U.S. stocks took yet another idiotic leap yesterday, presumably buoyed by news of a ghastly increase in the U.S. trade deficit. Of course, on Wall Street these days all news is fabulous news, and so no one should have been surprised when the broad averages leaped to embrace and celebrate this latest, absolutely appalling evidence of a failing U.S. economy. The Commerce Department reported that imports exceeded exports by $42.3 billion in May. A dip below April’s already frightening enough $40.3 billion deficit had been expected, but it was simply not to be. One analyst attributed the latest increase in imports over exports to the stockpiling of Chinese goods by U.S. retailers and producers fearful of a trade war. If so, Wall Street’s best and brightest are bound to see this prospect as a win/win development, since the very process of losing such a war would necessarily ratchet up the flow of cheap Chinese goods into the U.S., stimulating more borrowing by American
consumers. That should please the Keynesians, too, since it would give the nation’s tireless, ever-patriotic shoppers a chance to pick up the apparent slack in government borrowing caused by a growing reluctance on Capitol Hill to ratchet up the U.S. debt ceiling beyond its current, so-far ineffectual, threshold of $13.2 trillion.
Rally Suits Us Fine
Meanwhile, if stocks should continue to rise it will suit us just fine, since the rally so far has been as predictable (and therefore easily tradable) as the rising epidemic of Chlamydia among U.S. teenagers. On Monday night, for instance, with index futures flatlining, we advised subscribers who monitor the markets in the wee hours to jump on the E-Mini S&Ps if the futures tripped a “buy” signal at a predetermined price. The recommendation was geared toward traders who are proficient at using the Hidden Pivot Method, but if you want to imbibe the advice in all of its particular details, including a chart showing the predicted “takeoff” point, click here. In the actual event, the futures contract hit our entry trigger and never looked back, providing an uninterrupted 11-point cruise that could have been worth as much as $550 to insomniacs and traders in time zones outside the U.S. We are obliged to note as well that just because this trade worked so nicely is no reason for you to infer that we could repeat the trick even once in a thousand lifetimes. Moreover, futures trading is so very risky and difficult that most people who attempt it never even come close to succeeding. So caveat emptor! Just one last detail: There is still an important Hidden Pivot rally target remaining for the E-Mini S&Ps in this cycle. It lies at precisely 1108.25, as stated in the trading tout linked above, and you can do with it what you will.
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@SJM
What is going on right now is a mish-mash of decisions by BP and the Obama-trons. Even if BP wanted to drill six production wells, no way will Obama and his minions allow that because they have halted all Gulf drilling. I agree with you that the relief wells can fail and there is no back-up plan. Drilling six more production wells is a back up plan and should have started immediately. But these are exotic drilling rigs that are booked up worldwide. You have to find some that are available.