Sunday, January 6, 2013

I have a theory

I am sure it is not unique, but worth sharing nonetheless.  My view is the Federal government is desperate to get the stock market back to being the tax revenue engine it was under Bill Clinton.  Incomes are flat, and national income is not going to be growing anytime soon. They have a problem; how do they goose the stock market and yet control inflation in food and energy.  Their answer has been suppression.

First is was lowering interest rates, then massive selling of interest rate swaps, then massive selling of volatility futures, and massive selling of alternative investments like gold and silver, and probably energy too.

We have however have reached the point of marginal utility.  Interest rates are zero, the largest open short interest in silver ever, and the largest sell off in volatility ever.  These are just the tools I can readily see.  Math and physics are taking over, we are reaching infinite intervention amounts with less and less effect.

Please take a look at the charts from Simply stunning, and ties into my thesis from last week.  Talk about blowing your wad.

My charts

I exited the week pretty light, and stand ready to buy volatility on my signal, and sit back through earnings season and watch.  Miners and natural gas companies look poised and some are already moving higher.  I am and will take some trades in this area.  Have a great week.

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