Schumpeter’s wave of Creative Destruction just starting in Germany … short surf is UP!
Posted on September 25, 2014 Leave a Comment
Voo Doo principle: a pattern appeared and at the PRECISE level the BUYING STOPPED and the SELLING took over … believe it? or not?
Here’s what I do know:
- ANYTHING can and will happen …
- YOU DO NOT NEED TO KNOW WHAT IS GOING TO HAPPEN NEXT TO MAKE MONEY
- There is a random distribution between wins and losses for any given set of variables that define an edge … (MY edge is PATTERN RECOGNITION)
- An edge is nothing more than an indication of a higher probability of one thing happening over another …
- EVERY MOMENT IN THE MARKET IS UNIQUE
- Thank you Mark Douglas for Trading in the Zone.
Here’s what I SEE w/ regards to the German Dax – PATTERNS are complete across long time frames. IF (the big IF) these patterns work (they sure seem to be) THEN it is very bearish.
GERMAN DAX Monthly AB=CD from all time how to all time high – COMPLETE
Butterfly #1 on German Dax
butterfly pattern MONTHLY GERMAN DAX number 2
EWG ETF for German Dax
and, here’s the ETF w/ the “SEE PATTERN APPROACHING” back in December 2013
the SELL PATTERN approaching
CLIFF NOTES: as I’ve said for the past 6 months (it hasn’t even been a year blogging!) this is a PATTERN RECOGNITION blog. And, guess what … we have ANOTHER PATTERN from an all time low. Here’s the pattern …
German Dax
EURO and 138 …
Posted on September 24, 2014 Leave a Comment
usually try to stay away from blindly buying or selling the .618 retracement … that number is the usual first introduction of people using leading indicators and sometimes it works and sometimes it doesn’t and people eventually say “hogwash” and run away from these techniques — GOOD! however, when we have projections or overlapping patterns then I get interested in this level. here’s the .618 retracement overlapping patterns:
overlapping patterns into .618
Daily EURO look
here’s where the 138 gets interesting ….
1) the Euro vs USD, believe it or not, has been down 138 days. and, having seen my past posts on the 66.6 months for the S&P and 1920 days since the low and the concept that PRICE equals time then if we do a calendar day count from the last high on the EURO on May 09, 2014 we get 138 days. How do we convert that to PRICE in the FX ? Well, we really don’t care about decimal points in the world of vibrations .. we care about the NUMBERS so convert like this:
- HIGH was 1.3989 or 1.4000 (work w/ me people)
- 1.4000 = 4000
- 138 days = 1380 (also pretty close to 1382 or 1.382)
- 4000-1380 = 2620
- 2620 = 1.2620
- 4000 square root = 63.25
- (63.25-12)^2 = 1.2626
so, not trying to be a hero here BUT back when the dollar was at 79 I was recommending the BUY … but now, everyone and there brother is lighting up the twitter universe, CNBC, Yahoo Finance, Marketwatch and blah blah around the DOLLAR DOLLAR and the bearish sentiment for the EURO is massive … a perfect time for the EURO to bounce ….
Carving out a bottom folks … and, while I remain extremely bullish on the dollar am expecting the classic 3 wave corrective movement so … am going to let the .618 or .707 (square root of 2 – 1.4142, 1/1.4142 = .707) level prove it and then look for an OPPORUTNITY to BUY the pullback that SHOULD be a classic 3 waves …
EURO and the number 138
revisiting the XLP/SPX ratio … AGAIN
Posted on September 23, 2014 Leave a Comment
folks, bringing this up, again, because this divergence is MONSTROUS.
in order to show the divergence and how something is “not quite right in toon town” I’ve actually inverted the ratio to show the S&P 500 on top this time. t
the only reason is it shows the amazing divergence present .. when you look at the chart below notice the perfect synchronicity between the S&P500 and the S&P500/XLP. but notice around 2011, the dance breaks up … that’s a big deal to me and while it’s true you obviously can’t fight the fed and it’s different this time what I believe it tells us is the “smart money” has stayed in staples or haven’t jumped into this amazing bull market as much as anyone thinks.
notice the divergence!
now, here’s the same ratio but this time we have the STAPLES has the numerator … note, when this ratio BOTTOMS the S&P 500 TOPS and when this ratio TOPS the S&P 500 bottoms. EXACTLY … the theory is the institutions move in/out of “defensive” names during times of volatility so we expect the relative strength of the XLP’s to increase during bear markets / sell-offs (the ratio goes up) and decrease during bull markets/rallies (the ratio goes down)
the ratio HAS NOT GONE DOWN during the past 2 year rally phase … tells me the institutions have kept their powder dry.
XLP / SPX – note divergence and NO NEW LOWS on the ration ….
just a matter of TIME …
IWM it’s almost been a year since our warning
Posted on September 22, 2014 Leave a Comment
9/22/2014 – the IWM has been getting a lot of news lately and well it should. just wanted to point out the below charts that warned of 113-120 being very stiff resistance if not a TOP back in November of last year … sure looks like distribution but, knowing nothing of the fundamentals I will reiterate over and over and over and over (get the picture) on my blog that’s it’s simply a PATTERN. Sometimes they work, sometimes they don’t. Manage the risk ….
note the same fractal present as 2007 .. still believe the 108 handle will be key to supporting either the bulls or the bears …
IWM WEEKLY
11/26/2013: the “zone” of 113-120 should be very strong if not the “top” for a while … if this pattern fails, I’m going into gardening.
IWM
$BABA and Ripley’s Believe it or not …
Posted on September 19, 2014 2 Comments
folks, this is the largest IPO in history AND it’s got the beat of music to it and, hopefully, the charts below will prove it .. if you don’t believe it, that’s cool. you might not believe me, but these initial “geometric seeds” will be responsible for EVERY future turn in this stock …!
as soon as $BABA opened I went to the charts to watch the action ….if you go back on my twitter feed you’ll see I said look for turns in around 90 minutes. WHY? well, folks, defy the human condition and do the work … PRICE equals TIME and TIME equals price. at major turning points THERE IS ALWAYS A CORRESPONDING RELATIONSHIP with a TIME AND PRICE confluence. the HARD part is that it is either EXACT or it’s a multiple of 1/1oth, a square root or music and geometry but, trust me it is there … period.
in the chart below there is a lot going on …
- the open was 92.65 but during the trading minute shown a low 0f 90.06 was made….the chart tells me.
- Square Roots and their inverse are at the root (pardon the pun) of ALL CYCLE WORK.
- this is based on music.
- the frequency of string is directly proportional to the SQUARE ROOT of it’s tension … and/or equal 1/square root of it’s length.
- there you have it — square roots and 1/square roots. THAT IS THE KEY TO EVERYTHING …
- now, if we take the square root of 1.618 we get 1.27. if we take 1/1.27 we get .786. That is NOT a fibonacci number … it’s an inverse of a square root of the golden mean … see?
- the frequency of string is directly proportional to the SQUARE ROOT of it’s tension … and/or equal 1/square root of it’s length.
- this is based on music.
- Square Roots and their inverse are at the root (pardon the pun) of ALL CYCLE WORK.
- if we take the square root of 90.06 = 9.49 and add them we get 99.54. THAT WAS THE HIGH TODAY OF BABA (ok we missed by 18 cents but you get the picture)
- now we start down and use our simple yet very powerful projection method, taught to be Mike Jenkins, of 1/8 increments of the signal reversal candle. (SRC)
- SRC – is the candle that takes out the candles that either makes the high or the low …
- now we have used blue horizontal lines to show the horizontal levels of the 1/8 increments DOWN …
- note price went thru the .5 (4/8) but bounced up from the .786 retracement and was resistance
- note price went to 1.25 (1/8) and hung out there until ….OF COURSE, 90 MINUTES AFTER THE IPO THE MARKET INFLECTED.
- so, once a SRC is made we PROJECT up and do the same thing, but this time up (the black lines). Note the BLUE ARROW. The SRC was the reason for the resistance …
Now, here’s the hard part … on this 1 minute chart we have 90,99,92 as PRICE components and those numbers are going to spin out their own cycles …our inflections will occur when multiple time cycles that have spun out from today all come together … that’s the hard part, keeping track of them.
I’m going to be interested in September 30th …
- the square root of 90.06 = 9.49 and, well, PRICE = TIME = DEGREES.
- So, something might move 9.49 degrees and if a PATTERN in PRICE is present then perhaps we’ll have a trade.
- just like we project PRICE 1.618 or 1.27 or equality we can do the same thing w/ things that move in degrees.
BABA first day of trading
additionally, below, you’ll see what we’ve shown before — the angle of ascent or descent is key to deriving the true trend lines. in this case we had a 88 degree move up and guess what … the market bottomed 88 minutes after the first trade. YES, that’s a coincidence … (?)
BABA angles …
one last … note the chart below. THIS FIRST INITIAL IMPULSE MOVE UP WILL BE THE ROOT OF ALL FUTURE TREND LINES AND ANGLES …
THE BABA square
ENJOY THE WEEKEND .. what an amazing country we live in and what an amazing story for the $BABA team …
rock on, ok?
Let the market tell you – EURO quick look
Posted on September 19, 2014 1 Comment
CLIFF NOTES:
- follow the black dotted line to see where the major level has been for the Euro.
- Then, follow the orange line.
- Additionally, note a nice little cycle coming in at 778 days. We are off by a week, but that’s OK and – quite frankly – the reason is a little too esoteric for this discussion. we are still in the time zone for a bounce.
- Note, from the beginning of the BULL market that started in 2000 we have used the “standard” 1×1, 1×2 and 2×1 angles but the KEY is we have oriented them to the plane of the move up that began the bull market. Follow the bouncing ball and we’ll see that the 2×1 caught the July 2012 move and now we are approaching the .618 retrace and the trend line.
- Bottom line: EURO bounce coming based on 1) structure, 2) “basic” and “advanced” time cycles, 3) trend line from the beginning of the bull market in 2000 4).618 retracement 5) the 1/8 increment of the signal reversal candle down completes a little lower and 6) we are developing bullish divergence.
- WAIT to 1) short the upcoming bounce or 2) let the market tell you a bottom is in place and then buy the first pullback that should have a 3 wave structure . (NOTE the only correction so far has been a flat. by the law of alternation, we will have a triangle or ziz-zag appear. so WAIT for the bottom…
EURO vs USD weekly
EURO vs USD Daily
EURO vs USD 30 minute
Would you SELL or BUY this chart?
Posted on September 19, 2014 2 Comments
Been active on Twitter and for my readers about some cycles hitting and square outs occurring and, well, blah blah blah. So as any technician is EXPECTED to do when the PATTERN has failed pretty dramatically, I hit “erase all” and went back to work. Asked myself … so, if the PATTERN SELL has failed then would you BUY it? In order to answer that question I inverted my chart and simply said – would I BUY this chart in it’s inverted state?
Would you BUY or SELL this chart?
the Great British Pound Rules of Engagement for 9/18/2014-9/19/2014
Posted on September 17, 2014 Leave a Comment
Joe Dinappoli once told our seminar … your either going to build the boat OR sail it. Choose one …what he was trying to say is your either going to TRADE or your going to put out research. No one side is better than the other …I’m of the mindset that in order to TRADE you need to put in place a game plan or strategy. But in the end, it’s about putting the gameplan at risk by deploying money….
Tomorrow might be a historical day and, then again, it might be a whole lot of nothing. If the Scott’s do vote to leave the UK well, it’s going to move EVERYTHING. As a spot FX trader I want to be ready for that .. so tonight I INTENTIONALLY erased EVERYTHING off my Pound vs USD chart and decided to work TOP – DOWN into a POTENTIAL gameplan to manage risk and TRADE WHAT YOU SEE.
Back in the day flying we came up w/ concepts of criteria for mission accomplishment: commit criteria, drop criteria, valid shot, abort criteria, skate or bonzai criteria , etc., etc. And, these were based on the Rules of Engagement (ROE) for any particular theater. So guess what, we are going to devise our ROE based on risk management:
By the end of this post, a game plan will have unfolded … let’s begin !!!
- ROE: Counting will begin approximately 2200 British Summer Time or 5PM est 09/17/2014. Due to monstrous potential for volatility w/in the FX market, a POSITION will NOT be put on until after 5:00 PM. Any position could be immediately wiped out if a monster reversal occurs. Then again, if your right the position could move in your direction amazingly well. But guess what … that’s gambling not trading. WAIT until the count is complete.
- ROE: expecting 1.5700-1.5800 to be major support and given the very oversold condition of the Pound on a daily basis, will be very cautious to “just short” the Pound. If we reference the monthly chart, we will see that current move down is very small in the big picture. there will be time
- ROE: if the market rallies then will look for 1.6390 but higher targets are more favorable to relieve the oversold condition. they are 1.6460 and 1.6540-1.6560.
- ROE: note, some of these levels are pretty far away and if you are a scalper then just book mark these levels. There is a distinct possibility that the Pound could move 200-300 pips in a matter of minutes. Unless you are a HFT w/ exceptional light speed MOST IF NOT ALL BROKERS will not get you the fill you want … however, after the initial burst, these levels become very important and therefore a gameplan can be worked.
Great British Pound Monthly
Using RSI to see where the support and resistance levels have been … the big thing is notice that the 2007 – 2014 time frame we are seeing a grid shift in that the we busted thru support and now, have failed at the lowest level in the history of the chart. My mindset is bearish and therefore believe on a weekly/daily timeframe (key) any rally should be faded. Other than that, no specific and/or tactical ROE aspects to consider. Analysis only …
GBP vs USD WEEKLY
Again, using the weekly RSI, note that we are oversold but “no divergence” is present. Can still go lower, but notice the dotted blue line and you’ll see the polarity principle at work. if we break that dotted blue line price “should” vacuum to the 1.5756 level. Also, the red 90 degree angle is something for us to consider. but 1.5756 is in the way, right now.
Great British Pound Weekly
note on the above – we have a .382, .5, .618 retracement all coming in right in/around/on top of our 1.5775. THIS SHOULD BE SUPPORT.
ROE: as we approach this level, if during a sell-off DO NOT SHORT in/around this level as it could be major support ….
GBP vs USD DAILY
Note, if we can rally look for those RED LINES to short against. Also, note we are still deeply oversold on a daily basis.
GBP vs USD 60 minute
note the geometry from today’s move … hit the high and the red X is showing the gap from Sunday (very very rare in the spot FX world) has been closed. Note upper targets as shown by the light blue.
Palladium liquidation and NASDAQ
Posted on September 17, 2014 Leave a Comment
9/17/2014: this correlation is pretty strong and Palladium hit our target exactly and has been being liquidated heavily in the past month. Keep an eye on either 1) Palladium finding support to build momentum for a move higher in NASDAQ OR 2) drag the NASDAQ down w/ it. Let’s face it … ain’t NO WAY anything was going to get in the way of the Allibaba IPO. It’s going to be a crazy market as we see what happens w/ Scotland, we have a triple witch expiration, a reweighing and the largest IPO in history .. not to mention it’s been a FED week.
8/24/2014: : Palladium converging into to major resistance. This is important because it’s a nice little commodity to watch w/ regard to the NASDAQ and AAPL. In order to build the pattern we are going to to go step by step this morning into “why” Friday’s high was important from a PATTERN perspective.
1. First, here’s WEEKLY charts of 1) NASDAQ and Palladium and 2) AAPL and Palladium.
- notice that when palladium broke out of the consolidating triangle, AAPL took off.
- of late there has been a lead/lag relationship at times BUT the overall directional pivot is clear. As Palladium goes, so does NASDAQ and AAPL.
2. When constructing a PATTERN there are three things we do — PROJECT / EXTEND/ RETRACE. In order to keep this post brief I’ll do the basic stuff …
- PROJECT: note in the two charts below we have 2 “basic” projections coming into the same area. That warns of resistance.
Palladium 1.618 Price Projection
- EXTEND: note, we used the middle point at 593 for the extension pattern. Also, note 1.68179 nd 1.732 are used. musical note and the square root of 3 …
extension from 2008 (shaded light blue triangle)
- RETRACE: from the all time high we have a .786 retracement. This is NOT a fibonacci number. Here’s the math- 1.618/square root is 1.27 and 1/1.27 = .786.
so … as you can see, we have a bunch of NUMBERS adding up to this being a big level for Palladium. And, while a case can be made that, since these are weekly/monthly nodes coming out, it SHOULD be a hefty amount of resistance. That being said, it could also BLOW RIGHT THRU EM’ and rip higher and higher. It’s just a pattern folks.
Last – the BUTTERFLY PATTERN is present. Connect two triangles together and that’s the butterfly pattern …
Butterfly SELL pattern
put it all together and here is the picture:
PATTERNS complete on Palladium …
here’s a potential count — note – 4 doesn’t CLOSE below 1 so I say “go for it” w/ regard to the count. Additionally, alternate targets provided at little higher. Sure seems like it wants to head up that way … ?
Palladium Count Potential
last thing we check is the “relative strength” using ratio analysis. in this case we have PALLADIUM / GOLD. When we overlay Gold on top of the ration there isn’t that big of a correlation. HOWEVER, when Palladium is overlaid (see below) we can see that this ratio is extremely important. And, what do we have on the ratio – a SELL PATTERN appearing, which, in the past, has caused Palladium to inflect. Stay tuned.
note, palladium prices overlaid and how the ratio is nicely synced w/ the highs and lows.
ratio of XPD / XAU – note pattern completing a little higher
So, there you have it … watch this important relationship, closely next week.
BART
bunch of cycles coming together …but who cares
Posted on September 17, 2014 Leave a Comment
how many institutions are there out there ….? perhaps 30-50K? and, if you think about it they own 10MM+ shares of the big names. the “big names” have, on average, say 5MM shares / day traded. so, what happens if they try to get out of a non liquid market that has been manipulated by “buy” and “sell” programs …? That’s a liquidity problem … but, perhaps I am the only remaining individual on the earth that thinks this market can correct — 20-30%. I’m alone on an island …
here’s some more time/price coming together.
my pivots are 2020 and 1988 …
amazing …
more time and price coming together
