Stocks blithely ignore traditional warning signs
by Rick Ackerman
Originally posted Sep 29, 2010
I wrote here recently that the stock market is almost completely driven these days by algorithmic trading and prop-desk automotons who couldn’t care less about whether the ups and all-too-infrequent downs of the broad averages accurately reflect “reality.” Following is a post from the Rick’s Picks forum by “3 Lions” that nicely frames the insanity of it all. The theme is especially timely given the mini flash-crash perpetrated in bullion Monday night. This brazen, quasi-criminal shakedown not only allowed DaScumballs –aka the Night Shift – to steal gold and silver futures for far less than they were to fetch later that morning in more liquid markets, but to pick off widows and pensioners in some key stocks that trade round-the-clock, such as Apple, IBM and Google. –Rick Ackerman
UNEQUIVOCALLY, WE HAVE REACHED A WATERSHED OF THE U.S. STOCK MARKET and therefore global stock markets. Never mind whether traders or investors are making money or not; the stock market has now become nothing more than a casino where the “table” almost always wins. Business-news channels in the USA are nothing more than offshoots of Hollywood sitcom studios which 20 years ago would have been rejected for children’s TV as being too dumbed down. The U.S. stock market has become so far detached from reality that justifiably it cannot be called a stock “market.”
Those of us who believe that one of the best ways to keep proper tabs on the financial charade is by perusing the consistently accurate touts in Rick’s Picks should spare a thought for those still bogged down in ancient trading methodology, such as Elliott Wave analysis, that began life when the stock market was indeed a “market.” A trading/investing friend of mine had 24 years in a row of profits until 2009/2010, when his proprietary trading method failed dismally. During the last 18 months, Bob Prechter has had more wrong calls than the Shanghai telephone exchange, and Dr. McHugh likewise. (I must point out that I have great respect for both of these men — they are still as clever as they always have been, it is just that the rules have changed).
It even looks like the otherwise invincible Charlie Nenner has got the top wrong (some say he is a secret agent of Goldman Sachs, but he does get it right 90% of the time). There are so many charting indicators (i.e., no fewer than six Hindenburg omens) that say this market should be collapsing – but it isn’t…so far. To cap it all, the infallible and rare VIX Bollinger signal almost two weeks ago signaled “down, down, down,” but in fact we have gone up, up, up! Meanwhile, the latest figures reveal that U.S. corporate insiders are selling 1411 shares (!) for every share they’re buying.
Undoubtedly, this market will not go down until “Da Boyz” are totally overwhelmed by some kind of trigger event that sets off a chain of events that will see the legs of their “table” collapse. It will be a “flash crash” of immense proportions rather than a “stair-step” decline. The only thing that is still favorable to Main Street is low interest rates, so when they start to rise, that will most likely be the trigger.