Stand By to Make Ready.

http://stockcharts.com/c-sc/sc?s=CEW&p=D&b=5&g=0&i=t13310476131&r=1464877547533

...emerging currencies turned toxic this morning with EMLC on the threshold. The southern winds continue to die and TLT is posed for a cross in a couple of days.

Rock Popping Up Above 50 DMA

http://stockcharts.com/c-sc/sc?s=FXY%3AFXB&p=D&b=5&g=0&i=0&r=1464876312725

...I don't use the 50 at all but it illustrates what I'm currently seeing on the sonar/sounding with the 'rock' sticking up now above the 50.

No Clue Where QGMIX has it's Money

http://www.marketwatch.com/investing/fund/qgmix

...between ASAIX and QGMIX, the Q is in a fund classification the GA would be in. Whatever they have done over the last four months has gone south. They might be set up for a crash, or maybe it's a case of being whipsawed. All in all not a good year for them...so far.

Bookies...Don't Believe the Polls.

http://www.marketwatch.com/story/bookies-still-deem-brexit-unlikely-and-for-good-reason-citi-says-2016-06-02

...the Scots turn tail, and so will the Brits when voting date rolls around.

PIMCO...Rocks? What Rocks?

http://www.investing.com/news/economy-news/pimco-sees-'significant'-chance-of-brexit-vote-in-uk-406034

...even if Brexit happens, it's no biggie (according to PIMCO). Sorry guys the GA will not take the risk.

Most Interesting...Brexit Mindset.

http://www.nytimes.com/2016/06/03/world/europe/britain-eu-brexit.html?_r=0

...Merkel of course is being back mailed by 4.0 million potential migrants on Turkey's shore.

Trump to Visit UK 'The Day After'

http://www.rollcall.com/news/politics/donald-trump-scotland-brexit-stumped-eu-uk

...Trump, not surprisingly, is a supporter of leave.

Spring Winds From South Dying Down.

...if they reverse and start blowing out of the north it will be an easy tack down to catch the Canary Current picking up cargo of UUP/Index Shorts/VXX/ and TLT.

The UK rock could set it all in motion, especially if the north current (higher interest rates) weakens which it hasn't hardily at all.

Went Out and Bought House Paint.

...no sense watching the screen until the rocks sink below 75' for both China and the UK.

As it stands now I'd be well underway if China was my only concern with the sounding at an all safe 75' at the close.

UK, on the other hand, had a reversal from 74.75' to 74.60' a measly increase of .15'! Still I must wait, hopefully the pound and yen reverse their directions tomorrow--but that would be a miracle.

In the mean time while the UK rock remains less than 75' below the surface I'll begin trimming the sails tomorrow selling 50% IYF and then everything else on Friday going into the weekend with 100% cash/hedged positions.

The British Invasion...Not the Beatles.

http://www.telegraph.co.uk/news/2016/06/01/cctv-footage-fuels-fears-of-migrant-trafficking-in-kent-town-of/

...stories like this, every day for the next three weeks aren't going to help the 'remains'.

China Depth 75' & Falling, UK 74.6' & Rising.

...Damn Brits! Just when the GA is clearing 75' from a possible China implosion, the rocks are rising from the ocean floor on a UK implosion.

Rock Rule: It only takes one set of rocks to sink a ship.

Such a perfect set up, shot to smithereens by the Limeys. What I'll do now is sit out in the harbor and trim whatever sail I have up and sit 100% in cash until...

The rocks keep rising higher and trigger TLT/UUP purchases tacking hard to the Canary, or the rocks sink lower and I can re-ride the Gulf.

What do: Occupy Wall Street, Donald Trump, and Brexit have in common?

Answer: Everything! Rage against the global financial structure.

EUM:FXI Sitting at 50 DMA

http://stockcharts.com/c-sc/sc?s=EUM%3AFXI&p=D&b=5&g=0&i=t78985823726&r=1464795119751

...rather incredible that both sandbars/rocks are exactly along the 50.

FXY:FXB Sitting at 50 DMA

http://stockcharts.com/c-sc/sc?s=FXY%3AFXB&p=D&b=5&g=0&i=t25734099591&r=1464793979675

...finely balanced to say the least. My indicator tells me the sandbar/rocks are now closer to the hull of the Ames than they were yesterday.

The sounding yesterday was 74.65 today 74.55. The depth is only slightly less than minimal, but the direction points to increased hazard. Captaining the ship I'll always opt for discretion being the better form of valor.

http://www.dictionary.com/browse/discretion-is-the-better-part-of-valor

Brexit...Old vs. Young.

http://www.foxbusiness.com/markets/2016/06/01/wilbur-ross-if-u-k-leaves-europe-it-will-be-madhouse.html

Oldsters who vote want out and the young who don't want to remain.
Oldsters want their country taken back from Merkle, who is building an empire, why telling Britain to let go of theirs.

Battle of Britain Part II is shaping up nicely. Now in the spring/summer season of illegal migration the warm weather can't help but hurt the 'remains'.

The market is telling me today the trend in the bottom becoming deeper has reversed and that the Ames should take caution in the fact.

All Ahead...Stop.

Decrease in water depth caused by FXY:FXB sandbar has brought the GA to a dead stop with a 100% VXX hedge of XIV.

This has reduced bullish equity exposure to 10% w/ 90% cash or hedge.

A little know fact about the GA is that on her maiden voyage she actually ran aground on a sandbar in the Carolinas. Don't want that to happen again.

Two Global Sandbars.

It's not enough the world has to deal only with a China implosion we can add Brexit to it as well judging by the forex movement this morning sending the yen shooting up and the pound down.

FXY:FBX will be a new sounding instrument with an advancing line indicating a rocky bottom and lower water depth, and declining as more depth.

Good article on the threat of Brexit...

http://www.telegraph.co.uk/business/2016/06/01/brexit-would-set-off-global-chain-reaction-oecd-warns/

SCS a Finger Nail Away From Breaking Through

http://stockcharts.com/c-sc/sc?s=SCS&p=D&b=5&g=0&i=t41378520394&r=1464728233769

Goin' Need Some Pounds Visiting England.

...going on a trip abroad should you buy the Forex here or there. I have found buying the FX in the USA has less mark up than abroad.

Anyway...

Bought a 2% position in FXB, thinking the Brits can't really be stupid enough to chop off their foot because of an in grown toe nail. But hey, who would have thought Trump would be the GOP standard bearer. A concept Brit Steven Hawkins finds more mystifying than black holes!

This is the sail the GA will have flying into tomorrows opening:

XIV 4%
QQQ 2%
IYF 4%
ITA 2%
FXB 2%

14% bullish with 86% MM.

No Clue to Public Opinion.

...I try to distance myself as far away from the public as possible. After all they are giving the electorate (not me since I've never voted...a streak after 50 years I'll probably never break) two candidates for POTUS who shouldn't even win a city council seat in Podunk KY.

HL Mencken and I think a lot a like.

Illegal Albanian Migrant Raft Crossing Day.

Every day has a story and the story today is about a raft of 18 Albanian's who tried to sneak into England over the weekend. The papers played it up big time and the sports book William Hill reported that 85% of the wages over the weekend were on the exit side.

That coupled will a well timed poll showed more in favor of exit than remain sent the pound and markets around the world into a swoon with sovereign debt benefiting putting the Fed rate increase out to July vs. June.

Still...today was quite good for the voyage all this considered in that the water depth is increasing, the current is still strongly north, the winds are consistent out of the south, and the waves (TLT) have died down to nothing.

However...the market speaks and I listen holding off on buying the second cannon at close. I will be picking up instead a 2% position in QQQ assuming price holds from these levels.

Profit Colleges Should Be Moral Like Healthcare

...and do no harm!

http://www.marketwatch.com/story/for-profit-college-students-earn-less-than-before-they-enrolled-study-suggests-2016-05-31?link=MW_latest_news

Add lower earning to interest payments from a boat load of debt and the terrible picture turns horrible.

Pound Back to Mid-Range 50/200

http://stockcharts.com/c-sc/sc?s=FXB&p=D&b=5&g=0&i=t56640942826&r=1464710733928

...pound slumped and TLT reversed on new Brexit poll. What the market is saying is that July and not June will be the increase meeting.

Right you Are. If the UK Dissolves...

the GA will tack hard and pick up the Canary current. After all no sense going to the UK if it doesn't exist--lol.

Patience is Indeed a Virtue


http://www.marketwatch.com/story/in-this-market-the-patient-will-be-rewarded-2016-05-31?link=MW_latest_news

...very slowly adding sail.

73' Deep, and All is Well.

...up from 72' on Fridays close

Moving through the harbor with one canon in place and the other to be fitted by the close today, the GA is headed out to open sea which looks a bit chopper given the selloff in TLT.

Bear Window Closing Quickly.

http://www.marketwatch.com/story/why-the-window-for-stock-market-bears-is-closing-rather-quickly-in-one-chart-2016-05-31?link=MW_latest_news

Food is Included in GCC.

...when GCC turns back into a buy I'll load up the hole.

Hard for Me to Knock Corn...being a Cornhusker

...but corn turned into a hold in Dec. 2012 and then turned toxic in April 2013 and has remained toxic ever since. I'll watch the stuff and once it isn't toxic anymore I'll let you know.

Hard, fast rule...never buy toxicity.

Never Book Passage on a Pirate Ship.

Giving your money to a money manager is putting your financial life in his/her hands. Trouble is you don't really know you've been taken for a ride by a pirate until one morning you step out of your berth to find your ship sinking with legs ankle deep in water and news that the captain had thrown himself overboard.

http://www.omaha.com/news/crime/omaha-investment-adviser-charged-with-fraud-officials-say-it-has/article_5c0d2775-2285-5f91-bc8e-8c563046a65c.html

...this breaking news of course caused the pirate captain to have a 'bad day'. All accounts by his family, who had been living high on the hog with stolen money, made him out as a wonderful family man.

http://www.ketv.com/news/he-found-himself-in-a-dark-place-and-tried-to-reach-out-it-was-just-too-late/39783468

Note: Con men are all 'wonder persons' that's why people are suckered into committing financial suicide trusting these delusional crooks. Maddorf to this day would love to be released 'so he could 'make things right'.

Picking Up a Couple of Aft Cannons Tuesday.

http://stockcharts.com/c-sc/sc?s=ITA&p=D&yr=1&mn=0&dy=0&i=t64305545428&r=1464616178843

The GA is a freight schooner not a man-of-war, still she needs a couple of cannons to deter would be privateers. Interesting that ITA has THE best chart action of any asset since the February turn.

I take this as a read that when November rolls around the voters will elect 'Killary'.

When We Change Course and Ride the Canary

http://www.marketwatch.com/story/by-this-measure-us-stocks-are-more-expensive-than-ever-2016-05-27

...the bear sails will fill with north wind and take us to a place 'cold enough to freeze the balls off a brass monkey'.

But I'm ahead of myself, we've just set sail and southern spring winds are blowing along a northern current of rising interest rates. I wouldn't be worried about the world falling apart anytime soon.

If your a passenger sit back and enjoy the bull ride, if a crew member stand ready to drop sail.

Sounding = Sail.

The GA is a big ship needing a minimum of 75 feet of water to maneuver in less than 50 feet she runs the risk of running aground.

As the depth of the water decreases the sails come down and a change in course is a real possibility. As the depth increases they increase, with 75+ foot likely to bring out all the sails.

I take a daily sounding using EUM:FYI and by looking at the chart you can see how the level of the water depth has decreased over the last couple of years, but how very recently it's gotten a bit deeper.

The current depth is 72 feet, increasing from 71 feet on Thurs.,
and a low depth for the current cycle of 69 feet on Tues.

Drifting East...Destination England or Algeria.

The secular trend of interest rates determine east/west drift. Given the secular increase forecasted the GA is drifting eastward, but will it end up in England or Algeria?

That depends if the winds will come from the south...higher price inflation, or from the north...lower price inflation.

The good news is for all those wanting to visit Piccadilly Square is that the winds are now blowing steadily from the south. In sum the currents and winds are predicting both higher global equity prices and lower global sovereign bond prices.

SCS is About to Rejoin the Living

http://stockcharts.com/c-sc/sc?s=SCS&p=D&yr=5&mn=0&dy=0&i=t30873503028&r=1464523015370

...after climbing out of it's grave earlier this year SCS is poised to break the 200 DMA this next week. Reminds me of Thurman's hand punching through the soil in Kill Bill 2.

In case you didn't know SCS is my single stock bellwether for global growth.

Storms, Whales/Icebergs, Grounding, and Maelstroms.

Setting out and hoping for a boring plain sailing trip to England I'm aware of the possible dangers. Storms (market action) can blow us off course or sink the ship breaking it up, whales/bergs (totally unforeseen events) can damage the hull and possible sink.

Grounding can also breakup the ship, especially if caused by a storm, and finally the mythological maelstrom or whirlpool which can suck a ship and entire crew down to Davey Jones'es Locker.

None of these should be considered at merely high seas which can be ridden out.

To measure the possibility of something really bad happening I'm using the EUM:FXI index and inverting it. Today it reads +8 down from +9 meaning the seas contain an element of danger, but the danger is diminishing.

When the danger threat reverses itself, and the positive values grow, I'll take down some/all of the sails and then either totally change course or proceed once the danger passes.

Fookie Back Above Rising 50 DMA

http://www.barrons.com/quote/stock/hk/xhkg/1929/interactive-chart

...ADR's for Fookie are all but non-existent.

Match Race.....Week #21

GA began her maiden voyage this week, slowly moving out of the harbor gaining +.10% on the week and +3.39% YTD.

ASAIX once again lost ground giving up -.31% for the week and -3.38% YTD. QGMIX matched the GA performance for the week increasing .10% but is -3.65% YTD.

Both AQR funds are now in the lower 10% of their respective mutual fund categories. Long/short hedge funds overall are finding 2016 tough going. Longer term, using the last full four years, they have done a respectable job however, gaining an average of 6.5% annually.

http://www.barclayhedge.com/research/indices/ghs/Equity_Long_Short_Index.html

THE goal of a long/short is to always make a positive return selecting from the various assets underperforming equities in bulls markets, but outperforming in bear markets.

...steady as she goes.

One Chart Sure to Terrify the Bears.

http://stockcharts.com/c-sc/sc?s=XOP&p=D&st=2007-05-28&en=2000&i=t34625185454&r=1464427269550

...looks like June 2009 all over again complete with now crossed 'Golden Cross'.

It's Called 'Reloading'.

I explained it this way to my class (not-PC)...if the fort is under Injun attack (recession) it's always good to have some bullets (positive interest rate you can cut...firing off 25 basis point cut bullets) when they attack.

In the olden day's once you were at zero the gun would only go click, click, click...not much of a deterrent.

Nowadays, with QE & negative rates, they can borrow bullets and shoot them off so the need to reload isn't really necessary unless your a traditionalist monetarist.

Well anyone over 50 is pretty much in the traditionalist camp and long for the good old days when the Fed didn't have to borrow bullets. The unanswered question is can the economy take a dose of good old medicine (castor oil) and not go into a coma?

We're soon to find out.

Have a good MD break.

Well Shiver Me Timbers...58%

...that's the percent of the GA sails which will be catching bull wind blowing east if next weeks market action matches this one.

Candidates for purchase next week are:

JNK, EWS, GCC, DIA, IBB, FXI (yep, China), XOP, EEM, & DGZ (gold short).