I'll start the week out with a chart from over at Slope. Oh, if only analogs like these played out more than the seemingly about 1% of the time that they do... Oh, if only...




Source: http://slopeofhope.com/2014/06/draw-thine-own-conclusions.html

I just couldn't see them waiting when it was so strong and the Fed just promised them the moon. The question is, does this start a real parabolic explosion up and over 2000 now?

Yes, Marcin, that's what 'should' send it down a bit. But, when I first started trading there was a saying that said 'News trumps technicals'. Now I have a saying 'Programs and frenzy trumps technicals'. That's not to say technicals aren't playing out, but as we all know, there are lots of choices made within a technical framework. This is what I call 'context'. To be a successful trader, I feel, it's about making good decisions when deciding which areas will likely be ignored, and which will be used. 'Context filtering'. In a strong trend the 'lower high 'W2's' will almost always be ignored. I pointed this out to Jarek and everyone else in past discussions in here. Don't get me wrong, in this specific case of the Aussie we may have an immediate response to the Fed, and then it comes back in. I'm just saying, in general, unless 'context' tells me so, I'm very cautious when I see this kind of setup.

I've done a lot of trading posts, so indulge me when I spout a little economic stuff. Here's a quote from Armstrong, basically saying what I've been saying for years. I love to relate points to movie and music lines. In the movie 'War games' they think they've avoided the disaster and then they find they can't stop the W.O.P.R. and so the general says "We might have to go through this thing after all." I've always said, our fate is pretty much inevitable at this point.

For it not to happen, the government, which acts just like a living entity trying to protect itself (I've been working on some mathematical/biological models about why societies and especially government entities behave just like living organisms), would have to 'commit suicide' and allow itself to die, and we know that ain't gonna happen. It will fight to the last drop of your blood to survive.

Hence, as I've said for years you will be consumed. No ifs, ands, or buts. It's not open for negotiation, it's just simply a fact, and we are powerless to stop it. It's too hard to accept, and human nature is too positive (and I think that is the main reason why we are in this situation, and why the outcome is inevitable), so few if any will take what I say to heart. And, as he said in 'Rounders' "Your fate, he is sitting right beside you".

Armstrong:

"I realized that we simply just had to go down this path until we crashed and burned. There would be no stopping this freight-train from hell. So to all of those who send emails asking what if government would listen, my response is they cannot and will not. They will follow the invisible hand in their own self-interest to survive and keep raising taxes to try to sustain that power until everything collapses. That is just the way it has to be."

Source: http://armstrongeconomics.com/2014/06/15/consumption-tax-will-it-ever-return/

Thanks for your post on context, Jim.
This is something I will be struggling for a very long time, I guess.

Everyone should remember what I have said many times, and reiterated on the updated mentorship page. Everyone should reread that page (even if you are already mentoring, and even if you have zero intention to ever mentor with me). I said it takes five years full time, on average, to develop minimal competency, and ten years to become a low-level master. And that doesn't mean everyone who does the work reaches those levels, I'm just saying that's what I consider the average for a smart, hard-working person who winds up in the 'fortunate group' who do get somewhere. Like medical school, most will 'flunk out'.

Anyway, the point is, if it takes say 1.5-2.0 years full time to get a handle on the basic technical skills (how to create the setup area, decide on entry, do management, etc.), then what are all those other years for? 'Context'. That's just the way it is. And it can be a long, frustrating road, with most of the lessons learned in the College of Hard Knocks. It has to be that way, or everyone would do it. You want to be part of an elite group, like a pro athlete, airline pilot, doctor, architect, etc. Most will fail, and those that don't worked their a#%es off to get there. It's just the game we are playing, whether it is trading, or something else performance/skill based. My two cents.

And I don't want to give the impression I am always on the right side of the market, or am making perfect trades left and right (I'm always saying real trading is 'ugly' and it's about managing things once you find you fell overboard and the sharks are circling). It's really just a matter of where anyone is with their skill level. I don't like doing direct comparisons, but each of us is somewhere with our skills. I am constantly seeking to improve. It becomes a matter of what level of skill does a particular person need to be profitable, or profitable to the desired degree.

From there, some may choose to just 'go to work' and leave it at that (of course always adapting to changing market conditions, everyone must always do that). For me, I must always seek to improve, and improve as aggressively as possible. I'm a 'Type A' personality, and I'm highly intelligent (just a fact, not bragging), so I'm bored easily. That's my route. Each person has to figure out what they want. As Ed Seykota says: 'Every gets from the market exactly what they want'. That's paraphrased. Keep in mind, his point was, that includes what your subconscious wants, too.

Anyway, to finish my point about not me not wanting anyone to think I'm 'perfect' after all these years, let me relate a quick story about a karate teacher I had many years back, when I was much younger. This was a 'full contact' studio, before MMA, and when 'full contact' was very uncommon. This goes back maybe 35 years ago. Anyway, my main instructor, the one who owned the studio, he was a serious bad-a#%. He hardly had to even work to handle his best instructors, and they were seriously good. And this was full contact, so not too much left to discussion about what would have happened, or might have happened.

Anyway, one day I said to him that I thought he must be one of the best anywhere. he laughed and said heck no, there are a slew of guys out there that could clean his clock, effortlessly. I had a hard time imagining that at the time. Now, I totally understand it. He was good, very good, way, way better than I was, but he wasn't anywhere near 'perfection'. He just seemed great from my vantage point. I won't compare myself to others, especially because we have a unique discipline here, and it is unlike any others. We could compare its effectiveness, totally on a monetary basis, to other disciplines, but being totally discretionary, it's really more a comparison of individual traders than methodologies.

All I know is, I have a long ways to go myself. I can't live long enough, since I think if one was immortal (or essentially so) perhaps one could still always learn (okay, there are several mathematical paradoxes in what I said, given truly infinite time, but let's only look at this in a general sense). So, I will not even scratch the surface in my lines of research before my time is up. Hence, like my karate instructor, I may look, to some of you, pretty darn good, but I am a beginner. We will all die beginners, in the strictest sense of the word. In my opinion Einstein died an 'amateur' scientist in the big picture, as have all others. But, we can always try to improve where we are. I hope this gives some 'context' to the journey.

5th lowest equity p/c ratio since 11/8/2006...

Doesn't matter, though, does it... VIX should soon have a single digit handle. Doesn't matter, though, does it.. Highest margin debt, highest this and that ratio ever, and so on. Doesn't matter, though, does it..

Nice pump to another new all-time high.

A quick summary of some things I have been saying for years. At least many are talking about it. It won't matter, but at least the record will show 'we' all knew it was coming. Not going to be a lot of room for them to say 'No one could have known, no one could have predicted this'. But, they'll say it anyway, and the masses will probably believe them...

http://usawatchdog.com/dollar-ready-to-die-we-are-losing-our-country-jim-willie/

I think the middle one applies, too, if you know the enemy, but not yourself.