When Jim Cramer started shooting his mouth off about what the decline in Asia would mean for the U.S. stock markets, all I could think of was, he hasn’t learned anything in the seven years since he made this genius call:
( Mad Money Host Jim Cramer: Don’t Be Silly on Bear Stearns! https://www.youtube.com/watch?v=V9EbPxTm5_s)
During the beginning of the credit crisis, the PitBull told me that there was “rotten wood” floating around in the brokerage and financial stocks, which were the market leaders. The Bull went on to say that there was going to be a historic shift of money away from the US, and he was right. We called the S&P all the way down to 666.
So, when I think back, I believe one of the single worst calls of the last 10 years was from Cramer. I know Bob Prechter has been short for the last 20 years, and people love Cramer’s work, right or wrong, but when you look at that YouTube video and think of all the thousands of people who should have gotten out of Bear Stearns when they had that brief opportunity, but held it because Cramer told them to, it’s hard to listen to anything he has to say.
You see, I take a different approach to trading, and when I break it all down it’s based on volume, overbought and oversold conditions, higher highs and lower lows, and what the public is doing. When I know the public is all in I know it’s time to start thinking the other way. My other warning sign is whenever Cramer starts shooting his mouth off.
After he warned about China, it rallied 10%. Cramer is not the only one. There are tons of well-known market timers that have been calling the market wrong for the last 6 to 7 years, and you know what? They are still in business. I know a guy who has a service and he is short the S&P futures from 3,000 lower! How in the world can he still be in the business? And who would listen?
What I am trying to say is, do your own work, make your own conclusions, and search for the patterns that fit. You really can learn to see the patterns yourself and not have to rely on someone else you think knows better because he’s on TV. Sure Cramer can talk the language, and people like him, but I can’t listen to any of that stuff. Maybe for entertainment, but not for trading advice. I am an old school guy and just hearing that stupid stuff adds more confusion than clarity.
As for last Friday’s trade, it was long overdue. The futures gapped sharply higher, sold off a few handles and went roaring up into the buy stops. It then sold off a bit when the MOC came out $460mil to buy. The reason the futures pulled back is because the big firms front ran the buys, and once all the MOC buying was used up the futures fell. Overall it was a good day for the S&P as things come to a head in Greece.
In Asia 9 out of 11 markets closed higher, and in Europe 12 out of 12 markets are trading higher this morning. This week has a total of 20 separate economic releases, 4 T-bill or T-bond Auctions or Announcments, 4 Federal Reserve Bank presidents speak, Janet Yellen speaks, and tons of 2Q earnings reports. Today’s economic calendar has no economic reports and earnings from OZRK, and NEPT.
Our View: Runem up , Runem down. Deal or No Deal? We expect the news algos to go nuts today. The EU had only one objective, to reach an agreement, and after 17 hours of negotiations we have finally reached it. The ESU was down as low at 2052 in Globex Sunday night, and as high as 2087.50 this morning. Like the title to the video below, the Greeks were running out of cash and food. The unbelievable thing about this is they will have to draw up a new agreement in 6 to 9 months. It’s a doomed country.
This morning the ESU15 filled the gap back from late June. It’s been a long time coming, and while I may have been early when I said we would see a gap fill I never gave up on the idea. The ESU has pulled back to the 2082 area, and it’s possible we see more selling after the open, but I also do not think they have run all the buy stops. Our view: you can sell the early rally and buy weakness, or just wait for the pull back and buy ‘em. This rally is not over.
“The S&P 500, the Greeks, No Money in the Bank, and No Food on the Table”
As always, please use protective buy and sell stops when trading futures and options.
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In Asia 9 of 11 markets quoted closed higher : Shanghai Comp. +2.39%, Hang Seng +1.30%, Nikkei +1.54%
- In Europe 12 out of 12 markets are trading higher : DAX +1.30%, FTSE +0.63%, CAC+1.84%, MICEX +0.25%, GD.AT +20.03% at 7:00 am CT
- Fair Value: S&P-6.89 , NASDAQ -8.25 , Dow -85.68
- Total Volume: 1.57mill ESU and 7.3k SPU traded
- Economic calendar: There are no scheduled economic reports . >
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