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Central Bank Manipulation Is Enough to Keep You Up At Night

I warned yesterday before all the news was out overnight that we almost had to stay awake all night and trade 30 minute bar charts because of the current degree of “flexibility” in the cycle patterns, and the nasty habit of extracyclical factors–little things like central bank manipulation–upsetting the apple cart. When markets can move 4% overnight before NY opens, even the idea of swing trading becomes a joke. As for long term investing, good luck with that. All it takes is one mean, stupid, and futile gesture by a bunch of central bankers interfering in a thin, illiquid market, and your short side profits earned through careful observation, discipline, and patience are gone. Poof!

For now, the gambit has worked, and the big interference has tilted cyclic wave patterns to the upside for a move that could last a few weeks or die tomorrow. Within illiquid trading ranges, big moves and rapid reversals are the norm. The solution is to give up sleeping and just trade the electronic futures 24 hours a day on intraday charts. Really. What else can you do?

For practical purposes, we had some forewarning of a short term up phase, so this isn’t a total surprise. We should stay focused on the short term cycles up to 6-7 weeks (low to low, not low to high), and grab profits quickly when they are available.

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S&P 500 Chart
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