Friday, December 31, 2010

Does The New Year Change Anything?

12/31/2010 - The year 2010 ended appropriately enough. The final day of trading was typical of the previous 364 days. The Plunge Protection Team and every manipulator on the planet was hard at work until the last minute of the last hour of the last day of the last month of the year. The first chart below shows the DIA in 10-minute bars for the last week of the year. Yes, December 31 was a Friday and it was New Year’s Eve. You would think that trading would be light and it was. The DIA traded 3.7 million shares. Over 600,000 of those shares traded in the last ten minutes in a ferocious buying flurry. Now, who would be standing at their station trading stocks a 3:50 PM on New Year’s Eve on Friday afternoon? Somebody obviously thought enough of the DIA to supply 17% of the day’s total volume in the last ten minutes in an effort to boost the stock indexes higher. I wonder who would do such a thing?  So, stock indexes had a positive year and ended on a positive note with a positive PPT pushing them positively. Does the New Year change anything? Nope. There’s just going to be more ‘positive’ from the PPT. Don’t attempt to adjust your portfolio. The Fed wants a market bubble and a market bubble they are going to get. Look at Chart 1.

Chart 1 - DIA 10-minute bars, intraday trading 12/27/10 - 12/31/10
Chart courtesy
Since the New Year is upon us, I’m going to keep this short. As strange as it may be, 2010 ended with the US dollar up for the year and the Chinese Shanghai Composite down for the year. Yes, the world’s most indebted nation enjoyed a rising currency while the world’s fastest growing economy (for those that really count) did not enjoy a falling stock index. See Chart 2. It would seem that manipulation will beat out growth. There in lies our strategy for the New Year.

Chart 2 - 1 year SSEC in candlestick and USD in green
Chart courtesy
Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. Advisory services offered through BMF Investments, Inc.

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