Thursday, May 5, 2011

Post Steroids?

I was poking around some charts the last couple of days, not that any of them are of much use anymore. So many patterns have been blown up, what with, QE 1, QE 2, errr ahhh QE 3, high frequency trading, Big 5 front running, expert networks etc. who knows what else. What was that phrase again from Jeff Macke, oh yeah, "the market is in stupid phase but you can make a lot of money during stupid". Funny how he didn't mention how you can get your clock cleaned during stupid. Maybe it was just an oversight on his part. Would one really expect anything less from a paper pusher like this?

Given all the market interventions and machinations by the all-knowing, high priests of the money temple and the influence said interventions have on the Pavlovian parking valet attendants at the helm of institutional money world wide we get similar market results that say a body builder with steroid enhancements might experience. Say, maybe like this.

Forget the legal or not aspect of the 'roids' the fact remains result is Mr. Olympia 7 times and a market doubling off the lows. It would behove us to remember these are short term enhancements and they can not and will not go on indefinitely. At some point the laws of human anatomy or monetary physics will set in. The math as they say never lies. People do. These machinations will end when they end and of course reality will set back. Post steroidal. Say, maybe like this.

Something to consider while the pundits extoll the virtues of this cheap market and you are scheming ways to make a lot of money during stupid.

While poking around the charts one I came across was the GDX. Been thinking some about how the pm stocks have been lagging the bullion (negative divergence). I believe the longer term views weekly and monthly are still more reliable so lets have a look at the weekly on the GDX (below).

We are out of the pink channel now which implies a target of about 50 which would break the midpoint of the double top (??) at 52.5 which would then imply a target of about 41.

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