Friday, 18 January 2013

So Much For History.

History says Jan. OpEx is normally Red.
But this year the history was turned upside down, as was last year.
And all the day trading bears got slaughtered, again.
I sometimes visit a day trading forum of a TA site and I see folks animately discussing VIX trend line,( a new low of 12.31) T2111, USHL5, NYHGH, so on and so forth. The conclusion is that a Top is around the corner and things are about to crash.

I still hope for some sort of correction beginning of next week but definitely no crash. By the way, does any one remember what I wrote about VIX a week back? If you don't , here is a link:
Expect VIX to reach low double digit

The problem with these TA guys are same as that of Robert Prechter or ZH.
They are never wrong, just little early.
And TA need not be complicated. It works when you can make it simple so that anyone can understand it.
Prechter has been early with his S&P500 crash call for the last 5 years as has been ZH. May be one of these days it will really crash and then they can say "Told you so". But I doubt anyone would be left to short the market then, because by then everyone would have blown up their capital with these wrong calls.

Today gold and silver faced the resistance and retreated a bit.
Let us look at the chart of gold.
This is a simple chart with trend lines and Fib info. Easy to understand that gold is facing a resistance at $1700 and that is what we saw yesterday and today, when gold came close to $ 1700 and retreated. Very soon it will break this triangle and I am on the camp that it will break to the upside and run away. So we will be patient with our long gold position for many months to come. While there is a short term top in gold, the weekly cycles are up.

Nat. Gas is presenting a paradox. Seasonality and longer term cycles are down but having closed above $ 3.38, the price actions indicate that it wants to retest the last high before rolling over. As I do not trade against the cycles, I will not go long here. Rather, I will wait for the price action to exhaust itself and then take a short trade again.

Coffee futures are grinding higher but is still away from the long term buy signal. But cycles are close to bottom and specially in such situations we can expect whipsaws. The coffee ETF, JO is presently at around $35.10 and I think a buy signal would come around $ 38.75 or so. Please send your feedback on this one.

Oil has reached a point where I do not expect much short term gain and is looking a bit stretched here. A correction to the $ 88-$ 89 level is needed before we can go long oil again.

All in all, a very interesting week. There are some very interesting trends developing and Sunday Newsletter will highlight some of them to the subscribers. As always, let's not front run because this beast has some more energy to run.
Have a great weekend folks.

1 comment:

  1. JO
    Timewise this is the longest rally we've seen since the beginning of the bear market which started officially (in my opinion) in June 2011. It is only a sign of a possible bottom.
    The price move has unfortunately not confirmed or signaled anything. I'm a little concerned about this. Also, we had huge volume on this ETF but a really small up move which I estimate as bearish. Finally, the 13-week ema is still pointing down.So, I'm still tentative on this one.

    JO needs more time to base before making a big move.