In an announcement that brings the federal government to the verge of a weekend shutdown, on Thursday (December 7th) Democrat Leader Nancy Pelosi said her group won’t support a Republican bill for a two-week funding extension because almost none of their demands have been met.
Speaker Paul Ryan, appearing at the same podium just minutes after Pelosi left it, said he’s optimistic the Republicans can win enough Republican-only support to pass another Continuing Resolution (CR). On Thursday, The Hill reported Speaker Ryan said, “I feel good where we are . . . “
Well, maybe he does but I don’t and the markets don’t seem all that thrilled either as there was a 2:00 p.m. (EST) sell-off. in the Stock Indexes Then the whip count was texted to the banksters (the number of committed “yes” votes by Republican Congressmen), the Magic Levitation Team stepped-in and we saw a hard bounce right back up that continued into the close
HINT: Non-Farm Payroll is tomorrow. Don’t think for a second the friendly folks at Goldman and JPMorgan and Citi and DeutschBank, et al. don’t already know the magic number the rest of us will see for the first time at 8:30 a.m.
But as far as government spending — by CR or otherwise — we’re already over $20-TRILLION in the hole . . . what’s another $100-Billion or so? C’mon! We already pay $229-BILLION — and rising — each and every year on the national debt (it’s actually more but they net what we supposedly receive from interest against what is paid); the U.S. pays about $600-BILLION a year on the military; and $1.25-TRILLION a year on social security with another $985-BILLION on medicare!
— 87% of mandatory spending is on social security and medicare
— 53% of discretionary spending is on the military
The United States spends almost $700-BILLION a year more than it takes in via taxes and all other revenue!
Anyway, according to Bloomberg, the bill is a “waste of time” that doesn’t include funding for combating the opioid crisis, among other priorities like enshrining DACA provisions into law, something Pelosi has said must happen before the end of the year. But, hey, kick the can as far as possible. If only 2-weeks then you have 14-days to get the PR machines working on why the other side is to blame . . .
Speaking of blame, the two party leaders wasted no time blaming one another for the precarious situation. What else is new? It’s WWE Professional Wrestling on display with YOUR IRA, 401(k) and other retirement on the line.
The current CR expires at midnight on Friday — December 8, 2017.
If it expires, who knows what will happen when the markets re-open?
12/7 Update: Yep, as expected, the can was kicked 2-weeks down the road. But the House of Representatives won’t have as easy a path to getting another CR because the House Freedom Caucus wants things the Republican Establishment is not really willing to give. Forget the Democrats who will obstruct-obstruct-OBTRUCT and try to use this as an election issue for the November 2018 campaigns! Plus, even if it somehow cobbles enough votes to pass the House, the Senate is another whole dysfunctional thing!
Again, I ask: What will happen to markets as a result of the U.S. Government effectively running out of money and shutting down? Something to keep very much in mind . . .
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World Market Cap Near $100-TRILLION!
First, the 2017 right edge looks a lot like the INSANE Bitcoin chart to me.
Second, understanding what this top chart is might help. It’s the total capitalization (current “value”) of all the stock markets in the world.
Update: The first chart was “debunked” (for days) by the corporate-controlled propaganda media outlets because, supposedly, Venezuela was counted wrong by a little. Right math. Used their Stock Index value — but it wasn’t “adjusted” to reflect what “would have been” — kinda’ like the non-GAAP financial statements from the corporate world. Anyway, they’re using the same old trick: argue about individual trees and ignore the forest! What difference does it make if the world cap is $90-Trillion or $85-Trillion? It’s still going parabolic!
I keep telling everyone in the LIVE! Trading Room that markets are broken! We see more and more evidence of it all the time. But . . .
When anything goes parabolic, it’s a bubble that’s due to POP!
It’s like the Dutch tulip bulb mania — version 5.0.
Don’t know what that is? Well, it’s happening right before your eyes in Bitcoin and stock markets.
OK kiddo . . . get comfortable . . . here’s the story: In 1593 tulip bulbs were first brought to the Dutch from Turkey. They were new and unique and became popular quickly. Then some sort of disease struck — which didn’t kill the tulips, but which caused them to flower in wildly exotic patterns. This increased the rarity of an already rare and popular “asset.” So tulips, which were already expensive, became even more expensive — especially according to how the most exotic patterns were demanded and how many were available (supply). Everyone — farmers, barbers, metalworkers, grocers, etc. — began to deal in tulip bulbs which was essentially speculating in the informal Tulip Bulb Market — a market which apparently had no limits. Tulip bulb merchants (like garden centers) bought for the next season which decreased supply even more. Soon, prices were rising so fast and so high that ordinary people were trading their land, their life savings, and anything else they could sell to get more cash to “invest” in tulip bulbs. Many Dutch stubbornly believed they they would sell their hoard to foreigners, and thereby become instantly super-rich. At its peak, the originally overpriced tulips saw a twenty-fold (20X) increase in value — in one month! [Now stop and think . . . You might have managed to get in early and have 5 tulip bulbs and be able to afford 5 entire estates. But until you actually traded for the estates all you had was imaginary wealth.]. Well, back in Tulipland, then the selling began. It started slowly and as prices fell more jumped on the bandwagon and a domino effect resulted. There were NO buyers — only sellers. Finally, the next natural step of panic-selling “at any price” kicked-in and soon most had lost everything! At the peak of the market, a person could trade a single tulip for an entire estate — and, at the bottom, one tulip (for which someone had traded their entire estate) was the price of a common onion!
Can you see the similarities to the markets and Bitcoin?
Both are going parabolic (pretty-much straight up).
Everybody is buying-buying-BUYING! Some are selling other assets to “invest” in tulip bulbs, oops, errr, I mean Bitcoin or the stock markets.
When “everybody” — your barber, your mechanic, your lawn service guys, grocery store managers, McDonalds managers — are investing in something (well, anything) because they all “just know” it’s going up-up-UP — then if I haven’t already, I sell.
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It’s like the actual New York stock broker I met while traveling to Costa Rica in late-2006, I think. Now, of course, this was before the banksters were hitting CTRL+P and creating more imaginary money every day to flood the markets.
The Dow was so clearly (to me) topping and I had just encouraged my buddy (who was in the group that went with me to Costa Rica) to liquidate. When he called his guy at Edward Jones — he told my buddy he was nuts! He was a real professional (I guess unlike me) and the market was absolutely going higher-higher-HIGHER!
Well, in Costa Rica we came across three young stock brokers and we started chatting about all the beautiful girls and the best places to go at night, etc. One asked what I did for a living and, aside from practicing law and writing, I said I was a day trader.
“Ooooh, can you believe the markets? Going to the moon!” he said.
“Nope,” I replied, “they’re topping and are gonna’ come down. Maybe a lot.”
“You’re crazy!” he insisted.
Even after I explained exactly why, he said he was “backing up the trucks as soon as they got back to New York and loading-up!”
In other words, he was going to borrow money and margin and buy as much as he could — because those tulip bulbs were only going to get more expensive.
Well, the moral of the story is that my buddy made out like a bandit. He saved 100% of his 401(k) and got back in after the correction. To this very day, he still has to buy me beers when we go to a favorite sports bar.
And we still drink a toast sometimes to the bankrupt stock broker.
When everybody says buy-buy-BUY — if I haven’t already — I sell.
When I see the World Market Cap going parabolic — I worry for everyone else.
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Speaking of Bubbles — How About The Dot.com Bubble?
I’ve been trading since the 1980s.
WOW! That’s over 30-years!
Anyway, I’ve seen and lived-through a lot . . . and younger traders might not have seen everything I have.
Heck, I can still remember when I was lucky enough to pay the exorbitant monthly fee I did for live data via satellite and so I had real-time charts and could call my broker to place swing trade orders in the mid-1990s.
Today, I press a button and get an instant fill. WOW!
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My children and grandchildren have never known anything but the Internet, while I can remember a time my Nintendo Entertainment System (NES) and Pong game were cutting-edge. LOL!
The Internet started to catch-on in about 1995, I think. Some 10-years after my Nintendo.
Soon, the IPOs of internet companies emerged with ferocity and frequency, sweeping the nation up in euphoria. Investors were blindly grabbing every new issue without even looking at a business plan to find out, for example, how long the company would take before making a profit . . . if ever.
It was buy-buy-BUY!!!
The NASDAQ — where almost all were listed — rose and rose and rose. I’ve often said a chimpanzee could have thrown a dart at the wall and you would make money on whatever stock it landed on.
But obviously, there were problems. Serious problems. The first shots through this bubble came from the companies themselves. Many reported huge losses and some folded outright within months of their offering. Silicon Valley overnight-millionaires were frequently moving out of $4 million estates and back to the room above their parents’ garage.
In the year 1999, there were 457 IPOs — most of which were internet and technology related. Of those 457 IPOs, 117 doubled in price on the first day of trading. In 2001 the number of IPOs dwindled to 76, and none of them doubled on the first day of trading.
The NASDAQ lost about 78% of its value as it fell from 5046.86 to 1114.11.
If you invested when everyone was buying-buying-BUYING — and you were lucky — your nest egg of $100,000.00 was soon worth about $22,000.00 . . . and you got to start all over again! If you borrowed and “loaded up the trucks” to invest in the Dot.com Bubble, well, you’ve probably met that former New York stock broker who once could afford a trip to Costa Rica.
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Speaker Ryan Eyes Push For “Entitlement Reform” In 2018
The Hill reported that last Wednesday — the day before the 2-week CR was passed — Speaker of the House Paul Ryan (R — Wis.) said House Republicans will aim to cut spending on Medicare, Medicaid and welfare programs next year as a way to trim the federal deficit.
“We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” Ryan said during an interview.
Actually, there is a very good TWO-prong approach:
(1) Decrease spending — across the board; and,
(2) Raise income (i.e., taxes).
Neither of these will be popular to Americans but the answer is a coming hard crash instead of a softer, more manageable landing.
No country can continue spending $700-BILLION a year more than it takes in and survive. The only thing that has allowed the United States to do it for so long is the devil’s deal cut with Saudia Arabia decades ago that required all crude oil transactions to be settled in U.S. Dollars.
That makes the U.S. Dollar also be known as the Petro-Dollar — and it is under attack by other, rightfully jealous countries all over the world! Those attacks are becoming more and more coordinated and now involve China and Russia. The days of the Petro-Dollar are indeed very limited and the U.S. must get its financial house in order before it’s too late!
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Anyway, I’ve served in elected office and understand the legislative process a little at least.
I also know it’s best to negotiate from a position of strength.
The Democrats, who are in the minority in both the House and Senate and out of control of the White House, demand DACA (immigration-related: Deferred Action for Childhood Arrivals) be made permanent law and that’s their biggest demand and, thus, bargaining chip right now.
Making them choose between constituencies — those who are Latino, for example, versus those who receive “entitlements” — places them in a much weaker position and forces them to choose. They can’t have both: DACA and “entitlement” programs as currently funded. And make no mistake, the GOP is not about to touch social security and medicare — so they might initially lump those in but for all intents and purposes are only taking about SNAP (food stamps) and TANF (formerly called AFDC years ago) and Medicaid.
I differ from the far left-wing Democrats and do not want to see generational, or multi-generational, families living off government assistance — without doing anything to help themselves. But I also differ from far right-wing Republicans and do not want to simply cut-away the social safety net SNAP, TANF and Medicaid provides. There has to be some middle-ground.
But what does this have to do with day trading in the LIVE! Trading Room?
First, depending on the budget situation and what happens vis-a-vis a U.S. Government default or shut-down, the Stock Indexes, and currencies, and Gold could respond violently.
Second, this is a hot-button issue and could result in civil unrest or outright rioting if a substantial “entitlement” cut is made. The fabric of American society has never been weaker — with already hate-filled responses if you don’t agree with someone’s politics. Can you imagine them having their “entitlements” cut? That will also affect the markets we trade.
Third, with more cards on the table, it becomes more likely that other matters, such as tax reform and immigration reform, can be agreed to and passed. Those will have repercussions in the markets we day trade as well.
Forewarned is forearmed!
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If you have any questions or comments, please let me know using the form below!
There is a Chinese curse which says “May you live in interesting times.”
Like it or not, we live in interesting times with these markets which have gone from “more and more” to now completely dominated by HFT (high frequency trading) computers.
So we’ve adjusted our trading.
But you always have to adjust your trading since what I did in 1999 no longer worked in 2009 (actually a lot sooner than 2009) and what I adapted to in 2009 no longer works today — and hasn’t for several years. You always have to adjust to the markets — which are never wrong.
January — March:
2017 began with this Blog being knocked off-line since the end of November 2016 — unknown to me. Apparently my friend, who was hosting, threw a huge temper tantrum when President Trump was elected and responded by just shutting down her servers. Talk about cutting off your nose to spite your face (and mine too!) . . . I finally got it back on-line at the end of February.
But trading was good to very good the first quarter — as it usually is.
April — June:
April trading was fantastic!
Then April ended and May began. Like a switch got flipped, volume and volatility dropped to near zero! What had been working so well for all of 2017 to date, just stopped. Suddenly. We were getting BE after BE. Markets weren’t moving. The number of trades that actually got to the Profit Target went down, down, down! But because we manage risk the way we do, we were still profitable on trades called in the LIVE! Trading Room.
That’s a big deal — and one we experienced through the rest of 2017: When major Hedge Funds were closing their doors right and left, when (since 2015) there had been record withdrawals from almost all managed funds — that is people demanding their money back, or what was left of it — when financial bloggers and market experts were tearing their hair out in despair — through all of that carnage, we still managed to make money for Members of the LIVE! Trading Room . . . just not as much as we would have liked.
Some didn’t understand. One got angry. Surely a real trader could turn on his computer and have money pour-out any time . . . Thankfully, we have those folks to take the other side of our trades — until their accounts are gone.
July — September:
The record low volume continued and the difficult conditions likewise also continued. In fact, conditions were getting steadily worse as the Stock Indexes made new ALL-TIME high after high after high — which were WEAK highs on almost no volume.
Central Banksters had completely captured all major markets across the world through their day-after-day hitting CTRL+P and creating more and more imaginary money which was given to their corporate buddies (or used by the banksters themselves) to buy-buy-BUY equities on every dip! The Indexes were glued to ALL-TIME highs. They couldn’t go up by any significant degree and were not allowed to come down.
And VIX (the Chicago Board Options Exchange — CBOE — Volatility Index) stayed glued to abnormal and historic lows!
In short, the markets were dead.
“As one measure of volatility, the Dow Jones Industrial Average traded in its tightest trading range since 1900 this year.”
That’s a record 117-YEAR tight range!
Here’s what Bank of America derivatives expert Benjamin Bowler recently wrote:
While asset valuations are not at life-extremes, volatility is.
In 2017 the Dow traded in a 110yr record tight trading range, the VIX hit all-time lows, and US equities reversed from sell-offs at near their fastest pace in 90 yrs. Investors no longer fear risk but love it, as it’s another opportunity to harvest “dip-alpha”. Volatility across asset classes has decoupled from uncertainty. Even if seemingly irrational, apathy to all risk has been the right trade and an impossible trend for most to fight – the definition of a bubble. [Underlining added].
We tried everything I could think of — and strangely continued to see much more success in the Pre-Market Session . . . but once the HFT computers were fully turned on, it was like a shroud of death covered the markets.
Gold futures have been blatantly manipulated for years. Now it was the various currencies, in addition to the Stock Indexes, which got jobbed. They stayed in small, whippy ranges — until the HFT computers spiked them (up or down — trend didn’t seem to matter) after which they went right back into a small, whippy range waiting for the next spike. Often there was simply a big order to fill (a large amount of, say, Euros that someone needed converted into Dollars) and that spiked price only to then spike right back.
So we made due with smaller profits in the LIVE! Trading Room and looked forward to October — historically the single most volatile month year-after-year-after-year!
October — December:
Finally October arrived! YEA!
But the historical volatility never did.
The trading world waited through that first week . . . through that second week . . . through that third week . . . and it became more and more apparent that the “historic” volatility was not coming at all.
In fact, October 2017 made a record as the LEAST volatile October ever! It was also the lowest volatility month of 2017 thus far. Amazing!
Now please think about that: Not only was October not the most volatile month of 2017 — as it historically always was — it was the LOWEST volatility month in the lowest volatility year! “What’s going on?” we asked over and over. Just like every other trader in the trading world . . .
What started in May continued into October, then November and finally into December.
We still had respectable results in the LIVE! Trading Room — but nothing like years past!
However, some days the best you can do is not lose.
Some years the best some traders can do is to stay in business — tread water and keep their heads above — not blow-out their Trading Accounts, or inflict so much damage they’re handcuffed going forward.
I’ve read over and over that 95% of all traders fail. It sounds and feels about right. That leaves 5%. Out of that 5% — about 3% manage to tread water — they become and remain break-even traders. They don’t really make anything but also don’t really lose. It takes a little help (or a LOT of hours and study in front of the screens) to join the 2%.
But I’m not talking about that Permanent 3%. I’m talking about professional traders already in the Top 2% who have a few excellent years and then a very tough one. It’s that very tough one that determines if they’re still around the next year. The worst thing you can do is get more aggressive to “make back” what was lost or missed out on. We do the exact opposite: cut-back and wait.
I’m explaining this because that doesn’t please some who want action — who demand an Add-On Day every single day and every single week — who demand that they get handed the Daily Profit Target in every market every day and especially the one that person has decided to trade that particular day — and who fully expect to be made a millionaire by next week with a $2,500 Trading Account. I’m talking about you MICHAEL!
I’d like to report that this year was even better than last year — which I can usually report. But I can’t. Not this year. During what was a blow-out year — during what was a year that saw the best and brightest $Billion+ money managers closing their doors because of 3-years of bad performance — we still managed to make money for Members of the LIVE! Trading Room. Just not as much as we would have liked. January through April provided the majority of our great trades and the majority of our Add-On Weeks. In fact, I’m pretty sure we could have walked away at the end of April and spent 8-months or so playing golf around the world and probably have enjoyed 2017 more. LOL!
Just watch the videos I posted from the end of November into the beginning of December. See the unusual number of losing trades and BEs? The theme for that video series was PATIENCE and DISCIPLINE. It’s always important but much more so in times like we’ve had in 2017.
You never know what day will be a tremendous day — so you show-up and work through the tougher days.
You have to weather these storms — like the second half of 2017 — to be around for 2018 (hopefully) when volume and volatility returns.
We can already see it with the newest market we’ve added: NQ — the E-Mini NASDAQ. That market is (right now, in December 2017) violently, hysterically whippy . . . but volatile! I’ll have it tamed in 2018!
What are the plans for 2018?
Well, I’m an optimist and I don’t believe the record low volume and volatility can continue forever. It’s like that real picture I sometimes show in the LIVE! Trading Room of SEVEN (7) straight 19s coming-up on a roulette wheel – and an even more amazing 12-out-of-15 being a 19 or 20! Clearly that roulette wheel was broken and just as clearly to me the markets are now broken.
But they won’t stay broken!
There’s simply too much money at stake.
So . . . We will continue to take fewer, more selective, trades.
We will continue looking for smaller, tighter Profit Targets until volatility improves.
We will continue taking smaller losses in the LIVE! Trading Room, when possible — which is most of the time — so that a single profitable trade can erase multiple small losses.
We may begin taking more intra-day swing trades — trades that have bigger Profit Targets but also take longer to work. The only problem with this, and why I didn’t start in 2017, is they are often not completed by 11:30 a.m. when we stop the Morning Session. But that’s still a distinct possibility.
We also may start trading during the more reliable Pre-Market Session. But I like to save that Session and the Afternoon Sessions for One-On-One.
We will probably start what I’ve been thinking about for most of 2017: Teaching/Helping those who are interested successfully pass the test to become a funded trader at one of the several reputable funded trader programs. But I still have to work-out the logistics.
We had a very challenging but overall survivable 2017.
Markets are the most difficult that I’ve seen since I began this full-time in 1999 — and worse than any those who have been trading longer have seen since 1992. But all things change!
We have (so far — knock on wood!) weathered the 2017 Storm and are still here, every day as scheduled, doing our best. Our best in 2017 has been to enjoy success — just not as much as we would have liked.
We have definite and realistic plans for 2018.
I hope your 2017 was at least manageable.
P.S. — If you have comments or questions, please leave them in the comment section below.
For months now I’ve been telling Members about the steadily increasing rig counts here in the U.S. while Canada has seen both increases and some decreases. This is very important as it relates to fundamentals of the Crude Oil futures market — one of our favorite and most reliable markets.
Ever since last November, the rig counts here in the United States have been going up . . . up . . . UP! The trend in Canada — though not as strong — has also been a general increase of producing rigs.
This operates to generally increase supply and, therefore, work to keep prices from exploding because of the latest O.P.E.C. price manipulations in their artificial production cut-backs.
It’s also very good policy as the more energy-independent a country can be, the less necessary it is to intervene half-way across the world in conflicts that country really has no business in becoming entangled — other than oil.
So I’ll “officially” update this space frequently so you can keep track of just how much the rig count is increasing.
Update: April 21, 2017:
U.S. +10 to 857 — Canada -19 to 99
Total -- U.S.
Total -- Canada
April 21, 2017
April 13, 2017
April 7, 2017
March 31, 2017
March 24, 2017
March 17, 2017
March 10, 2017
March 3, 2017
February 24, 2017
And we’ll cover some more specifics . . . such as the reason Canadian rigs have been going down for the last few weeks. Hint: It’s mostly due to seasonal adjustments, as far as I understand.
Now there’s no replacement for technical analysis in my opinion. But if I know the fundamentals favor over-supply and, thus, cheaper oil, it may tilt the chart just a little so moves down are easier to milk for larger profit targets.
For example, this week alone (April 17-21, 2017) we saw multi-DOLLAR down days following the Crude Oil Report and a Friday sell-off. At one point today (4/21), Crude Oil was down over 6% from the start of the week. Just saying . . .
We’ve just lost 7-years+ of work (November 2016) when my friend suddenly gave-up her server. She said it was all because President Trump had won. She bartered-away her websites, shut-down the server and claimed she was leaving the country! Sadly, I’m not kidding. I sure hope she changes her mind but in the meantime, all the files and charts and videos and posts from this blog were just suddenly gone . . . Poof!