Blog | Red Dragon Leo - Stock Market Trading on the Darkside | Stock Market Trading on the Darkside

Maybe Not That Hard To Kill A Bull?

Leo's Den

Red

-

May 4, 2010

The Bears celebrated today by laughing and giving each other "High Fives"...

It's seems it's been such a long time since the bear has had a decent meal, that this one almost seems like a dream. The sell off I've been waiting for is finally here... but will it end today? I don't think so. Here is the same chart I posted on Sunday... now look at where we are compared to the last sell off?

Do you notice anything similar? I certainly do, and I believe that tomorrow will not bounce at all, as many of the bulls are expecting it too. I think it will open and continue selling off until we hit the 115.00 spy level, and then a bounce will occur. How much is still unknown? It could end the correction and then we are back to the slow grind up to our finally destination of 11,816 (DIA 118.16), where we have our fake print that Sundancer caught many weeks back.

However, the way the market climbed to it's current height, leads me to believe that we will continue on down to the other fake print of Dow 10,000 and 107.38 spy first, and then rally hard. The climb up is too step I believe, and a larger correction needs to happen before turning the ship back around.

Think of it as a large ship, traveling way too fast in the water. If it sees danger ahead, (like a fleet of enemy ships), it must turn the ship around as fast as possible and go back another direction. Unfortunately, it's been moving too fast for too long, without stopping for any maintenance (pullbacks in the market), and now the engines are kicked into full reverse causing the ship too turn quickly.

But, half way through the turn (the coming bounce at 115.00), the ship's engine's lock up from the stress, and a quick repair must be done (another sell off to 107 area), before she can get back up to speed and away from the enemy ship (full of an army of bears of course).

So as you can see, I'm really leaning toward fulfilling the lower target fake prints first, before the rally continues back up again. Will it play out that way? That's any one's guess? I think it will, but time will tell...

Red

It’s Hard To Kill A Bull…

Leo's Den

Red

-

May 3, 2010

266

Well, it seems that small bounce up wasn't good enough for the bulls, as they rallied back well above 50% of Friday's sell off. Those bulls are pesky and irritating creatures... to say the least. But, I knew that it was possible that they'd rally it back up, as the charts were showing that the market was oversold on a short term basis.

However, today they ended overbought. So, I do believe we will sell off some tomorrow. I'm not looking for anything major, as I think everyone is waiting on the job's reports on this Friday. That should be a big market mover. Of course between now and then, any news out of Greece or some other event, could spook the market first... and let the selling begin.

One thing of interest today, on both the 60 minute and the 15 minute charts, was how the market couldn't get above this downward sloping trendline. It is clearly putting pressure on it, and if the market wants to go above it, then a gap open over top of the trendline, is going to be required.

It's the same trendline shown in this chart below (found on Cobra's blog). Problem is, there is also a lower trendline that is supporting the market, and preventing further selling. This is looking like a symmetrical triangle (credit goes to Cobra for spotting it, as I didn't), which still has another day or 2 of room to trade in, before it reaches the apex, and must jump out.

All the other charts are still signaling that the market will pull back, but unless we get some bad news event to cause the selling, we are waiting for Friday to produce it... and that's only if the jobs data is bad. You know how the government likes to erase some of the digits on the report. It's just like giving the report card of the students grades, to the student first, and telling him to give it to his parents. Funny how easy it is to turn those "F's" into "A's"... So as much as I'd like to tell you that all the charts are pointing down, the chart above could go either way.

We are also now 3 weeks away from this months' option expiration, and although the market sentiment is still extremely bullish, the amount of puts purchased versus calls, for the month of May, is way too heavy on the put side.

That doesn't mean we can't sell off this week, and rally back hard into opx, but the chance of the market crashing into opx is very slim. Those market makers are not going to pay out on all those puts. I've seen it too many times, how they sell tons of puts to the retail trader, and then rally the market, making them expire worthless.

Of course after opx is another story, but for now, the bears have really only got this week too get a sell off to happen. The week of opx, and most of the week prior to opx is already reserved for the bulls I'm afraid...

Red

Weekend Update…

Leo's Den

Red

-

May 2, 2010

1,032

CHECK OUT THE VIDEO I DID ABOUT THE NEW LOOK

Last Friday we had a really nice sell off, which extremely rare these days. But what does it mean? For an answer to that we have to look at all the charts. So in this weekend update, I'm going to go over the monthly, weekly, daily, hourly, and the 15 minute charts.

The question that always comes to my mind, is whether or not technical analysis actually works? I've done my best to learn it, and to adapt to fit in the news, as well as the "manipulation factor". But, it's still not perfect. The reason probably lies in the fact that I might interpret the charts different then the next person.

This "difference of opinion", between myself and other people, is the exact reason I have this blog. There isn't anyway that I can cover everything, and put all the pieces together. That is why I need YOU, the reader and commenter.

By everyone posting their thoughts and comments, we all are then better informed. Hopefully, we can adapt and still make a profit from the market, even if it goes against us. Believe me... I know, as it's went against me too many times.

So let's dive into the charts, and try to figure out what's next. Below we have the monthly chart of the SPX, which now is clearly showing a "Topping Tail". That's a very bearish signal, which means that the "Top" may very well be in. If so, then it's probably down hill for the next several years. But I'm not convinced that this is the final top, as the MACD's and STO's haven't rolled over yet. That leads me to believe we will have 1-2 down months, and then back up to the fake print area of DOW11,816 by the end of this summer.

Moving on to the weekly chart, we see that we just put in a very bearish reversal candle, closing at the low end of the candle. You can also see that the MACD Histogram put in a lower candle, and that we have a bearish cross on the Full STO's. The RSI is also pointing down now, and hasn't done so since January. Notice how steep the downturn is on it. This is very bearish.

Now let's look at the daily charts. The first daily chart shows the SPX, with another very bearish red candle on Friday. Notice that the 10 EMA (blue line) is just about to cross over the 20 EMA (red line), which hasn't done so since the January sell off. Look at the RSI, as it's fell from the "above 70" area, and is now at the 50 line, and pointing down. I expect it to break soon, which will give the bears more power. The red and green ADX lines are criss-crossing, but I expect the -DI (red line) to rise back up soon, causing more selling.

Now let's look at the daily chart of the SPY, with some different indicators. The one thing that stands out is the clear break of the rising support line. The first break was on Tuesday, and then the market back tested the line on the next two days, and finally failed to get back above it on Friday, as it sold off hard. Looking at the Full STO's you notice that the black line is pointing back up and touching the red line. This indicates that the market could go up on Monday, or even Tuesday too. I expect it to fail and roll back down, not crossing the 50 level.

Let's look at the 60 minute charts now. Now this chart is from Ron Walker's site (he's "the chart pattern trader"), and he has it marked as a "head and shoulder's" pattern, but I disagree with that labeling. From what I've learned, a H&S pattern must have a rising trendline, with the right shoulder having the higher part of the trendline. Meaning that it can't be a level trendline (support line). It must slope up on H&S patterns, and slope down on Inverse H&S pattern.

Regardless, it still looks like the market still pointing down. The MACD's have rolled over and are pointing down, and are also below the zero line. The Full STO's are still going down, and then the ADX line is gaining strength with the -DI (red line) on top and rising higher. All are bearish signs, indicating that the market is likely to open down, or flat, and start selling off. The only question is whether or not it will bounce at the triple bottom or just gap down below it on Monday.

Looking at the 15 minute chart, we see it is also pointing down, with the Full STO's still going down lower, while it's already below the 20 level. This is very bearish. That triple bottom support is about the only bullish thing I can find right now. Look at the MACD, as it's still going down too, and the RSI is at the 30 level, giving strength to the bears. Plus the ADX line is rising, giving power to the DI line on top... which is the negative line.

I think that we are either going to see a gap down on Monday, and continued selling until we hit 117.50 spy for the first level of support, (which should give at least an intraday bounce), and then 115.00 spy, which should be a multi-day bounce. Or, we open flat, trade sideways for the day while the MACD's and Full STO's roll back up. If so, then I'd expect them to peak on Tuesday, and start back down by Wednesday.

The moves up should put in a nice bear flag pattern, as I don't expect the market to get back above Friday's high. Maybe a 50% retrace, but probably less. This assumes that we hold the triple bottom and don't gap down past it on Monday morning. But either way, I'm looking for the week to be down again.

Red

The Bears Are Back…

Leo's Den

Red

-

April 30, 2010

55

Great day to be a bear, as the market sold off today, erasing yesterday's gains. Most of the fear was based on the news released that Goldman Sachs could face criminal charges too. Originally, they were just civil charges... which is no big deal to Goldman, because they have plenty of money to pay any fines.

But criminal is another story, as somebody could go to jail. That's what I'd love to see, but I think it's more smoke and mirrors then actual arrests.

I'll do a weekend post that will be more in depth, with what I'm seeing for next week. I do think we will bounce up on Monday, at least in the morning. That's assuming no more negative news is released over the weekend. That's the wildcard that no one can see.

Anyway, have a great weekend...

Red

The Bulls Are Back…

Leo's Den

Red

-

April 29, 2010

1,820

At least the retail bulls were, but the big institutions didn't participate in today's rally. For many months now, the volume on UP days is low, and the volume on Down days is heavy. Why is that? Simply put... the big institutions are selling big on the down days, and sitting on the sidelines on the up days.

They buy a little bit, just to get the market jump started, and then the retail trader jumps in and pushes it up the rest of the day. That's exactly what happened today as the big boys gaped the market above the key overhead resistance, and then turned it over to the retail traders.

This really reduces the odds of nice correction now, as today's move rallied most indexes back inside key trendlines and support areas. That doesn't mean the bear is dead, but he just got a bull horn jabbed into his side today. It's a serious wound, and makes any more downside attacks limited.

I am surprise that the bulls didn't go up to the double top level at about 1212 spx today. They had the opportunity, as the volume was almost non-existent. But, since tomorrow is Friday, I'd expect them to push it up some more and at least reach that double top. The news released by the government tomorrow, will of course be manipulated to push up the market more. Any news that they control will be made up, and not accurate.

The earnings report from various companies is tougher to manipulate, but the government encourages them to lie on them, so they will look positive for the economy. So, since there isn't any major earnings report tomorrow, the only news left to report is various economic reports (GDP being the major one)... which again will be favorable.

It's looking more and more like we might be forming a sideways channel, as the bears can't seem to break the downside support levels, and the bulls can't go above the overhead resistance. It really makes more sense to manipulate the market sideways, so the crooked banksters can unload their stock slowly to the retail trader.

The dollar is also looking bearish, and should continue to fall. This will of course help push up the market, as they are still locked in sync with each other, and go in opposite directions. Without the dollar pushing up, it's going to be hard to see the market sell off hard.

So, I guess it's time to put the old green up arrow back up, as the odds of a serious sell off on Friday is very low.

Red

Same Old Speech…

Leo's Den

Red

-

April 28, 2010

26

Once again the Federal Reserve Board did nothing. Not that I was expecting them to raise rates, but it's more about what they say, then what they do (or don't do). I'm sure everyone expected them to leave the rates the same, but what are their plans for the future?

The answer is... nothing much! In other words, they didn't say anything to give the market hope, or to cause a sell off. That was one of the reasons the market was basically flat today (small up, but nothing like the down day on Tuesday). This was too be expected, as most Fed Day's are UP day's.

However, even though the market did go up a little... it looked VERY Weak today. Every time the market tried to rally today, it would quickly sell off. This is one tired Bull, and I look for it to continue selling off this week. Possibly another flat day tomorrow (Thursday), but I really doubt it on Friday. I can't see many traders holding over the weekend with all the bad news out in the market today.

Greece is still in trouble and other countries are too. Any trader that holds over the weekend, with another possible bad news event being released while the market is closed for 2 days, is gambling with fire. Fear is back in the market and most people will sell first, and ask questions later.

While another sideways day is still possible tomorrow, I think we will fall to the 117.50 spy support level by Friday. It could happen tomorrow, if the job's numbers aren't viewed positively? Either way, the odds of a large up move are slim now, as the Bears have gained back a lot of power.

Best of luck to both the Bulls and Bears...

Red

Going Down…

Leo's Den

Red

-

April 27, 2010

36

What a beautiful day it was in the stock market, as reality finally slaps some sense into it. When bulls finally run out crack, they sure do come down hard! It was certainly long overdue, I'm I glad to see it happen. It gives us option traders the volatility that we need to make some decent money trading them.

Not that it can't be done in a up market, but it's harder to do as the time decay kills you, due to the market moving up so slowly. The down moves are fast and furious, but don't last long enough to make me happy.

Anyway, I'm looking for a small bounce tomorrow to get short again, as I closed out my put spread today around the first low of the day. I missed out on a little more money, as it continued lower into the close. But, nothing goes straight down... because "Down" is a bad word in the stock market, and "UP" is all that's allowed to move continuously without dipping. (Not really, but it's sure seems like that).

Moving on...

Let's just focus on the key support levels for now, so we know about when to bail out on our short positions. Tomorrow is tough day to call. The best thing to expect is a "pause" day, meaning that after a large sell off, there is usually a day that the market goes sideways, to slightly up or down. That's what I expect for tomorrow, but it's not a guarantee as it could continue selling hard. (The futures are about flat now, so that tells me a bounce is more likely).

Assuming there is a bounce tomorrow, I plan to use it to take another position on the short side, as I don't trust any long trades at this time. That's because I don't think we have sold off far enough to get a several day bounce in the market yet. (Day trading is different of course, but I only swing trade).

So, the support levels going down are at 117.50 spy (horizontal support line), 116.25 (50 dma), and 115.00 (horizontal support line). I expect the several day bounce to come in at either 116.25 or 115.00 level. If we make it down to that 115.00 (1115 spx) level, I would expect a decent bounce.

But, we might stop on the 50 dma around 116.25 currently. We just have too take it one level at a time for now. Let's not forget the fake print of 107.38 spy from last month, and the DOW 10,000 fake print Sundancer caught too, as that might be our final target, before a summer rally?

However, I don't know if we are headed down to that area first, and then a rally into the May option expiration, or a rally into opx from a higher level (then the fake prints), and then a sell off to the fake print areas after opx is over.

Time will tell I guess...

Red

What Happened To Bullish Monday?

Leo's Den

Red

-

April 26, 2010

147

It seems that "The End Is Near" now, as the usual Bullish Monday failed for the first time still the stone age was around... or it least it seems like it's been going on for that long. Seeing a down day, (even if it is only a few points), on Monday is so rare that I can't believe it actually happened today.

Not that it means anything of value, as the trend UP is still intact. No damage has been done to the Bullish Charge, that's been going on since February the 5th, 2010. So, I'm not expecting any large down move tomorrow... so don't get all excited on me.

Yes, yes... it's a POSSIBLE end to the UP trend, but only slightly possible. We Bears should know by now that this is most likely just a small tease, and not the start of the correction we have been waiting for. However, it could be the top, but I really doubt it.

They are so close too reaching the 61.8% fib. level around 1228 SPX, that I don't expect big sell off until they hit the target they are looking for. They told us with the fake print of 118.16 DIA (about 11,816 DOW, and I'd estimate 1270-1280 SPX) several weeks ago. I thought that we would go down to the other fake print at 107.38 SPY (also DOW 10,000) first, but it looks like they are going up first.

The markets seem to be getting more and more boring everyday as the VIX settles into a low range, making trading options about worthless. Without some volatility, it's hard too trade them the way I like too do. Still good for day traders of course, but that's just not my cup of tea.

Anyway, at this point, I'm not expecting any large down move tomorrow. It's looking like it might sell off some, but only based on what the 60 minute chart shows. It might only sell some in the morning, and rally back on light volume in the afternoon, as it always does. So I guess we can expect more of the same, until the dam finally breaks.

Yawning now...

Red

Weekend Update…

Leo's Den

Red

-

April 25, 2010

83

So here I sit on Sunday afternoon wondering what to write on this weekend post? It seems (or at least feels) like I keep writing the same thing every weekend. "The market is way overbought and should sell off ASAP!" I said that last week, and the week before that, and etc, etc...

I feel like the boy who cried WOLF... for the hundredth time! Well, I'm going to cry Wolf one more time, as this FAT Bloated PIG of a market needs to shed some weight ASAP, before he explodes violently!

I don't have a lot of charts to show you, as it seems that "Overbought" can remain overbought for unknown time periods, so I'll just show you this chart of the Put/Call Ratio (courtesy of the chart pattern trader).

The percentage of Bears is now at a record low of 17.4%... which means that 82.6% of the people are now Bullish on the market. That's an insane number folks! And you and I both know by now that the market doesn't reward the side of the "majority", but instead it takes their money from them. When, of course is the question we all want answered?

If I could answer that question accurately I be filthy rich by now... so of course I have to guess at it, just like everyone else. Currently we are only a little over 10 points away from the magical Fibonacci retracement level of 61.8%, coming in around the 1228 spx level.

You know that everyone and their brother knows the significance of that level, and that in of it's self should tell you that the market isn't going to just go there, stop and wait for people to short it, and then reverse allowing the average retail trader to make money from it. It's never that easy my friends.

That simply means that we must either fall short of that level, or bust on higher past it. Since we have already been given our final upside target of 118.16 DIA, which should be around 1270-1280 SPX (guessing here), we have to calculate the odds of another parabolic move straight up from the current level to that all time yearly high.

I don't know what the odds are, but I simply can't wrap my head around the idea that the market could get through all the huge resistance overhead, without a pull back first. That would probably make the bullish percentage in the low 90's by then. I don't know if it's ever got that high before a pull back?

Logic (but again, the market isn't logical) tells me that they will take the money from those bulls way before going that high, just like they did the bears... on this insane rally up. Plus, they will actually need the bears to be heavily short, so they can use them as fuel to rally higher. Without the ability to squeeze the bears, and with no bulls left buying, they must rely solely on the PPT money... and I just don't think that will be enough to overcome the negative news being constantly released, and the huge overhead resistance.

Of course I've said that before, and been wrong before, so why is this time any different? I don't know? I only know that the odds of a correction first, before going up to the final top for the year, is even higher this coming week, versus last week. Odds, numbers, and percentages are really all you can trade on now, as the typical TA charts don't correctly tell you when the market is going to turn.

Obviously, the super computer algorithms are much smarter then the average trader, as they combine all the data in a fashion that isn't predictable by humans. I'm sure there is a reason behind the madness of it all, but I don't know what it is?

However, there is little doubt in my mind that it's all politically motivated, and of course "Financially Motivated"... meaning that they are trying to time events around key political issues, like the health care bill, and now the bank reform bill. And let's not forgot that the elections are this fall, which tells me that any correction we get will be short lived, as they need to rally the market into the elections.

After the elections are over... well, does the old saying "Katie bar the door" paint a good picture for you? Or maybe "Timberrrrrr"? I'm sure you get the picture by now. Once all the new and old Democrats and Republicans get re-elected, there isn't any reason to hold the market up until the Presidential election in 2012.

The market could fall hard all of 2011, and then rally in 2012 for Obama to look good just before he tries to get re-elected again. Of course none of this helps out our short term trading accounts, as forecasting the next weeks' move is much harder then the next year or two.

But, who ever said picking a top or bottom was easy? Could it happen next week? Possibly? I hope so, as I'm really tired of the never ending bull rampage. It's quite sicken to see so much deception and manipulation in the market.

I do know that is coming soon, as the insiders are moving to a short position, as explained in this article by ZeroHedge. A 10% (or more?) correction is planned, as these guys are the "Smart Money". I'm hanging tight, with my short position (even though it's underwater now), as still see a sell off before OPX in May.

I leave you with this chart from Cobra's blog...

Red

Rescued Bull…

Leo's Den

Red

-

April 22, 2010

2,023

No Post for Friday Gang...

I'll save it for the Weekend Post.

The Bull got rescued today, (by the PPT of course). It seems that a bear slipped up on his last night while he was sleeping, and pushed him down a hole. Hurt and bruised up a little, the bull finally got his mojo back and charged higher into the close.

These bear attacks are becoming more frequent now, and the bull is getting tired and falling asleep while standing. The bull needs to be careful where he stands as a cliff is nearby his grazing area, and one missed step could result in a one steep fall.

At this point, the bulls are up against a whole lot of resistance from multiple trendlines, all intersecting about where we are now. A big move is coming soon, because it has too... The bulls must gap above all the overhead resistance and go make a new high, or give up and jump off the cliff.

It's really that simple. Steep sell off down, or jump over the major resistance overhead. Everyone seems too be long here, as they all expect 1228 to be the next level the market is going too. That's the 61.8% fib. retracement from the March, 2009 low to the 2007 high. But, you know the old saying... if everyone is expecting it to happen, it won't happen.

So we are at a crossroads again. Either we must go above the current resistance, to trap the bears that will go short at the level, or sell off before reaching it, to trap the bulls that are waiting to sell at that level. Someone is going to get burnt... who will it be? The Bull or the Bear? (In the end, you know it will be BOTH!).

Red

Apple Fails To Rally The Market…

Leo's Den

Red

-

April 21, 2010

368

After Apple blew out earnings estimates on Tuesday evening, you would have expect a big rally on Wednesday. But, it didn't happen, as this time the Apple was rotten. Apple clearly is the leader in the Nasdaq, and carries more weight then all the other stocks in the tech sector. But even with it's overnight jump of 15-20 points, the overall market didn't rally up huge like you would have expected it too.

Most people would have expected a 100-150 point Dow move up, with Apples' great news. Since Apple carries so much weight in the market, this is clearly not a good sign for the Bulls. Who is left to rally the market now, if Apple couldn't do it?

I'm really seeing more and more signs that this market is going to fall very soon. I'm not going to stay that the "Top" is in, but the odds are much higher now. Light volume is about all that can save this market from falling. If they can keep the volume light tomorrow and Friday, then they could take out the current high with some fake jobs numbers. That is something that they can easily fake, as earnings on all the various companies is a little tougher to alter.

Looking at the 60 minute chart, it sure looks like it is ready to fall. But light volume rules as the PPT can easily push up the market when there aren't any sellers to stop them. This Goldman Sachs issue is about the only thing I can think of that could cause some serious selling.

Many people and large institutions are currently trying to get out of Goldman, as they don't want to take a chance on whatever outcome may happen from their fraud charges. This will put constant downward pressure on any rally attempts that Goldman has. However, I think someone is going to hit the panic button if the rest of the market starts selling off.

I don't know if it will happen this week or not, but you can just feel the tension in the market, as the tape struggled up some, down some, up less, and down more... all day today. Just like animals can smell fear, I think the traders are now smelling fear. I don't think it's going to be too many more days before the panic starts.

They will wait for the jobs tomorrow, and Microsoft's earnings after the bell Thursday. If that data does show some real improvement in the economy, I think the serious selling will start asap. We could have a Black Friday? I don't know how good or bad earnings will be for Microsoft, but I can tell you that most people will say that "Vista Sucks", and Windows 7 is just Vista part 2.

And since Apple is their biggest competitor, who just blew out earnings, what's the odds Microsoft will blow them out bigger then Apple? Remember, Apple couldn't rally the market today. How is Microsoft going to rally the market... without any new gadgets like the iPad? Is Windows 7 as big or bigger of a money maker then Apple's iPad? I don't think so.

That leaves it up to the Jobs numbers to be outstanding, causing another rally. Everywhere I read, more and more people are stating that they don't believe the numbers to be accurate as the government lies so much now. Nobody believe anything they say or do now. So, if the numbers are too good... will the market believe it? NO, of course not. And if the numbers are bad? Just another reason to sell off and take some profits.

You put together the NO Win Situation with the release of the Jobs data tomorrow, along with the high odds that Microsoft fails to beat estimates enough to justify a continued rally, and throw in the Goldman Sachs issue... and I'd say the odds are very strong for a sell off to occur.

And since Technical Analysis doesn't seem to work too accurately by itself anymore, I'm leaning more heavily toward the "overall" feel of the market, and what news events are coming out first... then see if it matches up with the TA's. Right now, they do match up. The TA's have been showing overbought now for quite awhile. We have just been waiting for the right news event to trigger it. Will it be the jobs data and Microsoft? I think it's the bears best shot.

Red

Bulls High On Crack Again…

Leo's Den

Red

-

April 20, 2010

1,360

It's seem that the Goldman Sachs news has been completely forgotten by the market, as the Bulls pushed it higher again today. Even into afterhours the Bulls kept buying up Apple, after they blew out earnings. Once again we are back to more of the same bullish crack high that the Bulls have been snorting for months now.

When will the market come down to it's senses and sell off to levels more reasonable... maybe never? Everyone is now expecting the 1228 spx level to be hit, before any pullback. The monthly 50ma is around 123.00 SPY, and the weekly 200ma is around 122.50 SPY. Those levels match up with the 61.8% fib at 1228 spx, which is what everyone is expecting now.

The question is... if everyone is expecting it, will it still happen? Remember, the market likes to take your money, not pay out money too you. That level is obvious to every trader out there, and that makes me believe that we will either fall short of it, and trap a lot of bulls, or pierce through it to a higher level, and trap all the bears that get short when 1228 is hit.

So which will it be? I don't know, but these charts tell me that it should fall short of that target, as they clearly show the bulls losing steam. Unless they turn around quickly, they won't have enough momentum left to get there.

Look at the top of the chart, and you can see that these last 2 days of rallying up has still produced negative Histogram Bars on the MACD. Notice at the bottom area, the volume still low, and dropping. Also, the bottom chart shows the bearish crossover already happened 3 days ago, and now both DI lines are below 80.

I know it feels like a bear trap, but it looks more like a bull trap too me. Many people will go short at the double top too, which makes it even tougher to go on up above the 122.50-123.00 level. Remember, it's not likely that they will hit that level and then reverse. They have to either fall short, or go above to the next level.

Either trap the bulls by falling short, or trap the bears by going above it. Both bears and bulls will be looking to go short at 1228, and/or close out there longs. The market isn't that giving. She wants to take everyone's money, so tricks must be played. I think they just tricked the bears with the Goldman Sachs news on Friday, and today they are tricking the bulls with the Apple news afterhours.

Maybe it's just my bias toward being bearish, or maybe I'm actually reading the charts correctly this time? I really don't know, as I've been burnt too many times to believe anything I see in the charts. Maybe I'm just seeing what I want to see? Possibly?

Or maybe I should just throw the charts out the window and call up Jim Cramer and ask him to hook me up with one of his Goldman contacts, so I'll really know what is going to happen next. Since he is so crooked and well connected with them, maybe we can use that too our advantage?

The last I heard, he was extremely bearish on Goldman, telling everyone to sell it. Why? I suspect that it's because Goldman sold all their shares (and some that don't exist too... you know "Phantom Shares"), and that they need to buy back those shares. So, if they push the market down hard, (or at least their stock), they can buy them back at a much cheaper price.

Now at some point, it will hit a level that Goldman will start buying them back at. Of course they will tell their puppet-man Cramer to continue telling everyone to sell it, so Goldman can continue loading up on every push down. Once they are fully loaded, and have bought back all the shares they want, they will pull Cramer's strings, and he will become Bullish again.

Pretty simple to read really. So, that leads me to believe that a sell off is still coming... and very soon.

Red

Still Hanging On…

Leo's Den

Red

-

April 19, 2010

94

The bulls recaptured lost ground today, as the weekend allowed the media to spin the Goldman Sachs story as a non-event. We know differently, as where there is one roach... there's always more! Nothing is ever easy in trading, and you can bet that this coming correction is going to be full of bounces along the way.

Looking at the 60 minute chart of the SPX, you can clearly see that we finally busted out of the trendline from the 1044.50 low. We are now in "backtest" mode, and will likely try to recapture the trendline tomorrow by closing inside it once again.

That doesn't mean it's over for the bears, as the daily chart tells a different story. Looking at it, you can see that the -DI line (in Red at the top of the chart) has clearly spiked higher from Friday's sell off. The +DI (in Green) is also losing power and pointing down. You can see that the RSI has dropped out of the "above 70" range, which means the up trend is losing steam. I'd like to see it fall below 50 for me to confirm that the bears are in control, but it's a start at least.

So, at this point, I'm not going to say that we aren't going back up and make a new high, as it still could happen, but the odds are slowly going down. We could have another sideways, wild swing, up and down movement similar to the November 9th to Mid-December time period.

I don't think that will happen, but it is possible. It really depends on what the "powers that be" want to do at this point in time? Do they want to go straight down to the fake print around 10,000, or drag it out sideways, and run up to 11,816 first.

Personally, I believe that the release of the news on Goldman was just a start of the coming news to be released over the next few weeks. I can't be sure, but if I recall what was "in the news" during that sideways chop fest in November and December... it wasn't anything majorly negative.

That makes me lean more on a quick 3-4 week sell off, as they didn't just release this news on Goldman for a one day event... at least I don't think they did? I'm sure it's possible, but usually they toss a bunch of negative news out there when they want to sell it off, and then pump positive news when they want to rally it up.

Bottom line here... it's all about what news and earnings come out this week. If they make them positive, the market could chop sideways for weeks, until it finally pops out of the range and goes on up to 11,816. Or, they could dump all the bad news over these next few weeks, and cause the sell off.

I'm sure that Goldman wanted their stock to tank, so they could buy it back cheaper. Who knows how much phantom stock they sold to the public? If you read the story Matt Taibbi published, that I put up on yesterday's post, you will see how they borrowed shares that didn't exist, so they could bankrupt Lehman Brothers. I'm sure this is a common occurrence for them.

But, at some point, the phantom shares must be put back into the phantom vault. That's probably why they tanked their own stock, so everyone holding shares of it would sell them at the "now heavily discounted" price.

In a way, it reminds me of a friend of mine that owned a "buy here, pay here" car lot. People would buy the car at over inflated prices, (because they had bad credit), and then pay higher then normal interest rates, with payments on a weekly basis, instead of monthly. Once they missed a payment, he would repossess the car, which would then be sold again to another sucker.

He got the car back at a discount, because the person did pay some of the weekly payments, and of course some type of a down payment. He could re-sale the same car multiple times, and do the same thing every time. Some cars he re-sold 7-8 times! He made a good living that way. Of course the difference between his business and what wall street does to the average investor, is that the people that buy the car do know the risks, and the late payment results. Wall Street lies, cheats, manipulates, and does flat out fraud to steal peoples' money. Big difference there...

Anyway, I'm expecting an up day tomorrow... but hopefully not too far up.

Red

Weekend Update…

Leo's Den

Red

-

April 17, 2010

1,097

I'm going to divide this update in two parts. The first part will cover the Goldman Sachs story and what the media won't cover, or tell you. Of course I can't prove any of it too be true, but I believe it is the closest thing to the "Real Story behind Goldman Sachs". The second part will cover the usual market forecast, and what I'm looking for over the coming weeks.

Part ONE: "What the media won't tell you about Goldman Sachs"

Let's go back a little on the history of Goldman Sachs, so that we can show that they are well connected, and have been behind all the crashes and rallies since at least the 1929 crash. For that, I'm going to let you re-read the article written by Matt Taibbi titled "The Great American Bubble Machine" (read or download pdf file here, from scribd). If you haven't read it, you should. It shows you how long Goldman Sachs and Company have been doing this to the American Public for almost a century now.

(I just uploaded the pdf to my site as well, just in case it disappears from scribd. I did have a hard time finding it again, as many sites took it down. Wonder why? Click Here to read it from my site. Be sure to save a copy... just 'right click' and then save).

You will no doubt-ably hear all kinds of stories about Goldman Sachs in the coming days and weeks, but what is really going on is just another way to steal the American Public's money... right in front of their eyes. Let's go over how this actually works first, and then how the scam is working currently.

The Theory Behind Supply And Demand...

The stock market supposedly works by supply and demand... right? If the demand for a certain stock, (in this example we will use Goldman Sachs as the stock in demand), is higher then the actual supply of the stock, then the price should rise as each stock certificate is viewed more valuable because so many people want to own it.

If the demand is lower then the supply, then the price should drop to a level that more people (the demand) are willing to buy it (the supply) at that price. But here is the problem with that situation... people wouldn't be able to buy and sell stocks almost instantly if they had to wait for the price to drop or the supply to become available, as some people hold stocks for years.

So, in order for the market to trade quickly, a middle man needs to be created (aka "the market maker") who steps up and provides instant buying and selling of the stock (liquidity), both when there is "too high of a demand, and no real stock available", and when "no demand is there, so they do some buying to create some demand".

Since there are so many stocks in various exchanges around the world, it makes sense to have people who specialist in trading certain stocks (providing liquidity)... who are known as "Specialist's".

How appropriate? makes good sense, right?

For example, if there is a total of 100 million shares (example only) of Goldman Sachs stock certificates issued, and only 90 million of those shares are actually in the public or institutions hands, then the remaining 10 million shares are sitting somewhere waiting to be put in circulation.

So, that means that those shares are up for sale, but maybe no one is interested in buying them at the current price. The "Specialist" has the job of trying to sell those stocks. But, if the public doesn't want them, then what can he do? He must wait for the price to fall to a level that the demand for the remain shares would be great enough for the people to want to purchase them, or purchase them himself, to create some demand. Seems simple enough... right?

Ok, now here is the tricky part... what happens when the demand for the stock overcomes the actually amount of shares available? What if this time there is a huge demand for the same stock, but still only 10 millions available, (and the other 90 million shares isn't for sale by the people or institutions that originally purchased them).

How do you sell what you don't have? That's exactly what happened during the last few months, as the market as floated up like it was on a sea of clouds. Goldman Sachs' stock also became in high demand, along with many stocks in the market too. Using this same example, what if the demand for their stock during this recent run up was 30 million shares, but again... only 10 million was available?

Here is where the "Planned" fraud and manipulation comes in...

You Borrow Shares That Don't Exist! And NO, that "in of itself" isn't illegal technically, as that is simply how you keep the liquidity in the market. The shares are suppose too exist, but you don't necessarily have to have them in your possession when you sell them. But, selling stock that there isn't any real paper certificate to back it up with, is basically "phantom shares"... which is illegal.

But, if you are Goldman Sachs, that's no problem, as you have already bribed the "Specialist" and the Securities and Exchange Commission (SEC), so you can pretty much get away with anything.

OK, so you simply sell phantom, or "virtual" shares of your stock, with the promise to put it back in the virtual vault at some future date. So how are you going to get the public to sell you back the stock you sold them at the peak of the stock market?

Simple... you create a scare in the market, the stock price drops, and you buy back the stock needed to replace what you sold at an over-inflated price, to the unsuspecting public.

Once the price collapses, many of the people in the "90 million" share group will be willing to sell their stock now, as they don't want to lose anymore money on the falling price. The supply of Goldman's stock is going to be abundant over the coming days and weeks as the price falls, (along with the demand shrinking).

Goldman will go in and buy back their stock once the market bottoms, keep the difference between what they sold it for, and the cost to buy it back, and give back the stock they borrowed from the virtual vault. That's basically the plan, and that's probably what's going to happen.

That one day fall wiped out $12.5 Billion Dollars worth of gains over the last 2 months. That's $12.5 Billion Dollars that they will basically make as a profit, minus any pointless fines the government will slap on them. How do they make a profit on their own stock when it falls over 13% in one day you ask? Simple... they don't own their own stock anymore... they sold it to the public, collected the money, and will re-buy it back at a lower price within the next few weeks, after the market finds a bottom (pre-determined by them too of course).

Lobbyists = Legalized Bribery

Goldman was of course most likely told ahead of time that the SEC was going to file charges, and Goldman probably told the SEC (current enforcement chief Robert Khuzami) to wait until they squeezed the last drop of cash from the retail investor, which produced the "Top" on the stock market. The SEC are bought and paid for by the 5-6 largest banks anyway, so of course they are going to do what they are told to do, or risk losing all those "donation's to their favorite charities"... the one's in their wife's' name, that they are the president of.

Yes my dear reader, the SEC will go after Martha Stewart for chump change, but turn a blind eye to the Goldman Gang. I suspect that the SEC has enough evidence to bury Goldman Sachs, JP Morgan, CitiGroup, Merrill Lynch, and Bank of America in grave that's deeper then the grand canyon. But don't count on any of it being released, as you don't rat on the person feeding you!

So why release the evidence now?

Timing, timing, timing... The Obama Administration just got through a crappy health care bill that most American's are still pissed off about. Now don't get me wrong, I'd love to see every American get health coverage. I just think that bill sucks! It forces you too pay a middle man (aka the Insurance company) to get health insurance. Other countries of the world, that have universal health care plans, pay a tax directly to the government, which reduces the cost tremendously because the middle man is gone. Their plan works, Obamacare won't!

Moving on...

Obama spoke several months ago about regulating the banks more. He had a bill that he wanted passed, but after he strong armed many of the senators and congressmen during the passing of the health bill, many of them don't support his bill to regulate the banks more.

So, how to you get that support back? Simple really... instead of attacking the banks publicly, you just expose some of their dirt to the public (which is one thing the government doesn't need to manufacture... LOL). That will of course make the public hate the banks, and then force the senators and congressmen to support your bill, as the public will demand the banks to be punished. What political official would go against what the public wants? Only one that doesn't want re-elected I assume?

Now, congress will be forced to back Obama's bill, even if they don't want too. Great move by Obama this time... I have too give him credit for that one. Of course I'd love to see the banks regulated more, but I suspect that the bill is full of loop holes, and it's designed to get the democrats elected in this years' coming fall elections, more so then regulated the banks more.

Regardless of whether the bill is worth a hoot or not, the timing is picture perfect. Of course you need to call your friends over at Goldman ahead of time, and tell them that you are going to call the SEC and have them bring charges on them, so they can finish up dumping all the shares they can to the naive public at the highest price possible. Plus, you need to get yourself positioned short, so you can make money on the fall of your own stock.

Poor Pete Rose... he got in trouble for gambling by betting against his own baseball team (supposedly... I personally don't believe Pete EVER intentionally tried to lose a game because of a bet he made. I like him, and don't agree with those who say what he did was wrong, and that he shouldn't be allowed in the Hall of Fame. Bullshit! He was a great player!)

Goldman on the other hand, can routinely short their own stock, and it's OK if they do it. Yeah right... one law for the common folk, and another law for the elite.

What Is The Current News Story On Goldman Sachs Really About?

So, now that you know the story behind Goldman and what there are really planning to do, you probably want to understand what the recent news story released is all about. It's not really all that complicated. They simply packaged together a bunch of debt, called CDO's (Collateralized Debt Obligation), and sold them... knowing full and well that they would go down in value, as the housing market collapsed. On top of selling "A Lemon", they also shorted the CDO's so they could profit from them as they fell in value.

It's no different then what they did in 2007, at the peak of the housing bubble. If you read the article by Matt Taibbi, he explains how they bankrupt Lehman Brothers short selling their stock (more phantom stock), and how they sold packages of mortgage backed securities to other large organizations and entities, knowing that the bubble was getting read to bust, and that those packages would fall in value greatly. They even took it one step further and took out insurance policies with AIG, to pay them money if people defaulted on those mortgages.

Also, they collected huge sums of money upfront when they sold those mortgages to the home owner (because many had bad credit), and then made the home owner pay the insurance premium on their own house in case of default, but the home owner wasn't the beneficiary... Goldman was! What a scam! These people don't make money honestly, with values and integrity. They make it by scamming the innocent public. A public hanging of these crooks wouldn't be justice enough to satisfy the evil deeds they've done.

So, To Sum It Up...

I believe that the Obama Gangster Gang (Obama, Geithner, Bernanke, etc..), and the boys at Goldman Sachs, got together and planned out every detail in to how and when they were going to release this news.

They needed to wait until they had exhausted the market, and sucked in every last retail investor, producing a ridiculous 11,000 plus high on DOW.
They needed to let enough time go by before causing the coming correction, so it wouldn't be blamed on Obamacare.
And of course they needed to make sure the banks would profit from it too. After all, the banks paid for Obama's election... you don't really think he's out to get them do you?

Just A Side Note...

Now, as for the volcano erupting in Iceland, I hope that is was just coincidental, and not the government's HARPP machine turned on, causing the eruption... which will cause many stocks to fall as airlines can't fly, and products and services can't get delivered, etc... That will of course cost Billions of dollars in lost revenue for many industries, which is going to cause a sell off in the stock market.

I know that just about all the financial events are planned out and created by the government, so they can steal money from the public. But, I don't think they cause all the natural disasters, but I know some of them aren't "natural". I know they do have the ability to create hurricanes, earthquakes, and even cause volcano's to erupt. However, I'm going caulk this one up as just a coincidence. After all, the volcano could have just erupted when the market peaked, right? Everything in life isn't a planned event, is it?

...

And finally, Part TWO:

As for the market next week, I do think that the whole week will close down. I think Monday could have a small bounce up, or just a flat open, but end the day down. In fact, I'm leaning more toward a gap down open, but either way, I see the close negative.

Looking back at past history, I see that almost every time the market finally broke rising trendline/channel, it fell for a least 3 days straight before producing any bounce. While a backtest is common when the market is trading with light volume, heavy volume rarely gives the bears a chances to get short with a backtest of the broken trendline.

Here on this chart I've drawn all the trendlines for the past sell offs in light green. Notice how the market fell multiple days in a row, without any backtest of the trendline. Once the line is broken, the bears don't get a chance to get short until the largest part of the down move is over with. That's why I suspect we will fall on Monday and Tuesday, at the bare minimum. We could fall more then 3 days in a row?

(Chart from Cobra's blog, with my notes on it)

I think our first area of support is around the 50 dma, coming in around 1140 spx currently. I do think the bounce will be short lived, and a continued fall down to the 200 dma around 1070 spx is likely the finally bottoming area before the market starts back up in "rally mode" again.

The move is likely to last 3-4 weeks, and then be over. After that, I think the market's will go back to light volume during the summer months, as it slowly grinds higher... waiting for the next staged event to be released, causing yet another sell off. What will it be then? Who knows? But you can bet your last dollar that the market will be at another peak, with record numbers of people bullish. The bear will be non-existent by then.

And of course... Goldman will profit from it too! After all, they've only been manipulating the market since "at least 1929", so what makes you think it's going to stop now? Even if you shut them down, the rats would just leave that burning building and find a new home in another one.

The more things change, the more they stay the same...

Red

P.S. These are of course just my thought's about Goldman and the market, and I could be wrong about any of it? I just try to piece it together with what little facts I find, and re-tell it in a story that makes sense. Your thoughts and opinions are welcome too be heard. After all, we still have "Freedom of Speech" here in America... don't we?

Goldman Sachs Crooked?

Leo's Den

Red

-

April 16, 2010

20

You're kidding me... right? Duh! Hell yeah they're crooked! I've been saying that forever! This is just the start of the selling. I took a short position today, with a Vertical Put Spread. I bought the May 118 put, and sold the May 113 put, for a cost of $1.04 per contract.

More on my weekend update. For now, the bulls had better shop quickly, before the bears all wake up and release the bulls are in their territory. Enjoy your weekend everyone.

Red

Foreclosure’s And The Stock Market Move Up Together…

Leo's Den

Red

-

April 15, 2010

110

Foreclosure’s And The Stock Market Move Up Together…

So today... once again, the market makes a new high... AND So does the Foreclosure rates! What? Are the foreclosure rates and the market locked in step together, like the dollar and the market was? Granted, the dollar being sold hard everyday by the Obama Gangster Gang doesn't get the market up as high as it used too... but they still trade on opposite sides for now.

This foreclosure matter is another deal. So here we have an article by CNN telling us that the foreclosure rates rose 7% from last quarter to a record of 930,000 now. And the stock market rallies some more. WTF? Seriously? Who is doing all the buying for the these companies to have great earnings?

Maybe it's like Anna commented on yesterdays' post, that people aren't paying their mortgage, and instead using that money to buy more stuff (in her case, some hot sexy outfit's from Victoria's Secret... you got too love sexy women).

Or maybe people should be standing up to the crooked banksters like this guy did...

Where is the "so called help" that Obama promised? You remember, the promise to help home owner's keep their homes. What a joke that is! Why should a bank refinance your home when they can steal it from you by foreclosing on it. Why should the bank's loan out any new mortgages when they can make more money manipulating trading the stock market?

Think I'm kidding? How about this story of an "insider" who came out and reported that JP Morgan was manipulating the metals market (story here). That's why the market is going up... it's not people buying, it's just manipulation, using the publics' money.

Yes folks, the so called "Bail Out" funds! You remember that don't you? They were suppose too stimulate the economy right? Just in case you have forgotten about them, or wonder where the money went... here's the story again.

Step One... The government scares congress into having an emergency meeting in late 2008, quoting that the banks will fail and the world will collapse if they don't pass an emergency bailout program to save the banks (in reality it was only the 5-6 largest and most crooked banks that were mainly in trouble, as the small to mid-size banks would be allowed to fail... to eliminate the competition of course).

Step Two... The government passes the bailout plan, and proceeds to borrow money from the Federal Reserve Bank (a private entity ran by crooked banksters, created in 1913 by banksters, with the sole intent on profiting from the government by controlling the monetary system... aka MONEY!).

Step Three... The government prints I.O.U's (aka... treasury bonds), and gives them to the Federal Reserve in exchange for Cash, instead of just printing the cash themselves, at zero percent interest... because they gave up that right to print money themselves in 1913, when they gave it to the Federal Reserve. (A right that was written in the Constitution when America was created, that was to always be done by Congress).

Step Four... The government then takes the cash they borrowed (at whatever interest rate the bonds are worth.... currently 1+ percent on 2 year bonds and longer term), and then loans the money back to the banks (at near zero percent interest), with instructions to get the economy going again by loaning out the money to the public. (Yes, you read that right, they basically pay the banks on money they are loaning them! Huh? Yes, stupid I know! But well planned so the banksters can get richer, which secures the politicians a nice fat job at one of those banks when their term is up).

Step Five... The banksters ignore the government and take the money and buy up their own stock to the ridiculous levels that they currently are at. Why take risk's loaning money to the public for mortgage's at 5% when you can make more money in the stock market? Plus, those loans would be highly risky as the people that the government wants the banks to lend money too, are the people that lost their job's from the banks mortgage bubble that they created that topped in 2007.

Step Six... The banksters pay off common media personal to entice the retail public to get back into the market at the top, so they can unload their bloated stocks to them.

Step Seven... The banksters start to "get short" on the market, while telling the public to buy, buy, buy!

Step Eight... The banksters release some hugely negative event that causes a meltdown in the market, and then tell the media puppets to start telling the public how bad everything is... which causes more selling, fueling the fire and forcing the market down even more.

Step Nine... The banksters go to the government and claim that they are going to fail if they don't get another bailout. The government gives them another bailout.

Step Ten... The banksters take the bailout money, sell out of all their short positions (with a huge profit... stealing the publics' lifesavings from their 401k plans, etc...), and combine that new free money and stolen profits, and start buying up their own stocks again... rallying the market once more again.

Step Eleven... Later, Rinse, Repeat...

Red

P.S. Support Ron Paul, as he want's to get rid of the Federal Reserve and give Congress back the right that was originally theirs in the first place. And support the Tea Party Movement, as those folks are actually out there with signs, on street corners protesting the crooked banksters, etc... I'm simply doing my part to spread the word with this blog, as I sure as hell can't forecast the correct move in the stock market! Ok, well I'll give it a shot for tomorrow... UP as usual (secretly hoping for a crash though)

Happy Illegal Personal Income Tax Day!

Jobless Recovery? Huh?

Leo's Den

Red

-

April 14, 2010

47

CNBC posts that we are going to have a "Jobless Recovery"! HUH? How the hell does that work? Just curious, as I'm not the brightest tool in the wood shed. If we don't have any new jobs, and people that aren't working don't have any money too spend... then who's buying?

The people that still have a job sure ain't! The company I work for may not survive, as the work load has been cut down by 75% or more. We have about 40 tech's covering 4-5 states, and work is down to 1-2 "half day's" of work per week. It's the worst I've seen it. Last year, during this same time period (which is normally slow), I worked 4-5 days a week.

Now, it's more like 1-2 days... and those day's are only half days. Do you think I'm spending any money? How about the other 39 tech's? Other friend's of mine are also struggling as work loads drop, and all overtime is cut out. If you still have a job, you should count yourself lucky. Mine may disappear during this great jobless recovery...

If so, I'll be sure to take my laptop with me, to the homeless shelter. I'll have to hide it, or they might think I'm rich or something? I'll walk to McDonald's and steal their free internet, so I can continue doing these worthless daily posts... or bitch sessions.

If I'm ever going to be right calling the market, I'd better get used too saying... "the market is going UP again today", as the word "Down" is now a forbidden word (just like the media won't say Hussein... Obama's middle name? WTF?). Who really cares anyway what his name is? I just call him "the Puppet", just like the President before him, and the one before him, and on and on...

The country is ruled by the elite few, and the President, Secretary of State, and the Federal Reserve Chairman are all just their puppets that they put out there in the public eye, so they can hide safely behind the scenes. So if I sound bitter... well I am!

I'm sick of wasting my time looking at charts that tell me this market should rollover, but yet it continues up as the Great Jobless Recovery creates all these great earnings. It's all horse shit! (Sorry for language) I talk to people every day when I'm working out in the public, and everyone tells me the same thing... the economy is getting worst, not better.

At least the economy was still booming during the 1999 tech bubble (thanks to Ronald Reagan, not Bill Clinton). People had jobs then, and they were spending money. Who's spending money now? I guess I'm just plain stupid, as I don't get it... nor do I see it!

As for tomorrow... more of same B.S.

Red

Recession Over…

Leo's Den

Red

-

April 13, 2010

869

Yes dear reader, the recession is officially over now, as the Dow close above 11,000 for the second day in a row. Happy days are here again! The jobless people are back too work now, as Intel must have hired them, causing the great earnings report announced after the bell this afternoon.

Quote... "Intel Corp. says its net income in the first quarter nearly quadrupled over last year. Intel's latest profit was lifted by sales of new chips for computer servers as well as an overall bump in technology spending. And in the comparable period last year the company took a big charge to write down the value of an investment." End Quote.

Hmmm... Did Goldman Sachs need newer and fastest super chips for their computers, that they use to manipulate the market with? Yeah... that must be it! That's why Intel beat estimates this quarter. Regardless of how they did it, (if it's actually an accurate report), we pretty much knew that all the earnings reports this week are going to be positive.

No company is going to go against Uncle Sam and tell the market that they had a horrible last quarter, as no one bought their junk because of the bad weather. Instead, they are going to make up whatever they want, (positive of course) and the government is going to clap and applaud their report.

We are so far from reality that INSANE isn't a strong enough word anymore. Anyone that lives in the larger cities can drive up and down the road and see stores and restaurants still closed... and they will never reopen. You can drive though many of the new sub-divisions and see house after house for sale.

The real unemployment is around 17%, not the 10% the government tells you. No one is spending money now. In fact, there is a large shift now to "pay down debt" by most Americans. Where is the spending coming from to create the great earnings? The government didn't send me a check in the mail, with instructions to go spend it and simulate the economy. Did they send you one?

Everywhere I look, and all the people I talk too... are struggling now. People are hurting. They are moving in together to share expenses as most are losing their jobs, or getting pay cuts. My mother and father are at that age where they are retired and like to travel around in a motor home. My mother is very conservative, and doesn't look at all the corruption and stuff... like I do.

In the past year I've noticed her mention the government many times, speaking specifically about how crooked they are. Coming from my mother... to hear that was a shock! She is definitely a "Blue Pill" taker... if you know what I mean.

Of course I took the Red Pill. But anyway, she was telling me how many homes she saw up for sale, and how many businesses were closed down, as she and my father were driving around in Florida. Of course I already knew that, but hearing it from her just reaffirmed how huge the disconnect is between the stock market and the real world.

So, I guess we will continue rallying up a little bit each day, until all the bears are dead, (or in hibernation), and the bulls are sleeping. Then one day, out the blue, BAM! ...a loud gun goes off as the farmer decides it's time to kill the bull, and eat some steak.

As all the other sleeping bulls awake, they will all run for the exits to escape the farmers rifle. But, it will be too late for many, as the farmer is an excellent shot, and many bulls will be slaughtered. But for now, the bulls can graze peacefully knowing that Obama and the gang are paying the farmer quite well to keep them alive.

Red

Let’s party like it’s 1999!

Leo's Den

Red

-

April 12, 2010

1,348

I guess the market will never go down. Good Times are here again as the Dow reaches 11,000. Next up... 12,000 --- with 25% unemployment, instead of the 17% we currently have. The more people are unemployed and underwater on their house value, the better the economy... right?

That's what the media is feeding the unsuspecting pigs (I mean public). Get them to borrow their last dollar from their maxed out credit cards and buy, buy, buy! Don't miss the rally, the bull is just starting... so says the media!

At this point, I see no way to make money shorting this pig! It just keeps getting fatter and fatter. How much slop can this pig eat? Apparently enough to go up another week... or month, or year? Who knows? I've never seen such a huge disconnect between the "real" world... which sucks right now, and the "twilight zone"... in the market.

Unless the earnings are really bad this week, and I seriously doubt it, the market will probably just trade sideways to the usual slow grind up. I feel I like I'm on an old dark century torture table, that slowly stretches my arms and legs... one notch at a time. I can hear my bones start to crack, as the Obama Gangster Gang smiles and laughs as they slowly rotate the wheel, and the rope tightens as it pulls me a little more apart.

It would be nice if the ropes would snap, and free me from this torture table, but I just can't see any reason for the market to fall this week. Although I can't find any technical reason to go long at this point, (the only reason you really need is the fact that the printing press is still going strong). Without the mass printing of our money, which is then given to Goldman... who pockets half of it, and uses the rest of it to push up the market... this market would have corrected a long time ago.

However, nothing really matters as long as they have tons of free money to buy up the market. It's not going to fall, until every bear is dead. Someone sent me this chart showing the extremely low level of bearishness in the market currently, as it's at 18.9% now... with 48.9% of the people bullish.

The 5 year low was 15.6% bearish, and 62.0% bullish. So, I guess we have a little ways yet to go? It seems that we are going to head up to 11,816 dow first... before rolling back down to 107.38 spy. So, I'm going to go long here with every last penny I have... (about 6 cents, as I held back the money I got from pawning the wife).

You know, if there is one thing I can say, that's 100% accurate and true... is that "This market is really wearing me out!" I think I'd be better off as a "Buy and Hold" retail investor right now, as everything is smelling rose too them presently. Of course it will eventually be their turn on the torture table, but right now it's my turn... and my poor old body can't take too much more of this torture.

Just kill me and get it over with! Stop with the slow grind... day in and day out! I can't take the torture anymore. Rally up to 12 million and get the damn P2 over with... please!

Red

Weekend Update…

Leo's Den

Red

-

April 10, 2010

77

OR

Will the week kill the last bear, as the bulls continue up on Bullish Monday and then trade sideways the rest of the week? Or, will the week slaughter the bulls by crashing down multiple days in a row? It's any body's guess at this point!

The market is a cruel mistress that likes to butter up the bulls by feeding them hype-hay, only for the sole purpose of getting the bulls fat enough... too later make steak dinner out of them. Neither bull nor bear is safe in such a treacherous environment. Both will eventually be slaughtered, as the master loves to eat them both.

Lately, the masters have been eating bear for dinner, but I think they are ready for a new kind of steak... "Bull Steak", as too much of the same thing can get quite boring. We all need a change from time to time... and the masters are no different.

And fortunately (for the masters)... next week should bring in a lot of volatility as all the earnings are announced (meaning it's "open season" for both bulls and bears). Of course all the companies will lie and spin their numbers to whatever they want them to be. But I suspect that most "insiders" have either already sold their shares, or will shortly. They know first hand... how bad their earnings really are.

With all this sideways to slightly up trading movement in the market, the company owners have had plenty of time to unload their bloated stocks to the unsuspecting public... at top dollar of course. But, now that earning season is upon us next week, what kind of numbers do you think they will report?

Of course they are going to lie a little (more like a "lot"), and maybe fudge a number or two (more likely "double" the real number), and the earnings will look OK, and the stock won't tank... right? Maybe? Or maybe the numbers are too bad to be able to fudge enough where they are believably to the market.

Think of it like this... these last 3 months have been horrible for bad weather across the country as snow was everywhere. We already remember from previous job's numbers that the government blamed the bad report on the weather, stating that people weren't able to go to work because of the snow, etc... Now, if they didn't go to work, to make money to pay bills, and have extra to spend... do you really think they went shopping and out spending money?

Of course not! People aren't spending money... because they don't have any extra too spend. What is that going to do for the earnings for next week? American's are broke, and it isn't getting better. Yes, they can continue to spin the numbers, and fool the public... but at some point (like now) the crap is going to hit the fan!

The "Bullishness" is as high as it was in 2007. Look at this chart from Cobra's blog. It's from Thursday, so it's probably higher now, as the market rallied again Friday.

Cobra gets permission to post it from time to time, but it is from a subscription service at www.sentimentrader.com, so I want to give credit to where it's from. It's a few days old now, so hopefully no one minds that I posted it here.

The point to notice here is... "this isn't the the time to go long"! Of course day-trading is different, but not swing trading or investing, as that's like committing suicide right now. Yes, it could continue up some more, and you can continue to pass the gun around the table... spinning the chamber, and pulling the trigger while aimed at your head.

Each time you have a 1 in 6 chance (5 empty chambers, and 1 with a bullet in it) of shooting yourself, so the odds seem good... right? It's like saying that everyday is a new day in the market, and there is a 50% chance the market will go up, and 50% chance it will go down. Same thing with flipping a coin... right?

We all know that's not true, as the odds DO change when the outcome is the same multiple times in a row. While in theory, it is logical to state the odds as even... and that is logically correct, but humans are not logical in their actions. Maybe they are in their thinking, but their actions are done on impulse.

Take the coin for example. If you flipped the coin in the air 20 times in a row and every time it landed on heads, what are the odds that it would land on heads the next flip? Would you think it would be 50%? Seems logical doesn't it? Here's the problem with that thinking... the person who flipped it 20 times in a row is probably pretty amazed that it landed on heads every time.

In fact, I'd say that he changes the way he tosses the coin because he is actually trying to toss it the same each time. But he can't, because his mind will remember all those previous times in a row that it landed on heads. He will change something, causing the coin to land on tails.

The same thing would happen if you were to spin the chamber of the gun 20 times. You would try too hard to continue spinning it exactly like you did the last time, and "Bang"... you kill yourself.

The stock market is no different. While next week should have a 50-50 chance of going up or down, the reality is that everyone who trades the market knows that it's been up the last 6 weeks in a row, and that will prevent them from believing that the odds are the same for another up week.

They all know the past history of how many times the market has been up 6 weeks in a row, and what happened on the 7th week. Emotions are what makes these odds vary on the stock market, tossing a coin, or playing Russian Roulette.

And yes... I'm very aware that computers are now the largest traders in the market, with Goldman's program leading the pack. But, who programed the computers? Humans did of course. And what parameters did they use to program them with? Human emotions is the correct answer. The super computers are designed to play (or I should say... steal money from) human retail traders, who are emotional in their trading decisions.

If the computers simply took greed, fundamentals, and emotions out the equation... the market would be at about DOW 3,000 now. But add in those factors, add you can quadruple the price. People aren't logical in their actions, only in their thinking (and that's only the really smart people).

Which again, brings me back to the market next week. Logic says the market has an even chance of going up as down next week. Emotions though... gives a different chance. Odds are much higher for a large down move next week, then even a small up move.

While many will disagree with my conclusions on "odds", I'll simply wish them the best of luck. If they decide to go against the odds, and place their chips on the Bull next week, (in my humble opinion)... the odds are highly stacked against them.

Red

P.S. Should the fall begin next week, and should you bears get really excited... like I know you will, let's not forget our downside target captured here in this picture by our friend Sundancer...

Once we hit that target, we bears should be getting out of our shorts and put on our bull suit. Yes... I know, it's hot, dirty, and smelly as bulls roll around in the mud, while we bears tend to clean ourselves in the river... but at least you won't go hungry again. So suck it up (your pride I mean... mine too), and go long when all hell is breaking loose! By the way, that target should line up with the 107.38 spy print I got last month.