Tuesday, August 31, 2010

S&P 500
The S&P is on VERY thin ice! Last evening it was suggested that the S&P may challenge the resistance at 1072. That is exactly what transpired in the Globex session before the markets opened Monday morning when the S&P traded at 1072.50. (E-Minis @ 1072.75). The markets reversed in the regular session and accelerated down into the close. THIS DOES NOT LOOK GOOD FOR THE NEAR TERM. If the SPU trades below 1040, it will suggest that prices are headed SIGNIFICANTLY lower in the near term--perhaps MUCH lower. A close on the VIX above 28 would be indicative of a imminent decline of large amplitude.

The only caveat that would suggest that a wave three decline is NOT commencing is if the S&P can manage to trade back over 1073.00. If this was to occur, the market could hold up and rally into the month end. A rally above 1086 would cause caution flags to come out and a trade above 1105 would likely negate the bearish market structure.

The Energy Dates will be posted tomorrow evening, but the preliminary dates are Sept 7-9th and September 20-23rd. The latter date could be a time period of INTENSE DANGER for the markets.



T-Bonds
The market rallied on Monday but remains below the high of last week. Bonds may attempt one more rally but if a top has not been made last week, one will be established on the next rally. Bonds may rally based on a 'flight to quality' rationalization if the stock markets decide to get a haircut.Protective stops on short positions should be adhered to according to your personal trading strategies.
128.25-128.30 remains the near term target.

U.S. Dollar
The $ looks like it is ready to re-establish the uptrend. The is a shortage of bulls out there--which is always a good condition for the market to be in if one happens to be holding long positions.
Check last evening's comments on the U.S. Dollar for further details. Aggressive traders and pyramid traders may have a chance to add to base positions if the recent high is taken out. Don't be greedy and trade in a disciplined manner. Over exposing oneself is a recipe for disaster.


Gold
The market is indecisive! The 45* trendline from the July low will be tested over the next day or two. This is occurring at the same time that the down-trend line from the 1265 high is acting as resistance at current price levels.

There is a trend change due in the early part of September which will likely establish an intermediate cycle trend direction. Stay tuned.

Monday, August 30, 2010

S&P 500
Friday's rally, although impressive on the surface did not do much damage to the overall bearish picture. As can be seen in the chart below the September futures contract moved almost exactly one square up from the 1040 area to close at 1063.70--which also filled the gap on the floor session between August 23rd and 24th. Globex prices also stayed within the confines of the channel suggesting that prices still have room to move to the upside before challenging the 1072 resistance. The S&P could oscillate between the 1060-1075 level until the Energy Date that is due in early September--immediately following the Labor Day holiday. September 7th should be interesting.
The daily chart shows the impulse wave down from April and the corrective rally that ended at the August 9th Energy date. The previous support at 1040 has been tested and it will likely take some consolidation before another test--which should ultimately break the 1040 level.
The trend remains down with resistance at 1072 and 1086. A close above 1086 would cause the 'caution lights' to flash. A close above 1107--highly unlikely--would possibly change the bearish structure of the market.


There has been a lot of talk about the 'Head and Shoulders' in the S&P. Market pundits have been warning investors of the dire consequences of the neckline of a head and shoulder pattern being broken. It is interesting that while the large H&S which is depicted in blue is rather popular in the financial media, the potential of a reverse head and shoulders has not received much press. The potential Reverse H&S is highlighted in yellow. Just an observation !!!


Treasury Bonds.
Friday was a great day to be short T-Bonds. After having met its Gann square objective, bearish candlestick formations supplied further evidence of a imminent reversal. Prices broke hard on Friday. There are Gann and Fibonacci price harmonics at the 128.25--128.30 level. Once prices break below the green support trendline emanating from the May and June peaks, T-Bonds should decline swiftly to this harmonic support.



Gann's Hexagon Chart, Planetary Aspects and the U.S. Dollar

The graph below shows what is known as a Gann Hexagon. It is used like a Square of Nine chart to determine both time and price harmonics. Gann Square charts, when combined with its natural adjunct--planetary phenomena--can deliver incredibly accurate information pertaining to future price objectives and time periods to expect pivots or acceleration in the trend.

The Dollar made its low at 80.08 on Friday August 6th. During that weekend Venus was in opposition to Uranus and conjunct Saturn. On Monday August 9th Venus made an opposition to Jupiter. It is little wonder that the Dollar and Stock market made significant pivots during this time period. (Energy Date). Since Venus is the common factor, its relationship to the conjunctions and oppositions should be monitored. This means that when Venus makes harmonic angles to between 0 and 3 degrees of Libra-Aries the U.S. Dollar and the U.S. Stock market should be especially sensitive. This also suggests that the autumn equinox--which occurs when the sun enters Libra (Sept 23rd) may be a important period for both currencies and stock markets. Note how the S&P and USDX made pivots on the summer solstice and the spring equinox.
The culmination of the Cardinal T-Square is now beginning to effect markets in a significant and dramatic manner.

If you look at the Hex Chart you will see that the Venus ingress and conjunction/opposition took place between 0* and 2* of the Libra-Aries axis (0-180) If you look at the 240* line, it intersects '80' -- the low of the U.S. Dollar. This indicates that when Venus changes signs (30* multiple of the 0-180 hot spot) the U.S. Dollar and possibly the U.S. stock markets become activated. (120* & 240* are trines of the circle)

The Gann chart overlaid on the U.S. Dollar is not perfectly accurate since the price graph uses trading days and the Gann data is based upon calendar days. The accompanying tables on the graph indicate the prices and dates to watch for.

GOLD

Not much to report on Gold. The sidelines seem like a good place to be until further price action gives clues to the direction of the main trend. There is a confluence of cycles coming at the end of this week which could resolve the question as to whether the latest rally is corrective or part of a new impulse wave to the upside that will test the previous high and perhaps break through to new highs. Wait for more evidence.


Friday, August 27, 2010

Looking into the Abyss ?

VIX: Ready for Lift-Off?

The 28% level is the critical point for the VIX. A decisive break out above 28 would indicate that the markets are about to get a little 'rocky'. Stay Tuned.


Royal Bank of Canada
RY has retraced 38.2% of the tremendous rally from the 2009 lows. Canadian banks came out of the financial meltdown of 2008 relatively unscathed but the current chart of RY is suggesting that some trouble might be brewing. In order to negate this omen the stock will have to reverse to the upside sooner than later.
Support levels have been violated while volatility has increased significantly. The last few sessions produced losses that were accompanied by increased volume. NOT A GOOD SIGN.




Apple Computer:
Several months ago I included AAPL along with BIDU and GOOGLE as potential Kamikaze put option trades.
Since that posting on May 28th
  • GOOG has declined $40.00/share
  • BIDU has increased by $3.00/share
  • AAPL has declined $18.00/share
While you could not have realized a profit from the BIDU if you purchased short term contracts, depending on what strike prices were purchased for GOOG or AAPL it is possible that one could eke out a profit. I still think that both BIDU and especially AAPL qualify for kamikaze speculations at this point in time.
If the market does fall out of bed, the downside potential of AAPL may be quite significant. Apple's share price is hanging by a thread.

Thursday, August 26, 2010

30 Year Treasury Bonds

The credit markets celebrated the full moon with a little volatility that resulted in what could potentially be a reversal day. This afternoon I posted a 20 year T-Bond chart with a Gann square arguing--albeit in an unorthodox fashion--for a top to be made near 127. Wednesday's high was 126.84 before dramatically reversing lower. The candlestick pattern--a doji followed by a huge engulfing bearish candle suggests that a top is in.

The 30 year Treasury reversed as well--forming a bearish engulfing line and hitting a conventional Gann Square almost exactly as well.
Gann Squares can be calculated as follows to determine natural support and resistance levels.
  • Take the low that the current cycle commenced from: in the case of the 30 yr. 114.34
  • Calculate the square root of 114.34--which is 10.6929
  • Add 1 to the Square root value: 10.6929 + 1 = 11.6929
  • Square the resultant sum: 11.6929 * 11.6929 = 136.72
  • Wednesday's high on the 30 year was 136.84, before reversing lower.

The chart below indicate the precarious position the U.S. Treasuries currently find themselves--gaps to fill--momentum divergence--bearish candlesticks--and over believed.

The risk reward parameters are fairly well defined for aggressive speculators.

Wednesday, August 25, 2010

A High in 10 Year Treasuries? An Unorthodox Use of the Gann Square of Nine.

The following may be somewhat hard to follow and may also be hard to accept as a valid analysis using Gann's Square of Nine:

  • Take the 130.61 (131) high and the 114.50 (114) low on the 10 Year Treasuries.
  • Using the Square of Nine, these values are 146 degrees apart. The 114 value is at 248* and the 131 value is at 34*. Therefore 34 + (360-248) = 146*
  • Divide the 146 into fourths: 73* & 36.5*
  • 248 + 73 = 321 * and 321 + 36.5 = 357.5
  • Therefore on the Gann Square Wheel the following angles are significant: 248, 321, 357.5 and 34.
  • Draw lines intersecting the center point from these angles.
  • The Gann Harmonics can be ascertained from where these radii fall on the Square of Nine Values.
  • The following levels are highlighted.
Purple: 122 & 140 (321*)
Green: 114 & 136 (248*)
Light Blue: 109 & 131 (34*)
Dark Blue: 106 & 127 (357.5*)

Light Blue @ 131 represents the HIGH, Green @ 114 represents the LOW
Purple at @ 122 represents the resistance at 121.17
Dark Blue represents the POTENTIAL HIGH @ 127

Price Considerations.
Since the value of the price amplitude = 146 degrees, A projection of 146 days is extended from the June 11 2009 low.
  • First Octave is at November 4th 2009
  • Second Octave is at March 30th 2020 (near the April 5th secondary low at 114.89
  • Third Octave is at August 23rd 2010 (near the 127 Price Harmonic)
The chart below shows the Square of Nine and the 10 Year treasury Chart. The 10 Years are very close to the 127 harmonic coincident with the 3rd time octave at August 23rd 2010.




Emerging Markets: The Next Meltdown?

Tuesday, August 24, 2010

Full Moon, August 24, 2010: 1 Pisces 25’


S&P 500
  • August 16th low (1069.49) taken out on Monday
  • Big Volume days are DOWN DAYS.
  • Expect acceleration below 1056.88--July 20th low--especially on a closing basis.
  • Monitor Volatility (VIX) for a breakout above 28--This will spell trouble straight ahead

GOLD
  • Possible Head and Shoulders forming.
  • Trendline from 1265 touched Thursdays high of 1237.20
  • An excellent time TO BE FLAT. (See 'Three Charts to Ponder: July 29, 2010)

U.S. Dollar
  • Bullish stance continues
  • Possible resistance at 84.40 where a corrective decline may commence.
  • 81.75 is a strategic point for position protection.
  • Enjoy the ride because the train is not crowded.

Monday, August 23, 2010

The Significance of Panic Midpoints

VIX
Volatility appears poised to break out to the upside. A close below 1069.49 on the S&P 500 accompanied by a break above 28 on VIX would portent a market that is ready to decline significantly.


The Significance of Panic Midpoints
.

As a predictive tool:
The low of an impulse wave can be estimated by identifying a panic--finding its midpoint--and then using that level as the possible midpoint for the entire impulse wave. This example uses the May 4th-May 6th panic.
  • Look for a string of consecutive declining days that produces a loss in excess of a 3%.
  • Candlesticks are excellent at spotting these since they will all be the same color—usually black or red.
  • After the first day up—a white or clear candle—the amplitude of the panic is available for measurement.
  • Measure the amplitude of the panic decline—calculate the midpoint.
  • This will likely be extremely close to the midpoint of the entire decline.
  • Take the high—immediately before the panic occurred—and subtract the midpoint.
  • Take that result and subtract it from the midpoint and that will be close to the bottom of the impulse wave.
  • The midpoint will act as a resistance area in the future.
It works for ‘panic advances’ but not as well


Combining Midpoints to Ascertain Support and Resistance
:
Several panic periods can be used to create multiple support and resistance levels as demonstrated by the chart below. In this example note how the average of the three panic midpoints is very close to the important 1107 area discussed on the July 28th Update and again on the August 9th Update.


On a Short Term Basis:

The example below shows the SEPTEMBER S&P contract:
  • On August 18th the SPU (Sept.) dropped precipitously in the afternoon and continued the next morning. This is the decline highlighted in blue and yellow—the midpoint of the decline being where blue changes to yellow—which is 1092.50 :1069.00 = 1080.75
  • The immediate preceding high on August 17th was 1098.50
  • The distance from the 1098.50 high and the 1080.75 midpoint is 17.75 pts.
  • THE MID POINT OF THE PANIC IS USUALLY VERY CLOSE TO THE MIDPOINT OF THE ENTIRE DECLINE OF THE IMPULSE WAVE.
  • Therefore the bottom of the impulse wave should be approximately 1092.50 – (17.75*2) = 1092.50 – 35.50 = 1063.00
The actual low was 1061.80 slightly below the projected target.

As mentioned above the 1080.75 midpoint should act as resistance to any advance coming into Tuesday's Full Moon. (Note the August 9th high was made on a New Moon.) This knowledge can be invaluable at executing opening positions and managing open trades.


Friday, August 20, 2010

A Possible Market Trajectory.

This should clarify any ambiguity with regard to my opinion of the S&P 500.

If and when the 1069.49 recent low is taken out--especially on a closing basis--the possiblitly of a crisis developing in the markets increases significantly.
The chart below shows some of the possible Fibonacci Harmonics that are clustered in the event that a 'THIRD WAVE' decline commences.
Three Fibonacci projections are shown that are used to trace out a possible trajectory of a decline. Since the decline will be part of a impulse wave within a bear market, the decline should have a series of five wave structures.
The timing and price targets should not be taken too seriously since the market decline may manifest in a number of different ways, but it is a seasonal tendency for the markets to experience 'anxiety' in the months of September and October. The Energy Dates for September and October will clarify the time price harmonics with greater accuracy as we enter the autumn.
Some VERY preliminary Energy Dates projecting into the autumn are:
September 7-9
September 17-21
October 1-4
October 7-8
October 26-29
Note: These dates will shift slightly as the calendar progresses.

Some Observations:
  • There is a cluster @ 1039-1040 which may be first support--that will give way rather quickly
  • The 920-950 (especially 940-950) area looks like it could offer some relatively strong support and may be the level at which some form of bounce occurs. 943 also represents 2.618 of the 1129.24-1069.49 decline since August 9th.
  • 839-840 represent the decline being 1.618 of wave (1) (using 1040.78 as the low) or 1.382 of (1) (using 1010.91 as the low). 847 is 4.236 of the recent 1129.24-1069.49-1100.14 decline and corrective bounce from August 9th.
  • Note how 660.57 represent the 2.618 multiplier of wave (1) (using 1040.78) and 2.236 of wave (1)( using 1010.91). This is close to the March 6, 2009 low of Wave 1 of greater degree. (October 2007-March 2009)
  • Below 660? Yikes!!!!!!!!!!!!!!


Thursday, August 19, 2010

Sea of Red

Courtesy of FINVIZ.com

Energy Date Window.

S&P

Important levels
1116-1117
1107-1109
1099-1101
1084
1069

Thursday's Pivot Points
R2 1107.24
R1 1100.70
Pivot Point 1093.23
S1 1086.69
S2 1079.22


Weird Close and after hours session!
Enough Said


US $

  • possibly completed a 38.2% correction--if so, a powerful resurgence in the dollar may be about to commence.
  • Fibonacci targets point to higher prices
GOLD

Gold has a VERY interesting chart
  • the rally off the 1155.90 low has retraced slightly more than 61.8% of the June-July decline
  • RSI is creeping into overbought territory
  • Current price level approximately equal to the December 2009 high
  • A possible Head and Shoulders forming: REPEAT possible H&S
Still bullish but becoming increasingly CAUTIOUS.


U.S. T-Bonds
There is talk all over the street about the 'BOND BUBBLE'--what bubble--does this look like a bubble--a parabolic curve fueled by blind enthusiasm? Or, is the Bond action a wall of worry supported by a combination of desperation and exasperation?

Nonetheless, the current level certainly is intriguing:
  • 61.8% retracement of the Wall Street Meltdown chaos
  • current level same amplitude as the 2009 basing structure (bc=ab)
  • RSI moving into over-bought
If things were to get 'interesting' vis a vis the economy, Wall Street, and the US$, bonds may once again exhibit 'high anxiety'. Who knows? People talk about markets being manipulated etc etc--well if anything is a Ponzi scheme it is surely the US Debt market. (Fiat Comedy at its best)

I would like to thank the individuals who have visited this site on a frequent if not daily basis. You know who you are, but I don't for the most part. I notice your frequent 'hits' on my Site Meter. Since I don't know your names I will simply list your location.
Hong Kong: Central District
Brussels Hoofdstedelijk Gewest
Singapore
Rome Lazio Italia
Barbados
Turks & Caicoes
Grand Cayman Islands
London England
Washington, DC
Stamford Conn.
Huntsville Alabama
Montreal PQ Canada
St. Laurent PQ Canada
Sterling Heights Michigan
New York City (several ISPs)
Los Angeles CA
Utrecht NL
and of course
Sudbury, Ottawa and Toronto

Thank You: I appreciate your interest.

Wednesday, August 18, 2010

Read the Chart -- Tame Your Heart

The three major price harmonics of an a-b-c corrective rally are 1099-1101, 1106-1107 and 1116-1117

S&P 500

Last night I stated that the S&P may only rally 'to the 1099-1101 area, and then turn lower', at which point 'the market will be sending a strong signal that the internals are incredibly weak .' Tuesday's high was 1100.14 before selling off in the last hour. A case can be made for an a-b-c correction being complete.
The chart below shows this possible scenario--however--the Tuesday's peak at 1100.14 may be only the 'a' subdivision of the corrective wave with the 'b' commencing during the last hour. This would mean that a 'c' is still to come--which could bring the S&P up to the 61.8% (1106-1107) retracement level before turning down. (Note: The market is entering a Energy Date window)
If and when the 1069 level is taken out, the decline will likely accelerate in a dramatic fashion. The resultant damage may shock even market veterans.
At this point. aggressive traders have the opportunity of putting to use some fairly distinct risk-reward parameters to either add to existing positions or to initiate a trade.

Note how the 21, 55 and 200 exponential moving averages have converged at 1096-1098--near today's resistance. The market is coiled like a 'set' trap ready to spring close and ensnare its victim(s).



GOLD
Last night I discussed the benefit of trading multiple contracts in order to realize some profits at significant harmonic points in the time-price structure. Tuesday's DOJI lends evidence to the fact that the Gold price may be at such a juncture.


Cdn. Insurance Companies.
Here are two interesting charts--Sun Life Financial Services and Manulife Financial Corporation. These are two Canadian-based international financial services company that offer a diverse range of insurance and investment products.
While MFC.TO has been in a serious decline for several months, SLF.TO has recently broken support and appears to be taking the same trajectory as its competitor.
These charts tell me that there is something very pernicious going on in this industry which could easily escalate throughout the financial community. When the soldiers begin to fall en masse, it is not long before the Generals order a retreat.

Tuesday, August 17, 2010

UPDATE: 12:00pm 1107 Revisted....AGAIN ???????

S&P 500
Last week I mentioned that the structure of the decline would be important in its early stages since it would give clues as to the longer term trend. The markets may have reached an inflection point on Monday. The S&P has declined 50% of the 1010.91-1129.24 range and has produced yet another doji, signaling indecision in the short term outlook amongst traders.
If a rally were to commence at this point the 1107 area would once again play an paramount role in the determination of the intermediate trend. As the saying goes: Once support:now resistance. The 1107 area has acted as a strange attractor to the S&P during the decline from the 1219.80 high of April 26th and will continue to be a pivotal level until the intermediate cycles resolve themselves. (likely at the end of this week or the first week of September)
If the markets were to rally up and test the 1107 area--especially during the next ENERGY DATE window (Aug 18-21) and then decline--taking out Monday's low of 1169.49, then a significant decline is likely going to take place in the near future. If a rally does ensue off Monday's low and fails to approach the 1107 area--perhaps only to the 1099-1101 area, and then turns lower, the market will be sending a strong signal that the internals are incredibly weak and are prone to a very serious decline in market valuation. Conversely, a close above 1109 would raise caution signs about the ferocity of the bear.



U.S. Dollar
The USDX has encountered some resistance at the first of the three Fibonacci fan-lines formed from the recent decline. Once prices enter into the Fibonacci harmonic rectangle traders may have a chance to evaluate the strength of the current rally more thoroughly.


GOLD
Gold closed above the 61.8% retracement of the June-July decline while technical indicators are not in over-bought territory. Gold should encounter some resistance at the downtrend line emanating from the onset of the decline in June. (currently approximately 1230-1232)
The current price action in gold demonstrates how trading multiple contracts at the onset of a trading campaign gives a trader increased options as to how to manage the constant risk-reward dilemma--better known as the struggle with greed and fear. For example, a trader who initiated their long position with 2 contracts could look to exit one of them as Gold approached the trendline--OR-- exit one contract if prices returned back into the Fibonacci retracement rectangle. (blue and yellow box). Being open to reducing exposure and pocketing profits is an excellent method of protecting oneself from blowing up in a campaign due to greed and lack of discipline--although traders obsessed by greed would likely disagree with this strategy. Two guns are usually better than one in a battle because you get to reload.

Monday, August 16, 2010

GANN ROADMAPS

U.S. Dollar



S&P 500


Gold & U.S. Dollar

Friday, August 13, 2010

Harmony and Chaos = Volatility

S&P 500
The chart below shows the harmonics that lead to the August 9th peak.

  • The cycles shown were some of the components of the projected August 8-10th Energy Date. ( 1.272 = 1/.786 : where .786 = the sq rt of .618)
  • The 50% retracement of the May 24th low suggests that 1040.78 was the conventional wave 1 low which price projections should be calculated from.
  • If the 21 day ema (1103.07) crosses back under the 55 day ema (1101.15), it would substantiate that the 1129.24 peak on August 9th was in fact the top of Wave 2--which suggests that a violent wave three is dead ahead.



Volatility
Volatility is looking like it is in the process of breaking out. Volatility typical increases during declines. Long VIX strategies may prove to be very timely at this juncture.



GOLD
Gold is rallying nicely--breaking to a new recovery high. This gives traders a opportunity to adjust trade management parameters.

U.S. Dollar
More on the Dollar this weekend.

Wednesday, August 11, 2010

KABOOM !!!!!!!!!!!!!!

"Democracy depends on an INFORMED electorate. As a group, the American voters are dismally ignorant. They hold the power of the votes; yet they elect and re-elect a corrupt and self-serving Congress. It is incumbent on every American to be informed and vote. Until that happens, I guess we get what we deserve. The people are passive and ignorant. Congress is active, shamelessly self-serving and corrupt." Richard Russell

S&P 500
No one likes to get a wedgie: On Wednesday the consequences of the wedge formation on the S&P became evident. We have now entered the time period where it will be essential to attempt to decipher what the markets are going to do--whether this is a shake out in a major advance--or the start of a decline that will instill fear in both bulls and bears alike. I believe the latter is the greater possibility. If this is the start of a classic Elliott three wave decline, support levels will be few and far between and VOLATILITY will SKYROCKET. (think VIX Calls) As the adage goes: The Tape Will Tell The Tale.


GOLD
Gold is at an interesting juncture. It has retraced 50% of the June-July decline coincident with the down sloping .618 fan line. A test of the recent rally's conviction will clarify the overall structure of the market.



U.S. Dollar

Well today was certainly entertaining! This market could get as crazy as the equity markets potentially could. A continuation into the 'Fibonacci sector' is likely before a evaluation of market structure can be made. The technicals, harmonics and sentiment all suggest that the market could go significantly higher.