I'm going to include a picture of where I will be Saturday.
Tuesday, November 30, 2010
Comment cleaner
I really don't have anything I want to post at the moment as I'm using everything for the premuim newsletter so I'll just use this as a comment cleaner.
I'm going to include a picture of where I will be Saturday.
I'm going to include a picture of where I will be Saturday.
Tuesday, November 23, 2010
Friday, November 19, 2010
HOLDING THE 200
Last week the market regained the 200 week moving average. I suspect after the brief 2 day move back below that level we will see the market now hold above this major support level.
Yesterday's rally was strong enough to form a swing low and should mark the bottom of the daily cycle. I'm still expecting the new daily cycle to move back to new highs before topping in mid to late December and rolling over into a more substantial intermediate degree correction in January.
Yesterday's rally was strong enough to form a swing low and should mark the bottom of the daily cycle. I'm still expecting the new daily cycle to move back to new highs before topping in mid to late December and rolling over into a more substantial intermediate degree correction in January.
Wednesday, November 17, 2010
ABOUT TO HIT A BRICK WALL
For the duration of the dollar's secular bear market the 200 week moving average has acted as pretty solid support and resistance.
The recent two week rally has now relieved the oversold conditions and in the process the dollar is about to hit the brick wall of a declining 200 week moving average. It's already bumping up against the intermediate dow trend line.
The dollar is now short term overbought, in a strong down trend, is pushing up against solid resistance, in a secular bear market, is caught in the grip of a left translated 3 year cycle decline, and in the early stages of a dollar crisis.
I don't like the dollars chances of pushing significantly above 80.
As soon as the dollar resumes its collapse into the 3 year cycle low I expect we will see stocks and commodities resume their upward advance.
The recent two week rally has now relieved the oversold conditions and in the process the dollar is about to hit the brick wall of a declining 200 week moving average. It's already bumping up against the intermediate dow trend line.
The dollar is now short term overbought, in a strong down trend, is pushing up against solid resistance, in a secular bear market, is caught in the grip of a left translated 3 year cycle decline, and in the early stages of a dollar crisis.
I don't like the dollars chances of pushing significantly above 80.
As soon as the dollar resumes its collapse into the 3 year cycle low I expect we will see stocks and commodities resume their upward advance.
Tuesday, November 16, 2010
CORRECTION SET TO GAP DOWN TO SUPPORT
If the premarket weakness holds into the open the market will gap down to the 200 week moving average this morning.
In April the 200 WMA acted as resistance and turned the market down into the extended multi-month correction. Now the market has regained that important resistance level. I have my doubts that it will spend very long below that level if at all now that it has been recovered.
I've been harping all along on the fact that we needed to see an "obvious" correction before we could consider that we have a move into a daily cycle low. We now have it and it is taking the form of a bull flag on mild volume.
Usually a bull flag will break sharply higher as it is normally a bullish pattern. Unless we get a sharp break down out of the flag traders need to stay nimble as we could put in a bottom at any time. A swing low this late in the daily cycle will have high odds of marking a bottom.
In April the 200 WMA acted as resistance and turned the market down into the extended multi-month correction. Now the market has regained that important resistance level. I have my doubts that it will spend very long below that level if at all now that it has been recovered.
I've been harping all along on the fact that we needed to see an "obvious" correction before we could consider that we have a move into a daily cycle low. We now have it and it is taking the form of a bull flag on mild volume.
Usually a bull flag will break sharply higher as it is normally a bullish pattern. Unless we get a sharp break down out of the flag traders need to stay nimble as we could put in a bottom at any time. A swing low this late in the daily cycle will have high odds of marking a bottom.
Saturday, November 13, 2010
I'M NOT BUYING IT
The general consensus now appears to be that all asset classes have put in an intermediate top and that the dollar has made an intermediate bottom. I jumped to that conclusion myself the other day. After further consideration I'm not buying it any more for several reasons.
First, the cyclical structure of the stock market is not set up for an intermediate top unless we are on the verge of another 2 month horror show like we saw this summer. I don't think for a second that with another 900 billion scheduled to be thrown at the market, of which 110 billion will come in the first month, that we are going to see the market roll over into an extended correction during the traditionally bullish Christmas season.
The intermediate gold and dollar cycles also aren't set up for an intermediate top. Ever since March of `09 the Fed's QE programs have stretched cycles, not caused them to contract. Here are the last 5 intermediate gold cycles.
Every single one of them has run long except one and that one was followed by a very stretched 30 week cycle. If the current cycle follows the pattern of the last two years then it's too early to expect an intermediate top, and the current correction is nothing more than the normal move down into a daily cycle low. Once that bottom is in place (possibly sometime next week) it should be followed by one more daily cycle higher before putting in the larger degree intermediate top.
But more importantly the dollar cycle is way too short to be looking for an intermediate bottom. In order for stocks and gold to form an intermediate top we would need to see the dollar form an intermediate bottom.
You can see in the above chart that the Fed's monetary policy has led to normal to slightly stretched dollar cycles also. The current cycle would have to have bottomed on the 13th week. This would also have to correspond to the yearly cycle low.
Now what are the odds of a yearly cycle low, a major bottom, being put in above 74, in a shortened cycle, with sentiment never hitting true bearish extremes? (The recent public opinion poll had bulls at 29% and I've seen it as low as 22% at prior yearly cycle lows) Pretty slim in my opinion.
There is no question the dollar is now in the grip of the three year cycle decline and in the beginning stages of a currency crisis. That being the case I seriously doubt the dollar will be able to move significantly above major resistance at the 80 pivot. It's already half way there now. If this is an intermediate bottom the rally is about to hit a brick wall that I have serious doubts it will be able to penetrate for more than a day or two, if at all.
Far more likely in my opinion that the dollar rally will fail at 80 and roll over into the natural timing band for an intermediate cycle low sometime in mid to late December. This should drive stocks and gold higher into December before finally rolling over into intermediate degree corrections in January or early February.
Finally, to top it off, we still haven't seen the large selling on strength day or days that occur at virtually all intermediate tops. Until we see signs that big money is sneaking out the back door I'm going to assume the intermediate rally is still intact.
First, the cyclical structure of the stock market is not set up for an intermediate top unless we are on the verge of another 2 month horror show like we saw this summer. I don't think for a second that with another 900 billion scheduled to be thrown at the market, of which 110 billion will come in the first month, that we are going to see the market roll over into an extended correction during the traditionally bullish Christmas season.
The intermediate gold and dollar cycles also aren't set up for an intermediate top. Ever since March of `09 the Fed's QE programs have stretched cycles, not caused them to contract. Here are the last 5 intermediate gold cycles.
Every single one of them has run long except one and that one was followed by a very stretched 30 week cycle. If the current cycle follows the pattern of the last two years then it's too early to expect an intermediate top, and the current correction is nothing more than the normal move down into a daily cycle low. Once that bottom is in place (possibly sometime next week) it should be followed by one more daily cycle higher before putting in the larger degree intermediate top.
But more importantly the dollar cycle is way too short to be looking for an intermediate bottom. In order for stocks and gold to form an intermediate top we would need to see the dollar form an intermediate bottom.
You can see in the above chart that the Fed's monetary policy has led to normal to slightly stretched dollar cycles also. The current cycle would have to have bottomed on the 13th week. This would also have to correspond to the yearly cycle low.
Now what are the odds of a yearly cycle low, a major bottom, being put in above 74, in a shortened cycle, with sentiment never hitting true bearish extremes? (The recent public opinion poll had bulls at 29% and I've seen it as low as 22% at prior yearly cycle lows) Pretty slim in my opinion.
There is no question the dollar is now in the grip of the three year cycle decline and in the beginning stages of a currency crisis. That being the case I seriously doubt the dollar will be able to move significantly above major resistance at the 80 pivot. It's already half way there now. If this is an intermediate bottom the rally is about to hit a brick wall that I have serious doubts it will be able to penetrate for more than a day or two, if at all.
Far more likely in my opinion that the dollar rally will fail at 80 and roll over into the natural timing band for an intermediate cycle low sometime in mid to late December. This should drive stocks and gold higher into December before finally rolling over into intermediate degree corrections in January or early February.
Finally, to top it off, we still haven't seen the large selling on strength day or days that occur at virtually all intermediate tops. Until we see signs that big money is sneaking out the back door I'm going to assume the intermediate rally is still intact.
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