NOW: The government has infused something like $180 billion into AIG, which only has a market capitalization (value) of around $25 billion. ARE YOU KIDDING ME? It has just become known that both Citigroup and JPMorgan Chase each have trillions (with a T) of credit default swaps (toxic assets), in fact, both have more than AIG by factors of 2x and 3x respectively. ARE YOU KIDDING ME? This sounds more like “survival of the shittest”, rather than the fittest! Our government is defying the laws of nature, rationality, fiduciary responsibility, morality, and many others.
Last Wednesday, the Fed announced they’ll be expanding their balance sheet by another TRILLION dollars. “Expanding” means they’ll be rolling fresh new dollars off the printing press to go out and buy our own government bonds, since the Chinese, Japanese, and Middle Easterners probably no longer will. With PBO (President Barack Obama) on TV almost daily “spinning” another program, flanked often by Geithner and/or Bernanke, it’s obvious the full court press is being applied to cover up the real threat to our system. That being the ongoing sacrifice of the US dollar, household, family, values, and lifestyle. There is no other way to understand the eventuality of the course of action we’re being dragged down, IN OUR HUMBLE OPINION! Continue reading
This is another INTERIM update…
It’s a little whippy searching for a bottom of the importance that this one is. But, after being blessed with the navigation grace to help you all through the worst selling event since the 1930’s, we’re okay with a couple false starts. Thanks for your patience.
To recap the last few weeks: after exiting the market last Spring with the break under Dow 13,100, we finally entered our initial 1/3 position on a break under Dow 7600, and the second 1/3 position on a break under Dow 6800. Due to pattern issues, we exited our second 1/3 position on Friday’s close at 7218. Trying to fine tune the perfect risk-managed exposure, we said we’d replace the second 1/3 position on a break above 7450. However, after observing the lastest edition of “Wag The Dog” by our government, we decided mid-day Wednesday that we’d push that re-entry trigger a bit higher to a CLOSE above 7550, so we could allow a bit more pattern to develop and increase our confidence. Continue reading
The Dow popped above 7450, but hasn’t closed above it yet, so we haven’t added our second 1/3 allocation. WE WILL NOW MOVE THAT TRIGGER UP TO A CLOSE ABOVE 7550 (rather than 7450). There was huge volatility surrounding the FOMC’s announcement that they’ll destroy their balance sheet by adding another TRILLION dollars to the bailout effort.
THIS IS NOT, NOT, NOT THE ANSWER, AND THE MARKET KNOWS IT. THE MARKET WILL DEMONSTRATE ITS OPINION BY SELLING OFF FOR SEVERAL DAYS. We’ll track this closely and provide high confidence entries next week, when signalled by our “anomaly optimizing” system. Continue reading
This will be a brief update on market action since our last comment, and the alternative strategy as listed therein. If it appears too complicated, it’s okay to just sit tight and ignore the final wiggles of this decline. The next BIG move will be a rally of several thousand points, whereas this final wiggle is likely to only be 800-1200 points. If you want to step aside and attempt to re-enter at lower levels, our best strategy follows. Continue reading
NOW: In all humility, the market could not be following our hallucination of how it would look as it formed a multi-month bottom much closer than it has since we began describing it in early summer ’08. Loyal readers should remember our warnings that a break of 13,100 would hint of a major market top, but that a break of 12,000 would confirm it. Once confirmation was given, a test of 8,000 would be the initial target, with more bearish targets into the mid 6,000’s a real possibility. After the Dow tested 8,000 in September ’08, and rocketed nearly 2,000 points higher back toward 10,000 within a week, we adamantly suggested that the ultimate low WAS NOT in place. Further, we warned that this revisit to 10,000 was the last chance to exit the market before the tsunami of selling wiped out portfolios across the world. We stated again that ONLY AFTER NEW LOWS BELOW 7450 would the market be temporarily safe to re-enter for the biggest bounce since the slide began in late 2007. Continue reading
Beware the Ides of March! This warning is as important today as it was when originally used in the days of Julius Caesar. Ominous meaning was later attached to it in the works of Shakespeare. Originally, it was just another way of referring to the 15th day in a month. History, however, attached darker meaning through various events. To us, it means that we should ALWAYS look a gift horse in the mouth, like presidential buy signals! Perhaps the saying should be modernized to Beware the Ides of 30:1 bank leverage, when the public is only allowed to be leveraged 2:1 in margin accounts? Or, Beware the Ides of Zombie Banks that are being considered by the master planners to deal with the derivative problems? Zombie Banks are like your attic, where you put stuff you know you don’t want to deal with in hopes that it’ll go away while it’s up there. The problem with over stuffed and ignored attics is that sometimes, spontaneous combustion causes a fire and burns down the house! Do we have to learn this lesson again? And, on the scale that this would involve? We’re about to! Continue reading
NOW: Modern Portfolio Theory, Efficient Market Theory, Mean Variance Analysis, Efficient Diversification Models, Dynamic Asset Allocation, Fundamental Analysis, Top Down, Bottom Up, Risk Arbitrage, Buy and Hold, Dollar Cost Average, etc…the BODY OF LIES is endless. The good news is that with the failure in the past couple years of each and every investment strategy known to mankind, we can stop kidding ourselves into believing they work. THEY DON’T! Sure, some might work for various periods of time, but not one can be said to work well enough to have removed your funds from the market in late 2007, keeping you from experiencing the 50%+ loss of your wealth in the past 16 months. Except one: Elliott Wave Theory. More on Elliott later… Continue reading