Stock Market Through October

bbbDon’t click on these headlines. They are images and just for display. September through Mid-October is the logical time for the market to crash. Will it crash? Everything under the sun is being done to hold it up. Headlines like the ones displayed here are not what they seem. They are designed to draw in short sellers to squeeze so as to help push the market up. The financial news, regardless of where it originates, does not report much genuine news. The financial news is an opinion management service and promotes faith in the financial markets. The only time a lot of bearish articles show up, is when there is a planned boost to equity prices. The more traders who short are expecting a decline, the easier it is for manipulators to drive it higher.

Who is buying stocks? The public is buying only a little and hedge funds are not buying much. Certain central banks are buying heavily. There is no way to tell exactly what the Federal Reserve is doing, but be assured, it is buying through surrogates if not outright. Friends of the Fed are creating artificial demand through the derivatives markets. These are large institutions which get advance information and other benefits from the Federal Reserve for helping make each day green. There are corporate buybacks. This is a type of corporate cannibalism that generates higher earnings and stock prices in the short run but that will eventually break the companies.  The Federal Reserve assures the corporations that they have their backs and that their buys will be profitable.

Think of this as a chain that will be broken. We don’t know what link will fail but when one does, the whole system will collapse.

Central Banks + Friends of the Fed + Corporate Buybacks + Short Sellers Getting Squeezed=Higher Stock Prices

The central banks will not fail. You as a citizen can only invest what you can earn and borrow. Central banks have no worry about taking losses. They get all the free trading money imaginable free, with just a click of the mouse.

Friends of the Fed are organized crime. They will participate as long as the Federal Reserve’s guarantees allow them to make a profit. They are the ones who squeeze short sellers. All of their trades are short term, sometimes just seconds apart. Friends of the Fed are the most likely link in the chain to break. When the Federal Reserve can no longer guarantee them risk free trades, they will disappear into oblivion.

Some corporations are already backing off of buyback programs. Many corporations have losing positions in their own stock already. The eventual losses will be devastating. Corporate officers love buybacks because they allow them to get paid the largest amount of money in the shortest period of time.  If the stock of their companies tank, corporate officers have little concern. Their cake has already been made and all they have already eaten it. Corporate buybacks could evaporate very quickly.

Short sellers amaze me. So many still trade is if they were in a genuine trading environment. They are shrinking in number because so many have gone broke.

There are two ways the market can crash this fall and they are both long shots. An enormous amount of stock could come on the market from unanticipated sources. A war or an assassination could trigger something like this.  Members of the Federal Reserve Open Market Committee could suddenly be overcome by guilt and confess as to what they have been doing and what the outcome will be. Definitely don’t count on that.  The other way is for one of the links to come undone. Friends of the Fed are not doing as well as they were. I know nothing of their exact profit and loss situation. They will cut and run sooner or later. I have no way to tell.

Central banks are not going to give up controlling stock prices. My expectation is that they will be successful in keeping the market up through October. It is getting harder to do. My portfolio consists of cash and just a few small positions in bear etfs. I am a good trader but I know my limitations.  Like everyone else who trades I would have to trade against the government based on what I expect the government to do. Even expecting the market to move higher through October I won’t go long. The chances of a huge one day washout are simply too great.

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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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