Surging Euro, flying pigs.

Do you believe in flying pigs? I don't.
No, I am not a hard-headed atheist. If I see it, I will believe (I will not have to touch it).
What left me quite perplexed today is my reading of the safehaven.com . There are three fresh articles, written by thoughtful and certainly bright gentlemen, plainly calling a rally in the Euro, and one even predicting  a glorious event of "soaring" of this much beleaguered currency. That site is a place where independent thinkers and folks with contrarian traits tend to congregate and publish, and that's what makes me go there for others' opinions and thoughts, so I certainly do not take their opinions lightly.
Clearly, I need to take another look at my charts, and bear with me when I am doing it.
The very first is the weekly Euro chart, clearly showing breakdown of the support at 126.

Admittedly, there is some potential support at 125, which was a secondary low in March of 2009, that is likely in play now since Euro has had a minor consolidation above that number today, but support from 3 years ago is purely psychological. No trader has kept any position for that long. However, when I go to my long-term Euro chart, I can see 125 support that I have drawn really long time ago, based on several points of it being a resistance or support going back to 2004.

So, maybe be there is some importance of this number (yeah, just since it is a round/quarter-like number).
Drilling down a little further, there is the chart with a head and shoulders pattern that broke down and reached it's target.

So maybe that's it. Target reached, time for a bounce. I still do not see the "soaring" though.
Well, let's take another look at the same chart.

This time I marked a large H&S pattern with red letters. Granted, the head is very ugly (ragged, indented top like would be in a victim of the attack with a sledge hammer), but the rest is a classical pattern with a breakdown and retest and target of 113 if the red neckline is counted, or in a multi-head version if we count the blue neckline at 126, the target would be 103. I also see a clean wave starting from 133 at the beginning of May, that had only one weakly blip mid-month bouncing from 127 to 128, that appears to be targeting support at 119-120 and certainly does not appear to be completed yet.
Thank you for bearing with me, if anyone did.
Have a nice long weekend and let's see if pigs can fly

Weekend wrap- giddy feeling- turning the clock back

What a week!
It truly deserves the exclamation sign and more.
There are unrelenting waterfall declines across the board, carnage everywhere, with markets giving up practically all the gains for the year.
And yet,  yesterday, the Bloombergs and CNBC on my XM radio just having that also unrelenting, but giddy talk about the FB IPO. The closest feeling to that I had during March of 2000. Well, maybe I am oversensitive but that felt very, very strange.
Lets go back to the charts.
The very first one to illustrate the point that  the gain for the year has been given up.

Interestingly, the 200 days MA is at the level of the market at the beginning of the year, thanks to it being flat of course. I believe that puts additional pressure on institutional investors to defend it, but also makes the potential breakdown even more damaging (being under water is not a pleasant feeling and may evoke seizures-like activity,  as some clients of certain agencies of our government could attest).
SPX itself stopped exactly on support that I have drawn a while back.

R2K wasn't so lucky and closed under its 200 days MA. On that note, if you look further abroad, FTSE seems to be leading the pack (for "developed economies") and is very un-comfortably sitting under the water already, and actually already crashing if you ask me.

Ditto for Brazil, that has been falling like a BRICK since the beginning of March.

There is obviously a multitude of charts around that I could add to illustrate the same point- please feel free to browse my chartlist. There is practically no bullish charts around, well, with a little exception of bonds, VIX and the US buck.
The dollar long-term chart would be the most depressing though to the crowds of the gold bugs that I was swearing my allegiance for quite while, if get it correctly.

In brief, it looks to me that the dollar is in a very early bull run, that may last till 2016-7. That would fit nicely with the next major through for the gold that's due in December 2016.
Now, once you know all about the future, have a very nice weekend folks.

Silverado 2- silver bottom.

Do not get me wrong folks. I am a silver bug and has been ever since 2000. Just taking a hiatus ever since silver hit $40 last year- my long expected target. I did share my thoughts at that time, see my earlier post Silverado. My current suspicion is that we may need still to wait a bit for the final low in silver. I just updated two silver charts with potential targets for the silver bottom around 20 bucks.

From the technical perspective, silver did make a double bottom at 26, but failed to do anything suggesting that that number will hold, finding resistance at 30. The only pattern that would make turn me bullish near term, would be crossing 30 and then finding support at 30 again. Unless that happens, I will be expecting further downside with an excellent support at 20, which I suppose would be a buying oportunity of a lifetime.

Just to sidetrack to the rest of the market, it has the feeling like it wants to move in another downside leg unless something dramatically positive happens next week. Anyway, my guess is that next week will tell.

Ordely Bull chart list 2nd aniversary reflexions.

Well, entire 2 years just passed since I started to publish my charts on stockcharts, and I am truly surprised I found time and energy to keep doing it fairly regularly. The cyclical bull was then only few months old and there were plenty of bears rampaging on the public list, so I felt compelled to dust off my crystal ball and share whatever I could have glimpsed looking at it. I can say, truly nostalgically, that it was a very easy time for the propheting. The bull was very young, bearishness was still rampant, and those in power around the world were committed to providing stimuli to the economy. Moving fast forward to today, there has been a dramatic change in all those factors. My prediction of the bull run till the Summer of 2011 was fulfilled. The powers of the word are showing such tremendous stupidity and ignorance now, that it is just my stubbornly contrarian nature that makes me looking for possible bullish resolutions.
Going back to predicting the future business, the good news though is, that we should get a pretty good clue very soon, maybe even next week.
The markets made a nice but predictable rebound to the 200 days MA and if they can't decisively break, the bear will be confirmed. If the rally continues, another leg of the bull is on the way and should last for several more months, and likely the retest of old tops at just above 1500 for the SPX is eventually in cards.

The resolution of this setup will dictate how the other markets will fare, whether the dollar, gold or crude.
Having said that, lets look at the setups in those markets.
US Dollar has made an honest attempt at the launch two weeks ago, but the second-stage engines did not fire and it failed to archive the escape velocity last week, printing in the end indecision to bearish weekly candle.

Interestingly, Australian Dollar may be drawing an inverse head and shoulders bottom.

The fate of the XAD is also closely linked with gold and the PM miners. Interestingly, the miners seem to be leading gold on this rebound/rally (that's positive).
The GDX gold miners ETF and it's younger sibling GDXJ are clearly tracing ascending wedge patterns, that could turn out to be either very bearish or very bullish (ending versus leading diagonal respectively).

Crude oil has been behaving most bullishly of the pack, but pulled just to the resistance at 100 bucks and obviously still may turn on a dime if other markets falter.

And finally, bonds may have seen a historic once-in-a-lifetime top. But that also needs a confirmation.

On the side, it will be interesting to look at all of this 2 years from now.

Weekend wrap- listening to the bell ring.

I presume you have heard or read a phrase that the bell does not ring  at the top or at the bottom. Do not believe in it, it does. It is just like the Christmas bell in the Polar Express movie, not everyone will hear it.
 To me it rung quite loudly when the DAX after breaking down from what appeared to be a triangle printed a bullish daily candle.

With US markets holding the early August low, it was quite convincing that the bottom was in. Objectively, we still are missing the confirmation of the bottom- that would come with breaking of the thick red resistance. But that is likely to happen sooner or later.
For the SPX the picture is also quite clear, breaking 1225 would confirm the bottom as well. Just notice how both indices stopped right at the crucial resistance today. Once that happen the run to the 200 days MA seems assured.

Longer-term technical picture appears on the surface still grim though, unless 200 DMA gets decisively broken, but that's the scenario I am putting more and more faith in now.
I will post more extensive review next week, time permitting.

Stupidity galore- political rambling.

This will be not-market-related. Just few thoughts about the republican presidential debate aired tonight.

Just as I started to notice some some folks returning to sanity, I got again surprised how pervasive stupidity is in the media and our political leadership.
The first idiocy I am referring to is the belief that the US budget deficit is the biggest problem that we have and I commented on that in my prior blog everybody-knows-consensus
For a shrewd market observer, it should be clear that with the interest rates near zero, the problem is the opposite- not enough borrowing by our government. With the private sector and the public on the spree of deleveraging and with "debt aversion", the US government became the "borrower of last resort". It is actually an interesting spin on the theory nicely explained by Charles Kindleberger in his book "Manias, Panics, and Crashes" that I had pleasure to read in the runup to the 2000 market top. In that book he explains the role of the central bank as the "lender of last resort". My spin is that while the European central Bank does not get that it's its role to be the "lender of last resort", our central bank (Federal Reserve Bank) does not get it that it should play a role of the "borrower of last resort", could be because there is no book written about it yet (at least nothing came my way). Not surprisingly, you could discover that the same concern of "balancing the budget" was very prevalent in the aftermath of the 1929 crash, as depicted in the "The Great Crash of 1929" book by John K. Galbraith.
Well, after getting the first idiocy out of the way, let me tell you what other idiocy bothers me tonight.
 And it bothers me very much. I guess I just can't stand cunning idiots. Two of the candidates attacked Rick Perry for issuing an executive order to vaccinate young girls against HPV (a virus causing cervical cancer and some of the head and neck cancers) in Texas. One of them is sadly a physician, and the second a woman. Michelle Bachmann then went on and on about the great harm and violation of the innocent girls that Rick Perry caused  by his order. Well, the problem is that by vaccinating you can prevent majority of cervical cancers and save multiple lives (annual mortality from cervical cancer is 4000 and from head and neck 11000). So, you can see what my problem with those folks is. Unfortunately, Mr. Perry did not handle the argument well and did not bury those two idiots the way he should. In the meantime, while I am still waiting for Ralph Nader, Rick Perry is the only candidate that gained my sympathy and respect.

Just on the side, likely a significant day in the markets today with possible bottom for Europe (US might have bottomed at SPX 1100 a month ago).

Weekend wrap- Nader for president.

The good news is that the market did not collapse on Friday and held 200 days moving averages as well as June lows. The bad news is that it may easily collapse next week and that would confirm for me the transition to a bear market. From the Elliott Wave analysis perspective it is simply a choice between two wave 5 outcomes as below.

The move in ether direction will be swift and totally news dependent.
We are in a window for this cyclical bull top and any further drop will be just a confirmation that a top was build up over the past several months and that will be as clear as it could be. In case of a surprising "solution" over the weekend a blow off rally to cap-off this bull will likely materialize in short-term.

From the political perspective it just becomes clear to everyone (if you did not know before), that we truly need protection against our own government, and the best idea I could find about that is that we should  mobilize and start molesting Ralph Nader to try another run for the Commander-in-Chief spot.

Weekend wrap- Sequential tops revisited.

It seems to be a good time to follow-up on the sequential tops theme rather than concentrate on short-term noise which is anyway just a part of the larger scheme of things and any political outcome will get interpreted according to the stock market outcome.
Just one comment: no fools in sight yet- see my old post Everybody knows-consensus.
Time has validated my contention that airlines cyclical bull has topped in November of 2010 and the sector is already in a cyclical bear, now accelerating.

Having one bear confirmed, let's look at the last cyclical bear topping sequence. I put together this chart a while back and it shows SPX top 9 months and oil top 18 months after airlines.

If that relationship is upheld this time, we are looking for SPX top in September.
I lost my gold chart so it is a recreated one. If you look closely, we may be at a beginning of a sweet 6-months rally to the top for gold and the miners.

Now a close-up of the last oil top.

If history rhymes enough we may have some rally till September followed by trading range till January where a final blow-off would commence. If the blow-off repeats its past performance it would take us to 200 bucks per barrel.
Now the disclaimer: things are not likely to repeat exactly same way.

Weekend wrap- Welcome to Pamplona.

Well, nothing beats the fun of a nice bull run.

Just do not get yourself in the way.

After this precautionary notice, let's take a look at where the markets stand now.
The very first observation is that there was a palpable spike in bullishness last week, while the markets generally had minimal net gain by the Friday's close. This by itself, even without further looking at the charts makes a good case for correction to happen next week.
The charts tell a similar message. On most of them you could see a push towards resistance practically across the board.
Just few relevant charts below before further dissecting this bull run.

Now, just a follow-up on the 2010 bull run that was a wave 5 of the wave A of this bull, with reminder that we are in wave 5 of the wave C and both wave appear to have similar dynamics, at least looking from the perspective of this (assumed) early-stage of the wave.

I placed a tentative labeling on the current wave below.

As you can see, R2K may be on schedule for about 3% correction next week. Now the caveat:
Anything much more than 3% would bring the possibility of failed 5 as on this count.

And another caveat, and the reason I put the pictures of the Pamplona run at the beginning of this post.
Bull runs can be quite unpredictable, and we can just keep going up.

Weekend wrap- wave 5 close-up.

Well, we did get some early 4th of July fireworks this year, and that's in the markets. If you look at my prior post, the scenario of wave 1 of the bear is clearly out of the window (as expected), and the failed 5th is highly unlikely now. Simply stating: we are in the wave 5 of the wave C of the cyclical bull as outlined in the last post.
There is plenty of interesting developments, including gold stocks outperforming gold (gold should bottom soon), bonds-mini-crash and euro consolidating in a triangle. But, not to waste anyone's time during this beautiful holiday weekend, I will just take a closer look at the wave 5 of the wave A, just to see what may be in cards for the balance of the summer.

Just to clarify, we are looking at the wave that started in February 2010.
As you can see, it was a very dynamic run, lasting about 2 1/2 months, with only occasional pullbacks to the 13 Days exponential MA, and the "flash crash" came after decisive breakdown of the trendline that was defined by the very first 1 and 4 days of the rally and of the 13DEMA. Now, looking at the current setup, you can see that the beginning of this wave is not so humble again, which lefts me wondering if the rest of the run will have similar features this time as well.

Obviously, that's a major conjecture on my part and anything could happen.
Have a nice holidays!