Waiting for the Hail Mary

 

IMO there is likely wild turmoil in the markets as we have a confluence of financial events culminating in the next ~4 months.   When President Trump hears the "market is collapsing" or "going down", with full certainty a tweet to "put a band aide" on the market sentiment.  The insiders will force the market to gap up, very hard core, forcing all the people short (like me) to sell their positions.  That will give the top 1% ability to sell their shares (to the short covering people) and a final flush to resume.

I am NOT mega short, I will take it on the chin hard core when above comes to pass, but I am leaving cash open.  When this event happens, there is no need for a post, or talk to me, I am going in.  Maybe not 100% on the day of the announcement (whatever it is), but I will be looking to load the boat.

This economic situation has been building since before 2008, and we have done nothing since then to fix the core financial rot.  We could have kicked this can for another 4 years if the people elected another politician.  They did not.  We are pulling forward the financial reckoning. 

Post washout, as the government "issues free money", Bitcoin/Gold should soar.  That will of course start government taxes or limits on such investments, and the price controls will begin.

I do expect the next USA downturn to be short, as the "new thing", AI, is from USA.

Through all of this I expect the USD to do well.  If China or Russia fail as countries, we could see a crazy rocket of US stocks.

Long term investment trading signal

After watching the markets since 2006, and being a professional day-trader in 2000-2001, I have learned quite a few things.  As an analytical person, I search for logic in a the markets, which do not operate by any rules at all.  If you have a rule-based trading system that makes you money, one thing is for sure, eventually the system will break.
Upshot: Great to have guidelines for trading, but nothing is absolute.

Couple of mantras I heard as a day trader is 'don't fight the trend' or  'the trend is your friend'.   Basically if the market is going up, many stocks will be going up, and vice-versa.   The market has been on a tear up since 2009, will be 7 years this March!!.  That is quite a trend!
Unfortunately I did not listen to this rule to my detriment, and second-guessed when the market is topping.
Upshot: Spot the trend and play in the direction of the trend.

Today I bring back a post I did in 2008, I am re-writing it simply because my original post is a mess, and this week we may have a trend change upon us.

The concept is simple, have a MACRO tool to spot a trend change to help remove the emotion of guessing the market direction.   I present to you today a tool that has worked as far back as the market has been trading.  Take the weekly simple moving averages for 20 week and 50 week average and use its trend direction to indicate overall market direction.  In the image be,ow when the 50 week (blue line) is above the 20 week (orange line) the trend is up.  If reversed, the trend is down.

Does this mean we are in for a multi-year market fall? Perhaps.  As we can see on the chart the two may flip back and forth and the trend does not change (one example around 2012 below).  But even if this happens, simply sell when the indicator shows, and buy when it flips.  Historically speaking the 'profits' lost is minimal compared to the typical risk of ignoring this indicator.
I do think the markets may someday reach a flat-line when this indicator will be broken.  But until today, it has shown to be a very useful tool.

So look at the image below, take the emotion out of your trading, what do you see?

I see a time to be conservative.  Combine this with China production at 78 month low with china stock market collapsing,  Japan contracting, Brazil collapsing, along with other emerging countries.  USA indicators include (click to read) Factory orders down, payroll is shrinking, GDP is revised lower,  US 3 month treasury yield has gone NEGATIVE, Chicago PMI collapses, home prices are weakening, durable good orders declining, Fed reports plunge in orders, backlogs, and workweek, Fed reports US households contracting in spending, existing homesales decline almost 5%, Philly Fed manufacturing survey collapses, NY manufacturing plunges, Illinois (the Greece of the US) has halted payments due to lack of funds, US export prices collapse most since 2009,

Combine above with my article on future of work, US income levels are back to 1971 levels for men and 2001 for women,

All doom and gloom, not at all!  I see a very bright future AFTER we go through some more hard adjustments to the new economic model.  What matters now is preserving wealth.  For that, consider the long term trading signal below.  For current chart click here:

Video from Karl Denninger, explaining this signal history

Market Zooming to the moon, comments on miners

Very nice snapback rally, and we very well could see a nice rally into the end of year with new highs.
I don't see anything really to kill this bull, unless buyers simply disappear.

But who could be buying? Big institutional money I have to suspect has replaced the common stock investor.  I can't imagine tons o money from the 18 to 40 year olds pouring into the market.

As for Gold Miners, follow Chart freak through this, see what he says, now through the 30th may be interesting.

http://www.chartfreak.com/2014/10/23/look-dont-touch/

Market goes up, up, up

Every time I talk to a hands off investor who has good savings, I hear commentary that the market will continue higher.
Until my post in 2010, I believed that laws and the 'system' would revert to the mean.  That somehow fundamentals would curb asset inflation eventually.

Since my post in 2010 titled  View Change, I am open to the idea that this here, right now, is a market bottom never to be seen again, S&P 500 will hit 4000, then 20,000, on the way to a million.
All that has to happen is stop enforcing financial laws, give away money no strings attached, and influence the market through manipulation.  As I said in 2010, if the S&P 500 hits 2000, USA citizens will hit a new low for USA living standards.  With 41% of working age Americans not working, 15% of Americans living in poverty, inflation for 2014 target double the central bank target, forecast at 4.1%,   As a comparison how US citizens are faring, in 12 months 22 billion dollars in homes bought by Chinese citizens in CASH in just California! 

We have seen this to varying degrees since 2008, starting off with suspending honest accounting in place since the great depression back in 2009.    Without honest accounting, I am still unsure how any company under fictitious accounting can ever be severely punished by the market.

Please keep in mind, if the market doubles from here in the next year or two, all is not well.
We will see an acceleration of side effects, consequences, there will be ripples into bond markets, commodities, currency destabilization with smaller countries, and worst of all big money starting to lose fear.

Losing fear of consequences of actions, companies no longer required to work as hard to get that carrot.  Recklessness, corruption, and acceleration of lawlessness.  Money is a powerful motivator for change, to drive people to be productive, but it can drive down real work if too easy as it would become if the market drives higher and faster.

I honestly have no clue what is next market wise, today maybe the best time ever to buy into the market, I really mean that.  Or we are about to get a long over-due correction back to reality.  When the orange line crosses below the blue line, you must listen and get out of the market, for we could have one hell of a correction.

For now, party on dude, S&P 500 to 4,000 and beyond!

Gold Miners, Stock Market what next?

Gary of the Smart Money tracker is getting bullish on Gold Miners. I myself added to my options a few weeks ago. There is a neutral indicator that I have used and at times dis-reguarded to my own detriment of a stock direction. Please refer to post When to buy and get out of the stock market, a guide for long term investing.

Using this same indicator, I applied it to GDX, and it is not yet clear that GDX is on the rise using this indicator, but the stock may push the indicator over the edge in the days ahead.
Below is a graph of GDX, calling out when the 20-50 weekly SMA crosses, potentially indicating a stock trend change.

As you can see it is reasonably accurate as an independent indicator over long periods of time.

Using this indicator, there is ZERO indication of a market trend change, so for now the sky is the limit.

Fools Folly

Unless tomorrow AM has a ridiculous open lower, I am covering all my shorts in the market.
Since my last post, the market really hasn't exhibited weakness.

I can't imagine a scenario where I try to short again, its plain foolish based on all aspects of market action.  No matter what happens, the market rebounds.

If this trend continues, then back to gold miners is the best play.  As an example. this morning someone DUMPED 500 Million dollars in gold assets in a flash, gold rebounded nicely today.

So while the market did go down today, I am unimpressed by the action.
I'll hit out of options, may keep some of SZK.  Oh well, after watching for years for a break down, its a fools folly to try to predict when this ends.

As I said in 2010, the end maybe a break up not down, and who wants to be short into that!

First hit, right on the Chin, whats next?

Today was one hell of a rally.  Needless to say, my buying spree on Friday should have been delayed to today.
SQQQ strike June 21st, 56 call, shoot for 3.90 an option, buy at the open, 10
That position took a 50% NOSEDIVE IN ONE DAY!
Yikes! Hind sight I should have done 1/2 Friday 1/2 today, buying all position on a whim is never good.

But even with that, I am still optimistic for a market decline this week, and the weeks ahead.

The Volatility Index took a nosedive today, and what goes down usually goes up.  VIX going up means market volatility which is down.

Today the headlines reminded me of back in 2008-2009, shouting at the rooftops to encourage stock owners that all is well, just before the left hook comes.

Then again, we could rally for weeks ahead, how do I know?
If I had tons of $$$ to risk, I'd be doubling down today.
Instead I nibbled, CALL (SQQQ) PROSHARES TR SEP 20 14 $55 at 5.10 an option. (2).
With such a drop today, I couldn't double down, but I did add with a farther expiration.
If I had real strength, I would have bought 1 week from this Friday much cheaper and many more shares.

Good Luck!

Time to take it on the chin

The market seems exhausted, and Gary of Smart money tracker not only agrees, in his paid service has a variety of reasons pointing to this.  Assuming the market FINALLY starts to head lower, we have gone up for so long, so high, this things may quickly fall apart.

Gary's thought is by June FOMC, we could have capitulation on market deterioration, ready for the next free dollar give away.

I have NOT gambled heavy in years, since 2010 really.  But I am making  a big play for the AM.
I don't know if I'll get these prices, but I am trying.
I advise NO ONE to do this, really, it is stupid.  But when I look at the chart below, maybe not so much.

Options are high risk, I may hit out of all of these by next week if I am eating crow.

Triple inverse Energy - Energy up over 18% last 3 months
ERY Strike June 21st, 17 call, shoot for 60 cents an option at the open, buy 10
Double inverse Oil - When markets fall, energy takes it on the chin.
SCO strike June 27th, 28 call, shoot for 1.50 an option at the open, buy 10
Triple inverse S&P500 - Catch general market fall
SQQQ strike June 21st, 56 call, shoot for 3.90 an option, buy at the open, 10
Consumer good - market falling does not make good for consumer
SZK buy 1,000 shares at the open, market order.

Market Topping?

In my post January 2014, The Great Unwinding Starting in 2014, I called out mounting evidence that the global economic ponzi scheme was starting to crack in 2014.   Since then, the market has made valiant attempts to re-establish a sustained bull market, but has failed to materialize.

We had Ben Bernanke leave the Federal Reserve, replaced by Janet Yeltsin.  I think Ben knew the top was potentially near, and wanted to exist on a high note.  I am not a Ben hater, I just don't think any one person can fix the global economic system, and his attempts where I believe in good faith given the many constraints of the current model.  But if I was to believe his actual words, he is naive to think buying time by relaxing laws and policies will 'teach' people to be economically responsible.
World Ward 2 is best example how appeasement doesn't lead to better results.  Germany now is also a lesson on how LACK of appeasement does not lead to better results.

Before I go on, credit where credit is due, Gary of the Smart Money Tracker posted market topping as a possible scenario right now.  I believed the market has been topping for the last few weeks if not since January.   But that is a feeling, and I relied on Gary to give a harder signal to trigger this post.

When in doubt, I try to go to the MACRO view of the markets.  In my post about long term investing, how to spot a market top, we have NOT yet had a signal this has occurred.  So if you want to wait for the signal, please do!  Read my post When to buy stocks or get out of the market . I encourage everyone to review their holdings and pick hard stops.

Below is a picture of the current market valuation, and I recommend watching this video making a case of peak everything.

Assuming there is a near term top in the market now, the USD valuation should rise.  Latest USD chart of valuation below. Right now there is no indication USD will rise, but it isn't failing yet compared to recent years. (TheChartStore.com)

US 30 year interest rates, this is the most damning for markets.  The US government knows that interest rates for 30 year bonds MUST stay in the range below, or a crisis could trigger.  To force rates lower, we need a 'flight to safety' for investments, that is usually triggered by stock market valuation problems.  See my post on The Hard Road MUST be Taken on the global currency battle stakes.

Assuming safety is the play, I have to imagine gold is going to get hurt, and buying bonds is good now.  If the USD valuation breaks down, or interest rates break up then this assumption is likely wrong.  This is one of those periods in time, I see risk everywhere.  If the market falls, so should gold and gold miners.  HOWEVER, GDX is about to show it is entering into a bull market!  So I am torn.  I did lighten up GDX and GDXJ this past week and keep an eye out for what happens next.

Back to market topping.  A market usually tops with high fliers cracking first.  Here is a bunch of charts, while most have not shown a convincing top using 20-50 weekly SMA, many look toppish.

Is US Dollar Under Duress

Its no secret that America's luster has been tarnished since 2001, and arguably since Nixon.
With (Russia) Putin's Hubris, and China's economic duress, either acting aggressively to take down the USA is not out of the question.

USA has had the benefit of being the world's reserve currency since World War 2.  This benefit in the last decade has turned into an albatross.

No matter what the USA has done with it's finances, the world adjusts it's currency valuations to ensure their currency parity is in line with what politicians and economists believe is a health exchange rate.

Even countries, like Russia, who may prefer USD to falter, are compelled to be compared by the US dollar since their trading partners do keep their currencies locked to USD.


The net result is the USD has had it's valuation tied to its trading partners, and in turn countries that don't want USD to be world currency reserve have no choice but to maintain parity.

However, we are starting to see some unusual pressures continue to build.  I posted previously on various countries having local currency problems.  That combined with potential with aggressive countries may look for an opportunity to attack the US dollar standard puts America at risk.

Further, a market PREVENTED to freely trade by suppressing interest rates, changing accounting laws since 2009 in place since the great depression, giving banks 85 billion dollars a month (yes giving) for 2 years, and other aggressive measures will have an unintended consequences.

What I fear is a USD decline that once it hits a certain point, a run for the door will happen.
If/when that happens everyone will be trying to put their money into assets to stabilize their wealth.

Natural resources, and now crypto currencies are good candidates for storage of wealth.
Now to the charts, lets take a first look at the US stock market, S&P 500.  Does anyone believe the economy is stronger than 2000 by a longshot? Than 2007?  If you don't then you must ask, how can the market be valued this high?  Answer is simple, accounting rules changed and various unintended consequences of free money.

 toda

Now lets take at look at US Dollar valuation since 2000.

Hmm, the US dollar was 50% higher in 2000 than now.  At that level, a market at 1500 in 2000 is equivalent of 2,250 today.  So we have not yet broken the highs of 2000 even though the first chart indicates we have.

OK, so we get it, USD is lower, market looks higher, but in real valuation it is not.  Big deal right?  Things move around.

Now lets take a look at US 10 year interest rates, notice we hit a bottom around June 2012, as I posted back then!  It was a golden opportunity to bet against US bond values as we hit.  So far that was a correct call.





Lets take a look at Gold, old school alternate storage of wealth.  Remember I HATE gold = money, but it still needs to be raised here:

Gold has been recently rising since end of December.  Also gold is near its long term up trendline.  Notice the 25/50 weekly SMA lines are starting to turn up, if they cross it usually means the asset is on an upswing.  But we are no there yet.

What about Bitcoin? Despite its original exchange blowing up and going bankrupt, its valuation is holding steady, dropping from 800 to 650 from the scare. Not bad for something that just recently exploded from 20 bucks to 1200, going to 800 before the crisis hit.

So what does this all mean?  The market is going higher but still hasn't surpassed the USA wealth of 2000, not by a long shot.  The USD if it ever crosses below 70, it is a very strong indicator we are in a new world, probably an epic crisis, based on USD valuation over last few decades.
US Interest rates may have bottomed for my entire lifetime in June 2012.  If the rates break out of the range we are in now up, we can see a generational shift from decreasing costs of debt to ever increasing costs.
Gold is still trending higher, relatively stable since before 2006 with a nice steady rise.    Bitcoin for all the shouting about its a crackpot scheme has been fairly well.  No where close the reaction the US economy had with the bankruptcy of Lehman brothers.

One thing should be a takeaway, the market valuation ever higher is an illusion considering how much money is being pumped to prop it up compared to 2000.  The USD value alone tells a story about USA wealth.  With rates seemingly past the least costly in 60 years, Gold and Bitcoin holding well, the USD may be headed for troubled waters from its enemies.

Good luck

Gold and Gold miners - A buy

I have been beating the gold miner drum for a while now, but I'll re-iterate this call.
I see no need for me to report charts, reasoning, and other items to point to gold miners.

Instead I refer you to Gary Savage post 'Behind the bear raid'.  I don't subscribe to the reasoning that there is a plot to tank gold miners recently.  Ignoring Gary's twist on the gold decline, the charts and analysis is good.

Consider looking at ETF's  GDX and GDXJ, with GDX at 28 today, and GDXJ at 45.

I am almost full tilt in this sector now.  good luck!

Crash of 2013

I really love this blog, and wish I could spend the time to blog daily like I used to.

Work is insanely busy, and I have a wonderful boy who is 3 turning 33, time flies.

Today I will go back 2 year ago, to the day, on a prediction I made in post "Reaffirm that I believe the market will go to heck".  Back in 2010 into 2011, I was insanely bearish on the market.  Quite clearly, I was dead wrong.

What I didn't understand then, and I do now, there are no reliable laws.  Laws are agreements today that can be changed tomorrow.  Sometimes laws change simply by en mass wink wink, lets not enforce.  Sometimes laws are changed officially to change the landscape of what is reality.

Back in 2010-2011, I understood that what was being done then is doomed to fail, as I still believe today.  But I have changed on the 'doom'.  I no longer believe that the specific issue with the global financial system is 'printing money' per say.     As I have written since then, I believe what we are seeing is a financial system established by men in pointy hats in 1913 that try to use human processes to control something that is too big to actually control.    The rapid technology assault will uncover the weaknesses and destroy the system.  This is pretty much the same pattern for every industry technology has struck.  Unfortunately, I am concerned that the global financial system under assault may lead to not so nice consequences.

Here we are, with markets going higher, never ending higher.  It should be quite clear to anyone looking around that this is not the market highs of the mid 1980s, or even 2000.  This is a game score being manipulated to appease the fans that the game is going good.

Fundamentally, there is plenty that is going really good in the economy and technology.  I am very excited about many new industries pushing forward.  But when you look at the wages and breath of impact, it is a bit disappointing compared to past decades.

Which brings me back to 2011.  I posted

"So for now, I am playing long, I am also adding stop losses all over the place, with a bit of room to maneuver. I suspect that most of the market is doing the same, which makes this truly an insane game of chicken. I really don't know when I will jump off this ridiculous ride back into cash. For part of this game is the fear the USD will implode next.....something I agree will happen, but it's too soon. 2013-2016 is my thinking."

What I have come to realize is, the markets have zero to do with reality at this point.  What is in control is politics front and center.  Central banks are no longer influencing based on sane decisions, but instead on the will of the environment.   Everyone but anyone thinks pressing buttons that say 'ignore accounting' and 'print more money' will end well.  I am here to tell you for 1,000's of years many societies try this, it hasn't worked yet.

So I expect in 2013 a punch in the face for the markets.  And here is when it gets hard.

Gold, Gold miners, can they withstand the pressure.   They may go much cheaper also.  But maybe they won't pull back hard leaving everyone without a bargain buying opportunity.    The precious metal mining sector will reach unbelievable heights as a limited resource is subjected to leverage to push valuations artificially high.  This of course will happen sometime in the next 4 years when people are panicking, looking for security.  After the panic passes gold will be the most spectacular crash ever seen.  I of course, want in on the upside, and I may jump out too soon on the way up.

Between now and then is really the question, what to invest in.  For now, I have no good answers.  When the crash hits, and markets start to recover, one thing is for sure, natural resources for the next pump and dump years.  

Decent Entry for Miners

Its no secret the market has taken a beating, and resource stocks have been brutalized.

Some like Gary are calling for a near term bottom in gold miners.  For me the jury is out.
There are many factors at play, and one of them is the Fed's reaction to the deflationary collapse that is gaining steam.

Assuming the Fed announces a new Quantitative easing "rebranded" announcement, gold may be poised for a nice leg up, along with it the Gold Miners.

If you haven't already, consider adding - yet again just a little - GDX at 41.50 range, and GDXJ at 18.50 range right now.  Put some stink bids in at 39 & 17, and see if we get a down-up day for a good price.

Make sure you have margin left over, for this rabbit hole could go much deeper.
I wouldn't buy anything else right here and now.  We could have a nice 2008 deflationary collapse again.
China's real estate is cracking so is Australia.
In a deflationary collapse gold miners and gold could repeat 2008.
Isn't this fun?   The bets are not on business cycle, but on what is the reaction of world banks.

I am selling some of the inverse funds, DXD and VIXY right here, and putting stops in.  Too much down too quick for not to take it off the table.

Good luck.

Market Breakdown Near?

Everything I read states market breakdown maybe around the corner, or at very least slow bleed in the months to come.  Either way, fixed income is the only place to be, as all assets may decline.

The wild card of course is the world's hero, Ben Bernanke, he can give the market another pop, but each time the half-life of the effect hits.  So even if he does, it just kicks the can for months, not years at this point.

On target for 2012 to be a down year, after a really strong start.
Good luck

Bernanke Villain or Hero

I read a blog post or two, and saw picture of Ben Bernanke pictured as Hero.  Article goes on to say how there is much debate about Bernanke's actions, and what this will lead to.

For those not following Ben Bernanke, he is the chairman of the most powerful banking institution of the world, the private bank named Federal Reserve Bank.  This bank is not part of the US government, but does act in concert with US government co-operation.

Mr. Bernanke took extraordinary measures to prevent an all out deflationary collapse back in 2008.  Since 2009, normal accounting measures Mark to Market have been suspended as they are to this day.  Under the new order of super low fixed interest rates, corporate accounting changed to mark to fantasy valuations, the corporate earnings have never been better.

I actually don't have a problem with the dramatic steps taken in the time of pressure.  Some decisions may have been not the best, but overall at the time, the net result cannot be disputed by anyone.  The collapse feared did not materialize.

What I have a problem with is there is zero plan to return to normal accounting measured in place since the Great Depression.  Further, I have an issue with lack of any prosecutions at all for the trillions in fraudulent mortgage operations that have been clearly documented publicly.   Also I have issue that the US government has not had a budget since George W Bush and spends money as it sees fit, without any constraint.

These acts are a perversion that will lead to consequences.  Lets not forget WHY 2008 imploded.  Basically the Federal Reserve Bank allowed fraudulent asset bubbles to occur.  Ben Bernanke himself testified numerous times that the economy was rock solid.  He was either ignorant or lying.  And now he takes the credit for being right after all the drastic measures taken and saving the world?  The entire 2008 problem was partly to blame on him and his predecessor.

But I digress.  What I realized is I actually DON'T have a problem with Quantitative easing per say.   That is the Federal Reserve Bank purchasing long term US debt (30 year bonds) in the billions to artificially lower interest rates.   I used to until today.  Why the change of heart?

I realized, that my argument in the past of "what is money" and "gold is not money" align with what Bernanke is doing.  In effect, if 30 year bond rates go to zero interest rates, he is creating the scenario that cash can be printed with no interest attached.  This is in line with my thoughts of what currency should be.  Money should be created without a "bank tax".  Each US dollar you have in your hand, or in a bank, has a tiny amount of interest that is going to someone, somewhere.  Granted, with fractional reserve lending, the rate is net lower for each dollar created, but its there.

What will make this all fall apart isn't QE.  Its enforcing law, and treating currency (QE or not) with respect. Currency can't be created with zero limitations into thin air.  Money must be created with true value of work behind it.    For example, if you photo-copy money and spend it, the fraud is you did not contribute to society to EARN the cash.  In effect, your "promise note of work" is fraudulent.

If currency is printed and doled out without work behind it, the new dollars are in fact fraudulent, and will devalue faith in the USD over time.

In closing, the consequences of actions taken by Bernanke and others will unfortunately lead to hardships for all of us, as there is nothing for free in life.  The fraud running rampant will cause an effect.   Bernanke needs to take not just the good, but the bad that he encourages through the Fed.   And in 2013, when I think things will start to get hairy, I don't think you will be seeing Hero magazines of Ben.

My friend John says, when the market hits a top or bottom, no bell rings.  Today Bernanke is claimed to be  a hero while at the same time, market volatility index the "VIX" is at a 4+ year low, with stocks at a 4-year high (SPX 1400).   VIXY may be a buy here at $39.48.  That is as close as a bell as I can hear.

This week in no charts

This week I don't bring any charts.  First, I am being lazy.  Second its the last week of the year, and I suspect charting this next week is pretty much useless.
So lets look forward shall we?
 If gold etf GLD fails to break below 150, there is a very good chance that this is a near term bottom.  Seeing that Oil has not collapsed is not encouraging.
Hedging into gold is not a bad idea here, as 2012 may bring unintended consequences from this money printing party started in 2009.

The worst case for this economy isn't a market drawdown back to SP500 at 800 or so.
The worst case is a rising costs in commodities.

This is the last thing that should happen right now.  China's economy has popped. So has Australia.
And its no secret that Europe hasn't had a good time of it as of late.
Further, the public news media hints at a new recession in the USA.

All of this combined spells falling commodity prices as the major countries contract.
Therefore if the USD starts to fall, and/or commodity prices fail to lower, we could be starting to see some hangover from free money.
Gary of the Smart money tracker is calling for gold to go much higher if this is the case.  I encourage readers to pay for his services to read his thoughts.

I am not so sure.  If Ron Paul actually gets some traction as I previously posted, we may have some USD optimism.
I think the moment Ron Paul is being sidelined in the nomination, we'll have out answer.

Gold up, USD having a hard time keeping its level, and markets mixed or down.
All we need is Peak Oil, USD issues to drive oil higher and that should really put a strangle hold on the USA.

If we d start to see Gold firm up, this will likely be the last reasonable entrypoint, gold thereafter will look crazy to buy at levels at that time.
This is why i encourage everyone to buy some gold (GLD).

Oh, and this week, my best guess is up.  Why? Who could possibly be left to sell going into this not so good outlook for christmas.
if there isn't sellers, by definition, there are more buyers than sellers.

OK...I Lied...here is a chart EVERYONE should pay attention to.  I'll likely reprint this again in another post.
Food for thought about commodities.

From WebSufinMurfs FinancialBlog2

When does the other shoe drop

It is quite clear the markets are in rally mode.  Nothing moves in a straight line, but assuming Europe does succeed in advancing its voluntary debt forgiveness but this is not a default according to law plan, markets may levitate for a while.

But there is a fly in the ointment on multiple fronts.  First there is this Christmas sales.  The US Economy is still judged by public consumption.  So if sales are poor, or margins cut deep, companies may not have a good season.

But lets assume that sales do OK, what else is on the horizon?

Think back to August, what news was on every tv, every hour, and had a buzz about on every news program?
Think back.

Wait for it......

The US debt default, end of the world.  How quickly we all forget the end of the western world almost happened in August.  And it was true! right? It wasn't political.....wait....maybe it was overblown slightly.  It was a crisis right?

I am here to tell you there was ZERO crisis.  But it doesn't matter about reality, it is the perception that matters.   And at that time, the debt ceiling increase passed, but under the condition of a special super committe is formed to determine government spending.  That the committee must come up with 1.5 trillion debt reduction over 10 years.

What a freaking joke.  The government will agree to basically cut 150 billion a year on a 3.7 trillion dollar budget for 10 years.  Does anyone at all believe any of this?

Again, it doesn't matter about the reality.  But one thing is for sure, next year is an election year.  That means the Republicans and Democrats are going to be filling the airwaves AGAIN about budget, this time deadline November 23rd.

So before we look to the sky for how far the market will run, consider that the news will once again be financial topics, and being spun loudly for November 23rd.  The market hates uncertainty.

My bet?  I don't want to be long markets into November 25th, right after Thanksgiving.  Between the Christmas sales and newly passed budget cuts, I am not betting on a new market high.

Between now and then, Gold goes up, dollar goes down, markets climb or trade in a range.  I'll stick to gold, gold miners, and silver.
Good luck

UPDATE: 10-28-11 @ 8:50 am  Election worries drive deficit talks

Ditto Head Returns!

Back in August of 2010, I announced my ditto head status of Gary of the Smart Money tracker. For those not looking to make money on any given month, but have a multi year time horizon, Gary is still king in my book.

But I wrote on several recent occasions that I departed from Gary, on the short term. I am very happy to say, I am back on the Gary bandwagon.

Quote from my November 14th post, when gold peaked:

I guess I need to recant my ditto head status of Gary. I am still 100% on board with Gary over the long haul, but for the short term, I am not going to try to catch falling knives. I lost a ton last year trying to that. Lesson learned.

So while I will still resist trying to catch falling knives, Gary in private advisory service (pay for his service, it pays for itself), we are now back in sync with my call on Nov 14th for a 6 to 10 weeks for gold to pull back.

That places the near term bottom of natural resources & gold between late December and late January. Gary is currently calling for mid to late December.

So for now, I'll just sit tight, and wait for more air to come out of gold and natural resources. I'll decide later if it is time to catch falling knives into the end of the year or wait until January.

For me, it this is a bit of vindication of my departure of being a Gary ditto head, and a welcome return to his leadership. In the scheme of life, a difference of 6 to 10 weeks is a drop in the bucket. By February those who aren't Gary fans (or of me) will have their answer. By then natural resource costs, and specifically precious metals, should be back onto the upswing.

I am going to delay my weekly chart posting to Tuesday or Wednesday night, to see how the markets react to black Friday sales and Cyber Monday.

This Week in Charts

This week in charts, who knows direction, I am hoping for a pop up, everything is a little shaky from the recent correction. I am hoping for a correction longer term (July/August?) market completely comes apart for the final swan dive to begin over the next year. For now, its watch the charts, try to position.

I don't like gold (again) for now, I will when it breaks to new highs, or a "swing low" is apparent.

Low interest rates in 30 year is giving the government breathing room to add trillion + more debt in some sort of stimulus attempt. Obviously I am unaware of such foolhardy plans, but I suspect as this market gets scary, the final put-it-all-on-the-line move by the government will be announced. Once rates are pressing up instead of down, we will see the rug pulled hard out from under everyone. It is possible that decision was already made when the rates where pressing up. It's impossible to know.

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Market Decline, the cause?

NOTE: Posted Thursdays post very late, so check for last two posts.

The media chanting the huge decline a few weeks ago was due to a "fat-finger" is outright wrong, as viewed now. First, that decline showed there was not enough buying interest out there to prevent that decline.

I am hoping for a huge market rally Friday, so I can re-enter shorts. If we end the day down huge, I will probably cover shorts. Monday could be all out crash, but really, it isn't worth it to me to "let it ride'.

But by looking at the charts, that decline was the shift, from up to down. We are now in a full market CRASH possibility. Why? Because of what I have been saying since 2008. The losses MUST be recognized for the massive credit/fraud done from 2002-2010. Pretend accounting does not make problems go away. Giving trillions to companies does NOT fix root cause.

Fixing root cause requires.
1) All financial valuations are marked to value
2) All debts are brought onto balance sheets, no "off books accounting".
3) The LAW is enforced for finance across the board.
4) all "risk bets" are placed onto exchanges with risk ratio's enforced to avoid an AIG scenario.

I hope everyone who has been reading this has stop for all longs. If you don't set them now.

This market in my longer term view is bottoming at 50% LOWER or more from here. This decline could stop now, but I am hoping it stops at 925ish.

From WebSufinMurfs FinancialBlog2