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Alpha 2 Says “Cliff Ahead”
Freaky Friday – Alpha 2 Says “Cliff Ahead”
One step in hitting our goals for 2011 is BEING CAREFUL WITH OUR ENTRIES! As noted in last week’s Stock World Weekly, we have been rolling along this month right in line with the TradeBot’s Alpha 2 pattern that they ran last year and Elliott sent me an advanced copy of this week’s newsletter where he cleaned up the chart to match out the expiration dates. I believe you will see why I still have a slight concern:
Spooky, isn’t it? Don’t forget, we identified this pattern on the 3rd and we targeted 11,850 on the Dow and 1,285 on the S&P as the adjusted tops of our ranges and, so far, Lloyd and da Boyz have been firing on all cylinders to paint a picture that is just as pretty as the one they painted last January, right into expiration day, when the VIX ran all the way down to 17.50 (from 30 in November) as complacency reached extreme levels. The tip-off at the time, that we were about to drop, was a sudden pop in the VIX on that Friday, back to 17.99, and by the next Tuesday we were back to 18.68 and, by Tuesday the 21st, panic was back in fashion and the VIX finished the day at 22.27 – on the way to 27 the next day. Now THAT’s a sell-off!
Is it "different" this time? How much are you willing to bet on that? We’re not betting much, we’re cashing out the $10KP and we’ll see what happens next week, confident that we KNOW that if the market goes down – we can make money and if the market goes up – we can make money but we can make so much more if we wait for the right opportunity before placing our bets.
As David Fry notes on his DIA chart, POMO does make this time different and it does seem like we are being hard-wired to buy those F’ing dips. That’s OK, we can accept that if that’s how we have to play it but please Lloyd, show us that you are willing to break the pattern first – then we’ll be willing to step a little closer to the edge of the cliff. Forgive us, of course, if the idea of standing next to you at a cliff when we know that you might make a Dollar for pushing us over gives us the creeps – it’s just that, well, we know you!
Speaking of people who are willing to sell their country out for a Dollar – GE had excellent earnings and I got my daily "WHUCK?!?" moment this morning when Obama named Jeff Immelt the head of his Economic Advisor Panel, replacing Paul Volker who quit when he realized this country is totally being controlled by Souless Corporate Interests who are embodied by none other than – Jeff Immelt.
Yes, it’s the same Jeff Immelt who just signed a deal to transfer America’s Avionics Technology to China’s State-owned Commercial Aircraft Corp. of China who (and I mean who, not Hu, althogh it’s easy to see how this is confusing) intends to go into direct competition with Boeing, who is not only a top US military supplier but our nation’s largest manufacturing exporter BY A MILE – so much so that Durable Goods have to be measured ex-Aircraft to smooth out their shipping cycle.
Boeing sells $68Bn worth of airplanes per year and has over $300Bn worth of orders for the 787 backlogged. The company directly employs 157,000 employees, mainly in the USA and, as they build their planes here and tend to use American parts, they in turn employ roughly 1M more people, accounting for close to 10% of our nation’s total manufacturing employees. As I mentioned when the deal first broke – the technology GE is turning over to China represents 100 years worth of advances in American avionics and, just because GE legally got their hands on the patent rights over the years – does not give them the right to put a bow around them and had them to Hu (not "who," this time I literally mean Hu).
There’s a word for what GE is doing. It’s right at the tip of my tongue. Oh yes, TREASON!!! Oran’s Dictionary of the Law (1983) defines treason as "…[a]…citizen’s actions to help a foreign government overthrow, make war against, or seriously injure the [parent nation]." Well, the supreme court just decided that our Corporations are citizens and have the right to give politicians unlimited bribes contributions as they exercise their right to free speech. Why then do we not hold them to a citizen’s standards when they clearly take actions that are against the best interests of the United States of America?
I wonder if a Paulson-like immunity from prosecution comes with Immelt’s job as head of the President’s Economic Counsel and I also wonder Hu benefits from having their main man firmly inserted at a desk in the White House? Surely the timing of the appointment to coincide with China’s visit is not a coincidence. As an M&A consultant, I have seen this happen a million times – a company (or country, in this case) is having trouble paying it’s bills and their balance sheet winds up in breech of loan covenants which prompts a visit from the President of the bank (in this case the PBOC) who wrangle some additional concessions and guarantees and, in extreme cases – the Bank asks that one of their boys be given a seat on the board so they can "keep tabs" on your progress.
That scenario is bad enough when your bank is just a bank but when you borrow money from a competitor and put yourself in that position, you may as well pack it in because you essentially just spilled blood in the shark tank. It’s only a matter of time before all your thrashing around, trying to stay afloat, turns into a selachimorpha version of a piñata game.
Is this the beginning of a long and glorious partnership with our Chinese Masters or simply step 2 in the dismantling of America as Immelt Presides over the transfer of the rest of America’s Intellectual Property to China so we can cut out the middle (class) man as our Global Corporations expedite their operational shifts more and more overseas. With only two years until the next election – there is the danger that the American people will wake up and demand action so, as happened during the final days of the Soviet empire – we can expect big moves like GE’s partnership with China to come fast and furious over the next 24 months.
What are we doing about it? Well, as I told you yesterday, we’re BUYING GE, as well as JPM and, if you can find any more loathsome Corporate bastards who have top-level access to the White House and a pocketful of Congressmen and Judges – we’ll invest in them too because the first step towards working your way up the ladder in a Corporate Kleptocracy is to realize you are living in a Corporate Kleptocracy. Once you accept that – the rest is obvious…
So have a great weekend – the news doesn’t matter – we’ll just keep an eye on the Bots and continue to go with the flow, even if we have to hold our noses while we’re riding it out.
Be careful out there,
- Phil
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You are right, I think they are ratchetting up the move of technical know how and industry to China because in a sense America is done and the new leaders on the block are China and it's 1.3 billion people. What will happen is America will be a third world nation that will farm and produce resources for others to use. I remember Obama and others talking about green technology and producing small farms and using less etc. etc.. A nation only says that if it's bankrupt and can't pay for all the entitlements it promised. This is a signal that we won't lead in this century. What if Obama said instead of that (which is good in itself), how about new technologies for the future like nanotechnology or new power systems and propulsions to move man cheaply into orbit and to the planets. New sciences to explain strange phenomenon in science that could help us in the new century and also to help us in manufacturing of new materials via low G industry etc. etc.. He didn't do that because it seems that Obama and his cohorts who are behind him want us to essentially devolve or stagnate to a society of serfs.
As a society you must continue to go forward in thinking, in science and in culture in order to survive. The only people who like to keep a society stagnate is the elite of the society/world and the powerful. And thats because change to them means less power and/or out of power, so it's better for them to keep everybody in a form of dark ages to keep their wealth. You may wonder but other parts of the world is growing quickly and such. Thats because this was meant for the US and Western europe and since they couldn't keep a tight reign on europe they have managed to do it in the US and so the US will be the home of the technological elite and the masses of serfs who will serve them.
Frankly, to be impolitic and blunt, Immelt is filth. "Treasonous" is a wholly appropriate description.
Buy the dip.........
Your point on AAT cannot be over-emphasized.
I love charts! Keep em coming. Immelt is really interesting. He runs a dow30 company that has it's hands in just about everything. Heathcare to Jet Engines. Anyhow, I hope he keeps the lid on our technology. A presidential appointment from our current president, is akin to selling birth certificates in Hawaii after you lose them.
i follow the ratio between gold stocks and the djia, specifically the xau, just because it has the history, and it is less volatile than gdx. the ratio has been a leading indicator since at least 96, when gold stocks fell out of bed, while the dow continued higher for almost four years before we crashed. the ratio turned up in 2002 ahead of the market. i believe that now the lead time is even shorter. if you look at this ratio since the bottom in 2002 notice that even the crash in 2008 did not alter the trend. however that's nine years (interesting from cycle angle).
in 2010 for instance the ratio actually broke its point and figure support and went as low as 14.5. 14.5 was also the 2009 low. so i expect the ratio to drop to that level at least, (if you have a target on either one, you can do the back of the napkin figuring to see what the other may be, as absolute predictive power, all i can say is that when the ratio goes south the djia goes with it, and the other way too) but if this is a cyclical change then the ratio will keep going.
a long while back i saw a huge triangle in the chart of Harmony gold, which translated into a price objective of 4. i still expect to buy Harmony at that price.
meanwhile the divergence between gold stocks and djia may not mean the end of the bull market, but we are much less well off than we were in 96. the xau eventually dropped into the 40s in that bear market. keep your eye on this ratio, it really is all about gold, the bullion is just too erratic and subject to all sorts of influences.
now with talk about a gold standard i think some economists view this as inevitable, but of course we have to wait until the damage is done to the fiat currency. then you want to buy gold stocks for the long haul.
It is treason. How many taxpayer dollars have subsidized the development of that technology over the years?
@hbjork1: "Boeing is very through."
I'm sure you intended "thorough", but many here would agree with the misspelled version of your sentiment.
The engines and the air frame of these aircraft MUST be done correctly.
Boeing had an engine failure in test. Airbus had a failure in flight.
As we found out with BP, managements that push too much, perhaps trying to catch up, do have more mistakes on their watch.
DuPont ran Savannah River Plant making plutonium for nuclear bombs and tritium for hydrogen fusion bombs for decades and did not have a newsworthy failure. Three Mile Island was, of course, Westinghouse. My first job out of school was at Savannah River. A mistake was a social sin. People who did not do their homework would not have had a bright future. The saying about DuPont was, "The wheels down by the Brandywine grind exceeding slow but they grind exceeding fine."
I did not go back after military service because the nuclear field was going to take a long time to develop beyond weapons production.
Boeing is very through and I am happy to be on one of their aircraft. If I was on a Chinese built aircraft at 40,000+ feet and 500+ MPH, I would be nervous all the way. The aircraft we are talking about are very high tech. I would not want to be on a Chinese built aircraft of that type.
You refer to manned aircraft. I suspect that these avionic technologies will find their way into various unmanned People's Liberation Army Air Force vehicles of, for example, the cruise variety.
This Immelt-sanctioned transfer of technology is a terrible development, having long-term repercussions.
New word of the day - whuck!
When did that enter the lexicon? Must be getting old ...
http://www.urbandictionary.com/define.php?term=whuck
go long bastards...
plenty of trades available.
I'll think about it.
It's not Immelt that sold out his country.
It's EVERY American who sits on his lazy ass on the sidelines doing shit or just complaining who are selling their country out!
PUSSIES!
So, if we were doing what you're doing, that'd be what precisely?
Never missed a strike when I think my right are violated.
I've also started 2 big city actions against lack of governemnt action.
I've always been very involved in my community.
What have you ever done besided being a smart ass?
Yep, total coward douchebags.
Enraged Gumby-thingie!
<double>
Domo kun would indeed be enraged by the 'gumby-thingie' thing...
Keep your kittens safe.
Tuna Melt - he's such a pig. The greatest student of Capitalism, yes Karl Marx, said that this would happen. The Capitalists would sell their best technologies to their worst enemy, just to make a buck.
IF you think Jeff Immelt or Barak Obama are capitalists, I am not quite sure you understand the meaning of the word.
This is a fascist kleptocracy.
Forcefully, the guy could not be a capitalist.
Who was by the way?
I'm going to sit this dip out.. if there is a real one.
Shorting this market has been futile.
Oil demand is hitting new highs, possibly creating a panic or "oil shock".
Dollar is diluted, oil producers anxious about selling in dollars, inflation going berzerk.
I sold out everything 3 weeks ago.
The only thing I've got left is 1500$ in BAC puts may 2011 13$ which I bought last week and those just jumped 65% these last few days :)
But to be honest, I wouldn't bet all my money on it because whenever you think the sun shines it start raining shit 5 minutes later.
It's all just a bit to unlogical. And betting it all on POMO is not what I call a smart bet.
Somehow I don't think the FED can be trusted about that. Maybe it's just me...
Long, long time since the US harped on the culture of secrecy hold by guilds and introduced the patents system as a counter-balance and a means to spread knowledge.
100 years of avionics technology? Wonderful. Wonder if a guild conserved their secrets that long.
Has the US successful delivered on anything they found that devasting in ancient societies? Big question.
some of that 100 year-old tech, like wing-warping ailerons controlled by cables, could be quite stealthy on a wood-and-fabric airframe.