Tuesday, September 29, 2015

Daily News Roundup: I can't please everyone, I'm not a jar of Nutella

Foreign Policy:
Sweden preparing for war (321 Energy)
Renzi: Leaders must bring Russia back from the cold (Bloomberg)
An independent Catalonia in the Euro? (The Telegraph)

Russia able to extend life of a reactor by 100 years (International Business Times)
Egypt to start building nuclear power plant (Egypt Independent)
Coal company cuts 100,000 jobs (CRI) 
Commodity route starting to look like a crisis (Bloomberg)

German inflation drops below zero in Euro area price alert (Bloomberg)
Volkswagen to fix 11 million cars (The Telegraph)
Hong Kong home prices might decline 30% through 2017 (South China Morning Post)
Glencore CDS rout continues (Zero Hedge)
Consumer confidence rises to 103.0 in September (Market Watch)

Art and Design:
Porsche Mission E Concept, the "Tesla Kill'ah" (Hi Consumption)
Nike Cortez 72: First track shoe ever is revived (Cool Material)
The Emory Porsche 356, a modern take on a timeless classic (Uncrate)

Monday, September 28, 2015

Biotechnology: Will there be a breakdown of the head and double shoulder pattern at $280?

If I listened to my own advice a little carefully I'd be rollin' in it at the moment instead of breaking even! In any event, and I'm not entirely sure what the signficance is, but the upward channel I had proposed has broken down leaving in it's wake the possibility of a very awkward first right shoulder forming a fair distance from the lows of first left shoulder (blue circles). I'm not entirely sure head-and-shoulder patterns work like this but if we have a turn-around at 280 tomorrow I'll look like a genius, otherwise I'll just look like a tool. Incidentally, the full stochastics (14) indicator is just entering the oversold position and so a turnaround seems appropriately coincidental. 

Sunday, September 27, 2015

Update: The "reprieve" counter-trend rally to 1975 (or 2040) for a "right shoulder"

Further to my earlier post about two weeks ago it looks as if we have just entered the "reprieve" part of the trend once we hit 1840 (the right shoulder of the year long head and shoulders pattern). I think the S&P means to 'melt' higher after it's second bounce on the lower channel support line but I don't see it rising above the diagonal channel line (resistance at about at 2040). The 50% Fibonacci for the year is at 1975 so I would watch this VERY closely, first.

Things appear very weak at the moment, but it is at their weakest rallies materialize in order for institutional long positions to be unwound. This first leg down allowed the market's appettite for a decline to be gauged. Janet Yellen's speech on Thursday was bullishly received on Friday but eventually gave way to some bearish selling as the trading session wore on. I think Friday's overall trend is what one can expect in the new week: strong opens higher with weakness throughout the day.
This strikes me as being a fairly obvious counter-trend bounce and one I would only marginally be interested in trading in from a risk standpoint. Let me reiterate: this would be for aggressive day traders only. The full stochastic indicator (14) is still strongly down but the mean and signal lines are quite deviated with the (5) firmly up after being oversold. All the RSI's and MACD's are trending strongly down, but as northmantrader.com points out lots of other indicators are oversold (read link here). The $NYSI index, $SPXA500R chart, and the $USHL charts are all oversold. I believe short positions should be accumulated AFTER we approach 1975 and possibly 2040.
Reproduced from northmantrader.com without permission.
It's interesting I think that Northmantrader.com put the peak of this rally at 2030 according to the resistance line above (which I am not able to reproduce on my charts), and yet the upper resistance line of my current downward channel is also around 2040!

What is absolutely critical here is that the left shoulder which is already in place is only about two and half months long meaning the same can be expected for the right shoulder currently going in. This counter-trend rally will not only take us to 2030 but should end by the last week of October whereupon the next phase of the decline begins.

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Saturday, September 26, 2015

Market update: Counter-trend bounce in the S&P

Further to my earlier post it looks as if we are just entering the "reprieve" part of the trend. I think the S&P means to 'melt' higher after it's second bounce on the lower channel support line but I don't see it rising above the diagonal line (resistance at about 1970). The 50% Fibonacci for the year is at 1975 so I would watch this VERY closely.

Things appear very weak at the moment. Janet Yellen's speech on Thursday was bullishly received on Friday but eventually gave way to some bearish selling as the trading session wore on. I think Friday's overall trend is what one can expect in the new week: strong opens higher with weakness throughout the day.
This strikes me as being a fairly obvious counter-trend bounce and one I would not be interested in trading in from a risk standpoint. The full stochastic indicator (14) is still strongly down with the (5) firmly up. All the RSI's and MACD's are trending strongly down. I believe short positions should slowly be accumulated throughout the week as we approach 1975.

Friday, September 25, 2015

Daily News Roundup: Funny, I thought only banks and financial institutions lied and screwed people over

Foreign Policy and International Politics:
Boehner (giggidy) is out - Democrats and Republicans rejoice (Bloomberg)
China, U.S. to cooperate on hacking (Bloomberg)
French concessions to avoid Brexit (The Telegraph)

Oil rig count falls for a fourth straight week (Bloomberg)
Oil prices to head for end-of-year slide (The Week)
Zambia's wheat crop due to drop 11% (Bloomberg)
Natural gas bests coal as top power source (The Globe and Mail)
"Unusual" COT data in gold (321 Gold)

Liquid natural gas powered shipping vessels (Bloomberg)
I doubt it, but Fed "on track" for rate hike this year (Financial Post)
Ambrose Pritchard: "Deflation supercycle over" (The Telegraph)
Time difference not a problem for London-Shanghai stock exchange (South China Morning Post)

Art and Design:
Halloween stores sold out of Trump wigs (Market Watch)
New Nissan GT-R announced for 2018 (Slash Gear)
Range Rover SVO featured in James Bond film 'Spectre' (Design You Trust)
Bob Marley "The Complete Island Recordings Discography" unveiled (Design You Trust)

Tuesday, September 22, 2015

Market Update: Reprieve, more pain, repeat

My call on Saturday of an ascending bearish wedge in the market was absolutely spot on, so congratulations for those of you who took advantage. I personally shorted biotechnology (via LABD) which at one point Monday was up 18%. I also posted on SlopeofHope.com and website founder Tim Knight gave my chart my five stars!
I feel this is as appropriate point in the chart to provide an update on what I think is happening and where we may be headed. Indicators such as the Full Stochastics (5,3,3) are telling me that we are already entering the oversold region and yet the same indicator at (14,7,7) has just barely crossed over. The message this is sending is that our fall so far has just begun, but after two days a little reprieve is expected. The form of this "reprieve" is a descending bullish wedge on the 30 minute charts. This should be part 3 of our 5 part downwave. In the next day or two our decline should continue. The beginning of our double bottom I hinted at a few weeks ago is finally being put in, but seeing whether 1870 holds on S&P is the real issue.
The same descending bullish triangle has also appeared in biotech stocks and other index ETFs. See below:

Monday, September 21, 2015

Daily News Roundup: "I think all right minded ordinary decent people in this country are sick and tired of being told that ordinary decent people in this country are fed up with being sick and tired"

Foreign Policy:
Saudi Arabia heading UN Human Rights Panel (Zero Hedge)
Syriza wins narrow re-election, Golden Dawn third (Business Insider)
Catalonia would be kicked out of the Euro zone, Spanish Finance Minister (The Telegraph)

Oil rebounds as OPEC forces drillers to cut back (The Telegraph)
Russia losing ground in battle for China oil imports (Bloomberg)
Gold prices set to jump (Market Watch)
Billionaire Naguib Sawiris to acquire 30% of Endeavour Mining (The Globe and Mail)
Speculators most bullish on U.S. crude oil in two months (Bloomberg)

Home sales fall almost 5% (Zero Hedge)
Biotechs fall 4% after Hiliary tweet (Zero Hedge)
JCB cutting 400 jobs in the U.K. (The Telegraph)
London and Shanghai agree to stock market link-up (South China Morning Post)
Sources: Apple car out in 2019 (Market Watch)

Art and Design:
The Running of the Wieners: Hophaus Southgate Inaugural Best Dressed Dachshund (Design You Trust)
Alexander Markin Photography: One third mockup of Russian space shuttle found (Markin Photography)
One million please!! World's first 3D gummy printer (Bored Panda)
Smog free tower opens in Rotterdam (Design Boom)

Sunday, September 20, 2015

Weekend Commodities Report: DBA, KOL, JO, DBC, JJC, USO, UNG, GLD, SLV, URA, COW, LIT, WEAT

With the fall of the dollar to around 91 cents I thought it would be a good idea to review commodities and see if any interesting patterns were developing.

Agriculture: DBA
DBA is listed as neutral. I've had a hard time making sense of DBA's chart lately (as you can probably tell) but a bear flag has appeared and support on the RSI(14) trend line has appeared.

Coal: KOL
KOL is listed as a neutral. A "buy" signal has appeared on the RSI(14) indicator but currently appears caught in it's current downtrend. What is also worrying is that it currently only appears to have gone through three of the five down waves.  

Coffee: JO
JO is listed as a neutral. Coffee also appears to be caught in it's long-term downtrend with no end in sight. It's interesting to point out that some indicators like the MACD and KST are actually bullishly positioned, but the chart does not appear happy at the moment. I would advise staying on the sidelines for now.

Commodities: DBC
DBC is being changed to neutral. I am not happy listing DBC as a "buy" until it comes up to the support line on the RSI(14) line. I've shown a "short/sell" signal but this is to illustrate an upcoming decline rather than being a counter-trend that you can profit from.

Copper: JJC
JJC is listed as a neutral. I am expecting a fall in the upcoming week but this should only be part two of a three wave ascent. Watch closely as a lower high may be put in with a top at around $32.00.

Crude Oil: USO
USO is listed as a long/buy. The effects of the falling American dollar should be seen in crude oil which is coming up to a critical support line in it's current channel pattern (around $14.30).

Gold: GLD
GLD is a speculative buy. Next week is going to be very important as the line which has created resistance three times before is coming up. The Full Stochastics indicator and EMA suggest this is going to break out, but perhaps with a little pause first.

Lithium: LIT
LIT is being changed to a speculative short/sell for next week. I want to see the RSI(14) signal come back to it's support line before buying.

Livestock: COW
COW is listed as a neutral. COW is still caught in a massive bullish declining wedge which gives it excellent long-term prospects but near-term I think it's best to just watch it.

Natural Gas: UNG
UNG is a speculative short/sell. I still believe that in the long-term natural gas looks excellent but near term $NATGAS could be going back to $2.40.

Silver: SLV
SLV is being changed to a long/buy.

Uranium: URA
URA is a speculative short/sell. Divergence has begun to appear on the RSI(14) and MACD however near-term URA has some more distance to fall.

Wheat: WEAT
WEAT is listed as a neutral. Long term wheat was looking quite strong in it's bullish declining wedge but currently is just barely staying inside. The pattern is aborted if $9.35 is breached.

Saturday, September 19, 2015

Biotechnology: Low cut fatigues and lots of harmless pinching

It seems that the markets (and biotechnology in particular) are showing signs of being in a very strong bearish rising wedge pattern ("pinching"). The appearance of this wedge in the S&P coupled with the distance from the channel resistance line suggests to me that one, a fall is still about a week or two off, and two, we are only in wave three of our five wave descent. If this wedge is correct not only will another rapid and sharp decline soon follow but it's resting point could take us to the 1700's. Shown below is the S&P:

I've complained about biotechnology several times before. A week ago I illustrated the beginnings of this rising wedge but was not yet satisfied with it as a higher high in it's pattern had not yet gone in. Interestingly though, IBB (our biotechnology index ETF) is already right up against the channel resistance line. With biotechnology being more inflated than the general market on a price-to-earnings ratio, it follows that next week biotechs could lead or presage this imminent fall before the general market follows a week or two later.

What I also find fascinating is that this rising wedge pattern puts the super long tail from the 24th of August in context with a possible "double wedge". Data from the last week of August and the first three weeks of September could represent one rising wedge, while the 24th of August onwards could represent a second rising wedge with it's ultimate demise coinciding with the S&P's later in October.

Weekend News Roundup: Tumbling markets, the French downgrade and a photo of a brave little girl

Markets and Business:
Hong Kong Monetary Authority: U.S. may not wait much longer to raise rates (South China Morning Post)
Production stopped at U.K.'s largest steel mill (The Telegraph)
Upcoming squeeze on dividend shares? (Bloomberg)
Markets tumble on global concerns (Bloomberg)
Too much leverage has exposed China to imminent decline (South China Morning Post)

China hording world's oil? (Bloomberg)
India poised to open gold mines across the country (The Guardian)

Foreign Policy:
France downgraded by Moody's on weak growth (The Telegraph)
Biden to announce Presidential run? (Zero Hedge)
Egypt: High priests at the temple of the old state (The Economist)

Art and Design:
Photo of the Day: Syrian refugee in Tovarnik (Design You Trust)
Affordable and fast: Lotus beating rivals five times more expensive (The Telegraph)
Could they have made anything more beautiful? The Mercedes Brabus AMG GT-S (Hi Consumption)

Thursday, September 17, 2015

Gold Miners: Doing so well it'll be a, ummmm, gold mine

The rational part of my mind said that The Federal Reserve wouldn't raise interest rates, however the fearful irrational part of me thought there might be an outside chance they would. I'm not saying this is necessarily a good policy as it's gotten countries like Japan no-where for twenty years, but I must admit I've flipped back and fourth over the last week. I guess I was hoping that someone would be brave. Needless to say, U.K. bookmakers Ladbrokes has put a 7% chance on The Federal Reserve raising rates by the end of the year but has put a rate increase at 75%!

In the meantime I wish to illustrate a major turn that I think has occurred for gold miners (GDX). Serious "long/buy" signals have appeared at the end of it's apparent five-wave-down pattern and have subsequently found very strong support at $13.00. Point-and-figure charts have this current near-term run going to $17.25 however I personally think that should be pared back a little to around $16.00 since that was the level of the previous high. When I made the call on Sunday the stochastics had hinted that a new uptrend had begun, but at the rate it is currently going a lot of room has been left for upside ascent which makes me quite hopeful. Today it comfortably passed the EMA(34) and I am eager to see how it later handles the channel resistance line at around $15.00.

What has me really excited is the weekly chart. Yes, we are still in a downward channel but a "buy" signal has emerged on the RSI(5). Resistance might appear at the level of the EMA(15) level which coincidentally also occurs at around $16.00. No crossovers have appeared yet on MACD or KST lines but they will be watched closely. All of this may be part of a large bullish declining wedge which I have drawn in and puts upper resistance at $17.50.

The reason for all this? The American dollar is not looking healthy and in it's current trend I am eventually looking for it to rest at 91 cents, but not before first pausing at 94 cents (the 61.8% monthly Fibonacci retracement).

Sunday, September 13, 2015


Things in the market still seem precariously positioned at the moment. SPX is still caught in a triangle that looks as if it could collapse yet with momentum indicators looking positive, it's difficult to decide direction.

SPX is looking like a neutral. I still think it's best to be in cash at this point. We don't have a third hit yet on the downward line for the RSI(14) and it is consolidating very quickly so an imminent move is expected that will dictate direction for the short term. If we are able to break above the resistance set by the resistance line RSI(14) then we will know where things are headed.

U.S. Dollar: $USD
U.S. dollar is listed as a short/sell. It had previously appeared as if an inverse head-and-shoulders pattern was forming but this has not come to pass. Right now it looks like it's headed for around 91 cents and is well contained within the declining RSI(14) resistance line. 

Biotechnology: IBB
IBB is listed as a speculative short/sell. Right now an ascending triangle has emerged which is a bearish sign and should be resolved early in the new week.

China: FXI
FXI is listed as a very speculative long/buy. Late last week the downward trend-line on the RSI(14) finally broke up which is a bullish sign and we may be seeing the beginning of a three wave up. Furthermore the diagonal resistance line (dotted red) already has two hits and the third may witness a break up. Any move above $37.00 is very bullish.

Consumer Staples: XLP
XLP is listed as a neutral. We still haven't seen two closes above the line at $47.25 yet and we need to see that before I think this is continuing upwards.

Emerging Markets: EEM
EEM is listed as a neutral. The RSI(14) set up a very strong downtrend back in May and the chart looks like upper resistance is appearing at $34.50.

Energy: XLE
XLE is listed as a neutral. I think a higher low still needs to go in before a "buy" signal can be issued. There's a red dotted resistance line which needs to be broken around $66.00 (and already has three hits on it) which appears at the 38.2% Fibonacci retracement. Keep an eye on this for next two weeks.

Europe: VGK
VGK is still listed as a short/sell. Divergence emerged on the RSI but does not yet look strong enough to be a "long/buy." I think another low is still imminent. 

Financial: XLF
XLF is listed as a neutral. I'm really confused by this chart because of the long tail that appears on August the 24th and I am open to assistance from the community. In the meantime next week critical resistance levels are being approached on the RSI(5) and RSI(14).

Gold Miners: GDX
GDX is listed as a long/buy. If my surmise is correct about the U.S. dollar falling next week this would be bullish for precious metals and miners. A buy signal has just appeared on the RSI(5) although a higher low still needs to appear on the RSI(14) for a long term signal to be issued.

Real Estate: IYR
IYR is listed as a speculative long/buy. Support has held really nicely at $68.00 and now looks as if a three wave up-trend is about to begin.

Semiconductors: SMH
Listed as a neutral. I misjudged SMH where recently on the third hit of the red dotted diagonal line it closed above it twice. The slow stochastics are over-bought at the moment so perhaps a higher low is being put in.

Transportation: XTN
XTN is listed as a neutral. XTN is now sitting right at a long term support from five years ago! This is only it's second hit so we may see a bounce from here. XTN is also coming up to a critical long term support on the RSI(14). Breaking above it would be quite bullish but for now upper resistance is put at $47.50.

U.S. Treasuries: TLT
TLT is listed as a long/buy. It currently appears on the chart as if a bull flag has emerged.

Jakob Richardson © 2015