I was hanging out in a Georgetown bar, talking trash and trading lies, when I was approached by a beautiful Russian spy...
Anna Chapman, Russian Spy
She sat down and said, “Secrets, tell me secrets... I have to know.”
So, like any red-blooded American male, I sold my knowledge cheap.
“Anna, you can't tell anybody,” I said. “But you are barking up the wrong tree.”
“What do you mean?” She asked, sipping her iced tea and flipping her hair back.
“You shouldn't be in Washington. Or New York. The strings of the world are pulled from the penthouse on the Jersey side.”
“Is Goldman in this?” asked Anna.
“Yes,” I said. “It's Goldman.”
“How do you know? Where do you get your information?”
“They feed you lies within lies, misinformation about deception. But you cannot lie to a chart.”
Observe yesterday's action:
As you know, the market had to close above 1140 on the S&P 500 or we would be in a free-fall to 680.
The chart above shows a clear head-and-shoulder pattern. Thomas Bulkowski in his classic book Chart Patterns has quantified this pattern as having a 93% success rate throughout history.
But no one wants another sell off. And so yesterday closed at 1,041.24.
“So, how can this happen? This is America, no?” she asked.
I imagine the conversation from the Federal Reserve Chairman to the CEO of Goldman Sachs going something like...
“This is Ben Bernanke here, get me Blankfein.”
“Yes, Ben. What can I do for you?”
“Lloyd. Good to hear from you. How's the family?”
“Nice Ben. Thanks for asking. We bought Sandy a new diamond-encrusted yacht for her seventh birthday.”
“That's great, Lloyd. But look, we have some serious issues here. The market wants to sell off and we just can't have that.
You know I've been feeding you 0.25% interest rates and letting you clean up on the carry trade...
And according to SEC documents you have total assets of $841 billion, quarterly revenue growth of 35.50%... Not to mention year-over-year earnings growth of an amazing 90.50% and a P/E of just 5.”
“Letting me, Henry?” scoffs Lloyd as he lights his Cohiba, reclines in his chair, and admires the amber reflection of Lady Liberty in his 21-year-old single malt.
“Yes, Lloyd, yes. We all know who is in charge.
But if you could do me a little favor today... It would be nice if you could hit your rally button just before the market closes.”
“Rally today? Not sure if it's good for me. My masseuse is coming in later.”
“Come on, Lloyd. All you have to do is start buying at 3:50. Look, tell your boys to go long and you can make a killing off the short squeeze.
You know, we can shaft those people who still believe it's a free market — like you did yesterday, when you put out that report saying Exxon would buy BP... Only this time, it would be bigger.”
Lloyd replies, with a hearty chuckle, “I liked that one myself, Ben. Exxon buying BP! That kills me.
OK. I'll hit the rally button, but you have to gut that financial regulation bill.”
“Done. Smoke and mirrors, Lloyd... Smoke and mirrors.”
The Goldman Sachs Building, Jersey City
Anna scanned the room nervously, perhaps afraid of an informant.
“But if it is controlled, manipulated, and bought... How can you make money? What, exactly, is going up?"
“Treasuries,” I replied.
“Three percent gains in a year,” Anna laughed. “That won't buy me love.”
"Ah, right you are, young lady. But that's because you don't know about the ProShares Ultra 7-10 Year Treasury (NYSE: UST)... "
“Is it good?”
“Only when it's bad,” I said.
"When investors get scared, they run to cash or safe returns from U.S. Treasuries.
The UST is an ETF that seeks a return of 200% of the return of the Barclays Capital 7-10 Year U.S. Treasury Index.
As you can tell, it only goes up.”
“But don't tell anyone," I warned her.
"It's a secret.”
Until next time,
Christian DeHaemer
Editor, Wealth Daily
I give this article 5 stars, if 5 stars is the best you can give.
article for indivisual investors,
will get 5Star rating from myself.