THE CURRENT PATTERN IN THE EURO LEAVES IT WITH ONLY ONE PATH TO TAKE IN THE NEAR FUTURE
When I looked at the chart of the Euro over the weekend, I had an instant reaction that I had seen this pattern somewhere else in 2011. Being that I have a library of my thoughts available to me through this website, I began looking over the charts I had posted this year. Then the memory became more clear. I knew it was a pattern in the QQQ. After a few minutes of looking through QQQ charts, I found the chart I posted way back on April 12th. The link to that chart is here http://www.zenpenny.com/wp-content/uploads/2011/04/QQQ-4-12-11.gif Here is a shot of the chart zoomed in from that time without my notes: click chart to enlarge Here is a current chart of the Euro: These are the exact same patterns. Of course, the Euro's pattern is in reverse. However, equally as powerful. The series of small declines in the QQQ during an uptrend eventually led to a powerful explosion higher as the shorts couldn't sink the ship despite piling in thinking the market would collapse. Now with the Euro we have a series of higher lows that looks very organized and calm in its approach. It is more or less going nowhere, however, given where we have come from. Guess how this ends? With the Euro plunging from here in the coming weeks just as the QQQ exploded higher in April. This is a powerful pattern that is highly reliable. A breakdown from here is an inevitable conclusion for the...
6 CHARTS HANDCRAFTED TO MAKE THE WEEK AHEAD A FESTIVAL OF BEARISH DELIGHTS
click chart to enlarge
THE PIECES ARE FALLING INTO PLACE FOR A MOVE TO THE OCTOBER LOWS
In order to gain an accurate appreciation for where the market is going, it is important to look back at what has been said. With the overwhelming abundance of information available to us, it is nearly impossible to remember the analytic road map that got you to whatever frame of mind you are in with respect to the market. This is why I find it imperative to keep this blog updated, as well as take personal notes, in order to realize where my current frame of thought is originating from. Without these valuable journals, I am left with an abundance of thoughts each and every day that remain uncatalogued and disorganized. I believe we are reasonably close to a point in the time for the markets where an intermediate term top will be seen. This top will give way to a test of the October lows within the coming 1-2 months. I don't simply base this on the study I posted Thursday night with respect to the topping formation on the weekly chart for the S&P. I base it on analysis that was born in mid-November with this article explaining the reasons why I believed we were on our way towards testing the October lows. A day after publishing that article, I published a follow up note explaining how sentiment was still not in the proper place to reward the bears with a dramatic move down. That article is here. I have been following the sentiment picture very closely, as it holds the key to cultivating an environment where a retest is possible. Let's look at how the sentiment picture has changed, not via surveys or odd indicators of money flow, but with real money data utilizing the put/call ratio. In order to gain some sense of where we are currently vs. where we have come from, the first chart and notes are from mid-November. I use the moving average of the put/call ratio ONLY in order to smooth out the data: click chart to enlarge My article from November 13th was titled "The Next Leg Down Will Begin Once This Indicator Falls In Line". As of Friday's close we are 1-2 days away from the indicator moving into a territory that allows the sentiment picture to accommodate a drop back to the October lows. You can see in the current chart of the put/call, the 20 day moving average has plummeted recently without new intermediate term highs being observed in the markets. This highly reliable sentiment study along with price patterns and the suspect price action during bull moves, makes me believe that it is not a matter of IF we revisit...
BULLS WATCH YOUR STEP, THERE MAY BE A CLIFF RIGHT BEHIND THAT CHRISTMAS TREE
I'm about to pee in the bull's cheerios. Or if I may invoke a Christmas motif, I am about to pee on Santa Clause. I don't necessarily want to berate the bulls at present since I count myself as one of them via my current portfolio exposure. However, it is my responsibility to report what I see as I see it. That's the point of this website. An unbiased reporting of observations regardless of my current book. It helps me and hopefully you in making decisions that will keep us all from going the way of Willy Lump Lump. There were some problems today from a pure price action perspective. It is a well known fact that this market has made it a habit of putting together most of its gains over the past few months via upside gaps that have very little in the way of intra-day gains. What happens is we gap up overnight for one reason or another, mainly due to a positive action with respect to Europe. The market simply spends the rest of the day either moving sideways or adding another percent to the one or two percent gap that nobody managed to catch. When the market is left to its own mechanisms - without the benefit of a news driven gap - the action hasn't been anything to write home about. Today was a prime example of the problem the market faces in terms of momentum and sheer power. There isn't any. That's the bottom line. You can blame it on the lack of liquidity given the holiday season all you want. However, I should remind you that past the first half of October, this has been the modus operandi for bull runs that do not begin with gaps. Without the gap the bulls are crap. A t-shirt is born. That should leave the bulls asking themselves: 1. How will we function with the much lauded 200 day moving average lying dead in our path? 2. How will we overcome the October highs above 1290 without the benefit of further gaps? I'll tell you how. The bulls need more gaps. The bulls need news driven action to make it stick. Problem is there is only so much that can be announced before the bulls have to do it themselves. Short of the singing of kum ba yah in Europe by members of the ECB and governmental authorities, there isn't much more good news that is going to come out over the next few weeks. That's a problem. And then we have this chart. Could it? Would it? Will it? You be the judge. I...
THE ANATOMY OF A COUNTERFEIT MOVE BULL REMIX
We saw a substantial move back above the upside trajectory point take place today, completing what should be the third and final counterfeit move before the downside trajectory line and 200 day moving average are taken by the bulls. Here is the chart outlining the counterfeit move from this weekend. The following is an updated chart following today's move: click to...
THE 5 CHARTS THAT WILL HAVE YOU SINGING THE CHRISTMAS BLUES DURING THE WEEK AHEAD
click chart to enlarge
THE MOST IMPORTANT CHART I’VE POSTED THIS YEAR
The magnitude of the opportunity that awaits those who take advantage of this obvious counterfeit move will be substantial. A double digit percentage gain in the S&P 500 over a one month time frame is how this should resolve itself. The resolution should take place over the next 1-2 weeks, with a majority of the gains taking place in January. Here's the chart: click to...
THE 4 CHARTS THAT WILL WHISPER SWEET MELODIES TO YOU DURING THE WEEK AHEAD
click charts to enlarge
COUNTERFEIT MOVES IN FINANCIALS AND S&P REVISITED
Let's get right to the charts here to see the type of progress that has been made over the past week in two areas of focus. To get a better understanding, I will first post the original chart of each published last week. Starting with the financial sector represented by BKX click chart to enlarge Up next we have the S&P 500 starting from the view on December...
SHORTED FINANCIALS TODAY: HERE’S WHY
I took a mid-sized position in FAZ today. I have explained the trade from a price action perspective below. There are also reasons that go beyond price action, including current sentiment, potential news flow and seasonal cycles that are at issue here. I focus on price action because that is where I look first and foremost. click chart to...