The Market Makes My Head Spin…
All – a short letter today due to the holiday!
The older I get, it seems that the faster time goes by. It’s the middle of February already – and wasn’t it just Christmas? We are also
seeing a very healthy density of utterly bizarre news, and it’s my assessment that the actual level of insanity is climbing to new heights. I tend to enjoy sniffing out the fraud and baloney of the Wall Street gangs – the likes of JP Morgan, Goldman Sachs, etc. – but here are some quick tidbits that rolled across my screen this week:
- $3.9 Billion in Fed Cash Flowed to Energy Firms With Ties to The White House
- Website helps Florida Co-Eds find ‘Sugar Daddys’
- Russia and Iran are still arming Syria
- Gasoline Prices up 83% during The Obama Administration
- Chicago is the most corrupt city in USA
- Obama’s deficit spending is costing each person $17,000, and each family $70,000 per year.
- US Voter Rolls in disarray – listing over 1.8M dead people as active
The point of the above is that each and every one of these little snippets has a story behind it – and the sheer magnitude of all the stories and insanity is simply overwhelming.
There's a lot going on folks. We are in a technical no mans land. If we don’t hold the 1350 line on the S&P things can indeed get ugly. Why did I pick 1350? Well, the real barrier line is from 1355 to 1361, that's the old 3-year high. But I've noticed that when a market is trying to push up and through a multi-year high, it often takes a position right below that and "lurks" there. It builds a base, and just wiggles around for several days. Then it tries to make its move and bust over the old resistance. If we can't hold 1350, the "base" that
we need to build won't get built, and we're in for a 5 to 8% pullback.
But that all said, I told you last week that we'd see them get the market to the S&P 1350 level and they did. I also told you of course it doesn't belong there, it's a hope and extend rally. This whole move has been built on accounting lies, Bernanke money, and outright fraud. This market may very well soar to ALL NEW HIGHS. In fact, sometime this year it probably will, but is now the time, or do we get the pull back first? That's the part we are struggling with.
I’ve gotten really defensive starting last Friday, and have sold down a lot of positions and have taken a lot of profits. We still have a small handful of things working in case they do muster the oomph to blast us off, but my guess is that we get a pull down first. If we get a 5,
8, 10% pullback, I'll buy it like there’s no tomorrow, because The Ben Bernanke will use that pull back as an excuse to shovel QE3/4/and 5 on us, and we will rally big time.
Now, the European situation is technically hopeless. Greece is arguing over 130B Euro's and even if they get it, their debt to GDP is over 120%. It will solve nothing and everyone knows it. What if the hard liners on the right simply say no to more austerity? What if it really gets ugly and they just cut Greece loose from the EU zone? The U.S. market has an implied backstop. The Ben Bernanke has winked and nodded that if the market gets really soft, he'd be to the rescue with QE3. But how soft would it need to get? I think the market could fall 5 to 8 percent and potentially nothing would be done. But have it cross over 10% and keep moving toward a 20% correction – that will
cause a major Q3 eruption.
So, a good report out of Greece Sunday will probably propel us to new market highs very quickly, and we would see DOW 14K. If things don’t go so well over the weekend, there's a really good chance that this attempt at break out will fail and we're in for a pull back before they try again.
Brad L writes us with some more facts:
- There are 23 elections around the world this year – a 50 year high for a single year!
- There is heavy down-volume coupled with light up-volume,
- The 52 week high list is pathetic,
- Bullish sentiment is 69% bulls, and
- Insider selling is 8.5 to 1 (insiders are taking profits) – which is quite high!
We continued to lean long into this week – and keep our stops tight. The gap up on Friday didn’t allow us to add all that much going into the long weekend. We’re currently holding:
- CPNO Copano Energy – in at 35.5 (currently 36.76) – stop at entry
- SWN Southwestern Energy – in at 34.36 (currently 35.54) – stop at entry
- FNSR Finisar Corp – in at 22.51 (currently 23.41) – stop at entry,
- DOV Dover Corp – in at 64.15 (currently 66.10) – stop at 65.15,
- ADBE Adobe Corp – in at 30.00 (currently 32.70) – stop at 31.80,
- SPY (ETF for S&P) – in at 131.16 (currently 136.75) – stop at 132.50,
- GLD (ETF for Gold) – in at 159.49, (currently 167.59) – no stop, AND
- SLV (ETF for Silver) – in at 28 (currently 32.30) – no stop.
To follow me on Twitter and get my daily thoughts and trades – my handle is: “taylorpamm”.
Please be safe out there!
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