Sunday, June 5, 2011

June 6 2011 Update

"The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title." Anonymous

There are many bubbles looking for a pin !!!!!

US Dollar

The USDX has had its largest rally since the late December 2010 peak--a bullish development. Currently, the market is correcting and could resume its uptrend in the near future. A close above 75 would be an indication that a powerful continuation rally (3 Wave) is commencing.

GOLD (June)
The rally in June Gold was reached approximately the 78.6% retracement from the 1462.50 low of May 5th. The chart below shows the importance of converging trendlines which intersected at the 1462 low. A break of this level on the downside could usher in a violent decline and and reassertion of the BEAR trend. A break of $1520 would violate the recent uptrend.
May 28th was 120 calendar days from the January low, while June 5th is 180 cds from the Dec 7 2010 high.

June Cycles
The geometric price projections form a energy cluster between June 15-18th--look for a possible trend change or acceleration of the trend in this time frame. The period between June 27th and July 2nd is also a potential harmonic time window.

The DJ Transportation Average is approaching a crucial support level and will have to hold if the equity markets are to stay in their bullish trend. A break below 5175 would be disastrous!!!!

S&P 500 (cash)
The 1289-1294 level is critical support and should hold if the Transports are going to hold its support area--5175-5200. A break below the 1294.70 would suggest that a test of the March 16th low of 1250.11. Equity markets are deteriorating in concert with weak commodity markets and a strengthening US Dollar.
The adage 'SELL IN MAY AND GO AWAY' may be particularly apropos this year. If support breaks the next 4 months could be frightening--if not disastrous-- to the Bullish crowd. Leveraged Market Bear ETFs may be a very prudent holding over the next several months. Any rallies should be viewed with great caution--especially if market breadth does not confirm apparent index strength.
Monitor the performance of hedge funds: a drop in liquidity may be a serious development for the industry.


Google is currently trading below the major trend line from the 2008 bottom. If further price erosion continues an acceleration in its decline will be the likely outcome.

Important trendlines are in the process of being tested. A sideways consolidation before a resumption of the incredible uptrend is likely the most bullish of scenarios. A break of horizontal and diagonal support could lead to a significant decline in the valuation of Apple.


Chartrambler said...

Nice charts !

Fibocycle said...

thank you--things are about to get interesting.