible. To that end, I want to share my chess library with those who would like to avail themselves of the material and perhaps start their own journey if they haven’t started … or, help those who find it difficult to find material by giving them the fruits of my research. In any event, enjoy, and let me know if you like any of the material. Everything is there from complete beginner to Grand Master [GM].
Turning to today’s market … we’re about 3-4 hours from the open, and here comes the upside “vapors”; first the DAX30, and now the Dow30 & SP500 join the party. EXIT QUESTION: “How long does this circus of upside vapors continue before the entire system of trading collapses”? It’s not a rhetorical or academic question … here, at the NY open, it looks as though the Chipmunks are sitting this open out in terms of paying higher prices for stocks … doesn’t seem to be any buy interest minutes before we open … man-o-man, does this stuff need to go down some, simply to work off some of this “FED euphoria” … especially the SP500, but I don’t think we’ll see much. We’ll see.
Two hours into this freak show, and first trade of the day yields a literal scratch; long the Dow30, the SP500 rallies over 2 full points and the Dow30 simply will not rally. SP500 hits new high for the day, and the best the Dow30 can do is be 25 points away from its overnight high. As I said earlier, the correlations are simply breaking down. Oh, this just in from BofAML; “There are many reasons why know and we would caution against relying too much on history for forecasting the likely outcome of these risks." Isn’t that special … where have you guys been? … I’ve been saying this for months … congrats on figuring it out eventually. The link to the ZH article directly below in case you missed it today.
“How bad is it? … This bad!”
What you quickly realize from the table above, is that the rules have been changed; there’s a “new Sherriff” in town, and what the central bank Twits say goes … it’s no more complicated than that.
It goes without saying, that the “quants” and “gurus” at Merrill Lynch are at a loss for explaining or predicting anything anymore, cuz like I have been saying, “Toto, we aren’t in Kansas anymore, and anything and everything prior to the “crude oil save” in February 2016, is useless and worthless cuz the central bankers say so”! Just now, they’ve joined the club. [And as I write, another blue blood, Morgan Stanley, has entered the mix with its very own special research way of saying, “We don’t have an F-ing clue either”. When it rains “obvious”, it pours.
It’s Noon in New York, and right now, I’m not sure no matter what you did [buy or sell], you could get out of the spread within 10 – 20 minutes. Ranges are so tight today, any movement at all exacerbates the potential for either a melt-up or a waterfall down via stops. Throw scumbag dealer LP’s into the equation to hand out slippage on fills, and it is very difficult [if not impossible] to get a fair fill. From the time I got out of my long position 2 hours ago, the Dow30 hasn’t moved 10 points up/down and we’re 1 point from my liquidation fill … throw in a mixed correlation with the SP500, that does no good, and it’s a 50/50 proposition the market can move 2 points … and no pun intended, what’s the point?
And I will say again what I said on Friday … the overt and outright manipulation of these markets is staggering in its scope and intensity … with nary of a whimper from the “street”, with the exception lately of a few voices expressing concern [where in fact, there should be outrage]. What the central bankers have done is criminal … and you can by proxy extend that to every other MT4 market as well … every single one of them is manipulated by the same friendly folks from the “faculty lounge” who have bungled stocks. Here we sit at record ALL-TIME highs and there is no trading at all … nada, zip, zilch, zero; go ahead, tell me this is normal.
Meanwhile, over in DAX30 land, the index puts in its normal daily range of about 130 points. And while I will post starting next Sunday night the important info for the upcoming week in the DAX30, this week the average daily 20 day simple moving “average” = 133.5 index points, and the daily 20 day simple moving “median” = 113.0. Using simply these 2 key metrics, we can easily place the day’s open with a horizontal line, and if the market goes below the line, we only get long “STARTING” when price drops to around the daily average range for the week [from high to low], and attempting to get long on lows from this point … that’s it. When the market is above the open line, any break of 20+ points, and then the “teacup handle” turnaround after about 10-15+ minutes will get me long. More info obviously, will be forthcoming in the manual, but we need the weekly metrics, and that’s why I’ll be posting them on Sunday night for the following week [M-F]. And if the Dow30 doesn’t get its act together here quickly [like 1 day], I’ll start getting up early and trade the DAX30.
With slightly less than an hour to go until the close, today’s action definitely ranks in the top 10 worst trading action days of all time; this was an insult to pathetic. One trade today, a total scratch, and the market is drifting listlessly slightly lower; my hope is tomorrow morning we can get a blast lower with some SP500 lower action that cleans some weak longs out of the market … that could potentially clear the way for higher prices … the worst thing would be upside overnight vapors or a market that opens higher and goes higher; neither setup makes for a good afternoon with rising price. All-in-all, another sick day for equities while the central bankers manipulate the world.
Here at the close, SP500 moving towards its low for the day, and the Dow30 limping along in tandem; still seems to be support down here, but the negative close from an afternoon break is not encouraging for longs overnight or into the morning. However, with central bankers running the show, they don’t know that, so who knows what transpires. We’ll see in the early A.M. tomorrow. Onward & Upward!
PAMM spreadsheet directly below.
Time for the beach … dog and I are outta here … until tomorrow.
Have a great day everybody!
OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MANAGED MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!