Stock Market Choke Points

part 5 B

by Brian Stoll, TimingStrategies.com | May 30, 2008

Print

I want to take just a brief moment from my usual S&P / stock market estimations to comment on all the flap in financial media and the obfuscation by the current political jackassery in DC as to the primary and root cause on high oil prices and inflation, I normally keep my outside opinions, outside of my client and public commentary reports, but at this time, I just can’t stand it any longer with all the disingenuous attempts to deceive the public as to what the true cause is. Take a look at the chart above, it is the price of oil with the price of the U.S. Dollar Index, overlayed and inverted! (Upside down) I inverted it to help make the demonstration perfectly clear. There is almost a 95% correlation or higher to the debasement of your wages and savings that are denominated in U.S. Dollars, which is being used to bail out the Wall Street Menace, to the price inflation of oil. In that perspective, the next time some idiot polling or commentator attempts to blame OPEC or speculators or some mysterious phenomena, you will immediately understand that either they are complete morons that haven’t the slightest understanding of what they speak or they are part of the cover up. There is very little if any “bubble” in a precious and finite resource that is being depleted, whilst the public gets stuck with the bill for the corruption of Wall Street and DC. (there! I feel much better now, throw the rascals out!)

Now let’s take a quick look at the S&P via the SPY. On 05/02/08 in our Rydex EOD model. We went short 40% on an indices basket, on 05/19/08 we upped that allocation to 80% short in the basket and on 05/013/08 we took half that short position off for a small profit, with a 40% short still remaining. Our near term estimation 1-5 days is a bit clouded due to the recent strength in the R2K & NDX with the divergence in the Dow and S&P.

I am looking for a potential top in the overall market starting today Friday 05/30/08 up to and as far out as 06/09/08. I realize that is a very wide window with more than enough room for error to be able to say, “See, I told you so”! Believe me, that will never be the intent of anything here. The purpose is to manage client risk and take the higher probability set ups when they present themselves, of which we never know how that will exactly develop. In the present scenario, to my best estimates, there are approximately 60/40 odds favoring the S&P and or other indices being squeezed or walked up higher into the 05/30-06/09 time window and higher into the price “Kill Zone”. That is/was the purpose of taking half of the 80% short position put on at 5/19, and then half out on 5/23, for a profit and risk management. Should the indices mark new highs into the 05/30 – 06/09 time window, depending on price action and several other indicators, we will reestablish an 80% - 120% short position. Should the indices make their highs today on Fri. 05/30 and then drop lower into the 06/09 time zone; the script will most likely be to buy a 35%-100% long allocation depending again on price action and other variables. 

Longer term, I am very confidant that we will at least see the March lows again and likely breach them. The only big question on that matter is “when” and from “where”??? I don’t have that answer. Take everything you read from here with a grain of salt as I do not know or predict the future. There are numerous structural, political and fundamental elements, that in my opinion, are pulling the markets lower. These are the natural “free” market forces, which are constantly being subverted by the Tres./Fed. thru their money printing / debasement and ways of primitive banking deceits. (Imagine paying full cost of $1.00 per $1.00 for U.S. Treasury debt if you were a pension fund or foreign government and at the same time watching the Tres./Fed. giving the Wall Street Scoundrels that same Treasury paper in exchange for garbage debt consisting of sub-prime, car loans, credit cards, pet rocks etc: being priced at .20 cents on the dollar) 

This is part of the trick to managing money. This sort of thing also affects the resource markets, which are in my opinion, being talked down by the pathetic strong dollar policy and other propaganda piped into the financial media constantly. This as well as in consideration with those 60/40 odds I mentioned earlier, will most likely have a temporary affect on the oil, materials and emerging markets. Should we see a drop in the resource stocks (remember, just because the physical stuff drops or rises does not always mean the same for the related stocks) at the same time in the physicals, will, in my best estimate, help locate in determination for the overall market indices and the longer term portfolio allocation we seek to achieve. This is by no means a recommendation to buy, sell or make any investment whatsoever

BTW, We are currently undergoing website hosting and developing constraints, therefore our website is off-line presently, although if you need to contact us, our Email is still operational and any further questions you may also reach us by ph. at 949-675-8889, sorry for the inconvenience.

© 2008 Brian Stoll
Editorial Archive

contact information

Brian Stoll | TimingStrategies.com | Registered Investment Advisor
Newport, California | Email  |  Website

The opinions of FSU contributors do not necessarily reflect those of Financial Sense.