iBankCoin
Read Scott here on iBankCoin and also at http://www.createcapital.com/
Joined Jan 19, 2010
717 Blog Posts

This year, same as last year…

Nobody dares say “green shoots” this time around, but most trend investors are thinking it. Hell, we don’t need no green shoot this time because the economic recovery is real. Right? Well, it doesn’t matter because the market says so.

We’ve just finished a record setting month, with performance hardly seen in decades. The markets have been taken to extremes, but that is par for the course with a marketplace that is dominated by trend followers who are ready to go past all semblance of “normalcy”.

We ended 2009 and began 2010 in a very similar fashion. Enjoy the “deployment” party and get ready for blow-off action with your finger on the trigger!

Comments »

Last T+3 of the decade…

Today is the last day to officially own stocks in this, the first decade of the New Millennium.

Markets are uniformly trusted as Central Banks are assuring prices through asset buying. There has never been a time in market history that this has happened. It makes the Greenspan Put look like an AIG CDO circa 2006.

Equities are as lopsided as they have ever been and sentiment is at a bullish record. In just one earnings reporting season, the prevailing perception amongst market participants has shifted from “run for your life” to “everyone in the pool”. I think we had better get used to these types of swings as they could be with us for a long time considering sentiment will shift as a direct result of market action.

The headlines and talk of economic recovery is pervasive, just like last year. Remember? 

Here, during these last trading hours of the decade/year/quarter/month, what is working is the commodity trade, plain and simple. This could continue until prices are are so high that nobody is left to buy. Then prices will crash. But we are not there yet.

There is a wicked equity and commodity correction that is imminent. Yet I cannot tell you the hour of its arrival. Plus, it will be bought by the “dips”. But watch out if the dip buyers cannot lift the market. When that happens, my strategy of raising stops and liquidating at our price targets will be proven correct. Of couse, my detractors will say “a broken clock is right once a day” or something along those lines. They were the same folks calling me a perma-bull just a few months ago.

Remember, most money managers are sheep in Brooks Brothers clothing. They will follow the mantra of what is working now. But the smart money is doing something else entirely.

HAPPY NEW YEAR!

Comments »

“THEY” don’t want you to worry about a thing!

It is still 2010, but the New Year trade has begun, even under the last blizzard of the decade.

What was strongest (autos) are weak. What has been weakest (banks) are strong. The over-riding action though, remains the liquidity and inflation trade in commodities. Oil is above $90 and copper is at record highs.

Many market prognosticators will tell you that these and other commodities are rising because of the weakness in the dollar and the robust economic recovery. Throughout all the commodity rise and QE, the DXY is remarkably stable, so it’s not the dollar. Some will blame China, again, yet end user demand is stable at lower levels. We have nobody to blame but ourselves for the rising price of materials.

It is beyond the scope of comprehension that the FED actually wants and needs to CREATE inflation when their job is to supposedly suppress and limit it. But it is all a part of the perverting of the price mechanism of today’s markets. Does this sound legal to you?

1. The FED and Treasury (THEY) creates money out of thin air.
2. THEY then lend it to banks for nothing (0%, free money).
3. Banks then lend back to THEM.
4. THEY allow banks to act as intermediary to make a guaranteed profit.
5. THEY buy Treasuries from banks for cash and allow them to Hypothecate that money the standard 11:1.
6. THEY allow banks to take the hypothicated money and buy other assets on margin.
7. THEY allow commodities to have the lowest margin requirements of any financial instruments other than Treasuries.

Can you see the money machine at work? THEY create a dollar and it can become $100 and allows it to buy anything and everything market-related. Then prices rise and everyone is happy!

 Do you wonder who is buying stocks and commodities? All this price perversion in the name of  “saving the system”.

The desire is to get everyone hurrying to spend and invest before prices go too high. But the continuously rising prices crowd out end users because they can no longer afford the materials in question for end usage. The only buyers then become financial speculators. That is until the price is so high that nobody can buy and then prices crash from lack of buyers. Then speculators will need to sell to meet their margin calls.

The end result is that all the money THEY created will go to money heaven and we’ll be knee deep, again. And the higher the price of materials go, the closer we come to that end. I just hope my work will allow us to get in front of that end–but not too far in front of it. In the meantime, they can raise rates all day and it won’t matter. Not yet. But soon…

There are those who will tell me to wise up and get on board, 200%. Sorry, we were almost wildly bullish a few months ago when few were. Now, after less than one earnings reporting season, everyone is on board.

HAPPY NEW YEAR!

Comments »

MERRY CHRISTMAS…

Wishing you much happiness this Holiday Season and may the New Year bring you all you hope for.

Comments »

It’s taken trillions and been a long time coming…

There have been two major stand-outs in the market during this up cycle that began in September. The first is anything related to commodities. With the FED goosing money into inflationary assets, Jim Rogers ties his bow-tie just a little tighter. We know this. In fact, the price of commodities are so extended in relation to actual supply and demand, that I wonder who will be able to afford them other than the newly minted Chinese Billionaires.

The other sector that has been the best performer is the broad area of technology. Now, at year-end, you are being told that technology is “your savior”. It is where the gains are, where the beta resides. And you are tempted to buy it, hand over first.

This is the exact flipside to what you were told during the warm summer months. Back then, anything outside of the AAPL sphere of influence was a trap and should be sold even though most of the stocks in question had already fallen 30-50% from their yearly highs. Good advise, thanks for that! Most stocks tested their July 2009 breakout where we did some mondo-buying. Thanks again…

Since this rally began on September 1st, the MSH is up 28%. That’s right, in just one quarter, this key technology index is up by almost one-third. Has there been some fundamental change in the business since the summer? No. If fact, there has yet be even one reporting quarter since the rally began! Are these gains simply a snapback from some extreme bearishness? Has there been some new technology bringing new revenue and earnings? Nope. Just our PM friends looking for some Beta.

It is the end of the year and Dr. Fly has correctly warned us that there is NOTHING that can stop the Santa rally this year and he has been dead on right. With the FED doing 2 POMO’s a day, QEII in full swing, the ECB saving countries left and right and China encouraging 9% growth by hook or by crook, money managers don’t really need a reason to sell or to even take profits. The market is lulling everyone into believing the trend can continue forever.

Remember, individual investors are out of stocks and into bonds. The markets are controlled by the FED first and foremost, but are also dominated by computerized professionals who are happy to say goodbye to the odd lotter. They are why most indicators run to historic extremes. And most of those indicators are there right now. The cycle is stretched and that coincides with the end of the year fun and everyone believing that green shoots are back.

It is amazing how right the Maestro was. A stock market rally will do more for confidence than any stimulus, and now, after a huge 25-30% rally in the last quarter, everyone has been on the same page for weeks. There is a time when the consensus is right. But it doesn’t usually last very long.

For those who followed me into the abyss months ago, continue to raises stops, liquidate positions and watch the lemmings as they pump and primp themselves before they go careening off the cliff. Don’t jump into an overextended cycle because it is suicide. Keep your powder dry and get ready for the next opportunity. Don’t worry, it will be here before you know it…

Comments »

AS LONG AS THE MARKET STAYS UP…

Fiscal Apocalypse! Commodity Parabola! Bond Destruction! Political Meltdown!

Take the news headlines and throw them in the garbage. The tax bill is meaningless. So are corporate earnings and the trillions of dollars held by banks and corporations. The stock market is firmly entrenched in fantasy mode.

Now don’t get me wrong, I love when the market trades in the never-never land of false reality, especially when I’m long. It allows me to take advantage of the newly converted and those who are very late to the game. In just two months market sentiment has gone from near-record bearish and swung to the other extreme. These latecomers have allowed me to create a taxable event this week. Check my portfolio in CreateCoin for details.

The bond market–with the exception of zero percent FED money–is in the midst of a FLASH CRASH. That’s right, Muni’s and other paper is experiencing its version of the flash crash that stock suffered earlier in the year. That is when everyone moves in one direction at lightning speed. Blame higher rates on a “stronger economy” or “end of the year shennanigans”. But this is the speed at which markets move in the world of HFT. Those looking for yield should be paying careful attention and picking their spots for buying, especially in the ten year time horizon.

All of these factors SHOULD make the stock market correct, even just a little bit through the normal ebb and flow of markets. But the stock market is not allowed to drop for even two hours without a magical, mystical buy program materializing with the focus on everyone’s favorite stocks. Once the green light for levitation becomes apparent, the rest of the stock world levitates as well.

Our fiscal and monetary policies are designed NOT to help the economy. No. They are simply to give our banks what they need to survive and this will continue until THEY say when. As long a the FED pretends they are stimulating in order to help employment, the banks will get their free money at the expense of everyone else. With the markets at post crash highs, you would think that cooler heads would prevail. You would be wrong.

The day before–or the day after option expiration SHOULD be a time to see some ebb and flow. But since Greenspan gave the green light on the Sunday talk shows by saying “a stock market rally would do more good than any government stimulus”, the market has seemed one way–and it will continue to feel that way, even when it isn’t. Internal deterioration, technical signals, poliical upheaval, and bond market destruction be damned. I continue to use the fantasy levitation act to sell while its easy and you should too. If you wait to sell when its difficult, it is your own fault.

Comments »