This chart may have some pretty serious implications.

cohodk

I'll let others interpret. Now thats a parabola.

Weekly view.




Daily view. I sure hope this holds.

Justacommeman

It's interesting how gold has separated itself from the index. If support doesn't hold the stock market won't either.............MJ

CRB index ($CCI)

Energy Crude Oil, Heating Oil,
Natural Gas 17.6%
Grains Wheat, Corn, Soybeans 17.6%
Industrials Copper, Cotton 11.8%
Meats Live Cattle, Lean Hogs 11.8%
Softs Coffee, Cocoa, Sugar
Orange Juice 23.5%
Precious
Metals Gold, Silver, Platinum 17.6%

cohodk

Care to extrapolate any future implications from a breakdown? So it breaks down. It wont mean anything to anyone, will it?

Justacommeman

<< <i>Care to extrapolate any future implications from a breakdown? So it breaks down. It wont mean anything to anyone, will it? >>


Stock market- would go south and I would look at shorting financials, REITS, Oil and China. Dollar and Yen would probably benefit. MJ

roadrunner

I think gold would hold its own....at least a lot better than it did during the 2nd half of 2008 as people are realizing it's a reasonable alternative to stronger fiat currencies. And gold has broken to new highs in all leading currencies while stocks, silver and other commodities lag far behind. Silver would certainly follow the CCI down. CCI to 265 level if the C leg an ABC correction continues from here. The Hang Seng is already looking like it could be heading into a major dump mode in which case the Dow/S&P should follow. Having the GSR continue to head north would fit into the scenario of commodities weakening in the summer and the dollar continuing to strengthen all the way into the 90's.

This is basically the age old discussion of deflation vs. inflation or liquidity (money infusion) vs. illiquidity. And that discussion has to include the fact that excessive weakness/failure of currencies leads to hyperinflation.

roadrunner

ProofCollection

Not sure what you're asking. Yes that was a parabolic move but clearly it's topped out and had its "bubble pop" decline.

Gold is not a commodity. Currently it is behaving like a currency.

If you want to talk about bubbles and parabolas, look at bonds... When's that bubble going to pop, and what's it going to do to the POG and stocks?

Justacommeman

Dave, I would add the white metals including silver to me list if the $CCI doesn't hold. It' s usually the first thing that gets sold. MJ

cohodk

You guys are getting close to my thinking, but not quite broad enough. I like Roadrunners thought that a break would lead to 265. If this were to occur, it obviously means prices for ....

"Energy Crude Oil, Heating Oil,
Natural Gas 17.6%
Grains Wheat, Corn, Soybeans 17.6%
Industrials Copper, Cotton 11.8%
Meats Live Cattle, Lean Hogs 11.8%
Softs Coffee, Cocoa, Sugar
Orange Juice 23.5%
Precious
Metals Gold, Silver, Platinum 17.6%....

on the whole, would have declined by over 40%. That would be some pretty serious deflation. Im not concerned about the price of gold, but rather the effect on the entire economy. Real estate and the stock market--the two largest asset classes are already back to the 2004 levels. Gold would not be immune to such a force, although would probably not suffer as greatly as the index. Oil and grains and base metals--including silver(white metals) would be crushed. What would the economy be like if this were to happen? The ironic thing, if all the ducks were to line up, is the US budget could actually be revised to a surplus as future expeditures could be revised to the negative.

This is Bernanke's worst nightmare. As much as he tries to reflate, he has not been very successful. The Euro is giving him fits. Its collapse would probably push the dollar up 50% and this chart will live up to its potential. Hopefully, that does not occur. Although I wouldnt mind buying a castle in Europe. Oh, the bargains Americans would have.


PC,

I will agree that the run in Treasuries may be long in the tooth, but it has not been a parabolic move, and it not a bubble. The trend may reverse, but is more likely to be an orderly decline. The POG and stocks may simply trade sideways. In 2000 the 30yr was yielding 8% and the SP-500 was 1500. Earnings on the SP-500 were about $50 per share. Today they are about $75 per share. Companies on the whole are also much healthier than in 2000. They have more cash on the balance sheets and most have refinanced debt from the 8% levels down to 5%. History has shown that stocks and gold, can do quite well in rising interest rate environments.

percyb

The STO suggests some possible weakness ahead or at the least...no sharp advances. It's good to be cautious and use stop orders.

jmski52

It appears that the last time it broke down was when the Bear Stearns story was breaking and the mortgage meltdown was beginning. This time around, I think that more people are at least aware of what might happen if their stocks go south, and "might" be prepared to make some diversification moves with serious money.

I don't think you'll see a big breakdown here. I bet we do see some volatility though.

cohodk

<< <i>It appears that the last time it broke down was when the Bear Stearns story was breaking and the mortgage meltdown was beginning. This time around, I think that more people are at least aware of what might happen if their stocks go south, and "might" be prepared to make some diversification moves with serious money.

I don't think you'll see a big breakdown here. I bet we do see some volatility though. >>




The above are not charts of the stock market. They are of commodity prices. During the 2008 meltdown. EVERY asset (except the dollar and Yen) declined. Diversification did not help, unless you had dollars and yen. So if people learned anything, maybe they buy dollars and yen?

ProofCollection

<< <i>on the whole, would have declined by over 40%. That would be some pretty serious deflation. Im not concerned about the price of gold, but rather the effect on the entire economy. Real estate and the stock market--the two largest asset classes are already back to the 2004 levels. Gold would not be immune to such a force, although would probably not suffer as greatly as the index. Oil and grains and base metals--including silver(white metals) would be crushed. What would the economy be like if this were to happen? The ironic thing, if all the ducks were to line up, is the US budget could actually be revised to a surplus as future expeditures could be revised to the negative. >>



Unlikely, IMO. Even if commodities and prices in general go down, the government's costs would seem to me to be not very closely tied to commodity prices. And that's assuming that the government can keep spending under control.



<< <i>This is Bernanke's worst nightmare. As much as he tries to reflate, he has not been very successful. The Euro is giving him fits. Its collapse would probably push the dollar up 50% and this chart will live up to its potential. Hopefully, that does not occur. Although I wouldnt mind buying a castle in Europe. Oh, the bargains Americans would have. >>



Bernake's not done yet, don't underestimate him or the fed. You don't think the PTB aren't working on a way to ramp up the trashing of the dollar? Some counter-measures will take time to organize, implement, and in some cases, sell to the American people. The USD is not good for exports (which Obama says he wants to double), and is thwarting economic recovery. This won't be tolerated. I expect we'll see something in the next couple of months to bring the USD back down a bit and help propel gold up its parabolic path.



<< <i>I will agree that the run in Treasuries may be long in the tooth, but it has not been a parabolic move, and it not a bubble. The trend may reverse, but is more likely to be an orderly decline. The POG and stocks may simply trade sideways. In 2000 the 30yr was yielding 8% and the SP-500 was 1500. Earnings on the SP-500 were about $50 per share. Today they are about $75 per share. Companies on the whole are also much healthier than in 2000. They have more cash on the balance sheets and most have refinanced debt from the 8% levels down to 5%. History has shown that stocks and gold, can do quite well in rising interest rate environments. >>



Treasuries are so over-bought now I don't know how it can't be considered a bubble, and I can't think of any other commodity or security or investment vehicle that has ever had an orderly decline from overbought levels of this magnitude (can you?). US companies can handle the higher interest rates, but it will thwart the economic recovery and prevent or diminish new financing and growth. The US government on the other hand, can NOT tolerate much higher interest rates. Interest payments on the debt already consume a huge portion of the annual budget, so even a few percentage points high in interest rate means an even bigger piece of the pie going to interest payments. Where will this money come from? My guess is the printing press, and once treasury holders & buyers see where the money is coming from (not that it isn't already), they will begin to dump treasuries because inflation will make holding them unprofitable.

roadrunner

Sinclair's thoughts on currencies make sense to me. Once they are finished attacking the Euro, or destroying it, eyes will eventually turn towards the dollar. And the USD won't have the Euro to act as inverse strength. It will have to survive on its own accounting. As currencies are attacked one by one, commodities will be one of the few things left of value. I can imagine a very brief and steep knockdown of commodities this summer but then a rebound as well as the flight from currencies continue.

It's also possible that commodities could peform a lengthy sideways move from here to satisfy the need to work off the time factor from the 2008 peak. Gold in particular has been quite adept at working these sideways corrections for its C leg. In any case, gold looks the safer place to be for a while. The stock and commodity markets in general look to want to dig deeper and test those recent "fat finger" trading lows. There's always some truth in those fat fingers.

roadrunner

jmski52

The above are not charts of the stock market. They are of commodity prices.

Yes, I know. That's why I made my comment.

jmski52

Sinclair's thoughts on currencies make sense to me. Once they are finished attacking the Euro, or destroying it, eyes will eventually turn towards the dollar. And the USD won't have the Euro to act as inverse strength. It will have to survive on its own accounting.

I could envision waves of currency selling, not necessarily focusing on any given currency for long, and not in a sequential fashion with the dollar as the last currency standing - but of a continuous devaluation with gold and commodities rising across the board in fits & starts - kinda like right now and for the past 6 months...

Wolf359

I can't see 2008 being repeated...the effect of the PPT and Bailouts wear off after a while. Confidence is being lost....we had confidence in 2008.

I see the crash coming sooner than later...maybe this year.

Justacommeman

Dave, I do not subscribe to your deflation case at face value. Inflation and hyperinflation will be the result of a currency event/collapse IMO. We are laying witness to a currency event as I type. Stay tuned. MJ

cohodk

<< <i>Dave, I do not subscribe to your deflation case at face value. Inflation and hyperinflation will be the result of a currency event/collapse IMO. We are laying witness to a currency event as I type. Stay tuned. MJ >>




The Euro is going through growing pains. It is a teenager afterall.

I hope we dont slip into deflation, although I would prefer it to inflation, as would the 100 million or so savers and fixed income folk. This does not diminish its possibility, however.

cohodk

<< <i>I can't see 2008 being repeated...the effect of the PPT and Bailouts wear off after a while. Confidence is being lost....we had confidence in 2008.

I see the crash coming sooner than later...maybe this year. >>



Did you mean to write "can"? Afterall, I think we did crash in 2008.

cohodk

The stock and commodity markets in general look to want to dig deeper and test those recent "fat finger" trading lows. There's always some truth in those fat fingers.

Roadrunner, your understanding of the stock market has grown exponentially the last few years.

Tomohawk

<< <i>The stock and commodity markets in general look to want to dig deeper and test those recent "fat finger" trading lows. There's always some truth in those fat fingers.

Roadrunner, your understanding of the stock market has grown exponentially the last few years. >>



That's a very interesting observation and comment, guys, especially from a conspiracy-theory point of view (not that I'm calling either of you such!!)...the "mistake," and then the blaming of the little guy are classic conspiracy or manipulation signals, as far as I'm concerned. Something larger is afoot here. PC's comment to not underestimate the FED is very well-received...and I'm just not seeing much of a pattern in Silver's pricing lately (last 3 months or so) other than "frothiness." And I just don't buy random events when money is involved...

jmski52

commodities rising across the board in fits & starts

Clarification:

Not all commodities as reflected in the CRB Index. I would think in terms of food-related commodities and precious metals, but not necessarily industrial commodities. Just sayin'.

Justacommeman

<< <i>

<< <i>Care to extrapolate any future implications from a breakdown? So it breaks down. It wont mean anything to anyone, will it? >>


Stock market- would go south and I would look at shorting financials, REITS, Oil and China. Dollar and Yen would probably benefit. I would add the white metals including silver to my list if the $CCI doesn't hold. It' s usually the first thing that gets sold.MJ >>



Well Dave, I hope you're happy

MJ

yellowkid

I still believe technical financial charts to be of little use in predicting future market moves.

Justacommeman

<< <i>I still believe technical financial charts to be of little use in predicting future market moves. >>


Jerry, you are allowed to believe what you want and you are not alone in your camp. Even technical traders can not often agree on chart interpretation. Every sunken ship had a chart as well.

However, a good technical trader can use charts to interpret market sentiment by past history. Like it or not history does seem to repeat itself often. A lot of market sentiment can be garnered by price, volume and support/resistance. These numbers actually tend to reflect predictable human stimuli and therefore there subsequent actions........A lot of us have made a living past and present by following the trail of rice dating all the way back to Old Japan and applying it to our trading style. Technical trading combines science, psychology and art in my opinion and that's why I'm drawn to it. Truth be told I'm a hybrid technical/fundamental trader. Meaning I don't take the trade 95% of the time unless BOTH the chart and fundamentals support it. But, that's just me.

For what it's worth a few of last night "predicted" the future. We said the DOW would bounce off of the 9900 level and gave our technical reasoning. Guess what, the market bounced 275 points off of the the 9900 level. A day trader could have made a small fortune and a swing trader could have entered positions there with a very easy stop management and has a high risk/reward trade in front of him. I have no idea who will close this market today, but I'm already out of the trades I took this morning, all positive. Do all of them work all of the time? Of course not. You don't need all of them to work. If you manage risk correctly you really only need 45% of your trades to be successful in the end providing you cut bait on your losers quickly.

Of course, you are allowed to simply say you find technical trading of little use if you don't use it. I find hair gel of little use................all the best. MJ

RedTiger

<< <i>I still believe technical financial charts to be of little use in predicting future market moves. >>



And I find most fundamental analysis to be of little use in short term trading. Where does that leave us? <attempt at humor follows> Astrology? Darts? Monkeys?

If a person doesn't find something useful, ignore it. A person is never going to convince the other side, especially if that other person may have decades of success using that something.

yellowkid

Let me amend that a bit I think that a lot of the "results" of technical prognostication, is a result of all the people who are following whatever indicator they are watching acting on what they think is going to transpire, thus actually creating the result. I would liken technical indications as akin to weather forcasting, sometimes they are right, sometimes wrong, maybe a better result than no analysis, but not a large difference beyond a 50-50 shot.

yellowkid

I don't pretend to understand all of the nuances of the financial world, my degree is in the liberal arts I base my previous statement on things I have observed and learned over 35 or so years of investing. There have been a lot of people in that time who wanted to "make money for me." I have always felt ,and firmly believe, that if someone really did have a system that worked, be it in stocks, real estate investing, the commodity markets, that they would be fantastically wealthy and certainly wouldn't be after my paltry holdings. I learned years ago that most traders don't beat the street, about the same time I learned about John Bogle and his investing ideas, keep your costs low and index, that made perfect sense to me and I have been with Vanguard for years. The 90's of course were a no brainer, buy anything and watch it go up, even in the past decade I managed to make money because of my overseas exposure, my bond holdings, and PM funds, all by buying the indices. My feelings about technical indicators are based on the "most traders don't beat the street" credo and this includes the people who use tech indicators, I feel that if they worked, these people would be enormously wealthy.
There are some very bright people here, I say that sincerely, maybe some of you are the few traders who do make a lot of money and if you are, and are using the charts to base your decisions, then I am wrong. Please PM me, I want to talk to you.

gecko109

<< <i>Let me amend that a bit I think that a lot of the "results" of technical prognostication, is a result of all the people who are following whatever indicator they are watching acting on what they think is going to transpire, thus actually creating the result. I would liken technical indications as akin to weather forcasting, sometimes they are right, sometimes wrong, maybe a better result than no analysis, but not a large difference beyond a 50-50 shot. >>





Who said that ......"you cannot accurately observe an atom, because the mere fact that you have looked at it now has influence over its future action"?

Its something along those lines anyway.

CaptHenway

<< <i>

<< <i>Let me amend that a bit I think that a lot of the "results" of technical prognostication, is a result of all the people who are following whatever indicator they are watching acting on what they think is going to transpire, thus actually creating the result. I would liken technical indications as akin to weather forcasting, sometimes they are right, sometimes wrong, maybe a better result than no analysis, but not a large difference beyond a 50-50 shot. >>





Who said that ......"you cannot accurately observe an atom, because the mere fact that you have looked at it now has influence over its future action"?

Its something along those lines anyway. >>



Without looking it up, isn't that the Heisenberg Uncertainty Principle?

yellowkid

<< <i>

<< <i>

<< <i>Let me amend that a bit I think that a lot of the "results" of technical prognostication, is a result of all the people who are following whatever indicator they are watching acting on what they think is going to transpire, thus actually creating the result. I would liken technical indications as akin to weather forcasting, sometimes they are right, sometimes wrong, maybe a better result than no analysis, but not a large difference beyond a 50-50 shot. >>





Who said that ......"you cannot accurately observe an atom, because the mere fact that you have looked at it now has influence over its future action"?

Its something along those lines anyway. >>



Without looking it up, isn't that the Heisenberg Uncertainty Principle? >>



You're asking me, the liberal arts major???

RedTiger

<< <i>

<< <i>
Who said that ......"you cannot accurately observe an atom, because the mere fact that you have looked at it now has influence over its future action"?

Its something along those lines anyway. >>



Without looking it up, isn't that the Heisenberg Uncertainty Principle? >>



Correct. The act of observing changes the event.

This applies to all indicators. Whenever an indicator proves useful, whether it be fundamental or technical, gets back tested, published, and widely adopted, the indicator tends to either stop working, or tends to work a lot less well. That's why the game is difficult. The target keeps moving.

One simple example is seasonal calendar tendencies. I mentioned that May tends to one of the best months for gold, June one of the worst. Lots of folks have seen the same data. The natural course of events is that traders using that information start to sell in late May, or in mid-May to get out before the anticipated weakness in June. The indicator can still useful, but it becomes skewed. Folks try to anticipate the anticipaters, and so on.

That doesn't mean the data is worthless. It does mean a trader or investor has to realize that a lot of other folks have the same information, and are playing the same anticipation game.

cohodk

<< <i>

<< <i>

<< <i>Care to extrapolate any future implications from a breakdown? So it breaks down. It wont mean anything to anyone, will it? >>


Stock market- would go south and I would look at shorting financials, REITS, Oil and China. Dollar and Yen would probably benefit. I would add the white metals including silver to my list if the $CCI doesn't hold. It' s usually the first thing that gets sold.MJ >>



Well Dave, I hope you're happy

MJ >>



I think we both are. What a great week!! Lets do it again!!!

roadrunner

Roadrunner, your understanding of the stock market has grown exponentially the last few years

Again, thanks for the plug. It wasn't that hard considering I was starting from zero. For me, nuts and bolts are the easiest part of trading (ie fundamentals and TA) since they somewhat reflect order/mathematics/etc. But the most difficult elements for me to get a good handle on are emotions and psychology. And until I get there, the system runs at reduced efficiency.

And yes, the Dow did almost come all the way back to that 9800-9900 "fat finger" level today. Unfortunately, I never shorted the Dow when it bounced back up to 10,900....doh! Over the last 4 weeks the Dow has traced out a clean 5 legs down waveform. Should be some relief in store from here for equities. The dollar/Euro and treasuries have run to extremely overbought/oversold levels. When's the last time we saw a 0.69% rate on the 2 yr note? The 10 yr. bond is darn close to 3.0% again. And the $USD has run hard into the bottom of .88 overhead resistance from the 2 previous peaks. But it has formed most of a cup formation that for starters needs a handle added over the next month. But for now, I could use a little commodity partying.

The Dow has hit a number of markers dead on this week. It's now retraced essentially the 5th wave up of the past 14 month move. So with that it has pulled back to about the range needed for a first leg down. It also touched the 50 wk moving average twice in the past 2 weeks before bouncing back (thanks PPT!). This pullback is now 4 weeks old and matches the exact length of the earlier 2 pullbacks. A recovery leg up to 10,500-10,750 would be in order and then possibly another leg down to the 9500 support range to complete the ABC correction. The dollar seems to agree as it has completed a series of either 5 smaller legs up since April, or a larger group of 5 legs up since December. Either way the dollar looks to take at least another 3 weeks rest....to shift back to the risk trades while driving the GSR back down.

roadrunner