Dow Jones Transports – almost parabolic.

September 17, 2014: below you will see some of the continuing work I have done on the transports.  Quite simply, an incredible move …

there are, however, some things we can learn from this from a PATTERN perspective:

  • my “job” as a PATTERN chartist is to do my best to find the patterns and then present them to you, my readers.  (thanks for the following also)  As a PATTERN chartist you are NEVER wrong.  The PATTERN works or it doesn’t it … it has NOTHING to do w/ you.  On long term time frames, well, the patterns are “easier” to construct.  An all time low to a “former” all time high gives you AMAZING projection capabilities. In fact, it is one of our easiest PATTERNS to form – the “zig zag or AB=CD” PATTERN.  Folks this formed on the Transports and got SMOKED … not even a token of resistance.  Wow …
    • when a “zig-zag” or “AB=CD” PATTERN fails it will usually go to 1.27 or 1.618 of the PATTERN.
  • so, what do we have “now”
    • note the all time low of 13.43 was on July 05,1932 a mere 30,024 days ago.
      • using that low and a 1.27 AB=CD we get a target of 9149
    • note, the “old” all time high in 2000 to the 2009 high was a 1.8877 extension (musical note).  sometimes, the PATTERNS repeat the same harmonic. NOPE not today … blew threw it.
    • also, you can see the blue arrow projections and the “minimum” objective of the head and shoulders BULLISH top that formed comes in around 8880

      some other projections shown for the Transports
      some other projections shown for the Transports 

Since this move is going PARABOLIC it’s sometimes helpful to bring out the old geometry … this is simply the technique of how to draw a circle from 3 points.  (full disclosure: I have NO IDEA where the GRAVITY CENTER is going to end up.) Note, when using this technique our gravity center is, basically, the zone for the past major top in the Transports.

finding the gravity center
finding the gravity center

 

now that we have found the gravity center we can get to work ….

  • note, the gravity center (blue horizontal line) is the “reason” for the major tops
  • note from 1994-1999 price “hugs” and rolls right up into the top. that tells us we have a nice gravity center …
  • note also that when we draw, from the gravity center, harmonic trend lines we find the “major reason” for support and resistance …
  • when projecting from a neckline, remember, the depth of the neck is how to project UP (in this case) to project a minimum target. (again, it’s minimum target, NOT the target or though it can be)
gravity center harmonics
gravity center harmonics

CLIFF NOTES: this is an incredibly powerful move.  Some more targets are coming into play as noted above.  when the PATTERN around 7600 failed the vacuum up was to be expected.

 

 

June 12, 2014: more than likely, you saw my long term transports post a couple months ago and as this target got attacked I was truly looking for a “little” resistance.  I mean, come on, it was the ALL TIME LOW to the “old” ALL TIME HIGH and we have a 1.618 extension RIGHT ON TOP OF THE LEVEL.  As patterns go .. this was a doozie.  However, as patterns go, it failed.  Folks, it didn’t even put up a fight …

so, I hit “erase all” on the chart and, quite frankly, left it alone.  the joy of patterns and charting …

I went back to it tonight and I still think we have a pattern forming so I went back and said “self, what did it do the last time we surged past an old high and into a new high?  Well, guess what?  It surged thru the 1.618 extension in 2007-2008 an stopped on the 1.8877 extension!  TILT … 1.8877? Well, that is exactly a major seventh ration in the equal octave scale of music. So .. perhaps it did that again?  Please see below …we smacked into the minor and, quite frankly, the major is still out there.  However — this sure looks like a MONTHLY 3 DRIVES TO A TOP pattern.

Keep the mindset (defensive) of ‘breaking a swing low’ …until we do break a weekly or monthly swing low this puppy will still keep running but if we break 2 or more weekly swing lows … we could see this thing drop to the old highs at 5600.  Stay tuned …

What a run! Hugh?

Main20140612220624 Main20140612221917

Also, please be advised that a reader corrected me on the price and time of the old time low.  I did some more research and it appears the low was in the 1930’s around 30 points lower than the one in the late 1800’s. Negligible when we are up at 8000 BUT extremely important.

When you look at the Yahoo Finance Chart below – try to disregard this is the entire life cycle of the Transports – and just look at the symmetry of the 3 drives to a top pattern that is appearing.

 

notice the decreasing volume and POTENTIAL 3 drives to a top
notice the decreasing volume and POTENTIAL 3 drives to a top

 

Carrier Aviation Strike Planning and Investing …

Have seen the recent TWEETS by my friend and fellow blogger JC about Gasoline Futures and, while I don’t trade it, I am interested in it so I thought I would give it a shot … let’s face it, I owe JC a lot because he got me blogging a little over a year ago.  Now, gasp, I have around 250+ people who check out what I say. One day … it’s will be 2500 and then another 25,000.  So, this is pretty cool …

Before I throw some Voo Doo on the page I’m going to address some of the recent flow on TWITTER about risk and how, your not going to be right every time .. period.  That’s why I have found the holy grail.  PATTERNS tell you where your WRONG every time!  🙂

People sometimes ask me – how right are you on your calls/trading?

Me: “100 percent”.

Them: “You can’t be right 100% of the time.”

Me: “100% of the time I have defined my risk and know where I’m wrong”

  • if they don’t get it … they don’t trade
  • if they do get it, then a meaningful conversation or, at a minimum, a drink or four follows.

So, why is investing/trading like Strike Planning?  Because you spend TONS of time and cover the most MINUTE details and plan every thing to the SECOND and guess what?  When you launch … EVERYTHING changes. I mean everything … I’ve been known to “hold court” at a happy hour or three and I could fill hours telling you some of the craziest stories about how the PLAN CHANGED as soon as wheels were in the well …

How is this like investing?  Well, as your going to see below, some considerable time and brainpower was/is spent on Gasoline futures … a gameplan has been developed and it will be followed BUT INVARIABLY the ENTIRE DARN THING IS GOING TO CHANGE!

Here’s the key …

“Adapt and Overcome !!!” – the true saying of Naval Aviation

Natural Gas:

  • IF we are going up THEN a case can be made that we have finished a triangle (labeled a,b,c,d,e w/ light blue trend lines and that is a continuation pattern)
  • THIS IS WRONG if the most recent swing low of today goes any lower on close.  If the triangle is complete, then the move up was 1 and this move down is 2 and according to the rules … 2 can’t go below 1.
  • We have 3 reasons why the 2.455 held … retracements and “TCB” Taught to me by my mentor, Mike Jenkins, the TCB takes the TIME of the move up and converts that to the PRICE of the correction.
  • One last, take note of the bold/dotted blue/grey arc.  As you can see, the BIG MOVE DOWN was pretty violent (orange arrow) by using that move down as a radius, we can swing an arc and then use the 3 o’clock position as TIME which will represent the pyschology of that big move down has been digested and it’s time to go back up.  Depending on the thickness of the bar and exact geometry it can be very powerful. All were trying to do is say it’s either “now” or “soon” that the move DOWN has been digested in TIME …
Nat Gas BULLISH case
Nat Gas BULLISH case

Now, go down to a daily and the KEY HERE IS THE MOST RECENT HIGH at 3.1500 WENT UP TO THAT HIGH!  Folks, that’s a classic B wave (3 waves in a B wave) and what follows is  a devastating 3rd wave.  IF this analysis is correct then the C wave of the A-B-C correction should be ending here/now.  (note it’s exactly 2.71828 *a which is the natural log and basis of the pyramid geometry – I digress)

GASOLINE FUTURES continuous contract - DAILY
GASOLINE FUTURES continuous contract – DAILY

so, what’s going on down in the trenches ..? here’s the 5 minute chart –

5 minute chart
5 minute chart

 

UGA DAILY
UGA DAILY

there you have it … a red box of risk.  take it or not ….but either way, as soon as you enter the market, everything is going to change because every market moment is unique.

rock on, ok?

have a good weekend …

PS — this could be totally wrong and, well, that’s OK w/ me because we have defined the risk. Do you think this aircrew expected to be flying along, hanging out and have his WSO eject and leave him w/out a canopy?  Probably not …  🙂

buy me a martini and I'll tell you the story on this one ...
buy me a martini and I’ll tell you the story on this one …

 

Wheat – pattern from the 1970’s complete

CLIFF NOTES: charts below show the SAME PRICE PATTERN from 1970 is complete … we do have some pretty BIG candles going into the level so “waiting” and letting the market prove it is advised.  That being said – we have bullish divergence on a weekly basis and we have a PATTERN complete so put on your radar screen.  If we go thru 473’2 then believe this PATTERN is toast.

Main20140912090807 Main20140912091335

Chinese Yuan Pattern complete ….

 

09/11/2014: for all intensive purposes this BUY USD vs CHINESE YUAN pattern is complete … WATCH this closely as we continue to monitor the GLOBAL flow of funds.  I’m not a fundamentalist (I have nothing against it, I’m just not smart enough to understand it – remember – I draw pictures w/ crayons) but I am aware that 100’s of BILLIONS of dollars are closely aligned to the “EASY” (my emphasis) LONG Chinese vs USD and if we get another UP move (YUAN weakness) there could be nice little unwind ….

for now, all appears quiet on the Chinese front but don’t discount this patterns, as the YUAN could weaken big time and in the global flow of funds that is a big deal.

PATTERN COMPLETE - BUY USD vs CHINESE YUAN
PATTERN COMPLETE – BUY USD vs CHINESE YUAN

 

 

09/08/2014 – let’s not forget this looming shot across the bow.  It’s close/at our BUY level so watch this Currency Pair closely. The “trend” is DOWN so expect the levels shown to fail but if they don’t …that could be a “big deal.”

Chinese Yuan at/approaching key levels
Chinese Yuan at/approaching key levels

 

For years institutions have “bet” on the continued strength of the Yuan as a “safe bet.”

That might have all changed around mid January of this year … from Jan-March the Yuan weakened appreciably.

To quote one news article – “this move is particularly notable, as the yuan has broken through the 6.20 yuan per dollar mark. At that point, some investments that bet on a strengthening yuan should start to incur “sizeable losses,”  (my emphasis added) according to foreign exchange strategists from Bank of America Merrill Lynch.”

Folks, the pattern shown below is a BUY pattern which, if correct, will lead to another move HIGHER – weak Yuan vs the USD.  Right now, as we move down from the notable move UP perhaps all seems OK.  Put this into the context of the recent sell-off in the equity markets —  I’m guessing here, but I bet it’s “safe” to assume 100’s of billions of dollars are tied up in some exotic way for the institutions to grab any yield out there w/ regards to the “safe bet” on the Chinese Yuan.  If this thing starts going back up again then my hypothesis (only a thought) is the “institutions” are going to try and unwind these positions – maybe in a hurry.

There are many ways countries muscle their weight around … cyber, traditional weapons, deterrence, etc.  In the end, these are usually reactions to the global flow of funds.  The next move by the Chinese will be extremely interesting (folks, they control (manipulate) the currency level – it’s not a true float) on the global scale.

If you don’t think it’s true then just think of the masterful move by Mr. Putin.  Right before an invasion of Ukraine (maybe) the Russians sign an order to BUY BILLIONS of dollars of planes from Boeing.  Now isn’t that interesting …. (http://www.reuters.com/article/2014/08/06/ukraine-crisis-russia-airlines-idUSL6N0QC3JK20140806 )And, why they are at it, let’s give Snowden another 3 years in our country. CHECKMATE …  China, your next move please?

WATCH CLOSELY ….

B

 

on pressure from the US (and others) the YUAN has steadily strengthened for years ... is that over?
on pressure from the US (and others) the YUAN has steadily strengthened for years … is that over?
BUY pattern appearing on the Chinese Yuan vs USD (if holds = YUAN weak)
BUY pattern appearing on the Chinese Yuan vs USD (if holds = YUAN weak)

dollar strength foldback up move – complete

September 9, 2014

CLIFF NOTES: the mirror image foldback that we have been following has, for all intensive purposes, completed the move up.  Expect some dollar weakness and, believe it or not, the entire leg down noted by the red arrow to the left of the chart could be a possibility.  the key point – when mirror image foldbacks fail, they usually fail at the key inflection points so watch the current levels on the USD and the levels on the Pound, Euro, Swissy, Loonie, Chief, etc. for signs of dollar weakness.

Dollar Index Foldback - next leg complete
Dollar Index Foldback – next leg complete

as a side note, I’ve added a long term chart of the US Dollar that began the entire dollar strength run back in 2011 …it’s a beauty.

long term US Dollar Foldback
long term US Dollar Foldback

 

 

May 08, 2014

CLIFF NOTES: I thought I had posted this once before .. the POTENTIAL mirror image foldback on the US DOLLAR.  I have gone thru my charts and I can’t find it but I know I sent it to Larry P so … here it is.  Also, go back and look at the UUP (Dollar ETF) chart that we looked at for the .886 retrace and “one last hope.”  Well, today’s action was pretty impressive …is the dollar bull thesis still alive?  Shoot, I don’t know so I sit on my hands, STILL.  Keep an eye out on the dollar … perhaps it set a low?

Mirror Image Foldback
Mirror Image Foldback

 

the other thing that is interesting is the FRACTAL pattern that appears to be working itself out on a longer term chart …

Main20140508214324

 

Chinese Yuan Pattern forming ….

09/08/2014 – let’s not forget this looming shot across the bow.  It’s close/at our BUY level so watch this Currency Pair closely. The “trend” is DOWN so expect the levels shown to fail but if they don’t …that could be a “big deal.”

Chinese Yuan at/approaching key levels
Chinese Yuan at/approaching key levels

 

For years institutions have “bet” on the continued strength of the Yuan as a “safe bet.”

That might have all changed around mid January of this year … from Jan-March the Yuan weakened appreciably.

To quote one news article – “this move is particularly notable, as the yuan has broken through the 6.20 yuan per dollar mark. At that point, some investments that bet on a strengthening yuan should start to incur “sizeable losses,”  (my emphasis added) according to foreign exchange strategists from Bank of America Merrill Lynch.”

Folks, the pattern shown below is a BUY pattern which, if correct, will lead to another move HIGHER – weak Yuan vs the USD.  Right now, as we move down from the notable move UP perhaps all seems OK.  Put this into the context of the recent sell-off in the equity markets —  I’m guessing here, but I bet it’s “safe” to assume 100’s of billions of dollars are tied up in some exotic way for the institutions to grab any yield out there w/ regards to the “safe bet” on the Chinese Yuan.  If this thing starts going back up again then my hypothesis (only a thought) is the “institutions” are going to try and unwind these positions – maybe in a hurry.

There are many ways countries muscle their weight around … cyber, traditional weapons, deterrence, etc.  In the end, these are usually reactions to the global flow of funds.  The next move by the Chinese will be extremely interesting (folks, they control (manipulate) the currency level – it’s not a true float) on the global scale.

If you don’t think it’s true then just think of the masterful move by Mr. Putin.  Right before an invasion of Ukraine (maybe) the Russians sign an order to BUY BILLIONS of dollars of planes from Boeing.  Now isn’t that interesting …. (http://www.reuters.com/article/2014/08/06/ukraine-crisis-russia-airlines-idUSL6N0QC3JK20140806 )And, why they are at it, let’s give Snowden another 3 years in our country. CHECKMATE …  China, your next move please?

WATCH CLOSELY ….

B

 

on pressure from the US (and others) the YUAN has steadily strengthened for years ... is that over?
on pressure from the US (and others) the YUAN has steadily strengthened for years … is that over?
BUY pattern appearing on the Chinese Yuan vs USD (if holds = YUAN weak)
BUY pattern appearing on the Chinese Yuan vs USD (if holds = YUAN weak)