Thursday, 12 April 2012

On The Way To Re-Test The Highs?


Today was an example as why not to front run. It also validates my reason not to short the market even when the trend model gave sell signal and stayed neutral. I had many factors to consider like few technical parameters, trend model, cycle analysis and money flow. And they did not line up together. In the end, I decided to believe the cycles which tops next week.

The earning season has started. Alcoa started with a better than expected result and today Google came out with a better result as well and is up after market. I think the euphoria will be back tomorrow and next week and all talks of gloom and doom will be forgotten. That is how they set up the market.  Again, it is not the time to go long nor it is the right moment to short. Only good thing to do is to sell in the strength. We might see SPX reach 1450 next week if the euphoria continues but risks are high. And I am writing this over and over, unless we see a re-test of the high and its failure, we are not sure of trend reversal.

When the market sold off 5%, I got some hate mails, ridiculing my call of SPX 1450 and market top call by April Op-Ex. My favourite  south Asian (I think he is an Indian settled in US) troll even told me to stop writing. I fail to understand why the troll reads my blog and spend so much emotional energy to hate someone whom he has never met. Internet gives us anonymity and the chance to show our true character. May be the guy grew up in a hateful environment and had a difficult childhood. May be he saw his father abusing his mother. Who knows. But that guy is truly damaged.  The bottom line is, chances are we will still see a new high before the market rolls over. I still do not rule that out.

Today AUD gave a new buy signal and US $ broke through important Fibonacci support level. Michael Boutros has this nice chart: (Ticker: USDOLLAR)

Even the RSI broke through the rising trend line.

The Speculative Sentiment Index shows that the retail trade is long USD and short EURO and AUD.

SSI is a contrarian indicator and it signals more gains for Euro and AUD, at least in the short term. If that were to happen it will definitely benefit the risk assets including equity.

Tonight we will have Chinese GDP data release and I am sure it will add to some volatility tomorrow.

Gold is at a very interesting cross road. It is near the end of the cycle bottom, but we have not seen any capitulation of the investor sentiment yet. Today the Gold is up because US$ was down big time. But by end of April or early May, we are likely to see further strength of US Dollar. How PM sector behaves during the period of Dollar strength is to be seen. All in all, I am still waiting to see a good bottom for Gold and would rather give up some initial gains.

After a long 3 month up-trending market, we are coming to a period when we will see sideways and choppy movement in the market. I would not like to participate in such markets and will wait for clear and definite trend, whether up or down.  We do not always have to be active in the market.

Thank you for reading http://bbfinance.blogspot.ca/. As usual, I always look for your comments and mails. 

26 comments:

  1. Regarding your troll: If I don't like what I read, I delete the website from my favorites and move on. If I pay for a subscription service, I may get upset with bad information - never mean but a little rude. I like what you do. I can think for myself. I can do as you believe the future holds for stocks, do the opposite, or do nothing - wait and see. I choose what I invest in. You simply give me one person's ideas of many I read.

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    Replies
    1. Fully agree with you. Thanks for sharing my thoughts. I also want to learn from you guys.

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  2. Don't respond to trolls. Just delete and add to block list.

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    1. That's what I am doing these days. Thanks.

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  3. Great post, and don't worry about those guys,you need to take money from somebody right? :))
    I think we might even get passed 1450 and see all time highs this year, don't forget its an election year!
    Now, what comes after in 2013 and 2014, that's another story :)
    Keep up the good job and ignore these people!

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    1. Thanks. We will reach new high by Oct./ Nov. I am thinking about the next week or so. Shall we see a new high next week?

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  4. You have been making some nice calls, and yes....cash is a position! So we wait....I have a small position in GDXJ and HDGE.

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    1. I would also like to get into HDGE but I am waiting for now.

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  5. " We do not always have to be active in the market." 95% agree... Opened a (small) long pos on LLY ... waiting the (high) retest..

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  6. Thanks BB. Still in agreement with you, even after the pullbacks, too fast just like all the other pullbacks during this rally to really short. This pullback was a bit stronger leading up to the end of the current uptrend somewhere around the 20th of april. Now we are seeing a crossover in the stochastics of all the indexes indicating a reversal in the downtrend from an oversold position. I expect the market to have a little choppiness over the next few trading days leading up to a couple of tests of a new high or at least a test of the previous high. Don't see a big crash coming like so many bears want. Perhaps a downtrending market until June

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    1. I am also not getting a good downturn price target. I think we will get some corrections which will be fast and furious. Will wait till end of April to get a clear picture.
      Thanks for sharing my thoughts.

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  7. thanx for your analysis -- i enjoy your blog and have learned from it. i've been long since december and look to go short (or at least into cash) soon. Keep up the great work.

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  8. Good post, thank you for your analysis. My analysis has an ES target of 1450 that confirms with a break of 1394.25

    I don't deal with timing predictions, but I see nothing wrong with this occurring next week.

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  9. Keep it up mate. Always been a mystery why so many trolls are around. They can always move on to the next blog.

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    1. Thanks.I think I have to develop a thick skin. But I cannot understand the reason and that bothers me.

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    2. To look for a reason assumes that trolls are logical and acting with rational motivations. Not a safe assumption.

      Trolls are there because they get pleasure out of being gratuitously unpleasant. That is their crime, and being an asshole is their punishment. :-)

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  10. just a quick mention, last time the stochastics were this oversold the week after thanksgiving, the s&p moved up around 100 points in three days while the dow moved up about 800 points.

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    1. The overall model is not giving a sell signal yet.Therefore although the really is about to get over, I am not yet ready to shot it. It might give a last burst of energy.

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  11. many thanks for sharing your great work



    I did not like the massive volume on the  downside and the volatility spike VIX! – (VIX has risen by 40% over
       the last 2 weeks).
    But as you keep repeating and as long as rates are kept ultra low and with so many dovish people around it is very difficult to short this market

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  12. Today will be the hammer formation

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  13. Dont worry be happy!
    A question of time!Crash!

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  14. It's difficult to find experienced people about this topic, but you seem like you know what you're talking about! Thanks
    Also see my web site :: legal dmaa

    ReplyDelete