More Pumpkin Soup … added a new ingredient to the recipe: GOOG.

classic or not that certainly proved to NOT be a head and shoulders neckline but a launching pad for a SATURN 5 and kaboom it exploded.  as you can imagine the short well, took it on the chin to say the least: http://www.youtube.com/watch?v=05PKG_pWsVY !

Howard (Founder/CEO of Stocktwits) commented “as for me, I’ll stay long.”  WELL PLAYED …

as for me, I’m licking the open chest wound and trying to put it all in context…

  • that one day accelerated price action to such a degree that in one day it EXCEEDED the entire MONTHLY price action since GOOG’s IPO.  Seriously…?
  • the NASDAQ 100 has SO MANY parabolic charts it’s downright scary … have we not learned our lesson?
  • the NASDAQ 100 continuous futures contract is right at major resistance / SELL pattern area
  • Palladium has a very nice daily sell pattern about to complete (nice correlation in technology stocks and the palladium metal)
  • our 925 level held for 6 months and then, kaboom, it exploded ..hugh?
  • so, if at first you don’t excede, try try again (?)
  • here’s my next set of targets w/ regard to GOOG
next set of targets ...

next set of targets …

Plotting the next move in fixed income …

fixed income has bounced rather nicely and now the big question is “are we going to go to new highs?”

1.5 years ago, as fixed income flirted w/ the all time highs for 5 months we correctly saw multiple correlations that put the sell pattern present in context …

http://allstarcharts.com/are-interest-rates-at-a-key-inflection-point/

from there, the bonds fell pretty hard into the lows that were hit a couple months ago:

http://bartscharts.com/2013/08/20/fixed-income-revisited/

this happened BEFORE the infamous FED meeting last month and I held my stance that the Buy Bonds (Sell Yield) was the side of the trade to be on:

http://bartscharts.com/2013/09/18/bruce-buffer-of-ufc-and-the-fed/

now, the question is will the bonds seek new highs suppressing yield to a great degree?  there is a count that favors this action, but honestly, I don’t know ..just have to realize that the correction that has occurred in fixed income is almost precisely in line w/ the “normal” corrections that have occurred in the context of this 30 year BULL market. things are truly about to get very very interesting ….

30 year continuous contract found major support ... a dead cat bounce or another move  to higher prices .. .stay tuned

30 year continuous contract found major support … a dead cat bounce or another move to higher prices .. .stay tuned

Part 2 of Part 1-V on the S&P

Part 1 was a look around the world at different equity indices based on ETF’s:

http://bartscharts.com/2013/09/14/part-1-the-sp-500-but-first-we-need-to-go-around-the-world/

of note is the Global Equity ETF (ACWI) and the SELL pattern that is appearing as we showed in our last “around the world” update shown below. Overall, nothing to crazy but the analysis appears to have been correct.  Summary: NONE of the “around the world” indices have come even close to making new highs from the 2007-2008 time frame.

ACWI Butterfly Sell Pattern

ACWI Butterfly Sell Pattern

Part 2 was the banks and too big to fail:

http://bartscharts.com/2013/09/14/part-ii-the-sp-500-and-too-big-to-fail/

The targets w/in the 21-22 area are approaching … the XLF is close to being a sell if not already one.

XLF update

XLF update

Part 3 took a look at technology:

http://bartscharts.com/2013/09/14/part-iii-the-sp-500-and-the-influence-of-technology/

Palladium has an extremely nice sell pattern and multiple patterns were hit or are about to hit …NASDAQ futures have an extremely strong target and sell pattern coming in right here, right now

NAZZIE Futures Continuous Contract

NAZZIE Futures Continuous Contract

Part IV was energy

http://bartscharts.com/2013/09/15/part-iv-sp-and-energy/

this is the one sector that isn’t showing a clear SELL signal – yet.  As you can see below w/ the XLE a case can be made for another 10% higher or it needs to start down now…energy could be the one sector that holds this puppy up for now.

Energy, a case could be made for continued strength thereby delaying the move down in the S&P

Energy, a case could be made for continued strength thereby delaying the move down in the S&P

and finally, part V was the look at ratio’s and sector rotation:

http://bartscharts.com/2013/09/16/part-v-sp-and-sector-rotation/

the pattern has completed perfectly and even w/ the S&P making new highs, this pattern has held …. this is bearish for the overall equity market.

a turn in this ratio has been present at EVERY major inflection point since 2000.  a BUY in the ratio is a SELL in equities

a turn in this ratio has been present at EVERY major inflection point since 2000. a BUY in the ratio is a SELL in equities

 

CONCLUSION:

ACWI, XLF, NAZZIE, SELL pattern complete/completing.

XLP/SPX ratio showing a beautiful BUY (SELL equities) pattern …

US DOLLAR low in here or perhaps a little lower

ENERGY needs to be watched like a hawk….

Do you really want to be long this market?  The only way I would stay LONG is if all the above fails and, quite frankly, that could happen.  So, watch ENERGY and DOLLAR strength for first clues.

WEEKLY S&P CASH SELL TARGETS

WEEKLY S&P CASH SELL TARGETS

 

DAILY S&P CASH sell patterns appearing

DAILY S&P CASH sell patterns appearing

 

 

 

 

the joys of the puzzle …

a couple days ago I posted about the US Dollar missing my lower target and the potentiality of a bottom and even saw a “nice” inverse head and shoulders that IF it broke thru would be a bullish signal.  it didn’t and, now, looks like my lower target is going to be attacked.  quite frankly, I’m glad … for over 2.5 months i have steadfastly WAITED and deployed NO CAPITAL.  Always, thinking, “I missed it” or “why the heck did it do that” or any number of ugly “little voices” that appear.  my mentors have banged into my thick head to ONLY invest at PRECISE levels because then and only then can we manage the risk.  I’ve taken that to the extreme and, quite frankly, it’s my Achilles’s heal from an PM perspective.  making no apologies.  I think the tendency to try and “nats ass” levels is based on the HOURS upon HOURS that I spent in the Navy precisely aligning attack vectors for putting a 2000 lb pound in the center of a window from 35,000 ft at 1.2 IMN.  old habits are hard to break ….

the other reason is because of a chart like below:

US Dollar Math and Geometry

US Dollar Math and Geometry

 

if you take the time to STUDY the chart (and why not if your reading my post – thanks by the way) you’ll see the EXACT, again, EXACT measured moves at the low in 1992-1995 hit.  so, in the context of  WAITING 2.5 months for this opportunity to present itself, it’s really nothing in the context of 3 years.  YES, there is and was a lot of money to be made day in and day out trading the swings.  but you know what … I don’t like doing that.  it doesn’t fit MY STYLE so I like to put the pieces of the puzzle together and deploy capital.  So, this AM, let’s take a look at the pattern coming in on the US DOLLAR INDEX.

the key for me is the “measured move” correction like that of 05/2011.  Bruce Buffer time … HERE WE GOMain20131018064530Main20131018064940

 

QUALCOM Confluence ….

PROJECT then EXTEND then RETRACE …

for QCOM they are all coming together a little higher.  Frankly, never seen this many ratio’s come together. Stay tuned BUT that’s all she wrote ….

projections (basic)

projections (basic)

extension (basic)

extension (basic)

 

retracement (basic)

retracement (basic)

butterfly top (weekly)

butterfly top (weekly)

 

 

 

 

the Shutdown and the US Dollar

my first post was almost two months ago and it concerned the US Dollar: http://bartscharts.com/wp-content/uploads/2013/08/august-20-2013-us-dollar.png  and then it was updated: http://bartscharts.com/2013/10/01/dollar-index-done-or-correcting-or-a-little-lower/

we probed the lower level but never quite reached my area that I had been watching for two months as the place to attempt the long on the USD versus either the EURO or the POUND.  this am, it is showing some pretty significant strength so this is in alignment w/ my analysis. now put the investment hat on and look for the best area to get long that will manage the risk.  with the chaos in DC, this target a little lower could get hit on some surge/spike/rumor/ etc…we’ll just have to wait and see.  lastly, look at the 4 hour inverse head and shoulders neckline that is being attacked.  Sure looks like the dollar has bottomed …

this is BARTS CHARTS … if they go UP we have more buyers and if they go DOWN  we have more sellers. Playing relaxing music and watching the chart instead of listening to the talking head pundits is just easier, don’t you think?

USD Inverse Head and Shoulders potential low in place

USD Inverse Head and Shoulders potential low in place

t easier, isn’t it?

Gold/Silver Index … continuing the thread

here’s the previous Gold/Silver Index posts:

http://bartscharts.com/2013/10/03/gold-silver-index-a-guide-for-the-yellow-brick-road/

so, as you can see the geometry is sure starting to unfold for a “double bottom” type of scenario and then, potentially, higher.  If you read my Gold posts

http://bartscharts.com/2013/09/07/good-as-gold-part-1-of-2/ 

http://bartscharts.com/2013/09/08/good-as-gold-part-2-of-2/

then you’ll see how I’m looking for one more move lower on the Gold to set up a very  nice buying opportunity.  you’ll also see the reason why the levels approaching on the Gold/Silver Index are so key.  Stay tuned on the Gold/Silver index because the level it found support in is KEY .. if we break that to the downside via a daily close below that level, then the index and Gold could certainly take a smash.  stay tuned …

Gold Silver Index double bottom potential?

Gold Silver Index double bottom potential?

Japanese Yen Advance

I have been following this pattern closely … after an amazing move upward, we have been consolidating in what looks like a multi-month triangle.  From a counting perspective it does fit the  characteristics of a 4th wave so we’ll have to watch it closely for signs of the triangle being complete.  At this point, right now, I don’t know.  The symmetry of the ratio’s of the legs is “close” to the rules (they are supposed to be .618 of each leg) and the most latest low of yesterday finished a very nice buy pattern.  For now I will sit on my hands … but the move is coming for weakness of the JPY versus the USD.

long term count

long term count

 

daily chart of triangle ratio's and potentiality

daily chart of triangle ratio’s and potentiality

 

other targets

other targets

 

pattern complete

pattern complete

 

60 min chart as of 0400 10/10/2013 ... pullback coming to buy (?)

60 min chart as of 0400 10/10/2013 … pullback coming to buy (?)

 

 

 

 

Staples Strength vs the S&P

if you wan to catch up I recommend reading the following two posts:

http://bartscharts.com/2013/09/22/the-upcoming-week-of-922-for-the-sp/

http://bartscharts.com/2013/09/25/the-ratio-of-staples-to-the-sp-xlp-spx-trust-me-its-important/

this AM, our pattern that we have been following has completed.  what does that mean?  the pattern either works or it doesn’t … if it works then our thesis is that the staples (as a sector of the overall market)  will start to outperform on a relative strength basis (no not the oscillator) the general market.  when this has occurred in the past, it has very nicely timed inflections points to the down side in the market ….

October 07 2013 XLP - SPX ratio Occtober 07 2013 XLP - SPX comparison

Long term monthly w/ bullish stair steps present

Long term monthly w/ bullish stair steps present

stay tuned … the symmetry of the BUY pattern in PRICE and TIME is very powerful that this level should hold.

the WMT greeter and inflection points

ratio analysis compares the relative strength of one security versus another.  if the numerator is stronger then the ratio will go up and vice versa.  what I try to look for are meaningful ratio’s that plot fear and greed and can warn us of potential inflection points in the market.

I am going to make an assumption that “everyone” loves Walmart ($WMT) and it’s place as a fabled American institution is a fact.  Our thesis today is during BULL markets it will “not be as strong” as the overall market (the ratio of WMT/SPX will go DOWN) and during times of fear or volatility it will “be stronger” than the overall market (the ratio of WMT/SPX will go UP).

the chart below does a pretty good job of showing this assumption is valid.

the blue line is the SPX. the candles are the ratio of WMT/SPX. the dashed purple vertical lines are placed on the chart to show the inflection points at tops and bottoms.

note, in 2000 (high), 2003 (low), 2007 (high), 2009 (low) the ratio has 1) moved w/ almost the same velocity and 2) inflected almost exactly inverse as the S&P.  HOWEVER from 04/2011-08/2012 the ratio actually trended with the overall market.  (this is denoted by the blue arrow going up during this time frame)  then, the ratio “went back to normal” and started going back down and the market continued up.  an interesting divergence,,,,

ratio of WMT/SPX compared to the SPX

ratio of WMT/SPX compared to the SPX

 

the power of pattern recognition is it works on everything.  so, we can look for patterns w/in this ratio to show potential inflections and then wrap it into an overall look at different sectors w/in the SPX to make a reasonable guess at moves to come.  also, the longer the time frame of the chart, the more powerful the potential pattern becomes.

the chart below shows a clear 5 wave move ending and a pattern to be completing just a little lower.  this signals that IF (the big IF) the pattern holds and the ratio finds support and begins to move UP then we “should” see a corresponding move down in the overall market.

buy pattern coming into play a little lower

buy pattern coming into play a little lower

stay tuned and say hi to the next greeter you see and also tell them  thanks for the market information!

Bart

 

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