Tuesday, June 16, 2009

Still Working On P3!

From this blog? You gotta be kidding me? Nope, the barrage continues. I have found several nice articles that challenge the pundits green shoot theory and do a damn good job of it. Read 'em all back to back and you'll feel a lot better.

Since ZH readers voraciously send TD all the good stuff, I raid his pantry again. One you may have missed or skipped over is Andy Xie: Tight Spot for Fed, Blind Spot for Investors. There you will find, "The world is setting up for a big crash, again. Since the last bubble burst, governments around the world have not been focusing on reforms. They are trying to pump a new bubble to solve existing problems. Before inflation appears, this strategy works. As inflation expectation rises, its effectiveness is threatened. When inflation appears in 2010, another crash will come."

In another delightfully truthful and well documented article The Big Picture has Have stock markets run away from reality? Richard Russell, veteran writer of the daily Dow Theory Letters, commented on Monday: “I’m of the opinion that this bear market rally is in the process of topping out. When a counter-trend rally tops out within an ongoing primary bear market, the odds are that the stock market will break to new lows during the period ahead. That means that the stock market will break below its March 9 lows in coming weeks. A violation of the March 9 lows would be a shocker to most investors, and it would be a forecast of an even worse economy coming up.” Nice!

In an older post you may have seen (but keeping with the theme of this post) you may have read The Great Depression II meme from Credit Writedowns. If not, READ IT. "While I have been singing a more bullish tune in regards to the prospect of a technical recovery in 2009, I am concerned about a double dip as a likely outcome."

It's a comin folks. How it all goes down is any one's guess, but like they say about that light at the end of the tunnel "oops, it was a train", and right now everyone thinks it is something better. Wrong, oh how wrong all the green shoot subscribers are. P2 may be topping here, or the sheeple may drive the markets higher after some sort of significant pullback then the crash, but the crash is coming. Everything I am reading is pointing to 2010. the sooner the better I say. Let's get this over with.

More than P3? Yup, if you are severe perma super uber mega bear read Deep Thoughts From Jeff Gundlach. Quite possibly the scariest thing I have read to date. This takes us beyond P3 to monetizing the national debt and screwing the world which IMO will lead to the war to end all wars.

I'm sure you read that Obinhood has said no to CA bailout. Too bad they can't become a bank holding company. The shit is gonna hit the fan in CA. The Governator is gonna shut down the government. This will make for some good footage from Youtube! If you think the Watts riots were bad this will make them look like child's play IMO. From ZH and the S&P ratings agency, "With the specter of approaching payment deferrals or issuance of registered warrants, the magnitude of the cash and revenue problem, and the limited amount of time left within which to make meaningful budget reform, downward pressure on the state's rating is intensifying, in our view. A failure to address the structural budget gap leading to significant use of registered warrants, payment delays, and more acute liquidity strain could cause the rating to fall below the 'A' category." Not good.

GL trading.


  1. Hey Shanky, for P3 to start, doesn't the Dollar need to rally?

    Then what would be the catalyst for the Dollar to rally?

    If Europe collapses, will the Euro tank and the Dollar rally?

    What is your thoughts on that?

  2. good job shanky...i miss your charts! how about a spx chart update with your thoughts...i read daneric and kenny and like to see your opinion.

    thank you.


  3. This comment has been removed by the author.

  4. Shanky....looks like the expected downturn MIGHT be starting. I won't jump up and shout it out until 905 and then 875(ish) area is breached. Unfortunately a lot of folks will be hurt again with this downturn. I hope they are watching so they bail...

  5. Shank: When will we see the posting? " Shanky is short!"


  6. Shank: Thanks for the update on K's blog and the upside targets on your charts! Do you think we will grab the upside gap on this next push, before we turn down? Thank you very much


  7. @GFD75 - I'm not so sure the $ has to crash for the market to go, although the two together would be devistating. The theories on inflaton earlier than later seem to be gathering steam. Tthe economists are all over the place as usual. Rremember in 2007 when we were in/not in/in/not in a recession, then 9 months into it they declared it? Same thing here with the deflation/inflation arguements. There is no question IMO that a dollar collapse is VERY possible given all that have been printed and given to the banks. What might happen is they trade in conjunction with each other and fall at similar rates vs one spiking to far from the other. I'm very interested in the Fed meeting later this month and what they say about rates and the possibility of raising them. The various feds seem to be having varyong ideas about what is going on and how to fix the issues, and I feel better about the regional feds rhetoric than Hellicopter Ben's. Are they serious about controlling inflation and taking some $ out of the system? We'll get a good idea then. Hope this helps.

    @ Deadhead - As for a chart post, I'll have one up very soon. Probably in the AM. I'll post on K's site when I put one up. Can't just throw them out there hanging with DE and K. Got to get may game on.

    @ Michael - you are spot on. Manipulated markets can be brutal on shorts. I'll continue to make small plays based on the 60m indicators both ways till new trend is confirmed.

    @ Anon - I hope soon but not counting chickens just yet.

    @ Caddy - As noted - I'll play my first 60m chart with long and short (see red and green verticle lines that are most often posted real time - dashed is a possible turn small entry with tighter stops and full is confirmed larger play with no stop that I baby sit) till the downside move is cemented in.

    Thanks to everyone for the views and comments. It means a lot when I get questions and feedback. Helps to know I am helping and doing right or wrong.

  8. It would help to admit we are in P1-I5 :-)

    We are still in the channel and heading on down to the other side:

    The $INDU is clearly signaling sayonara:

  9. BTW, you might want to redo the trendlines on the daily charts. The charts need to be linear and the trendlines need to based on closing prices (textbook for charts under 3 years). The log scale is for acceleration purposes, and that is not what should be done for trading. Case and point is the May 08 and August 08 closing tops puts this major down trendline (as shown in my link above) slicing right through 950 vs 1000 (where the log scale puts it). The pros are using the 950 one so they are using linear closes which is what everyone should use. This was major-league respected last Thursday and Friday. Watch this: http://www.youtube.com/watch?v=fZztjOKya8E
    He is a stickler for drawing trendlines right.

    I pointed this out to Kenny, and he quickly deleted the post and banned me as it F'ed up his bogus DOT. What a major A-hole. Can you tell he is even more defiant on the DOT the last few days? Funny as hell.

    I don't see us getting over 950 at this point, especially with the turns on the daily indicators and many others. That trendline is dropping 10 pts/week.

  10. Shank,

    You previously said we'd hit 950 (we hit 954) before sell off to 850ish, then 1020-1055...then pullback to 675 or worse...still standing by that? Thanks...great job!


  11. @ S135 - I'll look at changing trendlines, but I draw what I see by the rules I know and sometimes by what I like. I obviously have my own convoluted way of looking at things and it seems to work. Everyday I learn more and try to get better and comments like yours help me, so thanks. As for the K dot (DE had it and I kind of had it), we all see things. I have learned that it is best to try not to be too critical of others observations. You should know that this comes to bite you in the ass. Be supportive, wish 'em well and politely present the other side is what I try to do. As for P1 v P2 I'm still P2, but only time will tell as EWT is always recounted backwards to get it right. Bottom line is we are headed south and to watch the charts for clues. K is pretty damn good. He's patient and very helpful with me and has taught me more shit in the past two years that any textbook ever could have. As for the market, I think we're toast from here, but not ruling out some sort of manipulated rally. Daily and weekly indicators are set up. Earnings manipulation has me worried thru the EOY.

    @ best20onclub - I'm getting ready to post on that soon. time to put "it" on the chopping block again, but yes, I'm still thinking that way with a lot of caution. As I have said, this is either it or we get some more bullshit manipulation up then crash. Charts will tell. Look for the post.



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