06/04/2012 Live Update

[CounterTrend]

http://www.georgesoros.com/interviews-s ... nto_italy/

fairly amusing and right on rap by Soros. if you are not interested in the (fairly concise and simple) stuff on reflexivity you skip down about a third of the way to the para starting " until recently my interpretation of financial markets was either ignored or dismissed" where he starts fading into a very nice section on the euro zone. esp a cute idea on the timing of any crash being roughly 3 months (based on greece and germany cratering if they take longer)

two key points if you are skipping it--

(1) ask your self if your technical trading system assumes a 50-50 chance of tending to order (stats and past patterns) or disorder (stuff getting seriously whacko). TA Traders like to take the position that they are above rational markets--but in fact they usually get killed on any serious change as "that didn't happen last time". So ta only works 80% of the time and often the other 20% can be where the fast stuff happens.

(2) consider what this stuff means about your personal life. What soros did (which now a small number of people take for granted--but which at the time was seriously hot stuff) was see that living systems do not act like physical systems (so a dog does not act like a rock). Now i learned this stuff from a different angle which was information theory and we used the world "learn". so living systems cannot be understood in the same way as physical systems since living systems learn--physical systems do not. if you toss the same rock at 100 dogs you will get varied responses which themselves will change if you do this 10 time so each dog and learn what is going on--or odds are some dog will bite your ass at some point. if you take the same rock and drop it--you will not get this pattern and the rock will act egg-xacty the same every time.

The problem in trading is how to grasp this point--everyone now expects liquidity to be the answer. But the fact is the problems are so messy that it is going to be harder than usual to even come close to using this solution in a meaningful way over time. Everyone if forced would likely admit that if things continue in the direction we are going at some point there is going to be a "dislocation". But at the same time everyone will always say "it's not this time" maybe it's next time.

The problem in our lives is much the same. it is easy to see our lives continuing--yet as time goes on the chances of a larger change are huge. When we look back we can usually find a pattern (such as not using our bodies for 10 years and getting sick--or a belief that starts a war which is totally bogus so that 80% are for the war at the start and 20-30% at the end the other 50-60% usually cannot remember the point they changed their minds--the same with all medical econ etc)

the issue here is how to learn prior to the bad feed back loop--that is lurking out there. the Euro Zone and USA are clearly blowing it so far.

and this really brings up (what i think) is Soros' greatest contribution. Even beyond his theory--is the idea that "economic theory is wrong" and has been so for a very very long time. What we are looking for here is a different way to see all econ-theory--and that is why this whole mess is so long and drawn out. One of the info greats (Bregory Bateson) pushed the idea "the map is not the territory" (an idea that shows up in the fine car chase movie Ronin where esp amusing to info theory guys is the point that never in the whole film does anyone learn what is in the case they are all killing each other over--an fine meta take on life)

So right now econ theory is the map that is not the territory--it is wrong--most of the world is focusing on the map and not looking--and that is why we are here. and it is also why there is likely an event starting Now or fairly soon--that is going to "tend to disorder".

"order" is understanding the old econ theory that forced this situation to come to pass. oddly disorder is "understanding the old theory failed--and a new theory is actually evolving in real time". so order is often a delusion--whereas disorder is actually the truth emerging. when this happens to us it's usually resisted and there in lies most of our problems in life. (and trading)

in terms of phyiscs--econ theory is like the old newton "bridge building stuff" and the new theory is more like "string theory".

good luck to all traders (beware dogs that look like rocks)

Soros...A wiley Fox. Aging Globalist seeing his obsession/dream threatened...The last few days he has been out drumming up the usual dose of fear to sway the public and european lawmakers to get them begging for a bailout.

[ClarkW]

BIG H&S chart on World (ex-US) Index via http://blog.kimblechartingsolutions.com ... djune4.gif

[taggard]

Modern Monetary Theory is a post-keynesian fraud. http://moslereconomics.com/mandatory-re ... -is-money/

Its motto is "mosler´s law:" MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

louie

if this is what MMT is--then no that is not what i was referring to. this idea is still very simple "if this than that" and doe not take into the rock dog thing. the idea is that concepts like a rational market where you have simple absolutes which are not gamed by almost everyone is the problem. in turn this idea of a rational market assumed all sorts of stuff was a simple absolute--so that a so called rational person could then factor all this stuff.

the problem is the stuff we are trying to factor is in fact "not staying in the same place while we are thinking about it" AND "due to our imperfect understanding and personal bias--we are usually in a state of mild delusion"

so generally any simple absolute idea in econ is at the very least suspect

a statement like "There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it." would fit that since it could be gamed by dogs who are learning. the trick is the basis of the econ theory has to somehow include the idea of "disorder" and "learning" which is frustrating for guys trying to write simple laws to comprise a theory.

good luck

[Petsamo]

Asia had a chance to respond to US bad jobs numbers. The Nikkei & Hang Seng sold off as expected. India rallied some from their open. The DAX closed unchanged from their open. Europe had their chance to respond to US bad jobs numbers Friday.

[MrMiyagi]

London is closed today and tomorrow.

[lcgllc]

VIX failed to make new high on SPY new low, perhaps we'll see some volitility profit taking into Tuesday turnaround and potential overnight positive headline risk

[louie]

Modern Monetary Theory is a post-keynesian fraud. http://moslereconomics.com/mandatory-re ... -is-money/

Its motto is "mosler´s law:" MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

louie

if this is what MMT is--then no that is not what i was referring to. this idea is still very simple "if this than that" and doe not take into the rock dog thing. the idea is that concepts like a rational market where you have simple absolutes which are not gamed by almost everyone is the problem. in turn this idea of a rational market assumed all sorts of stuff was a simple absolute--so that a so called rational person could then factor all this stuff.

the problem is the stuff we are trying to factor is in fact "not staying in the same place while we are thinking about it" AND "due to our imperfect understanding and personal bias--we are usually in a state of mild delusion"

so generally any simple absolute idea in econ is at the very least suspect

a statement like "There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it." would fit that since it could be gamed by dogs who are learning. the trick is the basis of the econ theory has to somehow include the idea of "disorder" and "learning" which is frustrating for guys trying to write simple laws to comprise a theory.

good luck

Right. I was just "asking" about the MMT (don't agree with it). Along with what you are saying, my "personal" biggest fight is with confirmation bias. Really hard to distance and look at all possibilities. And as far as "gamed system", I have a VERY STRICT day trading rule: all cash at the end of every day - no matter what! I miss some very large moves with that but I'm way too old to let these Players play me

[louie]

VIX failed to make new high on SPY new low, perhaps we'll see some volitility profit taking into Tuesday turnaround and potential overnight positive headline risk

My XIV position been green all day. Came very close to stopping out but never did. STRANGE!

[KeiZai]

D

[champix]

This time, seems a real breakout on CL
Long 83.56 target 85.50 stop 83.56 let's see...

[CarlosDK]

Cobra are there any chances that we could have formed a short term bottom today ?

[Petsamo]

SPY & the banks made a double bottom.

XLF has a p-bar

[Cobra]

OK, i think all my calls have been fulfilled, now let's see how this rebound goes.

[Cobra]

Cobra are there any chances that we could have formed a short term bottom today ?

I don't see bottom pattern yet, but still 2 hours to go, maybe everything would be changed.

[L_T]

taggard: are you referring to MMT?

what is mmt?

Modern Monetary Theory, I prefer MMR as an explaination to how econ theory has changed.

LOL. Measure Move Target.

Modern Monetary Theory is a post-keynesian fraud.

http://moslereconomics.com/mandatory-re ... -is-money/

Its motto is "mosler´s law:"

MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Actually MMT is a very clear and accurate way to describe the way most fiat-issuing nations monetary systems operate today. This guy has a great website and excellent paper he wrote describing such:

http://pragcap.com/understand-the-moder ... ary-system

[CarlosDK]

Cobra what do you think about euro 30min ? what pattern do you see ? if bullish that might help markets up ?

[Cobra]

I think this should be a 2 legged rebound. we're on the 1st leg.

[SWalsh]

Big News today....some on MoveOn.org are calling their Kenyan leader a psychopath as he kills by drones and continues the war he said he would end immediately while breaking his promises and feeding Wall Street. Unless you were living in the dark, it is of no surprise. We little people get to see the market's demise begin and the increasingly less powerful HFTs stuff quotes in the new game of, "Trading For Pennies: Or, I made all the Bids I Could So Please Don't Indict Me". They will attempt to save the pig whose lipstick is smudged and missing....

The collapse is setting itself up nicely in all traded vehicles. Some H&S projections are for new lows. Still, they will give it a try for a kick-save. It will fail as 2008 Redux starts to meld into place. I suggest guns & ammo, canned good, and bottles of Jack as investments. King Ludwig II has been on a bender and it will be one helluva hangover:

[Petsamo]

USO got excited

[louie]

L_T, pragcap is into MMR not MMT.