Friday, December 31, 2010

12/31 Weekly Commentary

In the stock market there remains 1 small pop Sunday night to complete the late rally.  The old high is 1258.50 so I'll short there.

I1 peaked today and will decline through 1/10. 
I bought DX futures 1% at 79.235.  Cash dollar index exceeded it's 12/14 low by 6 cents.  However, Euro was well below it's 12/14 high.  Since the dollar index is an amalgam of currencies I have turned to using the Euro to understand the current environment.
In the Euro I have changed the count to a simple abc from the 12/23 low at 1.3050.   It peaked today well short of it's 12/14 high with what appears to be a completed count.  I expect initial strength in the Euro in the Sunday session corresponding to the pop in the stock market, giving way to weakness.
Gold and silver should decline with the stock market next week.  I am still short gold futures and hold 1% ZSL.

12/31 7:57

Bought 1% DX at 79.235.

12/31 9:50

I have an order to buy DX futures at 79.205.

12/31 pre-open

For the dollar index I'm using the 1-minute, 260-unit plus 6.5 cents and the 10-minute, 140-unit M/A plus 7 cents to re-enter.  The count may have ended here but more probably has 1 more low.
Currently these thresholds are 79.445 and 79.76.  I'm buying at 79.18 on a further decline.  The low of 79.145 on 12/14 was the start of what I count as a 5 up.  Dollar cash low is 78.83.  These levels must hold or the dollar rally is kaput.
The stock market needs a 30-minute close below 1249.25 basis March SP futures to give early warning. It comes into the morning with critical support M/A at 11,570 and a breaking point of 11,414.  This is I1 top day so I'll look to short later this afternoon.

12/31 2:45am

Sold DX futures at 79.62.  Using short-term M/A for re-entry.  Looks like it's going to 79.15.

Thursday, December 30, 2010

12/30 Daily Commentary

Now that the stock market is becoming actionable I'll be making more frequent comments.  Currently I'm short gold futures and long dollar futures.  I'm long ZSL from yesterday.
I1 peaks tomorrow at a pathetic 1.22 and bottoms 1/10 at .19.  I'll be shorting the stock market tomorrow with futures and ETFs.  In my mind the market just completed it's Minute 3 wave up yesterday. It's the only way that the I1 rush starting 1/11 makes sense.  This decline should retrace some real estate with such a big wave 3.  However, if a rectangle develops at least I won't lose money.  I believe I'll be selling into a rally tomorrow.

 EWI counts it differently, so if they are correct the decline through 1/10 will be sizeable.
The dollar hurt yesterday and today.  I'm currently long 1% but I did not post the sale of the 1% at 80.08 after yesterday's close so I'll carry 2% into the Trade History.   I am using the Euro for wave counts due to the picture-perfect 5 up the morning of the 28th being retraced by more than 100% to today's low.  The Euro count was posted earlier and has not changed, being a series of 3 waves defining an upward correction to an established downtrend.  My trade tonight will pivot on the 10-minute, 145-unit M/A plus 6 points as a buy signal.  I'll make the trade but will not reflect it in Trade History, carrying the 1% at 80.09.

If the stock market declines after tomorrow then gold and silver should follow.

12/30 12:45

The Euro is putting in a triangle, like the dollar.  The Euro chart shows more clearly that this is a 4th
 wave in progress.

Dollar index futures past 80.055 will be the initial buy signal for the run.

12/30 11:30

The first sign of a stock sellof would be a 30-minute close 1249.25 March SP futures.  Critical support broken below 11,415. 
Dollar has to be counted as 3 waves into a building triangle.  It hit daily M/A support so the low should hold.
Gold is breaking hourly M/As.  Silver has to break 30.50 to consider a downtrend in motion.
Crude short was closed at 89.375 for almost $2 profit.

12/30 10:45

The dollar has just completed it's first 5 up.  Queueing off of the Euro's sets of 3 waves completing it's upward correction I think the dollar has a long way to go. 
Stocks hit the critical support M/A.  Breaking it requires a decline below 11,415.
SP futures have not broken their 30-minute M/A, which I use a an early warning signal.
I'll cover the crude short at 89.375 basis Feb futures.

12/30 pre-open

The Euro explains what to do with the dollar.  On the hourly chart it shows a series of 3's with the latest peeking just above it's old high but closing the hour below.
The dollar index cash daily chart shows price declining into an important M/A in the process of building a triangle.
The crude supply report is due out this morning and is expected to show a drawdown but the market has fully discounted that with last week's rally.  Prices broke down overnight and there will probably be support at 90.225 basis Feb.  I will hold the short through the expected bounce.

Wednesday, December 29, 2010

12/29 1:50

I bought 1% ZSL at 9.98 as silver approached it's Dec. 6 high.

12/29 1:40

Stop 1% DX 79.87 and 1% 79.85.

12/29 1:15

The count appears complete for the 2nd wave retracing almost all of wave 1.

12/29 1:05

Dollar index March futures just bottomed 80.07.  Gold, silver, and crude highs were made 3 hours ago.  Bought another 1% at 80.09.

12/29 noon

Dollar retraced to pima's 80.22.  However, gold, silver, and crude did not rally.  Apparently all are being sold into.

12/29 11:00

I'm short crude and gold, long dollar index.
Crude came back up to 91.425 which should be the top of a complex correction of a 5 down yesterday.
Dollar index low 80.445 should be about it.  When a market wants to trend it makes short corrections.  This one was only 25%.
Gold exceeded 1409 hourly but Bob Prechter's stop is 1413 spot which was not exceeded.  With only a $4 difference I'll hang tight using his.
Silver's high today of 30.695 is just shy of the bull market high 30.75 Dec 6.

12/29 pre-open

Short futures crude and gold.  Long dollar futures.  No change to outlook.  Gold had an hourly close 1409.  Any higher hourly takes me out.
SP futures 30-minute M/A at 1254.50 with a break on a 30-minute close below 1248.25.  DJI critical support breaks below 11,394.  Both of these levels are moving up until touched.  I won't consider going short until these levels give way.

Tuesday, December 28, 2010

12/28 12:30

I'm glad I exited my silver short last night.  The gold short is now against me 1404 vs. entry 1388 but this is small change compared with the potential silver hit.
Dollar is retracing it's 5 up, down to about 80.43.  Long from 80.05.
Crude is retracing it's 5 down, probably up to 91.55.  Short from 90.975.
Stocks are rallying after almost touching critical support.  I1 small top 12/31.

12/28 11:10

Dollar has completed a 5 up from this morning's low.

12/28 10:20

I count crude 5 down with retracement potential back to 91.30.

12/28 10:00

Crude retraced up to 91.67 but I'm still short.  Dollar working out well.  Still short gold.
The DJI critical support M/A is at 11,539 giving a support break below 11,384.

12/28 pre-open

Bought 1% DX futures 80.05.  Holding 1% crude from 80.975.  Holding 1% GC short from 1387.90.
Dollar retreated to a previous 4th low.

This looks to be part of a triangle on daily chart.

I was stopped out of crude but re-entered same price.  I'm carrying the short with stop at 91.65.
Gold rally stopped at 1400 Feb futures.  1409 gets me out.

Monday, December 27, 2010

12/27 Daily Commentary

Shorted crude again at 90.975, stop 91.30.
The stock market hit the 5-minute, 370-unit M/A and bounced the rest of the day.  SP futures came right to the edge of their 30-minute M/A envelope (.5% below the 30-minute, 90-unit M/A on a 30-minute close) before rallying.
The process of shorting the stock market for me revolves around three elements:
1) I1 which is currently rising to a minor high 12/31 at a very low 1.22
2) The 30-minute M/A, which I will only act upon with a declining I1
3) The 5-minute, 370-unit M/A -1.35%.  If this is broken then I will look for a shorting opportunity
Currently I am content to stand aside.
Precious metals have been marking time.  I covered my silver short at 29.35 on an after-hours rally.
I'm still short gold.

12/27 3:30

We got the 10-minute close signal on crude.  I have an order in shorting at 90.975.

12/27 2:15

Covered crude short 91.075, 1 tick off entry price.  Current short re-entry is 90.975.
SP futures came right down to test the 30-minute M/A break point in early trade but held. 
The Euro broke through it's hourly M/A and came back to re-test it before rallying once again.  I won't re-enter dollar long until Euro trades back under this M/A (blue line).

12/27 1:40

Put in order to cover the crude short at break-even.  I'll re-enter short on break of the grey M/A. Crude is responding to the rally in the stock market.

12/27 noon

Shorted crude futures 91.05 stop 91.40.  Crude has been abc'ing all the way up from it's August bottom at 71.  I show a potential downmove into Feb.

11/27 10:45

SP futures 30-minute M/A crossed on downside at 1152.50 and will only be broken by a 30-minute close below 1246.25.  DJI critical support break only below 11,374.

12/27 10:15

I hope everyone had a nice Christmas. 
30-minute support for SP futures will only fail on a 30-minute close below 1246.25.
DJI critical support M/A is 11,531 and will fail at 11,374.
I1 will only be in buy mode after 1/6.  Until then a correction is possible but I won't short until 11,374.
Dollar index fell out of it's rectangle.  I'm flat but I want to re-enter long on drop to 80.30 or rally past 80.92.
Gold short is OK.  Silver short is OK.
Crude is now a short, but I'm waiting on a bounce to 91.20.

Thursday, December 23, 2010

12/23 3:50

Sold dollar futures 80.84 on triangle unfolding with probabilities of downward breakout.  This would cast the dollar from heaven (the large rectangle forming the past several days).  Using a stop on a fast-moving M/A to re-enter (red line).

I downside breakdown occurs I expect to re-enter 80.25 - 80.

12/23 noon

Dollar index took a hit back to the lower boundary of the rectangle.  A fall below 80.62 would be the first sign of a breakout followed by 80.57 to confirm.
Count remains unchanged from earlier.
SP futures are dancing on their 30-minute M/A.  This triggers sell on a 30-minute close .5% below.

12/23 9:40

Shorted March silver futures 29.22 last night. 
Long March dollar futures from 80.68, looking for high 81's.  Appears to be in 4th up from overnight low 80.70. 

Stocks fell back to the 30-minute M/A before bouncing back.  Stocks are bullish until a 30-minute close .5% below this M/A (blue line).

Gold short looks good.

Wednesday, December 22, 2010

12/22 Daily Commentary

The stock market rallied to kick off the first day of the I1 cycle.  As long as SP futures don't penetrate 15-minute M/A (green line) by more than 3 points the hourly trend remains up.
I'm long the dollar futures with a 2nd wave in progress as a rectangle correcting a clear 5 up from the overnight low. 

Longer-term the dollar is in wave 2 correcting a 5 up from 12/14.
The dollar sports an ascending sentiment gauge.

Still short gold which has been forming a short-term top to complete it's abc up.  Penetrating the green line on the upside by 3 dollars will get me to cover.

Silver needs to break 29.23 to confirm trendline break and get me short.

12/22 3:15

Dollar index has formed a triangle after a 5 up from the overnight low of 80.62.  I would expect an upside breakout to a new rally high.
I've avoided crude as it is a prime beneficiary of fiat expansion.  Hedge funds love this market and generally work off of leverage.  That being said the rally from the May low has been a series of abc's with what looks like the final c in progress destined to take out the rally high of 91.175 basis Feb.
Crude has it's own forward sentiment gauge which is in declining mode but has been partially offset by QE2.

12/22 11:40

I'll want to short March silver and buy ZSL when March silver breaks an uptrend line, currently at 29.25.
PM1 is negative and silver will pop to challenge old high or break down here.  If the stock market goes on a tear then upside breakout for silver.

12/22 10:30

Holding off going long stocks until 1/6 due to the tepid nature of the I1 rise that started today.
Currently long DX futures from 80.68 last night and short gold futures from 1387.90.

Tuesday, December 21, 2010

12/21 Daily Commentary

I did not go long the stock market today.  I1 in ascending phase but only marginally until 12/21 with a peak of only 1.22.  A slight decline follow into the 1/6 low which is followed by a robust I1 increase to an initial peak above +5 in mid-Feb and then another peak above +8 in early March.

I went short March silver late today at 29.42.  I covered at 29.34 because the chart looks bullish for a pop to 30.
I'm already short gold and intend to stay in the trade with a stop at 1397.

I'm currently long March dollar futures with no stop.  Target 81.95.

12/21 1:25

Shorted 1% March silver futures 29.42.

12/21 10:25

Sold 2% SDS 24.06 and 4% QID at 11.53.

12/21 pre-open

Gold short is still in the money.

I'm currently flat the dollar waiting on a retracement for re-entry.  
I1 bottom is today.  DJ futures have been holding to a trading range which I'll count on to exit SDS 2% and QID 4% at lower prices this afternoon.

Monday, December 20, 2010

12/20 Daily Commentary

In reaction to a question as to whether the stock market has ever declined in the face of an advancing I1 I dedicate this post. 
I1 has only been able to confine the market to sideways movement during this down cycle. I'm not heavily shorting the stock market until early March or critical support breaks with I1 going down. QE has distorted the stock market and put it on life support.  The inability of the stock market to break critical support since the July low (except for once in November) indicates that the green light has been given to risk. 
To answer the initial question, I1 has never declined or even gone sideways when it's peak value was +5 or higher.  The March peak value is above +8. The Fed has kept the market from relapsing these past 6 months when I1 was in a general declining period with a trough just below 0.  These conditions indicate that the market will advance from 1/6 through Early March.  I'll be buying a small position tomorrow.
The dollar index rallied today and completed it's 5 wave from Tuesday's bottom at 79.14.   I sold at 80.94 at the 4:15 close based on the action of the Euro, which formed an ascending triangle today. 
I currently have an order buying DX again at 80.47, although this number will creep up through the night (blue line). 

12/20 10:15

The dollar has broken out of a congestion to the upside.  I expect it will come back up to old high at 81.70.  Gold is up a tiny bit here against my short, but still well below my entry.   QID is up well and SDS is at break-even.   So the best money is made long the dollar, where I believe we are in a 3rd of a 3rd of a 3rd with the latest 3rd orginating at the 79.89 low on 12/17.  Short-term we are in a 5th wave starting at the 80.67 low last night.
I1 bottoms tomorrow so we are running out of time to break critical support, which would only occur below 11,320.

Saturday, December 18, 2010

12/18 Weekly Commentary

The 11/24 Daily Commentary laid out my expectations for a stock market trading range into 12/21 and probably through January 6 based on I1.  In addition the suppression of natural market forces in the financials has caused me to scale back any positions shorting the stock market. Consequently for the past several weeks I have focused more on commodities.  Currently short gold futures and long dollar futures.  However, I'm currently 2% SDS and 4% QID (added Thursday).  All positions are in the money and the past month has been profitable.  I have updated the Trade History and year-to-date am up 35%, not including profits in open positions. 
The short gold position reflects a market in wave 3 of 3 down with forward sentiment gauge declining until early January.  This corresponds with my I1 low of 1/6/2011.

The dollar is in wave 3 of 3 up with a rising foward sentiment gauge for the next several months.

I1 bottoms at the close Tuesday.  I haven't been shorting this I1 cycle much due to QE and the upcoming opportunity on the long side after January 6.

EWI has changed their count to Primary 2 complete, that is the 5 up from July is complete and the abc from March, 2009 as well.  A look at the above chart shows the market still has legs before Primary 2 is done.  XMI is the only index that has a chance at an ascending triangle to launch this final rally phase.

Here are the I1 values for the next couple of months:
20101201 11.37165

20101202 12.79749

20101203 13.61196

20101206 13.86173

20101207 12.77042

20101208 11.88531

20101209 10.98693

20101210 9.50034

20101213 7.620538

20101214 5.351872

20101215 3.830426

20101216 2.548973

20101217 1.30961

20101220 1.062204

20101221 .8301926

20101222 1.869141

20101223 3.425628

20101224 4.60533

20101227 7.038039

20101228 8.59992

20101229 10.33879

20101230 11.40734

20101231 12.23454

20110103 10.65931

20110104 8.740036

20110105 6.669497

20110106 4.659269

20110107 3.130109

20110110 1.958889

20110111 2.423436

20110112 3.04538

20110113 4.081726

20110114 5.459954

20110117 7.244822

20110118 9.279465

20110119 11.4923

20110120 13.90587

20110121 16.33031

20110124 18.86588

20110125 21.5293

Thursday, December 16, 2010

12/16 7:30pm

Bought 1% DX futures 80.19.  It sports a 5 up and 3 down to support.

12/16 1:00

Bought 4% QID 11.61

12/16 10:00

Covered crude short 88.10.  It should have traded down more with the stock market.

12/16 9:45

Yesterday the DJI hit critical support on the button and rallied.  The break occurs nearby at 11,300.

I'm still holding 2% SDS, short gold, short crude, and looking to get long the dollar on weakness or a new high. I sold my ZSL yesterday at 11.22.

Wednesday, December 15, 2010

12/15 3:40

Sold 2% SDS for 24.77 at DJI 11,448. 

12/15 2:50

I'm holding 4% SDS.  DJI 5-minute, 370-unit M/A is 11,448.  It will not break until 11,295.

12/15 pre-open

30-minute M/A remains unbroken.  Until we get a 30-minute close below 1230.75 I'm staying flat stocks.  Gold, silver, and crude positions are working out OK.  Crude is testing the lower bound of a rectangle. 

Tuesday, December 14, 2010

12/14 Daily Commentary

Gold, silver, and crude are declining in tonight's trading.  SP futures need a 30-minute close below 1231 to support a short. 

We have 5 trading session through the I1 bottom 12/21. 

Crude is also on declining sentiment:
A 90-minute chart reveals the rectangle forming with a probable downside breakout.  It has broken the
blue line which now should offer resistance.  Any trade above 89.50 will cause me to exit the short.  I'm using SCO currently. 

Another measure of crude forward sentiment paints a similarly bearish picture:
In short gold, silver, crude, and stocks are overbelieved and the Fed is seen as potent.  Through February the bulls will probably have their way and I intend to be long stocks at the close 12/21.  It isn't until early March that I can look forward to reality setting in.  If we do not start showing solid numbers for job growth and industrial production by then we will not get them and the markets will fade the Fed.  The tax bill is being passed because the reconstituted Congress starting in January will not pass this budget profligacy.  So the Fed and the House are moving before fiscal and monetary restraint kicks in.  The stock market looks six months ahead so March is about when the stim stops and the economy will have to recover on it's own.  Extended unemployment benefits and lower taxes can lend some support but the economy has been weak over the past several years with these factors in play.