Unlocking Strategic Position Trading Opportunities for Investors since 2003


Search Non-Subscriber Articles:
Search Subscriber-Only
Articles:
 ·  You are viewing this site as a non-subscriber
 ·  Home  ·  Mission Statement  ·  FAQ  ·  Disclaimer  ·  Site Map  ·  
Login
User Name

Password


Subscriber Services

Not a Subscriber yet?
Subscribe as a member and get access to all Subscriber''s Articles and Information!

Subscribe Now:


Signup Information
Lost Password
Account Inquiries


Sample Articles

· Let The Good Times Roll
· Do or Die
· The Truman Show
· The Taming of the Shrew
· Silver No Fly Zone
· The Liquidity Trap
· Welcome My Son - Revisited
· Peak Complexity and Impending Reversion to the Mean
· High Anxiety
· Sirens
· No Plan B
· The Commoditization of Everything
· Suspended Animation
· Nature is Supreme
· Zombie Nation
· Life in the Fast Lane
· While Nero Fiddles
· Decentralization Process Accelerates
· Noise to Signal Repartee
· Avoid the Pain
· The Twilight Zone - Revisited
· West World
· Elysium
· Videodrome
· A Fool and His Money
· The Tortoise and the Hare
· Monkey You
· Silver Linings Playbook
· Mr Blue Sky
· Parapeto
· The Dumbbell Rally
· Gravity
· Achtung Baby
· Being There
· The Twilight Zone
· One Of These Days
· Groundhog Day



Subscriber Articles
· Kiss of Death
· US Index Open Interest Put / Call Ratios
· Vive La France
· Trading Notes
· Lawless
· Party Like Itís 1999
· Irrational Exuberance
· Trading Notes
· A Permanently High Plateau
· Trading Notes

See More Available Recent Subscriber's Articles

Non-Subscriber Archives
Sun, 26 Mar 17
· Ratios at Work
Wed, 22 Mar 17
· US Index Open Interest Put / Call Ratio Analysis
Sun, 19 Mar 17
· Playing Chicken with a MACK Truck
Wed, 15 Mar 17
· The Human Race is Broke
Sun, 12 Mar 17
· Sell the Rumor and Buy the Fact

See All Archived Non-Subscriber Articles

Elysium
Posted on Tue, 13 Jan 2015 @ 11:30:46 CST by Captain_Hook

Commentary_Free
Originally published as a subscriber only article on 2 September 2014.

It’s no secret the rich are getting richer, and the poor poorer. Accounts of this worsening condition are stroon across mainstream media and alternative news sources alike, albeit with somewhat different storylines. Although increasingly recognizing the importance of this issue, mainstreamers, who both cater to and are controlled by the status quo, portray the condition as a result of race and education differences (which is true), and that these shortfalls should be addressed via public policy (which is not true). And by doing so, they avoid discussing the more profound problem, and the real culprits in this regard, for whom they (think they) are obliged for a living.


Here we are talking about the greedy bastards at the very top, like Warren Buffet and Bill Gates, who will do anything, including the hollowing out of the larger economy (think off-shoring, debt enslavement, destruction of the middleclass, etc.), to stay there. In the movie Elysium, it was no secret that there was the very rich, and everybody else. However today, this growing reality still escapes most, not that it will matter soon. Because today’s modern empires are built on thrones of debt, meaning they are destined for the same destruction of the surfs in good time. Of course in the meantime they are going to get as much as they can, and if they have robots to control the populations at some point (through fear if not reality), there’s no telling how far the atrocities will extend. First they will use them on foreigners in the larger war machine as justification for their creation, then on us like all the other surplus hardware / ordinance being employed to control the public by increasingly militarized police departments across America.

Think it’s bad your liberties have been eroded? They are already killing anybody who steps out of line, with over 400 police shootings per year in the US now the norm apparently, where the robots could be used to do the things humans would object to. Obviously we are years away from this kind of thing, but if the technology were there, based on the way things are going, and in knowing whom we are dealing with, one would be foolish to discount such an outcome completely. Again, if history is a good guide, one should know elites would do anything to gain and maintain power. This is the way they are wired. And so is the rest of our materialistic society, which is why these bad actors are allowed to push forward their agendas, as the public attempts to ascend to the stars as well.

The continued destruction of our economy(s) – the economy, currency, and middle class (and up) basically guarantees such an outcome, because even high-income earners are feeling the pinch these days, especially if most of your net worth is tied up in your home (never regaining previous glory and heading down again), which has become nothing but a money pit. (i.e. don’t forget about higher taxes.) But don’t expect this to dissuade the top 1% from their agenda anytime soon, because as pointed out long ago in my essay Journey to Babel, these jokers have us engaged in a suicide mission that will eventually call into question our very survival as a species as we burn through all of the earth’s life sustaining resources at break-neck speeds. They will discover one cannot be insulated from the realities of humanity, and that they too will pay the same price for destroying paradise as earthly inhabitants.

In terms of the stock market (and all the other bubbles that depend on increasing quantities of ‘make believe money’), it’s becoming increasingly evident (to those looking) that the present mania is running on fumes, meaning when the corporate buybacks and margin buying reverse course, unless the is will to literally become the buyer of last resort, the party will be over. Much speculation is being drummed up regarding ECB QE, however it should be remember such an outcome is not as ‘in the bag’ as talking head fluffers would like us to believe, not that it would do any good anyhow with all the backdoor monetizations being employed already anyway. In fact, it could end up backfiring on them if inflation expectations were to take off, and that could prove terminal for European bonds, along with the daisy chain of debt and equity markets down the line. (i.e. sovereign debt markets are more important to European pension funds than stocks, making formal QE risky business.) (See Figure 1)

Figure 1 – Click Chart For Sharper Image

 
Be that as it may, we are about to find out whether any of this matters to European stocks depending on which way the DAX breaks, up (to the denoted Fibonacci resonance target featured above), negating a potential head and shoulders pattern, or down, not that any of this matters to the crazies in New York, or their masters in the heavens. Not as long as US stocks keep riding, allowing the chosen few to keep living the high life. So wouldn’t it be fitting to hand these assholes their heads just when they don’t expect it. As discussed in our last meeting, a combination of the Fed’s prop desk, corporate buy backs, and foreign capital continues to support US stocks; however, if the divergence between European stocks (think German) and domestics gets too profound, as measured by a monthly close in the DOW / DAX Ratio above the ‘trend definer’ pictured below, all bets on such complacency continuing should immediately be rethought, and then acted on, if history is a good guide. (See Figure 2)

Figure 2 – Click Chart For Sharper Image

 
We are definitely not there yet however, and based on the way the S&P 500 (SPX) / CBOE Volatility Index (VIX) Ratio closed last month, we are in fact set up for a seasonal inversion during September, meaning stocks should continue to climb into a possible blow-off at Alibaba IPO time mid-month. It should be remembered however that in order to complete the sinusoidal pattern in the monthly plot pictured below, the SPX / VIX Ratio should finish the month at or about the 192 mark, meaning risk adjusted stocks will need to blow well past this level in the event of a mid-month top, allowing for giveback into month’s end. (i.e. in order to end up in the vicinity of 192.) If however, no such blow-off occurs, likely taking the cash SPX towards the 2100, or higher, then expect prices to grind higher more steadily all month to reach the target, again, setting the stage for a sell-off in stocks beginning in October, or November, whenever it is speculators finally become exhausted in buying downside hedges / speculations. (i.e. a seasonal inversion.) (See Figure 3)

Figure 3 – Click Chart For Sharper Image

 
You may remember from previous discussion on this subject matter we thought a blow-off followed up by giveback into a monthly close in the proximity of the target (192) was the most likely outcome, along with our being able to identify a high-confidence top. So, we have our fingers crossed in this respect, because we can get our teeth into believing in the validity of such a high would be the ‘real deal’ given most speculators have had their heads caved in over the past few years, knocking many out of the game, and the ones who remain will likely not screw with seasonals. This means put/call and short ratios should fall and remain low(er) this winter, giving the machines (algos) little to nothing to fed on in order to maintain the perpetual short squeeze. Such is already the case with respect to key Nasdaq related ratios, evidenced by recent large moves lower in NDX, MNX, and QQQ levels. All we need to see is the QQQ to drop close to unity like the NDX and MNX measures and short of buying up the market themselves, the bureaucracy’s price managers would not have a ‘hope in hell’ of preventing a failure in tech stocks against the blue chips, triggering a major sell signal. (See Figure 4)

Figure 4 – Click Chart For Sharper Image

 
In the meantime however, we have hedgers / speculators gaming the weak seasonals with generous buying of VIX calls via the VXX, evidenced in the plunging open interest put/call ratio, providing all the fuel necessary for continued price management higher in stocks, even tech stocks apparently. Based on the low and declining tech related put/call ratios however, one does need question the sustainability of a breakout back into the ‘extreme bubble territory’ denoted in Figure 4 above, where we are to witness just such a breakout this month apparently. Of course an intra-month / options cycle related failure is what we are expecting in the bigger picture for September, the seasonal inversion idea, not that what we expect matters to the bureaucracy’s price managers. Heaven forbid the less endowed continue in their failure to recognize the inverse relationship between increasingly bad news and the stock market and step up hedging / bearish speculating practices again as we continue into the fall, which would of course expand the bubbles further.

Why is this so undesirable? Because there may be no coming back from such profound distortions, meaning what we are engaged in, is economic suicide. This reality will never dissuade the likes of Warren Buffet (his brain has gone soft) from continuing to blow the bubbles bigger however, so one should get used to the idea wholesale economic collapse is on its way at some point, characterized by both extreme inflationary and deflationary episodes, and everything in between. Right now, with the break above Fibonacci resonance related resistance in the SPX / SLV Ratio, we have further evidence an extreme inflationary push in stock prices is underway, with the next significant resonance related resistance in the vicinity of 115, as can be seen here. Of course if this blow-off in stocks is to get ‘really stupid’, a move into the 140’s is not impossible – believe it or not. It’s now out of the control of humans, and in the hands of the machines apparently.

So, heaven help us, especially if you have precious metals, because with put/call ratios still so low, the machines will eventually do their worst in all likelihood. Seasonal strength time has arrived for precious metals, so all the bumble-headed morons who think this matters are either writing about that fact (and recommending their readers / subscribers buy the various forms of precious metals investments / speculations), or busy buying calls themselves, which is why stock market to precious metals ratios can be expected to extend present trends towards further extremes, followed by collapsing nominal prices later on as well, when the broad measures of stocks finally roll over. At least this is what history (and common sense) tells us to expect, as once aggressive speculators begin the wholesale purge of margin debt from their portfolios; nothing tends to escape the negative drag initially. And I don’t see why this sequencing should go any different this time around given margin debt and net worth levels are at all time extremes.

But hey, I’m just attempting to keep my head as people grow increasingly desperate, which has always proven to be a good idea in my experience. The degree of extremes these knuckleheads can push things to is designed to break you if thinking in this manner of course, as increasing numbers go soft in the head thinking they can ascend to Elysium with Warren and the boys.

All I can say to these people is – good luck.

Back on Thursday with a few more comments on precious metals.

See you then.

Captain Hook

Copyright © 2014 www.treasurechests.info All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by www.treasurechests.info. All rights reserved. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. We are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence regarding investment decisions.


 
Options

 Printer Friendly Printer Friendly



 


Copyright 2003 Treasure Chests. If you have any trouble using this site, you may contact us at accounts@treasurechests.info.























PHP-Nuke Copyright © 2005 by Francisco Burzi. This is free software, and you may redistribute it under the GPL. PHP-Nuke comes with absolutely no warranty, for details, see the license.