Wednesday, May 25, 2011

GOLD and S&P Update

GOLD (June)
Gold is rallying and has taken out the May 11th high of 1526.80 reaching the 61.8% retracement level of the latest decline. A close below 1462.50 would be quite bearish and could possibly lead to a violent decline.

S&P 500
The S&P is showing waning momentum and is having difficulty rallying from the latest decline. A close below 1316.20 would be a warning of further weakness while a close below the 1294.70 low of April 18th would strongly suggest that an intermediate cycle decline has commenced. While a further rally is quite possible, a labored move above recent highs would make the structure of the market highly suspect. Caution showed be exercised at these levels as the markets have reached harmonic price levels (1360-1370) and the intermediate cycle uptrend is getting quite mature.

Thursday, May 19, 2011

Confluence of Cycles

The May 23-29th time frame could possibly usher in a cycle downtrend of significantly higher degree than most traders expect.
Gold. A brief rally could set up the 26th wave in the three peaks and domed house formation. If #26th does materialize, the ensuing decline could be of epic proportion.

Note: Updates will be limited until June 3rd.

Friday, May 13, 2011

$DOWT | Index Price Chart for DOW Transportations

Caution: Transports could be breaking down. More on Equity market cycles this evening: Major Energy Cluster May 23-28th

$DOWT | Index Price Chart for DOW Transportations: "$DOWT"

Monday, May 9, 2011

Correction or Transition?

The low made on May 5 @ 1325.50 (SPM11) is the low point of the recent swing. If this low is taken out the likelihood of a rally into new high territory diminishes. If the April 18th low of 1290.50 is broken the onset of a major correction--or bear trend--becomes significantly greater.

Although there are many potential turning points in May and the early part of June, Monday May 23rd could be important.

Gold is looking rather nasty. The three peaks and domed house formation is tracing out point 24. A rally should ensue for several days. If the formation is valid, when the rally fails the market could be on a precipice.

Friday, May 6, 2011

S&P 500

The rally since the November 16th 2010 low--interupted by the a-b-c during Feb-Mar is getting mature. The technicals--RSI and ADX--are showing classic signs of an ageing bull.
As with the metals markets--perhaps all markets that have gone ballistic over the last 12 months--the equity sector may be about to shock complacent bulls. The behavior of VIX over the next three weeks will be very important in ascertaining the potential of the approaching intermediate cycle down-swing.

This is a really good time for investors who have benefited from the huge bullish moves in the markets over the last 2 years--think four year cycle--to remember the old adage--Bulls and Bears make money...but....pigs get slaughtered

The three peaks and domed house formation is back with a vengeance (point 24 or 26). The bounce will be very interesting to analyze...if the formation is valid, the golden bear is just waking from her hibernation.

Tuesday, May 3, 2011

Gold Harmonics

Although it is stretching things, the three peaks and a domed house scenario is still a possibility--especially considering the market action and the time price harmonics coming into play in this time frame.

  • 50% of the low to low cycle of Jul 28 2010-Jan 28 2011 (184 cd) was April 30th.
  • The price amplitude of the Jul 28-Dec 7 bull wave was $274.70 . 1/2 of 274.7 added to the 1430.60 Dec 7th high is $1567.95
  • The $122.50 decline from Dec 7th to the Jan 28th low at $1308.10 when added to the Dec 7th high equals $1553.10
Therefore there is a 2:1 ratio evident in the market structure--both in terms of price and time.

The chart below shows the potential 'Three peaks and domed house' formation which if continues to form has VERY BEARISH implications for the gold market.
Silver is clearly parabolic and VERY overbought--coincident with a test of the 1980 highs. Certainly a time to exercise EXTREME caution.