Thursday, February 06, 2014

I'll Get You Before You Get Me

Did I mention that I don't trust this market? This morning DIS and YELP were up on great earnings reports. DIS is a long term keeper and YELP is a great growth story with little earnings. I bought both pre market and sold both into the early whoosh up. I can always buy them back, but my credo is to opportunistically trade the momentum and grab the profits before Mr. Market lowers the next boom on us. This is strictly a stay in cash market unless one is very fast. And if the stocks go higher, so be it. I cannot be a pig in this environment.

Some charts:

SPY This morning the spy is bouncing a bit from its oversold condition. Is this the "fishhook of doom" begging the bullish chumps like Charlie the Tuna take a bite only to get hooked? Or is this just another oversold dead cat bounce. Real bottoms take time. In 2013 every bottom did not take time. Those "V" shaped bottoms may be last years news.

DIS popped to resistance on fabulous earnings. Can it break out. I may buy back with a tight stop if it does.

MU Pierced its old highs and fell back a bit. Lets see how it goes, but MU is very impressive having held up well during the sell off

YELP Another great growth report. Very high valuation and new high. We shall see if later in the day I can scalp another trade.

The question is do we trust this tape ahead of tomorrow's unemployment report. Not that the report is real. The chart below shows the real unemployment rate verses what the government reports. By "real" I mean the unemployment rate adjusted by the so-called discouraged worker effect. We all learned about the discouraged worker effect in college economics 101. The chart below shows what unemployment would be without labor force "drop outs."  Excuse my French, but "drop outs" my ass!

This time it really is different. The numbers are skewed up by epic proportions because chronic unemployment is not included in our unemployment numbers. Just because one is not entitled to unemployment benefits does not mean that one is "discouraged" and not unemployed. It really means that the government numbers are total BS. Hence it brings into question the true strength of our anemic economy. Look at this jump in so called "discouraged workers" To quote Mark Twain and Disraeli, "there are lies, damn lies and statistics."

And when our anemic economy has been propped up by the insane monetary growth under so called "modern monetary theory" AKA, same pumping, dressed in different clothing, what will happen to the economy when tapering continues. This punch bowl is going away. Can the economy grow without QE? Is the economy slowing right now just as the Fed cuts off the steroids? We still do not know. Tomorrow's report will give us some more clues.

Just look at this breathtaking growth in Fed stimulus! What has it done for the economy other than stave off death and created some asset booms in stocks, corporate profits, and housing? What is going to make the money go into real economic and employment growth?

BIG Capital Advisors and Seaview Partners are not responsible for your investment decisions. We believe very strongly in our opinions, but you must perform your own due diligence in making your investment decisions.
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