Q: What Does a Review of Your Short-Term Trade Look Like So Far?
Today, I’m going to review a previous blog on September 14th that I titled “A Short Term Trade”, something “We Never Provide Information About”. In that blog, I wrote that I felt that the NYSE and the S&P 500 were due for sharp corrections and that the dollar looked as it would strengthen short-term even though long-term I think the U.S. markets are among the worst markets to be invested in and I think the dollar is one of the worst currencies to own. Since then, the dollar has weakened somewhat against the Euro and Yen and the U.S. stock markets have been shooting higher, perhaps providing evidence that short term trades are indeed something that we should “never provide information about” since that is not the strength of what we do here at maalamalama. By short term trades, typically I mean six weeks or less, so even though we’re only two weeks into my prediction, if we don’t see this correction very soon (and I mean really soon), it’s probably unlikely to happen before the U.S. mid-term elections. Why is the date of the mid-term elections so important?
If you recall, I did temper my blog thoughts that day with the following statement: “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.” Today, as I stare at the stock markets, they continue to rise. However, they continue to rise on continuing negative news about housing starts and inventory that investors ignore on the confidence of the lowest oil prices in six months and rapidly falling commodities. The U.S. stock markets continue to rise despite continued deception on U.S. government reports about the real rates of inflation and real levels of national debt that will eventually cripple the U.S. economy.
So again, what is happening is government interference in the guise of deceptive economic statistics and real actions in the manipulation of commodity prices (remember that Henry Paulson, ex-Goldman Sachs CEO is the U.S. Secretary of Treasury, and that the Goldman Sachs commodities index (GSCI) influences the positions of fund managers worldwide as many fund managers directly peg their portfolios to any changes in the GSCI weightings). In fact, in July, unleaded gas accounted for 8.45% of GSCI’s dollar weighting. If you follow this link to Goldman Sachs’s own website, you will see that the GSCI’s dollar weighting for unleaded gas has been slashed by 72.66% to a measly 2.31% now. Concidentally, U.S. President Bush’s approval rating has been demonstrated to directly fluctuate with the price of gas (petrol) in the United States. The price of gas comes down, his approval ratings go up. It goes higher, his approval ratings sink. Of course there are a multitude of other factors that affect President Bush’s approval rating, but various polls have shown that the price of gas has a significant direct link to his approval rating. The U.S. Secretary of Treasury is not an elected position, but one that is appointed by the U.S. President. So let’s put 2 + 2 together.
Bush appoints his friend Henry Paulson to the position of the U.S. Secretary of Treasury. Henry Paulson was formerly CEO of Goldman Sachs. Mid-term elections approach, and Bush and the ruling incumbent Republican party in Congress are widely seen as being in serious trouble to keep their seats in Congress. The price of gas directly affects President Bush’s approval ratings. Goldman Sachs is one of the largest monetary contributors to the Republican Party’s war chest. Paulson is in a position to directly help his friend Bush. Goldman Sachs dumps 72.66% of its position of unleaded gas in its GSCI, a commodity index that is tracked by almost every major commodities fund manager in the world. All fund managers with huge positions in unleaded gas are forced to revise their positions and dump unleaded gas as well. Mere coincidence or blatant manipulation of the markets? You decide.
Political intervention has historically created great anomalies in stock market performance, and in fact, I utilize politics to great success in long-term investment strategies. However, to execute short-term trades as we approach significant political events of important stature like the U.S. mid-term elections takes on additional risk. But the real question is how long can this deception hold up until reality eventually wins? Commodities will rise again, particularly gold. Even oil will most likely come back before the end of the year.
In fact, it amazes me how easily financial analysts flip positions and jump onto the current popular bandwagons of thought. Currently, many of the same “experts” that were raging about $100 oil no less than a month ago are now raging about $50 oil. Oil is extremely oversold and likely to see a strong bounce. This is precisely the reason we dig down the rabbit hole and rarely give information about short-term trades because short-term behavior can be manipulated and is thus, unpredictable. However in the end, indisputable facts will always break down the walls of deception and win.
So the only question that remains is will the deception hold up through the mid-term elections or break down before then? Currently, I am building a gold timeline to illustrate the collusion in controlling gold prices, including the alleged recent dumping of gold by some European central banks to depress the current price of gold in the short-term. I will post the gold timeline shortly.
The markets as you describe them J.S. are “sticky”. Investors are caught between lies and reality but since the average person follows lies, it seems that lies have been winning but that just increases the “stickiness” of the situation. In long sword attacks, there is something known as “sticky swords”, where the defense is to intercept the cutting sword and to “stick” like glue to his sword as he cuts.
In open hand techniques, we practice a similar technique called “sticky hands” where you “stick” to your training partners’ hand and learn to feel when a strike is coming and counter parry with a block. At the same time, you take your opportunity to try to strike him, your hands always remaining “sticky”, and his goal is to counter with a block.
“Stickiness” whether fighting with weapons are open-hand techniques, is not entanglement. Entanglement can be dangerous as it can become a war of strength whereas “stickiness” allows you to maintain control. Right now the U.S. markets are entangled in a web of deceipt and lies and it is up to you, the investor to “stick” like glue to the markets and maintain control of your portfolios.