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Tuesday, July 18, 2017


“Wall Street guru blows the lid off the game!”

It really is kind of amazing … over the last week or two, I have read more “main line” blue blood Wall Street firms completely throwing their collective hands up and admitting … likely for the first time in a long while, if ever, they know nothing and have no confidence in their forecasts for stock prices going forward. In my entire trading career, I haven’t ever seen this … it’s not that they are in “panic mode”, it’s simply they aren’t believing what they are seeing. They can’t get the square peg in the round hole.

Well, I got news for them all; up and until you face the fact the central banks of the world [G3 + SNB] have taken over trading, nothing is ever going to make sense. Add to this, no matter what gibberish they put out for mass consumption to the Sheeple via CNBC & Bloomberg, they aren’t ever leaving either. As I’ve said before, it’s the last paradigm you will ever see in trading barring a complete revolution in western democracies with blood in the street. Until then, fugetaboutit!

Bank earnings a disappointment today … seems trading revenue from clients is down sharply [“gee, with approximately 50% of the trading days from May 1 showing a VIX below 10, what did analysts expect exactly when there is no trading activity”?] This should [hopefully] produce some “flushing of the toilet” so to speak and at least for the first portion of trading this day see sell stops hit off on weakness in the Dow30. We’ll see; the $64,000 question is, will the first low hold after the open, or give way to lower prices and stops. Given the political news on health care [there isn’t gonna be one], tax cuts [where, when?], and now bank earnings, it will be a stretch to see price hold on the Dow30 and especially the SP500 after the open. I’m expecting somewhat lower price during the day; stops below will be key to take advantage of and exploit.

Well, after about 60-75 minutes, that escalated quickly didn’t it? Talk about “stops” … how about 100 points worth … meanwhile the SP500 finally cracked and started to lurch lower as well, although not nearly as severely as the Dow30 … looking out over the entire trading horizon, the EURUSD is up sharply into the upper 1.15's; territory it hasn’t seen in many, many moons, a DAX30 market that has put in an almost 200 point slide, and it doesn’t look good for stocks … which, naturally led to a good scalp off of that waterfall in the Dow30 for the first trade of the day … I treated it as a scalp given the severity of the decline, and the fact that it’s still a long day ahead … market is likely to remain down here in the upper 21400’s to low 21500’s with shots down … as far as I can tell judging from the news, this isn’t another “Trump Dump” OMG-he’s-gonna-be-impeached-in-5-minutes-BS we’ve seen the last month or two, so the selling pressure should remain in here after bounces up.

Another factor is the fact that both SP500 & Dow30 are so over-extended on the upside, one wave of selling isn’t likely to be the end of the profit-taking [thank you Bob Pisani, CNBC] … we’ll see, but even if it rallies, I’d do the same thing 100 times out of 100 given the severity of the selling pressure today.

And in what I can describe only as being in another trading universe, the outright manipulation of the SP500 in the face of the selling has me very much concerned; cuz as soon as it was over, it started straight up, and again today we see the SP500 rally and the Dow30 sit. Well, what happens when the manipulators back off and let the SP500 go down some; what happens then? It makes me nervous as hell to be long the Dow30 and see the SP500 rally and the Dow30 does nothing but sit; I’ve played at this rodeo before, and I know how fast the Dow30 can drop when the broader market stops dead in its tracks. But the simple fact is, the central bankers aren’t as much concerned with the Dow30 as they are with the SP500, and in this market you’ll find the bulk of their manipulation in the futures market.

In fact, I think the FED manipulators take glee from the fact they are screwing so many short sellers and those either predicting or wishing for a market crash, especially in the SP500 market. Behind this outward glee, though, is the fact that with passive investing bringing in upwards of $10 billion a month to Dow30 & SP500 ETF’s & index funds, along with other institutional factors, JPM estimates it would only take a 4% move off of the record highs to set the “selling tsunami” off and on its way, taking indices prices down 30% - 40%. Perhaps that is why they are so paranoid about even the smallest of corrections; they have painted themselves into a nasty corner from which there is no escape … I know it, the “Street” knows it, and the FED knows it.

Well, nothing like a “Plunge Protection Team” [PPT] effort in the SP500; not so much in the Dow30 really, as TBTF banks in the Dow30 are suffering from reality known as “earnings”, and that is holding prices of those down. Still, another “stick save” to stem the waterfall, and it’s “mission accomplished” in the SP500 as short sellers and those liquidating on the drop get to pay a dear price for their actions minutes later. It’s who they are and what they do.

Here at Noon in NY, equity markets have finally reached “peak lunacy” … seriously, these things belong in a mental institution, especially the SP500, which I’m thinking has gone full retard; given the spread and RT commission, it’s almost untradeable in its manipulative form. In no way, shape, or form do these markets represent anything even close to the trading patterns seen in the past prior to February 2016; they are so “exposed” to bouts of selling from these artificial and elevated levels, that all it takes is for the SP500 to go down a fraction of an index point, and it can trigger a 20-30 point “mad rush” slide in the Dow30, or it can be ignored and the Dow30 actually rallies 10-20 points. Who knows, the correlations are so screwed up.

From this, toss into the mix the scumbag LP’s, who at the very first hint of selling hitting the market, start the downward process in the bid [where you sell], where literally anything goes from an orderly move lower to bat excrement 5-10 point downticks that can end … well, its anybody’s guess really. What that means, of course, is that you have to … you don’t have a choice … you have to sell on the way up, and you can’t wait for the turn cuz if you do it’s a guaranteed crap fill you ain’t gonna like. You live with it, and move on … simple as that. Of course, it works exactly the same on the buy side, only in reverse.

Meanwhile, over in DAX30 land, that index has come alive with the uncertainty of the ECB and future policy regarding their QE, the value of the EURUSD, and their purchases of stock via the PPT; it makes for some volatile DAX30 days. Currently, the DAX30 has a much tighter spread at 0.6 index points, and more importantly the daily ranges [not inflated by BS overnight vapors] are higher than the Dow30 and the Dow30 is almost 100% higher in value. Add to that the price change is in Euro’s, which means 1 point = approximately $1.15. Starting tomorrow, I’ll be up to start again trading the DAX30; by 9:30, I’ll make the switch over to the Dow30 for the remainder of the day.

As we move into the afternoon, the SP500 is so heavily manipulated and bid, there’s virtually no trading, only lurches up to one level and then some minutes later another lurch up as the central banks adjust their bids; truly pathetic. So, what you end up with is the following; lurch down, then lurch up, then die … thanks, come again. And this is supposed to be the world’s largest and most liquid stock index? Directly below, the M1; see for yourself how disjointed, screwed up, manipulated, with a total lack of price discovery in every sense.

“Somebody tell me what the hell I’m supposed to do with information like this?”

It’s only better on the M1 in the Dow30 cuz the LP is too busy screwing people with fills, the price range is much bigger, and therefore gives the impression there is at least a market that is being traded. For its part, it is trying to rally, but the Dow30 big banks putting a lid on price cuz of very poor earnings. I wouldn’t be surprised at all if the SP500 went to new all-time highs later today on yet more squeezing of shorts and central bank bidding. Regardless, trading conditions are extremely poor, with almost no trading activity except LP dealers filling market orders off the market … you can see the terrible fills on the tick chart. Simply put, after this morning’s waterfall, this has been a cruel joke for making money.

For those of you who are new to the website, as my many readers/clients already know, in the past I traded the DAX30 many times, and earlier versions of the volatility algorithm actually started with the DAX30. Months of very little activity took me away from the index, but with the Greek crisis behind it, more unsettled central bank monetary/fiscal issues facing investors, the intraday volatility has come back and it very much can be traded as well, if not better than, cuz it’s not nearly as manipulated, as the Dow30. There are slightly different rules for each market, but the version 4 algo manual goes over all of these in detail [and yes, I’m working diligently on the manual to get it done and published]. Simply put, right now, the DAX30 is better than the Dow30 and light years better than the SP500 for trading … the only downside is the time of day it trades for U.S. based traders.

Here towards the close today, the action after this morning’s waterfall lower on stops is very disappointing … I’m not happy with the price action I’ve seen, as in my minds eye it looks very much manipulated to get the result they wanted … kill longs first, then kill shorts … end the day almost where we started and let’s do it again tomorrow. I was hoping that the early action would make for a good action day … boy, did I ever get that one wrong; what a mess. And to prove my point, directly below some action from this afternoon in the Dow30; take a look at the gaps in price discovery between the M1’s, particularly between the close of one and the opening of the next; again, gaps everywhere distorting price discovery of where the market is … and just like the SP500 chart earlier, somebody tell me how the hell to read this, cuz I got no clue, and have zero confidence anything means anything other than what the scumbag LP wants you to believe second-to-second … and I’m not going there under any circumstances.

“One hell of a market mess with gaps everywhere!”

Ok, compare all of this to the DAX30 directly below; with a 5 point grid, take a look at the difference in the “trading action” versus the totally 100% manipulated SP500 market and the 99% manipulated Dow30 market. You’d have to be blind not to see the difference.

 “Whaddaya know … a market that actually trades!”

It’s simple, the DAX30 threshold for the European PPT is a lot different than the ones from the FED, who are in the 2 U.S. indices every damn day. Not so with the DAX30 … they are simply there for emergencies [e.g., market down 500 points or something on that order], and you can clearly see the difference in the trading action versus the 3 M1 charts from today; hey, it’s like this every day! Simply put, the DAX30 has a much tighter spread [0.6 index points, $2 RT per 100,000] than the Dow30, and right now, this week, the average 20 day range = approximately 133 index points. How many days over the last 20 has the Dow gone more than 30 or 40 points in the New York trading session; not the “vapors” seen overnight, but during the “main enchilada” during New York? A couple? [Note: the RT commission in the DAX30 = $2 ÷ (100,000 / 12430) = 0.2486 X 1.1550 = approximately $0.29 RT per 1 lot CFD. Therefore, a 10 lot CFD = approximately $2.90 in round turn commissions.] So, the “net” cost to trade is approximately 0.63 index points in a market that currently has an average daily range of about 133 index points … and actually trades!

A disappointing day really in terms of not only the trading activity, but profits should have been higher given a cursory look at the day’s range. However, after the smack down and subsequent rally back up, there wasn’t a damn thing to do the entire rest of the day except to observe the “manipulative drift” higher with literally no trading … and I can tell you straight flat out, I’m not buying the rally in the Dow30 … so, without any breaks to new lows, test of lows, or other waterfall breaks, there isn’t any way I’m buying this stuff cuz I know what that usually means, and it isn’t pretty. In any event, tomorrow sees the DAX30, which should give us better trading opportunities more in line with stock indices trading traditionally … it can’t be any worse than the crap we get subjected to on a daily basis by the manipulators in the Dow30, so in that regard there isn’t any downside for the PAMM or your trading in general if you trade your own account. Onward & Upward!

PAMM spreadsheet directly below.

Time for the beach … dog and I are outta here … until tomorrow.
Have a great day everybody!

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