STB Morning Post 09/13/11

Not much to say other than China saved the day yesterday (again). It seems that you can always count on intervention of some sort to save the day (till you can't). Bottom line is they will continue to stick save till they can't. As noted on STB a few months back, it appears that the power brokers in governments around the world are tired of bailing out the banks.

The bankers have bled the system and their puppet politicians as much as possible (times two). The governmental representatives have gained nothing politically as their voter base has become increasingly dissatisfied with their performance. On the other hand, you would assume that the money flowing into their coffers from these special interests is coming in at an astounding rate. Quite the trade off, sacrifice your country and political career while you go for the big cash grab. How American!

I think they are thru throwing good money after bad. I think the politicians are actually beginning to see the light. After throwing a DISCLOSED $4 trillion at the problem (not the actual $30 trillion it took to bail out the world) and getting nothing out of it, maybe, just maybe they are growing a set large enough to take on the banks and the default issues that are coming.

I hope you all like the new look old blog. STB.com is still down and I am actually considering staying here at this point till the new blog is up and running. Comments and suggestions are always welcome. What you like and don't like I need to know so it can be incorporated into the new blog. Don't tell me after the fact, you need to tell me now.

Minis this morning have made quite the recovery (not sure who came in with the big stick (or wantons filled with dollars as sellputs put it yesterday). All it takes is a rumor to move the DOW 100 points either way in minutes. Thus, this is a dangerous playground to bring your ball to. Remember to have a trading plan for each trade and to always use stops.

Minis - yellow channel support being backtested. the blue triangle backtest is just above. 1161 (price at now) is first resistance and then 1178. Those can get run thru with the right "solution" today. Inversely 1123 is the magic number for severe downside action continuation. Bottom line is the markets are consolidating at these levels and remain range bound. Note - I adjusted the channel a bit this morning to what should be a more accurate representation of the channel capturing the last low at 1138 - where it was below the support diagonal yesterday. This is an allowable thing to do and is sometimes necessary when working with charts. STB always reviews his trendline positions and if adjustments are necessary, then I make them (and you should as well).

FAZ and BGZ Crazyness.

The first chart is TNA 3x long. The second FAZ 3x short. FAZ may be unfair in this instance because of the financial mess, but it works for the purpose.

I thought I'd look into some of the 3x and 2x charts to see what they have to say about the market and if there may be some opportunity. The shorts are all showing signs of extreme bullishness. This type of pile on usually happens at bubble tops. Look at the volume candles on both charts. A high majority ocurred in the afternoon. These are some of the better equity indicators of extreme bear/bull ishness (and greed). One thing for sure is that those going into FAZ are not showing any signs of wanting to get out, and people are hauling ass to get out of TNA. The option chains for March are all over the place with some wild bets being placed. I mean all over the place. The fomations are rising and falling wedges that are both narrowing. FAZ's rose, fell and rose again this week once already, so I am not discounting another small pennant possibility.

At this time I'm not on either side of the trade as I am finding it frustrating as the market artificially levitates above where it should be and tests the lows. I am a perma bear. I know we are going lower, but I don't know when or how. Wave 5 is in progress. Is 3-5 ending or are the targets of 735 to 750 still valid?

I want to warn or remind that you'll get killed on any sudden reversal. Go look at my BGZ chart or SKF to see the pain that can be caused on the downside if you are not there to pull the plug. The bullish volume spike today in BGZ is incredible. Stops won't help you on a reversal at these levels, because it will not be orderly especially on a swing trade. Last one out turn off the lights.

If you hang out in these be careful and smart, not greedy. Pigs get slaughtered and this is the perfect vehicle for the slaughterhouse.