The Market is Always Led by Catalysts

Oil still has nothing to do with the market. The market is always led by catalysts, whether it be the FOMC, oil, or unemployment.
It is now high priced oil, fed by option traders that lead the price, and the never-ending bad news on banks that triggers the downside.
When downside or upside occurs FEAR or GREED then take over the market.
News are just triggers. Cycles are cycles. News or events trigger the cycles.

From a subscriber:

So here I am, completely new to trading (about 4-5 months), and completely confused about what the heck is going on!! ! month ago we were flying high in the mid to upper 12,000's and now people are discussing when we are going to fall into the 10,000's again! I understand that you cannot predict what the market is going to do. I understand that you are teaching us how to develop an edge to trade the market and obtain quick, 20-40% profits. I love your system and I believe in your system. The one thing I am having trouble getting is your DOW projections, the 21 day cycle and how or what affects the market.

I was at the Library with my girls and I found this book, called Pick Winning stocks by J.K Lasser. In the book he speaks about the following:

* That the stock market has become a victim if overselling by market insiders whose primary goal is to drive up prices well beyond their actual worth. Saying that the market has become an overvaluation pyramid-type scheme where the insiders profit the most when the market is overvalued the most. Is our market overvalued right now?
* He mentions a very secretive group known as the Working Group on Financial Markets, made up of investment industry and government people, who would be in just the right position to rescue the market whenever it is poised to retreat or substantially collapse...also knows as The "Plunge Protection Team." Basically indicating that the market is manipulated by people both on the way up and on the way down.
* He mentions our credit crisis, our over-spending, and our lack of savings as a country. This formula only leads to complete financial ruin...which is where our country is headed...in the not-so-distant future (how much time do you think?).

Floyd-This is the stuff I write of each week, and he sounds like me. The PPT is a well known group, many traders believe they exist.
I believe right now it is Bush and team trying to hold the market up for the Republicans to have a chance to win in November.
The market is always manipulated. Everything he says is true, but it's been going on for years. We deserve all that is happening to us, but it's likely that the market will turn up when least expected, as the recent downturn has gone on too long. If this is unable to be "held", however, we will simply enter a recessionary longer term period, and puts will lead our recommendations. Much depends upon this week and next.
Even in a recessionary period there will be exhaustive gaps up. There always are.


The bottom line is that he is basically saying, "All is not as it appears!" And that we are in serious trouble. Which echoes what you teach as well. I guess the major questions I have are the following:

1. What really controls the market?
Institutional traders.


2. Do you even know who are the powers that be and what dictates their decisions?
Fear and greed. It is not a conspiracy, but simply market manipulators. It is critical traders do not begin believing that conspirators control the market. This is much like saying that Bush planned 9/11. Many believe this, and it's hogwash. It's simply normal events taking over, and now the USD and price of oil that couple with subprime losses that never seem to stop being exposed.


3. One month ago you were certain that we were staying in the 12,000's. Now we are heading towards the 10,000's. Looking back, was there something you may have overlooked? Is there something we can watch out for in the future to help us recognize in advance what is going to occur? Did the point and figure charting indicate a potential drop of this magnitude?
No, this is much like in January when the drop became precipitious on news, and triggered back. The difference now is that oil is building it's own bubble. All bubbles burst. Two years ago no one could see housing and interest rates as a bubble, and it's now obvious. Oil may not burst for some time, but something will burst. Shorts may soon lose if the market rebounds just as longs are losing now.


Let me tell you Floyd...I am with you and your system all the way. I'm just completely baffled that we had a drop of this magnitude over the course of a month and could not see it coming. I was wondering if we can do something to prepare for the next one (or potential bull run).
Typically, no. I sold out all our BCO stocks at 14,100, predicting a longer term downtrend, and was right. I missed this last leg down, over a two week period. I"ll miss things like this again. The end of the world is not near, and the market will not collapse.

3 to 6 month projections are not possible at any point in time for option trading, but are for stocks. We entered Gold and Silver and TIPS in BCO about a year ago, and are doing great. We sold short puts on banking 6 months ago and hit it right.

Bernanke followed Bushy on the USD (which is how oil is valued) and it's now caught up with us. Greenspan led this years ago with his "easy money." We are now caught up in what was done before.
If McCain is elected we will have a worldwide depression, as he will change nothing and the dollar will fall more, as oil is controlled by floor traders. McCain is a supply side economics politician, ready to stay in Iraq for 100 years. Someone has to pay for this. We are paying for it now. Communist China holds our debts.
Today's moves, which we detail within our Dow projections and open signals, DID allow profits for both of our recommendations, but profit taking must be fast and tight, as the market moved bi-directionally twice around 580. We need 100 points of upside that holds to show any changes to the market that can show a shift to bias.
Oil at 142.00 did not trigger more negative downside, an interesting note in a market that has had catalyst and trigger.