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Just got back from the Blues Jam. Early night tonight.

I was thinking of a friend of mine who’s a musician. He lives in a constant dilemma.

You see, he wants to play his own, original music for others, but they don’t show up to hear his music. They show up to hear the old familiar tunes, the ones they know and can sing along with.

He knows exactly how to bring in the crowds- he can play the cover songs like ringin’ a bell, as they say. He can drive the traffic if he wants to.

Here’s his dilemma: Does he ignore his own music, his passion, and cater to the crowds? Does he play his own songs for whoever drops by, and hope that one day the crowds come to him? Does he stop playing in public altogether?

Or does he continue to play covers, strategically inserting an original of his own now and then once the audience is in the house, so that they have to listen (much like throwing green leaves on a fire once it’s started, hoping it will be hot enough that they will ignite)?

If you gotta play at garden parties, I wish you a lotta luck
But if memories were all I sang, I’d rather drive a truck
But it’s all right now, I’ve learned my lesson well
You see, you can’t please everyone, so you got to please yourself
(Ricky Nelson, “Garden Party”, 1972)

If deflation caused by the credit market collapse overtakes the easing Fed and the falling dollar (leading us into a painful recession), we’ll hear about it from CNBC and FoxNews about nine months too late. Is there any way for the astute individual (who knows what shows up in the “news” is always past-tense) to spot the breakdown as it’s happening?

There is- watch the commodities, they react first.

Keep an eye on the charts of Oil and Gold for a top, see the dollar find a bottom against… everything, and when you’re comfortable we’ve rolled over into the spiral, plan your trades accordingly. What worked brilliantly the last year or so may suddenly stop working, and you’ll find your trades hitting stops instead of profit targets.

That will mean it’s time to get out the old playbook and mix things up, because we’ll be on the field with an entirely different opponent.

Related Links

• Refinancing Subprime Loans to Prevent Debt-Deflation
• Dollar Stronger against the Euro?
• The Fed Should Not Be The Hedge Funds’ Insurance Agency
• Speaking of Deflation…

I just heard Garrison Keillor reading a poem on Writer’s Almanac, after the news and before the music on NPR. It made my day. Thought you might enjoy it as well. It’s a poem called “When I Am Old” by Ray Nargis from Almost Tomorrow. The link I’ve inserted is the NPR affiliate link to Amazon, so they get the two cents if you buy it.

Here are some excerpts:

When I am old I’ll drink whiskey in the morning
And coffee at night
And laugh and spit and swear wherever I want.
When I am old I’ll help Girl Scouts across the street
Even if they don’t want to go
And I won’t have a car
And I won’t have a bike
And I’ll walk everywhere.
…
When I am old I’ll tell people exactly what I think of them
And surprisingly, most of the time it really will be good stuff.
When I am old I won’t have a TV
And I won’t have a radio
And I won’t have a computer or a clock or a phone in the house.
I won’t read books and I won’t read magazines
And I won’t read newspapers and maybe, finally
I’ll learn something just watching the birds and the weather.

In an email exchange with LP yesterday morning, I’d said that I was not looking forward to entering a trade before what amounts to a 5-day weekend, but that I may have to if we got anything other than another down day-

If we can get a light down day on SPY today then a positive close tomorrow, I’m in (grade of B). A gap down and reversal this morning (grade of A), or light drop today and OGRe tomorrow (grade of A+) and I’m in. Spike down to new lows, then positive close (A). Or just a plain positive close today (B-).

Well, we did get one of those, and I’m in:

The alternative to developing a method and then strictly sticking to it would be to enter and exit “by the seat of my pants,” and I still have a full-time job (which I’m ICK! about to leave for) to prove how well that works.

Coffee Pot Crisis

A little entertainment for this Thanksgiving Eve. My coffee maker is about a decade old, was maybe $20 new, but makes (made) the best-tasting coffee on earth. I’ve even bought newer, more expensive ones, then reverted back to Old Faithful.

Yesterday morning I shattered the decanter. Is it me, or do they make those things out of the most brittle, breaks- into- fatal- shards kind of glass on earth? Anyway, I don’t usually have panic attacks (often), but I did then. Mister, I have GOT to have my coffee!.

Here’s my rather inelegant, but amazingly functional solution (had to tear the no-drip valve out of the basket, but it’s one big coaster anyway now):

“Coffee Pot”

I haven’t been writing much lately. Lots going on. Bought a house. Remodeling before I move in. I have a picture of my Acura TL with 1200 lbs of ceramic tile in it I’ll upload one day. Low Ri-der don’t use no gas now, Low Ri-der don’t drive too fast.

Parasites still pursuing their lawsuit, but it’s being delayed due to some “bigger money” cases, which I take to be good news.

Have had multiple awesome job offers in a short period of time, may yet find the perfect combo of pay, schedule and autonomy and finally leave The Hospital.

Right now, I’m sipping my favorite Hot Drink for a Cold Night (it dropped over 40 degrees in just a few hours last night). Unfortunately I can’t reveal the super-secret family recipe.

(Note this is not the famous cider promoted on the Bob and Tom show by the Dickens company…)

One of these and a bit of reading Vonnegut or Watts or Pirsig, and a crappy day becomes a very relaxing and pleasant evening.

Oh, and the market-

As I wrote last month, I took what was left of my account (mostly drained due to legal and home-buying circumstances) and loaded up on PUTS. The RSI(4) method I developed last Spring and Summer was screaming “short,” and I was just ready to get on with it, one way or the other. As mentioned, on October 5-10, I bought PUTS on QQQQ

I bought PUTS on GE

And, of course, I had to buy PUTS on AAPL

After time decay, the AAPLs ended up in the red, but the GEs and the Qs did ok. I did not manage to blow up.

Which brings me to my newly discovered rule of how the market works: The Market does not want you to lose money; it simply wants to foil any plan you have, which just coincidentally usually is a plan to MAKE money.

Monday afternoon (I have witnesses who hate my guts), I had had all I could take, the RSI was screaming again, and I flipped out of all the PUTS and fully into CALLS on the Qs. I actually entered very near the bottom of that candle:

I fought the overwhelming urge to sell those CALLS Tuesday on that Long White Candle, staying with the odds that after such a run the market would gap up Wednesday morning. It did, and I sold almost immediately. Nearly 200% in a day and a half.

I actually was so “in the groove” that I flipped again and bought a half position of PUTS Wednesday morning, but I had to go lay ceramic tile (see new home reference above), and sold them before lunch for a small gain, 20% I think. Guess if I had held them you’d be seeing the Snoopy picture again.

Anyway, I discovered, or rather remembered, why the different jobs and a few thousand more dollars working for someone else still doesn’t appeal to me…. because my time with my daughters is paramount, and as for income, this is my passion, this is where I want to make my living. As a guy I love dearly said in a trading interview last year,

The autonomy. It’s all on you. No one else to take the blame when you mess up, no one to steal the glory when you shine. YOU are the rate-limiting step, or to paraphrase Seinfeld, the master of your domain. I think trading attracts doggedly-independent individuals for that reason.

$100 Oil. $850 Gold. Federal Reserve Easing. China mentions diversifying, loosening the peg, letting the yuan rise. Dollar tied firmly to whipping post:

Potential Wolfe Wave-type reversal mentioned in previous post has failed spectacularly.

Are we headed for $150 oil, $1200 gold and $2.00/euro? I don’t believe so. Note that a falling dollar would be the market’s natural method of correcting the ills of a massive trade deficit and a spendthrift government. (Here’s where I get to link to my diagram from over a year ago).

I still think the impending debt-deflation from an imploding mortgage market will outstrip the Fed’s ability to inflate us out of this crisis by once again rapidly expanding the money supply.

I would like to point out that, equity-wise, neither a catastrophically falling dollar nor a catastrophically rising dollar is a positive thing. We are on a tightrope here.

Even though I’ve discussed the potential for a falling dollar for years, I currently lean in the direction of a dollar bottom and rise because that’s now the extreme contrarian viewpoint, and I’m, well… me.