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Trade the Bollonger Band Squeeze

Archive through May 19, 2010

Chart Forum » Hilarius' Hall Of Fame » Our Daily Bread » Archive through May 19, 2010

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eblode
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Monday, May 17, 2010 - 07:49 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody,
Don't give this tax on minerals a second thought. Never happen. Impossible!
Never at 40%. Maybe 10 or 15%. Maybe. But never 40%. Abbott will never let it happen. Neither will Julian G. It would be political suicide. You know it, I know it, and they know it.

Eugenio


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market_mad
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Tuesday, May 18, 2010 - 10:53 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



The positive start on our market has been retraced on the back of this (quite significant) news;

US Senate votes no on IMF aid to troubled nations
WASHINGTON, May 17 (Reuters) - The United States would
oppose International Monetary Fund bailout packages to
countries that are not likely to repay them under a measure
passed by the U.S. Senate on Monday.
The 94-0 vote came amid widespread concern that the United
States is indirectly supporting a $40 billion IMF bailout
approved for Greece earlier this month as that country
struggles to rein in its debt.
A series of unprecedented U.S. bailouts to stem the 2008-09
economic crisis has angered many Americans and lawmakers have
said they are unwilling to bailout foreign countries, as well.
European leaders have asked the IMF to stand ready to
provide up to $310 billion as part of a $1 trillion package of
loans and guarantees to prevent Greece's financial woes from
spreading to other euro zone countries with big budget
deficits, such as Portugal and Spain.
The United States is the IMF's largest contributor and has
veto power to block decisions, although has never used it. The
United States' stake in the IMF is roughly worth $54 billion in
subscriptions.
The measure, proposed by Republican Senator John Cornyn,
would direct the United States' executive director at the IMF
to determine whether there is likely to be repayment of loans
to countries whose public debt exceed their gross domestic
product.
If the director determines that the loan is not likely to
be repaid, the executive director would be obligated to vote
against it.
The measure was added to a sweeping rewrite of financial
regulations that could clear the Senate this week. It would
have to be reconciled with a similar bill that passed the House
of Representatives in December before President Barack Obama
could sign it into law.
Senator Christopher Dodd, the Democrat overseeing the
financial-reform bill, said he supported the IMF clause but
added that it might be modified in coming weeks to satisfy
others' concerns.
(Reporting by Andy Sullivan and Lesley Wroughton; Editing
by Bill Trott)







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rdumas
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Post Number: 3432
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Tuesday, May 18, 2010 - 11:01 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



XJO Price Action

Whilst it's nice to get a bit of relief from the downward move this morning I suspect that this move down isn't quite finished. I have posted this chart before and as you can see we have been given a perfect replica of the current downward 5 wave move since the top of the Fog Horn pattern in the previous 5 wave move down from the top of the Fog Horn pattern.



Note that in the previous 5th wave there was a large range candle down followed by 2 small range candles before that leg was completed. Now I am not suggesting that we will get another 2 candles down but what I am suggesting is that most of the down move on this leg is over and there may be just a little bit more to complete the leg. Somewhere near the bottom of the lower boundary of the Fog Horn pattern would be appropriate at this stage.

In my current preferred scenario should this bounce occur then as mentioned in my weekend market wrap I would expect a bounce as shown in the following chart/diagram. I would also expect the move up to complete sometime between the 24th and 28th May somewhere in the region of my label b before moving down to complete the entire correction sometime in early to mid June. From then on I would expect a multi month (perhaps till the Aug/Sep/Oct time frame) rally that would take the index to somewhere near the 5400 level. This scenario is depicted with my label for wave (B)?.



The more bearish scenario (my lesser favoured scenario) is the one where wave (B)? was the top of the March 2009 rally and we are in the midst of a severe move down that will take out the March 2009 low during its journey downwards.

Those two scenarios are the extremes available. There is a third scenario that is more Buddhist in nature in that it is a 'middle path' scenario. This scenario is one where the bear market will end up forming a contracting wedge (triangle) pattern. In the pattern below the November 1, 2007 to March 2009 drop would be wave A and the March rally would be wave B. The doubt about this pattern at this stage is that normally wave B would have retraced more of wave A than has been the case in the bear market so far.




I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Tuesday, May 18, 2010 - 11:09 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi MM,

Welcome back. I thought that you must have taken my dead horse comment as having a go at you (which was clearly not the case). I took so long to write that last post that I had not noticed that the market had dropped off as I was suggesting in my post.

Your post is definitely bad news for the market because once again it will make people extremely nervous. Mind you I don't disagree with the US's decision because these bailout packages continue to grow the debt burden on the global economy that eventually must be paid back.

When you see what's happening it is not difficult to believe that Prechter's scenario is starting to look like a real possibility.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ken
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Tuesday, May 18, 2010 - 11:24 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy,

I looked at my regular collection of web pages this morning and saw that Canada's TSX was down 1.68% due to mineral prices and then I saw the ASX up 1% on IG markets, so I put a short on at 4514. Seems to be working out.

Ken


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rdumas
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Tuesday, May 18, 2010 - 11:25 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



XJO Key Support Levels

One picture describes ..........





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Tuesday, May 18, 2010 - 11:42 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ken,

You're a braver man than I am. That lower boundary of the Fog Horn is a pretty strong support.

Good luck with your trade.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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Tuesday, May 18, 2010 - 11:43 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ken, - That was a great move. With industrial mineral resources so far down it would have been absurd for our market to go up in the way that the futures suggested. I admire the way you went about it, i.e. by comparing Canada - very much the right spot - and then calmly and logically proceeding to short our market. Well done.

MM and Rudy: I agree with your negative views, and am happy to be out of the market, except with my interest securities and ETF GOLD. This is itself down somewhat, but that does not greatly worry me. It remains, in essence, a logical hedge against the Australian dollar, which is continuing to go down against SEVERAL currencies (not just the US$) on people's awareness that there is a tight correlation between the commodities index and our currency.

Commodities have been absolutely savaged overnight, and there is no reason to believe - as the bulls at the open presumably did - that they will soon go back up. On the contrary, the European situation is now very widely seen as serious, and an impediment to growth and confidence, so there will almost certainly continue to be an interest in gold as a hedge, and also in the US dollar, as the best of the currencies on offer (somewhat ironically).

I thoroughly agree with the US's stance on not wanting to help out Greece etc, and absolutely disapprove of the way Europe has handled its crisis by in essence standing ready to transfer money from the competent and hardworking nations to the incompetent and lazy ones. This makes no sense at all, and can only make Europe in general weaker. There is also serious division within Europe as to what should or should not happen. This crisis is serious and dangerous, and extremely difficult to solve. It may well plague us for some considerable time. The Americans are right not to want to waste their money. It would have helped, of course, if to begin with they would have been as hard on themselves as they are now on others!


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ken
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Tuesday, May 18, 2010 - 11:51 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Closed the trade at 4470 after greater than 38% retrace.

Ken


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rdumas
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Tuesday, May 18, 2010 - 11:56 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ken,

A good move in my opinion. Once we get the fool's rally out of the way in about a week's time there will be a mint to be made on shorting the market and riding up the ETF GOLD rocket.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Tuesday, May 18, 2010 - 12:00 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Rudy,

God no - I laughed my head off at that comment about flogging a dead horse!!

Yes, I'd agree - the way things are panning out Precther's scenario (don't agree with his targets on the Dow though) is coming into play.

I see our market heading down to 4000 over the coming month if it is just the C Wave. I'd target it down to 3600 if this is a 3rd wave down as they generally accelerate to the downside. So I guess Rudy, I'm more inclined to think of your less favoured scenario playing out.

Cheers mate
MM


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ody
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Tuesday, May 18, 2010 - 12:06 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ken, - Thanks for giving us insight into that trade from beginning to end.

It is certainly true, as Rudy says, that that foghorn is a tenacious pattern. At the moment the index is back up a bit again. Even so, I think that intrinsically - not necessarily for the outcome today, but for the near future - things are looking good for the bears. Currently down trade is up a good deal more than up trade, and decliners are well ahead of advancers in number. The news - such as that provided by MM - is making a big impression, and there is no doubt that it is directly impacting on what people are doing. As most of the news is truly bad, there really isn't much incentive for people to go into the market if they intend to go long. And possibly not enough of an incentive to go short in a big way either ... though that incentive could well emerge, at the rate that matters are developing. The most attractive place to be, I would think many will conclude, is outside the market altogether, at a time like this.

In other words, though there is still a degree of resilience, my guess would be that if matters continue in the present vein, as far as bad news and sentiment are concerned, the chances of a further decline this time look good.


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ody
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Tuesday, May 18, 2010 - 12:22 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy, - I'd have to agree with you that for shorters "the best is yet to come", though I admired Ken's move. You may be right, even, that we are seeing a brief rally, though I think the evidence is inconclusive except for the fact that Wall Street "held". At the moment markets are not as negative as yesterday, but still often weak. There are some interesting differences, though, with the Shanghai Composite down 0.77% at present, but the Nikkei up 0.54%. I think that the Chinese figure will be found more important than the Japanese one. And the consistency of the Shanghai Composite has been remarkable, and a good indicator, as well, of what is likely to be in store for the Australian market. But we don't quite see a crash-through pattern yet, although I do think that this time the hold-up will be quite temporary.


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rdumas
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Tuesday, May 18, 2010 - 12:28 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi MM,

I must admit if I didn't have the benefit of musketeer Andrew's cycle analysis I would have exactly the same opinion as you. Just refreshing your memory about his cycles analysis. The waves making up the XJO can be deconstructed into several hundred individual sine waves using Fourier analysis. What Andrew does is take the three predominant cycles in each time frame, ie extra long-long-medium-short-extra short. For example the long term cycles are 1/2/4 year cycles.

As you can imagine the longer term cycles not only have the greatest cycle time but they also have the greatest amplitude. When we went into our market plunge in 2007/2008 all of the long term cycles were descending. Currently the 4 year cycle has bottomed, the 2 year cycle is rising and the 1 year cycle topped.

Keep in mind that all cycles are phase shifted and hence have different influences in different years.

It was the combination of the 1 and 2 year cycles going up that gave us the March 2009 multi-month rally in spite of the fact that the 4 year cycle was bottoming at the time.

If you can picture these cycles in your mind's eye you would see that the 1 and 2 year cycles when they start heading down together will cause the market to suffer the next large drop. That will be the case later this year and into 2011/2012. The fact that the 4 year cycle bottomed recently makes the Prechter catastrophic scenario highly unlikely.

Every individual sine wave in every cycle time frame has its influence on the final wave form displayed as the final resultant XJO wave form but based on Andrew's cycle analysis we should see another leg up before we get to a nasty move down. The 2011/12 period should be very bearish for these reasons.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Tuesday, May 18, 2010 - 12:45 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ody,

Just looking past any fools rally, the target that I currently have for the XJO is the 50% retracement level of the entire March 2009 rally as shown in the chart below. As mentioned in several of my previous posts I expect this target to be reached by early to mid June at this stage.






I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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Tuesday, May 18, 2010 - 01:09 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy, - I find both the level of the target and its approximate date very plausible. Perhaps particularly the level; the date is also very persuasive, though I think we could see the level reached earlier if pessimism continues at something like the present level. I note with interest that currently the XAO is below 4500 again. That seems to have been a critical level several times now. So if we are to get a rapid denouement then the market must clearly fall below it. I am not sure for how long it will continue to dither, though, and hence June may prove a more realistic time than May, even though it wouldn't surprise me if significant downward momentum were to be gained even this week.

I agree with you that the Prechter scenario remains unlikely at this stage. Your 50% sounds to me about right, at least to begin with! The market was clearly overvalued, and there is a lot of financial unsoundness in the world, but unfortunately that is likely to worry us over a period of some years rather than that we shall see a truly huge collapse immediately. A good oldfashioned sell-off, yes; a Prechter style collapse within a month or so, probably not. The very lowest I could envisage during the next few months would at this stage seem to be something like 4000 or possibly even a little lower - but anything beyond that would only occur if we moved to a very different level of calamity from where we appear to be, I would guess.


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ody
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Tuesday, May 18, 2010 - 01:26 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



A closer look at what is propping the market "up"

The market, to the extent that it is reasonably stationary just now, is not falling rapidly because there are buyers in the following sectors:

Consumer staples, health, IT, property trusts, telecommunications, and utilities.

Presumably fund managers are in the process of shifting money into stocks that are considered "defensive" rather than exiting to the extent that they would if bearishness were absolutely triumphant. The odd sector out in this list is IT, which is usually correlated with business activity. All the others, though, are among those conventionally seen as defensive. There is, in this sense, a diminished appetite for risk even among those who are buying; and that is of course even more true for those who are not buying or who are leaving the market.


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ken
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Tuesday, May 18, 2010 - 01:55 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy, when you say you are expecting another leg up, is this from current levels or from the 4100 level you expect a bounce from? And would this leg be of similar magnitude to the foghorn legs? What's your best estimate of its peak level?

Ken


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rdumas
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Tuesday, May 18, 2010 - 02:18 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



ETF GOLD

The ETF GOLD and the XJO have recently been operating in an inverse relationship which is why my turn dates for these two indices have closely correlated. Just as I see the XJO rallying to around the 24th~28th May I see the ETF GOLD going in the opposite direction.

I had orginally thought that the ETF GOLD would head down to the $128~$129 level but its recent high means that the goal posts have shifted. With the new high in place I now believe that if things play out as expected I still expect ETF GOLD to head down to around the $128~$129 level. From there I expect a very strong rally to around the $129~$131 level which should (in inverse respect to the XJO) reach that level in early to mid June.

The POG (in US$) has just fallen below what was previously its support. That support has now become an overhead resistance. I do expect it to drift down in the coming days.







To achieve a drop down to the levels mentioned I would need the AUDUSD to start going up at the same time as the POG is going down. That provides the double whammy required to get the maximum fall in the ETF GOLD stock.

The AUDUSD I believe is getting close to where I believe it will bounce. I have indicated all of the Fibonacci (both common and not well known) on the chart below.




The result of the above price actions I believe will lead to the following possible retracement in the ETF GOLD in the period suggested.




I will be monitoring both price and time to see where I re-enter the stock in the coming days.

It goes without saying that if none of the above actions transpire then all of the above post is absolute rubbish.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Tuesday, May 18, 2010 - 03:26 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ken,

In my post 3432 I posted the following chart/diagram which I thought explained my expectations. What may have confused you is that I have two different scenarios on the chart/diagram.

My preferred scenario is the one that goes from (B)?- "a"-"b"-"c"-(B)?-(C).

My less favoured scenario goes from (B)?- "a"-"b"-(C)?.



I will only discuss my preferred scenario below.

The short answer is that I expect a bounce from both locations in my preferred scenario. I first expect a bounce from the lower boundary of the Fog Horn pattern (in the next 1 to 2 days). The part of the diagram which I called a "complex corrective pattern" is the rally that I speak of initiated by this bounce. This complex corrective pattern terminates at label "b".

I expect "b" to terminate somewhere near the 4653 level (ie, the last interim top we had). The start of the dashed arrow that I have drawn from label "b" is positioned pretty close to the 4653 level mentioned. In my preferred scenario it would head down to the level that I have labeled "c" (which is the 50% retrace level of the March 2009 rally) and then bounce up to the new high at (B)? near the 5400 level.

Note that I believe that the move from around 4653 to the 50% retrace level of the March rally will be quite severe. I believe that this will be the case because it will happen much faster than the leg from the top of the Fog Horn pattern occurred and yet will cover about the same price range.

In my opinion the XJO has no chance in hell of going to the top of the Fog Horn patter in any fool's rally that takes place from these levels. However once it does get to the 50% retrace level mentioned above I do expect a new bear market high to be reached (around 5400) in that multi-month rally.

Let me know if I still haven't explained myself clearly enough.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ken
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Tuesday, May 18, 2010 - 04:30 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy, the explanation is good - I am interested in why you see 5400 as the bear market high.

I would have thought that the existing high would be hard to crack given that there is strong resistance from the three previous peaks, and if 5100 is breached it would appear to be going through resistance on the 4th attempt, which usually starts a significant rally.

Ken


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ody
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Tuesday, May 18, 2010 - 04:40 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy: ETF GOLD and the A$

Leaving the US$ aside, for the moment, I'd just like to say that I do agree very strongly that there is an inverse relationship between the POG and the A$, and inasmuch as one can use ETF GOLD as a substitute for the metal (though it is not exactly that) one can on a daily basis, almost, see how the two move in opposite directions. This does mean, as I conclude you think too, that one can most usefully consider the two together and in relationship with each other to see what things are at and where they are heading, and in practical terms it means that GOLD is a useful hedge in relation to the A$. It is very much as a protection against the fall of the A$ that I like to have GOLD. Also, for that matter, as a protection against the fall in the share market, and notably resources and resources companies: the A$ itself is generally likely to go up and down with the commodities index.

Thus I found your post most useful in not merely confirming my own view of the interrelationship of these entities, but also in your attempt to time matters, and again I'd have to say, though only from observation, that to me too it appears as though the A$ may now actually be calming down a little, while the POG, and indeed ETF GOLD, has gone down a bit at much the same time. But we also agree that, whenever the time comes exactly for the two to go into reverse, GOLD should go up handsomely while the A$ (and I would argue probably the Australian share market) go down. I find your forecast for the whole scenario quite suggestive.

I add that the US$ is a better currency to have than the A$ in the present situation. For anyone, either inside a super fund or outside it, to hold American dollars it is simplest to open a bank account in that currency if one believes that holding American dollars, too, will offer a degree of protection against the Australian dollar.

I would further point out that some falls in the A$ can be very quick indeed: in September/October of 2008 (I cannot remember the exact date) the commodities index fell heavily within a fortnight, and the A% went down as much as 20% against the US$ with it. There is often the view expressed in Australia that US$$ should never be held: this is simply inaccurate in that in times of crisis it often stands up a lot better than our own dollar.


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rdumas
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Tuesday, May 18, 2010 - 04:57 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ken,

You may well be right that the existing market top may be hard to crack. I have found that indices and stocks tend to attack Fibonacci levels. Once one level is breached they will tend to then target the next one up.

The XJO had 3 attempts to breach the 50% Fibonacci retracement level and succeeded on the third attempt. Even though it did not stay above the level for long it none the less did breach it. The market now knows that it can breach it and when it does so the next time it will close and stay above it for a period.





Once the 50% Fibonacci level has been conquered, the index will then attempt to conquer the next Fibonacci level. The 61.8% Fibonacci level sits at 5426.37. I doubt that it will conquer this level but I do believe that it will have a crack at it.

Once the index has made a new top (where ever it ends up) I believe that it will then drop and breach the March 2009 lows. Amongst the reasons for this is that I doubt that the index can retrace the plunge of 2007/2009 by 70%. As you would be aware, a Flat pattern has a B wave that retraces at least 70% of the A wave.

If we don't have a Flat pattern then for this and other reasons the likelihood of a Zigzag pattern becomes very much a high probability scenario. As you know the most common C leg of a Zigzag has a similar range to the A leg which will naturally take the index below the termination point of wave A (the March 2009 low).


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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More on the market today

Irritatingly, and typically enough, the ASX, i.e. the XAO, ended the day at 4500, essentially at the sort of point that we have come to see more than once as one where matters don't really move decisively. It fell by only 0.02%.

However, a further breakdown of some of the specifics (I shan't repeat what I said about sectors) reveals that nevertheless the market is "internally" more down than up.

For starters total volume was, as is not unusual now, fairly light at 1,9988,239,528. I agree with Charlie Aitken, who said on Lateline Business yesterday that such a figure shows that there are in effect no buyers (or at least not enough of them to move the market up). Furthermore, down volume was quite a bit stronger than up volume. Also, advancers counted 379, well below decliners, of which there were as many as 620 - a sign that a considerable number of stocks was sold off. And another interesting aspect in relation to the foghorn pattern is that new lows at 37 outpaced new highs by far: there were only 16 of those.

In appraising the total score and direction of the XAO, factors like these are useful to take into account, and these figures surely suggest that in effect it is going down rather than up, in its internal dynamics, which eventually will no doubt continue to be expressed in a slide for the index as a whole. Or to put it the other way round: nothing here suggests that the XAO is at all likely to go up. At best it is "holding the fort". On the other hand, that is no mean feat, and if 4500 once again comes to mean resistance on the downside, then it would in theory be possible for the market still to regain some ground. It is a possibility we cannot yet rule out. But all in all the downward trend-to-come seems to be clearly indicated, even if this time not nearly as outspokenly as yesterday.


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rdumas
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Hi Ody,

Yes these inter-relationships between the POG, AUDUSD, equity market and USD is extremely fascinating. You may remember it was not all that long ago that there was an inverse relationship between the USD and the POG. How things change.

The following chart shows that whilst they are not identical in pattern they are definitely are no longer in that inverse relationship. The POG is the bar chart and the USD is the red line chart.







These relationships are temporary and only apply from time to time. It is because of this that the AUD has been falling whilst the POG (and USD) had been rising.

Once the fool's market rally takes off, the USD will go down as will the POG. At the same time the AUDUSD will go up because of the influence of the USD on that equation. It is this effect that will bring about the result that I spoke of in the earlier post about ETF GOLD.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Ody,

There are a number technical internals at play also. Aside from the power of the lower boundary support of the Fog Horn pattern we have the TMF (money flow) which has broken through the descending trend line and is forming a base.

This is yet another indicator of a likely bounce forming in the near future.





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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baysider
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Right on time Rudy the price of gold is falling quite fast and Europe is up a reasonable amount. A bounce tomorrow looks well on the cards so at this time it looks your reading the tea leaves to perfection! What name is the blend again?

For those who want to play the bounce but want to steer clear of resources and banks through Government meddling can I suggest having a look at IIN. I'm not in myself at this time but have been keeping a close watch on it and I had a great run on it from $2.10 to $2.85. it's held up really strongly in the $2.60 zone and recently broke $3. Any buy around $2.85 may do well. TPM is another goody in the same field.


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eblode
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Baysider,
Have you been looking over my shoulder? Yep,I've got IIN and only yesterday sold out of TPM (TPG) when they dropped in price after a very nice ride. Bought into MML and MMS for another round. Did well with them last month. Taking a punt on a small engineering firm with big potential, DCG. Anyway I think we'll have a nice bounce tomorrow and the sun will shine again on the market.

Eugenio


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ody
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Baysider/Rudy

Yes, Baysider, you are right: Rudy has been entirely vindicated! Well done, Rudy!


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rdumas
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Baysider/Ody,

Thanks guys but 12 hours is a long time in the market cycle........anything can happen overnight. I was still expecting a little bit more downside tomorrow for the XJO because I didn't think the 5th wave had fully completed yet (it is very close though).


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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True, Rudy - things can still change, even at the time that I am writing (around 11.45 pm Adelaide time). But everything at this moment does show a clear reversal of sentiment, or perhaps, rather, bulls coming in. Logically, too, gold (the metal) is down by more than 1%. Every market I have looked at seems "fresh" at the moment, with verdant green.


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ody
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From Bloomberg:
---------------------
Stocks Rally, Oil, Copper Rebound as Europe Concerns Ease

By Whitney Kisling and Rita Nazareth

May 18 (Bloomberg) -- Global stocks rallied and copper and oil rebounded as European finance ministers said deficit-cutting measures won’t trigger another recession, while U.S. housing starts and earnings at Wal-Mart Stores Inc. topped estimates. The euro stabilized above a four-year low.

The MSCI World Index of 23 developed nations’ stocks climbed 1.2 percent at 9:50 a.m. in New York, its first advance since May 12. The Standard & Poor’s 500 Index increased 0.9 percent. Copper rose 3.7 percent, erasing some of yesterday’s 6.5 percent slump, and oil rebounded above $72 a barrel. The euro strengthened 0.2 percent to $1.2425, extending yesterday’s rebound after touching the weakest level since April 2006.

The European Union transferred 14.5 billion euros ($18 billion) to Greece, the first installment from an almost $1 trillion emergency loan package aimed at preventing sovereign defaults. In the U.S., builders broke ground on the most homes since 2008 in April, bolstering confidence that the recovery in the world’s largest economy will be sustained.

“They’re now trying to handle the problem, prevent the contagion,” Thomas Nyheim, a Greenville, Delaware-based fund manager for Christiana Bank & Trust Co., which oversees $5.6 billion, said of European leaders. “It’s going to be a constant theme that’s running through. The euro zone is as big as the U.S. in terms of the economy, so you just can’t avoid it, it’s so big.”

The gain in the Standard & Poor’s 500 Index was led by energy producers and financial companies, with Exxon Mobil Corp. rising 1.3 percent and Bank of America Corp. climbing 2 percent.

Wal-Mart, the world’s largest retailer, and Home Depot Inc., the biggest home-improvement chain, climbed more than 1.5 percent on better-than-estimated earnings.

LBO Talks

Fidelity National Information Services Inc. tumbled 6.3 percent after takeover talks with private-equity firms fell apart, according to people familiar with the situation, scuttling what would have been the biggest leveraged buyout in almost three years.

The S&P 500 has fallen more than 6 percent from its high for the year on April 23 as concern grew that the global economic recovery would be jeopardized as European governments struggle with budget deficits.

‘Out of Their Cave’

“A lot of the things that would drive investors out of the market have been somewhat abated,” said Peter Sorrentino, who helps oversee $13.3 billion at Huntington Asset Advisors in Cincinnati. “The Greek bailout is beginning to fire up and run. The euro hit that low and hasn’t cascaded down dramatically. In the U.S., the latest housing figures and Wal-Mart earnings show that the consumers are coming out of their cave and willing to spend some money.”

The ZEW Center for European Economic Research in Mannheim, Germany, said its index of investor and analyst expectations dropped to 45.8 from 53 in April as the debt crisis threatened to break up the euro zone. Economists expected a slide to 47, according to the median of 35 forecasts in a Bloomberg News survey.

The Stoxx Europe 600 Index climbed 1.6 percent as shares of banks and basic resources companies rebounded. Banco Santander SA, Spain’s biggest lender, gained 5.5 percent in Madrid, snapping a three-day, 11 percent plunge. Rio Tinto Group, the world’s third-largest mining company, rallied 3.1 percent in London.

Electrolux AB rose as much as 4.4 percent to 200.40 Swedish krona, the highest level on record in Stockholm, as a report late yesterday showed shipments of major home appliances in the U.S. rose 12.1 percent in April.

China Rebounds

China’s Shanghai Composite Index jumped 1.4 percent, rebounding from its biggest plunge since August yesterday, when the gauge tumbled 5.1 percent. Most Asian stocks declined, sending the MSCI Asia Pacific Index down 0.3 percent.

Copper for delivery in three months rose 3.7 percent to $6,710 a metric ton, after declining 6.6 percent yesterday. Aluminum, nickel and zinc also gained.

Gold for immediate delivery fell 0.7 percent to $1,213.90 an ounce in London. The metal reached a record $1,249.40 on May 14. The S&P GSCI Index advanced 1.9 percent, after falling 2.8 percent to a three-month low of 487.395 yesterday.

Crude oil rose for first time in six days on forecasts that demand is picking up in the U.S, after prices yesterday dipped below $70 a barrel to a five-month low in New York. Crude for June delivery gained as much as 3.4 percent to $72.49 a barrel in electronic trading on the New York Mercantile Exchange and was last at $72.16.

Euro, Sterling, Gilts

The 16-nation euro traded near $1.24 after falling to as low as $1.2235 yesterday, the weakest level since April 2006.

U.K. government bonds fell, with the yield on the 10-year gilt climbing 4 basis points to 3.78 percent, as inflation accelerated more than economists forecast in April to the fastest pace since 2008, enough to prompt a public letter of explanation from Bank of England Governor Mervyn King. The pound weakened 0.1 percent to 85.755 pence per euro.

The MSCI Emerging Markets Index gained 0.8 percent, its first advance in three days. Life Healthcare Group Holdings Ltd., the South African hospital owner, said it will start selling today as much as 8.04 billion rand ($1.06 billion) of shares in what would be Africa’s biggest initial public offering.

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net.
Last Updated: May 18, 2010 09:55 EDT


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ody
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General point: after other share markets do well, Wall Street has been declining throughout the session, and is at present clearly negative (at around 3.45 am in Adelaide).

Rudy: again you were right - this time to express reservations about MM's and my optimism, as there were still 12 hours to come. Several stock markets did very well as did a number of commodities, and all looked good for bulls ... but Wall street has by now (around 3.15 am Adelaide time) shown increasing concern about Euroland. This is actually fully rational. The Americans are significantly dependent on Europe for their exports, and this is where they have a problem. The Euro, which had earlier seemed to stabilise, began to slide again, and of course worries remain about the whole structure of Europe and its lack of unity and a clear purpose. Anyway, several of the major technical (IT) companies turned sour as concern rose about their prospects, and in all respects the US is obviously very, very concerned about events in Europe, which it does not trust and does not like.

So we now have superficial relief in Europe itself, but more profound worries on the part of the US. In essence, of course both of these economies (which are very large and of much the same size) are in a state of disarray, and the problems for each are compounded by their interdependence. At the moment the US seems to be better organised, but it is still very vulnerable, and ill health of the European economy is a direct threat to its own welfare.

So, while Asian and European stock markets had looked like improving, Wall Street now appears to show the greater sense of realism, and is spoiling the fun for the bulls. It looks fairly probable that it will turn in a negative result at the close; and in any case it is already too low now to leave one confident for the days to come.

And ... on our own market, the futures are now down by 20 points, so your expectation that a bit more of a slide is needed may well be met very neatly today.

You have reason to be proud of your work.

To me the most interesting point has been that there was so much joy OUTSIDE the US, and that that turned out to be the spoilsport (at least until now).

Gold is down; but if American worries bounce back negativity into Europe and Asia then gold would presumably rise again. Anyway, it will all become much clearer. We are sure to see some very interesting weeks - far more so than the several months we have had during which markets remained in essence flat though they kept going up and down within a band. There are certainly now quite new aspects to consider, and I think we are most certainly in a state of transition. Most conspicuously so in that the Greek worries - which have become Europeanised - have not gone away, and probably won't do so, as the US cannot ignore them even though Europe had begun to feel relief about itself.
---
Footnote: the AUD is now down again against the USD, which will have implications for GOLD. In American terms gold is down by 0.94% acc. to the latest figure I have seen, but this does not mean that GOLD will be down by that much in Australian dollars, as our currency has sunk. Our dollar, like the Euro, is actually quite weak, and any slight move up, for both of these weaklings, does not appear to last long. Whatever else people feel, they do not like these currencies. And the benchmark turns out to be the USD. Here again the Americans probably sense an acute problem: if the Euro keeps going down, while the USD goes up (and these two events are interconnected), then US exports to Europe will indeed clearly suffer.

The European malaise - not least the lack of buying power which a lower currency and loss of e.g. German potency will produce - will hit China too, as that exports a good deal to Europe, and will find the going much harder from here on. Many of these changes are inevitable, but not yet tangibly felt; and they will cause further angst when once that happens. If China suffers, then inevitably so will we. And I am not even talking about resources at this point, or Chinese inflation, but simply about diminished opportunities for China as an export country. That is what it largely remains, as the population is still mostly frugal or poor. Sure, there is much work being generated by e.g. Chinese stimulus - but nation-wide consumption still is a problem, and in that regard the country is still very dependent on the consumer countries to which it exports. Its own body of freely-spending consumers is growing, but small.

(Message edited by Ody on May 19, 2010)

(Message edited by Ody on May 19, 2010)


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ody
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Wednesday, May 19, 2010 - 04:38 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Roubini's view

Roubini has on the whole been terrifically accurate in what would happen in the GFC and after, and on Bloomberg there is currently a video in which he explains why most likely events in Greece are merely the tip of the iceberg - i.e. that other countries face similar problems, and that those problems (in Greece to begin with) may well prove virtually impossible to crack. Go to http://www.bloomberg.com/?b=0; an announcement about the Video is very easy to find. The clarity of his grasp, and his power to "cut through", are very impressive, as is indeed the whole argument he presents. While markets may of course well have some up days, they are not going to be able to shun the difficulties arising, much though they would probably like to. The problems have been in the making all along: the difference with the situation of a few months ago is that they are now becoming very obvious, and very grave.

As Roubini himself would say: he is not Dr Doom, but merely telling us as it is; and in general he has been right in his views. I feel no reason to doubt him now any more than I did when I first learned about his views in 2006, which helped me greatly in deciding that during 2007 I'd have to get out of the market.


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ody
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Wednesday, May 19, 2010 - 04:49 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



The slide on Wall Street is now gaining real momentum

The Nasdaq is down by 1.8%, and the S&P500 by 1.5%, with the Dow down by somewhat over 1%. That is a pretty clear vote of "no confidence". One thing which is striking is that the decline has been pretty consistent throughout the session, and if anything now - not so very far from the close - seems to be getting stronger.

This will probably also mean that our own market will take its cue from Wall Street today, though e.g. Europe did well. But we generally do listen more to Wall Street, and it moreover has to be said that European insight into Europe's difficulties and supposed "solutions" has been extremely poor, so that higher share markets there should not be seen as proving anything about "improvement". Interestingly, the Americans seem to understand a whole lot better than the Europeans just what is happening in Europe, and why it is serious for the world economy.

Incidentally: the thought of our own RBA that the Greek situation has no implications for Australia shows the ignorance and lack of insight into these events among people here who should know a whole lot better. If matters go awry in any or all of the following: Europe, the US, China, we are automatically going to be impacted.


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rdumas
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Hi Ody,

Thanks for your recognition in your post 5007 of the reservation that I expressed in my post yesterday. I had a couple of reasons why I expressed that reservation.

The first was that the previous 5 wave move down to the current one had been such a perfect replica for the current move. Note that in the chart below, not only were there 2 additional candles after the large candle down in the 5th wave but the 5th wave in the earlier pattern terminated lower than the 3rd wave.



Now that fact in itself would not normally have been enough because in EW we can get what is known as a truncated 5th. You may recall that I have shown you privately a methodology that I use which determines approximately where tops and bottoms should form. Well that methodology indicated that the low formed at the termination point of the 3rd wave could not be the low for the pattern. In fact if it had been the low for the pattern it would have thrown out all my subsequent calculations and I would have not been a happy chappy.

The fact that we should get a new low in the next day or two is totally within my expectations in fact I would be delighted to see it even if it only occurred in an intraday spike which I think is a high probability event today.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Hi Rudy,

I think you shall get that low today - ASX futures closed at 4440 and I would expect that we may reach a new low early on in the proceedings today.

Not convinced however that we may bounce off this though. This could be the start of the 3rd leg down (on the chart you posted above) and not the end of Wave 5. What would concern me going into today is that Europe was up when the US fell so they will feel some heat tonight and if you have a look at the German Dax - it looks a dead set sell at the moment - has outperformed every other index and really looks set for huge falls from these levels.

US futures are also down 0.5% in early morning trade.

Cheers
MM


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baysider
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Wednesday, May 19, 2010 - 08:41 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



I know Eugenio is brave enough to buy today, hopefully at the low of the spike, anyone else? Whilst we're nearing the bottom of our pattern the S&P500 still has room to move further down to 1100 or a little below and still remain within its pattern. That's around another 2% which must surely impact us if it does make that move. Having said that I'm tempted to have a look for the odd bargain as we are very oversold and a bounce is due if only a very temporary one.
I need a cup of Rudy's tea so I can study the leaves more closely!

Rudy do you have any comments on IIN for Eugenio and I? This is one I'll be looking at today.


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market_mad
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Hi Baysider,

I wouldn't be touching this market at the moment - yes there is money to be made day trading - but I would leave it at that - in and out on the same day.

I still feel we are going down to 4000 and would be looking to load up at those levels.

Our banking index looks awful at the moment and the resources should struggle as well with the AUD and commodities down overnight.

Cheers
MM


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magnus
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Ody,

No doubt the short to medium trend has turned bearish. Looks like the cash S&P is trying to fill the key gap area and find temporary support at 1110 tomorrow.

Also, with Germany banning the naked selling of euro bonds over night - I think this will exacerbate the selling even more as it clearly did not work in 2008 - 2009. What do you guys think?





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market_mad
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Hi Magnus,

I couldn't agree more re the Germans banning shorts on certain stocks - it doesn't help at all..

As I said in my previous post I'm getting exposure to short the Dax on CFDs with a stop level at 6280.

Cheers
MM


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baysider
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Wednesday, May 19, 2010 - 10:56 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



On the other hand MM the Euro falling is really going to help German exports making their cars and machinery so much cheaper.

Agree today is HIGH risk. It's already lower than I expected, will it bounce from 4400?? I have a couple of low ball bids in not yet taken on IIN and a very risky bid on NMS at .255c. This one has taken a complete hammering and is at it's lows from the whole GFC. If I do get to buy at that price I'll have a stop at .245 which would be a new low. this one is pure bottom fishing speculation.


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market_mad
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Wednesday, May 19, 2010 - 02:46 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



And on the other hand Baysider - who's gonna buy the cars??


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rdumas
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Wednesday, May 19, 2010 - 04:21 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Folks,

Well, a call from an interstate friend that he and his wife were 10 minutes away brought an end to any plan that I had to looking at the market. We had a great time but I still haven't had time to really analyse what happened today.

If I expected a possible spike down and recovery to the lower boundary of the Fog Horn pattern it certainly turned out to be a very 'blunt' spike.

Unless we see some sort of a bounce very soon it starts to increase the probability of my less preferred scenario coming into play as shown in the chart below.



As you can see from the above chart, the end point is still the same (near the 50% Fib retrace level of the March 2009 rally) but it eliminates a couple of waves in between.

I wait with bated breath for the action in Disney land tonight.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Wednesday, May 19, 2010 - 04:44 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Baysider,

Without spending a lot of time on IIN at first glance it certainly seems to be in a strong position. It's obviously in a an ascending channel and the recent retracement stayed above the top of the previous up wave (see orange line) which is a good sign.



I'm not sure if the current retrace is anywhere near completed yet. It fell from $3.00 to $2.75 (25 cents) and then today went up to $2.88 today before starting another drop. With wave equality on these moves it could go down to $2.88 - $0.25 = $2.63.

If it only went down to that sort of level it could be a good indication that further up moves were possible (say to the top of the ascending channel). I would wait to see where the retracement ended before entering and do a risk/reward analysis on it then.

My stop/loss would be set at $2.50 and assume a peak at upper boundary of the ascending channel (say $3.11)


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ken
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Wednesday, May 19, 2010 - 05:29 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy,

Re the XAO chart, your final rise to 5400 from 4100 surely makes a 5 wave rise where a corrective wave is meant to be.
Wave 1 is the initial impulsive rise, wave 2 is the expanding triangle you have marked, wave 3 is the impulsive rise to October, wave 4 is the corrective expanding foghorn and the drop to 4100, which is about the level of the end of wave 1, and wave 5 the postulated rise to 5400.

How do you account for the possibility of a non-overlapping impulse wave where a corrective wave should be?

Is the bear market over?

Regards,

Ken


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ody
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Wednesday, May 19, 2010 - 05:30 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



A savage day

It was to be expected, in a way, when Wall Stteet turned out to be disappointing - but this is certainly very bearish. I was misled by the naive optimism displayed by the Europeans last night (plus a few other positive events!), and the continuation of the bearish pattern is far more in tune with how I have been reading the market and not least its psychology in relation to major bearish events in more than one economy.

I had a few days ago bought more ETF GOLD, in the supposition that our dollar at the very least, and our share market most likely, would go down. Admittedly I realised that if the market went up ETF GOLD might go down, but that did not happen, and I am well and truly in the green with even my recent purchase, and more so the one made in February. I possibly should not have bought recently, in theory at least, for obviously we COULD get a rally. Even then, I think that days like these do announce to us that our market is turning, and the pattern is now becoming more persistent, as are the signs of people's fears and/or concerns prompting them to see the market as negative.

Pleasingly, and speaking very selfishly, I have only made money on my holdings in the market. Taken together my interest rate securities are up, and producing a good yield as well; and my GOLD holding (which is a rather substantial amount) is also up. While I expect it to be volatile, my expectation of both our currency and our market is negative, so the purchase is meant to be an antidote.

The total purpose of my portfolio, to use that word, is to outperform, and guard against falls, in our share market - part of my consistent policy as an investor. I think it is easy to outperform the market when that is bullish, but very hard to do so when it is not, and hence during the present period I have no actual shares to worry about other than GOLD. It, AND my interest rate securities, AND my deposits (and even money in a cash management account) are all going up. As well, I am receiving handsome income on all investments I have except GOLD (which does not produce it). I believe firmly, and have shown to myself again and again since 1983 that, at least for people like me, success comes most easily by aiming for the asset classes that at particular times have the most chance of succeeding. At the moment these are to my mind deposits at a high yield level, interest rate securities (notably sought for their yield, which increases in the case of hybrids as interest rates go up), and gold in the form of ETF GOLD (I admit, though, that some shares in gold miners may do better, but I in essence want the metal, as a hedge).

I also believe the American dollar will continue to do better than our own, but have not really done anything about that. The way to do it would be to open a bank account in US$. And the purpose would be to hold the amount invested for as long as the A$ continues to go down. It's perhaps a failure that I haven't actually done this, but I found ultimately gold more interesting and perhaps more suitable, and I do also want a large amount of actual money (even if only A$$) to accrue to me in the form of yield.

I don't myself have the psychological capacity to short shares (I am a "long" person), so I don't. And for someone looking to go long I think the present market is quite unsuitable. Much better to wait: the chances of further falls are very good.

ADDITION: I forgot to mention that volume was much bigger today than during the two days preceding. But the reason is that we had more people SELLING, not that there were more BUYERS. Down volume today was enormous, as many - or at least a large amount of money - went for the exit. So it really does look as though the bears are taking control and the bulls are diminishing in presence or missing in action.

(Message edited by Ody on May 19, 2010)


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rdumas
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Wednesday, May 19, 2010 - 05:46 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ken,

I think you are asking me whether the 5 wave corrective pattern that I am suggesting may in fact be an impulse wave. Let me know if I have misunderstood you.

Triple Three corrective patterns (W,X, Y, XX,Z) are 5 wave pattern that don't necessarily have to have overlapping legs.

The leg from March 2009 (which was the first leg of this larger pattern) was clearly not an impulse wave because it was comprised mainly of overlapping waves. This would discount the entire pattern as an impulse pattern.

I have to shut up shop now so any further questions you may have I will have to deal with tomorrow.

I totally discount the idea of the bear market being over. A bear market of this magnitude will never in a million years be over in 17 months (possible slight exaggeration ). The great depression bear market took 25 years to regain its previous highs and stay above them and the 1987 crash took 9 years to do the same and this bear market is far worst than the latter.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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baysider
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Wednesday, May 19, 2010 - 09:04 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Thanks for that Rudy
I had a low bid that did not get taken today and the way markets are looking that might be a good thing. It certainly fell harder than expected today, maybe 4500 will now become resistance for any rally?







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magnus
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Wednesday, May 19, 2010 - 09:16 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Baysider, I'd agree with that observation. Also, looking at the european markets and US futures atm - in particular the dow and s&p 500. We may test the 200 ma tonight - if there is any support at this level we may see a relief rally in the coming days, maybe as early as tomorrow and in the coming days - although the expiration of options this week should make it really interesting.

(Message edited by magnus on May 19, 2010)

 
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