Friday, July 30, 2010

U.S. T-Bond Chart

VIX: Time to Take a Good Look.

It is not difficult to recognize the correlation between declining markets and rising volatility. Panic is usually accompanied by chaos (the non mathematical interpretation) while bullish exuberance is eventually replaced with audacity and complacency.
The 200 day moving average, which is a proxy for the general sentiment in the market currently stands at 23.39%. Thursdays close was 24.13%. If the markets are going to begin another decline the VIX will be very sensitive to the probability of this occurring. Therefore, it would be prudent to monitor this index closely over the next week when several harmonic cycles and planetary phenomena occur. (July 26-Aug. 9th)
On April 27th--one day after this year's high--the VIX broke above the higher end of its trading range at 18.40% and proceeded to spike to 45% during the silliness in May. A similar event could take place here, albeit at a higher level if the markets were to turn down and the 'pros' shifted there 'market view' accordingly. A sharp move and daily close above 26.25% may be a clue as to a possible breakdown in the market--especially if this is accompanied by a S&P close below 1070.

Click the Squiggly Lines logo to the left to monitor solar activity. There is a correlation between solar activity and market volatility; ergo market direction.



Support-Resistance for Friday July 30, 2010
R2 1126.50
R1 1114.01
Pivot Point 1103.42
S1 1090.93
S2 1080.34

Thursday, July 29, 2010

Rare “Cardinal Climax” Planetary Alignment This Summer Puts Stocks at Risk, says Veteran Sky Watcher Arch Crawford Hewitt Heiserman -- Seeking Alpha

A fascinating interview with Arch Crawford.(Crawford Perspectives) by Hewitt Heiserman (Seeking Alpha)
See: June Squiggly Lines blog

Rare “Cardinal Climax” Planetary Alignment This Summer Puts Stocks at Risk, says Veteran Sky Watcher - Hewitt Heiserman -- Seeking Alpha: "- Sent using Google Toolbar"

Three Charts to Ponder

U.S. Dollar Index
The USDX is approaching the 50% retracement of the Nov. 2009 -- June 2010 rally. Momentum indicators are entering oversold status and sentiment is becoming decidedly bearish--a perfect time to consider a contrarian strategy. A case can be made for a rally into the low Nineties before the longer term trend becomes mature.



Copper
Stock market bears would be wise to heed the action of the king of industrial metals. Prices are in the area of the 38.2-61.8% harmonics and the technical indicators are edging closer to over-bought status. If the advance since early June is seen as an A-B-C structure--C = A at 3.2585 which is near current price levels. Watch this market for clues as to where the stock market might be headed. A dramatic reversal--something copper likes to do--would be a warning of pending weakness in equities and signal a realization that the 'recovery' is not all that it is touted to be by the talking heads in the financial media. However, on the other hand it would not be wise to dismiss the rather bullish price action since mid-month.



GOLD
Gold is approaching the 50% retracement of the Feb-June advance. Both the RSI and MACD are entering oversold territory which suggests that nimble traders may want to consider a short term highly-speculative long position with a tight stop in place for protection. The market should find support at the 200 day moving average which is at 1145-1146. The fact that Gold is holding near the May lows of 1157.60 and 1166.50 suggests that some form of low might be happening.

Wednesday, July 28, 2010

Support Resistance for Thursday July 29, 2010

R2 1119.52
R1 1112.82
Pivot Point 1107.97
S1 1101.27
S2 1096.42

Did Terrorists Just Attack One Of The 7 Global Oil Chokepoints?

MAP OF THE DAY: Did Terrorists Just Attack One Of The 7 Global Oil Chokepoints?: "- Sent using Google Toolbar"

Why is 1107-1115 So Important.?

S&P 500
The area of 1107-1115 seems to be acting as a strange attractor in the S&P 500. The following points may be responsible for this area being so important:
  • December 31st 2009 close : 1115.10
  • December 21st Winter Solstice Close: 1114.05
  • June 21 2010 Summer Solstice close 1113.20
  • January 2010 trading range mid-point 1111.02
  • April-July 2010 down-trend Archimedes point: 1107.01
  • May 18-19, 2010 GAP during the decline 1107.34-1115.05
  • Midpoint of 'Wave iii decline (1173.57 - 1040.78) = 1107.175
Once this tug-o'-war plays out--energized by a price-time bifurcation--the markets will once again begin to trend. STAY TUNED.


S&P Midcap 400
The mid-cap index has traced out a symmetric A-B-C correction and is harmonic with a GANN calendar day count. (30-90). The symmetry of the corrective structure can be seen in the trading day count as well. A B and C are all 5 trading days in duration. It is noteworthy that both the S&P 500 and S&P 400 have--so far--failed to surpass the June 21st Wave iv highs.

Tuesday, July 27, 2010

Support and Resistance for Tuesday July 27, 2010

The markets are approaching a VERY powerful Energy Date time period. Monitor the Transports, Nasdaq, Russell 2000 and S&P for indications of a climax and reversal. The ensuing downside will be horrendous.

R3 1128.72
R2 1124.15
R1 1119.58
PIVOT 1110.44
S1 1105.87
S2 1096.73
S3 1092.16



Transports and S&P have met lower boundaries of an A-B-C corrective structure.

Wednesday, July 21, 2010

Waiting for the Train

Dow Theorists are no doubt aware of the fact the the Transports have failed to confirm any serious breakdown of the general market. In order to substantiate the onset of another bearish decline, the Transports would have to make a new low approximately coincident with the Industrial Average breaking its recent low.
There are two levels that should be violated if the markets are going to have another impulse wave down.
  • 3742.01 which represents the 4th wave of lesser degree and the Feb 5th pivot point of the March 2009-April 2010 bull campaign
  • 3624.72 which represents the Archimedes point of the March 2009-April 2010 advance.
If and when these levels are broken to the downside the conditions will be met to usher in a further--and most likely--violent decline in equity values.

Tuesday, July 20, 2010

Why a Counter Trend Rally to 1111 or 1145 is Possible

While it is always entertaining to evaluate structural targets for the unfolding of a trend, it is also prudent to continually be 'the devils advocate' and consider market moves that are counter to the prevailing trend. The chart presents such a scenario.
The SPX has retraced approximately 50% of the July 8 -July 14th rally this morning and has began to advance once again. If an A-B-C rally was to commence at this stage, a case can be made for the rally to extend to the 1112 or possibly the 1145 level before resuming the downtrend. A rally to the 1140-1145 area would cause many bears to cover and possibly go long--joining the bulls who believe the all 'clear signal' has been given by the talking heads on Wall Street.
This A-B-C scenario would set up the seasonal bias of the markets which suggests that the autumn is the usual time for the markets to experience HIGH ANXIETY. Perhaps a early August peak is in store followed by the much anticipated 3 Wave to the downside. August 9th and August 20 (+ or - 2 trading days) would be the potential time frame for the pivot to be established.
Given this possible scenario, traders should adjust their expectations and strategies accordingly.

Sunday, July 18, 2010

An Important Week Ahead

The week of July 19-23 promises to be an important week with regard to the future trend in global markets. Friday's dismal close in N.Y. bolsters the old adage: "Buy on Rumor--Sell on News."
Decent earnings reports and the news of the ridiculous Goldman settlement (proof that regulation is a poor replacement for morality) were met with reversals and bearish candlesticks galore by the close of business on Friday. If this market has any gas left in it...it had better put the 'pedal to the metal' this week.

Standard & Poors 500
The S&P continues to make lower highs and lower lows, the signature of a bear trend. Fridays dive following two bearish candlesticks on Wednesday and Thursday suggests that there is more downside to come--possibly MUCH MORE downside. There are some critical levels to watch this week:
  • A move above 1107 would be considered quite bullish and the market could rally to the 1130-1135 level quickly--destroying many bears.
  • A break of 1038 would set up a retest of the CRITICAL 1004-1008 level.
  • If the 1004 level is taken out it is imperative that the market holds the 984.00 Archimedes point. A close below 984 would confirm that the March 2009-April 2010 rally has terminated and the markets are headed for another significant decline.
  • There is another critical support area at 943-956. A break of this area would increase the probability of a market fiasco significantly.
  • Below 943 there is support at the 870-875 area, but it would likely prove temporary at best. Below 943 things become treacherous to say the least.



Toronto: TSX Composite Index.
Like its neighbor to the south, a five wave structure can be seen from the March 2009 low. Since the April high the TSX has been tracing out a pattern of lower lows and lower highs as well. The 4th wave of lesser degree @ 10990.41 remains the important pivot point. A break of 10990 sets up a decline to the 10450-10500. A break of 10225 would set up a HUGE decline--possibly to 7450-7570. This would not be inconceivable if the commodity markets decide to head south. Gold Copper and Oil will provide good clues as to where the TSX is headed.


Goldman Sachs


The Goldman slap on the wrist from their puppets in Washington is proof that regulation is a makeshift alternative to morality. Even the wording of the settlement is pathetic and does nothing except create a greater degree of moral hazard for the clowns on Wall Street. John Boehner recently suggested a moratorium on all regulation coming out of Washington. Considering the effectiveness of the regulation the government does impose on Wall Street, the oil industry and anything else that has lobbyists in Washington, they might as well abolish all regulation: it is all hypocritical lip service and does nothing to help anyone except corrupt politicians and greedy corporate thieves.
The Goldman chart is the quintessential example of 'il bacio della morte' (the kiss of death.) Many indexes and individual stocks rallied from below their respective 200 day moving averages, only to stop dead and reverse upon touching it. This is a bad sign--a very bad sign.
This stock is a joke and is likely head MUCH lower. One word can be used to describe the entire soap opera. DISGUSTING.

Mastercard and Visa

As deflation takes hold of the global economies, governments, corporations and consumers shun debt and take necessary steps to lower their debt exposure. Consumers are retreating from the delusionary orgy that they have been enjoying for several decades and leaving their credit cards at home or in the garbage can below the sink in their upside down house. Without the debt addicted consumer to bolster its debt processing function, MasterCard and Visa are doomed. If these shares continue to decline things could get very ugly quickly. I wont even mention what I feel the downside potential is--readers would begin to question my sanity. NOT A PRETTY PICTURE.


GOLD.
Like the TSX, a 5 wave structure can be seen from the October 2008 low in gold at 681.00. Currently spot gold is flirting with an important harmonic trend line (1.618:1) originating from the Oct 09 low. The fourth wave of lesser degree stands at 1166.50--a break of that important support would set up lower price targets with the area between 1014 & 1044 being a probable level of important support. Breaking below 1000 would seriously damage the psychology of Gold Bulls and result in chaotic market conditions, although at this point that scenario does not appear to be a high possibility. Watch 1150.00--below that things will get interesting.


Friday, July 16, 2010

The Country Club

Chaos Lyceum

Spare Me The Sudden Outrage The Reformed Broker

Mr. Brown posted this to his blog in April of 2010. Cant get a prognostication much more accurate than this.

Spare Me The Sudden Outrage The Reformed Broker

Thursday, July 15, 2010

The Beauty of PHI in my Backyard.


Support & Resistance for Friday July 16 2010.

R3 1116.79
R2 1110.01
R1 1103.24
PIVOT 1091.88
S1 1085.11
S2 1073.75
S3 1066.98

U.S. Dollar & T-Bond Update

U.S. Dollar Index

The U.S. Dollar could be approaching a pivot point:
  • 38.2% harmonic of the 88.71-74.23 is at 83.18
  • 38.2% harmonic of the 89.62-74.23 decline of 2009 is at 83.74.
  • A 1.618 support line from the 74.23 low is currently at approximately 83.60
  • The average of the above harmonics is 83.47. Wednesday's close was 83.43

The next harmonic clusters are at 82.00-82.20 and 80.00-80.50. Currently, 81.83 is the critical Archimedes point for the US Dollar.

U.S. Treasury Bonds

All I have to say about this chart is that the geometry is amazing. Draw your own conclusions.

Wednesday, July 14, 2010

CRITICAL JUNCTURE

The markets are at a critical juncture. Some observations:

  • Trendline from 1219.80 - 1131.23 is at approximately 1096
  • Archimedes Point: Fulcrum point of May-July downtrend = 1107
  • 200 day simple moving average = 1112.11 and FLAT-LINING
  • 55 day simple moving average = 1102.79
  • Continued pattern of lower lows and lower highs.
  • Volume on this rally SUCKS !!!!
Today's (Wednesday) S&R
1118.27

1110.63

1102.98

1091.82

1084.17

1073.01

1065.36



This is an EXCELLENT area for speculators with high risk tolerance to get short with TIGHT stops.

Tuesday, July 13, 2010

Il bacio della morte?????

Third test of the 55 day ema: This time coincident with the 200 day ema


Similar % rallies to the 55 day exponential moving average.

Will the Fireworks Begin?

Support/Resistance July 13th
1091.11
1086.99
1082.87
1076.66
1072.54
1066.33
1062.21

NOTE: The 1071-1076 area is extremely important support, if the market closes below 1070 a wave ii high could be in place.

Why did the market stop @ 1010?




Why might the rally stop at 1086-1089

Friday, July 9, 2010

Support and Resistance for Friday July 9 2010

R3 1084.26

R2 1079.59

R1 1074.92

PIVOT 1066.58

S1 1061.91

S2 1053.57

S3 1048.90

Fibonacci: 1131.23~1010.91
1056.87
1071.07
1085.27
1105.48

Fibonacci: 1219.80~~1090.91
1090.71
1115.36
1140.00
1175.10

Thursday, July 8, 2010

Legal noose tightens on Europe's monetary union

Legal noose tightens on Europe's monetary union

Gold: Where to NOW?

Gold is at a critical juncture. How the current decline plays out will reveal much about the future primary trend in Gold.

Short Term 1154-1166 is critical
Long Term 1040-1050 is EXTREMELY IMPORTANT.

Here are two Gold Charts.
Short Term Support levels are:
38.2%: 1180.88
50.0%: 1154.90
61.8%: 1128.92
4th wave of lesser degree: 1166.50 (March 2010)

Mayan Harmonics:
1112
1142 ****
1160 ****
1172
1187
1022
1232



Longer Term Support Levels:
38.2%: 1041.91
50.0%: 973.00
61.8%: 904.09
4th Wave of lesser degree: 1044.80

Wednesday, July 7, 2010

Anxiety of the Bear.

Psychologically, a bear market rally is the opposite of a bull market decline. When the bull is in charge dramatic short term drops cause the weak bulls to relinquish their positions in a state of anxiety. When the market suddenly explodes to the upside after a prolonged and dramatic downtrend the bears get nervous and run for their caves.
In the early stages of a bull or bear campaign the weak positions are easily shaken out of the market due to the speed at which doubt and fear returns to the psyche of traders. Currently, although a bullish case can be made due to the anemic bullish consensus, the state of anxiety amongst bearish traders has to be taken into account. It is only at major bottoms that weak and greedy bears are smugly content to sit through a rally--still confident of lower prices ahead. The anxious willingness of weak bears to exit the market is too high for a major bottom to be made at this time. Bear traps make great drama.

The following levels are important.

Retracement of the June 21 - July 01 Decline
June 21 HIGH @ 1131.23
July 01 LOW @ 1010.91
38.2% @ 1056.87
50.0% @ 1071.07
61.8% @ 1085.27

Extension of Wave A
1042.50
1010.91
1.618 @ 1062.02
2.000 @ 1074.09
2.236 @ 1081.55
2.618 @ 1093.61

Wave C Projection
X 1010.91
A 1042.50
B 1018.35
1.618 @ 1069.09
2.000 @ 1081.07
2.618 @ 1100.45

Chart Gap 1071.10 - 1071.45

Thursday's Pivot Supply & Resistance
R3 1093.24 R2 1082.25 R1 1071.26
PIVOT 1049.90
S1 1038.91 S2 1017.55 S3 1006.56

There appears to be three clusters based on the market structure from June 21st:
1069-1074
1081-1082
1093-1100

Moving averages:
21 day exponential @ 1068.88
55 " " @ 1099.01
200 day " @ 1095.35
Note: That the 55 day is just above the 200--close to making the 'death cross'. (although statistically it is not a great harbinger of lower prices.) A energetic rally to the 55 & 200, followed by a reversal would be a classic--but rare--bear trap. Action like this would satisfy the 'kiss of death' rally. (rally up to 200 and then reverse)

A move above 1107-1110 would set up higher targets. Any rally above 1110 would call for the reassessment of the current market structure. A close on Friday at either the 1071 or 1081 level would set up a time price harmonic potential pivot. (high)




The activity in the USD may reveal where the S&P is headed.If the USD finds support at the harmonic cluster at 82.70-83.10, both markets may reverse and follow their primary trend.

Resistance Levels

The Resistance levels for the rally currently underway are
S&P 500 Cash 1066-1069

Breaking above 1070 would likely result in a rally to the 1101-1106 level. If the market was to rally above 1110 then the entire structure would have to be reassessed.

The Missing Straws.

If there is going to be a significant decline in the markets the two indexes shown below will have to break the Feb 05 2010 lows which represents the 4th wave of lesser degree in Elliott terms.

Wednesdays Pivot Points:
R2 1053.79
R1 1040.92
Pivot Point 1029.64
S1 1016.77
S2 992.62

Russell 2000 Small Cap Index
Dow Jones Transportation Index

Tuesday, July 6, 2010

Why support at 1010-1020?

1008.55 = 38.2% retracement of the March 09 – April 2010 rally
1020.60 = 61.8% of the April-May decline from the June 21st peak. BC = .618AB

James Douglas "Jim" Morrison (December 8, 1943 – July 3, 1971)

Fireworks in July ?

The markets are entering a period of time where several cycles are synchronized in the same phase. Daily, Weekly and Monthly charts are turning down in unison and the threat of a 'air pocket' forming below current levels has become quite significant. The chart below shows the projections based upon the following market formations.
  • Golden Section of the March 2009 Low to April 26 2010 High
  • Fibonacci extension of the decline from April 26 2010 to the May 25th low.
  • Projection from the June 21st high of the ABC structure from April 26th: May 25th: June 21st.



The opening on the 12th or the option expiry on the 16th could be a fireworks display and provide speculators, who possess tungsten spheres, with an opportunity to generate some surreal returns.
Using the time and price harmonics last month proved to be very useful. Now that we are entering the firestorm the same tools may prove invaluable.

If the S&P 500 trades below 997 on Tuesday the mood may quickly change --as Jim Morrison said: "from glad to sadness"

Thursday, July 1, 2010

The Kamikaze Trades

These market darlings could be beginning to crack under the pressure. There is lots of air between the clouds and solid ground. (see May 28th post)