I admit that I am pretty lazy, and I don’t do a lot of technical analysis of markets and/or prices, but I do some charting of some things, and I naturally come across some of what others write about emerging chart patterns, and price-points, and channels, and bands, and stuff I don’t understand even more than I don’t understand any of this.
I bring this up because the other day I was, being a real peach of a dad, giving the kids some Kindly Fatherly Advice (KFA), which was to turn off the stupid TV and go out and get themselves some stupid jobs so that they could buy some silver to show me that they had some smarts and knew What To Do (WTD) when the damned Federal Reserve was creating so much excess money.
They did not leap to their feet, exclaiming, “Excellent advice, masterful and excellent father, and which will serve us well during the inflation in prices that will follow the inflation in the money supply created by the Federal Reserve which is, as you tell us, an un-Constitutional evil that is destroying us!”
Instead, they ignored me! The little bastards!
This, of course, irritated the hell out of me, and I thought to myself, “This chart of the S&P500 is like my feelings towards these stupid kids! Sometimes it’s up and sometimes down, like this peak here in 2000 where I would be happy with them because they were so cute and where, at worst, we politely ignored each other for weeks on end, or until my wife said, “Check on the babies, will you?” and I asked, “Okay! Where are they?”
At the time, I thought this was pretty funny, but which, I realize in hindsight, just opened a whole “can of worms” that resonates in my memory, even to this day, perhaps in the way she still calls me a “lazy worthless bastard,” or how I was the “worst mistake” she ever made and how starving, feral wolves would be better fathers than I am and blah blah blah.
That is when I would slide relentlessly down and down, like the graph of the S&P 500, down to where their idiotic pleadings (“Please love us, daddy!”) and incessant demands for money (“Give us money!”) take me to the depths of despair, only to rise again to…to…to…
The sudden use of the ellipsis at the end of that last sentence is indicative of where I, out of nowhere, noticed what looks like a huge head-and-shoulders formation! Talk about a classic chart!
The left shoulder is in 2000 when the S&P500 hit 1,500 before dropping to 820 in 2003, the “head” formation was after rising again to just over 1,500 in 2007 before falling to 680 in 2009, and now, after rising again to over 1,300, this would be a head-and-shoulders chart formation with the right shoulder lower than the left, and so, classically, it seems like a perfect, classic time for the market to collapse.
This is about as close to technical analysis as I get because I don’t need it because I have the Fabulous Mogambo Portfolio (FMP), and it’s loaded up with gold and silver, as it should be when the evil Federal Reserve is creating so much excess money and credit that hyperinflation is a certainty!
And with the FMP positioned to reap a windfall from a dead-bang certainty, what can you say except, “Whee! This investing stuff is easy!”?
The Mogambo Gurufor The Daily Reckoning
Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning , and other fine publications. For podcasts featuring the Mogambo, click here.
“Check on the babies, will you?” and I asked, “Okay! Where are they?”
“Check on inflation, will you?” and Ben asked, “Okay! What’s that?”
“Check on bubbles, will you?” and Alan asked, “Okay! Where’s the laundry?”
Mogambo is to family values as Ben & Alan are to fiscal values.
Oh we are all so freaking doomed!
Thanks GMG for keeping me in check. Buy Ag, sink JP Morgan. Drive out the money changers.
Wouldn’t that be a double top with the second low lower than the first? I believe in technical analysis about as much as I do that there is no inflation (have you seen the peice of cheese I need for my tacos?), but I believe that the chart formation portends a crash to below the second low (which is more than a 50% drop). Last time a larger drop only took 17 months. Isn’t it usually faster the next time?
Alas the price of my tacos has risen so much that I had to buy a live lamb so I can substitute the meat. Since there is no commodity contract for sheep, the fed fueled speculation has not yet inflated my soon to be lamb meat tacos.
I’m still trying to convince my neighbors that those sheep are dogs (nothing wrong with a dog in the ‘burbs), but at least I don’t have to mow my lawn anymore.
I’m about as good as you say you are when it comes to charts, but I believe that I have more than the basics down. So at the very least, chartists would believe that the next downturn in the market will “test” the support level put in at 820. If that support level is broken then the next support level is 665. So the first support level represents a 37% decline from today’s price (which will go higher over the next month). If that support is broken, then the next downturn can be about (or more than) a 49% drop. Technical analysts dont like to put in time frames, but I do, and I say that it will take 12-14 months.
And no, I don’t live in the ‘burbs. That part was a joke (so was the my sheep are dogs part). I actually live in the middle of nowhere where the roads are so poor that I’ve been either snowed in or flooded in for months at a time.
It’s also a place where I’d lose my home if the county decided to make real roads and charge the landowners an assessment for the work (which they can legally do).
But I’m serious when I say that the lack of commodity contract for sheep have kept their prices low. I feel that this is proof that Bumbling Ben in lying when he says that QE is not causing inflation and blames higher prices on emerging markets who are now eating more meat. Emerging markets are more likely to eat lamb than beef for Christ’s sake.
I recently purchased shares in a “virtual bank” – which holds Mortgage “assets” which claim to be guaranteed – with your comments about Freddy and Fannie being in over theuir heads – is this how they “solved” their financial dilemmas – by selling these assests to a “virtual” – if I am making 16% – how much of a risk am I taking with their “guarantee” – which I assmume is given by our enlightened government – should I hold on for a while, or, in your iopinion, am I about to get creamed?
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