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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • S N P - Demand, [Bernanke], Cannot Be Sustained As Is. 0 comments
    Jul 6, 2013 5:05 PM

    Saturday 6 July 2013

    If central planners were put in charge of managing the Mohave Desert,
    out West, it would eventually run out of sand. When central planners
    manage anything, they distort natural market forces, and that
    ultimately creates an exaggerated effect in the opposite direction.
    At some point, and now sooner rather than later, the Fed's [Bernanke]
    interference with the stock market is going to make the 2008 crash
    seem like a minor correction.

    There is one thing, and one thing only, driving the stock market, and
    that is debt. It is not new capital. It is not new investment in plants
    and machinery, the "old fashion" way of creating a sustained bull
    market. It is borrowed money, and the cost of cheap money is going
    to become dear. When that happens, the [overly] leverage factor is
    going to destroy everyone who is leveraged. This "party" to the
    upside will end, and when it does, those who chose to believe in the
    lies will suffer dire financial consequences.

    Friday's "positive" jobs "growth" is a lie, plain and simple. More and
    more Americans are leaving the work force, [not by choice], joining those who have already left, but are considered "invisible" by the
    Bureau of Lies and Statistics. More and more Americans receive some
    form of welfare from the Federal teat...Food stamps, an example of the
    government's latest "growth industry." Full-time jobs are disappearing; part-time jobs ascending, mostly all minimum wage, offering no health
    care. "Thank you, Obamacare."

    The government, on every level, is financial dead weight. Every cent
    spent by government comes from the public, and now, more so than
    ever, from deficit spending. Guess who is responsible for all deficit
    Read the 14th Amendment. With almost zero rates of
    interest, Congress has zero reason to exercise fiscal "responsibility."
    They do not care.

    Why mention all this? The charts are distorted, based on lies, just like
    those of gold and silver, where the COMEX has been used as a sledge-hammer against rising precious metal prices, the antithesis of fiat
    creation. The government hates anything that exposes its lies.
    Federal Reserve Notes are not dollars, not by law, and even according
    to their issuer, the Federal Reserve itself. Federal Reserve Notes,
    [FRN], are debt instruments.

    Here is a shocker for everyone: Debt cannot be money, yet almost
    everyone treats it as though it were money, believing in the lie. When presented with the truth, it is not believed because it goes against the lie, which is believed as true. Do not take our word for it. DYODD.
    [Do your own due diligence]. Cognitive dissonance reigns.

    We see the lies in the charts, and that is why the above lesson in
    reality was provided.

    Mention has been previously made that volume has been greater on
    declines, an indication of increasing seller activity. The addition of the dark channel lines show the weekly chart to be stronger than
    expected. The last swing high reached the upper supply channel, and
    the swing low of two weeks ago stayed well above the lower demand
    channel line, and also above recent lows from March and April, all
    appearances of underlying strength.

    The amount of time and price for the last swing lows are labeled. The
    current decline was similar in point value to the middle swing
    correction, but the decline accelerated in just half the time, an
    indication that sellers moved the market down with greater ease.

    Price has rallied to the upper supply line of the down channel, seen in
    more detail on the daily chart. We get to see the how of price
    approaching a potential resistance area on both time frames when the
    market opens on Monday, [Sunday evening].

    EPU W 6 Jul 13

    The LL and first LH are used to create the down channel. A line
    connects the high and the LH, extended lower into the future, the
    dashed portion, and a parallel line is drawn from the LL, extended into
    the future, also represented by the dash spaced portion. A new LL
    was formed at an oversold condition, and now price is retesting the
    upper channel.

    The dashed horizontal line off the wide-range bar down, in mid-June,
    usually offers some resistance, just not in this case. The ease of
    upward movement from the correction low of Thursday and continuing
    in Friday's rally would suggest a higher price on Monday.

    ESU D 6 Jul 13

    An intra day inspection of the wide-range bar from 19 June, on this 90
    minute chart, tells us price accelerated lower starting at 1638, and it
    can act as resistance on a retest, if price does go higher on Monday
    The high of the entire bar is labeled at 1646, just below the 1650 area
    swing high, and it, too, can be a potential resistance.

    The volume on the left hand side of the chart, as price was declining,
    is about twice the volume on the right hand side, as price rallied.
    There has been ample evidence of this out of line supply v demand
    activity in the past. This happens to show the disparity quite clearly.
    It is why this commentary began with the editorial caveat. No market
    can ignore the basic laws of nature without eventually succumbing to
    natural order.

    The lesser volume "demand" side comes from the Fed, injecting
    unlimited fiat into the market, overwhelming the natural inclination to
    sell. The forces of supply and demand remain distorted. Central
    planners can keep it that way longer than rational opposing forces can remain solvent, so sellers simply stay out of the way. They will have
    their day.

    Monday's activity can be telling for the immediate term as price goes
    into the obvious resistance areas, as shown on all three time frames.
    The daily and intra day time frames have been down, and a few
    attempts were made from the short side, resulting in small losses.

    If price weakens against support, expect a reversal to the downside.
    If price stays around the resistance area, its ability to hold is the
    market's way of telling us buys are absorbing the sellers, and price
    will continue higher. Plan accordingly.

    ESU 90m 6 Jul 13

    Themes: SnP, NAS, DOW, Stocks
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