Monday, August 22, 2011

THE DEVIL'S GAME


Easy money made on the short side short term. Now its the oversold choke train game. How much money can we get into the game before the trade turns. If you recognize what happened two Mondays ago when the Dow was crushed over 500 hundred points after the SnP downgrade of the U.S. debt AND the preceding political song and dance game for show....then you know that the big boyz pulled the OFF SWITCH. That's the opposite of the ON SWITCH. In a rigged market that is technical terminology for "we're goin' DOWN". Not just down in the market but down in the overall world economy. There is virtually no bright spot in this game right now. Cycles dictate that we take a breather on our monetization binge before we blow our election cycle payback schedule for the current administration of the Empire without Sun. Unless we want to start the meltdown this week in a big way then liquidity for a drowning EU banking system has to be opened. Since we are the big printer it will be gentle Ben that opens up the swap spigot for the Eurozone.

This is where it will get interesting though. QE2 was a stealth bailout of the Eurozone and political backlash was minimal for gentle Ben. The next bailout is not going to go down as easy. It will need to be swathed in baby clothes and chocolate. Ultimately it will be recognized but the key right now is not so much painting the market tape for CONfidence as opposed to getting 50billion a month into the Euro bank run to stem that disaster. Ultimatel all of this will be bullish for the PM trade but not necessarily for the stock market. Good short squeeze this week coming and you don't want to be on the wrong side of it. The better trade might be the Ben trade. Ben speaks on friday. I'm betting on him. I'm betting two ways. One...He rallies the market Friday and two he fails to deliver the goods. That's right two bets......btw they won't be big bets. When I say he fails to deliver I mean the long anticipated QE3 announcement won't be made. The timing isn't there yet. We need more blood before they pull that pin...if they EVER do.

Look for some announcements out of the administration to try and soothe the markets this week regarding fiscal stimulus. It will have to be a mix of tax cuts and incentives for job creation. NONE of which will have much real impact but should give some "Breaking News" bump from the MSM. We're talking serious trouble right now and they aren't going to sit on their hands without taking at least some free shots to slow the slide. Of course you know who will be ahead of the Breaking News loaded on the long side as usual.

Thats the dice game you're in right now. Its loaded and you need to be too to play. Gold is breaking out as is silver and for now a lot of momentum is behind it. Look for some more parabolic move before the crush this trade....and they will. Its too easy and the weak hands need to get picked clean. My guess is they will hit it right after or right before 2000 cross for a battle. Maybe a coordinated effort to rip the trade. I don't see it getting much below 1700 but I'll decide when I see what their effort is composed of. Unless they solve the insolvency of the Eurozone and ours too then Gold's not going for the major dive yet....it'll just feel like it though. Remember 200-300 pts would be fairly brutal. We're in a vortex now and its not going to be reversed by monetization...just altered with brutal squeezes and trading. I would like to offer you sage advice but I don't really have any. This is end-o-days stuff for market traders. The last two weeks were only a taste of things to come.











23 comments:

  1. Hi All,

    Joe,

    IPSU, should I get out as soon as I can, or hold to the cows come home?

    I appreciate any advice on IPSU. I'm in Colorado, and heading out to the woods for some camping in the Aspen groves today.

    ReplyDelete
  2. Dung,

    In the market updays try to get out of long equities, buy and hold stocks right now these days is playing with fire, if you are not a trader then stay away. The only buy and hold for longer term is RWM, ofcourse during market up days RWM goes down which is why I do not recommend folks trying to time RWM. Trend overall for the market is down with updays and squeeze in between.

    ReplyDelete
  3. Japan Nuke news-ummm no kidding...

    http://www.marketwatch.com/story/nuclear-evacuees-may-be-kept-out-for-years-japan-2011-08-22?link=MW_home_latest_news

    this thing is 15 times worse than Chernobyl and they downplayed it like a nothingburger...

    ReplyDelete
  4. For those of you who like to trade RWM, it is also a good trade in days like today, when the market opened up high, RWM droped to 35.05 which was a good entry for the day and from there up, now 35.90. Upticks in overall market right now are being shorted.

    ReplyDelete
  5. joe,

    dollar might get a little push for auctions this week starting tonite...RWM is good strategy...heck as you stated u can even avg in....

    ReplyDelete
  6. Chuck,

    YUP, for the past two yrs the trend for overall market was up, between now and 2015 the trend is going to be down with pauses in between and short squeezes, how ever the short squeezes are good time to average in RWM since the overall trend remains to be lower. The resistance which is upside for S&P 500 remains at 1200/1215, and support now is at 1100, if 1100 does not hold, watch out. Those who are looking for QE3 this Friday would be disappointed. As a trader, the best time to play RWM is in updays when at the open they take RWM down temporarily and you end up making good $$$$$$$ picking it up since overall market trend is down.

    ReplyDelete
  7. ATPG has built strong resistance close to $11 which gave me the signal to short at 10.90.

    ReplyDelete
  8. What about cenx? Golden Jackass saying being aluminum being manipulated, buyers cannot get supplies. Was thinking qe3 for sure, now thinking it doesn't come.

    ReplyDelete
  9. Nancy,

    CENX moves with overall market for now.

    ReplyDelete
  10. Sister, the politicians cashed out at 1250...no elections coming...Ben showed his hand with rates...I think no QE as of now...maybe in late fall/early winter for xmas cheer....most likely next year...elections always deliver..the elites like Obama in there...he's a money maker for them..

    ReplyDelete
  11. kli

    your post as usual was another good read. been eyeing SKF or FAS for that trade. i know its dynamite, but my gut says financials will get a nice boost, leading up to friday. i know i should stay away, but i will place a bet, hopefully my timing will be decent. still in wait mode.

    ReplyDelete
  12. Sir Blankfeinster just hired high powered defense attorney...GS drops 5.5% in minutes...

    What a racket the market is and I'm a tennis ball!

    ReplyDelete
  13. miners on breakout......should be good for a nice run next few days

    ReplyDelete
  14. All, just noticed the sharktrader's weekly recommendation is RIC. Our own joe/kli ahead of the curve on that one. Unfortunately kept waiting for a pullback to about $8 and only got 500 shares, but thankful for those.

    ReplyDelete
  15. http://stockcharts.com/members/analysis/20110820-1.html

    ReplyDelete
  16. sis Joe is no longer a hyena....he is now a great white shark...

    ReplyDelete
  17. Starting to wonder if any of the bullion banks actually have any of the bullion entrusted to them for safe keeping by foreign governments. I suspect Chavez will be re-assaying every ounce that comes back to Venezuela. The good and bad is now gold is acting more like a Central Bank currency , like during the last depression. The risk of government confiscation rises when foreign governments demand the physical repatriated and won't settle for tungsten bars.

    {In the near-term, Dempsey says gold may get a lift as bullion banks seek to meet Venezuelan President Hugo Chavez's recent decision to recall his country's gold reserves. "My guess is they don't actually have the gold — it's been lent out and [banks] are going to have to scramble to get this gold," he says. "The question is: 'At what price is it going to take to get it back?'"

    To reiterate, Dempsey doesn't have any specific knowledge of the whereabouts of Venezuela's gold reserves, estimated at some $12 billion in value. But "my guess is it's been lent many times over," he says. "Banks are going to have to go out and acquire that gold [and] it's going to be a higher prices."}



    http://finance.yahoo.com/blogs/daily-ticker/gold-rallies-money-flees-leveraged-financial-system-dempsey-182933547.html?sec=topStories&pos=3&asset=&ccode=

    ReplyDelete
  18. Red ...I can't believe you think they would do something like that.

    ReplyDelete
  19. kli,

    Gold ( real currency) these days is love, and love is like oxygen, you get too much of it, it get you too high, you get little and you die, heheeeeeeeee!

    http://www.youtube.com/watch?v=kRVwcPTnug8

    ReplyDelete
  20. Joe,

    Brings the old school pop rock into the game...I remember that song...Sweet!

    ReplyDelete
  21. Just read an article about Ray Dalio, founder of Bridgewater...he sounds just like you two as well..."I think late 2012 or early 2013 is going to be another very difficult period." But the article was written last spring...also "We will be in a deleveraging period for ten years or more." Also thinks U.S. & Europe slowdown caused by China & other developing countries being forced to take drastic policy actions to bring down inflation in addition to chronic debt. More confirmation that you think just like the Big Boyz.

    ReplyDelete
  22. I'm going against my own rules and letting the miner core ride. Sitting on some handsome profits, and I hope Kli is right, if another up day tomorrow, definitely taking 2/3 off the table.

    Kli, thanks to this board, I've sort of become a go to guy in my circle of family and friends when it comes to investing. People are asking whether they should get in to physical now, others who have a small physical core wonder if they should take profits. Would you sell some physical at these levels, if you bought in at < $1000 for gold, for instance?

    This would be for the full intention of buying back once they take it down a couple notches. For now, I'm telling people not to sell, but if you're sitting in 2-2.5x times profits, I'm not sure.

    ReplyDelete
  23. Anyone sitting on those kinds of profits should take some profit....imo

    ReplyDelete