WE’RE SITTING ON A POWDER KEG

“Poster boy for Stock Indices!”

BTFD is becoming so ingrained into the psyche of American stock traders, I don’t think 99.9% of them have any idea the explosive powder keg stocks are sitting on ready to blow; and I don’t mean up either. I have no clue how the budget battle or the debt ceiling works out, except to say I think President Trump is ready to call the bluff of members of Congress. He campaigned and was elected on 1) conservative Supreme Court Justices [so far so good], and 2) building the “Wall” on the border of Mexico, and in his most recent rally in Phoenix, doubled down on that pledge by saying he’ll shut the government down before he yields on the funding. Negotiating ploy? Maybe, but you better be prepared to do it.

Stock Indices, for their part, could care less about such trivial matters of the real world, living in their own BTFD universe, cuz as we all know, stocks can only go up cuz the FED says so and they got the “Plunge Protection Team” [PPT] covering their back … what could possibly go wrong? Well, I think there’s a very good probability we’re gonna find out in the next 4 – 5 weeks.

USDJPY [our stock indices primary global proxy] is “stuck”; maybe cuz it’s August, and the end of summer things usually get slow, but this feels different to me. It feels like sub 100 or let’s revisit 120+ come September, and if there’s ever a global powder keg, once it gets rolling, it’s USDJPY … cuz it simply feeds on itself and keeps going … and if stocks happen to get “pasted lower” cuz there isn’t any debt ceiling increase or budget, USDJPY in 2 digit territory looks really probable. So, while we fiddle around in tiny ranges with no direction right now, fasten your seatbelt cuz I will be shocked if things don’t explode real soon.

Turning to today’s market … Ok, can I go back to bed now? … seriously dead action with no range or direction … everything a function of who’s caught long/short, and how can we [the dealers] squeeze them for maximum pain [theirs] and profit [ours] … that’s it, nothing more complicated than that.

One algorithm trade early today, directly below, and really the algo trade “that wasn’t” which happened a little before, was the one that I wish had happened, only missing the “Tunnel” by about ½ - 1 PIP, and then springing straight up to a new high. But hey, it is what it is, and we finally got another legit signal, which I took … and it’s early yet, so nobody really knows if the market is going to be dead today or what … it was a “good news / bad news” type of situation. The good news is we got an algorithm signal; the bad news is it went nowhere. Finally, after more than 10+ minutes holding it, it popped up on a small spike and I liquidated it immediately … big whoop, but at least it was profitable.

As I pointed out yesterday, with both an “ideal” long and short position example, you want 2 things to happen; 1) it doesn’t stay in or around the tunnel but more than 1 – 4 minutes, and 2) it moves in your profit direction, giving you maximum flexibility in how you want to trade it. Well, today I had neither, and it made for an easy decision when given the chance to liquidate with any gain.

In tomorrow’s blog post, I’m going to give you an added “indicator” to use on the M1 for maximum flexibility and profit; it’s time tested, and together with the “Tunnel”, no matter if you’re a scalper or trend follower, will add profits to your account. I’ll cover that in detail tomorrow, and then over the weekend amend the manual and add it.

Here in the early afternoon, it appears a “Jackson Hole rumor” has hit the market … don’t know what it is, but the only thing the market is going on right now is anything out of the event … a nice almost 20 PIP romp straight up on panic short covering no doubt, with not a trace or hint that it was coming. For all it’s worth, today has been nothing more than a 20 – 25 point “Flying Wedge of Death” [FWD], with multiple trips to both ends to trap the unwary … some days you don’t get any trend, only serious chop, today being one … but if you are determined to try and force something, they will show you the door poorer.

But, what would any day be without running some stops? Seriously, what would dealers and large hedge funds do without such hijinks? And so, the obligatory stop run, right here before 3 NY time, that sees the high give way and then some PIPS added to the upside above 109.500. Can’t move 15 PIPS in the last 10 hours, but now more than 15 PIPS in 10 minutes; of course, buying this is crazy, cuz there isn’t going to be anything behind it … it was a stop hunt, just like yesterday on the downside; today it’s the upside. Like I’ve said before, every day in this stuff is a new day in terror, and the crap that gets pulled every day from the last hour of New York to the open in Asia is ripe and fertile ground for manipulation.

Both Grandma Yellen & Super Mario speak tomorrow at Jackson Hole, and while both camps say nothing new will be said, we’ll see about that; should be an interesting day. Onward & Upward!

PAMM spreadsheet directly below.

Time for the beach … dog and I are outta here … until tomorrow.

Have a great day everybody!

-vegas

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