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Stock Market Through October

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bbbDon’t click on these headlines. They are images and just for display. September through Mid-October is the logical time for the market to crash. Will it crash? Everything under the sun is being done to hold it up. Headlines like the ones displayed here are not what they seem. They are designed to draw in short sellers to squeeze so as to help push the market up. The financial news, regardless of where it originates, does not report much genuine news. The financial news is an opinion management service and promotes faith in the financial markets. The only time a lot of bearish articles show up, is when there is a planned boost to equity prices. The more traders who short are expecting a decline, the easier it is for manipulators to drive it higher.

Who is buying stocks? The public is buying only a little and hedge funds are not buying much. Certain central banks are buying heavily. There is no way to tell exactly what the Federal Reserve is doing, but be assured, it is buying through surrogates if not outright. Friends of the Fed are creating artificial demand through the derivatives markets. These are large institutions which get advance information and other benefits from the Federal Reserve for helping make each day green. There are corporate buybacks. This is a type of corporate cannibalism that generates higher earnings and stock prices in the short run but that will eventually break the companies.  The Federal Reserve assures the corporations that they have their backs and that their buys will be profitable.

Think of this as a chain that will be broken. We don’t know what link will fail but when one does, the whole system will collapse.

Central Banks + Friends of the Fed + Corporate Buybacks + Short Sellers Getting Squeezed=Higher Stock Prices

The central banks will not fail. You as a citizen can only invest what you can earn and borrow. Central banks have no worry about taking losses. They get all the free trading money imaginable free, with just a click of the mouse.

Friends of the Fed are organized crime. They will participate as long as the Federal Reserve’s guarantees allow them to make a profit. They are the ones who squeeze short sellers. All of their trades are short term, sometimes just seconds apart. Friends of the Fed are the most likely link in the chain to break. When the Federal Reserve can no longer guarantee them risk free trades, they will disappear into oblivion.

Some corporations are already backing off of buyback programs. Many corporations have losing positions in their own stock already. The eventual losses will be devastating. Corporate officers love buybacks because they allow them to get paid the largest amount of money in the shortest period of time.  If the stock of their companies tank, corporate officers have little concern. Their cake has already been made and all they have already eaten it. Corporate buybacks could evaporate very quickly.

Short sellers amaze me. So many still trade is if they were in a genuine trading environment. They are shrinking in number because so many have gone broke.

There are two ways the market can crash this fall and they are both long shots. An enormous amount of stock could come on the market from unanticipated sources. A war or an assassination could trigger something like this.  Members of the Federal Reserve Open Market Committee could suddenly be overcome by guilt and confess as to what they have been doing and what the outcome will be. Definitely don’t count on that.  The other way is for one of the links to come undone. Friends of the Fed are not doing as well as they were. I know nothing of their exact profit and loss situation. They will cut and run sooner or later. I have no way to tell.

Central banks are not going to give up controlling stock prices. My expectation is that they will be successful in keeping the market up through October. It is getting harder to do. My portfolio consists of cash and just a few small positions in bear etfs. I am a good trader but I know my limitations.  Like everyone else who trades I would have to trade against the government based on what I expect the government to do. Even expecting the market to move higher through October I won’t go long. The chances of a huge one day washout are simply too great.

Stock Market Follow Up

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426537_img650x420_img650x420_cropLast week I made the point that the all of world’s money creating power will be employed in an effort to move the stock market higher during the time of year that is most likely to host a market crash. That effort is going on right now and that is why stocks are going up.

There are commercials on the radio advertising products to invest in to protect assets during the certain stock market crash that is just around the corner. A hand full of billionaires are now warning everyone about stocks being over priced. The only way a crash can occur now is for an huge negative external event to take place. Because of the nature of crashes, they don’t occur when folks are prepared.

Again, the various plunge protection teams around the world have unlimited funds to work with. They take no personal risk. Every day, just like today, key stocks on charts will look like they are just on the verge of breaking down. Experienced technicians will recognize the patterns. However, stock prices are not being determined by supply and demand. The overwhelming majority of traders, professional and amateur still believe stock prices are being determined just as they always have been. Short sellers are offering their necks to the high frequency trading firms.

Notice the stocks that have fallen off this fall. All but a few are the kind that earn actual profits, have real revenue and can’t make any pretences. Stocks where value is created by hopes, wishes and dreams are always first to fly higher. Moving the Big Cap indexes higher is always the first choice. If that doesn’t work efforts are made to move the mid-caps. If nothing else will move, the Russell 2000 gets goosed. On any down day that is initially uncontrollable, the high frequency firms start sending out feelers to find  any stock where shorts can be squeezed. Any time downward momentum slows the high frequency firm start stabilizing the price much like is done during new offerings. All consolidation patterns become bullish. Phone calls are made to firms with buyback plans assuring them someone has their back. Complex algorithms accomplish the simplest things. There is no need to know the formulas. These are some of the things the algorithms do.

The chances for a down market between now and 2016 has been seriously reduced. I am scaling back bearish positions. Patience will pay off. It looks like there will be more time to get short, unless of course the external negative event occurs. I will take that chance.

Two things can eventually happen and both are bad for the stock market. Americans who are dead from the neck up can come to their senses or the ongoing political agendas will do so much damage to the economy that even the hope and dream corporations will follow the path of stocks that have to rely on actual results that cannot be embellished,

 

 

Stock Market Through October

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imagaesSeptember through mid October is seasonally the weakest time of year. Traders around the globe know the equity markets are on borrowed time. Given the fragility of the global economy many are expecting weakness in the early fall. Chances are very slim that a major selloff will occur during this time period. I would be thrilled to be wrong and hopefully I am. I took some additional bearish positions recently but have closed those out. I am back to 80% cash.

Any time volume drops off and prices consolidates, stocks can be manipulated higher and they will be unless there is another surge in selling due to something unsettling. It is important to understand how trends change and what happens after a change in trend as prices consolidate after a drop. Normally supply at that point will be only slightly greater than demand. In an honest market, selling pressure doesn’t increase until supply is ever so slightly greater than demand, but it does. more selling comes in after that.

In a dishonest market, like the one we are in, central banks including our Federal Reserve put a floor on stock prices and absorb any excess supply. Bears keep shorting stock because, the trend has changed. Derivatives are used to create artificial demand. With a wink and a nod, organizations like the Open Market Committee assure corporations doing buybacks that they have their backs.

Why all the buybacks? One thing all human animals have in common is  a desire to get paid as much as possible. Don’t be lulled into believing that corporate insiders take on that kind of work because they love humanity. The goal is to get paid as much as possible. With the kind of work corporate insiders do, not even a crazy person would do this kind of  job unless there was a good chance of cleaning up financially.  Corporate insiders have no life outside of their work. Interest rates at less than the rate of inflation provide a way to goose stock prices into the stratosphere. High stock prices are the best and fastest way for corporate insiders to make astronomical profits and they are doing it.  The government through the Federal Reserve is providing a once on a lifetime opportunity for a privileged to make a windfall.

For all persons, we know that work is a second choice. Corporate insiders have the opportunity to be paid huge amounts of money without working or without providing any utility to society. Of course they are thrilled at the opportunity. Any rational person would do the same.

The Federal Reserve has accepted the responsibility of supporting stock prices and at the time, they have the tools to do it. No one is intentionally destroying the economy. Open Market Committee members would like nothing more than the have the general economy rally so that the high stock prices they have created will be justified. That won’t happen.

An artificial market can be maintained by a central bank for a long time because they don’t have to work for the money that is used to elevate the market. Ordinary people can only invest what they have earned. So, with central banks, there is always demand for stocks. Then end will certainly come when companies do so poorly that they can’t even report positive earnings using non gap accounting. Getting paid for doing nothing makes smart people lazy just like it makes the poor and stupid and lazy. The economy will collapse and so will the stock market but chances are against it happening in the next two months.
The Grazin’ is Good, by Curbside Jimmy.

Available at: Curbside Jimmy’s Free mp3 Download Page

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