Saturday, September 12, 2009

Market Observations - Oil and Gold

I would like to point out a few things...though I was unsure that it would occur  and though I thought that it would be optimal...the inflation/fear trade has occurred - setting up a very nice trap. I hope Peter Schiff appreciates the short voctory...(see: So, its all getting very interesting...The best part of the trade has been that Gold advanced strongly while the dollar sold off strongly. However, gold has not reflected price movements commensurate to the dollars price movement. Additionally, the commercial net short for gold is 287,000 the highest of any recent the same time as 90% of peopl eare now bullish inflation assets such as stocks - this is not the kind of condition that supports a strong continued rally in gold or the stock market. Also the 72 day cycle occurred this week for, its definitely setup for reversal. If that happens, we need to watch the dollar and for a potentially strong sell of in the markets. 

A pullback and another rise would and should not be an unexpected occurrence...the pullback we get next week out of our ABC move I presented earlier could be quite interesting and get the bears all excited only to setup one more move to new highs...The problem is that the patterns for BKX, XLF, UTY, OIL etc are not saying that that's what is in store for us. (see: Interesting charts - non confirmations...)

Below is the chart of Oil, the dollar did not move much today intraday though it was down fairly substantially overnight - but Oil was up max 36 cents and tanked the rest of the day. Rather than potentially confirming an ascending triangle...a head and shoulders pattern looks much more probable.

Daneric has some very good charts of the 2-4 channels from the depression to now...guess what we have retested? See: Grand Supercycle Backtest Update

All in all, this makes it very likely that we do not get the luxury of a predictable ending pattern...a perfect ending diagonal may not be in the cards. 
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