$HG #F – Bart's Charts

“I think this is a song of hope …” Robert Plant Live Stairway to Heaven

The S&P 500 has been climbing a stairway to Heaven ..

folks coming into 2015 we had some pretty strong patterns appearing. some worked and some didn’t – isn’t that what we expect? that being said, it was prudent to be cautious due to their presence.

here’s what I posted around a year ago:

“Let’s don’t jump up and down and scream the BEAR MARKET is here till this chariot of the bulls breaks a swing low.”

so, while we’ve sold off for the past couple days let’s not go crazy. we have broken ONE swing low and that’s it, and it’s ONLY a weekly. WE HAVE NOT BROKEN A MONTHLY SWING LOW.

so, keep it ALL context of the big picture. We break a swing low on a MONTHLY and then a second then we have “issues.”

but for now, EVERYONE knows this puppy was on steroids and need some shaking out so let’s look for a pattern to BUY on a weekly (hint hint – it needs to breathe a bit) and if a bear I would still be very cautious.

what do we know and see … ?

we know a weekly swing low is about to be taken out and we’ll know that ONLY WITH THE CLOSE TOMORROW … we also know this has NEVER happened since March 2009 bull market began.

so, here’s the logic:

if weekly close below a swing low … get defensive.
if not, then keep in mind, we have pressure on the downside and it probably needs to breathe down so just chill …

enjoy the post below .. you’ll see some of the patterns were early, some were spot on. that’s not the point .. the entire post below is around the market action around a SWING LOW or SWING HI and to respect them — very very strongly.

let me know if you have any questions.

chart below is the ES .. note the red horizontal swing lows. those have never been broken on close. it might happen tomorrow …

Bart

As we have discussed multiple times in this venue, the move since 2009 has been one heck of a ride. This chariot of stock market emotion is, literally, off the charts. It is at an extreme that has surpassed 1929, 2000 and 2007. For the past 6 months it has defied the powerful cycles and patterns we follow. However, we are at another “potential” inflection point and based on this weeks price action the chariot appears to be running out of gas. So, objectively, the cycles and patterns we follow appear to be working. Let’s don’t jump up and down and scream the BEAR MARKET is here till this chariot of the bulls breaks a swing low.

Below you’ll see a quick demonstration of the Dow Jones Industrial Average from 2002-2009. No patterns shown but just an example of the power of the swing low. Take note, when we lose one swing low there is usually some selling and then it bounces back and, here’s the key point, it fails to make a new high. Price might congest in this area (going either direction – up or down) and then it starts down. One thing to watch is “usually” the third swing low. When that gives away, selling is vicious. So, as much as we see MAJOR patterns completing let’s not get to confident. THE MAJOR US INDICES HAVE NOT BROKEN ONE SWING LOW IN 5 YEARS. Over the coming weeks, pay attention to these swing lows and swing highs (note the VIX chart – not one swing high has been taken out since 2007!)

Also, note the Dollar Index swing low track record and the very thin neckline that is coming into play a little lower. We’ve reached some daily extremes in metals (Gold, Silver) and the Euro and Pound. Sentiment means nothing when a multi year extreme is taken out and one that has been tested roughly 10 times since 2012. Folks, a lot of stops are hiding beneath 78-79 on the dollar index. Certainly hope support holds here …

so, keep an eye on the swing lows and highs over the coming days and weeks … note price action after a first or second swing low is taken out and, seriously consider safety if/when a 3rd long term swing low is taken out to the up or down side ….

Inflection point for bearish or bullish EEM / FXI now

August 30, 2014: the CLIFF NOTES is we are at a crucial point for the EEM, FXI and Copper. Patterns suggest a bearish stance is prudent.

The bottom line is the neckline shown in FXI and EEM did not break and a very strong rally has taken place. That being said, BASED ON THE VERY BEARISH COUNT OF COPPER ON A LONG TERM BASIS, believe the EEM, FXI and Copper should start back down again. The charts will show the PATTERNS. Right now, I remain BEARISH on the FXI and the EEM because of the LONG TERM TOP in COPPER. Note, divergence is present in the recent price action. So, even thought they (FXI, EEM) have been linked very strongly to Copper, this linkage could be broken and they are now decoupled. With recent price action this is a distinct possibility. Let’s see if the patterns shown on EEM and FXI fail before we come to this conclusion.

note the CLOSE correlation of Copper and EEM for a "pretty long" time — note the CLOSE correlation of Copper and EEM for a “pretty long” time

FXI sell pattern ... — EEM sell pattern …

Here is the bottom line of these markets (EEM/FXI, COPPER) – If the point labeled 5 below was NOT the high (but a little higher on copper around 5 is the actual target) then these patterns will fail and we’ll see another move higher and I will update new targets. RIGHT NOW – behave/manage risk like the 5 on the chart below is 5 – and folks it’s a long term 5 – then the EEM, FXI and Copper securities should be starting down in/around here. DOES THAT MAKE SENSE? Enjoy the Labor Day weekend w/ family and friends.

please see this post to see why the high in copper is so important: http://bartscharts.com/2013/12/20/the-copper-script/

note a POTENTIAL for an ENORMOUS top in place for Copper 1,2,3,4,5

one last, note below the relative strength RATIO of EEM / SPY. Since 2010, on a relative basis the EEM has been getting smoked by the S&P500 as a whole. Also, note that the .618 retrace supported, for a while, but the broke and is now the REASON for the resistance. A little lower (blue shaded rectangle) is a NICE target to potential watch for a flow of funds into the EEM. Would hold off for now BUT do watch closely as we did break above the median trend line (like in the end of 2012 – which was defeated – blue arrow) and we should start down now w/ the SELL patterns present.

Rock on, ok?

Bart

March 13, 2014:

CLIFF NOTES: the move in copper should not be surprising // we are correcting a multi-decade 5 waves up complete. This has shown to put pressure on emerging markets and china. All according to the script.

if you would like to search for “copper” on this blog you will see that we have had a bearish stance for a good couple of years. A strong case can be made that Copper finished a multi-year 5 waves UP and is now undergoing a potentially very violent correction. if you also click on this link you will see the correlation between FXI (chinese ETF) and EEM (emerging markets ETF) and Copper : http://bartscharts.com/2014/02/01/copper-and-the-emerging-markets-eem-etf/ also here are the highs and lows in Copper: http://bartscharts.com/2013/12/20/the-copper-script/

The most recent breakdown in copper does not play well for FXI or EEM.

Gold and Silver Update ….and some more of the metals

CLIFF NOTES: a case is made, below, that inflection points in the ratio of GOLD/SILVER cause big movements in the spot gold and silver prices. Also, it appears that Gold lags. We are at a resistance level which “might” be one of those inflection points so expect the metals to get moving NOW or SOON. Probability points “lower” across the board for the metals.

Ratio Analysis – we love using the patterns w/ ratio analysis and, of note, is the noticeable strength in Gold vs Silver the past couple weeks. So, our first chart is going to be the relative strength of spot gold / spot silver. Basically, when the candles are going DOWN then SILVER is “stronger” and when the candles are going up GOLD is “stronger.” After looking at this chart one thing stood out … it really didn’t matter which direction the relative strength ratio was moving, but when the ratio shifted and one of the assets noticeable started to our perform or under perform THEN we had an inflection point in silver. Below you will see a set of three charts showing you the PATTERNS that were present in these ratio’s which, if we knew about them, might have helped us position ourselves – based on other patterns and technical factors — on the long or short side of the spot silver or spot gold market or both.

so where are we now …? Just using basic measured moves we can see that EVERY move in this ratio has been “used” before so our trick is to find out which one might work or not. Note the downward blue and orange arrows … then note the crash and how the vectors were almost perfect. so … we “should” do either the black or the purple measured move UP –right? note we are at the .618 of the gold/silver ratio and the black arrow would take us up to the .786. One of those two levels “should” hold and cause an inflection in the ratio. See below:

note the measured moves - that's all we are using — note the measured moves – that’s all we are using

so – now that we can see resistance ahead, has the ratio really helped pinpoint inflection points?

spot sliver - blue line - overlaid on ratio of gold/silver — spot sliver – blue line – overlaid on ratio of gold/silver

what about Gold? Well, take a peak … the key thing I see is that while it’s not as “precise” from a timing perspective it appears that GOLD LAGS THE INFLECTION IN THE RATIO …

here’s the daily:

Now, let’s take a look at the metals individually. Folks, below is a great chart .. it shows the pegged price of gold from 1913 and, guess what, roughly 1200 is the .382 retracement. So, in the context of this long run in gold prices (100 years in the making) Gold is holding the .382 retracement which is EXTREMELY BULLISH. So, if you don’t believe me here’s the chart:

if we do break that level – look for 950-1000. Spot silver – sticking w/ my guns here and a buy at 14.

Copper – folks, still sticking w/ a MAJOR 5 wave move in copper complete. More to the downside and, remember, how FXI (China) likes/mirrors copper ….

Copper Script Part II

CLIFF NOTES: the probability is high that we break the key support line in/around 3.0 that has been holding copper up since 2010.

CLIFF NOTES 2: here is the link to the “Copper Script Part I” to watch how a BUY was recommended in the midst of the crash in 2009: http://bartscharts.com/2013/12/20/the-copper-script/

Note, a potential gameplan is shown by the light blue lines …

Swing Low, Sweet Chariot ….

Update on Copper, Emerging Markets and China

CLIFF NOTES: the move in copper should not be suprising // we are correcting a multi-decade 5 waves up complete. This has shown to put pressure on emerging markets and china. All according to the script.

The most recent breakdown in copper does not play well for FXI or EEM.

Copper and the Emerging Markets (EEM ETF)

Copper is important … it’s still a major player w/ regard to the global economy and is something that should be watched. We also think Copper made a very important wave 5 top … here’s the chart as the top was getting made (I want to provide “real time “charts” so there is no “could of, would of, should of”). It certainly counts a 5 wave move UP being complete.

WHY IS THIS SO IMPORTANT … well, if we do, in fact, have this count right then the corrective move in COPPER HAS A LOT MORE TO GO. Here’s the updated chart and note the “neckline” that most everyone can see. Bottom line is this neckline is a big deal and, particularly to the EEM ETF. (Emerging Markets)

here is the EEM ETF (daily) and NOTE HOW IMPORTANT THE 37-38 LEVEL IS FOR THIS ETF. It’s completed a pattern and we had some good buying occurring at the key level but IT NEEDS TO HOLD.

now, why the diatribe about Copper above? Well, this next chart is Copper overlaid on top of EEM. Note the synchronicity … pretty well lined up.

PUNCH LINE:

IF COPPER has 5 wave top THEN it has more correcting and downside. Potentially substantial …
IF COPPER and EEM synchronicity to remain THEN EEM pattern that is noted on the DAILY EEM chart will, ultimately, fail.
IF COPPER and EEM break necklines THEN substantial selling coming in the future for not only COPPER but also the Emerging Markets.
THERFORE: don’t be LONG EEM.

Make it a great weekend …. B

Copper and China

the count (long term) for copper appears to have completed a very well defined 5 wave move … if this is correct, then perhaps we have a little larger rally to kiss the neckline and then down into much lower prices. why is this important to China? well, from a chart view they are aligned extremely nicely. so, IF Copper is going to go down THEN so should FXI if the correlation holds …

Tag: $HG #F

“I think this is a song of hope …” Robert Plant Live Stairway to Heaven

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Inflection point for bearish or bullish EEM / FXI now

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Gold and Silver Update ….and some more of the metals

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Copper Script Part II

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Swing Low, Sweet Chariot ….

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Update on Copper, Emerging Markets and China

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Copper and the Emerging Markets (EEM ETF)

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Copper and China

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