Thursday, December 24, 2009

How Goldman secretly bet on the U.S. housing crash | McClatchy

Here is some interesting reading for over the holidays. Merry Christmas and Happy New Year to all.
How Goldman secretly bet on the U.S. housing crash McClatchy

Wednesday, December 23, 2009

Spheres of Influence

The recent decline in the EUR/USD has 'skidded; down the arc of the recent bullish rally emanating from the initial thrust XY. The highlighted area in Novemeber 08 is coincident with the extreme arc of the circle--although not contained within it--and having been established before impulse XY was a reality...although that can be suggestive of a important cycle approaching ie: the March LOW. (debate could last for hours about that hypothesis)
Point Z has touched the arc and prices immediately declined to the horizontal radius.(the right hand highlight)
It is inevitable that the sphere of influence will be violated--but it remains to be seen if the EUR/USD will find support and rally or will continue to decline at progress towards the larger sphere of influence depicted by the larger purple arc.

Bottom Chart US Dollar Index:
This is basically the mirror image of the upper chart--although slightly different due to the components in the US $ Index.
This chart suggests a continued rally in the US $ albiet for corrections from over-bought situations--like the current market condition.
However time and cycle work suggests that there are price harmonics at 80 and 82 between Mar 03,2010 and Mar 16, 2010. It is quite possible that the US $ Index will find its way to this 'strange attractor' between now and March. This could be a valuable indication for option decay traders.

**click graph to view a larger image**

Gold Supply and Demand

Gold Supply and Demand

Wednesday, December 16, 2009

Gold Update

The chart below shows a POSSIBLE wave structure that could unfold to form the expected January 15-20th low.

The following harmonics have formed in the GOLD FEB 2010 contact. (60 minute chart)

  • Point Z, which is the high from the original impulse wave down would be equal to the 50% retracement level from the Dec 3 - Dec 15 range.

  • The vector AX which represents the initial wave down is equal to vector XY which is the horizontal (time only) vector emanating from the initial low on December 6th.
  • AB = 1.272 AX . 1.272 = 1/(Phi)2 -- a fibonacci harmonic.

A measurement from the first reaction high from the Dec 15th low will provide further information in ascertaining a projected high for "C"

If and when "C" is reached and indicates a short term high of significance--a projection for the anticipated Jan 15-20th low can be made with more accuracy.

Monday, December 14, 2009

The Baltic Dry Index & The Golden Mean

The Baltic Dry Index (BDIY) measures the demand for shipping capacity versus the supply of dry bulk carriers. Because the demand for shipping varies with the amount of cargo that is being traded or moved in various markets this index can be a good proxy of economic activity.
As can be seen in the chart below (click for larger image), the index reached its record high level of 11793 May 20th 2008. and hit a low at 663 on Dec 5th 2008. The Index has rebounded to 4661 on November 19th of this year.

Several Fibonnaci harmonics--both time and price and tXp come into play in the current time frame. Like the Visa shares mentioned last week, the BDIY warrants attention as it could be a harbinger of future market activity.

Wednesday, December 9, 2009

Gold Update

The high on Dec 3rd (D) was near the 1.618 Harmonic from the Oct 08 - Feb 09 rally (A-B). It has since fallen precipitously shaking many of the weak bulls from the market. There is a cluster of support in the $1000-$1020 range which is coincident with the February 09 high and representative of a 38.2% retracement (100-61.8) of the Oct 08-Dec 09 rally. (A-B-C-D)
Mid January 2010 represents a 1.618 time harmonic of the Oct 08 - April 09 low to low cycle (A-C).
If Gold is trading in the $1020 area in the mid-January time frame (ideally Jan 17-20), conditions may be ripe for a potential resumption of the uptrend.

Tuesday, December 8, 2009

VISA and the Health of the American Consumer.

Visa is an interesting stock listed on the NYSE. It can be argued that V can be viewed as a proxy for direct consumer participation in the economy, especially activity related to the amount of consumer credit being utilized. Market watch offers the following profile for the company.

Visa Inc. was incorporated on May 24, 2007. It operates as a retail electronic payments network and manages the world's most recognized global financial services brand. It facilitates global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. The Company provides financial institutions, its primary customers, with product platforms encompassing consumer credit, debit, prepaid and commercial payments. VisaNet, the Company's secure, centralized, global processing platform, enables it to provide financial institutions and merchants with a range of product platforms, transaction processing and related value-added services.

If consumers are not capable of returning to the credit driven consumption binge that drove the economy for many years, the fortunes of Visa may be adversely effected. This is a company worthy of monitoring on an ongoing basis: Like the Baltic Dry Index and the Dow Transports, the behaviour of this company could be a harbinger of future economic health: ergo stock market activity.

This chart is from The Fundamental Analyst blog and does not paint a very rosy picture of the credit scenario.

This chart is of Visa as of Friday December 04, 2009. As the adage goes: A picture is worth a thousand words.

Monday, December 7, 2009


right click chart to open in a separate window or tab.

The DOLLAR could be making a secondary low.

The chart shown above shows several trendlines all of which are the same basic slope. The initial line connects the 1989 and 1994 HIGHS in the $. When this line is extended it intersects the 2008 LOW.

  • the coordinates of the intial 2 points (1989-1994) are (x & -y)

  • the corresponding red vectors have the same x, -y values

  • the green vectors have the coordinates (x & y) (up-sloping green vectors)

Note that the latest green vector initiated at the low (intersecting the primary red vector) has supported the recent decline in the $. The fact that these vectors have highlighted several major pivot points gives credence to the argument that the recent low may hold. If this is infact the case, the new uptrend for the US $ could be initially contained in the yellow highlighted area.

EUR-USD: The FX EUR-$ has been contained in the upper fibonacci channel since the early 80s. The daily chart on the bottom shows a convergence of trendlines. Last weeks decline in the Eur-$ FX violated the uptrend line from the March 2009 LOW. The converging uptrendlines while the EUR-USD simultaneously meets resistance at the upper downtrend suggests that there will be an imminent resolution that will be followed by a large amplitude move.

Saturday, December 5, 2009

Transports, S&P 500 & TSX

Two of the charts below are somewhat dated (Novemeber 25th) and were emailed on Novemeber 26th but may be still pertinent from a broad analytical point of view. However the potential break of the transports to the upside must be recognized.

Dow Transports:

Friday's action was interesting. The potential triple top on the Transports was taken out on a closing basis which is a constructive sign for the equity markets in general. Momentum has turned up--albeit from heightened levels. Friday's 'candlestick' is rather ambiguous since the shadows are of equal length suggesting that the tug-o-war between the bulls and bears was a draw.

*right clicking the mouse will give you the option of opening the charts in a separate tab or window.*

This is the Transport chart from Novemeber 25th showing a possible a-b-c correction. However, seeing as the Transports possibly broke to the upside this analysis could be negated on any continuation above the potential triple top.

S&P 500

The chart below is as of Novemeber 25th: Since then the S&P has continued its sideways drift--making marginal new interday highs but failing to hold them. A break below 1080 would strongly suggest a further decline is imminent. Momentum continues to wane and the turbulence in the metals andbond markets could shake the stock market out of its recent doldrums.

Gold & Harmonic Price Confluence

* right click the chart for a larger view in a new tab or window *

SPOT GOLD 1975-2009: The chart shown above indicates that there is a confluence of price harmonics @ the 1240-1260 area.
1.50X 1976 low -1980 high $1242
1.618X 1980 high -1999 low $1238
2.00X 1999 low - 2006 high $1208
1.272X 1999 low - 2008 high $1246
1.618X 2008 high - 2008 low $1252
The orange fan lines emanating from the 1976 low and touching various high and low pivots between 1980 and 1990 have indicated support and resistance during the bull market from 1999. There is a 3 point fan-line indicating resistance in the 1225-1250 area.
The gold market is becoming overbought and could find substantial resistance just above the recent price of 1220.