Monday 23 July 2012

Bait and Switch.

That is the sound we are going to hear soon from the BTFD crowd.

So far in 2012 we have been conditioned to BTFD. Our brain has been wired to the safety net named Bernanke. That if the stock market ever falls 20 points, he will be there. In fact so much is the disconnect between the US equity market and the rest of the assets class all over the world, that it is not even funny.  But one of these days the sheeples will find that the punch bowl has been removed without so much as a “sorry”. And I think that day of reckoning is damn close.

Was it only last Thursday that we were talking about SPX 1400? I wonder what the next 10-15 days will do the market sentiment.  Most of the damage was done overnight in the futures. As soon as the cash market opened, SPX was down 20 points. So what chance retail had to position itself? After that they were lured to buy the dip throughout the day except the last 5 minutes again. What chance in hell do they have?  Now the futures are going down again. Possibly another gap down tomorrow.

I would like to show you a nice graph from Lance Roberts of XFactor.

So we have to be very careful for the next 10-15 days as anything can happen. I have been writing for many days now that any rip is an opportunity to sell. Unless Ben comes and shows us the colour of the money, there is no reason to be long.

How do I read the tea leave in this backing and filling market? Tomorrow I expect the market to go down and test today’s low at the open. Then a bounce in the afternoon, similar to what we had today, building up the anticipation for Apple ER. We know that Apple ER is both an art and a science and they will definitely blow away all the projection etc. There will be a general bounce and QQQ will possibly reach 64.50+. And then I think the punch bowl will be gone.  This is just a wild guess and please don’t shoot me if the market has some other plan for tomorrow. I am just reading the tea leave and the entrails of the dead bull.

The BTFD crowd is last to get the news but commodities had a real bad day. Silver broke $ 27 level and Crude lost almost 3%. Peter Brandt has some very interesting charts which match with my calls to the T. You may want to check it out.

I somewhat agree with his calls because I think Bonds will spike along with the coming correction of the equities. I also think there will be a flight to safety and margin calls, when folks will be forced to sell everything, including their position in gold and silver. That should take silver down to $ 20. Soft commodities like wheat, corn and sugar will also give back much of its gain. So if you have some profit in the current surge of corn and wheat, you may want to take off some profit and re-enter at a lower level.

Thanks for reading . Please join me in Twitter (@BBFinanceblog) and do re-tweet, post it on wall and share with your friends and circle.


  1. I wholeheartidly agree with your asssessment. The "energy" required to push this market up isn't there and not sure if the Bernanke can do anything about it. I think the game is up.

    Thanks for your blog.

  2. I have been reading your blog for some time (and recommending to others ) as well. You have been remarkably prescient.

    I do have a question though. What is it that makes you think the Bernanke put will be gone after Apple earnings are over? Thanks.

    1. It will not be gone for ever. It will be back by Sept. The gap between Apple earning and QE will be interesting. We are about to find out.
      Thanks for reading.

    2. what do u still make out of the Bullish EURO COT data
      .....US presidential election year cycle ...u also put up a chart from Bespoke sometime back .....these all suggested Bull year for 2012 ...i think we should see some correction ...into 1st -2nd week of August ....then we see a rally into September ...october should see some correction ....From November we head higher again

    3. I also think we will see some correction and then more money printing.Nice to see you after a long time.

  3. Have a safe Trip BB! Will definitely miss your calls on the markets. Hope to see you soon.