Thursday, October 15, 2009

Emini Futures Trading - Why Are You Afraid?


For God has not given us a spirit of fear, but of power and of love and of a sound mind.

Fearless Intro: Why Are You Afraid? from UpWords Ministries on Vimeo.

Everybody I know says they need just one thing
And what they really mean is that they need just one thing more

I don't want to lose the eternal for the things that are passing
'Cause what will I have when the world is gone
If it isn't for the love that goes on and on
Rich Mullins via Chris B

An elder Native American was teaching his grandchildren about life. He said to them, "A fight is going on inside me.. it is a terrible fight and it is between two wolves. One wolf represents fear, anger, envy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego.

The other stands for joy, peace, love, hope, sharing, serenity, humility, kindness, benevolence, friendship, empathy, generosity, truth, compassion, and faith." "This same fight is going on inside you, and inside every other person, too", he added.

The Grandchildren thought about it for a minute and then one child asked his grandfather, "Which wolf will win?"

The old Cherokee simply replied... "The one you feed."

How did JPMorgan earn so much money in such a bad economy?

We begin with a bit of skepticism. After all, we know consumers aren't borrowing. Consumer credit is going down. So they can't be making money there. And we know businesses aren't expanding, so they can't be making money by lending to corporations either.

Wait a minute. JPMorgan is a bank, right? Don't banks make money by lending money? Yes...that's what we thought. Then who is JPMorgan lending to?

The only net borrower is the government.

The Financial Times confirms that Morgan's "US consumer businesses continued to bleed, with its credit card unit losing $700 million in the quarter and its retail bank...barely breaking even." It wrote off $7 billion in uncollectible consumer loans - more than twice as much as last year.

Its mortgage group lost money too. And it surely didn't make any money helping US business build new factories and expand payrolls.

So what does that leave? All the components of the business that have to do with the real economy are losing money or barely breaking even. What's left?

The news reports attribute the huge profits to "trading." But trading is a broad category. And our guess is that if you look more closely you will find that JPMorgan made its money the old fashioned way - by ripping off the government.

'You mean, JPMorgan took the feds' money and now is showing huge profits because it is just lending money back to the people they got it from? '

Yes. But not only that. They're also probably speculating on gold, oil and stocks...along with everyone else. The feds' money has pushed all these speculative trades into profit.

'And now, they're going to pay themselves big bonuses, aren't they?'

Yes. The papers tell us, "bonuses explode on Wall Street to a new record."

'So, then...when the next crisis comes...they won't have any money in the banks, will they?'


'So they'll have to get bailed out again.'


'But maybe the next time the feds will wise up and just let them go broke.'

Not a chance. Wall Street has plenty of friends in the highest places in Washington. A report in today's media tells us that "Geithner Aides Reaped Millions Working for Banks, Hedge Funds." The aides earn about $150,000 for their government work. On the side, they advise the financial firms they're supposed to be regulating, and get paid millions.

Such a nice relationship. They make sure Wall Street prospers - even when it does stupid things. Wall Street makes sure they prosper - even when they advise the government to do stupid things. And when their gig is over in Washington they go back to Wall Street where they earn millions more. America's centers of political and financial power have a cozy little game going. It won't end any time soon. It's too profitable for both of them.

Until tomorrow,

Bill Bonner
The Daily Reckoning

Posted: 14 Oct 2009 09:23 PM PDT
Lot of email requests for an update after Wednesday’s Emini action. I sense an anxiousness to get Short or decide whether to stay with Short positions already taken.
Remember, market tops always take longer to form than market bottoms – and we just made a new high. So we need to see weakness and then a re-test first – and that’s if we just saw the high.
This rally is littered with commentators calling the top too early – including me with the weekly Hilbert Sine Wave turn at 920. I’ve learned my lesson.
Emini TRIN Indicator Image

TRIN Indicator (Emini daily)

The Better TRIN Oscillator has now reached +174. Overbought (obviously). If we see profit taking tomorrow this Oscillator will probably turn down. The Better TRIN Systems will signal profit taking and an initial Short position. That’s if we see profit taking.
Emini Hilbert Sine Wave Image

Hilbert Sine Wave Indicator (Emini daily)

Hilbert Sine Wave is yet to cross. We then also need to see price weakness for a cyclical turn ("End of Trend" warning signal) to be confirmed.
Emini Volume Indicator Image

Volume Indicator (Emini daily)

This is the chart that has me most concerned. We have not seen large volume profit taking at the highs. The largest volume has been Professionals buying on panic selling by Amateurs. And I don’t think the Pro’s have had enough time to distribute their Long positions yet. However, they were selling into the close on Wednesday – and so that might be the first step.
Good luck with your Emini trading.

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