Friday, June 24, 2011

6/24 Weekly Commentary

The stock market started a broad trading range 10 days ago and I've been playing defense since then.  I've been using the short-term timing component of I1 over the past several weeks because the 8-day lead is easier to visualize with this series.  I1 also has an 8-day lead.  In the past leads have temporarily developed within I1 after traumatic events.  World sentiment is "risk-off" and the markets have not fully reflected that reality. 
I'm pinpointing Wednesday as the final day for this respite from an ongoing bear market.

The stock market is supported by SPX and Nasdaq 200-day M/As. 

NDX and ND futures are forming a potential H&S bottom.  If so then the breakout and rally needs to begin pronto to make my Wednesday top day.  With no breakout then there will be a 13-day trading range with distribution throughout to propel the next down move.

Gold and silver fell on the crude news.  Today silver closed on it's key daily M/A:

Gold broke it's short daily M/A and if silver and stocks recover into Wednesday then a re-test of this M/A is likely.

Ben delivered a downbeat economic assessment and is mystified why the ocean of stimulus is not bringing jobs back to our shores. Ben, the plants are gone and polishing each other's shoes is not a long-term economic strategy. The next day Obama released 30mil barrels from the Strategic Petroleum Reserve and twisted the arms of other IEA member countries to do the same amount. They have now thrown the kitchen sink at the U.S. economic rot and, like fish fighting the Keynsian hook, are being drawn inexorably to the waiting net. I'm still betting that the U.S. will change in time to avoid street riots by the left. The Tea Party members of congress are holding fast and the dems are ramping up their blame campaign. Personally, I think that holding the line at no tax increases is an economic mistake as well as a political one. A plausible debt plan is needed to prevent the market taking over. This needs to include revenue increases as well as spending cuts. We need to stop relying on supply-side economics, specifically the Laffer Curve and stim via the military. We are beyond the point where party economic voodoo will get us out of this mess. Supply-side (Reagan) economics is not Austrian economics. I think some or many of the Tea Party congressmen understand this but the rest of the Republican party is stuck in Reaganist doctrine. Draconian cuts in government spending at all levels are required, including entire departments being eliminated and the military slashed to the bone in order to implement the Austrian solution. So while Boehner is supporting Tea Party members at this point but that support has not faced the ultimate test.

There are 2 separate fights going on. One the Dem/Keynes vs. GOP/Reagan has been going on for decades. Now we have TeaParty/Austrian vs. GOP/Reagan. The American public still believes in the power of government so the Austrian school is not politic and may swing votes back to the Dems next year. If GOP retains control of the House then the American political spectrum will shift away from belief in big government.

Converting to a newsletter next month in PDF format and e-mailed.  Comments welcome.


  1. Steve,

    Would the blog still exist via subscription?


  2. Dan, the blog would contain a pointer to the published entry. The entry would also be delivered via email as well as Facebook or Twitter if you desired them. So yes, the blog would still exist.

  3. Haven't commented in awhile, but wanted to stop in and say you are doing well and I check your blog often. Will definitely subscribe to the pdf.

    All the best,

  4. Hi Steve,

    One of the best blogs out there, I would definitely subscribe. Thanks for all your work.


  5. Steve

    I PDF would actually be preferred, some times when I try and print a copy of the blog for future reference, it gets messy (incomplete). I am one of those that needs to re-read articles so they can sink in better.


  6. PDF is fine. Twitter and Facebook are not for me. If you go subscription, have a look at ibankcoin PPT model. It has been reliable; based on WordPress.

    P.S. Please do not use that gawd-awful Scribd. Not even for uploading PDFs.