8 CHARTS THAT WILL MAKE THE GERMAN CHANCELLOR FRENCH KISS THE GREEK FINANCE MINISTER
click on chart to enlarge
10 CHARTS THAT WILL MAKE YOU HEAD BUTT, KISS, HUG AND THEN GET KNOCKED OUT BY YOUR OPPONENT
click charts to enlarge
THAT BEAR FLAG THING
It was the talk of the town last weekend. This weekend it will be something new, I'm sure. The scenario drawn up in the chart review last weekend for what the market would do this week turned out to be fairly accurate. I was expecting a bigger penetration of the downside of the "bear flag thing". It seemed to have sucked in enough shorts, with or without the bear flag thing, to cause the substantial rally we experienced this week. This is the S&P chart from weekend chart review on 9-11. click chart to...
REAL TALK ABOUT THE S&P 500
I've outlined my feelings about the S&P 500 in the chart that appears below. The bottom line is that a violent, chaotic pattern will resolve itself much as it has lived its life...through chaos. Chaos would be a break of the August lows. That would cause mass confusion. That would also put in a solid bottom for the markets to rally from. I'm holding 33% cash to take advantage of such an event. I can't see myself putting on equity exposure this week unless the criteria outlined in the paragraph above and in more detail, in the chart below is met. Upside from a break of 1100 on the S&P is roughly 20%. I can see that move happening in a span of roughly 2 months given the compression in prices and lopsided bearish sentiment. Think outside of the sphere of panic and defeat that is gripping everyone on Wall Street currently. That's the only way you'll come ahead going into the end of the year. Buying into group think isn't a hallmark of successful speculation. Real talk. click chart to...
6 CHARTS TO KEEP YOU IN PEACE AND NOT IN PIECES DURING THE WEEK AHEAD
click charts to enlarge
7 CHARTS THAT WILL HAVE YOU DRIVING FAST AND TAKING CHANCES IN THE WEEK AHEAD
click chart to enlarge
6 CHARTS THAT WILL KEEP YOU IN PEACE AND NOT IN PIECES DURING THE WEEK AHEAD
click on charts to enlarge
SO, UM, WHERE IS THE PANIC AGAIN?
It's cool to be a contrarian. It's like being a Michael Jackson fan in the 80's. A Nirvana fan in the 90's. A mortgage broker until 2006. And a foreclosure specialist until present date. All market participants have their favorite ways of measuring fear, greed, depression and despondency. Since August 1st, I have been saying that we are entering a period where contrarian theory will be tested. Watching your favorite indicator for clues as to when and where the market bottom stopped working a couple weeks ago. There is no reason to expect it to suddenly click. Market participants, however, have a way of rationalizing favorite indicators to the point where they can make the color green seem like blue if it appeases their emotional and intellectual market ego. Be careful of that as it means you have one foot in the grave and the other slipping in the mud. Contraianism becomes a costly disease during points in time when markets have a single minded purpose either to the upside or downside. This current decline in the markets kicked off with an excess of pessimism that had a lot of people doubting its validity. According to the study I posted here on July 31st, the fact that the market was ignoring the excess in bearish sentiment made the downside all the more dangerous, only serving to strengthen its validity. Take the excess optimism that has been apparent to everyone in the gold and silver markets for this entire year. Contrarians who attempted to doubt the uptrend and take on short positions have had to deal with a continuous move up for the majority of 2011. There is a time when the "deception mechanism" of the market breaks. Upon breaking, the uptrend or downtrend becomes self-reinforcing and accelerates greatly over time. These are markets that are the most dangerous to those attempting to pick tops or bottoms based on simple "everyone is bullish or bearish" theory. The equity markets have a very simple and accurate means of judging panic and fear. With a commodity like gold, it is one single commodity issue. You don't have any periphery commodity issues that can give you clues as to what gold is going to do. It is a singular entity unto itself. However, with the broad stock indices, you have thousands of stocks that can give you hints as to what certain groups of investors are thinking, loving and hating. I detailed this in my article about Phase 4 Investors in written in February. At present, it is important to look at the most widely, popular names in order to gauge the levels...
FORECAST: CHOPPY SEAS FOR THE REMAINDER OF AUGUST
We're washed out for the remainder of the August. Too many traders and investors have caught onto the bear side of the equation. It's gonna take some sideways chop, with a bullish slant, to shake loose some of the bearish convictions. This is a market where attitudes and emotions seem to flip on a dime. Therefore, I wouldn't be surprised to see a couple weeks of sideways chop, with perhaps a push up to 1230-1240 on the upside being the max for the bulls. Bears won't get anything less than 1170-1180. A fairly narrow range to close out the summer trading season. September is going to be another story, however. I'll have the reasons why later. It may look something like this. Nonsense trading, in other words. click on chart to enlarge Keep in mind that as the chop progresses so will the comfort in the market. We need some level of comfort to clear the way for the next leg down which should take place in September. You can't have an abundance of frightened longs and eager short sellers pressing into declines like we saw today. You know what happens when they press? Just look at the intra-day chart for today. You get a reversal of the trend towards the end of the day. Those so inclined will have plenty of opportunity to position themselves properly for a break of the recent lows. My plan remains the same: Increase short positions via inverse ETFs and exit a majority if not all long...
8 CHARTS THAT WILL LEAVE YOU NEEDING A HUG
The story this week is in the long-term charts for most market averages. That's where I am looking this week. That's where the real story of the market is told presently. I could dissect the daily charts, but I think they are generally useless given the volatility we have faced. Investors need to zoom out to get the real story. Smooth out the recent volatility. That's exactly what I'm doing. Enjoy: click charts to...