Watching Timothy Geithner.

He’s a decent poker player. He likely understands probabilities. He could use some help with bet sizing. He could use some work with sales. I’ve given him my opinion on a thing or two. He may make a decent cameo for the movie cc: theConsigliere et all

The S&P 500 traded in a narrow 10 point range today. The pit was very quiet. As previously chronicled here, the big money has been ominously quiet during this equity run up.

The bond has been trading in a narrow range of late. However, it is trading at the high end of that range as I write.

ZN_F 120 Minute Chart

In today’s edition of Trader Art, I present the S&P 500 Index. As noted on the chart, the same setup from May of last year is taking place this year.

History doesn’t repeat, but it often rhymes.

If history has taught us anything, it’s that history teaches us nothing.

The Setup

Peace

“The reason the dollar is strong right now is because investors consider the United States the strongest economy in the world, with the most stable political system in the world.  I don’t believe that there’s a need for a global currency.”
-Barack Obama
March 28, 2009

In many of my musings here at Trade the Picture, I have written of the dollar being a short and US bonds being a short. I believe this to be true AT SOME POINT. I was not sure when that would be. I have more clarity now. The bond and the dollar are not shorts here and now. It is my thesis that the dollar and the bond will rally fiercely. As this happens, equities will weaken to new lows.

The Bond and the dollar are the same. They move together. Think about who needs the dollar stronger. First, the United States does. We are starting to hear the President stress this fact. Second, China needs the dollar strong. Why? Because their currency is pegged to the dollar. Why else? Because they are the largest holder of US bonds.

The shills on TV keep declaring a bottom in equities. The shills don’t trade. The only thing the shills want are viewers, so they can sell advertising. Why do people even bother watching the propaganda that the television feeds them? I think I know why. History. If history has taught us anything, it’s that history teaches us nothing. Knowing this, the TV shills will continue their game. Meanwhile the cycles that have happened over and over again will play out.

Peace

This is, in essence, the entire story of the stock market, as I have found it. Like the South Sea Bubble, the great tulip trading mania in Holland, the Ponzi swindles, and the chain letters of the depression, it is kept in motion by one thing–faith. Sometimes the chain is broken, confidence lost, the whole house of cards comes tumbling down, and we have another Wall Street crash. Then it starts all over again.
-Nicolas Darvas
Wall Street: The Other Las Vegas

A relatively quiet day on Wall Street today as the dollar rose so equities sank.

Someone mentioned that there was a meeting amongst bankers today. Of course, more important than the meeting was the press circuit. Special emphasis was likely placed on make up and less expensive clothing. After all - this bonus scandal is a bit hot right now. Best not to wear the $10,000 suits around for a while.

Supposedly, one of these guys that runs one of these banks (hint : $BAC) declared over the television that at the meeting everyone decided that “we are all in this together”.

Now that, my friends, is the epitome of irony. YOU’VE been in this together for a long long time. Unfortunately, what YOU were in on (excessive use of leverage and negligent risk management) is what brought US here. Now YOU are declaring WE are all in this together. Unfortunately most of US aren’t running around with multimillion dollar bonuses in our bank accounts. Now WE are all in it together. Why ? Because of the losses that YOU racked up through deplorable risk management and excessive leverage. Now, all of this has to be paid for by US.

And that just isn’t right. Is it?

Peace