Pushed to the Brink

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October is turning out to be far more “trick” than “treat” for equity bears.

At the midpoint of the month, things looked sensational. Stocks were breaking down left and right, and it seemed that we had finally encountered a sea-change in the market.

Since then, however, stocks have exploded higher with a gusto that I underestimated. I certainly expected a bounce, but nothing of this degree. Much worse, it seems that the cessation of QE (announced yesterday) has done nothing to slow the equity bulls down.

This kind of environment can really mess with one’s head. Let’s take a look at the past couple of days on the ES: (more…)

Gold Update…Santa Rally or Bust?

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I last wrote about gold in my post of October 9th.

Price is slipping back to its critical triple-bottom support level of 1180, as shown on the 5-Year Weekly chart below. I’m watching for a break and hold below that level for a possible re-test of the 1000 level as I mentioned in that post…particularly if the SPX:VIX ratio breaks and holds above the 150.00 level, as I mentioned in my post of October 24th.

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Interest Rates

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Interest rates utterly collapsed at the equity market’s bottom on October 15th, and they have soared since then (as have, obviously, stocks). We are nearly a monstrous overhang at this point, however, and my view is that rates will resume their downward fall soon (with bonds, naturally, strengthening the whole while).

1030-tnx

The Flagging Dow Industrials

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Only three charts today as I’ve had a lot on this morning.

One reason I do my optic run views on my seven main US equity indices is because while SPX is often the technical leader, by which I mean not that it moves fastest, but that it is delivering the cleanest trendlines/patterns and fibonacci retracements, that is not always the case. That leader at the moment is the Dow Industrials, and my first two charts will illustrate why that is.

The rising wedge on SPX that I tweeted on Tuesday night hit the very well defined wedge resistance (tweeted at the high yesterday) and then broke down on the frankly very predictable not really news that QE3 had ended in October as planned, and the usual assurances that the Fed would be fighting hard to keep interest rates near zero until the stars fall from the sky. Now those of you who have been looking at my work closely for a while might have wondered why I was giving strong weight to a pattern on SPX that was mediocre due to the poorly defined support trendline, and the answer to that question is of course that ………. SPX 15min chart: (more…)