I bid you greetings from Opa restaurant in Los Altos, where it's happy hour and I sit alone, drinking my wine and looking at my charts. Surely there is no blogger on the planet more devoted to his beloved readers (I would also tip my hat, if I were wearing one – – which would be rather rude indoors, but I digress – – to SocialTraders, who continue to push the web site to unprecedented success).
Where was I? Oh, yes, charts.
Even though The Powers That Be pushed the market higher at the close, I was pretty pleased with how the day went. My portfolio was profitable for most of the day – – although a lovely five-figure profit dwindled to a two-figure profit (!) by day's end – – but the point is that my portfolio hugely outperformed the market (on an inverse basis since, as you've probably guessed, I was so short I could jump off a nickel). I remain positioned for a fall.
Recall my Path of the NAZ post from a few days ago. Here was the chart; take note of the highlighted prediction:
Using the NQ, I've highlighted the same "prediction zone" below. The key, of course, is that this thing fall into the bowels of hell soon. If it does, I shall declare myself The King of All Charts.
Critical to this, of course, is that AAPL cooperate. They report their earnings after the close on Thursday (errr, assuming RR Donnelly doesn't screw up and release them hours too early). Apple pretty much has to blow the doors off every car on the planet in order to justify its price. The notion of them zooming to $1,000/share is laughable.
The Russell 2000 is at a crucial crossroads. It formerly had broken above resistance away from a somewhat-tilted basing pattern (tinted in yellow). It then failed beneath this "neckline" (roughly speaking) and has been treating it as resistance over the past week or so (tinted in green). The crucial "break" is of the trendline at which it is currently resting. If we can break this trendline, God willing, then it's party-time.
It's pretty simple, really: if we can get a break of the supporting trendlines – – which would take very little additional weakness at this point – – we can gather together and profit from a medium-sized drop in the intermediate-term. Some kind of failure on AAPL's part will make this easy.
The Fed comes on stage this Wednesday (which, by virtue of the mopping-up crew that will be required, will promote new employment), and with QEinfinity in place, the only thing they can do at this point is to vomit up an even greater figure than the $85 billion they are conjuring up out of thin air every stinking monthly of the year. (More radical plans, such as printing up billions of dollars of new money to buy stocks like Facebook and Amazon in the open market could come later, but we're not there yet).
I imagine Bernanke & Company will simply puke up the same language they spouted last time, since their plans need time to prove themselves (which will lead to inevitable failure, but again, I digress). I am as sure that the equity markets are ultimately going to undergo a vicious collapse as I am the the sun will rise tomorrow morning, and Bernanke will ultimately be villified as a short-sighted idiot. But the future isn't here yet, and for now, he's Our Hero, and we have to live with him and his ostensibly-egalitarian policies, surely conjured up to benefit the good working people of America.
Thus Spoke Zarathustra.