Author: BART

BART is a CMT and an expert a "advanced" pattern recognition used w/in the intermarket analysis discipline. He's also an accomplished Business Development Executive providing solutions to a myriad of business markets.

important ratios – revisited

For those who have been following me since I started this summer, you’ll find I spend considerable amount of time analyzing the RELATIVE STRENGTH of the STAPLES vs the S&P.  Why?  The theory is that, in times of volatility and/or bearishness the “big guys” (read: institutions) will rotate into a defensive posture such as staples.  We need “staples” to live … water bottles, food stuffs, toilet paper, toothpaste, etc.  This does not mean that they won’t go down it simply means they are stronger from a relative strength basis.  If the ratios is GOING UP then volatility and bearishness is taking place … if the ratio is going DOWN then “good times” are here and, generally speaking, it’s BULLISH.  Where I take it to another level is in the pattern recognition … by using advanced pattern recognition techniques across the entire circle of life I try to develop a thesis and then deploy capital in the most risk adjusted manner …

here’s a list of some of the staples work:

http://bartscharts.com//?s=staples

  • the week of October 07, 2013 we have an AMAZING BUY of the ratio that was precise in both PRICE and TIME.  It hit, the market sold off but it was subsequently taken out and the PATTERN FAILED.  End result: BULLISH for the stock market.
  • it was also noted, that the .02 level was a potential target.  at the beginning of the new year this target was hit and, while it held intraday it has been subsequently been defeated.  In my mind, I try to stay away from intraday spike highs or spike lows …however, if we get a weekly close below a pattern level THEN, probability says it’s a failed pattern. Take a look at the below chart … we have a weekly close below.  End result: BULLISH for the stock market.
  • so … while we aren’t too far below the level depicted (1.27 and .786 overlap – usually strong support) I can tell you we need to get back up above and close above on a daily basis that level OR this S&P move could continue.
  • also, I put my trust weekly 14 period RSI in to check out the “zones” for it’s support or resistance … I went back as far as my data would allow and I can tell you that 1) we have bullish divergence on the DAILY chart and on the weekly this is the lowest the RSI has ever been.
note, do we have two patterns failing on the important XLP/SPX ratio?
note, do we have two patterns failing on the important XLP/SPX ratio?

 

note at major turns, the ratio gives a good idea of inflections ... it needs to turn up (xlp/spx) for the bearish case
note at major turns, the ratio gives a good idea of inflections … it needs to turn up (xlp/spx) for the bearish case

the other ratio we have looked at is the Walmart Greeter ratio … same thought process, except this is a single stock.  The “whole world” loves WMT so if the volatility comes back, THEN, the “big boys” will rotate to that defensive hallmark of Walmartians.  Guess what, it completed it’s pattern TODAY and, should go any lower …if the bear case is to be credible w/ our ratio’s.  Here’s the last post on the Walmartians:

the WMT greeter and inflection points

Walmartians relative strength vs the SPX
Walmartians relative strength vs the SPX

 

pattern complete
pattern complete

 

PUNCH LINE: these patterns are complete.  for the bears to have a chance, they SHOULD NOT fail …..

Heads up on Baltic Dry Index …

the headlines last Friday were about the US jobs report …however, there was an even more curious and eyebrow raising event occurring .. the Baltic Dry Index crashed 11.4% on Friday in it’s single biggest percentage decline on record.  It exceeded it’s last record, which occurred in October 2008. When this indicator rises, all is well and the party continues.  When it drops … well, you don’t hear much about it. As an FYI, the move w/in the Baltic Dry Index is the worst start in 30+ years.

stay tuned …

 

 

 

Airlines and the Recovery …

Over the past couple weeks I have had the AMAZING pleasure to answer numerous emails/phone calls regarding the AWESOME “pay out” of some of my buddies who fly for the Airlines.  They are either buddies who I flew w/ in the Navy or classmates or, in one instance my best friend.  To a person, they have all essentially asked “should I hold em’ or fold em?”

A GREAT QUESTION and one that I DO NOT take lightly ….but, as an expert at PATTERN RECOGNITION I am trying to be as objective as possible. Ultimately, it will be there decision.  Here we go:

Equities:  from a macro perspective, I see the US Equity market as very precarious, to say the least. just go back and read the posts that I have been providing …I am one of the few remaining BEARS out there.  I have also been wrong about the Equities for about 1.5+ years.  The length of this UP move has been amazing and when it ends, it’s going to be ugly. That I know … however, the SHORT of GOOG at 925 got SMOKED.  The SHORT of the DOW got SMOKED … I am humbled and licking my wounds but I am not deterred.  The equity market is a house of cards … until it’s blow over, run w/ it but certainly be ready to bail once the signs appear.  IF YOU CAN …

Airlines: With that diatribe complete, I see the Airline Index as being a proxy for the “recovering” economy.  Business Travel, Leisure Travel, Fuel prices, etc … they all play into the profitability, however, the airlines are acting like well run businesses.  They have cut costs (my buds have really taken it on the chin), trimmed the fat and are lean and mean.  That can’t be taken for granted … but in the context of where we are and what we do I see another 5-10% higher in the index at best before a major correction set’s in …CONCLUSION: if granted stock in the merger/bankruptcy ruling, then take a majority off it out of the market and 1) invest in tangible, scarce resources, 2) invest in you or your family w/ education or specific skill sets or 3) start a business or help someone start a business.

Also, take note, since the low in 2009, the Airline Index and Financials (ETF: XLF) have been almost 100% synced.  Therefore, keep a watch on the Financials and if you see them start to crack, the probability is the same will occur w/in the airline industry.

Gents, that’s what I see … take some profit man and if your a gambler, then roll for the next 7-10% if you can and then take some profit …but, as I’ve been saying for a quarter – CAVEAT EMPTOR.

Main20140111195151 Main20140111183347Main20140111195953

TWTR … BUY PATTERN appearing but caveat emptor

here’s the post on the fund that tracks Social Media (SOCM)

http://bartscharts.com/2014/01/04/social-media/

it is showing signs of a 5 wave top … now, we simply don’t know if this is the 1st of 5 to come or it’s the end of the emotional euphoria over social media.  perhaps another high flyer can give us a sense?  TWTR is showing the BEST BUY pattern of the bunch.  the entire 50-56 area, w/ 54 being especially important, is key support.  I have put a wave count that uses the IPO price of 26 as the beginning and then off to the races.

here’s my last two witter posts:

http://bartscharts.com/2013/11/14/twtr-first-sell-pattern-coming-into-play/

http://bartscharts.com/2013/11/09/twtr-if-you-shorted-it-at-the-pattern-completing-at-50-you-would-be-up-20/

obviously, who ever got in on the TWTR IPO doubled their money so good on them … interesting to note, and shown on the chart below, is the .618 price projection of the SELL PATTERN back around 44 held price EXACTLY and then off we went. (38.81)

just like the last JPM Morgan (JPM) post – trade what you see.  I see a BUY PATTERN appearing on TWTR.  If it WORKS (I don’t know if it will or won’t) then we could go up and see new highs.  If it fails and goes below 50, then this count is WRONG and it’s back to the drawing board.

take note of the SOCM post – it looks due for a big correction – that is – the entire space.  So, just make sure to keep an eye on these levels …it’s a BUY PATTERN but I still recommend CAVEAT EMPTOR.

TWTR BUY PATTERN
TWTR BUY PATTERN

Check this out- amazing whitepaper on wealth creation!

Wealth is Created in Private Markets

Had the opportunity to read this informative philosophy from Bill Militello; www. militellocapital.com  A must read! – Bart

look for a close in/around 4106 on NASDAQ tomorrow …equality of TIME and PRICE

IF, we can get a close tomorrow in/around 4106 on the NASDAQ THEN we have an equality “square out” of price and time … 4106 PRICE and 4106 calendar days is the “reason” we are banging around this area of the NAZZIE.  the LOW TIME squares out the HIGH PRICE.  Just keep an eye on it …also, some MAJOR resistance that is coming from the all time low in 1974.

REMEMBER – this doesn’t have to happen.  It’s just another tool and something to be aware of … combined w/ multiple confirmations PRICE and TIME square outs can be pretty powerful.  Let’s watch price action this week …

4106 PRICE and TIME
4106 PRICE and TIME
long tern LOG trendline
long tern LOG trendline

A revisit to GOOG …

if you go back some posts you will find a SHORT on GOOG was triend in/around the 922 area based on the classic AB=CD or thunderbolt pattern.  It held from May to October and then EXPLODED higher … ouch on that one.

also, if you go back some posts you’ll find the 1080 ish level was next target zone … we went higher than that but now are at another key 1.732 extension (which is a big extension – square root of 3) and it appears to be holding.  NOT SURE WHAT IS GOING TO HAPPEN but here are some thoughts:

  • MONTHLY historical volume has FALLEN since the IPO.  The volume at the bottom of the monthly doesn’t lie … it has steadily gone down.
  • the count shown is actually a bullish count.  the largest correction w/in GOOG could take it down to 625.  it shouldn’t go any lower becasue (4) can’t go below (1)
  • the GAP should be targeted initially and, being 75 points wide, should offer MAJOR SUPPORT but, if the old adage rings true, it should get filled, completely.  we’ll see about that.
  • my contention is if that gap gets closed and broken (they are called windows in the candlestick terminology) then a vacuum into the 600 level doesn’t seem that unlikely?
  • a nice, clear wave structure looks like 5 up on the daily are complete.
  • note the daily RSI … we do have bearish divergence but we also have the classic M formation and when that neckline of the M gives away, it usually spells a movement upcoming. conversely when we have a W bottom, it’s the breakaway to the top that takes out the neckline and it moves (explodes?) higher.

stay tuned…forecasting a move lower on GOOG (which could be rather sizeable) but ULTIMATELY one which should be bought to make a move UP and THREW these all time highs … could take a while.

questions to me.

B

GOOG MONTHLY w/ volume
GOOG MONTHLY w/ volume
GOOG Daily w/ RSI
GOOG Daily w/ RSI

 

FXI … wonderful set-up coming. be patient ..

we have taken a look at the FXI and it’s set of “lower highs” since 2011.  we have also taken a look at it’s relationship to Copper and how they have ebbed and flowed w/ synergy. what we haven’t done is step back and analyze the BULLISH case for the FXI.  YES, I am posting something that could be a major BUY set up.  However, it still needs to fall a good 50% in nominal terms.  from 37 to 22.

why the bullish case?  go back to the low in 2009?  From 19 to 48 we can count 5 wave UP.  In the context of wave counting that is either a wave 1 or an A wave that will form a 5-3-5 correction.  labeled a-b-c.  either way, we have a nice BUY in/around the 22-25 area that, if the count is correct, take out 48 and perhaps even higher.

so, stay tuned.  w/ MAJOR long term patterns occurring w/ in the US and Global Equity market certainly appears a good thump could be coming but what an amazing set up to BUY…

FXI BULLISH opportunity
FXI BULLISH opportunity

Social Media …

so, Social Media has changed the landscape of interaction on a personal, business, family, relationship and “you name it” level….frankly, I love it.  that being said, it’s finishing a PATTERN and it’s time to step aside.  Now, just because $SOCM has finished an 8/8 octave move and a 5 wave count doesn’t mean that it’s done for good.  I just think it’s done for now …the 5 wave sequence might very well be 1 of 5 more to come.  Just believe it’s RISKY to be getting in here/now. either way, here’s the patterns.  Also,, note the volume increase at the end of the octave move and a “Ray Charles” count …

SOCL MONTHLY
SOCL MONTHLY
SOCL 5 wave count complete. NOTE volume
SOCL 5 wave count complete. NOTE volume