Stock Market Next Week

081417

Very little has changed in a week. Notice the green index at the bottom of the chart. Again, prior to an acceleration to the upside, friends of the Fed load up on bullish derivatives ahead of time.  Usually, before the market launches there are multiple articles in the media outlining reasons why doom is just around the corner. This is to draw in short sellers to fuel the advance when the trigger is pulled. Those news stories are missing going into the trading week.  Again friends of the Fed participate in return for advance information. To participate they must make a profit. They will not take any risk.

When they cannot profit even when the Fed helps them they will cut and run. The market will crash. I know this is mostly a repeat of what I have already said.

The market will not drop as a result of supply slowly rising above demand. That kind of drop can be managed and it is often orchestrated as a way to draw in short sellers. If a fast drop occurs, it may continue.  The lack of etf volume is an indication that friends of the Fed are having trouble staying in the black. This has been a long standing feeding frenzy, so they won’t cut and run just because they take a one or two day loss. They will cut and run when they ascertain that there is no more profit to be extracted out of the unaware.

The free money for helping the Fed actually started during the Reagan Administrated and has continued to the present with very little interruption. The central economic planning also started during the Reagan administration and has continued to the present also. It is a testament to the free market philosophy that it has taken this long to destroy the system.  But, it has been destroyed and there will be hell to pay.

Again, the crash can occur on any day but there is only a low probability that it will happen on a given day. The potential consequences are to great to justify holding long positions. The market does look much more vulnerable than it has in a long time. We still cannot rule out the chance that central banks will just start buying outright with newly created unearned money. I am still holding a pile of cash and own just a few bearish 3X etfs. Sorry I can’t be more precise. I know my limitations and that alone has saved my neck more than once.

There is a good chance the European markets will start to tank prior to the U.S. markets. Keep an eye on that.

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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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