A One Woman Lean Mean Trading Machine – Slow Bleeding Markets

Headline trading this week. Rule of thumb : Ignore the news ! Forget your emotions ! 

Global perceptions of the situation has shifted with Bernanke and one FOMC. People are getting convinced, some more unconvinced and even more are shifting to the sidelines, including me. Even the FOMC members are unsure.

• Fed’s Evans called for more stimulus : “Monetary Policy Can, Should Take Additional Steps.” 17 Mar 12, Dow Jones Newswire.
• Fed’s Lacker says Fed May Need To Raise Target Interest Rate in 2013. 16 Mar 12, Bloomberg.
• Fed Nominee Powell : “Tremendous Risk” In Fed Exit Strategy; Can’t Shrink Balance Sheet Too Early and “Snuff” Out Recovery. 20 Mar 12, Dow Jones.
• Fed Kocherlakota : Expects Inflation of 2% or Higher In the Next 2 Years; Energy Prices Not A Major Factor. 21 Mar 12, Dow Jones.
• Bernanke : The Gold Standard is “A Waste of Resources”. 21 Mar 12, Forbes.
• Fed Bullard : Fed on Pause, More Stimulus Isn’t Warranted; Adding More Stimulus Would Complicate Exit Strategy. 23 Mar 12, Dow Jones.

Then came the PMIs. Utter disappointments, all of them, this week. And the talk of the China coup which ended with the deletion of Bo Xilai from search engines. Ireland falls back into recession. Spain and Portugal widens. Empty shops in UK hits new record.

Positive news : Baltic Dry Shipping Index is UP ! Crude took a tumble probably on lack of development on the Iranian front and not so much from Saudi hype on production increases, dropping the most in 3 months. Japan runs a trade surplus at last in Feb. US Jobless claims fall to a 4 year low. Hermes bags record 2011 profits !

Goldman Sachs makes a strong bullish call on the market saying it is “more compelling today than anytime in the last generation”. http://articles.businessinsider.com/2012-03-21/markets/31217778_1_equities-long-run-performance-returns-than-government-bonds

I am confused. And I am definitely not alone. Eminent economists and hedge fund legends are taking opposing stands. It is best summarized in the link  below. 

http://www.businessinsider.com/stock-market-bull-bear-battle-2012-3

Nassim Taleb aka Mr Black Swan, breaks silence to talk on CNBC. http://video.cnbc.com/gallery/?video=3000078341. He fears hyperinflation and I AGREE ! It sums up what I have been writing about in the past week which is starting to come together now in my little head. Click here for more on currency wars and here for my watermelon prices story.

The past week has been a massive trading week. Short EUR, then Long EUR, Short AUD, then Long AUD, Short EUR/JPY, Cut Loss on EUR/JPY, Short EUR/JPY again and Took Profit. Short Silver, Long Silver. Long Gold, still long Gold. Long Gold/EUR, funded. Long Silver/EUR, still long.  Trade and trade some more.

My brain has been whirling like a mini microprocessor with emotion thrown in. “Read, Chew, Digest and IGNORE the headlines !”.

I am not surprised I emerged somewhat battered but slightly victorious.

Yes. I am wrong so far about some things (GOLD, VIX, EUR, S&P 500) but I will try to make things right. The big picture is quite dire and we have not hit bottom yet. Sometimes when you turn your books around, the ship leaks a little. It is unavoidable.

Ashraf Laidi tweeted this.

When looking at past highs/peaks in tech analysis, one must distinguish between “reaction highs” & “impulsive highs”

The past week has been half use of the trading paradigm, courtesy of an old friend Paula in HongKong, who is another Lean Mean Trading Machine (LMTM), courtesy of her legendary LMTM mentor in London.

Market Expectations		Fundamentals
Market Positioning		Technical Analysis

Positioning and T.A., Fundamentals and Expectations count for nothing in this flux.

It is a slow bleed, this one. The market is too tired for mass hysteria and appears to be working itself into a stupor.

There is really a lot more to say here, as the GCW III (Global Currency War) plays out. But I think we have 2 weeks left to the next Non Farm Payrolls which will probably seal it for Q2.

But how did we ever get to thinking that a hundred thousand US jobs is going to save the world ?

Meanwhile, there is a Marmite shortage in New Zealand while the new IPAD burns 10 degrees too hot.

And Dalai Lama talks about money and fear here.

http://online.wsj.com/video/the-dalai-lama-on-money-and-happiness/6D57A3FB-B092-492D-811E-3E79AAE4A97D.html

There is some truth in it as we learn that at the heart of Steve Jobs’ leadership was Zen.

http://www.forbes.com/sites/frederickallen/2012/03/20/the-zen-at-the-heart-of-steve-jobs-genius/

I, for one, will not be expecting much enlightenment next week as we go back to the slow grind of uncertainty and the slow bleed into the end of Q1.