Wednesday, August 11, 2010

COILS IN S&P AND SILVER

We now have a volatility coil forming on the S&P and silver. Contrary to what one might think the initial move out of a coil, although it is often aggressive, usually ends up being a false move soon to be followed by a more powerful and durable move in the opposite direction.




Yesterday was the 25th day of the daily cycle in stocks so it is possible that stocks are dropping into a slightly early daily cycle low.

The dollar is bouncing which may signal a slightly early daily cycle bottom there also. However that opens up the possibility that the dollar could have another entire daily cycle before the larger intermediate cycle bottoms.

The total lack of any selling on strength days during this rally suggests that a breakdown out of the coil will be reversed soon as the odds suggest. In the last 5 years only one intermediate rally has topped without at least one of these large negative money flow days. With no sign of smart money selling yet it is unlikely the intermediate rally is finished.

And sentiment still hasn't reached bullish extremes either. Intermediate rallies don't usually end until sentiment reaches extremes and that includes bear market rallies.

10 comments:

  1. I've seen a rising wedge in the S&P on LIGHTER volume,so a pullback was expected-but I've never heard of such a 'coil'..is there a TIME or DISTANCE that you expect in this coming false breakdown?Also are you expecting a large dollar bounce or just to 1st resistance near 82? It is quite oversold RSI and STOCHASTICALLY and a large bounce could cause a lengthy reaction in the MKTS, no?

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  3. No target. Just history suggesting the intial move will be a false move.

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  4. any concerns about the possible descending triangle in silver (highs 19.75/19.25/18.75; 3 touches at 17.25)? there have to be a lot of stops at 17 that look awfully good to the large silver shorts.

    to me, this looks similar to august 2005 - d-tri, break below 7 to take out all the longs in early sept., then go straight up for the rest of the year.

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  5. I'm not a big believer in patterns. Generally speaking they tend work maybe 50% of the time, if that. Especially when one is as vague as the triangle you are talking about. I can't even see it.

    I just see a multi-month consolidation which will eventually break higher. It is a bull market after all.

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  6. Any price prediction on the dollar move upward?

    And is there a level that , if gold breaks down below does it, it would indicates that prior comments on the LOw being in...become undone?? EX:gold moving above $1194.50 ( article: Greatest Bull Mkt...)for the week was neccessary for the low to be in .Would that come undone and we look for a new low...regardless of how long in the TIME span we are? Best regards Thx

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  7. No prediction. If gold breaks below $1155 then we would have to figure we are looking at another stretched cycle.

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  8. Today Sept. 2nd 2010.... Silver @ $19.67. For the past week gold has dropped, the dow has dropped and silver either moved up or sat there and said; "Do whatever you want to do Dow/gold.... I'm not budging..... I don't think silver will be known as golds ugly sister for much longer and volatility will be, I say again, will be a thing of the past. Too many people are starting to view silver for what it REALLY is. It's rarer than gold, and modern civilization cannot function without it. Gold is a metal that shines nicely but if gold fell off the edge of the world tomorrow, modern civilization would just have to do with out gold jewelry..... PERIOD

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  9. Today, Friday morning 10 AM: Silver now teetering between $19.85 - $19.90 Dow up @ 10,415.80 (largely due to Obama's short new creation of jobs) Dollar DOWN AGAIN (NO SURPRISE) Gold down $2.10 @$1,251.30.... Silver again ignoring the Dow and or gold.... Still a couple more hours before the closing bell, Who knows what will happen? Will silver test the $20.00 mark today or will it wait for the weekend?

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  10. Today, noon Pacific time, News break: goldman sachs has announced their unofficial disbanding from propriety trading coupled with jp morgans notice of NO LONGER trading commodities........ Coils in SILVER ?????? Current Pacific time: 17:29 or 5:29 Silver now, after the bell sits at $19.97...... Is Silver oversold? Someone who still believes that the paper dollar is as big of a piece of mama's apple pie may try to convince the world that Ag. is over sold and there are PLENTY SHEEP WHO WOULD BELIEVE THIS LIE, but those in the know, those who will no longer accept a paper contract say; THE GAME IS JUST ABOUT OVER !!!!!!!! STEP ASIDE!!!! Article 10 sec.1 will be obversed..........

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