Weekend wrap- it's over when it's over.

If you thought a week ago that the back and forth ride should be over, you certainly got disappointed. Just another round-trip week. We may have a better chance of breaking that pattern this coming week, but will see. Simply it's over when it's over. Same goes for this entire bull.
SPX bounced from the gap and trendline support and rode just up to the resistance of the down-sloping channel.

Landmarks for the direction of the next move appear clear: 1312 down and 1330 up.
Russell 2000 actually pierced the trendline resistance intraday on Friday before pulling back. It did manage to close just above 50 DMA which was kind of fulcrum for the swings recently.

Just to repeat my previous thesis, R2K is already likely in the topping process even if it chooses to go up for another month or so.
Poor US dollar did top for this bounce in quite ugly fashion and amongst bearish euro news. Likely to get even poorer soon (bounces included).

That leaves us with oil and other commodities. Keeping in mind that Summer is generally a bad period for this pack, this year it may be relatively nice, considering the dollar development and the fact that the correction (or the bear raid) has already happened.

One more market to cover: Shanghai composite index. I have been keeping few charts of it in my list and just added few updated comments. I still expect it to recover and rally strongly for several months. That's purely based on the look of the charts- simply missing one more leg up. It got however to the point that the rally option is now/soon or never.

In summary, the market resisted quite nicely the distribution that's going on from all the "sell in May and go away" types and should have some progress over the next few weeks. However, if it chooses to continue to correct now, we should get into a very nice patch after the mid-Summer.

Weekend wrap- commodities bear raid ending.

Well, it feels like another round-trip week, but it was actually down-up-down ride, with end result of doji weekly candles on many charts. After not very decisive decline on Monday, I put support levels on charts that worked well, and whole action of the past week was just bouncing between the support and resistance.
SPX honored its support at 1320 and appears to be drawing a falling wedge. In case it breaks down next support at 1295 should hold.

Russell 2000 also dipped to its support at 815 and bounced.

R2K truly appears to be in topping mode- even if this pattern resolves (as I expect) to the upside. It may take some time before distribution complete- tentatively in July.

US dollar is trying its best to continue to rally but I suspect  it is done for now and may start dropping from the start of the next week. The question is what will happen in July/August when more weakness may hit equities, but will deal with that when the time comes.

That gets us to the oil, gold and other commodities.
Oil did indeed held up 95 despite 4 attempts of pushing it lower.

Which brings us to what really happened to commodities over the past 3 weeks. My take is that it was as obvious bear raid as they get, brought by very obvious silver topping that gave the pretext for the pack of bears to get on the ride across the commodities. Now it appears that the second part of the run is failing, and I would expect a strong reaction to the failed raid now.
Gold seems to be leading the way.

Commodities fate is related to the Chinese stock market and I encourage you to look at few charts of SSEC  that I have in my list.

In summary, the major event appears to be failing bear raid in commodities, and hopefully some more juice in equities that I expect to show itself up next week.

Weekend wrap.

The week turned out to be a round trip, capped by the weak finish. Gold printed a weekly doji candle and oil gained a tiny bit despite some rise in the dollar. The chart for the SPX is as interesting as they get, with several technical patterns in play.

There is an inverted H&S consolidation with a breakout and now the neckline being retested- a bullish pattern. There is also a support from the blue trendline. On the other hand there appears to be a deja vu of the pattern seen in February/March as encircled, suggesting that quite a bit of selling may still be in cards short term, with support around 1295. In support of this resolution is the non-impulsive pattern of the wave from March lows, and best fitting count  would be an ABC correction as marked. Back to the positives again: the uncertainty should be resolved rather quickly when the index breaks either blue or the red trendline. Anyway, SPX did not arrive yet to its top for this bull and more rally will eventually follow.
Russell 2000 is hanging on the support and could drop easily by 50 points if that's the direction of the move. If that happens we may be seeing actual top in making for this index. Just to be clear, bounces and retest would happen but just to complete the distribution process.

 US dollar had another decent week, pushing into resistance zone but target of around 62 still stands, and commodities should start picking up soon.

Oil held 95 and may have completed its correction, with the caveat that a final drop to the 200 DMA, currently around 90 may be a risk.

Silver printed weekly long-legged indecision doji candle and is simply writing its own story, that will be a legend for future generations. Near term a transition into a trading range as noted in the last weekly update is likely, with the caveat that early drop next week may push it down to lower level supports around 27 and 24.

In summary, after the indecision last week we may get some direction next week and that should be apparent early on. R2K is at risk for having topped out but I do not believe that top for the SPX yet arrived and commodities and gold should start rallying soon.

Weekend wrap.

Stock market suffered relatively modest selloff and commodities a true panic this week. All with a bounce of the dollar from a very oversold position and a minor support. This appears to me like a nice reset of the recent froth.
SPX remains in an uptrend with good support both from the trendline and support zone that covers 1320-1340.

The bottom spotter gave a fair (could be better) signal on Thursday.

Russell 2000 also still looks good, finding support at the trendline but any further drop could be a problem.

US dollar bounced after several bottoming candlesticks and commodities selloff already underway. It did not even get to the 50 days MA which is currently around 75.5 and that's highest I would expect it to go.

I will spend more time on commodities in this update, since that's where the action was this week.
I have been watching a potential rising wedge in Oil, expecting it to complete in June-July in time for the Summer correction, but last week made it clear that it was not a wedge but a flat, as you can see below.

This correction in oil corresponds to one in Oil Services, where it is more pronounced and clearly a continuation (or rather completion) of the process that started in early March.

My take is that we have seen the correction in energy expected for the Summer months already and the "Summer low" is in.
 I will mention Airlines here, since they trade contra-cyclical to oil and are in a bear market until proven otherwise. My suggestion is: do not get suck in.

Silver did not heed my good wishes and did what silver does well- sold off violently, landing at the support which should hold.

For its own sake silver should consolidate for a while between 48 and 36, and if he listens to me he would have a good chance for new highs later on. Duration of that consolidation is uncertain and could be weeks, months or even years. In the meantime, such consolidation if traded properly should be more profitable that an uncontrolled run.
Natural gas is getting on my nerves, but that's hopefully for the last time.
In summary, we just had an interesting but healthy week- if my take on it  is correct.

Weekend wrap.

A nice rally to the end of the week and month put new highs on many charts that I follow. Not much to complain about. SPX broke decisively resistance and appears to be on its way to 1400 and beyond.

Russell 2000 printed new all-time high, getting rid of overhead resistance and is trying to squeeze the best out of the remaining favorable season before the summer doldrums hit.

US dollar keeps dropping and got ahead of schedule threatening to land on 71 in a week or two if this free-fall continues, instead of 1 or 2 months. A bounce is expected from that level and that could mess up my timing for gold and commodities which I expected to run well into June.
Gold picked up the pace to the dollar's tune and ended the week and month against the long-time trendline, breakout of which would put it into a steeper trajectory, after eventual correction.

That takes us back to the longer-term dollar chart, that suggests the final bottom in the low 60s.

Silver is getting well to much attention, and truly I do not like it.
Oil is trying to climb over 115 and it is starting to hurt at the gas station.
Natural gas made its move and broke out, making it probably the only commodity around that looks fresh and not loved to death (this sentence has interesting connotations).

It should get to 6 bucks by the summer before required rest and then Fall/Winter rally which I am planning to use to help paying for the heating bills.
In summary, all as expected and a little worry about potential timing issues for the dollar that could influence the commodities and all the rest.

Weekend wrap.

After an ugly start, this short week turned out really nice, with SPX running by the close on Thursday right up to the resistance at 1337, were, if you look closely, a potential reverse H&N neckline is.

The pattern obviously needs to be confirmed. Once that done the standard upside target would be 1430, with the caveat that measured moves work better with H&S tops and for the consolidations are largely useless and targets tend to be exceeded. What I have for the target on some other charts is 1440-1460.
Russell 2000 is getting ready for new all-time highs, and I am quite curious how this wave will evolve. I have put an outline for an ending diagonal, but it has potential for better rally than that.

US dollar fell again and seems to be aiming at 70-71 by this summer. Potential falling wedge I drew on daily was obviously a fake as expected. Just to repeat my old opinion about wedges that I usually put as disclaimer when drawing them: Wedges are the least reliable patterns and most of the time they morph into a parallel channel, or extend much further than expected, so trading them is an easy way to lose money.

Silver is obviously making a run at the all-time high of 48 and I wish him good luck.
Oil is looking to challenge 147 before its favorable seasonality ends in July.
Natural gas is making nice progress and could break out next week.
In summary, I am expecting higher prices  and not more than minor pullbacks for now.

Everybody knows (consensus).

Bear with me. There will be no charts or music in this post, just a little rambling.
I do find it truly amazing, how from time to time in a society that is so diverse and divided, all of the sudden a consensus develops. Even more curiously, it is not a benign agreement, but aggressive, malignant consensus, attacking you whenever you try to put the news on or read a paper. Have you turned TV,  radio, or computer on lately? If not, beware. Otherwise, I am sure you could not miss it. It's the latest rendition of America Got Talent, with a strange chorus performance.
The first row of the chorus reciting the wisdom: balance the budget, balance the budget, balance the budget,  are the brewers of the ice tea, a very southern special, made of backwater and folly, sweetened with a spoon of libertarian honey.
The second row is made up of various victims of the hair transplant or hair dying procedures and their accomplices, aging and fattened by corporate lard, having difficulty keep up with the youngsters, just murmuring: kill medicare, kill medicare, kill medicare.
In the third row you will find all the well-meaning spenders of the other people's money (normally called thieves) yelling to the beat: tax the rich, tax the rich, tax the rich.
What brought this curious ensemble together, is the consensus over the solemn idea that the US is bankrupt, and the urge for revelations how to fix the problem.
Now, an obvious question comes through the mind of a skeptic observer: have we finally entered the utopian era when everybody knows what the problem is and even the solution? Is this the world where everybody is smart? Or just we can't spot the idiots?
To a stock market observer, this pitiful consensus is just another sign that the magnificent bull market we have been riding for the past 2 years could be entering its final phases. That's all.
My guess would be that just in two years, when another bear market will be at its depths, all this self-confident chorus will be singing to an entirely different tune.

Everybody knows.

Lyrics | Leonard Cohen lyrics - Everybody Knows lyrics

Weekend wrap.

Stock market is still showing a bullish posture, staging recovery rally after recent mild sell-off brought by failing at resistance SPX 1340 and RUT 850. RUT 856, the old bull-market high from 2007, was briefly penetrated before retracement. That would suggest plentiful energy for the index that should propel it to the new bull-market and all-time highs soon. SPX has also briefly penetrated resistance at 1320 on this recovery run before falling back just under that threshold.
All that said, I am starting my watch for the seasonal top, and putting together some charts helpful  in spotting such event, concentrating on RUT as it is expected to lead the SPX in the topping process/sequence. The following chart (also posted in my charts list) captures both 2007 and the upcoming tentative tops looking at the similarities and differences  between the two.

Another useful chart is the bottom-spotter combing daily SPX and put-call ratio in the background as a histogram. This chart requires interpretation of the PC ratio dependent on a specific market situation, but in general there is no sight of a bottom in a selloff unless PC ratio goes above 1 (1.2-1.3 for bigger selloffs) and the genuity of the bounce is confirmed by PC ratio at least 0.9 (the higher the better).

Another new chart is the oil priced in gold chart, showing that that ratio is half what it was in the Summer of 2008 and the trend is up now, closing on a resistance. ( Oil is twice cheaper in gold that it was then). This chart truly deserves watching because of  implications of this observation. If the oil breaks out against gold, and the gold keeps going higher as the current trend would suggest, by the next summer we all will be longing for the 100 bucks oil. Just very superficially: if gold approaches 2000 and the ratio goes back to the 2008 top, the oil should be around $300.

That leads us back to the energy. I added another chart for natural gas with better snapshot of the current price action. Note the apparent triangle (not an orthodox though). It appears to be coiled enough for an upside breakout that I think is imminent.

In summary, I am expecting bullish continuation for the next few weeks and preparing for much rougher waters ahead.

Silverado.

I truly, truly dislike saying obvious thing. So, if you live on this planet, you are probably aware that silver had a very nice (but expected) run since August of last year more than doubling and easily outperforming other investments. The run went so well in fact, that silver has met its price target of 40 dollars and is close to the old top from the Hunt brothers era.

This situation certainly deserves some consideration and comments.
It is conceivable, that silver continues to run unabated, particularly in the context of dollar breakdown and gold breakout. However, my suspicion is that the further upside potential for silver is rather limited in the short term and that there are better opportunities within the PM sphere for the next 2 months or so.

HUI, the index of unhedged gold stocks as other PM stocks has terribly underperformed silver, but there is a good chance it is about to change, at least for a while. Looking at the index itself, it looks nice and bullish.

As to when to switch back to the silver itself, the answer is in the charts above as well