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Saturday, November 3, 2012

What's the Real news?

It's one of the best clues for investors when the market rallies in the face of bad news, or sells off when flooded with good ones. On Friday clearly the latter happened. So a tempting question is what is the Real news?
Is the market fearing and predicting Obama's re-election?- could be.
Is the marked sensing that the latest everlasting QE doesn't have enough oomph! to push the markets even higher?
Is the EU unraveling even further in spite of relative calm on the surface?
Is China entering their "1930s like" depression?
The answer is that's likely all of the above and that it doesn't really matter, at least from the technical analysis perspective.
Let's just look at some of the charts from my collection.

US Dollar has been signalling  lately that it wants to make a double bottom, rather than sell further to the last year's lows, by breaking the red resistance line. It consolidated at 50 DMA resistance and broke out decisively above it on Friday. Granted, there is still a downsloping 200 DMA that may act as resistance, but the outlook seems to be bullish for the USD now. Please also note that same season last year has seen a major dollar rally, that extended to early January despite a dip caused by ECB easing.
On the other side of the coin are commodities, and if you look at the gold's chart, there is a triple top at 1800 with logic calling now for revisitation of the triple bottom at 1525. Which brings a question: is there a such thing as quadruple bottom?
Copper just hit a major support line .
And if you check the monthly chart, if the next support at 3.25 is broken, 1.50 becomes a target.

On the equity side, check this long-term SPX chart to see how transitions from cyclical bull to cyclical bear look like.

Index breaking 40 weeks MA, MA turning down and failure of the index to break out from below. Admittedly, there was one false bear signal last year, but do not expect false signals to become a norm, so watch it very carefuly for the signal.
Lastly, another of my old charts, showing that NASDAQ has reached a level that is a perfect setup for a top: 50% retracement of the early 2000s decline and the bottom of the first wave of the decline from that era.
Now back to my cycles charts, showing that a major top is due.
Well, having said all that bearish stuff, please keep in mind that others' opinions are important for their contrarian value mainly. 


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