Are you hoping when you should fear and fearing when you should hope?  Fear and hope are strangely intertwined emotional states.  Next time you feel either, think about whether you should be thinking about the inverse.

The market did not do too much today.  The S&P 500 ($SPX) is destined to break down through support from December 29th at 857.  I am not sure if it will fall through gradually or suddenly.  Whichever way, nature’s math will prevail.  It has no choice.  It is written.   Stay tuned to Trade the Picture.  You’re on the right channel.

S&P 500

What is nature’s math?  I’d describe it as the circadian rhythm of the universe.  Nature’s math is the foundation of all we are.  The building blocks of everything, from waves in the ocean to biology to fashion and market trends.  Everything beats to the same rhythm.  Strange place.

We live in Hyperspace.

Peace

The Swim

We hope, however, to obtain a real understanding of the problem of exchange by
studying it from an altogether different angle; this is, from the perspective of a
“game of strategy.”
-John von Neumann and Oskar Morgenstern
Theory of Games and Economic Behavior

The theory of games is a theory of decision making. It considers how one should make decisions and, to a lesser extent, how one does make them. You make a number of decisions every day. Some involve deep thought while others are almost automatic.
-Morton D. Davis

I recently flagged the short entry. Discussing this decision with my collaborators at
The Tinker Factory, our conversation veered off to Game Theory. Stay tuned for more announcements regarding Game theory and all of it’s implications.

Peace

The complexity of a decision is minimized if you view things visually, that is, if you Trade the Picture.
-Mr. Volatility

The Reflection

To everything - turn, turn, turn
There is a season - turn, turn, turn

-The Byrds

It is time to go short again.

The market has been inching higher on light volume.  Yesterday’s sell off is an ominous sign.  It is a tell for tomorrow’s economic numbers.  They will not be good.

It is time to ride the next wave lower.  I said I’d let you know when.  It’s time.

Peace

The U.S. Dollar is consolidating.  Consolidation precedes expansion.  The next expansion in the dollar is likely down.

US Dollar

Gold is moving well.  It is up nicely since my post on October 30.  The oldest trick in the book works and works and works, until it doesn’t.  When it doesn’t work anymore, there could be a larger scale attempt at manipulation.  Think 1933.  All of this is good and supports my thesis that the action in gold is going to be mind blowingly bullish.  The media will be shocked by it’s velocity.  Everyone will be rushing to own it.  All the while, my store of energy will be building.
Gold can only be held down for so long. Increasingly, the mathematics will demand the courage to face it’s implications.

Gold

The Office

Do or do not, there is no try. -Yoda

Peace

Let’s take a look at the current relationship that the dollar has with the U.S. Equity market.
As you can see it is inverse. Dollar up = stocks down.

spx-vs-dollar

How is this relationship going to look moving forward. In other words, tell me about the future.

While not a psychologist, I do have some experience with markets. And my experience tells me that this relationship has to change. It has no choice. It will roll in ecstasy into my bankroll. What we are staring at here is deep into the eyes of volatility.

The decoupling of this relationship is going to happen. We are no longer going to see the dollar rally as stocks go down. We are going to see the dollar decline as stocks go down. If you don’t believe me, allow me to elaborate with a picture. From our history. Take a look at the chart below. This is what the relationship is going to look like. The dollar and stocks will no longer have an inverse relationship. Position yourself accordingly.

Nothing changes in the markets. Just the participants.

usd-vs-spx02

Until we meet again….I’m back. Back in the New York groove.

Peace