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Faltering Friday – Market Finally Pulls Back on Day 2,003

2,002 trading days.

That's how long this bull market has been going on.  That is also exactly how long the 1920s bull market lasted so today is the great Crashiversary of that historic event – happy Black Friday to you all!

 There is, of course, no reason to expect a significant correction today – we are simply passing a milestone that makes this the longest bull rally in history (assuming we survive the day).  Of course, like many pre-crash markets, the volume sucks:

"For decades rising volumes have preceded a rise in prices in the stock market. Likewise, declining volume leads to a decline in prices,"Michael Paulenoff of Pattern Analytics said.

"Right now volumes are 50% lower in the S&P than they were in the weeks leading up to the November election when the markets saw a streak of declines," he added.  "The VIX is all messed up, we are somewhere around 11 and 12 when we should be at 8." 

Using Fibonacci levels, a technical analysis tool used by traders 'to identify strategic places for transactions to be placed, target prices or stop losses,' Raymond James identified the resistance point for traders to exit the market the S&P 500 at around 2,335, right above the current level of 2,349.  

For me, I don't buy into that technical mumbo-jumbo.  I think the market is going to pull back simply because it's ridiculously overvalued and is not taking into account all the potential negatives that lie ahead including Trade Wars, Currency Wars and Rate Hikes – among the things most likely to happen before Q1 ends in 45 more days.  At which time we will have to face the reality of Q1 earnings – the ones that are supposed to be flying higher to justify these ridiculous valuations.  

By the way, you are welcome on oil – down another $500 per contract on /CL Futures and that's $2,000 worth of winning oil plays alone that we've given you this week so don't tell me you can't afford to subscribe you cheap bastard!  More to the point – can you afford not to in this trading environment?  

Our Russell (/TF) shorts are now paying off as well as we cross back below 1,390, those are up $250 per contract on the 5-point drop and we took $2,000 for 8 short contracts from our Wednesday Webinar play and ran – because $2,000 is good money and there is no sense risking it into the weekend.  We do still have the 2 short Nasdaq Futures (/NQ) at 5,300 – those each pay us $20 per point on the way down.

Click for
Current Session Prior Day Opt's
Open High Low Last Time Set Chg Vol Set Op Int
Mar'17 53.47 53.52 52.94 53.06 07:45
Feb 17


-0.30 31186 53.36 83114 Call Put
Apr'17 53.87 53.91 53.31 53.43 07:45
Feb 17


-0.32 91768 53.75 460679 Call Put
May'17 54.16 54.23 53.62 53.76 07:45
Feb 17


-0.31 10584 54.07 229654 Call Put
Jun'17 54.36 54.48 53.86 54.00 07:45
Feb 17


-0.33 7696 54.33 259521 Call Put
Jul'17 54.55 54.64 54.06 54.24 07:45
Feb 17


-0.28 2034 54.52 113314 Call Put
Aug'17 54.72 54.72 54.17 54.34 07:45
Feb 17


-0.30 1157 54.64 81400 Call Put

As you can see from the NYMEX chart, 245,000

orders have been rolled out to other months to FAKE demand in those months too.  In fact, there are now 127,000 MORE FAKE orders in the front 6 months than there were when we checked last Friday – indicating even more pain lies ahead for the oil bulls.  Last Friday there were 328,293 FAKE orders for March and 75% of them have been moved and the other 20% (yes, 95% fake) have to be moved today and Tuesday to complete the cycle.

There's a reason they can fake all these orders (and here's a great article on spoofing) month after month, year after year and no one gets arrested and no one goes to jail.  Why?  Because, in order to monitor $117Bn worth of Oil Trading at the NYMEX, which sets the prices every single American pays for this vital commodity, the Commodity Futures Trading Commission has ONE (1) enforcement officer.  It's not really a regulation if there's no one to enforce it!  

We talked yesterday about the Trump Administration's move to outright elminate the EPA but it's just as effective to simply de-fund all the agencies that annoy your rich pals so they can run hog wild over the regulators.  The SEC, for example, has a 1,400-man team and gets $1.8Bn in funding which is nowhere near enough to keep up with their case-work, cutting their budget is a de-facto cut in enforcement and assures those wealthy enough to lawyer up that they are very unlikely to be bothered by all those silly rules and regulations that affect the bottom 99%.  

That's how you can have a "society of laws" but the laws only apply to the lower classes while the elites are free to do whatever they want.  Hell, if you pay your $200,000 fee at Mar a Lago, you can tell the President about any laws that displease you and he can executive order them away from you as soon as he gets back to his Washington house.

Of course, $200,000 only buys you the ear of the President.  To get a law changed, you'll have to do some serious horse-trading but, with Billions on the line (Trillions in Commodities), I'm sure you and he can come to some reasonable accommodation.  That is, after all, how politics work in America.  Paul Ryan is Speaker of the House, 3rd in line for the Presidency and it only cost $5.3M to get him flip his vote and fund the Import/Export Bank.  

What's shocking about US politicians is not that they can be bribed (Trump just removed the requirement that US companies disclose bribes made to foreign officials) but how CHEAPLY they can be bribed.  I think that politicians should be required to get at least 10% of what they are giving away – that way, maybe they will become rich enough that they aren't constantly looking for the next handout.  EXLM hands out BILLIONS of taxpayer Dollars to Top 1% Corporations – Ryan should have gotten at least $500M, not $5.3M!

If Trump wants to make America great again, he should start by negotiating the bribes on behalf of these politicians – teach them how to sell out for real money.  Doubling the access fees at Mar a Largo to $200,000 for 500 Members put a quick $100 MILLION in the President's pocket (per year), which means that fee alone is worth $800M if he serves out two terms.  Now doesn't Ryan feel silly?  

Just yesterday, the President elminated the Stream Protection Rule, which demands that miners monitor the water quality downstream from their mines and keep the pollutants at acceptable levels and even (gasp!) requires them to restore the stream to it's original health once they close their mines and move on.  The cost of compliance with this regulation was $81M a year for the $100Bn US Mining Industry (0.08%) yet less than $8M (0.008%) was spent to get the regulation tossed out.  Well, that and a few dead Cub Scouts, of course.  

Have a great weekend, 

- Phil


Provided courtesy of Phil's Stock World.

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