“The Professor” Corey Rosenbloom at Afraid to Trade offers us a longer term look at Gold. Although it’s breaking out on the shorter-term charts, the chart above clearly indicates there exists resistance above which must be cleared for the next bull rally to run. (Source: Afraid to Trade)
Gold Priced in Multiple Currencies
Precision Capital Management offers a very interesting look at Gold priced in multiple currencies. They state: “Gold is one of the leading indicators we follow at our website. Everyone seems to have noticed the spike up this week in gold, but how do we determine if the move is real, or merely a fakeout? To confirm that gold is advancing on its own merits as part of a longer term move, which is not the result solely of US Dollar weakness, we want to see confirmation of an up move in gold priced in other currencies. Above shows gold priced in the Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yen (JPY), and the Euro (EUR). When gold began its last advance in November 2008, the move was confirmed by higher lows in the commodity currencies of the CAD and AUD, as well as the EUR (even though there were lower lows in the JPY and USD gold). Eventually, there were higher lows in the JPY and USD gold at the beginning of December 2008. Accordingly, for the gold bull case, early confirmation would be to see current lows in AUD, CAD and EUR gold respected on the first pullback (especially in the former two as they are commodity currencies), preferably accompanied with a break through overhead resistance.” (Source: Precision Capital Management)
Gold with Fibonacci Indicators
Our partners over at RatioTrading bring us yet our third and final perspective on Gold: “As demonstrated in this chart, Gold has historically respected key Fibonacci Ratio levels and with Gold retesting all time highs, where could it be headed? Well as we look historically over the past year or so we see that in many instances when the GLD broke out and made a new low, it went right to either a 1.272 Fibonacci extension ($73)…
I wanted to highlight an interesting potential “Key Reversal” bar in the NASDAQ ETF QQQQ. Let’s take a look:
Take a look at the bar I highlighted on August 28. Price gapped upwards off the opening (due in part to the Consumer Confidence expectation) and formed a fresh 2009 high for the year… before reversing off the open and selling off almost the whole day.
Generally, a more ‘perfect’ key reversal bar would close lower than the prior bar, but what draws my attention to this bar is the logic behind it.
Imagine, you’re a bull and you see a long price advance and you’ve been sitting on the sideline, or have money you want to invest in the market that you’ve been holding. All of the sudden, a gap occurs and you can’t wait any longer so you rush in and put your money to work, excited and fearful that you’re missing the rising boat.
However, price begins to sell off just as you are most confident and you now become stressed and confused. Perhaps you hang on to your long position in hopes of a recovery (because now you are ‘underwater’) and if price continues to fall – like it is doing today (September 1st), then you ‘cry uncle’ and sell your shares at a loss.
Key reversal bars that gap up and then sell off all day are generally rare, but can be powerful short-term or even intermediate term trading signals, because it captures the euphoria of the bulls and then leads to downward movement as their hopes are dashed as they sell at lower and lower prices.
Beyond the key reversal bar drawn above, we see a critical negative momentum divergence as price tapped above the upper daily Bollinger Band – that’s enough reason to take a short-sale scalp/swing trade with a tight stop.
Study this pattern a little more and let’s see if we continue to get downside momentum from a possible ‘buying climax’ high.
First, let’s take a look at the monthly structure:
The 2000 high was a major peak (most likely a large scale Wave III) and virtually all Elliotticians agree we are in a long-term (10 year) expanded flat (ABC) which is shown on the graph above.
Whether or not we have completed the “C” wave is up for interpretation as will be shown below, but this is the generally accepted “Larger Elliott Picture” in a simplified version for you.
Now, let’s revisit the “Most Bullish Scenario” as described in May’s post which WOULD assume that Cycle Wave C (circled) is complete and that we are in a new bull market:
As a disclaimer, I am not yet in agreement with this count, and this would be known as a ‘minority’ wave count that few in the Elliott Community have as their primary count. However, I like to consider charts from all angles and remove bias when possible, so I am presenting this as a possibility.
Without getting too technical, this count would assume that the required 5 “Primary” Waves of the Cycle C have all completed, and that we are now on the cusp of a Brand New Bull Market.
I noted that I am skeptical of this count because the 5th wave does not subdivide properly into 5 waves, and is shorter than the 1st wave which is unusual. That being said, Wave 5 did make a lower low than the 3rd wave, so this is most definitely a plausible count.
It would assume that Waves 1 and 2 of a fractal new Primary Wave 1 Up have formed and that we would be in a powerful third wave up here.
We will know this count is wrong if we make a new low beneath 666 in the near future, and will know that this count is correct if we have a powerful rally up from current levels…
I’ve tended to focus a lot of my analysis on the S&P 500, but let’s take a step back to look at the Dow Jones Index for possible clues and an interesting pattern that *could* be forming on the daily chart.
As much as I hesititate to believe it, there is a possibility that the Dow is forming an expanding triangle or broadening formation, with an upside target near 9,000 (which would be a retest of the January highs).
We still have a negative volume divergence and a negative triple-swing momentum divergence which the bulls are going to have to overcome, and I think it will be difficult to do, particularly given the “Summer Seasonality” (stocks tend to experience seasonal weakness in the summer months, or at least a flat, trading range as volatility/volume is expected to decrease).
I’m mainly posting this as a “Hmm. This is interesting” and basing it off the swing highs and lows and the trendlines that originate from the May highs and lows which seems a natural fit.
Without effort, price shattered overhead EMA confluence resistance thanks to Intel’s (INTC) earnings surprise and the market’s reaction to it.
Keep this as a possibility as we get more information.
This past Friday saw what many like myself can only describe as a blatant example of just what’s wrong with both the economy – as well as the markets.
At precisely 15 minutes before the closing bell on Wall Street the now Chair of the Federal Reserve, Janet Yellen gave a press conference detailing further insights into upcoming monetary policy. I guess two days worth of FOMC discussions, along with a press conference detailing all that was discussed immediately after, followed by a question and answer session about all those “insights and decisions...
Friday's release of the publicly available data from the Economic Cycle Research Institute (ECRI) puts its Weekly Leading Index (WLI) at 131.6, up slightly from 131.2 the previous week. The WLI annualized growth indicator (WLIg) is at -3.2, up from the previous week's -3.6 and off its interim low of -4.9 in mid-January.
"The Song Remains the Same"
As I type this, the featured article on the ECRI website remains the February 23rd piece, "The Song Remains the Same" (full report requires a subscription), which illustrates the shrinking GDP growth during the seven business cycle expansions since 1970:
Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene
The replay is now available on BNN's website. For the three part series, click on the links below.
Part 1 is here (discussing the macro outlook for the markets)
Part 2 is here. (discussing our main trading strategies)
Part 3 is here. (reviewing our pick of th...
Well, it didn’t take long for the bulls to jump on their buying opportunity, with a little help from the bulls’ friend in the Fed. In fact, despite huge daily swings in the market averages driven by daily news regarding timing of interest rate hikes, the strength in the dollar, and oil prices, trading actually has been quite rational, honoring technical formations and support levels and dutifully selling overbought conditions and buying when oversold. Yes, the tried and true investing clichés continue to work -- “Don’t fight the Fed,” and “The trend is your friend.”
In this weekly update, I give my view of the cur...
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While I'm not going to argue the point about the possibility that Bitcoin drops to $1, or less, (that could happen yet, but not for the reasons you propose) I felt it necessary to point out something you seem to have overlooked.
While it's likely that the US government watching Bitco...
Bullish trades abound in Cypress Semiconductor options today, most notably a massive bull call spread initiated in the July expiry contracts. One strategist appears to have purchased 30,000 of the Jul 16.0 strike calls at a premium of $0.89 each and sold the same number of Jul 19.0 strike calls at a premium of $0.22 apiece. Net premium paid to put on the spread amounts to $0.67 per contract, thus establishing a breakeven share price of $16.67 on the trade. Cypress shares reached a 52-week high of $16.25 back on Friday, March 13th, and would need to rally 4.6% over the current level to exceed the breakeven point of $16.25. The spread generates maximum potential profits of $2.33 per contract in the event that CY shares surge more than 20% in the next four months to reach $19.00 by July expiration. Shar...
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PSW Members - well, what a year for biotechs! The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down! The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months. What could go wrong?
Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.
Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies. A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at email@example.com with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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