Saturday, March 31, 2012

Blow-Off Top Rally Coming.

The 1st quarter is now officially over and what a quarter it has been so far! The stock market rise which started with the Santa Rally did not look back and kept rising. The bear camp including many famous names have been obliterated and ridiculed. But it was a rally which nobody loved. The bears hate it because it destroyed them. Bulls hate it because they were not fully prepared for it and could not get enough of it. Those on the sideline hate it because they never got a chance to join it after a pull back. Because there was no pull-back.

While I correctly predicted the start of the rally, I jumped down too early based on Technical Analysis while my cycle analysis and fund flow analysis were still positive. But in the Fed manipulated world no TA or fancy chart works. To get an idea of how the stock market really works just take a look at the following chart.

Do we need anything else to beat the stock market?

Question is where we go from here.  The answer possibly lies in the Fed action as well. The Operation twist is ending in June and there is no sign of more free money as yet. Combine the need of the Banksters with that of the politicians and we will get an answer which is fairly close. The Presidential election campaign will kick off in earnest from June. If there is no further liquidity pumping, the stock market will surely decline. If the stock market does not do well, that is bad news for an incumbent president.  So the Banksters and TBTF banks want more free money without which they cannot keep the ponzi scheme going and Obama need the Wall St. to keep pumping the stocks to get re-elected. There is no chance that the stock market will be allowed to perform on its own free will based on fundamentals till November. Bernanke has no option but to provide free money to the Wall St. even when he is aware that ZIRP is destroying the country and excess liquidity needs to be drained. They are boxed in a corner. (This is my theory and I may be wrong).

You may ask that if the above is correct and Operation Twist is still in operation why then the stock market should ever correct even remotely. Once again it is a matter of timing. If the stock market continues to operate at this present level till June / July, what justification Bernanke will have to pump more money. And if the stock market tanks in July / August, it may be too late to repair the damage from Obama re-election standpoint. So they have to start pumping the market again at least from the beginning of the 3rd quarter to have meaningful and positive impact on consumer confidence and voter behaviour. They do not want to take any chances. At the same time, they are banking on the theory that American Voters have the memory span of a goldfish.Take everything into consideration and my take is that we will get the correction in the 2nd quarter which will give Bernanke opportunity to start another QE.

So we are going into 2nd quarter and already there are signs that the blow-off top is starting soon. May be from as soon as this coming Monday. I think SPX will top between 1450-1460 and by April OpEx will be the top in terms of time. But the majority of these gains will come in the next 4 trading days. Take a look at the following SPX chart.
There is a pattern from last December which I have circled. The index goes down for about 3 days and then shoots up making a new high. This is not TA. Just simple observation. Combine that with the cycle analysis and seasonality and odds are high that what I said above is going to happen. From now till April OpEx there are three weeks.  If the market will listen to my plan, then the 1st week of April is when the market shoots up. 2nd week it retraces somewhat and goes back and forth. 3rd week it re-test the high and fails. The roll over comes thereafter.  Let us see how it unfolds but I do not see many other alternatives. If you have a better plan please let me know.

That the people in the know are preparing for that final melt up can be judged from the action of the treasury market. Friday, TLT had one of the biggest one day drops in recent history.
However, those who think that end of the bond market is here, are probably jumping the gun little ahead of time. If we are going to see correction in equities, bond bubble will not burst now. Also Bernanke cannot afford to let the rates rise now unless he himself initiates it. The time for that is around November.

Apple most likely has had its share of correction for now.
I think it will also re-test the high in the coming week.

The US $ ETF UUP is breaking down the trend line and if we see the final surge in equities, that may well correspond will the down-move in UUP.
Remember the market always inflict the maximum pain on maximum number of people. In the coming weeks, people will be convinced that the bond bubble has burst, that US$ is going lower and SPX is going to 1550. They are going to be so disappointed. When the correction comes, dip-buyers will buy again, only to give up all the gains of these months. The bears will not venture forth initially because they have been burnt so badly.  It is a game where the house always wins.

Thank you for reading my blog. I wish you all a very good week end. Please forward it to your friends and family and ask them to visit  and follow me on Twitter (@BBFinanceblog). You can post your comments in the blog or email me directly at I look forward to hearing your thoughts.

Thursday, March 29, 2012

Endangered Bear.

Today’s report will be short as I am running an errand and short of time.

Three consecutive red days in SPX and yet it has not been able to break the low of last week. That goes to show that time is still not right for the bears. Both my calls for this week have come to pass. I had written that the last week of March will have some weakness and here we have three red days out of four. Most likely tomorrow will also be red but not much. I have also written that the maximum downside I expect is 1380 and we are well within the range. Of course we still have one more day left in the week and anything can happen. But I doubt that SPX will close below that level.

There is too much noise in the market place and everyone is trying to make a sense of the market action. Too many good folks are discussing world economics and depending on their conviction, taking position in the market. Some think Europe is going to blow up and will take the world with it. Some are taking precaution thinking Israel will attack Iran. Still others are buying because they think USA has de-coupled from the world and is growing. As they say, “Each to his own”.

I am trying to stay clear of economic analysis and stay focused on what the market is going to do. Apart from one call in late Jan, all my market calls so far have been spot on. Both for equities and PM. My method does not depend on TA alone and I do not believe in fancy charts. Charts have their usefulness but up to a point. I do not understand Elliot Wave and that is my weakness. Also because I was taken to cleaners by Robert Prechter in the past. But there are many who make good use of it and kudos to them.

Anyway, coming back to market, we got only 13 out of the 20 points that I was looking for. May be we will get some more tomorrow.  Depending on the price action during the day, I plan to go long for a very short time.

I will present my detailed road map for the SPX by the week end. Thank you for reading my blog. Please let me know what you think of my market calls. You can post your comments in the blog or email me directly at or follow me at Twitter. (@ BBFinanceblog)  I look forward to hearing from you.

Being Human, Humane, Humaneness, Humankind-redspirit

Beyond the 'Dong Zong issue'
by Azly Rahman
in Malaysiakini

I read with interest about ongoing governmental discrimination against Chinese schools, as highlighted by Dong Zong.

Why are quality teachers and an abundance of resources still channeled only to Malay-dominated schools? Why are children in Chinese schools criminalised by the ‘sanction on teaching staff” which will ultimately deprive students of a good mother-tongue education?

dong zong chinese school 325 protest 250312What actually is our illness with regard to denial of the students’ right to their own language? Do policy makers actually understand the relationship between culture, cognition, consciousness and citizenship?

What does nationalism mean these days, and how do we understand it vis-a-viz use of language in schools? Whose brand of nationalism is being made dominant and what should an inclusive one look like?
What is the real issue behind the age-old request for the Chinese schools to have more teachers? How are the children criminalised by all this? Where is the peaceful path to this gentle profession called education?

When I think of education, I think of the children first and foremost. I think of each child as a gift brought into this world in all his/her cultural and cognitive complexities and of the pride of the family raising the child independent of what the ‘state’ wants the child to become.

Schooling is a process of mass babysitting in a capitalist state, such that the child will be provided a place for eight hours a days, seven days a week, to be taken care of, like in a kibbutz, while the parents go to work, selling their labour to the state.

azlanThe child is supposed to behave and learn new things while the parents are supposed to be obedient and, as good workers, bring profit to the state. The state, through its apparatuses, uses the profits and products of ‘alienated labour’ of  parents/workers and ‘develops’ the country according to what the political and economic elite imagines what ‘development’ means.

The child gets to be socialised to become citizens of the state. The mass baby-sitting agencies called public, private or parochial schools, tended by ‘managers of virtue’ called teachers - and wardens’ in boarding schools.
Their role is to ensure that the child learns to become nationalistic or even ‘patriotic’ in accordance to what this means vis-a-viz state ideology. In Malaysia, the current ideology is perhaps called ‘1Malaysia’.

Polarised education system
Are schools a happy place for the child? How shall the child be moulded? What language will he/she be proficient in? Whose culture will he/she inherit? In Malaysia, will it be the culture of the Malays? Or a hybrid of the Malay-Muslim culture? Who defines what will be it in the best interests of the child?

What actually is Malaysia's philosophy of education in this age and time of growing restlessness demanding for radical change, inclusiveness, linguistic diversity and competency, and the demands of a globalised world?

dong zong chinese school 325 protest  250312Why not let the child be schooled well first in his/her mother-tongue to develop cultural pride, and next let the medium of instruction at the secondary level be in English primarily?

Why not teach even the subject of Islamic Studies and Moral Education in English, and next prepare the child well for tertiary education that is predominantly English-speaking, with courses such as Philosophy, Ethics, and Cultural Studies as compulsory first-year subjects?

Malaysians: Let us not be dishonest, ignorant or hypocritical in the way we design the best cultural and cognitive environment for the child to grow up to become world-wise and productive citizens. As it is now, Malaysia's education system is polarising and inspired by the apartheid system.

The products of the Malaysian educational system have for several batches passed through the conveyor belt. The issue of race relations has become more and more exacerbated, partly as a consequence of the inability of the education policy makers to design peaceful educational settings and peaceable learning environments to allow respect and appreciation for each other’s culture to flourish.

NONEPublic discourse is becoming more plagued with calls by this or that racist-fascist groups in defence of the bankrupt and morally and nationally bankrupting ideology of Ketuanan Melayu or ‘pseudo-Malay idiotic pride’ as I would translate it.

Has there been any effort by the Education Ministry to design and implement a curriculum on multicultural education? Has there been an interest in it at all, given the nature of Malaysia’s communal politics that has evolved into the state of ethno-psychopathology bordering on irrationality, greed and massive corruption?

As an educator involved in the teaching of cultural perspectives, philosophy, and education, I’d like to see children in Malaysian schools bring their culture with pride into the classroom, to be shared with others in a deeply engaging creative learning context.

This is so that we bring in what the philosopher Charles Taylor would call the “ethics of authenticity” - of the ethical traditions of culture - into the learning process and not have these young curious cultural minds evolve into become ‘knockers or boosters’ of this or that brand of ultra-ethnocentrism.

Let us see how the Education Ministry will resolve this Dong Zong issue once and for all, before another regime takes this important  task more seriously.

DR AZLY RAHMAN, who was born in Singapore and grew up in Johor Baru, holds a Columbia University (New York) doctorate in International Education Development and Master’s degrees in the fields of Education, International Affairs, Peace Studies and Communication. He has taught more than 40 courses in six different departments and has written more than 300 analyses on Malaysia. His teaching experience spans Malaysia and the United States, over a wide range of subjects from elementary to graduate education. He currently resides in the United States.

Wednesday, March 28, 2012

Waiting For Tomorrow.

I was pleasantly surprised with today’s sell off. I thought it will drift lower in a range but at some point SPX was down about 1%. Alas, it gave back about one third but that’s OK. I wrote yesterday about the sign of life in VIX and Bond as well as in US$. Also, I have been writing about the weakness in the last week of March for a while now.

While many have been writing about quarter end window dressing which may take the markets higher, I have been harping on the opposite.  But I am also writing that such a correction, when comes will be a buying opportunity. Therefore my earlier plan of going long on Friday is still valid as of now. However if tomorrow we see a huge sell off, then it may have to wait. I expect the sell-off to be good but nothing that will derail the up-trend yet. Today NYMO has dipped to negative 26 only and there is good enough scope for further sell off.

 Today was one of those rare days when everything was in red. Gold and silver gave back a good portion of its bounce and once again, I stick to my earlier call of further fall in prices of PM.  I think a good bottom for PM is still far. Sentiments and technical parameters do not align yet for a good entry. What happened to those investors who purchased gold during August / September of 2011? Are they still holding on to those investment? Because if they are still holding on, the wait will be very long. Yesterday CPM group’s “ Gold Yearbook 2012” was released in New York. Jon Nadler of Kitco has done a good analysis on that report. I quote from Mr. Nadler:

For starters, the finding that gold investment demand fell by nearly 6% last year, at a time when we were all told (by certain agenda-driven newsletters) that investors were beating down the door of their nearest coin shop. Evidently, that was not the case.
We mentioned numerous times in these posts that record and/or near-record gold prices present an obstacle that many an investors is basically unwilling to tackle. CPM’s analysts found that “Such investor hesitance also was seen in gold coin buying patterns over the course of 2011, in Indian demand trends, and in other aspects of the gold investment market.” The research firm believes that investment holding additions will also decline in 2012-if not by much-and that while no major declines in the price of the yellow metal are in the cards this year, neither are new records.
The firm anticipates a possible trading range in gold of from $1400 to $1,900-and-change for the year. This, despite the incessant chants by mining firm CEOs that $2K and $2.5K gold are ‘in the bag.’ Note that high gold prices do matter and that “Investors as a result appear already to be reconsidering purchasing increased amounts of gold at ever higher prices as they have been doing over the past few years. They are instead showing signs of being increasingly willing to hold off on purchasing metal until prices soften from recent levels, a tendency that may continue in 2012 and beyond.
CPM also busted certain other myths that are present in abundance in the gold market newsletter space. One of them relates to gold as an inflation hedge. Aside from the fact that CPM noted that gold is a currency and that all currencies lose value over the long-term and that therefore gold’s purchasing power parity attribute is largely fiction, the firm also pointed out that investors may be placing their bets incorrectly when it comes to gold.
To wit: Quite a few gold investors are piling into the metal in proportions that a far larger than what a prudent portfolio allocation model might suggest, because they are convinced that we will get sharply rising inflation owing to the recent round of global fiscal stimulus. Investors have also bought the line that negative real interest rates are gold-beneficial. It turns out that, historically speaking, returns on gold have actually shown a tendency to decline when real interest rates dipped under -2%. As for the topic of Weimar Republic-style inflation, CPM said that, in the near-term, this type of threat is a non-issue that the anticipated future inflation levels may also not occur.”

In the world of investing, timing is everything. Ask someone who has purchased a house in 2007 and is now deeply underwater. This, when we were told that house prices never go down.

Coming back to the stock markets, everything is going more or less as per plan and I am waiting for tomorrow.  A good 20 point sell off tomorrow will validate my call for next week. But either way, a blow off the top rally is coming from next week.

Thank you for reading my blog. Please let me know what you think of my market calls. You can post your comments in the blog or email me directly at I look forward to hearing from you. Without your active participation, it becomes pretty boring! 

Tuesday, March 27, 2012

Double Top In Dow?

I missed it in my evening post:
Do you think it is a double top?
If so, then the correction target is very close, around 13000.As they say, DOW leads. It is in line with the short term cycle low this week. 

Dumb Money Still Chasing Stocks.

In the good old days or normal market behavior, I would have said today was a bearish reversal day. But now-a-days TA does not work so well when it comes to bearish prognosis, so I am little careful to say anything bearish. It might offend Bernanke. We cannot fight the Fed after all.  Although per cycle analysis, the last week of the March is supposed to be little weak, the 1st day of week has already covered for the rest and any selling is just to take out the overbought conditions.

After a free fall, VIX recovered somewhat today.
As you can see in the 5 minute chart, it was up for most part of the day while equities dived down much later.
On a daily chart, it looks like VIX has made a bottom.
While SPX has made higher high, VIX has not made a lower low. But I can tell you, this is temporary.  The lowest for VIX so far was 9 or so. I think that low will be broken.

Also up throughout the day were the US Treasuries.
TLT 5 minute chart is bullish. In fact TLT has been going up for a while equities are on a tear. Makes you go hmmm.

Also up was the US $ while AUD sold off.  

All these give the feeling that we might get that 2-3% sell off we are waiting for before the blow off the top rally.  Possibly today was the beginning.  But it is not time to go short yet.  As per Guy Lerner’s Dumb Money Indicator, as long as the indicator stays above the upper band, prices should continue to go higher.

This is consistent with what I have been writing all along that as of now dips are buying opportunity provided you know what you are doing and are ready to jump ship very quickly should it start to sink.

Thank you for reading . Please pass it on and join me in Twitter for live market commentary. (@BBFinanceblog). 

Texas Holdem (Ways To Lose Your Money Other Than Playing Stocks)

This is my favourite card game, and the only game I would play when I am at a casino, which meant that I do not frequent the casinos in Malaysia and Singapore. They do not have Texas Holdem for players only (the Carribean and other versions are stupid odds-favouring the casino bullshit games) because its a low yielding game. Money basically changes hands among the players themselves and the house just takes a cut after every hand. Too small for the casinos in Malaysia and Singapore apparently.

I don't undrestand that because the biggest gaming place is Macau and Texas Holdem is very big there as in everywhere else.Most people like poker, but nothing can compare to Texas Holdem because of the various possibilities. Many people who play like to think they are good players, me included (lol), just like many people who invest in stockmarkets like to think they are better than the average (again, wrong). To make money in stockmarkets you NOT only have to be better than 50% of the players. You have to be in the top 20% because only 20% or so really make money over the long run, the other 80% will eventually lose - want to know why, come to the seminar on 14 April and remind me to tell you.

Anyway, back to the game, got nothing to write about the local markets for the past many weeks cause its a punting penny stocks phase. If I write, then I am becoming too speculative, so better not to write anything. Only thing worth writing about, which I have written already, is plantations. I think if you stick to second tier plantations, you should be getting 30%-50% return if you hold for rest of the year (i.e. NOT IOI Corp, Sime Darby, UM,  ... go for those I did not mention).

I like the game because its not about cards or what you have, most games end up not having to flip over any cards, so I don't know why people are so enamoured over what two cards they have in the first place. The first video is the great Johnny Chan, why, he shows us clearly never to fall in love with high pairs. Be them aces, kings, queens ... many people will never get away from them. The flop shows 6, J, J .... and you have two players in as well. Chances are high that at least someone will "decent high cards", i.e. J (one out of 4 cards in the other two persons).. not to mention anyone having a solo 6 to boot, your pocket Aces is almost worthless after the flop. But how many will still keep playing them with gusto, and wondering why they lost.

Play the players and your math skills. People wondered why they never make a lot of money when they have big cards, they curse when they get small pots when they have high pairs ... then that person does not understand and appreciate the game that well. Big pots has to do with somebody else having a hand and the flop has to be open and having some thing for everyone.

Among the current crop of players I really like is Tom Dwan, he is young and has balls of steel. Watch how he plays in a CASH game. He never needs to have the best hand. His skill is trying to make others think you have the ultimate best hand. After the K came out on the turn, his cards does not matter anymore. All Tom is doing is making the other person think he has the best hand. Maybe it does not work all the time because the ultimate best hand usually only happens 1 in 10 hands. But you still need balls of steel.

Because in a hand, when Phil Laak has the K pair, he can be beat by trips 5s, hidden pairs of 3s, or trips Qs.

Which is why, if you want to master the game (you will never, btw) instead of watching great wins, study the great folds. Ask yourself, would you have folded if you held those hands.

Monday, March 26, 2012

Slaughter of the lambs (Bears).

I expected today to be range bound but it turned out to be the day of a new high thanks to uncle Ben.  In a way it is consistent with the bigger theme which I have been writing for so many days. That while we can expect some weakness in the last week of March, we are ultimately going to 1450 in SPX. Any dip therefore is a buying opportunity. Question in my mind was about the degree of correction and after today’s price action we can be sure that it will not be much. Even 1380 would be lucky.  The following is from Uempel.

Today’s price action has pushed NYMO in positive territory from where a small correction can be started.

Why am I still looking for a small correction now? Among other things, seasonality. The following table is from Stock Trader’s Almanac.

So a correction in the range of 2-3% is in order.

Also, with the blow of the top rally due in April, markets cannot run higher when they are already extended. Therefore some profit taking before the quarter end is in order. That will also shake out the weak hands.

Will today’s high be considered a valid breakout?
Probably not but what does it matter. It is still a high and we are still looking for higher high. Already folks are talking about 1500 SPX by mid-April and everyone is getting giddy with excitement. So a little lesson in history is in order. The following is a chart from Chris Kimble which is self explanatory.

I am not suggesting that we have reached that stage and we may well renew the upward journey after summer but right now the market moves do seem parabolic. Let us see what tomorrow brings.

Thank you for reading . Please forward it to your friends and join me in Twitter for live market commentary. (@BBFinanceblog). 

Saturday, March 24, 2012

Free Fall Week Coming Up.

I told you so. They will somehow pain it green. And they did after the markets were down for better part of the morning. I also said that it will try 1400 again and fail it that attempt.  For the next part of the call we will have to wait till next week.

The market action of Friday confirmed two things. First, the uptrend has lost some of its mojo and a correction, however shallow is on us. Secondly, the correction will be very shallow, may be up to 1370 level before the blow off the top rally starts. Honestly, a 30 point correction is not a correction at all but sorry bears, that’s all you are going to get for now.

Many of the hedge funds have sit out of this rally and at this late stage of the rally they are thinking of joining the party.  I myself did not believe in the rally and have missed out a good 100 points which was there for taking.  One of the Fed’s regional head is also saying that there are lots of money sitting outside. The BOYZ know this and will do everything to bring that money on the table.  As such, every dip will be bought and some more.

This is called greater fool theory. We buy shares hoping that there will be another fool out there who will buy that rotten potato from us at still higher price. Till the music stops.  That is the nature of retail investing when people buy high and sell low.

But if the share prices keep going up on their own, then there will be no free money for the TBTF banks. Government will not buy their toxic assets like MBS and give them free money. So they will have to create panic. And they know that if they are able to create panic even for a short while in an election year, Obama will do anything in his power to lift the stock market up. There is no recovery anywhere! Stock price going up has nothing to do with unemployment rate of BLS. As per Gallop poll, who does that actual polling, the unemployment rate is well over 9%. Against all the hoopla that Europe has been saved, the fact is it has not been saved. Spain is daring ECB. We are seeing parabolic moves at different levels which is a pre cursor of the end game. As I have been writing, it is all a question of timing.

The TA is not a very useful tool in such manipulated market. There has to be a combination of many things but a clear understanding of the manipulation will surely help.  By the grace of God, so far my calls on the market have been correct except one, where I gave more weighted to TA over manipulation. That was a mistake and lesson learned.

Coming back to market, I expect Monday to be range bound with major damage being in the next 3 days. I plan to go long on Friday, 30th March for the blow off the top rally. I have been waiting on the sideline for a while for this opportunity. But this is not real and not for keeps. We will be running with the hares and hunting with the hounds.

Nothing much changed in the latest COT report. Commercials are still long EURO and JPY. That just re-confirms my theory of timing model. The trend is still up and dips are buying opportunity. So be nimble and play it safe.

Thank you for reading . Please forward it to your friends and join me in Twitter for live market commentary. (@BBFinanceblog). 

Thursday, March 22, 2012

Time To Get Real?

The FED’s PPT (plunge protection team) came out to talk the market up in the last hour of the trading. The Fed’s Evans gave a statement that more accommodation would be appropriate and the dogs of war started salivating. Do they think people are blind and do not notice anything? However, 3 days of red is kind of abnormal in this day and age. So for tomorrow they have confiscated all non green colours and only colour available in the market for tomorrow is green.  They will make their best efforts to paint the market green tomorrow. No wonder Ireland has made Obama an honorary Irish.  But with momentum down, it will be a difficult task. Difficult but not impossible. They may have to be satisfied with few points up before the plunge begins again next week or at least a short squeeze in morning.

I wrote last night that I would not be surprised to see a decent size sell-off and we got one. However I am not totally satisfied because it was not even a 1% drop. All that may well change next week.

The other news was the washout in TVIX.  It is a derivative of a derivative and CS has made it a closed ended ETF. I understand that they have now stopped supporting it. You may read more about TVIX here: What You Need to Know About the TVIX Freeze | Outside The Box Blog | Schaeffer's Investment Research

The following is a quarterly chart of Apple.

It reminds me of the tulip bubble. I have no words to describe it and staying far away from Apple. By the way, does anyone remember Qualcomm in the year 1999? I would like to quote from Phil Davis:
The bull case is all about recovery, which we're just not seeing on a global basis (and even the U.S. is debatable) and INFLATION. Inflation I consider a good reason to bet AAPL can go to $1,000 - because $1,000 is how much a new IPhone will cost once inflation takes hold and it's very likely it will take hold as the supply of money, worldwide, is through the roof - up over 100% since 2007. The problem is that money is not moving (no velocity) so the economy is not growing. Until we see the money move through the broad economy (wage increases, interest rates rising), we're not going to have inflation that sticks because the consumer is out of money.

However, short term trading and fundamentals are far removed. Although the market will eventually catch up with the fundamentals, the rigging and fixing game will continue at its own pace. We might as well go with the greater fool theory and hope that someone out there will buy the stock which we are holding now.

Coming back to the market, there is good bit of support between 1392 and 1390. Tomorrow it may try to break above 1400 again and a failure will start a cascade downward. For that I think we will have to wait till next week. I have been writing for past many days that cycle shows some weakness in the last week of March and that is consistent with seasonality.  

Thank you for reading . Please forward it to your friends and join me in Twitter for live market commentary. (@BBFinanceblog). 

Music Empowering Women

I still remembered the recent talk show section in BFM which focused on why women aren't climbing the corporate ladder more successfully. The world has never been treating women nowhere near fair since the beginning of time. Just pluck any cross section from historic times. We have made strides over the past 100 years or so but oh, we still are so far from being "fair".

In the corporate world, much has been said about women being represented in the board rooms and top management. The US being a much touted place for equality, and even Australia, are still poorly represented in those areas.

Do we dare to say women are not as capable? I don't think so. Look at the academic results for the past 20 years, given a fair go, women generally outperform men. Maybe success and a career in the corporate world requires more than just academic excellence, for sure actually. Leadership skills, charisma, interpersonal skills,  soft skills, high EQ, ambition, resilience of character, risk taking ability ... while most of those may "favour men" in their "natural makeup", it is not absolute.

The burden for women when it comes to child bearing, family, birth control, victims of sexual discrimination and abuse, etc... is for all to see. For a woman to make it to the same position as a man demands even more "productivity", perseverance and intelligence from them. Luckily for many women, that is not too difficult because men are generally assholes, yes, especially in the corporate world of chumminess, scratch my back - I scratch yours, old school ties, collusive behaviour, etc..

Sadly, the same can be said for women in relationships. Many are still locked in a time warp. Taking charge, knowing your worth as a person, self actualisation, being responsible for your own happiness ... are important objectives for a well functioning person of any gender. To rely on men to "open up" the boundaries for women is too passive. Too many women still play the role of "victims", docile in too many ways that represses the character. Too reliant on the other party for one's happiness and well being.

Equality for the sake of equality is hollow an ideal. Equality because we know its the right thing to do, because we are different yet the same, respecting the soul and integrity of a person ... then that means the world.

There are wonderful songs about empowering women (no, not I've Never Been To Me ... which is very much the exact opposite to what I have been writing):

Lesley Gore's "You Don't Own Me" back in 1964 says so much ...

Burt Bacharach's wonderful song sung resolutely by Dionne Warwick in 1963. "Don't Make Me Over".

What a song title by Meredith Brooks, all about the angst of being a female, in the roles of a girlfriend, mother, wife, daughter, lover.

Tori Amos' Silent All These Years, a thinking woman's empowering song, note the gut wrenching lyrics.

Excuse me but can I be you for a while
My dog won't bite if you sit real still
I got the anti-Christ in the kitchen yellin' at me again
Yeah I can hear that
Been saved again by the garbage truck
I got something to say you know
But nothing comes
Yes I know what you think of me
You never shut-up
Yeah I can hear that

But what if I'm a mermaid
In these jeans of his
With her name still on it
Hey but I don't care
Cause sometimes
I said sometimes
I hear my voice
And it's been here
Silent All These Years

So you found a girl
Who thinks really deep thougts
What's so amazing about really deep thoughts
Boy you best pray that I bleed real soon
How's that thought for you
My scream got lost in a paper cup
You think there's a heaven
Where some screams have gone
I got 25 bucks and a cracker
Do you think it's enough
To get us there

Cause what if I'm a mermaid
In these jeans of his
With her name still on it
Hey but I don't care
Cause sometimes
I said sometimes
I hear my voice
And it's been here
Silent All These...

Years go by
Will I still be waiting
For somebody else to understand
Years go by
If I'm stripped of my beauty
And the orange clouds
Raining in head
Years go by
Will I choke on my tears
Till finally there is nothing left
One more casualty
You know we're too easy Easy Easy

Well I love the way we communicate
Your eyes focus on my funny lip shape
Let's hear what you think of me now
But baby don't look up
The sky is falling
Your mother shows up in a nasty dress
It's your turn now to stand where I stand
Everybody lookin' at you here
Take hold of my hand
Yeah I can hear them

But what if I'm a mermaid
In these jeans of his
With her name still on it
Hey but I don't care
Cause sometimes
I said sometimes
I hear my voice [x3]

For pure fun, Shania's "Man! I Feel Like A Woman!". Nuff said.

Wednesday, March 21, 2012

Is it Legal?

Is it legal to have two consecutive red days? We have to check the by-laws of NYSE and read the web site of the FED. It might be against the mandate.  But here we are. We had a bit of a squeeze in between. I was expecting a range bound day with slight up close. But it was a range bound day with small loss.  Like I said yesterday, earlier, the dip would have been bought and some more. The market does look tired.

I have borrowed a chart from ZH for whatever it is worth.
While I am sure rather confident that we will reach around 1450 in SPX by mid-April and the above chart is ultimately meaningless, it is relevant at this point of time. Short term cycles are calling for some weakness by the last week of March and that call is consistent with the seasonality factors as well. I would not be surprised to see a decent sized sell off tomorrow although Thursdays have been most bullish days since October 2011. This pull back will be short and possibly not too deep and a buying opportunity for the last pop.

For the 2nd day in a row, bonds were higher.
As you can see it is recovering from deep oversold level and has some good space to run. That again is consistent with the call for correction in equities.

While Euro was unable to break above the H&S level, US $ is making preparation for breaking its H&S range.
When that happens, it will cause some damage to the risk assets. I expect that to happen soon. On the other hand NZD fell hard after US close as traders were disappointed with NZ growth data. Will the algos follow the NZ $ tomorrow? Both the 2 HR and 4 HR comparison with NZD/JPY and SPX shows that SPX has lots of room to come down.
This is not an exact science and it does not always follow the same path. But seeing that the correlation has worked well in the recent past, we can only expect it to follow suit in future. More so when cycle and seasonality and liquidity in the market seem to agree.

Next few days are going to be important and will define how the market is going to behave in April.

Thank you for reading . Please forward it / re-tweet to your friends and ask your friends to join me in Twitter. (@BBFinanceblog).

Tuesday, March 20, 2012

Beautiful H&S in EURO

You can see the beautiful almost text book H&S formation in Euro. If Euro breaks above 1.33 then the stock market correction will be very mute. If it fails to break above 1.33 and drops below, then we have a good show coming up. Depending on which side of the fence you are, you may want to keep the fingers crossed!

Shifting Grounds.

Today was an example as to why everything has to line up together before we can take a trade. That way we can reduce the risk. The important word here is REDUCE. We can never eliminate risk is trading and there is no system in world which can guarantee you risk free trading. Let us start with a closer look at SPX 15 minutes.

The chart may look complex but actually there are two BB. The outside one in red colour is in 3 standard deviation. The one next to it is BB with 2 standard deviation which is our regular BB. Then we have two moving averages, fast and slow.
The continuous push higher has stretched the prices beyond the rule of physics. If history is any guide, whenever price has moved away over 5% from the 50 DMA, it has reversed to the mean quickly thereafter.  The red BB which is 3 SD from mean acts as the outer limit. When price push that limit, either up or down, price will correct shortly thereafter.

You can see that SPX has been pushing the outer limit (red BB) and is now time to revert to mean. Mean today stands at 1344. Will we see that correction? If and when it comes, will it mean that the up-trend is over?  Possibly yes and no. However, if the correction has to come, it has to be fast and furious. There has to be a 70-90 point correction in three days or so. A gentle correction will not do. That was the reason I did not take the short trade today although the hourly reversal was triggered at 1405.

Let us take a look at VIX.
It seems VIX has formed a bottom of sorts as of now. Can it go down further? Of course it can and it will. But not yet. In case of VIX, price has touched the lower outer limit (lower red BB) and here also it will revert to mean.

As I wrote yesterday, US $ index have staged a reversal after 3 days. I expect it to test earlier high of 81.50 in the next 7/ 10 days.
The difference in price action today was the way it covered the morning dip. From my perspective, today the rebound in the afternoon was not strong. Earlier, the dip buyers would cover any morning dip and some more. Today was one of those rare days when everything ended in red. Therefore I feel a kind of tiredness and exhaustion.  Also, the Demark sell set up is supposed to trigger tomorrow.

I think the market may be up tomorrow, at least in the morning when they will squeeze the fresh bears and then we might see long anticipated sell starting Thursday.

However at this point this is just a speculation and the trend is still up. The point of highlighting this possible correction is not to short in advance but to stay away from new long set ups and have a very tight stop.

Thank you for reading . Please forward it to your friends and join me in Twitter for live market commentary. (@BBFinanceblog). 

Monday, March 19, 2012

Chart Of The Year

I have always had the same chart, only instead of level of income, I had the level of development of each country. The less developed would see more corruption and so on. The chart below says the same thing but on matters that speaks clearer to us. You want to know how to get higher income per capital (i.e. the average annual income per person for that country)... yes, less corruption.

To be fair, there are a few discussion points to the above chart. Indonesia for example has an abnormally large number of islands and people living in secluded areas which may be difficult to reach or partake of the general business economic activity. They may be classified as self sustaining farmers at best, people really living off the land and sea. Hence when you average them out as well, Indonesia's real figure should be a lot higher. Same goes for China. 

To be fair, corruption exists in every country, its the level of pervasiveness and the relative amount of leakages. We know that Taiwan and Korea are not very clean as well, the ties between the triads and government officials in Taiwan is well known, the unusually cozy relationships between major corporate figures and the Korean government is also well documented.

We cannot be too optimistic that eradication of corruption can be done in 10 years or even 20. I mean HK took at least 20 years and Singapore needed a heavy handed treatment for a very long time. Hence even if we do effect a change in government in the next elections, safe to say its just baby steps, but at least we must move forward.

This makes Malaysia's position even more untenable. Except for HK, I believe Malaysia's per capita income was higher than Korea, Singapore, Taiwan some 35 years ago ... vellapan ... do we need to ask why, we all know why. That is why when I hear politicians championing how good Malaysia's growth had been  for the last 20 years ... we have actually been grossly underperforming.

Deja Vu?

Once again, let me start with some of my morning tweets:

·         GM all. I don't have much of an upside target but may test 1410. Haven't seen any downside trigger yet. SPX hourly reversal at 1395
·         Retest of overnight high in ES failed. But also a small double bottom. lets just wait and watch which way it goes. No rush to front run.
·         Selling or shorting here would be dumb. At least we should see the hourly reversal.

That hourly reversal now stands at 1404. The daily reversal is at 1375 and long term monthly reversal is at 1320. So till 1320 is taken out we are still in an uptrend. Take that. I would expect almost everyone to be numb by now and resigned to never ending up move. Already we see talks of SPX 1600 and beyond!
But I think we are now entering in a correction zone.  The next few days may bear me out. I would expect between 3-5% corrections by the end of the month. However such a correction will definitely be a buy opportunity.  Precious metals continue on a sell signal and we may have to wait till Mid-April for a decent tradable bottom. Euro is making an inverse H&S and we may see a bounce upto 1.33. The AUD/USD and SPX correlation has now been replaced by NZD/JPY and SPX.
 This is a classic example as to how old correlations break down and new are formed. 

US $ index lost 3 days in a row but we may see a rebound from here.
 A lower close will give a sell signal and considering the total market, we are not ready for the blast off rally yet. May be next month.

As you can see, more often than not, it pays to follow the unbiased and uncluttered market analysis. I would be wrong from time to time but I have now incorporated the trend following algorithms with my other parameters which should reduce the whipsaw and will prevent front running.  No economic analysis or complex charts based on TA or EW. Pure trading and investing guidelines which works.

You may incorporate these signals with your methodology and see the results yourself. So pass it on to your friends and family who might be interested in stock market. And do follow me in twitter  (@BBFinanceblog) as you will find it useful. Thanks for reading