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Friday, August 11, 2017


“Clap if you’re short SP500 & long gold!”

Well, it all makes sense if you believe nutjobs like Kim are “crony capitalists” at heart, all the while outwardly totalitarian socialists. Many years ago, in a universe far, far away … specifically the gold pits of Chicago before they lost it to New York [a story for another day], the KGB used to play the gold market like their own personal ATM. Simply put, they’d use a specific house [any guesses?] to buy and sell gold futures through, and every 5 or 6 months, while nothing particular was going on in the world, the “buy brokers” for this house would start one day with bidding on 100 lots, and wouldn’t shut up for 2 seconds the entire day … all told by the end of the day, between 2 or 3 buy brokers, they bought between 20,000 – 30,000 contracts … and I would leave the day behind, go to the train station to go home and get out of Murder, Illinois thinking, “Hell man, who were those guys buying all that stuff”?

And I would wake up the next morning, grab a WSJ at the train station, and see that overnight Russia had moved troops to the border of Poland, cuz apparently to the Ruskies, “tensions” were building that needed troop support. And I’d hit the pit and get an opening call of $15 - $20 higher; “Well now, ain’t this interesting as hell”? And once gold opened, the “sell side brokers” would take over, and these guys started offering 100 lots every 2 seconds for the entire day … and what started out $20 higher, ended the day $5 - $7 higher, as this house sold every uptick the entire day.

Lo and behold the next day, pick up the WSJ and what do I read coming into the city for another trading day; well, the Ruskies overnight withdrew the troops after a meeting with the U.N. secretary general, and he assured the world [after he got his cut, for sure] everybody was interested in “peace & harmony” and all that other BS they dribble out … get into the pit and the opening call is $10 lower. “Ok rocket scientists, figure it out already”!

So, after this happened, and then again a couple more times, you could plainly see that the KGB was using the gold market every time they needed an extra $50 million bucks or so [for expenses] and were running a little short of rubles in the checking account.

So, what makes pot-bellied Kim Jong Un so different? He sells SP500 futures and buys gold futures right before the words start flying … not happy that his first words are sufficient to crack stocks and put a fire bid under gold, he ratchets up the rhetoric to get the desired result. PRESTO … BINGO! The only question now is, when does he cover? And if you got the world stage, a Swiss brokerage house account, and the ability to rattle President Trump’s cage, what could possibly go wrong? And of course, he learned the whole “set up” from the Ruskies and our bud Vlad, since he was in charge of the KGB back-in-the-day, and more than likely got the perfect instructions from one of the masters.

Cuz in my mind, the most likely scenario to this clusterfark with North Korea, is an out-of-the-blue total “everybody is happy” now solution, where some credible third party [the Germans maybe or the Swiss for example], or even some not so credible party [like the Chi-Coms, after they get their cut of course] come up with the “face saving” measure for all parties [after Kim covers of course, and not one second sooner], and the world can breath easier until the next time. In the end, it’s all about the money … and don’t forget, the biggest, greediest, and most ruthless dirtbags in the world are either TBTF banks [our friendly LP’s] or totalitarian dictators who see the “free money” for themselves by playing western capitalist markets … and you think the Arabs got clean hands in the oil market? [hahahaha]

Turning to today’s markets … very quiet overnight, as nobody really wants to do anything after the slaughter of U.S. stocks yesterday … and both the SP500 & Dow30 very quiet, with small ranges … it became very apparent to me as the European market opened and progressed forward, that EURJPY action would be almost entirely dependent upon SP500 price action, and that market moves would be choppy and very tough to trade … so, patiently waiting to get a clue from stocks … having said that, though, this won’t end on the downside until, at a minimum, there is some capitulation selling on the U.S. open; whether it’s today or whenever, opening steady and attempting to go higher invites selling later and more than likely the buying will not be able to be sustained after the slaughter yesterday. So, until you get a lower opening, stocks will be sold on the way up.

Here at midday, unbelievably stocks have been higher since the open with zero selling pressure … not a test of the lows, not even a smidgen of selling to get close to the “unched “ mark … this tells me the “Plunge Protection Team” [PPT] and most likely the SNB are in full “bid mode” today, and there is no way in hell they’re gonna let stocks drop so it can be in all the Sunday papers for the 401(k)-ers to see over the weekend; cuz as we all know, if the average guy/gal gets the idea that stocks have “had it”, and goes to sell the mutual funds and the passive ETF’s & index funds, the redemption's will make Thursday’s hurricane drop look like “chance of showers”. Meanwhile EURJPY doing a great job of anticipating SP500 moves today, but everything about EURJPY trading today out of kilter, along with a reversal “blow up” the talking heads are attributing to the 8:30 inflation report … nice try PPT, but we all know you use these dumb ass reports as camouflage for massive buying, and as a result EURJPY skyrockets 50 PIPS in about 5 seconds … a few minutes later Vampire Squid adds fuel to the fire by cutting rate hike odds for December, and you got all you need for a “kill the shorts” scramble to the high, where the market promptly goes into a 60 PIP correction.

It’s been a messed up day thanks to stocks, which 1) did not open lower, and 2) PPT efforts all day long at keeping prices comatose to take away yesterday’s bloodbath from investor’s minds [nothing to see here Sheeple … move along now], and going back to “biz as usual” and the Dow30 has about a 25 point range from the open. Of course, it’s early yet and anything can still happen … maybe the sellers show up later, I dunno … but it appears to me the PPT isn’t going to let the market drop today, at least not without a fight.

All day long, EURJPY has been following the SP500 in its minuscule range … SP500 goes up 1 index point, EURJPY goes on a ramp higher … SP500 goes down 1 index point, EURJPY disappointment sets in and price drops quickly. It’s been like this all day long, but the problem is the SP500 won’t move, along with EURUSD that has been “bid spooked” all day long alternating between those who want to sell any rally over 1.18000 and those looking to buy under 1.18000 and then running stops … rinse, repeat, and you’re looking at the entire day since Europe opened.

As much as I’d like to “swing for the fences”, today has not set up at all correctly for this in any of the 3 markets I’m looking at to trade. First, the DAX30 is a basket case of “Flying Wedge’s of Death”, doji’s, reversals, stop runs, horrible slippage, and last but certainly not least spikes from hell both up and down … the chart looks like spaghetti thrown up against a wall, and in its present state I won’t trade it cuz its insane from a risk/reward standpoint. Second, the Dow30 is back to “I refuse to move, thank you” conditions that make paint drying look exciting, along with the usual dealer LP games; no trading here unless it drops. Third, North Korea concerns have USDJPY spooked beyond belief, making EURJPY highly vulnerable to down spikes. Nothing starting today, the way things shaped up as I first surveyed the trading landscape said “big day” … instead, it was screaming “trouble lies ahead, be careful”. Simply put, a scalp kind of day in EURJPY, unless the SP500 & Dow30 can do something except sit. So far, from 10 hours ago, the twiddling is winning.

So, not much to do really, cuz if you throw volume out there and suddenly stocks move, if you’re on the wrong side it’s gonna hurt if you were long, and vice versa if stocks rally and you’re short … ouch; especially if USDJPY starts dropping like a rock in water [Yen rally] … what makes this all the more strange, is that yesterday saw massive moves lower on volume, and today it’s total crickets … go figure. And if stocks go down and up alternatively, and you’re expecting a bigger drop, you end up on the FWD “yo-yo”, and quite frankly you’re trading the DAX30 whether you realize it or not. In reality, everything on the board “out-of-whack” today, and the direct result of that is choppy, sharp action up and down as people panic on a Friday. As much as I’d like to, just not a day to hit home runs.

Over the weekend, I’ll be putting the finishing touches on the full EURJPY version 4 volatility trading manual; I’ll post it for viewing and/or download in the “Download Links” section of the website over in the right-hand column on Sunday night some time, and at the same time I’ll remove the “Quick Guide” that’s up there now. And, I’ll prepare you now … IMHO, the version 4 Algo for our “proxy” stock index is as close as you will get to “low risk, high reward” trading [that everybody says they want and desire] as you’re likely to ever come across. I start with the “logic & theory” behind the version 4 algo, and where it makes much better improvements over prior versions … generally speaking, the algorithm now covers all trading conditions, from very slow to hyper volatile … it builds on prior versions because the version 4 is the “general case” under all probabilistic conditions, and does not solely rely on candlestick signals which have disappeared since central bankers have taken over trading.

It’s not the easiest read on trading, but it isn’t “rocket science or brain surgery” either; it needs you to understand why it works and how it goes about making a visual trading platform like MT4 work for you and when to make trades, importantly when not to, and when to liquidate … all the fuzzy higher math is hidden in the visual components, so you don’t have to do anything EXCEPT follow the damn directions and rules for its use [you can follow directions right? … right?]. Once you read it and understand it, all you have to do is scroll back on the MT4 and see the power … it’s there for you to see, don’t take my word for it, do it yourself and I’m pretty sure you’ll be convinced as I am that it’s as “good as it gets”.

All told today, I did 2 scalp trades in EURJPY waiting for the damn stock indices to do something … shouldn’t have, as it cost me some good trades … on the other hand, I didn’t expect a totally zero day from the Dow30 either, and that’s what we got [so far]. If I had done the trades in the Dow30, I would have gotten eaten alive by the scumbag LP via slippage, and of course the spread, and I doubt I would have profited anything. Our “proxy” stock index has far, far superior trading conditions with the consistently tightest spread and low RT commission in the biz, resulting in a “net” cost to trade less than half a PIP … thank you, I’ll take it; I don’t know of any place else that is better than Turnkey.

Here towards the close in New York, some SP500 & Dow30 selling has appeared, thus erasing all the day’s gains … this exactly what I was afraid of since the “inflation report” jacked EURJPY up to the 128.70 – 75 area within seconds. And although we have had some lurches up since then, the market finds itself only fractionally higher from 7 hours ago … and if I was long from a higher level I’d be very nervous, looking to liquidate anywhere, going into the close. Next week should be a hoot, and it looks very much like volatility is back! Onward & Upward!

PAMM spreadsheet directly below.

Beach time … the dog and I are outta here. Until tomorrow.

Have a great weekend everybody!



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