Stock Market Follow Up

426537_img650x420_img650x420_cropLast week I made the point that the all of world’s money creating power will be employed in an effort to move the stock market higher during the time of year that is most likely to host a market crash. That effort is going on right now and that is why stocks are going up.

There are commercials on the radio advertising products to invest in to protect assets during the certain stock market crash that is just around the corner. A hand full of billionaires are now warning everyone about stocks being over priced. The only way a crash can occur now is for an huge negative external event to take place. Because of the nature of crashes, they don’t occur when folks are prepared.

Again, the various plunge protection teams around the world have unlimited funds to work with. They take no personal risk. Every day, just like today, key stocks on charts will look like they are just on the verge of breaking down. Experienced technicians will recognize the patterns. However, stock prices are not being determined by supply and demand. The overwhelming majority of traders, professional and amateur still believe stock prices are being determined just as they always have been. Short sellers are offering their necks to the high frequency trading firms.

Notice the stocks that have fallen off this fall. All but a few are the kind that earn actual profits, have real revenue and can’t make any pretences. Stocks where value is created by hopes, wishes and dreams are always first to fly higher. Moving the Big Cap indexes higher is always the first choice. If that doesn’t work efforts are made to move the mid-caps. If nothing else will move, the Russell 2000 gets goosed. On any down day that is initially uncontrollable, the high frequency firms start sending out feelers to find  any stock where shorts can be squeezed. Any time downward momentum slows the high frequency firm start stabilizing the price much like is done during new offerings. All consolidation patterns become bullish. Phone calls are made to firms with buyback plans assuring them someone has their back. Complex algorithms accomplish the simplest things. There is no need to know the formulas. These are some of the things the algorithms do.

The chances for a down market between now and 2016 has been seriously reduced. I am scaling back bearish positions. Patience will pay off. It looks like there will be more time to get short, unless of course the external negative event occurs. I will take that chance.

Two things can eventually happen and both are bad for the stock market. Americans who are dead from the neck up can come to their senses or the ongoing political agendas will do so much damage to the economy that even the hope and dream corporations will follow the path of stocks that have to rely on actual results that cannot be embellished,



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About Fantasy Free Economics

James Quillian independent scholar,free market economist,and teacher of natural law. Who is James Quillian? Certainly I am nobody special, Just a tireless academic and deep thinker. Besides that, I have broken the code with respect to economics and political science. Credentials? Nothing you would be impressed with. I am not a household name. It is hard to become famous writing that virtually no one in the country is genuinely not in touch with reality. But, if I did not do that, there would be no point in my broking the broken the code. If you read the blog, it is easy to see that there are just a few charts, no math and no quantitative analysis. That is not by accident. Given what I know, those items are completely useless. I do turn out to be highly adept at applying natural law. Natural law has predominance over any principles the social science comes up. By virtue of understanding natural law, I can debunk, in just a few sentences , any theory that calls for intervention by a government. My taking the time to understand the ins and outs of Keynes General Theory is about like expecting a chemistry student to completely grasp all that the alchemists of the middle ages thought they understood in efforts to turn base metals into goal. Keynesian theory clearly calls for complete objectivity. Government can only make political decisions. Keynesian techniques call for economic decisions. So, why go any further with that? Fantasy Free Economics is in a sense a lot like technical analysis. Technical analysis began with the premise that it was impossible to gain enough information studying fundamentals to gain a trading advantage. Study the behavior of investors instead. Unlike technical analysis, I don't use technical charts. What I understand are the incentives of different people and entities active in the economics arena. For example, there is no such thing as an incentive to serve with life in the aggregate. In the aggregate, only self interest applies. It is routinely assumed otherwise. That is highly unappealing. But, I am sorry. That is the way it is. I can accept that because I am genuinely in touch with reality. Step one in using Fantasy Free Economics is for me to understand just how little I really know. A highly credentialed economist may know 100 times what I do based on the standard dogma. Compare the knowledge each of us has compared to all there is to know and we both look like we know nothing at all. There is always more than we don't know than what we do know. I am humble enough to present myself on that basis. Why? That is the way it is. I am not bad at math. I have taught math. What I understand is when to use it and when to rely on something else. Math is useless in natural law so I don't use it. While others look at numbers, I am busy understanding the forces in nature that makes their numbers what they are. That gives me a clear advantage.
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