After a crazy week of violent up and down intraday action we focus on some of the most important information of the week. First off the Federal reserve desired to decrease(taper) their monthly open market bond purchases to 65billion, lowering for second time from the original 85billion. Keep in mind that this is just a decrease in amount they r continuing to buy, not an actual sale of the trillions of dollars they already have positioned on their balance sheet. Next we see confirmation of our thesis that the US economy slowed drastically in the biggest retail season of year with Walmart (WMT) & MasterCard (MA) delivering dismal updates. We also need to point out that with all the selling of equities this past few weeks, we still are holding price support levels similar to those of 2013. As we all already know we saw new All Time High(ATH) rallys off of these bases last year, so respect warranted to the trend continuing until we get confirmation otherwise. With computers algorithms controlling the direction of all of todays asset markets, we need to get a good understanding of how they work. Most of these big trading systems are built on technical analysis, reading chart data by the millisecond. To get a sense of what they can do we must accept that these computers do NOT trade on emotion, as most humans do, they are programmed to take advantage of human emotion & irrational trading from misguided trading programs. Its kind of like bookmaking, when the majority of the activity is concentrated to either the buy or sell side, the computers use their seemingly infinite leveraging capabilities to take the other side of the trade. In essence we can say that they are programmed for big $$$$ opportunities, and they take advantage of them all. The days of this long toothed & extremely excessive Fed induced rally are numbered, because reality will take over and these same computer systems that left many with jaw dropped throughout this historical rally will trip the other way & it will seem like endless bouts of selling barraging the markets in an instant!! The powers that be have still not learned the investment 101 lessons that can NOT overly manipulate any asset without massive repercussions, as we saw most recently in 00 & 08-09, and without the uptick rule in place the markets will be vulnerable to 08-09 like asset crashes. We will elaborate more on the uptick rule and why it is the most important tool in trying to keep asset prices from just collapsing, tomorrow. Please let us know if there is anything specific you would like us to elaborate on and we will do our best to explain to the best of our knowledge. We are here to help open eyes with the knowledge we have been Blessed with in an attempt to help others prepare for the looming swift economic slowdown and coinciding major asset correction fastly approaching. Until tomorrow, Good luck & God Bless!!
Posted on: Sat, 01 Feb 2014 02:29:42 +0000
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