Friday, October 28, 2011

Like an island…in the middle of the atlantic…the tsunami comes

perhaps its the pacific - its much colder water too. However, the reality is that yesterday’s gap and the patterns it placed are confusing many. The presumption is that the market is bullish…when we covered a month ago it was bullish…however, we did not go long that move. Now we sit precariously perched in a market looking for divergence and bullish extremes…and we also sit at very high probability reversal levels.  However, it is important to understand that the scope of a larger downtrend…divergences and bullish extremes often do not have time to build. This case looks to be no exception.

There are now complete patterns in the that should be scaring the pants off anyone who is approaching long that particular currency. The setup in the EURO postures for a move of epic proportions…perhaps 1,000 to 2,000 pips down in a matter of a few days. The risk markets are likely to correlate to the movements in the EURO as they did this time. In any case, as I indicated in yesterday’s post…the euro points to parity with the dollar and I think that that progression may likely happen faster than can reasonably be anticipated.

Also, of note is that the already strong buy trigger that triggered last week for US 30 year bonds is still intact and bounced off it…they are about to trigger another risk on desicion point…for the long trade ofr the UST 30 year.

It appears to me that we are setting up an Island top…and I think the water will not be of the nice calm Caribbean sort.

Thursday, October 27, 2011

Powerful decline awaits…some quick charts

I did not have time to annotate the charts…however, the short squeeze into the resistance has occurred in quite a few separate markets. In addition, we are sporting one ugly gap…looks like it will not be a pretty. Additionally, I want to point on the pattern on the longer-term view of the EURUSD…this pattern is setting up for a breakdown and the measured move is indicated by my target arrow…which puts the euro near parity with the dollar. This will likely occur rather much faster than people may be expecting when it happens. This is especially the case when you consider the fourth chart and the clear zigzag bounce that the EURO has had. The implications are rather grave for the EURO. Of note also is that that Dollar has ticked near a major support level which can be seen in chart 6. Lastly, one of the things that occurred today that increases the likely hood of a powerful failure is the overshoots of the rising and falling wedges as displayed on the last chart. We overthrew the wedge boundaries and the result will likely trigger a reversal that ironically is much more powerful than the overthrows. Also, a last note, the usually leading NASDAQ dramatically underperformed its counterparts today.

Tuesday, October 25, 2011

Mind of Money Interview of Robert Prechter

Douglsss Lodmell interviews Robert Prechter - this is a really good interview and I think rather timely. The dynamics of the market and the financial system are covered very well in it and I think its one of the better ones I have seen of Prechter...I highly recommend that you watch it in its entirety.

On a markets note, we simply came up to and hit my target at 1250 on the SP500 and the market structure has changed little. Credit fueled drunken lunatics are driving shorts out of position and longs into position as precisely the most expensive times and central banks are desperate to try use any asset as potential symbols of solvency...the Gold, Silver and Oil shorts finally triggered today and the currencies are shaping up nicely. US 30 year Treasuries triggered long on monday and that IS NOT a good omen for this rally. I think that as I have said before and as Bob says in this interview...its time to get safe! or as safe as possible...the drop is not going to be pretty at all.
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