Good (Saturday) morning, everyone. I was too wiped out Friday night to do a post, but here I am.
In spite of me being very "on" about gold, oil, and the dollar last week, it was still pretty much a grind in terms of portfolio value. In order to really blast my value higher, I need the "one-two punch" of both energy/oil/gold falling and equities falling. That will supercharge everything, based on how I am positioned.
Crude oil is really interesting. Although I didn't draw the neckline in the chart below, it cuts across about the $123 level. I'd say we're heading for the psychologically significant $100 level on oil within the next month.
I don't really look at commodities very much, but it is pretty remarkable just how fast commodities across the board have collapsed. I'm sure you recall earlier this summer how everyone was running around, screaming about exploding food prices, rationed rice at Wal-Mart, mega-wealthy farmers, and so forth. You could probably pinpoint the peak in prices across the board with all the squealing. Since then, things have absolutely plummeted. Just look at corn, below – from about $800 to $500 in a matter of weeks. I daresay the collapse in prices across the board has a long way to go.
As for equities, we continue to push into increasing complacency in bull-land. The VIX range since "the new market" began (that is, last July) has been from 16 to 37. We're at about 18 now. We are getting near the lowest levels of the VIX within this range. Historically, this means a nice surprise is around the corner.
The surge in equities Friday pushed things to very nice shortable levels. I also find it interesting to note how volume zoomed higher during the plunge in June and early July, and it has been withering away all through August. The market really doesn't know what to do with itself, and I think a lot of people are starting to lose interest. A watched pot never boils, and bulls and bears alike are growing weary of watching.
Zooming in to the intraday level, however, you can see how technically perfect all this price action has been. An ascending wedge, a break, and a perfect retracement to the underside. I would be very, very surprised (and disappointed) if we didn't see a down day on Monday. (this is Gary's cue to tell me that the 25th of the month is usually an up day 97% of the time…..)
My "short of the year" $UTIL has been higher, naturally, due to the recent strength in the Euro, but I think this is about to change. I say again: I think interest rates are heading much higher, the dollar is heading much higher, and the $UTIL is heading 20% lower.
Indeed, if you want a chart expressing the potential strength of the dollar, look at USD/CAD, below. If this was a stock, wouldn't you want to be long? Just wait until that descending trendline is broken. The push above the horizontal line you see was major news.
The IWM, on which I bought puts late Friday, also pushed nicely to its Fib level. I've boldfaced the two critical levels. We are just going to continue to watch (a) paint dry; (b) grass grow; until such time as that low Fib is snapped.
As for the rest of the post, a variety of charts I think bears may find of interest, some of which I've never mentioned before. Have a good weekend, and I'll see you Monday!
