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Michael Clark
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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
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Clark's Gate Timing System ©
  • 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 for Trades for  
        Friday THURS  
        3-Aug 2-Aug  
             
    TRADING SYSTEM T11D Sunmarry 10/Zero  
    (Intermediate-Term)      
    SYMBOL CLOSE Today Yesterday Company
             
    ARX 5.84 Enter Short   Aeroflex Holdings
    AXPW 0.302 Enter Long   AXION
    BMI * 32.99 Enter Short   Badger Meter
    DTO * 49.71 Enter Long   Short (Double Short) Oil
    GG 35.48   Enter Long Gold Corp
    KGJI 1.51 Enter Short   Kinggold Jewelry
    TTI 6.45 Enter Short   Tetra Technologies
    VMC 36.9 Enter Short   Vulcan Materials
             
    * See chart        
             
    TRADING SYSTEM M2F ALT    
    (Short-Term)      
    SYMBOL CLOSE Today Yesterday Company
             
    ^HUI 400.466 Exit Short   Gold Stock Index Daily
    ^XAU 147.73 Exit Short   Philadelphia Gold and Silver Index Daily
    ADBE 30.58 Exit Short   Adobe Daily
    AMTD 15.37 Exit Short   Ameritrade Corp
    BZF 18.38 Exit Short   Brazilian Real long currency
    CCU 62.4 Exit Short   Compania Cerveceria S.A.
    COW 28.27 Exit Short   Livestock ETF
    CTSH 56.28 Exit Short   Cognizant Tech Solutions
    EL 50.88 Exit Short   Estee Lauder
    GDXJ 19.02 Exit Short   Gold Junior Minors ETF Daily
    GLD 154.13 Exit Short   SPDER Gold Shares
    IAU 15.47 Exit Short   Gold Daily
    NKE 92.54 Exit Short   Nike Daily
    PG 63.51 Exit Short   Proctor and Gamble Daily
    INRRUB=X 0.585 Enter Short   Indian Rupee/Russian Ruble
    QRM 1.3   Enter Long Quest Rare Metals
    ^DJT 4,984.15 Enter Long   Dow Jones Transport Index
    ^RUT 768.6 Enter Long   Russell SMall Cap Index Daily
    AFG 36.58 Enter Long   American Financial Group
    AKAM 34.69 Enter Long   Akamai
    AXPW 0.302 Enter Long   AXION
    BAL 46.73 Enter Long   Cotton ETF
    CYTX 2.43 Enter Long   Cytori Therapeutics
    FISV 68.19 Enter Long   Fiserve Inc
    FXB 153.61 Enter Long   British Pound ETF
    GG 35.48 Enter Long   Gold Corp
    HMY 9.72 Enter Long   Homestake Mining
    INTL 18.4 Enter Long   Intl Assets Hold Co.
    IO 6.48 Enter Long   Ion corp
    KGN 2.96 Enter Long   Keegan Resources Gold
    LLL 68.58 Enter Long   L3 Communications
    MUB 111.55 Enter Long   I-Shares Muni Bond Index
    PDLI 6.68 Enter Long   Protein Design Labs
    PHM 11.57 Enter Long   PULTE GROUP HOUSING
    XRT 58.03 Enter Long   Retailers ETF
    DGZ 12.51 Exit Long   Short Gold ETF Daily
             
             
    * See chart        
             
    TRADING SYSTEM ChartMeter    
    (Intermediate-Term)      
    SYMBOL CLOSE Today Yesterday Company
             
    AOBI 0.39 Enter Long   American Oriental Bioengineering
    BCRX 4.3   Exit Long BioCryst Pharmaceuticals
    COW 28.27 Enter Short   Livestock ETF
    FST 6.33 Enter Short   FOREST OIL
    GBPCNY=X 9.881   Enter Short British Pound/Chinese Yuan
    ICN 19.87 Enter Short   Indian Ruppee ETF
    ITMSF 0.142   Enter Long Intermap Technologies
    JOY 48.77 Enter Short   Joy Global Machinery
    LD 44.66 Enter Short   Lead ETF
    LULU 54.48   Enter Short Lululemon
    VXX 13.03 Enter Short   VIX ETF
             
    * See chart        

    (click to enlarge)

    (click to enlarge)

    Michael J. Clark, Hanoi, Vietnam

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