Decisions, Decisions, Decisions?

It's been a little over 3 years since a post has been made.  Rainbows and unicorns and good times have transpired.  Solid "growth" and "recovery" have been made in that time with little to worry about.  Until last week.

For starters, this was the 2nd to last post made here. 
http://playwithmonopolymoney.blogspot.com/2012/05/here-we-are.html

It was decision time then and the market took off for one of the greatest runs we've seen in market history.  New strategies that have been successful for the past 3 years were to buy the high, sell higher (this is a legitimate momentum/trend following strategy), and buying the dip (for just about every investor or trader.) 

So what do things look like after last week when the market had a flash crash and huge volatility?  Let's first take a look at a weekly chart of the Dow futures.

As you can see above, the bullish trend lines of the past 4+ years were broken. The trend line will need to be retaken, and it very well could be, for the trend to resume.  The area to watch has the circle half green/half red.  If closes do not get above and hold those former trend lines, then a new trend is in the works.  It could be sideways, it could be down.  Nobody really knows the future.  But it's definitely interesting and important to watch and see.  This picture looks pessimistic for the long run with the weekly chart.  However, the trend line could be followed up, make new all time highs and never regain the upper side of the bottom broken line.  That could mean some unforeseen, quick drops in the future.  Those could also happen in the present, but I think there's enough emotional draw that this is just a minor correction in the market to keep buying the dip.  We should know more once the Federal Reserve has decided on officially raising interest rates in September or not.

There's also a look at the monthly picture.  See below.

This picture makes it look like nothing has changed even longer term.  A correction took place and bounced off of major support of a regular bull market that goes back to 2003-2008 run.  You can clearly see the financial crisis in 2008 when those trends broke, and it took over 3 years to return over the original trend, but it did. 

There's one caveat that I see though, and that's the unfilled circle.  The low of the past couple weeks broke through both of the long term monthly trend lines of the past 5+ years.  The close of the market tomorrow (8/31/15) will determine if the close for the month stays above the main monthly trend lines for the past 5 years.  But looking at the weekly, and at the monthly, the first crack in this amazing run has been made.  Staying near the filled green is key.  Falling to the filled red would be really dangerous. 

What to do about it is the question though...if anything.

MF Global 2.0 - PFGBest and Europe Banking Glitches

There is the next futures/commodity theft occuring now.

http://articles.chicagotribune.com/2012-07-09/business/chi-broker-pfgbest-freezes-funds-after-founders-suicide-attempt-20120709_1_suicide-attempt-suicide-note-mf-global

http://www.suntimes.com/business/13689539-420/pfgbest-accounts-held-after-founders-suicide-attempt-report.html

http://blogs.wsj.com/marketbeat/2012/07/10/pfgbest-scandal-another-black-eye-for-futures-industry/

http://www.zerohedge.com/news/pfgbest-now-mf-global-part-2-220-million-segregated-client-money-has-just-vaporized

$220 Million of customer money just doesn't seem to be there.  Huh?  Just like MF Global...only this time PFGBest (Peregrine Financial Group).

For reminders, Ann Barnhardt closed her entire financial firm over MF Global. http://www.theblaze.com/stories/going-galt-hedge-broker-shuts-down-firm-with-chilling-letter-about-the-market/ 

Her rant today (July 9th) is pretty telling. 
http://barnhardt.biz/

And Zero Hedge did start looking into who could be next.
http://www.zerohedge.com/news/first-mfglobal-now-pfg-who-next

Could this be just a futures problem in the industry, or a systemic problem in the banking/financial world?


My bet is on banking/financial world systemic problem.  Too many issues over too much ground across the world.

Not sure if any U.S. coverage is on the "IT Banking Glitch" over in Europe, but there's some other issues going on in the financial world. 

Ulster Bank, Ireland - 600,000 bank accounts - little to no access - no funds going in on direct deposits - funds still coming out.  An IT glich seems improbable for the length of time.

NatWest, England - 12,000,000 customers - same
http://uk.finance.yahoo.com/news/natwest-technical-problems-continue-hamper-081014918.html

June 24th - Bank Glitch needs a week to get fixed.
http://www.bbc.co.uk/news/uk-northern-ireland-18569815

June 30th - Won't be fixed by July 2nd
http://www.bbc.co.uk/news/uk-northern-ireland-18657127

July 9th - Finally catching up
http://www.irishtimes.com/newspaper/breaking/2012/0709/breaking35.html

And for comic relief for 600,000 accounts having limited / no access to funds...
Credit Rating - NOT AFFECTED - what a joke.
http://www.rte.ie/news/2012/0627/ulster-bank-accounts-back-to-normal-by-next-week.html

RBS is blaming Offshoring - yeah ok
http://articles.economictimes.indiatimes.com/2012-06-28/news/32457355_1_anti-outsourcing-offshore-outsourcing-outsourcing-issue

RBS is blaming duplicate mortgage payments on glitch...this is theft, plain and simple.
http://uk.news.yahoo.com/rbs-blames-glitch-mortgage-payments-being-taken-twice-120922678--finance.html


This is the joke of a financial system we have in the world today and something is very, very wrong.  Get prepared for when these "random" occurances happen to the U.S. banking system. 
I'd call them bank holidays and theft.  I guess they are calling them "IT Glitches" and "Accounting errors" these days.

Here we are....

So one of the last charts I posted was this one right here...going all the way back to January 26th.

Since then, it's been mostly sunshine and rainbows.  Except that all of the things discussed back in November through January still held true.  The only thing that really changed was the news out there.  Instead of being doom and gloom, the news really was sunshine and rainbows.  Why?  The gov'ts were able to do a kick save, then just put out all great information like decreasing unemployment, as the markets went up and up and up.  The news was mixed out of Europe.  There was a little issues with Greece possibly not making a payment on their new debt and defaulting, which technically they did and triggered a bunch of credit default swaps, but it was once thought the triggering of CDS' would cascade into a full collapse of all the banks in Europe and start a brand new 2008 style crisis all over again.  It didn't happen.  Probably because of the kick save and the liquidity swap rate being reduced, among other help along the way that isn't really important to discuss.  But, here we are.

You really can't write a better script than this.  America going into the abyss (in Nov).  The gov't comes in saves Europe and the US with a magic reduction in liquidity swap rates.  That goes to the peak and things breakdown.  Then they magically print (or trade) money out of thin air to "boost" the economy past the peak.  It last all of 5 months and we're heading back down.  What will our super hero do now that their save is in danger again?  It looks like we will find out. 

The blogosphere/banks/whoever have all been projecting QE3 (Quantitative Easing) to happen in June/July.  Partly because of the elections coming up, partly because the banks thought they would need the money again by June and mostly because that's when their next meetings are.  But before any QE saves can come through, the FED would need a reason to do more QE, so they (the banks) need another crisis situation.  It's happening.  Anybody see this one?
http://www.washingtonpost.com/business/jpmorgan-ceo-dimon-acknowledges-800-million-in-recent-losses-on-investments/2012/05/10/gIQAhyaPGU_story.html 

So like my title says again, Here we are.  Are we going to be going into "crisis" mode again because it's convenient and the banks now need more money?  It sure looks like it from the charts, and the news coming out lately.  I may go into the JP Morgan trading loss in another post as well as other things, but for now...

The stage is set!  The actors are ready play their parts! And around the corner is the greatest of shows... The Election!

Right now, at critical support.

 As you can see above, the "boost" didn't get us through any of the 2008 highs.  I didn't expect it to.  That tells me there really is no real recovery.  I've been saying that for a long time though.  What's interesting right now is that we sit on that critical support (former resistance) at the 12,300 level in the Dow Futures.  That is right where the "boost" pushed us through to give everybody the 20% gains for the 1st quarter of 2012 which have all been erased now in a matter of weeks.  (This is a fun ride huh?)

So a break down through this support level would signal to me a continuation of the previous trend (which is down).  That should last until all of the gains from the first "boost" back in November have been erased and we sit somewhere around 11,000 on the Dow Futures.  That's just a guess, but who am I, just a nobody with a faint idea of what I'm doing here.

One thing is for certain though...be prepared for anything.  The reason everybody hangs on Ben Bernanke's every word is because his word is the only real game in town any more.  (Next meeting June 19-20)  Whether the FED prints money or doesn't print money.  THIS IS THE NEW WORLD WE LIVE IN.  A world controlled exclusively not by free markets or entrepreneurial spirit, but by manipulated data, manipulated perceptions and manipulated markets.  You better get used to that starting right here, and right now.