September 14, 2006
This is the first time I have ever provided information on short-term trades because they are just too unpredictable and they take too much emotional effort to invest in. There are a lot of longer (not long but longer) term investments that can pay off quite handsomely so that’s what we normally stick to. Besides most short-term trades are based off of trying to read the psychology of the thundering sheep herd combined with technical charting patterns, an inexact science in itself.
This blog is kind of to appease the anti- “Zen of Investing” reader. The 99% of people that invest the same way, and that look for “get rich quick” investment schemes that are full of promise but empty on reality. Yeah I guess you could call this the anti “Zen of Investing” blog post.
Right now, the technical charts for the S&P 500 index and the NYSE index look very weak, meaning that a sharp break to the downside could be upon us, while the technical charts for the U.S. dollar and the Nasdaq index have just broken through their downward resistance lines and look strong. However these are all short-term indications, so you could possibly buy puts on the S&P 500 and the NYSE and go long the dollar and Nasdaq to try to pocket some short-term gains. To play the dollar both Rydex and Pro Funds offer strengthening dollar funds. So the short-term play would be to buy the strengthening dollar funds, and once you’ve made your money, sell out and enter their weakening dollar funds for the long-term.
That said, the U.S. mid-term elections on Nov. 7th are creeping up. Traditionally incumbent governments manipulate the stock markets prior to these mid-term elections as strong economies favor incumbents staying in power, so a couple weeks prior and a week after the mid-term elections (just momentum carrying over) historically have been good times in the stock markets. People tend to vote with their wallets, not with their hearts or minds (maybe that’s why we have so many messed up people leading countries all over the world). Sumner Redstone, CEO of Viacom, stated during the last U.S. Presidential elections that ideologically he was aligned with John Kerrey, but where his wallet was concerned, he was aligned with George Bush, so therefore he was going to vote with dollars in his eyes and cast a vote for Bush.
In any event, the artificial rally historically created by the government that leads into mid-term elections leaves a short window of about a month or less for stock markets to start tanking as their technical charts indicate (For after all, the government knows that the thundering sheep herd has a huge case of short-term memory and can be easily manipulated). So the mid-term elections looming on the horizon makes these short-term bets a little riskier than normal. But sometimes you have to appease the masses that want to trade. So here you go.
Oh, and sorry, Kaeho is away training in the mountains of Japan or China somewhere, so there will be no Kaeho’s Corner today. Don’t worry just feeling kinda anti-contrarian today so that’s why this post has appeared. I’ll be back to digging deep down the rabbit hole in no time again.
