Friday, February 10, 2012

2012.02.10 Experimental DJIA $ Gold $ Silver Ultra Short-Term





































Meanwhile, I've got a wavelet to catch! Have a great weekend!

Visit econocasts.net for free sample trading model downloads. 

3 comments:

Anonymous said...

Keep up the good work, I appreciate it (as I'm sure, so are the other visitors).

-Zero_Sum

Paolo said...

Thanks Zero_Sum.

There's something weird going on with the DJIA time series signal in the last couple of hours of trading. I noted the specifics in the regular weekly update. Other than being possibly related to low volume, I'd be interested to hear of other alternate theories.

Anonymous said...

Thanks for the vote of confidence, I'll try to throw in my 2 cents, but I'm just as confused about the markets as you are.

I believe that capital wants to jump out of the oven, and into the frying pan (less hot). Even a move from 3/5 to 2.5/5 on the risk scale, is still safe. Parking capital in Europe would mean a denomination in Euro for Euro stock ABC. So in order to hold ABC stock, but not in Euros, they hold the USA exact equivalent, which is now in dollars. Some companies have both Canadian and American exchange symbols, for example. The American Dollar is safer relative to the Euro. This applies for major funds who want to reduce currency risk, gain currency appreciation, and still hold the same weighting as the former portfolio.

Sovereign debt has lost it's appeal*, so big money has to park it's capital in stocks and USD denominated corporate debt. If they parked it in banks, they are only covered up to 100k(?) in default insurance, needless to say, USD stocks and corporate bonds are very attractive in comparison. The unusual buy/sell periods could be the result of the above hypothesis, one thing is for sure, it'll be interesting either way in the years ahead.

That is where my thoughts and the EconoCast model diverge. I believe we will have one last mega-cannonball splash (shift from bonds to stocks) into the pool of capital (stock market), spilling everything out of it on impact (depression, refer to [1]). This will wipe out the bond and stock market. Whatever is left, will be valuable assets for pennies on the dollar. The smartest thing I've done recently is admit I am not smart. I will avoid shorting this market or participating in it, because I truly do not know what is going on. Best case scenario, in a manner of speaking, there will be a depression and I will have capital to spend, invest, and survive on. Worst case scenario, I will miss out on a inflationary rally, which won't give me much gain in terms of purchasing power.

The bonds is where the big money reside, the true story is being told by the least nimble players.

[1] Please refer to this link for details on the capital movement from bonds to stocks: http://www.martinarmstrong.org/files/Why%20Bonds%20Always%20Rally%2008-01-2011.pdf

*Public vs Private, we have the confidence wane for Government, and transferred over to companies. Thoughts inspired by Martin Armstrong.

-Zero_Sum