Wednesday, March 25, 2009

The End of Capitalism?

Well, here I go again on my political stump preaching about things other than the market. I will get to the market later. If you don't want to read my "political economy" rant, just scroll down to the "RANT OVER" section.


Driving home tonight, I listened to some of the financial networks and was really disgusted at what I heard. It made me sad actually. Sad at where we are headed in America. We were built on capitalism. It is what makes the U.S. so great. It is what made the U.S. the world leader in productivity, currency and freedom. Along with capitalism comes greed in the private sector. What is wrong with greed? Absolutely nothing. It is what drives capitalism. Without greed, there is no capitalism.

But these "media personalities" on the radio where more than I could handle. The quote that got me so mad I almost pulled off the side of the road just to get out and kick a tree, was the commentator saying, "there are too many stupid people on Wall Street making $10M a year, and as a capitalist, I think that has to stop!".

Uh, say what!?!? He is a Capitalist and thinks that capitalism is bad????? How does this guy get on the air? How does he have a job???? As a Capitalist, I find his comments anti-Capitalistic (is that a word?) and thus, anti-American.

Then, some blow-hard congressman looking to make a name for himself gets on and talks about regulating and limiting executive compensations for ALL corporations trading on the public stock exchanges.

SAY WHAT???? Is this the United States of America or was I transported to Russia overnight??? This was a United States Congressman!!!! Are you kidding me? This is obvious class war-fare and obviously a push to socialism. We are near the end of the capitalism era in the U.S. with leaders such as this in Washington. Taxes will go higher over the next 5-10 years and unlikely ever to go down to our current levels ever again. The more you make, they more they will take out. No incentives for starting up your own business with higher taxes and limited compensation for companies that succeed. Perhaps the beginning of the end of the public stock exchanges themselves is upon us. You think I am kidding? Consider this. What company will want to go public or stay public if they are going to be regulated and limited by the U.S. government?

I feel ill. I feel like this is a bad dream. But I hope this is all just talk and this period in our history will be forgotten. Just a bad period in our history like the '70's which gave us Disco, pet rocks, Chia pets and the Ford Pinto.


Interesting move at the end of the day. A solid sell off from 820 to 791 with high volume, and breaking through a key resistance of 804 with a little difficulty but once it got through, was a free fall to 791. Yet, it bounced right back above the 804 resistance with no problem to close in the black at 818. An obvious short squeeze.

This tells us what I was expecting at the beginning of the week. We are going to have a great trading market for awhile. There should be 3 rules of thumb in your trading day:

1. You have to take profits on any significant moves. Don't hold too long thinking this is the next big move. Take your profits and be happy.
2. Don't chase. The market will come back to you. It really will. It may not be that day, but it will come back soon.
3. Stay nimble and don't get over extended. By this I mean, doubling down when the market moves against you could overextend you and put you in a position where you are forced to sell with a big loss if the market does not come back to you for awhile. This means appropriate stops and not putting all your cash on one side or the other.

We closed above the 804 resistance so the market sentiment stays bullish. The VIX though is truly telling us that this rally is near an end, at least for a short term. With the bullish nature of the market movement, the VIX should be under 40 but instead it stays solidly above. A sure sign that volatility rules and any significant move up will be turned back due to being overbought. And likely the same goes for big moves down.

So, my belief is we are in 1 big trading range which is split into two smaller trading ranges. I believe the trading ranges we are in are from 800-850 on the bullish side and 750-800 on the bearish side. Over the next few weeks I can see where we battle through these trading ranges as a consolidation period and to weed through the mixed news the market is getting.

Tomorrow we should gap up once again based on the move today. We should have a couple of good reversals creating some good trading. But pay attention to that 804 range. The key is the market needs to close below to get into the bearish range, and above to stay in the bullish range.

And I almost forgot...

It is day 3 since Geithner plan. Still no word from the banks on their opinions.
... Crickets


  1. 18 days

    time, not price

  2. Hey Enjoyed the rant cause it's exactly how I feel! You would think these Dolt's in Congress would learn the the Soviet Union was a failure and it trashed the Country for 50 years and their still a mess.

  3. what do you think of vix today? It's waiting to touch 39 tomorrow then reverse up to 45-47

  4. Will be posting my thoughts shortly

  5. You guys might enjoy my blog at

    I too can have a blog !

  6. The author of this article is wrong!! Plain and simple.
    Those who believe that capitalism is better than socialism are either too parochial in their views or are ignorant of the socio-political and economic reality of capitalism. In other words, you either are too ignorant to realize that capitalism has failed or don't know how it really operates. This current crisis is the swan song of capitalism, finally. Its demise is long overdue. After decades of plundering and exploiting the masses for the profit of a few, I believe it is high time for capitalism to exit through the back door in disgrace.
    Capitalism is a predatory and exploitative concept in which the few ensure that the wealth created by the many ends up in their hands.
    Tent cities are budding like spring flowers across the States and we have seen in the last 3 decades the most unequal distribution of wealth in history. If that is democratic, then those who believe that capitalism is still the only way of the future will inevitably get what they deserve.

  7. The author is full of it :) the only reason the Wall Street bankers were making 10m was the Fed was pushing cheap money into the equation, the Russians had centrally managed production, the yanks have centrally managed consumption through debt, its a system that been totally engineered on debt not capitalism , most Americans are off with the fairies, the trouble the bad dream has ended and the reality is even worse. The wealthy thinks its sustainable to sell the country out form under the feet of the middle classe, as Buffett say in 2006 the rich have declared war on everybody else and at the time his side was winning, folks are just waking up to this .