Sunday, October 16, 2011

Market Update...

I will be posting some charts later today to add to this post…(as of 10:49 pm I am totally wiped out have not recovered from 10 oscillations from zero to 26,000 feet and back yesterday testing out a King Air B200…will post charts in the morning) But as far as the markets are concerned, I would like to share some observations from friday. It is important for me to point out that as opposed to most blogs and professional services that charge for their opinions and usually give you two opinions and subsequently claim the best one post history. I present my view, it is merely a view but is a focused one. I have never found that I can make money in the markets by flip flopping…I don’t have time to waste doing that…either I am wrong or I am not. In the case that I am wrong, I want to determine it early and manage that condition proactively...the most effective tool for proactively managing risk is proper allocation.

Hence, my view and posture has not changed at all since my last post…the market was SOLD by institutional traders especially into the short squeeze at close on Friday. In fact, it looks to me like the primary activity in the markets has once again been a roller-coaster of leverage becoming de-leverage…longs became shorts after blowing out of their trades and now they are blowing out of their shorts. In addition to that, you have all the asundry liquidations by the various insolvent and liquidating financial institutions around the world. With all their crazy derivative and leveraged risk positions this does not imply that asset prices must go down...and can indeed imply quite the opposite. The most ridiculous thing is that NOW that we are above that trendline…most will likely look at it like a breakout which will likely further their whipsaw. I am quite confident that this breakout will be a retest overshoot and thus a failure.

The dollar has lost downside momentum and looks powerfully positioned (hence we have reentered the dollar in the 77.12ish area. The EURO has lost its upside in a spasm of de-leveraging…while, its counter part, the dollar is sitting above a multitude of major supports and that to me has profound implications for the whacky diatribes and promulgation I am hearing about.

Oil, Silver and Gold are all set and generated partial short triggers on Friday…I think the ride down will likely not be interrupted by a zigzag for the markets- meaning that we put in a pullback here to a higher low and then proceed to a higher high as a part of this move. If that were to happen, however, the targets would be in the 1250 area for the S&P500. While it is inruiging to make that guess on this pattern - I am not in the business of guessing such things for profit. I do believe that the market will likely fall here and that the trip will be a rather powerful unwinding - hence, I do not favor our current wave up being an A wave of an ABC zig zag positioning is looking more for nearer-term reaction...and is highly biased to the action of and in the currency markets which are indicative and at the center of our storm.
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