Nov 4

From yesterday: Chop, chop, chop. Up 3%, down 3% up 3%, etc. Definitely not an easy market to take positions in when these moves happen over 1-2 days

Today? 214th verse, same as the first.

My 60-min Trend System issued a sell signal today. Buy signal from yesterday got cancelled by the gap and move down this morning, giving the trade a 0.8% loss. Chop, chop, chop. See here and here. (These updates are sent out as part of my Trend System Notifications).

Currently waiting for the next setup to emerge.

Nov 3

Chop, chop, chop. Up 3%, down 3% up 3%, etc. Definitely not an easy market to take positions in when these moves happen over 1-2 days

My 60-min Trend System issued a buy signal today. See here and here. (These updates are sent out as part of my Trend System Notifications).

Nov 2

My 60-min Trend System issued a cover signal with the move up this morning. See here and here. (These updates are sent out as part of my Trend System Notifications). Not a huge gain with the move down (1.6%) but I will certainly take it and be grateful.

And speaking of being grateful, this is another reason why I am extremely grateful for my trend system in the current environment: One Big Fat F***ing ETF, Deal With It. Stock picking isn't dead, but it is really hard to get an edge that way when the market as a whole flips 'risk on' / 'risk off' like a switch. Finding a way to navigate that chop is key.

Like I was saying yesterday, the setup felt a lot like Sept 22. And today felt a bit like Sept 23 (a real ramp at the end of the day would have cinched it). I am considering a bit more the idea that a similar pattern might be playing out here:


And for anybody that is interested, here is my current EW count:

Nov 1

Gap down today, right into a big support zone. So far we are just hovering right above support and have been all day.

Today felt a lot like Sep 22. In fact my main indicator had also the same rate of change profile for the last 2 days as it did for Sep 21-22. It will be interesting to see how that plays out, whether this is a hold of support, or if this continues to break down.

The Real Macro Risks

Here is a good post by Warren Mosler.

The risk is not from US Sovereign Debt, the risk is not from 'bond vigilantes', the risk is not from relying on the 'kindness of strangers' to 'finance' the US. There are no US Government Bond Market 'Vigilantes', nor is the US Government 'financed' by anybody, it is the sole issuer of the US Dollar and is the source of all Dollars in existence.

So what are the real risks? This is one:

Meanwhile, the 1% running the US looks to be trying to take the lead in the global austerity race to the bottom as the Democrats in the super committee on deficit reduction have led off by proposing a $4 trillion deficit reduction package.

With the US consumer still in the middle of a balance sheet recession, and the Financial Sector still posing a risk to economic stability, and with the US economy having >9% unemployment and >35% labor under-utilization, and with inflation being moderate (and most of that is producer constrained cost-push inflation) and not even remotely demand-pull, we have no issue with the economy 'overheating'. We have a massive problem of deficient demand, and a $4 Trillion deficit reduction will be $4 Trillion sucked out of an economy when demand is already far too low.

Those who seek to massively cut the deficit (or worse, balance the budget) in the name of 'avoiding a Depression' will be the ones to cause it.

If this austerity effort makes serious headway, like I said here and here, then my sideways 'muddle-though' secular bear market projection becomes much less likely and something far more dramatic and bearish starts becoming probable.