Wake Up and Smell The Coffee

[Last Update for week]

US/European and perhaps most major stock markets are being manipulated and dominated by the programed trading of HFT, and/or the computers at major investment institutions they front run

Investors, are just being played for suckers.

Sheeple who blindly munch on the grass and then get fleeced.

Case in point –  Dow jumps almost 400 points in last 45 minutes on a FT news report of a European bailout plan #66 (you pick a number). 400 Dow points higher in 45 minutes as the markets closed on some European ministers who had “no formal discussion” but were “looking at” a plan “that was still under discussion”

What you saw was a short squeeze by High Frequency Traders and professionals that played oversold investors for suckers. The pro’s got squeezed and the HFT’s pumped up the volume. They do this obviously to make $$$$$$$$$.  What used to be standard investors who use technical and fundamental analysis got played for suckers.

Those that use the black box computer algorithms on everything from news items to imbalances in trading are simply playing everyone else as Sheeple waiting to get fleeced and slaughter.


_________________________


What To DO

Step #1Recognize what’s happening

The below chart is from ETF Digest by David Fry.

SPY 5 MINUTE

  • In 45 minutes HFT’s can move the Dow 400 points and over days/a week they are able to move  the Dow at least 1000 points and probably even higher.
  • HFT’s can play with any individual stock or sector by adding volume to a move in either direction.
  • Over longer periods of time (week+) fundamentals do seem to matter, but that’s after the damage has been done.

________________________


Step #2A course of action

Investors411 has developed a course of action to predict when the HFT’s will move the markets and in what direction. When markets get too oversold or overbought the HFT’s almost always swing stocks violently (big moves) in the other direction.

Investors411 looks at the overall conditions of the markets (MO), the playground of HFT’s (PCR) and some simple technical analysis to predict what will happen.

Investors411 – Technical Forecasting Tools.

Today’s #s

  • The PCR fell to +1.20 (Roughly - above 1.25 is getting Bullish and below 0.80 is getting Bearish. 1.00 = same amount of puts and calls. Over last two years the highest for PCR is @1.50 and lowest @0.60 - anything approach these levels shows change is likely. For more information on PCR LINK) Two day just above 1.25, and one just below at 1.20. Now  = Neutral

The McClellan Oscillator (#1 forecasting tool)

  • (MO) fell  to -33.53 (Rough estimates =-30 somewhat oversold, -60 oversold, -90 OMG oversold & +30 somewhat overbought, +60 overbought and +90 OMG overbought) Now = Neutral/Bullish

__________________________


Step #3 Reading- The Tea Leaves

Investors411 looks for when conditions are ripe for HFT’s to take a story (no matter how insignificant) and run with it.

From Yesterday’s blog when we had both a lower MO and higher PCR -

“Both Forecasting Tools are starting to turn Bullish. Neutral still dominates, but another major hit would get us below -80 on the MO and close to OMG oversold levels. So for those that can tolerate the risk, if another major meltdown occurs today, you have a short term risk on (long) trade.

We had that meltdown (Dow down @250)  and Investors411 accurately read the Tea Leaves (predicted an impending top or bottom) with a “Risk On” trade -

For The Third Time in Row.

Furthermore, over the course of a year by using simple technical analysis and the MO Investors has a very accurate measurement in predicting shorter term highs and lows.

Today there is a weak bullish bias. Far too weak to make a definitive call in either direction.

_________________________

_________________________

Slightly revised Same old mantraMay 20th & Sept 22 downgrades still stand. Obviously we did NOT have a confirmation of the bearish trend because of the major rally/reversal.

Add to this Europe’s problems, Japan’s disaster, China’s slowdown, a rising dollar (bad for globalized US companies), & our broken opaque financial system.  Best hope for a significant move higher is the Fed to act significantly – inject more liquidity or Europe to come to some clear final resolution instead of kicking the can down the road.

Long Term Outlook

(for US stocks only – not our economy)

CAUTIOUSLY BEARISH*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE



  • Share/Save/Bookmark