Thursday, September 10, 2009


Wilsin on SKF has been one of the posters to mention this issue a number of times as a consequence of the current market manipulation. It is THE risk of a rigged casino. Would you sit down at a casino table that you believed was rigged? Of course not. There is no real volume underlying the HFT and there most likely will not be. The question in the near term is what would return the suckers to the table.

I maintain that the next step in this process to "maintain the PONZI" is how to lure the remaining "money on the sidelines" back into the "rigged casino". So the next step will be the engineered market pullback and dollar strengthening. Again I refer you to yesterday's incredible essay

Without a serious pullback in the market sideline money will not move into risky assets here. Sideline money is not moving into the market at these levels and for the final push to 1200 they need to see a "bargain". GS has and will continue the process of HFT but that also will occur in a down move also. So you see....GS cannot lose. In fact Mr. Blankfein made a very nice impression on me yesterday with his speech condemning excessive executive pay in the banking institutions that "weren't profitable". Now that is PROFOUND. The governement and FED (see PONZI) backstop your HFT plan with QE monetization and you have the audacity to pontificate on your moral highground of giving bonuses by saying you are FKN PROFITABLE. TOO FKN funny.

Expect contiuned chop for now but we are inching closer to some meaningful pullback...but do not expect the cataclysmic P3 in the near term ..Gl and wait for them to come to you. Watch USD gotta hold 75 to keep below 1000........oil need to stay below 75.


  1. Isn't a meaningful pullback enough to trap the bulls? If everyone buys the dip why not just pull the rug out as soon as they're in?

  2. Yes Morla in a Market where "normal" forces operate. but this is controlled by the Fed thru GS.....they will orchestrate a "significant" can argue the could be a prolonged 6 to 8 week drubbing with bulls getting pounded as they enter at resistance levels only to get beaten down to the next the time its over....a "real" bottom is declared as GS ie fed rips the market back up thru the stronger dollar/QE/monetization. ie wash rinse repeat.....just my guess...look for the process to end with a push upward in December towards new highs.....

  3. Whatever move down occurs.....look for nice impulsive 5 waves that satisfy the EW predictions only to reach a "critical" point of no reurn.....and waala presto......mega intraday reversal....i would not even begin to guess how deep they are willing to go...but some think it will be more than the usual 3 to 5 % correction we have had in are bastaardizing T/A through monetization....and I don't have a clue how long it will continue....but Kress says it will go until 2012

  4. kliguy please explain to me why oil prices going up is a sign that would send the market up? the price of oil is around $71/barrel and it wasn't that long ago that the same price was a sign that would have a negative impact on the market.

  5. I will try.....oil has a negative impact on economy as it rises above certain level...serves as a tax on economy and consumer......but when daily market moves go oil price is a reflection of dollar weaking ie money going out of bonds/cash and into equities/assets...when I see oil ramping then I look to see if money is flowing into equities too.....they are flowing together ......

  6. if someone wants to take me on this feel free

  7. Mr. Kli,

    Well said, as long as dollar keeps going down, Oil and other commodities + general market will go up. If Dollar goes below 70 then general market will sell off but oil, gold, and silver will shoot up much higher. Dollar is the main driver now. Oil going up has nothing to do with demand and everything to do with Dollar.

  8. the oil rise and general market rise is a conumdrum.It is counter intuitive for sure.

    But again look to the weak dollar. As the dollar weakens more and more leave the dollar and take on '"risk" or "safety".

    Risk in the market in search of yield or at least capital "preservation"...hopefully...which will not pan out.

    Safety look at the yield of the ten year and the subsciption to the 30 year today. The auction was over subscribed. being in cash sucks.

    Oil price is just a function of the flight from the USD. It take more USD to buy OIL. Oil really ain't going up it is the dollar goin down.

    As oil and other commodities go "up" it drags the s an p up and more buy the basket and the basket buys more s an all goes up.

    Commerce is at such a low level right now that high oil does not seem to matter. I recently passed a fed ex hub in Otario Ca. The parking area was FILLED with parked trailers.

    Vacations are over and people are driving much less and 3.25 gas seems cheap compred to 5.00.

    If we had an demand we would have 5.00 gas.

    da Back Sheep.

  9. Today's action in Oil and gold is really starting to raise a short term alarm with me. The dollar is very weak and the Feds are having a very hard time pushing gold down, there are some big new players putting a floor under gold and it might just be China as the buyer in the face of GS and the Feds. Seems to me that the U.S. financial powers that be are at war with the finacial powers of China right now.

    Something has changed it use to be on a day like today with gold selling off early like it did it should have been down twenty dollars or so on the day but rallied back to 1,000 at one point.
    I think it's possible that we see gold over a Grand and oil over 75 in the next day or next week something has to give this dance can't last we are either going higher NOW and it's going to get very ugly or we will have a mass sell off in the commodites very soon along with the stock market. Just my thoughts

  10. correct express a concern that has to be adressed soon....either tank these POS overpriced equities and bring up the dollar or you will pay a price.......and that price is 80 dollar oil in a flash.....that will trigger a dump or we are REALLY in trouble .....dollar will be cracking 75 fast and hard ....70 will be next target......I don't see this but it is a true possibility because what you say is true.....we have a problem.....someone is not playing the game......I guess they didn't get the PONZI memo

  11. Anonymous at 4:22 - I agree something has gone wrong with the model, I had this modeled, but it passed over my key retrace target and has gone up directly, the USD broke down faster than expected as well. I believe more USD downside to a UUP low around 22.43, and then they need to support it. As you suggest, an external player may be forcing their hand to throw things off, just like the model they were running under seems to have been messed with. If you see a big spike in SPY, something like an up 200 day on INDU tomorrow would be a good example...look out below. This has been going up on fumes from burning the USD especially this last run. Great article Kli last night, that nailed it.

  12. Anon your cause for concern is shared but I still believe......even though exogenous events may not be working to the favor of GS and FED here ...that they will still engineer the their strategy..perhaps they will improvise but they are not going to fail as I have said before this is our country and our economy.....and it is devastating what is going to transpire if they fail.......

  13. Yes, the model is still recoverable, but I believe they do need a retrace here soon. Yeah I know, everyone has been saying this for awhile, but I'm not in the permabear camp, I have had this modeled up until now very well. I have been in your camp with not believing for a minute the top was in, and also had targets for UUP that have played out, despite others calling for reversals etc. If you look at open interest for SPY options, it is all over the place. There are even huge contracts around SPY 85, and I mean front month by that. That is not smart money, people are guessing and missing here big time. I find the SPY 85 contracts strange, why would such heavy money be hitting something like that? My low side target was SPY 95, the SPY 98 reversal made that less probable but still likely until the last couple days. Who would be playing something so far OTM, so far afield from what rational TA would even dictate given the trend? I guess this market eats everyone.

  14. I doubt China wants $1000+ gold right now, the best thing for them as buyers is to not set the goldbugs off on a stampede.

    That said, it's 1003 right now :P