If you're a regular reader of Emini-Watch you'll know I have a Short bias – I'm always trying to call tops. We made a new high this week and the market rally from the 666 ("Number of the Beast") low is now a year old. And frankly – I'm amazed, no staggered.
I hate this rally. I think it's based on lies. And this week's revelations of what Lehman Brothers was up to shows the depths to which (some) CEOs, Company Executives and Board members are willing to go to get their salaries and bonuses.
This is not just "shenanigans" – as Brad Hintz, former Lehman CFO, described it – this is fraud and we, the investing public, are being lied to.
What is most distressing is that this is not just one public company and it's auditor, as with Enron and Arthur Andersen. This has become systemic:
- FASB (Financial Accounting Standards Board): Spineless. Allowed banks to "mark to fantasy" instead of "mark to market". A nudge of political pressure and these guys buckled. I hope to God they're not in my platoon when we have to take the hill.
- Accounting Firms: They know who pays the bill. They don't work for you and me, the investing public. They work for the people they're supposed to audit – leaving the lunatics to run the asylum. Genius.
- Ratings Agencies: Talk about public humiliation of a "profession". Why would I believe a word these guys say any more? My advice – get a gun, slink away to a quiet office somewhere at the back and do us all a favor. Oh and don't forget the plastic sheeting, let's save the carpet at least.
- Federal Reserve Bank of New York: As Tim Geithner, former FRBNY President, famously said "I am not a regulator". Images of the Elephant Man and John Hurt slobbering "I am not an animal – I am a human being" play in my head. Yes, silly us. We thought the FRBNY worked for us – of course they work for the Banks, our mistake.
- Ayn Rand: Or is that Alan Greenspan? Wearing my Avatar 3-D glasses they look strikingly similar. Loved the books but who in their right mind would use "Atlas Shrugged" to determine economic policy? "Rational self-interest", please, let's call a spade a spade and greed, greed.
And again I have to ask – where is the outrage? Is the general public so consumed with keeping their jobs, paying their mortgage and the latest "cool" iPhone app that they don't have time to understand the issues and demand action?
To me, it feels like we're at a magic show. The crafty magician brings out his scantily clad assistant with long legs and womanly curves to distract you while he tricks you in front of your very eyes.
Why are we talking about Healthcare reform? Why are we focussed on Greece (a country with a population of 11 million people, half the size of Australia)? and Iceland? Why are there no movies or Oscar speeches about the GFC? Tiger Woods, Lady Gaga, etc. Take a look at this shiny trinket while I steal your wallet.
OK, on to the charts.
TRIN Indicator Turns Down (Emini daily)
TRIN indicator turned down on Friday. Smart Money oscillator turned down a couple of days again. Put Call Ratio oscillator at +196.
TRIN Indicator Systems (Emini daily)
Turn down in the TRIN indicator signaled to take profits on our TRIN systems Long trade. 32 points profits – surprise for me. Actual exit will be in the after-market.
TRIN Indicator System Equity Curve
These systems are "example" systems – that is, designed to show what is possible with the TRIN oscillator. There are no stops or money management built-in. But we're making new equity highs and it shows the robustness and lack of optimization.
TRIN Indicator System Performance
Again, just example systems but I like the balanced results from Long and Short trades. Similar profit factor, similar number of trades, similar average trade profit.
Commitment of Traders
Lastly, the Commitment of Traders chart. Professionals net Long with 2.1% of total open interest. And Oscillator has reached +112, over-bought but yet to turn down.
Good luck with your Emini trading this week and thank you for indulging my personal rant.
And Some Reader Comments …
“You are dead on … we're in a 'Bullshit' rally.” Bob H.
“Can't help but agree … now what we need is to get you a spot on NBC or CNN 🙂 … Love your site!” Vaden H.
“It breaks my heart to know that every last word is absolutely the truth.” Robert G.
“That was great! I agree 200% … Corruption will continue because of the investing public's insatiable demand for quick profits … This recent run certainly lacks reason.” Alvin K.
“As rants go I'd give that one an A+ … It was precise without leaving any of the principles unscathed yet there was no repetition or embellishment … Good job.” John R.
“I loved your rant and agree with you 100%.” Bill W.
“I think many of us who look forward to your guidance and writings are all on the same page. But unfortunately with many happy to turn a blind eye to the truth and the majority ignorant of it we can only trade what we see and try to be emotionally removed. But what you say is true and greed is a strong motivator.” Paul M.
“I agree with your comments. It's nice to know that I'm not the only one.” Ken O.
“Your comments are very timely. But just to add gasoline to the fire … you forgot the SEC. Thanks, as always for your insightful stuff.” Tom W.
“I think Ayn Rand would have said pretty much what you have said. But don't make the mistake of letting Greenspan speak for her; she clearly would have repudiated him decades ago. And he has been busy repudiating his former philosophy and evading his own responsibility for the destruction.” Bill S.
“I loved the rant and couldn't agree more … I'm of the belief that the whole market is a scam. It's not intended for the public to make a profit, it's intended for the insiders to take our money … Behind closed doors they probably laugh their asses off about how stupid we are.” David
“Well said Barry. Glad to see someone has the 'kahunas'[sic] to actually say it in a public forum … I once believed in a Government that for the most part could be trusted. Obviously that is no longer the case.” Mike S.
