China v USA v Europe

Which one is which?

The world order is changing - and we are witnessing a LONG TERM shift in power from West to East which could last decades !

Sentiment

Again this week CNBC watched by many (including the POTUS) are constantly talking about "finding bottoms"

Too many "bottom pickers" and "buy the dip"

Major US indices look like testing the pierced bottoms last week, and ,more than likely hitting new lows for this move.
The rally from the circled area looks corrective and losing steam i.e. not heading to the top of that range looks very bearish.

I would not be surprised to see a wash out next week ahead of Christmas, and THEN maybe we find a tradeable low.

Rally not finished ..YET

Even though it feels like it yesterday's falls in equity markets (blamed on various things..Italian elections, US FISCAL CLIFF part II! etc etc) probably is NOT the beginning of a sustained bear market move.

Sentiment has reversed quickly , with the FEAR factor rising  rapidly..NOT normally the way BEAR mkts start

Looking at the weekly charts

DAX

Weekly chart

Hovering at support 7570/7580

would need to break that significantly for more sustained correction

trend line support and horizontal support  seen better on DAILY chart

FTSE weekly

Daily chart

Bells are NOT rung at market tops

The press is turning bearish.
Is it a TOP?
Very unlikely..
Correction likely, but with all the press calling for a SLIDE the risk is more to the upside the the downside

Consolidation over?

DAX and FTSE have been consolidating after rally from November lows.  Is the consolidation finished?

It's looking increasingly like it.  Markets have given very little back; bears will be getting nervous, and buyers seem to be pressing.  The next rally could be the end of this run, but with quite a lot of bears around it may run further than expected.

FTSE

Looks like it has respected the channel it is in and bounced off the mid point

rally should head towards upper boundary 6426

DAX

seems to have found support at 7570

above 7726 should accelerate as bears give up

target minimum the highs..7860 though probably higher

NDX Nasdaq 100

After the big gap up traded in range 2700 /2760

very dependent on AAPL 

BUT has broken above that range

expect support 2750.2760

rally should carry eventually to 2890 or higher

Use AAPL weakness to buy dips!!

AAPL

Stiff resistance at 500

probably range bound 440 to 500

DJIA

 high level consolidation

everyone "expecting " correction

so probability is it heads higher..

a break above 14200 may accelerate

EURUSD top? AAPL bottom?

Euro has rallied off the 1,30 level quickly.

Is this it?

I don't think so..
1.33 was tested 3 times and pushed the rally back..NOW we are above that level, so we should now have support at 1.33 or close by.

How far can it go?

On the daily looks like 1.35 is reasonable short term target before a pullback

EURUSD daily

EURUSD weekly

On the weekly there is one rally followed by corrective action (Bull flag) no broken out and target could be as high as 1.40

AAPL daily chart

Still showing signs of positive divergence with price and RSI

Right angle triangle 

500 support (psychological level)

May get broken just because so many are watching that level.. a break may clear out the last weak hands and then rally, or it may start a new leg down..BUT it seems the NEGATIVE NEWS may already be priced in with the fall from 700.

click on links to see the stories

Sentiment wise everyone is negative, and yesterday front page of Market watch was FULL of bearish stories on AAPL, from cutting production to new competition from Linux based phones.  One positive story stating AAPL is cheap at 500 USD

APPLE

AAPL

Daily chart, seems to be setting up POSITIVE divergence (price makes new low, but RSI does not).

Sentiment: seems nobody likes AAPL at 500 !! Yet at 700 EVERYONE wants to BUY.

Some sayings which could be applied to AAPL now.

BUY in the red , SELL in the blue, ie Buy when others are selling and sell when others are buying.

Warren Buffet " Be fearful when others are greedy, Be GREEDY when others are fearful"

GOLD and SILVER

A lot of bearish thoughts out there..so sentiment is pretty negative

Weekly charts for both show that the BULL side may prevail, though with the sentiment so negative it may be that we get a quick fall and even quicker reversal just to mess with the BEARS!

GOLD weekly

Action look similar to 2008 after it made a high then, ie corrective so a plus for the bulls.
The RSI is low
MACD looks like it wants to turn up.

SILVER weekly

The bearish argument rests on the large DESCENDING TRIANGLE, which a majority of time breaks down ie a bearish formation.

However it can also be viewed as a CONTINUATION pattern, ie the trend that was in place before the appearance of the triangle will re-assert itself..in this case UP.

This chart makes me think we will have a quick fall, and then the reversal higher.

DAX question answered!

The DAX has now reached the FLAG target outlined in this prior post and today seems to be "eager" to head to the Head and shoulder targets at 5875/5850.  It would not be surprising to see overshoot especially the US markets open weaker today.

Interestingly Spain's IBEX has outperformed the last couple of days; finishing in positive territory whilst Germany's DAX and the US's DOW finished very weak.  The FTSE also showed relative strength on Friday but the market has been closed Monday and Tuesday (GSTQ!!) so will be interesting to see the open tomorrow.

Also interesting is SENTIMENT.  Now we are trading 10%+ lower from the recent highs, everybody wants to SELL!!  As usual the "crowd" will be right for a short time, and then get KILLED. It seems that we may be between "ENOUGH is enough, I'm selling and will never touch stocks again" and "See what did I tell you?"

Still looking to buy at the lower levels..accumulate position.

DAX 3 hr chart

Gold ready to shine>

When the media start Gold bashing it is usually a sign of a turn in fortunes.  Gold has been in a down trend since it;s highs earlier this year and in a sideways consolidation since it's all time high in Sept 2011.

It looks like it is breaking out of it's down trend; the real test will b a break above the descending line C, 1710 and then a break of 1800 would target new HIGHS.

DAX and FTSE update

Yesterday's rally was a bear rally.

strong, low volume, and serves to:

a. stop out the shorts
b. suck in the longs.

DAX

recently has been holding up pretty well, but not out of the BEAR woods YET..
A test of the lows at 6225 and a hold could be a nice BUY (tight stop)

IF it breaks the lows then we could see a PANIC move down to 6k or 5870
Nimble trading necessary as if it approaches the lower levels would be good LONG opp

FTSE

Similar to the DAX but with a clearer down move from the highs
Blew past the FLAG target (interesting that yesterday's rally went TO THE FLAG target)

5260 recent low WATCH this level !!
below targets:


5180 is the H&S target
5020 is KEY support
and below 4850


Unlikely to get to the lowest target, and at 5180 flattening out the shorts!
Below that look for longs

Ideas update AUDUSD

Aussie dollar...

Previous chart posted on May 8th 2012 full post here

Current chart

Rapidly approaching flag target at 9680

May overshoot a little

looking at longs from here

Sentiment seems very negative and conversely very positive for dollar

GOLD at support

Sentiment seems very BEARISH for GOLD and GOLD stocks..


The best time to buy!

Gold the metal is approaching support as shown in the daily chart.

NEM Newmont mining weekly chart

Approaching 61.8 % Fib retrace
40 % down from it's high at 72

DAX end of week look

DAX weekly looks to be close to a critical level; 6470, a break below and the UPTREND will be broken.  This could induce a short (in time) but sharp (in price) sell off which would

a. deflate the bullish sentiment
b. encourage the bearish sentiment.

Keep eye on sentiment , when the bearish side gets too noticeable, be ready to reverse and BUY!

For now sell rallies stop above 6785..or drill down to lower time frame for lower stop levels.

eg 30 min chart

Where are we?

Well "where are we?"  Well markets are near a TOP (IMHO) but today the equity markets are correcting, as is the fall in the YEN vs various currencies.  To get an idea where we could be, I look at the DAX, and even though ELLIOTT WAVE theory is not a good PREDICTIVE tool, looking back at where we have been can give us clues to WHERE we MAY be going !

so a look at the DAX daily chart


The preferred count is in RED (looks cleaner) which means we are now in a wave 4, and once this is complete we will head up in the last wave 5 to new highs (or equal if a truncated 5th)


If the count in BLACK is correct we should now start a LARGER correction or a change in trend to DOWN.  


looking at AAPL and equity markets it "feels" like we have just finished wave 3's (Wave 3: Wave three is usually the largest and most powerful wave in a trend  The news is now positive and fundamental analysts start to raise earnings estimates. Prices rise quickly, corrections are short-lived and shallow. Anyone looking to "get in on a pullback" will likely miss the boat. As wave three starts, the news is probably still bearish, and most market players remain negative; but by wave three's midpoint, "the crowd" will often join the new bullish trend. )

AAPL


This is classic wave 3 sentiment, prices rising rapidly, those wanting to get in on a pullback miss the boat and have to pay higher prices, analysts all getting bullish...crowd joining in big time!!

Almost there?

After the short correction last week, equities have jumped to the upside, and breakouts have occurred in DAX, NDX, and the DOW to name a few.  Notable in it's non participation the FTSE has been a laggard..and may have already completed a TOP..

May need a couple of weeks of distribution...

DAX chart daily


Arrows show possible topping action over next couple of weeks..anything LARGER and may even challenge the all time highs..

AAPL shares have soared and the bullish HYPE is growing which in the end will result in tears for the latecomers to the party.  Momentum s still on the bulls side, but AAPL has gone parabolic and when it ends parabolic moves usually give back a lot of not all of the rise.  For example SILVER..

compare to AAPL now

As with Silver the "analysts" and media extrapolated the recent gains so there was talk of silver going much higher, how silver was indispensable (in industry, health; silver lined fridges, washing machines etc etc).  Compare that to now how Ipads will be needed by everyone.  Problem is no one can see an Ipad alternative..but IT'S OUT THERE !!!

and here's SILVER after the parabolic move topped.

JUST SAYING!!

Correcto !

Well my gut feel as posted here was correct (so far)..

I LIKE BEAR moves..

They are normally quicker than BULL market moves..
Volatility tends to pick up so there  more intra-day opportunities

Just got to remember don't get married to the bear position YET..
Probably a good 10 % minimum correction and then it will be right to don the BULL outfit again!

Bear in bull clothes

I've been bullish since Oct last year but now am leaning bearish at least short term expecting a decent pull back in markets soon , after which it will be a buy opportunity again
Prob a 10 % decline
Everybody on mainstream financial news turning bullish so going to do opposite!!

Aussie dollar vs USD

Looking at the AUDUSD which has been the RISK ON RISK OFF indicator for a good while now..

It looks like it is in the process of forming a BULL FLAG and very near resistance between 1.07 and 1.08.  If it breaks out expect a test of the highs at 1.11, which should also coincide with an upside break out for equity indices especially US ones, which could be the EXHAUSTION RALLY before a sizeable correction (or dare I say it the TOP?)

As I speak S&P 500 looks to have broken the high at 1370 (cash 1373) and may encourage short covering and momentum players in the market (GOOD TIMING ..NOT!)

Waiting for the exhaustion rally..

Equity markets have been doing relatively little this week..Likely scenario seems to be an upside break out for most markets which will be received with euphoria on mainstream TV (think CNBC!), and will probably signal the start of the correction (markets do not go up in straight line forever).  The charts below show the case for upside break outs, also some warning signs in the tech sector (NDX, AAPL). I give it 70 % probability?

OR we fail to break out and then correct from here. 30 % probability?




FTSE
Finding support at high levels around 5910 after poking above resistance at 5920. If move gains traction then expect move to 6000/6100.

DAX 
struggling near resistance at 6930.  Possible negative divergence setting up on daily chart.  6930/6950 was support level various times during 2011.

Nasdaq 100 


Overbought under-performing this week.  Negative divergence forming.  Also main component AAPL, possible negative divergence.

APPLE

Negative divergence forming price/RSI.  Warning signal.  may get a new high but if unconfirmed by RSI sell off should be imminent.  

DOW INDUSTRIAL


struggling near 13,000 level.  Rising wedge formation (bearish), 13,00o psychological round number, and break out there could see 13100/13200 quickly, before a significant reversal probably targeting 12500