Wednesday, December 31, 2008

Crude Oil bounce at uncommon .75 node



The .75 node is a "minor" node usually..can't be sure if this has any power or not, usually they don't...

Tuesday, December 30, 2008

Monday, December 22, 2008

Slow markets, very weak rally in stocks...

Goes without saying, not much happening. The Bradley turn date is behind us now, and it's hard to see that it meant anything this time. Usually the Amanita site, suggests a turn will happen within something like + or - 7 trading days. We're close to leaving that window behind...

Monday, December 15, 2008

Gold sneaks up a little higher...



Maybe it's heading for the declining red trendline before it capitulates...

Closeup of $NDX chart showing detail of Friday's low on top of two levels of trendlines...



Compare with the chart posted Friday, it's the same, just closer in...
Today's low was a "higher low" and doesn't change the chart...

current USO chart...



Bottom shown at the .500 node, and resultant rally...now fundamentals have to feed it if it's to be sustained...

Saturday, December 13, 2008

Note the negative divergence on CCI versus Williams %R...





This kind of negative divergence within the confines of daily Bollinger Bands are usually what you see preceding a significant drop...Note also the .604 retracement (Fibonacci retracement from last Gold rally at 936.30). Not shown, but ROC is also showing negative divergence...

I think Gold will be in a Bear market for a while yet...

Note the current logarithmic chart. the double tops are at .12177 and .12907, both around the .12500 node. With negative divergence I would expect deterioration...

A "must listen" webcast....

Please, please take the time to listen to this internet broadcast from the FinancialSense website. Everyone is so preoccupied with the paper losses in the Stock Markets,
but an even more ominous storm is coming, and as usual our politicians are flat footed...

http://www.netcastdaily.com/broadcast/fsn2008-1213-2.mp3

This is the mp3 version...

http://www.netcastdaily.com/broadcast/fsn2008-1213-2.asx

This is the Windows Media version...

Basically it's about energy. the IEA is admitting that world oil fields are now declining over 6.7% a year. This is a recent development, obscured by paper manipulation of Oil prices.. To counter this problem it will require the discovery of a Saudi Arabia every two years just to stay flat...

Hard to believe with oil crashing to $40 bucks a barrel, that high oil prices are coming back, but they are, and in the not to distant future, there will be shortages...

So the world economy is going to have the double whammy of economic deflation even as we discover we have rapidly depleting energy resources. To address that second problem depends on lots of capital, which is and will be in very short supply...

Thursday, December 11, 2008

The $USD rally first pulls back at 1/8 node...



This node is generated by the entire down move from July, 2001. Since moves almost never end at the 1/8 node, this says a dollar rally of some considerable duration is ahead of us. The current decline is only a correction in a dollar bull market. The earliest possible failures would normally occur at the 1/4 node, which are sprinkled throughout 2009...The more likely 1/2 nodes for earliest termination of the dollar rally, are three time bands spread out from mid-2010 to late 2011. The actual value at this recent top is .12932 where .12500 (1/8) is ideal (3.4% off from ideal). The value of the currency basket in the index at the top is 88.46, as read off of Stockchart's output.

Even though I find the concept of eventual dollar devaluation compelling, this chart is suggesting deflation for quite a while...

USO and $WTIC showing energy in energy...

Note the bottom I called on USO a few days ago. Today USO is up 7.90% and it's cousin $WTIC is up 15.37%...they are moving...

Wednesday, December 10, 2008

Little change in $NDX so far...and other matters to discuss...



So far about the Stock Market, little to write about, still in a weak rally...

Probably of greater importance is the negative interest rates appearing on Government Bonds. It's slightly ominous when most investors are thinking the same way. Now that the hordes are all flooding into the presumed safety of treasuries sufficient to produce a negative interest rate, and knowing the market by it's nature fools most of the people most of the time, it feels like a trap is being set...
I still think a dollar devaluation is likely at some point, and that might be the trap, or maybe not, as that's probably a bit down the road. It may be something unanticipated..in any event we are in really unusual waters now...

Thinking about this a little longer, a rise in interest rates on those bonds could be devastating as existing bond face values decline as interest rates go higher. So circumstances that would force interest rates higher, especially fairly quickly, could be the mechanism, if not the rational or the trigger, for a bunch of people to lose more money, which is what markets like to do...As a trap, it has to be fast to provide no exit for a lot of people. Or if it were to happen more slowly, it could work against people because other options, other than bonds, could actually be worse. That would be another kind of trap. I will leave it to your imagination to think of scenarios that would provide these outcomes.

Tuesday, December 9, 2008

The Baltic Dry Index...

Anyone who thinks the current struggling rally is going to have any legs based on fundamentals should check out this site:

http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm

This keeps track of the state of international commerce. Basically, international commerce is just a couple of notches above nonexistent right now.

The nice thing about this measure is that governments can't spin it or alter it. It is what it is. It also led the decline of October 2007. It's a leading indicator.

If the "world economy" is "not happening" then a U.S. as well as a world recovery is nigh impossible.

Some of my current assumptions...


There is a big debate out in the world right now about inflation vs deflation, and who is right, and what it means for equities, precious metals, and stocks. I can see the governments of the world are printing huge amounts of money, which should be hyper inflationary, but collapsing debt structures are crumbling faster than they can run the printing press, and there has been a change in psychology around the world that will make it very difficult to reflate any bubbles, at least in the short term. I have run the numbers on $GOLD, you can all see it, it's a few days back. The likelihood for a bottom in precious metals somewhere in 2009 is what I think is probable based on the .250 nodes. The 1.00 nodes which are the second most powerful node after the .500 finishes way out there, like 2020 or so. The .500 nodes are fairly far out also. A bottom in precious metals that far out doesn't make sense to me.

So I could see the $GOLD price rise somewhere in 2009, probably near one of the three dates I have published, and this will be a sign of renewed dollar weakness, and that in turn, probably correlates to some sort of abatement in dollar based debt destruction. Hedge funds are being destroyed fairly quickly, although more have yet to fail in the short to intermediate term. When that process has ended, the dollar stops being supported by that mechanism, and assets will be under much reduced downward pressure (the pressure of forced liquidation by fund managers that have to raise emergency cash). This could allow equities to have a really decent rebound.
My assumption is that this process becomes visible next year, and this is my thinking behind my current interpretation of the Bradley dates.

There are some good comments on this subject on the previous post, worth reading.
Also I am open to other opinions, nothing is set in stone...

Click on the above chart to enlarge it...

Monday, December 8, 2008

What does the Bradley date, 12/14/08 refer to?

This is a time where we are approaching an important Bradley date. The question is, does this represent the end of the small rally we are currently seeing? Or is it just a late indication of the bottom just put in? I vote for the former so far, as the current bottom at 11/21/08 is quite far, time wise, from the 12/14/08 date given by the Bradley model. That said I tend to think the rally might stretch somewhat past that December date. One would expect a .382 retrace of at least wave 3 of the recent decline (see chart below with Elliott wave counts). It's going to have to really hook if it's going to do that and meet those price targets in that period of time...

$NDX is finally past some trendlines and moving up..





Here are this morning's charts. They may change by the end of the day....

Watch the dark green ascending trendline in the top graph and the dark blue ascending trendline in the bottom graph. One of those will likely stop the rally at some point. There is also a crossover not far away in time in the first chart, which has a chance of reversing it also, but I think it is too close in time to allow the rally to reach even a minimum retracement. So I would guess it won't be a factor.

The bottom chart doesn't show much trendline compliance, but shows the bottom forming at the .250 timing exponent or node as shown on the "X" axis, which is quite common. This one was, however a bit sloppy, with the absolute bottom shown at .273 rather than the ideal .250...

Compare that with the uppermost chart where the price action hit the downsloping magenta line precisely at .250 (acturally .25013) and formed a perfect bear market signal. The market collapsed from that point (on 8/15/08) as you can see. Note: trendline bounces and node hits don't have to be on the same chart, of the three I generate (as above), to produce a valid signal.

Note that I have added the Elliot count to the top chart...
Click on the charts to enlarge them...

Saturday, December 6, 2008

United States Oil (USO)...





Note that USO is at a .500 node (top spreadsheet chart and the "x" axis label value that's most recent) and also at a crossover (bottom chart). Further the "C" wave of the up move preceding this chart also has a 1.00 node on Monday the 9th of December (on a chart that is not shown). Unless fundamentals firmly say otherwise, USO should bottom in the next couple of trading days...

On the top spreadsheet chart, notice the .250 node was a minor bottom...

Note that the Bigcharts hourly chart is showing that a MACD crossover appears close, and positive divergence is present on Stochastics. This seems to confirm the proximity of a bottom...

Thursday, December 4, 2008

Check out the link to the Bradley site ...

The Bradley Siderograph is showing a major turn point in the Stock Market on or about 7/15/09...When that date is plotted on my $SPX chart, it comes in as a .494 node (can you say .500?, only 1.4% off) on the 1.272 chart...For a lot of reasons I think that this Bradley date will be a major low, and the rally we are struggling currently to see will eventually fail and produce a waterfall down towards this July date, in my view...

While we're at it, here's $Silver...





It looks like the .250 node at or around 12/19 (Friday) or 12/22 (Monday) might be a playable bottom in $SILVER. Worth watching...Should show up on the bottom chart (1.272)...It looks reasonable that it will strike and bounce off of the ascending blue trendline on the 1.272 chart at around $6 a oz., give or take a little bit...

As in the case for $GOLD, here's the node dates for $SILVER:

Date: Price:

.250 (1.272) 12/22/08
.250 (Average) 02/05/09
.250 (1.382) 04/13/09

.500 (1.272) 12/11/09
.500 (Average) 04/15/10
.500 (1.382) 10/15/10

Note the similarity in node dates between $SILVER at 04/13/09 and $GOLD at 04/29/09..., Close enough to be interesting...

Wednesday, December 3, 2008

What $GOLD looks like...








Watch for the .250 nodes..one of the three, (sometimes two of the three) could be playable...further out, the .500 node will, according to standard practice, probably produce an even better opportunity...

Notice the bottom chart shows a bottom at precisely a .125 node (1/8). Yes I don't talk about 1/8 nodes and I usually don't play them, but they are just another "power of 2" event, counting backward towards the present from the final 1.00 node.... (i.e., 1.00, 1/2, 1/4, 1/8, even 1/16)

When would GOLD bottom? Probably not at any of the 1.00 nodes, as those dates are too far out, timewise... More likey candidates are the .250 and .500 nodes. When are they?

They are as follows:

.250 (1.272) 04/29/09
.250 (average) 07/09/09
.250 (1.382) 10/20/09

.500 (1.272) 11/15/10
.500 (Average) 06/13/11
.500 (1.382) 05/02/12

My suspicions are that oil will bottom at or nearly at the same time (not the bottom we are forming now, but a later one), so I will shortly run the anaylsis on USO and see if I get a date for one of it's nodes close to one of these for GOLD. If we get convergence, this could tell us something...
like when Hyperinflation from too much money printing starts...

Data points used:
Date: Price:
04/02/01 255.00
09/11/08 739.80
03/17/08 1033.90

The rally is surviving so far, will update charts as soon as we clear the trendline...

Tuesday, December 2, 2008

Just added two more links...

Please check out two very good financial and market related links, the Korelin Economics Report and HoweStreet.com. Very insightful, and both have streaming audio of high quality, covering major market events...

Monday, December 1, 2008

Todays faliure at the trendline, as anticipated...




The $64,000 dollar question is "will the rally resume, after a pullback?" Watch the thin trendlines climbing up from the bottom (2nd order)...if those are penetrated (more than slightly), odds are the rally will have failed..

Sunday, November 30, 2008

The challenge of what lies before us...

It's not totally appreciated that the United States desperately needs to re-industrialize even as it no longer has capital to do so. Most countries in history that have had to industrialize quickly (usually for the first time) also had to use labor in a brutal way, to compensate for a lack of capital. When you don't have money, you build your infrastructure in more labor intensive and less efficient ways. Also, bluntly, worker safety in these situations is usually badly compromised.

In the United States, the labor force is mostly in the process of retiring, and the young are fewer in number and not used to the idea of physical labor. Most of them want corporate jobs that won't be there much longer.

Put these two concepts together and you can see how intractable the future may become...

Japan ETF...




Here you see the Japan ETF EWJ as it works it's way towards the 1.00 node and perhaps the red declining trendline down towards $3 a share..The 1.00 node here occurs on April 14, 2009....

Wednesday, November 26, 2008

Market might pause here..but plenty of upside remaining...



Just a reminder, the 10 week cycle that helped produce this bottom, tops out on 12/23/08..not a prediction, but something to keep in mind...

Tuesday, November 25, 2008

May be hitting slight resistance on upside as we approach this trendline..



But I think it will carry well beyond it...

Note also that the dollar is dropping, which I mentioned might happen (back on the 7th of November) if the market started to rally...

Sunday, November 23, 2008

The rally has started?

Remember I mentioned that two cycles bottomed around the 20th...Perhaps they are now working...

Wednesday, November 19, 2008

Not good! $NDX breaks trendline....



This is very dangerous...If the market is failing here, there is only support available at or near the 2002 bottom....there is a congestion zone at around 1000 and also at the 2002 bottom at 795..if that cracks, then the Second Great Depression is here...

There is a chance the market is producing wave 5 of wave 3 down, which would stop it before it got too much further down, but there is no guarantees in this market..I say that because there is a lot of positive divergence present, but that is not a signal, only a warning..

Thursday, November 13, 2008

Latest $NDX charts...





We've now reached down and penetrated the deepest of the trendlines...it's now or never, either the market rallies, or this set of trendlines are not then able to fully contain this Bear. I personally think a rally is still in the works despite the discouraging price action for the last month...

Tuesday, November 11, 2008

Market may be retesting it's lows..

There is a 10 week and 9 month cycle around the 20th of November, this may be the time period when the bottoming process finishes, unless some fundamental or political action causes a failure. This is probably the most treacherous market in decades...

It's possible that a drop in the dollar and a rally in the markets, may start at about the same time...

Friday, November 7, 2008

Something's about to happen to the dollar...



Notice the two Fibonacci grids on the $USD index chart. Both are the same size. You can see that the recent dollar rally is 1.618 times the size of the previous one. Also if you go deeper and analyse the current advance it has two legs, and they are also close to Fibonacci ratios. RSI is oversold and CCI is showing negative divergence...We are probably pretty close to the end of the dollar rally...This would be good for Gold and Oil and ultimately stocks in those commodities...

Wednesday, November 5, 2008

Well, so much for the idea of a post election rally....that's how it might seem...




But there may still be some more rally to go, after a correction..

Notice the rise in the breadth indicators after a very oversold condition...This would lead you to believe there's more to come...so maybe today's drop is a correction in a rally, not the end of the rally...It often rises to the top of the dashed purple channels before failing. But it need not make much price progress while doing so...It could just burn time...

But note that bounces off of a major time node, like this .25 node, are normally fairly substantial..more reasons why we might see more upside...

(Just to review, the .25 .50 .75, 1.00, and 1.50 are "major mathematical time points". Trend changes of some importance often happen there...The .50 and 1.00 nodes are the most powerful of the group)

Tuesday, November 4, 2008

election night situation...





For comparison purposes look at the BigCharts rendering of the same time period, which is the part of the top chart to the right of the thick black vertical line. It gives you some sense of the time compression involved in Exponential Charting...

Friday, October 31, 2008

Where we are now...





The bounce is clear on this chart...What has me frankly puzzled is that I expect a wave 5 down after this bounce is over, and all of the lower trendlines are sloping up. So either we bust these trend lines like we did the older ones, or we don't make a lower low on the next decline, which I have a hard time believing...

You can see in the top image the bounce has caught up to one of the blue trendlines and stalled a bit, but I expect it to go higher...

Wednesday, October 29, 2008

Where is the rally likely to stop?

I have a simple formula for using indicator divergence to estimate price targets. Originally I experimented with a formula in a book by Connie Brown, but after a while I came up with a variant I believe works better. None of these methods are foolproof, but currently using daily Stochastics, I come up with a target of about 1545 for the $NDX, which is a .382 retrace of the whole decline so far...

Monday, October 27, 2008

Positive divergence builds on $NDX...




In conjunction with the most recent and promising Exponential chart posted Saturday (see below), this conventional chart is showing good positive divergence with the price action on Stochastics,and MACD looks ready to cross-over positively...

Also from 10/31/07 to 3/17/08 is 99 trading days, from 3/17/08 to 10/27/08 is 161 trading days. Very close to Fibonacci on time...that is, the duration of waves 2 and 3 combined is very close currently, to 1.618 times the duration of wave 1...

Note also that the height from wave 2 down to wave 3's termination is approaching a 1.618 ratio of wave 1, which occurs at a price of 1132.5...