Sunday, December 27, 2009

2010....PREPARE FOR SLAUGHTER

This hyperbole is to get you to focus on what may be the most difficult trading market you will ever encounter....at least if you believe that standard trading strategies can be employeed. As 2010 begins "long and strong" will become "dead and red" as in "blood red". Even the miners may become a frothy mess of sniveling newbie investors....impaled on their crosses of greed. The purpose of this thread is to make you think and to question if you should even be trading in the coming year.

After all...in retrospect this year was all predictable and an "easy trade". Did you make money? After all that IS the criteria for a successful trader. I have to confess that the mid May thru June was devastating to my profit this year and I was calling for an up market from March 1 thru September. I still lost money KNOWING the direction of the market. All due to RETAIL TRADER STUPIDITY. I have been in similar situations throughout the years trading this market and learn with each lesson. If you don't go broke you can become stronger.

The "market" is composed of dynamic forces. If you understand how they are interacting you might survive. But essentially it is designed to take money from your pocket and put it into someone else's pocket. You are trying to determine essentially where the market is going and to avoid where the herd is. A classic example was the commercial real estate sector. Every talking head told you it was toast in January of 2009. It is of course. What was not anticipated was the level of manipulation by the Fed to put money into CRe through the various back doors with the printing press operating in overdrive. Thats cheating...right? Of course. But that is what the "market" is.

So again ....ask yourself ...do I want to play this game? If you answer yes, then you have to ask yourself what the plan for investing in this type of market should be for 2010. Are miners the answer? Is physical gold the answer? Silver? Paladium? I really don't know for certain, but equities are getting long in the tooth and miners are going to have problems when equities correct. As an old, wise investor told me recently ...."2010 is gonna be a mthrfker...this market is so screwed up right now that I wouldn't be certain of anything in the next few months." And I am telling you guys this guy is one of the best. If he is straddeled here ...then you had better be cautious.

So where does that leave us? Hopefully cautious. But not toooo cautious. Take some positions in the miners you like AUY EGO ANV SLW SSRI GORO GG JAG GDXJ. Hold cash heavy 60-70%...try and gap trade them. Hope they get killed in the next few months and increase your percentage. Read updates on the blogs like these and skf and Dano's.

Most importantly take the next 3 months to build physical gold or silver. best wishes to all.
The European Central Bank (ECB) decision to downsize its annual gold sale in 2009 to 155 tonnes is expected to further boost yellow metal prices in 2010. The ECB has sold 400- 500 tonnes annually the last 10 years.
Of late, there is a tendency among central banks of many countries to hold a major portion of their reserves in gold. The emergence of new net buyers is expected to add strength to the bullish trend in the metal. China had acquired 450 tonnes, India 200 tonnes and Russia 120 tonnes from the International Monetary Fund this year.
The US government holds 8,133 tonnes of gold, the Euro Zone 10,800 tonnes and the IMF about 3,000 tonnes. Governments across the world own close to 30,000 tonnes.
Mr Ajay Mitra, Managing Director (India), World Gold Council (WGC), said that gold is more relevant as an asset going into 2010. Increasing signs of recovery have heightened inflation concerns suggesting a favourable environment for investment demand.
While the ECB has a high gold reserve, many emerging economies have very low stocks or no gold at all. "In aggregate, Asian countries hold only 2 per cent of their reserves in gold. Were the Asian central banks to increase their holdings by just one percentage point, they would need to buy about 1,000 tonnes. Official sector activity will be a key metric to watch in 2010," said WGC.
Mr Navin Mathur, Associate Director, Angel Broking, said though gold prices depend on the rupee-dollar movement, gold sales by the central banks are always keenly watched as they impact sentiments. "With the gold price on a high, jewellery sales are likely to struggle with the exception of China, where the outlook remains cautiously positive," said WGC.
In 2009, investment demand almost made up for the weakness in jewellery and industrial demand as investors bought large quantities of coins and bars, besides exchange traded funds and other products.

http://www.thehindubusinessline.com/2009/12/26/stories/2009122652460100.htm

addendum from comments: I agree with Palmer's post that we are entering a long period of trading range(s) - it will be more than one level on SPX. When people hear something like trading range, they imagine some simple consolidation phase where they can ride positions long and short. No way this happens here at all. First, this will be a market to draw in all the bears, false hopes of P3 will dominate the posts of amateurs with little to no knowledge of TA. I'm not saying that to be egotistical, it is just the reality of the human psyche. Even a slight dip in the past has caused calls for P3, you will not get P3 in 2010. Do not assume you can predict market direction off the next two weeks, I posted that I am sidestepping it, that is not for random reasons off my model. The consolidation phase upcoming has a few factors involved, USD/GLD decoupling, USD/Commodity decoupling. Did you notice how the santa rally was used to flatline SPX but compared to the Swiss Franc you just saw great "upside"?. Nice way of baking in USD recovery while commodity plays still ramped to reset the bottom higher off the general USD to commodity model, so that a consolidation range on currencies could be achieved. LOL. The people running this ponzi are the best worldwide, the overall goal is not what you may think. Catastrophic failure of the model is already planned, and will actually be defined as a great achievement, while everyone worldwide thinks failure has occurred, victory will be declared since this is all in order to institute a new age of one worldwide global "currency", but not in the terms anyone currently thinks of buying power. Everything will be flatlined to have everyone equal, albeit you need to sign up for the model. No greater dupe to mankind than to define failure as victory, and to appear to tear down structure (current market model) as a way to institute another. Frame of reference is what counts. The challenge of the market in 2010 will be to keep switching around to various industries to float everything. There will be no logic to it at all. The past year saw currencies dominate market direction, and HFT from GS turn what used to be a semi-free market system into a Casino mockery. The HFT has existed in a simple form for quite some time as a brute force market driver, but only as technology has increased has this model been enabled to its full potential over the past couple years. The reality is they will keep using the HFT model to contrive things, but the failure point comes similar to what happened in the dot-bomb model. What is a free market? Another ponzi scheme that has credibility to draw in investors. Viability and logic is irrelevant. You may notice that recession recovery parameters are usually based off a logical recovery by sector, that has not occurred here, we have seen weird things like staples ramping while technology was in bearish broading pattern, only to be saved by contrived news events. This is why 2010 will be so difficult to trade. You have a hybrid model of long term rotations that has been skewed to drive the overall market higher, but there appears to be no reason to it. GL in 2010, you'll need it. - Analyze.

7 comments:

  1. All very good points. If you choose to trade then make sure you live to trade another day when the market goes against your play.

    We have seen several good traders pack it in this past year. 2010 will see more.

    XRA is another miner I would add to the list for playing gaps.

    ReplyDelete
  2. 2010 will be a trading range year. Even though the path of least resistance heading into next October probably will be down, in-and-out trading will provide some opportunities for capturing gains along the way. The year 2000 was similar to that. After the 10-year cycle peak in 1999, we had a trading range year in the Dow in 2000 and it afforded a few good in-and-out trades. It was a tough year, though, and if you weren't a good trader, it was very hard to do any kind of buy-and-hold investing. I think that will be true for 2010, too.

    palmer

    ReplyDelete
  3. Nice post, Mr. K. Thanks for the headsup on ANV. Did nicely last week. 2010 gonna be a trip for sure! WJA

    ReplyDelete
  4. I agree with Palmer's post that we are entering a long period of trading range(s) - it will be more than one level on SPX. When people hear something like trading range, they imagine some simple consolidation phase where they can ride positions long and short. No way this happens here at all. First, this will be a market to draw in all the bears, false hopes of P3 will dominate the posts of amateurs with little to no knowledge of TA. I'm not saying that to be egotistical, it is just the reality of the human psyche. Even a slight dip in the past has caused calls for P3, you will not get P3 in 2010. Do not assume you can predict market direction off the next two weeks, I posted that I am sidestepping it, that is not for random reasons off my model. The consolidation phase upcoming has a few factors involved, USD/GLD decoupling, USD/Commodity decoupling. Did you notice how the santa rally was used to flatline SPX but compared to the Swiss Franc you just saw great "upside"?. Nice way of baking in USD recovery while commodity plays still ramped to reset the bottom higher off the general USD to commodity model, so that a consolidation range on currencies could be achieved. LOL. The people running this ponzi are the best worldwide, the overall goal is not what you may think. Catastrophic failure of the model is already planned, and will actually be defined as a great achievement, while everyone worldwide thinks failure has occurred, victory will be declared since this is all in order to institute a new age of one worldwide global "currency", but not in the terms anyone currently thinks of buying power. Everything will be flatlined to have everyone equal, albeit you need to sign up for the model. No greater dupe to mankind than to define failure as victory, and to appear to tear down structure (current market model) as a way to institute another. Frame of reference is what counts. The challenge of the market in 2010 will be to keep switching around to various industries to float everything. There will be no logic to it at all. The past year saw currencies dominate market direction, and HFT from GS turn what used to be a semi-free market system into a Casino mockery. The HFT has existed in a simple form for quite some time as a brute force market driver, but only as technology has increased has this model been enabled to its full potential over the past couple years. The reality is they will keep using the HFT model to contrive things, but the failure point comes similar to what happened in the dot-bomb model. What is a free market? Another ponzi scheme that has credibility to draw in investors. Viability and logic is irrelevant. You may notice that recession recovery parameters are usually based off a logical recovery by sector, that has not occurred here, we have seen weird things like staples ramping while technology was in bearish broading pattern, only to be saved by contrived news events. This is why 2010 will be so difficult to trade. You have a hybrid model of long term rotations that has been skewed to drive the overall market higher, but there appears to be no reason to it. GL in 2010, you'll need it. - Analyze.

    ReplyDelete
  5. How is 2010 to be so difficult if you know so much about it? USD/Gold decouple alone should be profitable if you know for sure it's coming, shouldn't it?

    Being so certain that P3 will not start in 2010, one could simply wait for a large fall then buy and hold something. It seems like you've said trading will be difficult then given reasons why it won't be difficult, not for you anyway..

    Sorry, just slinging mud in the direction of the most confidence, I'm not a TA guy myself.

    ReplyDelete
  6. Also what are your/kli's thoughts on Zerohedge's analysis on the treasury issuance emergency?

    http://www.zerohedge.com/article/brace-impact-2010-private-demand-us-fixed-income-has-increase-elevenfold-or-else

    ReplyDelete
  7. IMO treasury issuance is old news in the since that it is all anticipated by the Fed. As long as they can maintain the delicate balance between equity markets, Housing prices, and most importantly the cost of essential goods and services then they will continue the QE manipulation of longer dated treasuries. My guess is we may see some upward manipulation in rates (that should be easy) to "test" the effects on the above markets. If the experiment becomes untenable then QE will quickly kick in on the 10 year to push rates below 3.5

    ReplyDelete