Seeking Alpha

Michael Clark's  Instablog

Michael Clark
Send Message
Michael J. Clark was born and raised in Sinclair, Wyoming. He is a poet, novelist, artist, historian, and market analyst. His fine arts portfolio can be found at the following address: http://www.hoalantrangallery.com/MJC2.htm His writing portfolio can be found at:... More
My company:
Clark's Gate Timing System ©
My book:
TURN OUT THE LIGHTS
  • MORE DOWNSIDE MOMENTUM: WATCH THE U.S. DOLLAR. SHORT BMI; LONG DTO (DOUBLE SHORT OIL ETF) 0 comments
    Aug 3, 2012 12:27 AM

    Ok: short and simple. Momentum is still down. Mario Draghi is a paper tiger: all hot air and bravado; another European gasbag. He can't buy bonds. It's against German law for Merkel to agree with bond buying. Even if he could buy bonds, like Bernanke did, this solves nothing. It merely adds debt to a mountain of debt -- and debt IS the problem. The high cost of Spanish debt is a way the market says Spain has too much debt-risk. Having EU citizens now buy overpriced Spanish debt resolves nothing, it only adds more risk to the system, while pretending to buy more time, until that miracle 'growth' component arrives to stimulate the economies of the world so they can grow their way out of debt. However, DEBT IS ANTI-GROWTH. Debt must be destroyed, on a grand scale, on the same grand scale that debt was assumed, before growth can return.

    Only deflation and debt struction (Austrian Austerity) solves the problem. Higher interest rates help solve the problem -- Austerity hurts, yes. We all enjoyed the party. We didn't pay for the party with our own money. That was the mistake. We borrowed 'future-money' to pay for the party. What hurts is that we now have to pay back our creditors, or default on the loads -- and this at a time when the global economy is hurtling into a black hole.

    Austerity is the pain. This pain is the cure. The Crisis cannot be fixed by some monetary hocus-pocus. It can't be wished away. In this case, as Jim Morrison wrote and sang so explicitly thirty years ago: "You cannot petition the Lord with prayer". Denial is not going to work.

    The EU Crisis, like bank deregulation, was a bad idea, based in and colored by human greed. The only solution to the EU Crisis is the abandonment of the EU and the Euro, and a return to separate national currencies. One currency cannot serve many economies and many peoples without creating imbalances that surface during economic contractions. Such economic contractions ARE NOT abberations. They happen like clockwork: every 36 years a contraction starts and lasts for 18 years. Debts don't seem to matter as long as the economy is expanding and inflation is expanding incomes and asset prices. But debts do matter -- I'm speaking mainly of PRIVATE DEBT, the kind that makes the banks so rich, at first, and then, after the contraction starts, makes these banks and bankers the great white whale in the room no one wants to mention.

    If ALL the EU countries are willing to sacrifice their sovereignty to unelected bureaucrats in Brussels, so they can keep their attachment to the Euro, then they might be able to solve this EU Crisis. Of course, this solution creates the next political crisis, as EU citizens realize they have given up their soverign democracies for the sake of easier accounting and loftier trade principles and freedom of travel.

    Once countries start willingly leaving the EU (the surplus nations I mean, Finland, maybe Germany also), then the EU is finished. The great divorce will gain speed and mometum quickly. As fast as the Soviet Union fell apart, so to will the EU break apart, another arbitrary collection of misalligned parts pulled together by good intentions.

    ***

    The markets have further selling ahead. Although you will note we do have some short-term buy signals below in our M2F Alt trading system -- so there could be a bounce for some stocks. We also closed some of our short positions in Facebook last night.

    Here are our three internnal momentum charts:

    Keep an eye on the US Dollar. The attached updated chart shows the relationship (Inverse) between the Dollar and the SPX (S & P 500 Index, GSPC). When our M2F Alt indicator (second pane down, gray line) bottoms for the USDEUR stocks top. This seems to be indicating we will have more selling for the next few days.

    (click to enlarge)

    Support is at 1329.24 on the SPX. If this breaks, then the generally positive short-term up-channel of the SPX breaks, portending an end to the rally.

    TODAY'S TRADING SIGNALS

    Momentum is down; but we are getting trading buy signals from our short-term M2F Alt Trading System. We might get a bounce up in some stocks over the next few days.

    We still like short trades over long trades today and we would choose the shortsale of BMI and the long trade of DTO (Double Short Oil ETF) as our two most attractive new positions today.

      Trades forTrades for 
      FridayTHURS 
      3-Aug2-Aug 
         
    TRADING SYSTEM T11D Sunmarry 10/Zero 
    (Intermediate-Term)   
    SYMBOLCLOSETodayYesterdayCompany
         
    ARX5.84Enter Short Aeroflex Holdings
    AXPW0.302Enter Long AXION
    BMI *32.99Enter Short Badger Meter
    DTO *49.71Enter Long Short (Double Short) Oil
    GG35.48 Enter LongGold Corp
    KGJI1.51Enter Short Kinggold Jewelry
    TTI6.45Enter Short Tetra Technologies
    VMC36.9Enter Short Vulcan Materials
         
    * See chart    
         
    TRADING SYSTEM M2F ALT  
    (Short-Term)   
    SYMBOLCLOSETodayYesterdayCompany
         
    ^HUI400.466Exit Short Gold Stock Index Daily
    ^XAU147.73Exit Short Philadelphia Gold and Silver Index Daily
    ADBE30.58Exit Short Adobe Daily
    AMTD15.37Exit Short Ameritrade Corp
    BZF18.38Exit Short Brazilian Real long currency
    CCU62.4Exit Short Compania Cerveceria S.A.
    COW28.27Exit Short Livestock ETF
    CTSH56.28Exit Short Cognizant Tech Solutions
    EL50.88Exit Short Estee Lauder
    GDXJ19.02Exit Short Gold Junior Minors ETF Daily
    GLD154.13Exit Short SPDER Gold Shares
    IAU15.47Exit Short Gold Daily
    NKE92.54Exit Short Nike Daily
    PG63.51Exit Short Proctor and Gamble Daily
    INRRUB=X0.585Enter Short Indian Rupee/Russian Ruble
    QRM1.3 Enter LongQuest Rare Metals
    ^DJT4,984.15Enter Long Dow Jones Transport Index
    ^RUT768.6Enter Long Russell SMall Cap Index Daily
    AFG36.58Enter Long American Financial Group
    AKAM34.69Enter Long Akamai
    AXPW0.302Enter Long AXION
    BAL46.73Enter Long Cotton ETF
    CYTX2.43Enter Long Cytori Therapeutics
    FISV68.19Enter Long Fiserve Inc
    FXB153.61Enter Long British Pound ETF
    GG35.48Enter Long Gold Corp
    HMY9.72Enter Long Homestake Mining
    INTL18.4Enter Long Intl Assets Hold Co.
    IO6.48Enter Long Ion corp
    KGN2.96Enter Long Keegan Resources Gold
    LLL68.58Enter Long L3 Communications
    MUB111.55Enter Long I-Shares Muni Bond Index
    PDLI6.68Enter Long Protein Design Labs
    PHM11.57Enter Long PULTE GROUP HOUSING
    XRT58.03Enter Long Retailers ETF
    DGZ12.51Exit Long Short Gold ETF Daily
         
         
    * See chart    
         
    TRADING SYSTEM ChartMeter  
    (Intermediate-Term)   
    SYMBOLCLOSETodayYesterdayCompany
         
    AOBI0.39Enter Long American Oriental Bioengineering
    BCRX4.3 Exit LongBioCryst Pharmaceuticals
    COW28.27Enter Short Livestock ETF
    FST6.33Enter Short FOREST OIL
    GBPCNY=X9.881 Enter ShortBritish Pound/Chinese Yuan
    ICN19.87Enter Short Indian Ruppee ETF
    ITMSF0.142 Enter LongIntermap Technologies
    JOY48.77Enter Short Joy Global Machinery
    LD44.66Enter Short Lead ETF
    LULU54.48 Enter ShortLululemon
    VXX13.03Enter Short VIX ETF
         
    * See chart    

    (click to enlarge)

    (click to enlarge)

    Michael J. Clark, Hanoi, Vietnam

Back To Michael Clark's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.