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Tuesday, August 8, 2017

WHEN EVERYTHING IS “THE MARKET HAS NEVER DONE THIS BEFORE”

“The Central Bank Paradigm for U.S. stock indices!”

Back in late July or early August 1982 [I forget which], “Business Week” magazine [one of the “Bibles” of business news] published their infamous cover story, “The Death of Equities”, in which they claimed stocks could never, ever, ever rally again and that it was “over” … Reagan had failed; Volcker [FED chief] had failed … stocks had literally no place to go. Of course, it was the bottom in stock prices in the modern era, and from those infamous words, it’s been pretty much straight up since then with a few hiccups in 1987, 2003, & 2008.

Now, every day I’m seeing things never before seen … ever … like in evahhhhhhh! Before February, 2016 [a date which will live in infamy] you could count one both hands the number of times the “Flying Wedge of Death” [FWD] showed up at the door of any stock index in 5 years … and those mostly around Holiday’s. Now, practically every frickin’ day in the DAX30, the FWD shows up and rears its ugly head, today being a classic 3 highs and 3 lows, then back to the middle,  in succession around an approximate 100 point range; whether it goes anywhere from here remains to be seen, the damage is done.

I said the other day, never before in history has the SP500 ever had 13 days in a row of closing prices within ± 0.30% of each of the 13 days; only twice before has it ever seen 10 … now we’re at 13 … can it go to 20? Before you answer, take a look directly below.

“Tail risk works both ways!”

So, here we are again today, and we open early this morning in Europe, and the DAX30 is all over the place; first up for 2 new highs, then down for 2 new lows … the kicker coming with off the last low straight up to new highs as the EURUSD gets blind-sided yet again over 1.1800, taking it all the way down to within a hair of Friday’s low [since taken out].

Ok, if that’s not enough, we also got a paranoid EURJPY market … for the longest stretch today, couldn’t go 5 PIPS to save its life … then BOOM! … down we go, not on EURUSD weakness, but Yen strength. Meanwhile the equities are flat.

That take us to today’s open in New York, where the bear market lasted all of 2 minutes before buyers stepped in and bought with both hands, for like the thousandth day in a row. And when the EURUSD broke down and dropped 100 PIPS, do you think any of the big blue chips that have run up on Euro strength faltered a nickel? No, we just make newer highs is all, all the way up to the 22200 mark before faltering. How bad have things become in the Dow30? Remember when I showed you charts of the SP500 on the M1 and how “disjointed” everything was; meaning no flow from one minute to the next, but simply “price lurches” that had no continuity from trading attached to it. Well, gaze your eyes on today’s Dow30 M1 around the Noon hour and tell yourself what you see. Directly below the chart.


Well, whaddaya know, it’s starting to look an awful lot like the SP500 chart isn’t it? See the gaps everywhere between minutes? Nothing like an honest market with honest prices, huh? If today isn’t the “top”, we’re damn close; the sell off from the high today has happened pretty fast, and from where I sit, I wouldn’t want to be long from here. We’ll see, of course, but nothing goes up forever … I don’t care who is manipulating it.

The DAX30, for its part, putting in the classic FWD, and almost untradeable at times with action 100% either straight up or straight down, and the only way you board this train is to buy fast up rallies or sell sharp breaks, and I’m not doing that.

Today’s trading saw one DAX30 trade, and 2 EURJPY [The “Anti-
DAX30” quasi-stock index, if you will]; the DAX30 trade the loser, and the EURJPY trades both winners. Capturing profits in these markets is like capturing butterflies on the prairie with your hands in summer; it’s there, no that damn elusive butterfly got away. All told, including commissions, a loss less than $20; and considering the overall “nuttiness” of things, the gaps, the spikes, the news bursts, and whatever else they want to throw at markets, today was one of my best trading days. As I have told people for ages, any Chimp can manage a winning trade; what do you do when things turn south? And believe me, any of these markets [including the Dow30, despite the manipulations] can turn and turn quickly, leaving people in the dust with sizeable losses. The DAX30, especially, is turning into a nightmare; the wickedness and speed of the spikes out-of-nowhere is literally unparalleled in any of the other stock indices markets, and the problem is getting worse not better. And lately, the FWD is appearing so often, it’s gonna be seen as a regular feature and not something that happens rarely.

The value of the EURJPY as a trading tool and utilizing it as the “Anti-DAX30” is a great trading instrument; twice today, not willing to trade an index that is totally nuts, but instead going with the pair that is more liquid, sane, and has better conditions, the EURJPY trades did exactly what they should have done at the time. I got long once, I got short once; it was a better trade than the DAX30 with superior results. So, I’ll take the “paper cut” and move on to tomorrow.

Here towards the close, and it appears there is a “leak in the Dow30 boat” [about frickin’ time]; whatever happens, when it breaks I’ll be there. We’ll see what tomorrow brings. Onward & Upward!

PAMM spreadsheet directly below.


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

 Have a great day everybody!

-vegas

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