Thursday, December 31, 2015


False Moves & the Force Behind Them

QUESTION : Mr. Armstrong,
I’ve heard you refer to “the false move”, and have witnessed it myself. I know there is no conspiracy to ruin my day nor deter me from trading. I was just curious, what causes this?
Thank you,
PS-Merry Christmas!
ANSWER: The real energy within a market is always to trap the majority for then they lose money and it forces them to cover their position. If 90% of the people are long, then any news can set off the collapse. If you scare the majority, there will be no bid when you try to sell, which results in a flash crash.
Likewise, the lows are made by excessive short positions. Again, something takes place and then the news sparks a short-cover panic. Likewise, because the majority are actually short, they are forced to cover and reverse the position which creates an abrupt swing to the upside.
DJ2731-W False Move
Therefore, markets always make the false move for that is the sling-shot that propels the market in the opposite direction. This is simply the REQUIREDmovement of markets to further an important directional change.
We may see that FALSE MOVE yet with a sling-shot on a very major scale. This is the BIG SHIFT that will set the stage for markets to align in order to prepare for what is looking to be the collapse of Western Governments & their Monetary System that is now way out of control. The closings today are an omen of what is to come.

“For auld lang syne”

Janus AE
January is named after the Roman god Janus who is pictured with two faces which we still celebrate on New Year’s Eve whereby with one looking at the past and the other looks ahead at the year to come. “Auld Lang Syne” is Scottish and as we sing “For auld lang syne” we are really saying “for the sake of old times”; indeed, should it just be forgotten?
Should auld acquaintance be forgot,
and never brought to mind?
Should auld acquaintance be forgot,
and auld lang syne?

Market Talk December 31, 2015

Trading Community
It was very dull day to finish 2015 but not really surprising given the performance we have seen for the year. Shanghai has finished the year up 9.4% but it was the smaller Shenzhen Composite with a YTD gain of 63.2% that was the shinning star. The Nikkei added to its annual gain by an additional 0.27% bringing the YTD to 9.3%. Meanwhile, The Hang Seng saw a small 0.15% daily gain but closes the year up +7.2%. Australia (ASX) closed the year down 2%.
Europe saw negative day across the board. DAX, CAC and FTSE all closed lower (-1.08%, -0.86% and -0.51% respectively). Probably not surprising but on the year the DAX was the best performer returning 9.5% and then not far behind that the CAC returned 8.5%. In the UK the storey was very different with a negative 4.9% return for 2015. As you can imagine it was the Commodity Sector that made the dent for many markets. Shares in the large producers (Anglo American and Glencore) made a massive dent on markets as their shares had lost around 70% on the year. Worth a mention, as it is year end, is the IBEX (Spain) as the market closes -7.15% for the year but was trading with a gain (in April) of almost 19%.
After a weak opening the US market has regained over a hundred and fifty point drop and then gave it up for the close with the DOW closing below last year’s closing warning that it is not ready still for a breakout to the upside most likely putting it off until 2017-2020.
The US Dollars performance has been the talk of many a market and not least against other currencies. The Euro lost over 10% having started the year north of 1.1950 while finishing it under 1.09. Against a basket of currencies the USD in general has returned around 9% for the year.
In the Bond market we saw more flattening (marginally) with a 1-3 basis point lower yield across the curve. 2’s are closing the day around 1.05% with the rest of the curve as follows:- 5’s 1.76%, 10’s 2.27% and 30’s 3.01%. For the year the 10yr note has risen around 15BP whilst 30’s has gained 32BP. 5yr notes have gained 19BP and finally 2’s added 45bp’s for the year.
Finally, Gold has fallen back but held the 1044 number for the year-end closing. Silver significant ground closing well below its year-end number indicating that the deflationary wave is still in motion. Oil held the $35 number closing just over $37. This will leave $40 as the critical pivot point for the new year.

Iraq Threatens War with Turkey

Middle East Map
Iraq warns that it will take military action against Turkey if they do not withdraw their troops from their territory. This would get complicated since Turkey is a member of NATO. So who is on whose side? Is Turkey just abusing its NATO status to attack Russia for 7 seconds of violating its air space when it has invaded a neighbor itself?

NYSE & NASDAQ Stop Loos & GTC Orders


NASDAQ and NYSE are acting really insane cancelling stop loss orders and GTC (good until cancelled). These type of orders it appears will be discretionary with some brokers, but the exchanges will not accept them. The problem becomes the burden of putting in these orders everyday. Look for brokers who will accommodate these traditional orders. Read the fine print, though. Some may classify them as “discretionary” so if they forgot to execute them they would not be held responsible.

Closings Today will be the Year-End Signals


The Holiday Schedule is below. The closing for our models will be TODAY and for the most part this will be a full normal day.
We are hovering around our year-end numbers in many markets from gold and the pound to oil and the Dow, which if it closes lower than last year 17823.07, then there is a risk that we will see further consolidation in 2016 and the Phase Transition will be far worse pointing to 2017-2020.  As we move into 2017, this will be the year from Political Hell since the direction of the world is on the brink with political elections which may yet prove to be a revolution and generational shift in so many countries not the least will be the US elections in November 2016.
Silver is already below its key number warning it is weaker than gold. Gold is trying to hold on to 1044, but the day is just starting. The S&P500 number for the close will be 205890 whereas in the DAX it lies at 1036700. In the British pound, the number is 15200, but the main number will be 146.12. Of course in Crude, the key number will be 35.11.
This is just a few markets. Today’s close will signal what is to come for 2016.

Equity and Option Markets
Thursday, Dec 31  Regular Hours
Friday, Jan 1  Closed
Monday, Jan 4  Regular Hours

Spot Forex
Thursday, Dec 31  16:00 CT – regular close
Friday, Jan 1 Closed
Sunday, Jan 3 16:00 CT – reopen

Futures Holiday Schedule  Equity Products
Thursday, Dec 31  1600 CT – Regular close
Friday, Jan 1  New Year’s Observed
Sunday, Jan 3  1700 CT – Regular open for trade date Monday, Jan 4
Monday, Jan 4  1600 CT – Regular close

Interest Rate and FX Products
Thursday, Dec 31 1600 CT – Regular close
Friday, Jan 1 New Year’s Observed
Sunday, Jan 3 1700 CT – Regular open for trade date Monday, Jan 4
Monday, Jan 4 1600 CT – Regular close

Energy and Metals Products
Thursday, Dec 31  1600 CT – Regular close 
Friday, Jan 1  New Year’s Observed 
Sunday, Jan 3  1700 CT – Regular open for trade date Monday, Jan 4 
Monday, Jan 4  1600 CT – Regular close

Grain Products
Thursday, Dec 31  Regular close – Per each product schedule
Friday, Jan 1  New Year’s Observed
Sunday, Jan 3  1900 CT – Open for trade date Monday, Jan 4
Monday, Jan 4  Regular close – Per each product schedule

Livestock and Lumber Products
Thursday, Dec 31  1355 CT – Early Close
Friday, Jan 1  New Year’s Observed
Monday, Jan 4  900 CT - Lumber market open  905 CT - Livestock markets open  Regular close – Per each product schedule

Russell Equity Index, U.S. Dollar Index, and Mini Metals
Thursday, Dec 31  Regular Hours
Friday, Jan 1  Closed Monday,
Jan 4  Regular Hours
Sugar No. 11, Coffee “C”, Cotton No. 2, Cocoa, and FCOJ Contracts
Thursday, Dec 31  Regular Hours
Friday, Jan 1  Closed
Monday, Jan 4  Regular Hours

VIX Futures
Thursday, Dec 31  Regular Hours
Friday, Jan 1  Closed
Monday, Jan 4 Regular hours (extended hours open at 17:00 CT on Sunday evening)

Maximum Gift One Can Give Anyone in Business is $25

The hunt for money is absolutely destroying everything. The IRS has placed a maximum on the depreciation of assets. Any high-end cars over $40,000 must be paid for with after tax dollars. This will have some impact on the high-end markets. States are already sharing revenue and info. As of January 2014, if you buy a car and have roots in New Jersey and Pennsylvania, you have to pay the higher sales tax; then the dealer has carves it up and New Jersey gets its 7% and 1% goes to Pennsylvania.
States, such as New Jersey, already impose a second surcharge sales tax on any amount over $45,000. They call this the rich man’s tax. You pay the gross sales tax on the full price of the car and then a surcharge on any excess over $45,000.
Now on top of this, the IRS has imposed a $25 limit for ALL business gifts you give directly or indirectly to each person during your tax year. A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. You cannot even buy an employee dinner.
“Bob Jones sells products to Local Company. He and his wife, Jan, gave Local Company three gourmet gift baskets to thank them for their business. They paid $80 for each gift basket, or $240 total. Three of Local Company’s executives took the gift baskets home for their families’ use. Bob and Jan have no independent business relationship with any of the executives’ other family members. They can deduct a total of $75 ($25 limit × 3) for the gift baskets.”

NYSE & NASDAQ Ending Limit Risk Orders — You Are On Your Own

The New York Stock Exchange and NASDAQ are terminating stop-loss and good-til-canceled orders beginning Feb. 26, 2016. They are claiming risks occur from such orders during volatile trading. They are really admitting that there is a liquidity crisis. Additionally, going after high frequency trading and demanding that they turn over the source code to the proprietary systems will send the smart firms out of the markets. Cancelling these type of orders will only increase the risks for the average investor. The assumption has been that a flash crash takes place, these orders are elected, and then the market recovers. Complaints then materialize with hindsight, as always. Eliminating these types of orders will work in the opposite manner when there is a real decline, for they have the tendency to create a bank of sellers on any bounce and others are carried out bankrupt and unable to get out in a panic. As always, this demonstrates the one-dimensional thinking that screws up everything. This may lead to more jumpers as we saw back during the 1930s.

Department of Justice

The Department of Justice (DOJ) has announced that it’s suspending a hugely controversial program that allows local police departments to keep a large portion of assets seized from citizens under federal law and funnel it into their own coffers. This program has been converting police agencies into criminal organizations by seizing people’s money without any connection to a crime.
The DOJ has announced that it is not ending civil asset forfeiture; it is simply ending the “equitable-sharing” program, which has given the police the option of prosecuting asset forfeiture cases under federal law instead of state. Typically, federal law has far less rights than most states. Federal forfeiture policies are, therefore, far more permissive and they do not really have to show any evidence of a connection to a crime. Allowing police to keep up to 80 percent of assets they seize is outrageous. They have actually seized more money than all crimes in 2014 and 2015 combined. The police have become the risk rather than criminals.
The police have become the people you avoid and never ask for help. Any contact with the police whatsoever will result in an immediate search of their database for anything on you. I have one friend who had a name that was on the no-fly terrorist list. What a nightmare he went through to prove it was not him.

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