Alpha 2 Says “Cliff Ahead”

One step in hitting our goals for 2011 is BEING CAREFUL WITH OUR ENTRIES!  

As noted in last week’s Stock World Weekly, we have been rolling along this month right in line with the TradeBot’s Alpha 2 pattern that they ran last year and Elliot sent me an advanced copy of this week’s newsletter where he cleaned up the chart to match out the expiration dates.

I believe you will see why I still have a slight concern:

phil's stock world

Photo: Phil’s Stock World

Spooky, isn’t it? Don’t forget, we identified this pattern on the 3rd and we targeted 11,850 on the Dow and 1,285 on the S&P as the adjusted tops of our ranges and, so far, Lloyd and da Boyz have been firing on all cylinders to paint a picture that is just as pretty as the one they painted last January, right into expiration day, when the VIX ran all the way down to 17.50 (from 30 in November) as complacency reached extreme levels.  The tip-off at the time, that we were about to drop, was a sudden pop in the VIX on that Friday, back to 17.99, and by the next Tuesday we were back to 18.68 and, by Tuesday the 21st, panic was back in fashion and the VIX finished the day at 22.27 – on the way to 27 the next day.  Now THAT’s a sell-off!  


Is it “different” this time? How much are you willing to bet on that?  We’re not betting much, we’re cashing out the $10KP and we’ll see what happens next week, confident that we KNOW that if the market goes down – we can make money and if the market goes up – we can make money but we can make so much more if we wait for the right opportunity before placing our bets.  

As David Fry notes on his DIA chart, POMO does make this time different and it does seem like we are being hard-wired to buy those F’ing dips.  That’s OK, we can accept that if that’s how we have to play it but please Lloyd, show us that you are willing to break the pattern first – then we’ll be willing to step a little closer to the edge of the cliff.  Forgive us, of course, if the idea of standing next to you at a cliff when we know that you might make a Dollar for pushing us over gives us the creeps – it’s just that, well, we know you!  

Speaking of people who are willing to sell their country out for a Dollar – GE had excellent earnings and I got my daily “WHUCK?!?” moment this morning when Obama named Jeff Immelt the head of his Economic Advisor Panel, replacing Paul Volker who quit when he realised this country is totally being controlled by Soulless Corporate Interests who are embodied by none other than – Jeff Immelt.  

Yes, it’s the same Jeff Immelt who just signed a deal to transfer America’s Avionics Technology to China’s State-owned Commercial Aircraft Corp. of China who (and I mean who, not Hu, although it’s easy to see how this is confusing) intends to go into direct competition with Boeing, who is not only a top US military supplier but our nation’s largest manufacturing exporter BY A MILE – so much so that Durable Goods have to be measured ex-Aircraft to smooth out their shipping cycle.  

Boeing sells $68Bn worth of aeroplanes per year and has over $300Bn worth of orders for the 787 backlogged.  The company directly employs 157,000 employees, mainly in the USA and, as they build their planes here and tend to use American parts, they in turn employ roughly 1M more people, accounting for close to 10% of our nation’s total manufacturing employees.  As I mentioned when the deal first broke – the technology GE is turning over to China represents 100 years worth of advances in American avionics and, just because GE legally got their hands on the patent rights over the years – does not give them the right to put a bow around them and had them to Hu (not “who,” this time I literally mean Hu).  

There’s a word for what GE is doing.  It’s right at the tip of my tongue.  Oh yes, TREASON!!!  Oran’s Dictionary of the Law (1983) defines treason as “…[a]…citizen’s actions to help a foreign government overthrow, make war against, or seriously injure the [parent nation].”  Well, the supreme court just decided that our Corporations are citizens and have the right to give politicians unlimited bribes contributions as they exercise their right to free speech.  Why then do we not hold them to a citizen’s standards when they clearly take actions that are against the best interests of the United States of America?  

I wonder if a Paulson-like immunity from prosecution comes with Immelt’s job as head of the President’s Economic Counsel and I also wonder Hu benefits from having their main man firmly inserted at a desk in the White House?  Surely the timing of the appointment to coincide with China’s visit is not a coincidence.  As an M&A consultant, I have seen this happen a million times – a company (or country, in this case) is having trouble paying it’s bills and their balance sheet winds up in breech of loan covenants which prompts a visit from the President of the bank (in this case the PBOC) who wrangle some additional concessions and guarantees and, in extreme cases – the Bank asks that one of their boys be given a seat on the board so they can “keep tabs” on your progress.  

That scenario is bad enough when your bank is just a bank but when you borrow money from a competitor and put yourself in that position, you may as well pack it in because you essentially just spilled blood in the shark tank.  It’s only a matter of time before all your thrashing around, trying to stay afloat, turns into a selachimorpha version of a piñata game.  

Is this the beginning of a long and glorious partnership with our Chinese Masters or simply step 2 in the dismantling of America as Immelt Presides over the transfer of the rest of America’s Intellectual Property to China so we can cut out the middle (class) man as our Global Corporations expedite their operational shifts more and more overseas.  With only two years until the next election – there is the danger that the American people will wake up and demand action so, as happened during the final days of the Soviet empire – we can expect big moves like GE’s partnership with China to come fast and furious over the next 24 months.  

What are we doing about it?  Well, as I told you yesterday, we’re BUYING GE, as well as JPM and, if you can find any more loathsome Corporate bastards who have top-level access to the White House and a pocketful of Congressmen and Judges – we’ll invest in them too because the first step towards working your way up the ladder in a Corporate Kleptocracy is to realise you are living in a Corporate Kleptocracy.  Once you accept that – the rest is obvious…

So have a great weekend – the news doesn’t matter – we’ll just keep an eye on the Bots and continue to go with the flow, even if we have to hold our noses while we’re riding it out.   

Be careful out there, 


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