Friday, 5 October 2012

Fooling Around Friday.

The NFP numbers were in line with the expectation; it is the drop in unemployment numbers which surprised everyone. Old Jack of GE tweeted that all this was hogwash and cannot beat the Chicago style. I was just wondering, if Bernanke logic is that he will print and pump till labour market improves, and now that labour market has improved according to Govt. will he stop printing now? Has QEI achieved its objective?  What? Am I out of my mind? No, I am just fooling around on a Friday evening.

They do everything in the name of middle class and poor folks. But rich in America has been the most beneficiary in the last four years of the messiah of change. Not a single crook has been prosecuted for their involvement in financial crimes and mortgage frauds. Corzine walks free after vaporizing millions of investor’s money.  What middle class and poor folks! All we have to know is that the system is totally rigged.

Anyway, enough of this political nonsense.  Yesterday, I showed you the various levels which are important for our investment decision. I wrote that gold and silver is vulnerable short term and I would wait a little while more before taking the plunge. Today we have the vindication. I also tweeted the targets to look for. 

Bounce target for gold:$1760, silver $33.80. May not happen today. Bounce from there-buy signal, go below that-short term sell signal

I do not think gold and silver will cross below that but even if they do, the sell signal will be short term. If we know the targets/ ranges, we need not front run. We have a very clear plan of action. Like one we have for SPX.  Here I must clarify various terms I used in the past, which may have caused some confusion. While SPX is the cash market, open 9.30 AM to 4 PM Eastern, Monday to Friday, the future markets for SPX are open 6 PM evening Sunday till 4.30 PM Friday, non-stop, 24 hours. It goes by the name of /ES or emini. When I gave the target, I was speaking of the SPX futures because that is where the TBTF banks manipulate the market. They pump up/ goose down prices on very light volume overnight and by the time retail comes back next day, markets are already higher or lower.  So we know that only when futures of SPX or /ES crosses 1460 convincingly and stays above, we can be long. On the other hand if the futures go down below 1430, time to short. Again, once we have the road map, we need not front run.

Two days back I wrote: Normally the 1st break, up or down is a head fake and the real move is opposite. If you remember the triangle, SPX broke on the upside and yet failed to close above our target price point.

In a normal market, I would say it is a bearish reversal day but in this new normal market when Bernanke and O team does not want to take any chance, I am bit worried to call for major sell off. At least till election. But it is definitely a failure of the test of the highs and now the market will test the nearest lows.

Stock trader’s Almanac has the following chart;

As you can see, many things are matching. We had a failed test of high, we did not cross /Es 1460 and we are following the election cycle pattern. So everything tells us that we will have a minor dip by the 8th trading day of October. That falls on 10th October. And I have been taking of a cycle bottom around 9th/10th October since many moons back.

According to that cycle, the major upswing will come around 15th trading day, which is around or just after October OpEx.

Now you know the road map and can plan your asset allocation. I will be allocating over 70% to PM sector. If Silver does not close below $33.80, it will most likely cross $ 40 around 10th November. Gold expected target around $ 1900. Whereas SPX may or may not reach 1500.

Well, that’s all for an interesting Friday. I have some very touching emails and comments and one was from traderwanabe. I know everyone out there reading this blog, wants to help me but this is not the only blog you read, and sometimes, people tend to forget after a day or two. Making money from on-line blogging is like finding space in-between elephant’s toe. So damn difficult! But little help extended by many good folks every day, can make a difference.  I will show you the proof tomorrow. And that is the reason I keep reminding everyone about loving the blog. At the same time, we cannot overdo it or talk very openly every day, otherwise, big G will banish us.

Thanks for all your support. I do hope to make a difference in your life and trading. Both in terms of how you trade and when you trade. I sincerely hope that all of you make tons of money without taking too much risk. Since June the market has been a meat grinder and if we did put our hand in it, we could lose our hand. Now I see some clear opportunities emerging and I think we should be OK going forward.

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  1. Hello:
    Are you looking for the correlation of a lower USD and higher stocks to break apart? If I am hearing you right, you are looking for stocks and bonds to go down with the USD. Also,they say markets top on good news, in the last month we've had Bernanke unlimited QE, the ECB and German Courts, etc, and now 7.8% unemployment. I don't know how much better it can get considering we are still in a secular bear market.

  2. Good stuff as usual BB. I really like the lead in cartoon.

    I wanted to pass on something that I recently learned about sites that generate revenue from their ads. The site owners are prohibited from encouraging the clicking. It makes sense since visiting an ad site without the intent of learning something useful from that ad site doesn't benefit the advertiser. So while we all want to help BB it is more appropriate for to mention seeing something interesting or useful in and ad, or that there are good ads on the site without just saying clicking.

    So now I am off to learn something from the advertisers and I hope the many other readers will too because I believe there is a lot of very useful information that is being provided for free and I hate it when I find a good site and the owner decides to make it a subscription only site.

    1. Excellent point made.
      yes, site owners are prohibited from asking their readers to click.Click on the ads if you think they are interesting or useful to you.
      Best things in life are often free although we do not always appreciate the free stuff.I sincerely hope to keep this free blog going for ever.
      I will make a special post on making money online and with your permission, use your comment above.
      Thanks again for your excellent comment.

  3. You have my permission to use my comment above.