No radio show on Thursday morning and no updates either.

Going on a little day-long adventure with “La Famiglia”.

See you back on Friday morning…

Are you surprised and shocked that the first day of the month is a huge up day? That we’ve moved from balancing on the edge of the abyss to right back to the middle of our 5 month trading range? Do you think we are up today because of something someone did or said? Because of some economic number? Don’t be naive…

As previously forecast, the billions spent on hedges and puts in anticipation of a Sept/Oct. mauling will burn. Maybe then puts will be cheap and worth buying.

Those whom are entrusted with the world’s money just had to buy what was working and sell what wasn’t up until 4pm yesterday. This phenomenon is now obvious to all (I think). So stocks no longer have selling pressure and snap back like a coiled spring. That doesn’t mean we are in the clear, it simply means we have more trading range action.

If you want to know when the “big move” will come? Just watch the big “diamond” or “triangle” pattern that is developing in the major indices. When we get close to the “point”, that will be the time…

Remember, our strategy has been to accumulate on weakness. We bought a few tech stocks over the past week or two–and they are up big today and they have much more to rally before they should be sold.

Then there is the “double dip” camp. They believe that we’ve already had a recovery and we are going back into a recession like during the credit crash of 2008-2009. That prediction is a falsity because there was no “real” recovery except in selected government statistics. There was no recovery so there cannot be another “dip”. We are simply slogging through the new normal of no growth with a dose of deflationary pressure thrown in for good measure. That is a raw truth that will be revealed sometime early next year.

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Well, here we are again. Option expiration and month’s end has been a very dicey and negative time for the stock market since the correction began in April. The new month usually sees the pressure subside.

Go back and look at the calendar. It seems that I write this same piece every month. Remember, most money managers are a Darwinian yet clueless lot. They do what is expected and what will  to benefit them the most. Forget the client’s money. It’s all about being at least as smart as the guy down the hall.  Combine that with low volume and  HFT for some real fun! 

Markets sure feel tenuous, like they are about to fall off the cliff. If they do, it may be one of the most telegraphed cliffs in market history. Question: do you think the markets don’t know the current economic situation? That there would be fast deflation if there was no “intervention”?  And inflation? All the money printing won’t make up for all the lost capital, so don’t worry about that anytime soon.

The action is defensive and the fear of collapse is palpable. So perhaps we begin September as everyone expects–with what appears to be a breakdown in the major indices. A new range low would certainly bring out the bearish guns and every trader would feel like shorting with impunity. But that would be the perfect setup for a marginal range low that leads to a sharp reversal back into the trading range and then a move to its recent peak.

Wouldn’t that just fuck everyone up?

ADDENDUM:

Looks like we just double bottomed at last week’s low and are rallying sharply. The month-end, the double bottom and some actual good news? An up market? Nah, can’t be! How about closing above SPX 1060 today and finishing the week at 1090? Again, no breakdown or breakout, just another opportunity to accumulate on weakness. That has been our strategy for five months. It may be frustrating but it will bring the best results…

I call it stuck, for now…

First they love it, then they hate it. They will love it again now that the bad news is pretty much discounted….