Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Technical Analysis of Stocks, Currencies, Bonds and Gold

Stock-Markets / Financial Markets 2011 Oct 17, 2011 - 03:06 AM GMT

By: Anthony_Cherniawski

Stock-Markets

Best Financial Markets Analysis Article-- When I last discussed the VIX two weeks ago, I had mentioned that the VIX was getting quite a bit of attention in the popular media. I should have suspected that it was the "kiss of death" for the continuation of the rally at that time. Although the formation appeared to be ready for an upside breakout, it was due for a Master Cycle low, first. It now appears that the low may be in, or nearly so. The VIX cycle turn date occurred on Saturday, so I am allowing one more trading day for the turn to happen.


-- Broadening formations often appear capricious and maddening in their design, but the outcome is very predictable once the pattern is complete. They are pre-crash formations. The first Broadening Wedge formation (March through July) anticipated a 20% drop in the SPX. This new formation, known as an Orthodox Broadening formation, anticipates a decline over 30%. Monday, October 17 is the next cyclical turn date for the SPX. This decline may be complete in less than three weeks.

Zero Hedge correctly identified this nine-day rally as a low volume short squeeze. This weekend a follow-up article describes how this algo-driven short squeeze was engineered. The explanation for the “surge in the past 9 days is not driven by any latent "optimism" that Europe will fix itself, but simply due to the previously discussed wholesale asset liquidations (as none other than the FT already noted), which on the margin are explicitly EUR positive due to FX repatriation, courtesy of the post-sale conversion of USDs to EURs.”

-- From a technical view the Euro was due for a bounce by early October. In early September it violated violated its first

violated its Head and Shoulders neckline, but fell short of its target of 128.60.

The new impulse low at 131.64 may be the locus of a new Head and Shoulders neckline with a much lower target at 113.88. It appears that the prior neckline at 139.00 may provide resistance for this rally.

You can see that there is a very high correlation between the Euro and the SPX since early May. This coupling of the Euro and the SPX will likely continue for the next six months or more.

-- The dollar has completed a 46.6% retracement from its first impulse high off the May 4 low of 72.70 72.70

72.70. The retracement appears complete, although it may search for the bottom at 76.27, its 50% retracement. Friday happens to be a cycle turn date, so there'll be no surprises if the dollar resumes its upward trend on Monday.

-- Gold may have made its cycle high and a 41% retracement high last Wednesday, October 12. If so, it appears ready to decline through the lower half of its cyclical trading range and possibly hit its Orthodox Broadening Top target of 1230.00 in the process. The cycle pattern suggests that the next significant turn date will be at the end of October. Whether it reaches its target by then remains to be seen.

The cycles suggest a significant low for gold in 2012. If it can remain above 750 at its 2012 low, the secular uptrend in gold may continue. However, should a decline below 750, there may be yet another four years of decline in gold.

-- By all appearances, USB may have completed an impulsive rally from its February low. So far, however, both the declining pattern and the cycle do not appear to be complete, leaving USB in no man's land. Should the rally resumed while stocks decline we may see a parabolic blowoff in bonds. On the other hand, should USB immediately join equities in their decline, we may see an end to a 30 year uptrend in bonds.

The cyclical picture suggests, but does not require, approximately 2 more months in this secular uptrend. I remain cautious that the trend in bonds is due for a change.

 

--West Texas Crude  has made a new Head and Shoulders pattern that lends meaning to the phrase, "When it first you don't succeed try, try again." I find it amusing that the second Head and Shoulders pattern has a target almost identical to the first. If the Head and Shoulders pattern holds, crude may be about to finish its rally and begin the next "crash phase" down in the next day or so.

Those of you following my work may remember that the initial Broadening Wedge formation anticipated a possible low near 74.00.  The August low was a near miss. The new broadening flag formation anticipates a low near 57.75. I would not ignore that warning.

Regards,

Tony

Our Investment Advisor Registration is on the Web

We are in the process of updating our website at www.thepracticalinvestor.com to have more information on our services. Log on and click on Advisor Registration to get more details.

If you are a client or wish to become one, please make an appointment to discuss our investment strategies by calling Connie or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

Anthony M. Cherniawski, President and CIO http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in