Currency Markets Approaching Inflection Points
by Chart School - March 3rd, 2010 4:00 am
Beautiful charts, courtesy of Chopshop at fibozachi.com.
AUDCAD
EURJPY
EURUSD
EURUSD ~ percent change chart, from recent peak
USDJPY
USDCHF
Disclosure: no position in the securities mentioned at the time of publication. During any given session, we may trade any of these instruments bi-directionally.
For similar technical market calls and insights into the idiosyncratic machinations of financial markets ~ check out fibozachi.com.
There, you can view detailed explanations of the unique design development and technical methodologies within the proprietary technical indicator packages that we employ daily to perform a comprehensive technical analysis of financial instruments (stocks, options, ETFs, bonds, futures, FOREX, etc.) across interval periods of time, tick and volume.
(What's this?)
(Money Morning, 3/10/10)
(Short-Term Trading, 3/1/10)
(All Allan, 2/7/10)
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The Chart-Tards Return
by Chart School - March 3rd, 2010 2:42 am
The Chart-Tards Return
Courtesy of Joshua M Brown, The Reformed Broker
OK, so we’re going to do this again. Really? We’re gonna go back to this business of looking at 200 year charts to try to discern relative valuations?
In terms of 1801 purchasing power — i.e., adjusted for inflation — $1.00 worth of 1801 gold was then at $1.45. That was still far below gold’s 1980 nominal peak, when it reached $4.26 adjusted for inflation.
But now gold has spiked again. At its Friday close of $1,118.30, an 1801 $1.00 worth of gold would be worth $3.26 in 1801 dollars. Gold is supposed to be a store of value. And in fact throughout the 19th century, its purchasing power did fluctuate in a fairly narrow range.
But the 20th century has been wild.
So is gold’s second, current spike sustainable?
While we’re looking at ultra-reliable pre-Civil War data, here are some other tools we may want to consult:
- Ouija Boards
- Rune Stones
- Chicken Bones
- A cracked serpent egg stirred with a witch’s pinky nail
- The alignment of Jupiter with Pluto (i bet you thought I’d say Uranus)
- Coin Flips
- The writings of Nostradamus
- The drawings of CoCo the Gorilla
- The scrawlings of the Tic Tac Toe-playing chicken in Chinatown
- The ramblings of Harry Dent
- The comic strip in that Bazooka Joe wrapper on the subway platform
Just some ideas, guys. Put those through Jeremy Siegel’s Wonderputer and see what it spits out.
Source:
Parsing 200 Years of Gold Trades (MarketWatch)
(What's this?)
(Gold Versus Paper, 3/9/10)
(Gold Versus Paper, 3/13/10)
(Money Morning, 1/23/10)
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CHART OF THE DAY: A SURE BET
by Chart School - March 2nd, 2010 6:39 pm
CHART OF THE DAY: A SURE BET
Courtesy of The Pragmatic Capitalist
There is, arguably, no more important gauge of investor sentiment than the VIX. Market extremes are generally best seen by the extraordinary swings in the VIX. As we’ve recently described, the market has been on a drunken walk that takes it in one direction for a series of weeks and then suddenly reverses with the utmost conviction. This back and forth has been a hallmark trait of the range-bound market of the last few months.
With today’s invincible feeling in the equity markets the VIX has now fallen a remarkable 14 of the last 15 days. That’s a 93% win rate in a three week period. Not bad if you’ve been trading or hedging via the VIX. Unfortunately, this trend is more than unsustainable. This is the longest losing streak for the VIX since the March 2009 rally began and the few losing streaks that came even close were followed by sideways to down markets in the following 4-8 weeks.
The VIX has become a sure bet. As the old saying goes, if something seems too good to be true it probably is. The trend is your friend until it ends and this trend is beginning to look like a mighty bad bet to me. I’m not one to call tops, but as a manager of risk this indicator has me feeling a bit uneasy.
(What's this?)
(THE PRAGMATIC CAPITALIST, 3/2/10)
(Wealth Daily, 1/13/10)
(THE PRAGMATIC CAPITALIST, 3/9/10)
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CHART OF THE DAY: Why This Market Needs Cheap Money To Keep On Rallying
by Chart School - March 1st, 2010 3:47 pm
CHART OF THE DAY: Why This Market Needs Cheap Money To Keep On Rallying
Courtesy of Joe Weisenthal and Kamelia Angelova at Clusterstock/Business Insider
The key story of the moment is the beginning of the Fed’s tightening cycle, a topic on which Morgan Stanley analysts recently dedicated a major report.
In it, the company explored the historical connection between cheap money. As you would expect, the market likes it. A lot.
As the below chart shows, the S&P 500 has been nicely correlated with excess credit growth — or the change in non-finanical credit. This latest rally was no exception. When the Fed does close the spigot, watch out below.
(What's this?)
(naked capitalism, 2/26/10)
(naked capitalism, 1/12/10)
(THE PRAGMATIC CAPITALIST, 3/3/10)
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Weekly Market Report
by Chart School - March 1st, 2010 3:21 pm
Weekly Market Report for February 28th, 2010 - March 6th, 2010
Courtesy of InTheMoneyStocks
The S&P 500 closed the week lower by less than 5 points. The broad based index has recovered 60 points from it’s February 5th pivot low. The 1150 level was the January high and is still resistance. The current pattern on the chart can go either way. It is possible that last week was a pause before another push higher. However, it is also possible that it is a short term retrace pattern before another move down. Technically the chart is still strong as the weekly 20 moving average is still significantly above the weekly 50 moving average and this signals that the trend is still up on the weekly chart. Should the SPX decline there is still weekly suppport at the 1050 level.
The SPDR Gold Shares ETF GLD finished the week basically flat this past week. The action was volatile throughout the week as the GLD traded as low as 106.60 and as high as 109.97. It is important to remember that gold is a double edge sword trade. Investors buy gold often as a play against the U.S. Dollar and most fiat currencies. They also buy gold as play aginst overall market fear. Technically the GLD is still in very good shape as the weekly 20 moving average is still above the weekly 50 and 200 moving averages. The one short term bearish case that can be made against the GLD is that it is possibly making lower highs and this must be watched. The dollar should also be monitored closely as gold and the dollar generally trade inverse to each other.
The U.S. Oil Fund ETF(USO) finished the week basically where it began. The USO is now nearing the high range that it has been in since June 2009. Until the the USO breaks out or below the range these levels should serve as good resistance and support. While the USO is trading above it’s weekly 50 moving average it is still not technically very convincing. However, as long as the USO stays above the weekly 50 moving average it can trade higher.
The U.S. Dollar remains one of the most important charts that must be followed and watched. When the dollar declines it gives a lift to most commodity and inflationary stocks. Since the late November rise in the dollar the stock market has paused and pulled…
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Have The Commercial Real Estate Stocks Bounced Too Far In February?
by Chart School - March 1st, 2010 2:23 pm
Have The Commercial Real Estate Stocks Bounced Too Far In February? (NYSE:SPG), (NYSE:VNO), (NYSE:IY)
By Nicholas Santiago at InTheMoneyStocks
In late December 2009, one of the clues that the major stock indexes were going to decline in the month of January 2010 was the commercial real estate stocks. Leading commercial real estate stocks such as Vornado Realty Trust (NYSE:VNO), and Simon Property Group (NYSE:SPG) headed the rally in 2009 and forshadowed the decline January 2010.
Many traders and investors have thought throughout 2009 that commercial real estate was going to be the next shoe to drop on the stock market. However, that was not the case in 2009 as these stocks not only held up well, but, actually outperformed. In late December 2009 these stocks started to show weakness. The ishares Dow Jones Real Estate ETF (NYSE:IYR), which is a basket of many different real estate companies rolled over at the same time and confirmed that the January decline was industry specific and not company specific.
Now we are back at interesting levels again for most of these commercial real estate stocks. Currently the February move higher has been nothing short of impressive for commercial real estate and the overall stock indexes. However, it has lacked several factors for a sustaining rally. Many of these stocks in this commercial real estate group are trading below their daily 50 moving average. This is something that many institutional traders watch very closely. Then the volume on this rally in February has been somewhat on the weak side. This is also another sign that many institutional traders will take note of. The last factor that we have noticed is that this industry group is now trading into good retracement levels which will usually serve as good resistance area.
These stocks and this sector have been excellent stock market barometers over the past year. The commercial real estate sector is now nearing a very important level. If these stocks start to fall soon the overall market may not be too far behind. Today these stocks are behaving just fine, however, this type of action could change on a dime and might be worth monitoring.
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Short-Term Advance Could Set Up Major Top
by Chart School - February 28th, 2010 11:13 pm
Short-Term Advance Could Set Up Major Top
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CHART OF THE DAY: A LONG-TERM PERSPECTIVE
by Chart School - February 27th, 2010 2:53 pm
CHART OF THE DAY: A LONG-TERM PERSPECTIVE
Courtesy of The Pragmatic Capitalist
Today’s Chart of the Day comes to us courtesy of chartoftheday.com. Taking the long-term perspective, you just have to wonder if the market isn’t in the same process it was in the mid-70’s when the sideways to down churn ultimately resulted in a downside overshoot that ended in the early 80’s.
For some long-term perspective, today’s chart illustrates the Dow adjusted for inflation since 1925. There are several points of interest. For one, when adjusted for inflation, the bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s. Also, the inflation-adjusted Dow is a little more than double where it was at its 1929 peak and trades 54% above its 1966 peak – not that spectacular of a performance considering the time frames involved. It is also interesting to note that the Dow is up 57% from its March 9, 2009 low which is actually slightly more than what the inflation-adjusted Dow gained from its 1966 peak to today.
Source: chartoftheday.com
(What's this?)
(Oxbury Publishing, 3/10/10)
(naked capitalism, 3/12/10)
(THE PRAGMATIC CAPITALIST, 2/27/10)
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Is The ‘Friday Effect’ In Place Today?
by Chart School - February 26th, 2010 2:50 pm
Is The ‘Friday Effect’ In Place Today? (NYSE:SPY)
Courtesy of Nicholas Santiago at InTheMoneyStocks
Rarely do we see a big negative day on a Friday. We call this phenomenon the ‘Friday Effect’. Ever since the 2008 panic began the markets have held up very well during a Friday. They usually close around the flat line area up or down a little. In the past year I believe we have had less than 10 big Friday declines.
My guess is that the institutional money that can move markets does not want to scare the Asian markets that open on Sunday night in the U.S. or cause any panic to build up over the weekend. Today looks like the ‘Friday Effect’ is in play, therefore, it is likely to see a flat to slightly positive close for the last trading day of February.
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Exxon Mobil And Chevron Corp May Tell the Tale (NYSE:XOM), (NYSE:CVX)
by Chart School - February 26th, 2010 10:45 am
Exxon Mobil And Chevron Corp May Tell the Tale (NYSE:XOM), (NYSE:CVX)
By Nicholas Santiago at InTheMoneyStocks
When navigating through these markets one must watch the leading energy stocks. The two most important stocks that are major Dow Jones Industrial Average components are Exxon Mobil Corp (NYSE:XOM), and Chevron Corp (NYSE:CVX). These two stocks are not only top integrated energy companies worldwide, but, also top stock market barometers.
If one looks at a chart of Exxon Mobil (NYSE:XOM) they will see that the stock is trading below it’s daily 50 and 200 simple moving averages. This is a bearish trend on the daily charts that must be watched closely. The stock is also 30 points below it’s 2008 all time high at 95.00. Exxon Mobil Corp is still a great company, however, the stock is in a poor technical position at this time and could be signaling lower prices to come.
The chart of Chevron Corp (NYSE:CVX) is not much better than Exxon Mobile. This chart is trading on it’s daily 200 moving average and lower than it’s daily 50 moving average. This stock is also trading 30 points below it’s 2008 all time high. Overall this is not a pretty picture on the charts for Chevron at this time.
When major stocks paint this type of a picture on the charts traders and investors must beware. These two stocks are major Dow Jones Industrial Average components. Therefore, if these stocks decline from here they are likely to drag the averages down with them. While they are very good companies they do not look like very good stocks at this time.
(What's this?)
(Short-Term Trading, 2/1/10)
(Investment U, 12/30/09)
(Stock Wizard, 1/25/10)
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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