Tuesday 3 January 2012

Nightly Report. January 3, 2012.

On December 27th , 2011, I wrote that I expect the SPX to go up in the 1st week of New Year. (http://bbfinance.blogspot.com/2011/12/final-friday-of-2011.html ) This is not rocket science folks.

Just be careful of the bulls**t that goes around.  Today they tried their best to scare people in many forms and when nothing worked, they started beating the drums of war with Iran.  Let’s get the facts straight.  There will not be any war tomorrow not even in the next six months. OIL will top in the range of $105 and GOLD around $1620 before we see correction again.  It is a function of US $ and Dollar index made a double top and dropped. The momentum is downward.

All the pseudo economists are screaming their heads off with macroeconomic and fundamental analysis to trade the stock market. I would suggest to them that simply follow the FX. If AUD is gaining strength, then things are happening in China and Asia which we are not aware of and may not know for many months. So forget the news and see the price action. Correlate and trade. I expect AUD is gain further strength and reach around 1.05 before it runs out of gas.
When Santa rally started, my target was +/- 1300 in SPX and time was up to 1st week of January 2012. We are now 25 points away and only few more days left. So basically we are running out of time for this cycle top.
I hope I am not confusing you will all these lines. Simply stated, the SPX is in a rising channel and it has to break 1284 convincingly before it can reach the target of 1310. I was hoping that it would be able to break 1284 today but that did not happen.  The intraday pattern is not very bullish but the trend is up. That lines up with my theory that we are running out of time for this cycle. But DOW has broken its October high and DOW leads. Overbought can stay overbought for some more time and there may be a bit more upside left in the rally. VXO / VIX have some more room to the downside.
On the whole, I would think that there is still some juice left in the rally but be ready to pull the trigger any time. Seasonality factor says that we have two more days so no more chasing the bus.
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  1. Awesome work, BB. You are the man. Gold, however, is going to 1680 before it corrects again. Silver either to 31 or 33.6.

  2. Thanks Win. I have my doubt about Gold crossing $1620 in this cycle. May be in 3 weeks time. I am a long term bull for Gold. If Gold has to reach $1620 now, then SPX will have to be near 1400, which I think is not possible.

  3. Happy new year BB. How low do you think SPX will fall during the next cycle down?

  4. Again, awesome comment about Gold 1680 and SPX 1400. Shows deep insight of the markets. It will happen in 3 weeks, as you said. Not 1400, but 1360 or so.

    TNX falling and stocks rising. It happened before QE 1 and 2. It is happening before QE 3.

    Again, BB, from what I have seen over 1-2 weeks, you are the man. As long as you stay humble, you will stay the man.

  5. Draw a descending trend line from the highs on GC. An inverse HS pattern is forming, and it will touch the TL. Look at the failed breakdown in GDX. Just my two cents. That's the way I'll be playing it.

  6. Win, I am touched by your encouraging words. Thanks. I will always remain humble.
    James, Thanks and happy New Year to you as well. I have not yet worked the downside target but it will not be very deep.

  7. What are we looking at in that 2nd chart? That is not the US Dollar. I can't figure it out.

  8. BB, as you know, remaining humble is not just an ethical thing. Overconfidence is the worst enemy of successful traders.

    You look at some of the same things I do with currencies, but you have a deeper understanding of COT. I learn from you.

    I am looking at 1290 (Tuesday) - 1260 (Friday-Monday) - 1360 (by Feb)

    AAPL 420 (Tuesday) - 395/400 (Friday-Monday) - 1480 (by Feb)

  9. The 2nd chart is Dow Jones Dollar Index.
    Win, that is the general direction I am also looking at. But when you say Tuesday, you mean Wednesday, Jan. 4? or Tuesday of next week? Regarding overconfidence, one can never be confident of the market. It is like walking on quicksand.

  10. By Tuesday, I meant today, which is actually Wednesday Jan 4.
    I am lightly short at these levels. Also, I meant AAPL 480 by Feb. Not 1480. Sorry about the typos.