Tuesday, May 10, 2011


I will likely be posting quite a few charts tonight. I added dollar on today's pullback, added index shorts and will likely look to take metals short again once silver converts the people who sold and lost - that its a buy again. This is a similar situation for energy. Even funds who got hammered are very bullish. Liquidity is the problem...fundamentals have nothing to do with that, so, most people are dreaming about what may happen in a vacuum.

I am working on several charts which demonstrates exactly how silver trades and why its not just realistic but likely that we have a complete retracement of the parabolic rise and then some. The reality is that there are already posts referring to the silver crash that wasn't...and when I see a few more of those I am quite sure that my system will be taking the opposite side of that trade for another 12 to 16 points down...but I may miss the trade as I am not sure that any of the prognosticators are going to get much of a chance to prognosticate.

It is very clear that the naked short from the 1920's on the dollar has to be and will be covered...in the near future. The retracement in the dollar is nearly a complete a-b-c. The c wave has a little bit lower it can go...but its a very shallow retracement and we have broken key levels to the upside and into a trend move on according to my system. I an not expecting the dollar to let the shorts out nor the longs in conveniently.

As to whether rates rise or fall here...the 30 year bond is looking a little a-b-c ish and that may be a clue that indeed rates may be rising if the impulse up can not get more momentum due to weak inflation asset trading. For me its a first come first served issue. If inflation assets weaken first, rates will be under pressure and bonds will rally. If the debt ceiling issue blows up, then rates will rally and bonds will be under pressure. Either way inflation assets will be sold and the dollar will rally. I am not on the rates trade - I will leave that to Bill Gross and friends...and I give favor to the bond rally rather than rates rally.
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