Last night I shorted gold near the high because gold was correcting a 5-wave down and breaking out from a 4th wave triangle. So odds are strong the top is in. Of course this being a wave 2 up it could correct all the way to the prior high, 1388.10. Commodities of all stripes are entering 2-year bear markets.
Gold has it's own sentiment indicator, like I1. It is documented in the page PM1 Precious Metals. This peaks the first few days of November. Since this indicator is not spot-on like I1 other criteria must be used to pinpoint specific points. In this case the wave count says it all. No need to mark up the above chart as the count is obvious.
We have 2 back-to-back volatile days. Election day should rally as the market celebrates gridlock. If our government cannot limit it's powers then I welcome gridlock as a temporary solution. Wednesday Uncle Ben will tell us how much he will stuff into our stocking. I'm not so sure we'll rally here as Ben has inspire the ire of our trading partners and, by the way, their governments. In addition, he has the likes of Bill Gross reprimanding him for insane action. People are judged as insane if they perform the same actions over and over expecting different outcomes. PIMCO has been selling treasuries, probably along with other savvy wags, and treasuries have declining into the expected largess of the Fed.
The stock market came close to a new high but backed off after completing a 3-wave up. This could be part of the final wave of an ending diagonal, with another 3-wave up to complete the pattern.. I'm still banking on the election to spur a final rally (I1 is up slightly this week as well). Since the last I1 sell signal 10/13 the stock market has only clocked 3-waves and choppy seas. The latest on SP futures is a decline to a key M/A at 1177 and the stochastic setting up for a rally. That little light blue line in the chart below (minus 13 points) has stopped this market for 2 months from breaking down.
If the AUDJPY cross retains some correlation to global markets, then tomorrow's election may be a dud.
ReplyDeletehttp://99ercharts.blogspot.com/2010/11/audjpy.html
Gold appears to have topped and if there's a decent correction, I plan to buy some more. The election, as you point out, may well end in gridlock which means no solution to the ongoing fraud perpetrated by TPTB.
ReplyDeletehttp://99ercharts.blogspot.com/2010/11/gold.html
SPX
ReplyDeleteThe election may be a dud.
http://99ercharts.blogspot.com/2010/11/spx_5857.html
The ED is still in play IMO. I am moving the end of wave 4 of the ED to yesterday's low. The move up at today's open would be wave A of 5 of the ED.
ReplyDeleteBecause we now have wave 5 of the ED starting at a higher price than the earlier version, we now have a higher limit for the throw over.
I calculate that 1214.08 is the max price SPX cash can reach and still have the ED be a valid count. The upper TL has been moving up over time as well, so now it looks like wave 5 of this ED should top out between 1206 and 1214.08.
It's interesting that if it comes close to its upper limit and tops out at 1214, that will be very close to the April top of 1219.8. For all practical purposes that will give the daily chart an appearance of a double top.
It seems that everything is riding on what Uncle Ben says tomorrow. If QE II is big, the dollar tanks and stocks and commodities soar. If it's considered small or not big enough, the dollar rallies and stocks and commodities fall.
ReplyDeleteWith so much riding on what the Fed does, it seems that I1 has to take a back seat.
Or how about this? The low I1 value results in exactly the opposite of what you would expect for this reason: I1 at a very low value causes a negative social mood. Would not Ben and the Fed governors feel that themselves? And wouldn't how they are feeling affect what they decide to do? Ironically, I1 having such a low value may result in a stock and commodities RALLY because it affects the Fed governors in a negative way (pessimistic outlook) and they decide to blow everyone out of the water with a huge QE II.
I1 is in an uptick through 11/5 to a very low peak level. My take is that the market has done nothing but 3-waves for 3 weeks in the face of QE2 on the horizon. Post-QE2 will be the culmination of yet another 3-wave. Targeting 2206 with orders prior to the FOMC. Holding off on dollar purchase same reason.
ReplyDeleteThe Fed and Congress have been playing counter-weight to negative sentiment. Every dollar spent or "invested" backs them further into a policy corner. Tea Party now rules the GOP platform and, like it or not, Republicans are going to have to propose budget cutbacks or face opposition within their own party. Fiscal stimulus is out. The Fed would have to carry the entire fiat program. A big Fed program would invite congressional investigation into the Fed as an institution. I believe that over the next 4 years the Fed will be a scapegoat and will be gutted, federalized, or abolished. Selling 3 trillion in treasuries would have deflationary consequences and invite foreign owners to join the selling. So, whatever the Fed buys it has to recognize as long-term. They will be stuck with it. That has to weigh on their minds. Smaller than what the street wants is what I expect. If the number is over 500B then the rally will probably be bigger.
"A big Fed program would invite congressional investigation into the Fed as an institution." Okay, then...make it $3 Trillion.
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