Trading Primary Trends as Good Friends

February 24th, 2010 by Rich

As Ronald Reagan said to PATCO during the 1980s Recession caused by oil shocks and price controls, how’s that working out for you?

And now we are in an undeclared Depression, the GDP having contracted more than -10% with unprecedented borrowing, regulating, spending and taxing – BRST.

Let’s make a clean breast of things, shall we?

We face a Tea Bag electoral  revolution today to rival the Socialist electoral revolution of the 1930s and 1940s led by FDR.

Things are not so different today from the causes of the 1930s and 1940s Deflationary Depression that led to World War, despite repeated denials by talking heads on Big Brother Telescreens.

http://en.wikipedia.org/wiki/Telescreen


That this is again a significant problem today may be suggested by the fact that the Euro GDP is almost a third larger than the US GDP according to the International Monetary Fund. The two Trilateral economies combined are more than half of the world economy.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_nominal

As these credit and currency problems continued after being solved by wise women and men, all bets were off on economic recovery worldwide since 2007.

A little over two years later, we are about where we were in 1931. We’ve had the green shoot headfake jobless reflex rallies. We watched them wither in the real economy. Now we are going down again to correct credit-driven price excesses.

The empty can cannot be kicked down the road indefinitely.

Substantial corporate risks with derivatives exceeding $600 Trillion were transferred to sovereign governments when they properly belonged to boards, management, debt and shareholders plus employees in that order.

US government agency guarantees today carry a significant part of the derivative risk that dwarfs the world economy.

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This entry was posted on Wednesday, February 24th, 2010 at 6:37 am and is filed under Market Psychology. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Trading Primary Trends as Good Friends”

  1. Rich Says:
    February 26th, 2010 at 9:46 am

    Aloha All
    After posting this, we noticed out of 23 market indices, commodity and industry groups, only two have the 20 day moving average above the 50 day moving average. Curiously, these are the Livestock and US Dollar index.
    Despite numerous calls for indices, commodities and industry groups like retail to bottom here with choppy markets, the trend may still be our friend.
    Our one year anniversary approaches and we are glad about our longs on equities last March 2009 above Dow 6469, the dollar last November 2009 above 74 and the short sell on gold last December 2009 below $1226 and the short sale on the Dow below 10,729 in January 2010. Subscribers to Big4 and TopTen did better.
    Stay tuned. We have a hunch things may be about to get much more interesting, reminding us of the old Chinese Curse: May you live in interesting times.
    Mahalo Regards*Rich

 

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