Saturday, June 26, 2010

6/25 Weekly Commentary

I shorted gold 2% of capital via DZZ on ARCA at 10.52.  Gold has rallied to within crying distance of it's all-time high at a time when trader sentiment is ravenously bullish.  It's forward sentiment measure (it's I1 equivalent) is set for a decline into early July. 



Just to get perspective on where we are on the large scale I present a series of charts from 2007 on. C1,2,etc are Circle1,2,etc. Currently we are in Minute ii of Minor 3 of Intermediate 1 of Primary 3.

I hold 4% SDS. I hope for a pop Monday morning to 10,260 to increase my short position.



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4 comments:

  1. AnonymousJune 26, 2010 at 7:25 AM

    Steve

    I have noticed that where the DJI and SPX have penetrated the February lows the IXIC and SML have not been able to yet. Do you have an explanation for this and how this other entices will act in the future? I was thinking they are higher beta and go up high and fall harder in the end.

    Jack C

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  2. JoshJune 26, 2010 at 10:25 AM

    Hi Steve,

    Your call this past week was AWESOME, and I think the market took many by surprise. One question you might be able to help us with on timing is as follows.

    If you have Minor 2 ending on Monday 6/21 at 1131 on the S&P, and presumably minute i of Minor 3 ending on 6/25, are you contemplating the possibility that minute ii will extend into 6/29 (Tuesday)? The reason I ask is that 6/21 to 6/25 for minute i of Minor 3 is a bit more than 4 days, and minute ii ending on Monday would be 1 day (morning) or 1.5 days (afternoon).

    Is it possible that we don't see 10260 or the end of minute ii until Tuesday morning?

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  3. Steve KotelesJune 26, 2010 at 11:06 AM

    Hi Josh,
    Although it looks funny I count minute i as ending Thursday Morning, for a length of 3 days. Minute ii has already lasted it's expected length so a pop early Monday would fit with the time horizon. I1 is down and so declines, rather than rallies, are to be expected. This count is not ideal because the b wave of minute ii is a bit farther than I would like in the DJI, but it fits the Nasdaq better (only .5% below the Minute i bottom).
    Thanks for the post.

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  4. Steve KotelesJune 26, 2010 at 11:48 AM

    Jack,
    Mid/small caps rallied strongly from the Feb low. I would expect them to fall harder once the realization phase sets in. As for Nasdaq it is setting up a head-and-shoulders like the SPX and DJI. It has a slight upward tilt to it. The small and mid-caps would be the ones hurt the most by a downturn as they have the least cash and the least access to affordable credit. Big-cap tech is much more liquid.

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