Wednesday, April 27, 2011

4/27 Daily Commentary

The circus came to town.  Yesterday was the parade and today was the big top.  The dollar carry trade wanted to hear no change in policy so oil and precious metals took off.  I used SP and ND futures as keys to reduce stock ETF positions.  The count in the Nasdaq resolved to complete 5 out of a triangle breakout so I re-entered QID at 47.88.  Russell 2000 old high is 859 and change on 4/6 vs. today 858 and change.  I re-entered TWM at 40.01.
Here is I1 30-day.  I drew in today's bar since my data downloads are not yet available.  Today is top day using this gauge.

The raw I1 has 5 trading sessions since it's high 5/19. 
Nasdaq tipped it's hand yesterday and today, forming a rectangle and indicating another leg up.  That breakout has completed it's wave count.  Here is a chart published shortly before the close.  Nasdaq peaked and turned down after this was posted:

The DJI also completed a 5 up:

With today's rally the stock market is too far away from meaningful moving averages to reduce exposure and wait for an imminent break.  Even the DJ 10-minute M/A is 70 points below market, so we'll see in the morning.  I was able to reduce exposure this morning because the market marked time last night. 
As far as the big ones, the DJI critical M/A is currently 320 points away from it's downside break level.  The SP futures 30-minute M/A is currently 1340.40 and a break occurs with a 30-minute close .5% beneath the M/A. 

It appears that the silver rally ended at 48.30.  This completed it's 3 up.  However, from it's high Sunday night it completed a 5 down, so this is a big clue that this 3 up is final.  I'll be going short silver May futures when the 5-minute M/A (green line) is broken by 21cents.

The rally in metals and oil gave wind to the sails of the stock market, as they responded to the punch bowl remaining on the table, as if there was ever any doubt.  Here is today's PM1 chart:

Nobody asked Ben about the dollar carry trade.  This is the root of international commodities' price explosion and contributes to the misery of the third world.  By carrying rates at 0, speculators borrow for free and throw the money, leveraged, at anything non-dollar.  They don't stay in the dollar because with 0 rates it is depreciating.  Ergo everything physical and non-dollar goes up.  Hedgies have lines of credit and can borrow in whatever currency they desire.  With rates at zero they borrow dollars and buy oil, grains, metals, hides, whatever, and so we export dollars overseas.  They also benefit from dollar depreciation due to this rate policy.  Nobody asked about this.  What the heck is going on?  Have we collectively dropped IQ's?
Due to the surge in stocks, oil, and metals the dollar hit a new low today.  Hedgies are cleaning up.


  1. PM's look strong here. Gold futures had huge volume in after hours trading (compared to after hours trading of other days). Gold and silver closed near their highs. 1660+ for gold and 50+ for silver look likely to me.

    Today gold has the beginnings of a parabolic blowoff. Silver has had that look for a while. Picking tops in parabolic blowoffs is very difficult. Good luck,

  2. pima, I appreciate your comment. If silver did not display a 5 down from it's highs I would not attempt. Breaking this 5-minute M/A will at least indicate that the panic buying is done. The volume in SLV is awesome, so everybody and their brother is buying silver.