Print Print Baby

I have written ad nauseum about the hopeless economic mess that we find ourselves. We all know about the ballooning debt and the derivative mess caused by opportunistic and irresponsible bankers. However they were not acting alone, they acted under the direct knowledge and support of our federal government and other governments around the world. We are is such big trouble the mess is so huge that its is bringing the world economy to a standstill and his own verge of collapse.

So now these very same banks, bankers, financial sector companies are on the hook for massive losses for  these derivatives that they created which  made them huge profits in what we can call a pyramid type scheme. For this reason and only this reason, under the auspices of this “too big to fail doctrine” so to speak. A saying created during the during the 2008 financial crisis, central banks globally are in the process of manufacturing or printing money which will essentially get all the banks in the financial institutions off the hook. They will get away Scott free, and as usual the average citizen will suffer, as we will all live in a super inflationary environment.  

And so I may sound critical, but I'm not. I don't think anyone has a solution for this gigantic mess. I am only critical of how we got here. I am critical of the failure of our president and our politicians to not protect our citizens by NOT putting the people responsible for this mess in jail. Where is the justice they speak of? They put a guy who has there priors for selling nickel bags or less sometimes in jail for 25 years. The guys who steal billions of dollars from ordinary people and pretty much put the entire world economy on its knees, they get a bailout and huge x-mas bonus, WOW. It's so ridiculous to think that this is actually happening and they are gonna get away with it.

Okay that's enough complaining. What should be done to protect ourselves and how can we make money in this environment. I firmly believe that soft commodities, there are many AG commodity ETF’s that are great for this purpose, simple basket is DBA where you get enough exposure. Then you have specific Ag plays, I think sugar, cocoa are good, oil (USO), and in physical metals (not ETF’s GLD or SLV). Stocks across the board especially tech will also move higher but their value of the paper will do erode overtime due to inflation.

I will put up some charts later today. Happy Monday 

PM's set to breakout

CLICK ON THE CHART TO ENLARGE

CLICK ON THE CHART TO ENLARGE

This Rally Has Got Legs

Legs

In my Sunday post i had mentioned there maybe a rally coming to wall street but I didnt expect this massive gap up, crushed all my shorts to break even to a little up. And I think there were powerful events that occurred last week and over the weekend, where the ECB took the reigns from Germany, they are now dug in deep and fighting for survival, there is way too much at stake not only for them, but for the US as well.  

So that is why I am longer pessimistic on stocks and commodities, basically the ECB is taking over Europe, Germany has been summarily Bi&*h slapped.

So the feeling is that we are in "risk on mode", and the ECB is going to hyperinflate their way out of this mess, thats why you saw oil, silver and gold as well as other commodities jump yesterday on excellent volume, obviously there was a lot of short covering but there is real buying. Click the link below, excellent article, talks about what happened and where we are going from here. It is by Dr. Paul Craig Roberts is the father of Reaganomics and the former head of policy at the Department of Treasury. He is a columnist and was previously an editor for the Wall Street Journal.

Oh and by the way after the bell, Fitch reiterated the US AAA credit rating but changed the outlook from stable to negative and this has done nothing to upset the markets, so we know this rally has legs!

http://beforeitsnews.com/story/1427/016/NL/

Santa Clause Rally Coming To Town?

So a few days ago we went short and that has paid of handsomely as we have had seven straight down days. The hourly charts show an oversold condition (MACD and RSI are in oversold territory) but the daily chart MACD is nowhere close to bottoming, RSI is getting oversold, however there is no panic indicated by a VIX that for me needs to get in the mid forties before I get excited, so I think there will be a bounce but no change in trend. And again we need to respect the news, if there is more bad news out of Europe the selling will continue despite the oversold conditions.

 Note the bottoming RSI and MACD, these are more sensitive than specific, but it should give you a heads up that the selling needs a breather or seller exhaustion. 

Could we just fall to the bottom of this channel (1100) only 50 points away from my target, would just be too easy, note the RSI just above 30 beow is oversold and the MACD is not even close. 

 Multiple tops on the ADX, heading to its lower end of sideways channel, again RSI just above 30.

 Oscillator is just about the low end of its range, signaling we are almost at a point where we get a reprieve from selling.

 Significant reversal in investor bullishness in energy, from 90 to 23 also supports reversal. As well as financials but not as drastic.

So here is the strategy: 

Cover half of the short positions on Monday regardless of the futures or news. Close rest of positions if we have a close higher than a previous close on the SPX.

Watch the market rally, back to levels indicated and then re-initiate shorts. 

Caveat: NEWS

Now to my EUR/USD short

The dollar looks to break out and the euro is breaking down, also see USD/JPY as that trend is reversing. If the euro hold up it could rally to 138, right now its signaling it may just fall off the cliff.

Finally take a look at Citi as a example for big banks because all the charts of GS, JPM look similar:

So we have a nice set up for a reversal, looking forward to this coming week.