What's going on?

To view the charts, click on them and they will expand.


We will look at Crude oil and gold in this blog, since there are signs that we might have some volatility, big time, that may influence the markets.

Actually some strange things happened last week after the CPI figures were released on Wednesday. Gold rose some $20 while dollar did nothing (although it fell Friday - see chart later in the blog). Dow Industrials fell, while SOX gapped up, breaking a long term resistance line at the same time. We are seeing conflicting signals.
Is something going on that we at the end of the food chain is not aware of?

Let's start by looking at Crude oil, since we also had some interesting things going on there as well.

We will start with a long term chart (from 1984), and what we see are dynamic cycles(fibonacci) ending at the bottom of the latest correction. The bottom is also a dual fibonacci support area. Added support is by a trendline from 2002. Clusters of cycles usually indicate trend change.

A little TA note here.
Look at the two trend lines below (1 and 2).
One chart has logaritmic scaling and the other line scaling. Depending on, if you use line or log we get support anyway. Usually the picture changes if you change scaling. So it does here also, but not the support....
Strange isn't it?
Well, to me that fact only confirms that we have REAL support att the bottom of the last correction.

We find another confirmation in the chart below, which is another amazing example of the interaction of different TA technics.
The blue line is a trendline, constructed by connecting two tops. The middle gray line is the swing from the Aug top to the D bottom as expressed by one single line. The other lines are then parallel to the central line and with 2 standard deviations making up the distance to the central line. We have trend channel. So how come the blue and grey lines are also parallel?
I haven't got a clue......... But the lines mean resistance below them. support above.

What interests me is that the channel is broken and that the bottom at D is the end of a perfect Elliot wave ABC correction, where the C wave is (fibonacci) 78,6% of the A wave.

The correction trend is over and we should be moving up

So let's move to the next chart.

Anyone who has read my blog know that one of my favorite situations is the "failure", especially H&S failures. They often generate fast volatile moves, usually above the head and beyond.

What we see here is a master example. Gap down below the (green) neckline. On the way back, consolidation around the line and break out( with a gap) last Wednesday when the CPI numbers were released (and Gold climbed $23), at the same time we also broke the falling (red) main resistance line from the Aug 2006 top.
Straight up for 4 days and finally Friday breaking the last resistance line (blue), with a small gap.




What's interesting about that failure, is that it probably hadn't been there if the oil market had been left alone.

What we see below is a probable manipulation up to the mid term elections, or for some other reasonat the time.
If we compare the distant 2011 contract with the near term April 2007 contract we can see divergence in price beaviour from End september 2006.
While the distant contract just rose for two months, the near term contract was pushed down - eventually breaking the neckline as shown above.
While the near term contract broke, the distant contract stopped at support.
Last week they both broke the main resistance line.
Oil now has to make up for lost time.

And that's where it gets interesting - if you are into Gold or Gold stocks.



Below is a Gold/Oil ratio chart. (The Gold price is divided by the oil price, both cash)

What is amazing is, how precise a TA study can be on a ratio chart. Just look below.

We are looking at two pitchforks, a falling resitance line (grey), fibonacci retracement levels (support/resistance) and old tops (support).

First check out the red one. Price makes perfect hits all over the place. Lastly at "a", which is the exact intersection of the grey falling main resistance line, the red fork and the 25% inside forkline of the blue fork, generating tremendous support.

The area is also supported by the 61,8% (fib) retracement level and the old tops.

and THAT'S the clue to the future.

If we agree on the support, we also agree that the GOLD/OIL ratio will fall.

If the ratio is not getting smaller and we have seen that Crude oils has to recover from a manipulation situation that produced a H&S shoulder failure, we should expect higher oil prices.

Now - if we consider that the ratio is static, will stay the same, higher oil price will produce higher Gold price.
If gold doesn't follow - the ratio will fall. Which it "can't" (of course it can, but the support indicates it won't)

A static ratio means that 1Crude dollar will change Gold with 10 dollars. Hence Crude rising $1, mens Gold rising $10. Rising ration will increase the gold price even more.

Further on - considering that the ratio is in a rising trend, just broke resistance, went up to the 78,6% level and then came back to test the break out, which held, wouldn't it be logical to expect a rising ratio ahead.

Together with rising oil.

Isn't that a nice cocktail (if you own gold or goldstocks).

Am I dreaming?

Well look at the chart below.

Cash oil and cash gold.
While gold just broke from an inverted H&S pattern and oil from a Cup&Handle, they both look to be moving higher

Instead of looking at gold, let's look at silver, which may lead the price this time.

The red line is the neckline of the large H&S pattern in this chart.
The upside breaks at (4) and especially (5), indicates a failure of that pattern (by now we know what that means...)
But let's look at the blue line which has been tested 5 times - last time from above, which was a touch-and-go affair. It is now support. Price is now heading higher and we have developed a (green) inverted H&S pattern, which is on the verge to be broken.
Relly?
Well if we go back to our "ratio logic" before we should have a swift move ahead of us, which should/could take silver above the neckline, leading gold to higher highs.
And $40 doesn't look that far away - does it?


Gold higher?
Doesn't that mean lower Dollar?

Well look at the chart below.



A gigantig (pink) H&S has been broken.
While testing the neckline from below an inverted H&S developed (RED). This pattern has now failed and every supportline you can dream of has been broken. On the other hand resistance lines above has held up. Last, price was rejected at the green lines when the CPI figures where released and we are no again heading lower.
Price above 85 could change that scenario, but let's wait and see if it developes.

A close up view of the dollar situation doesn't give higher prices much chance.

1. break down throgh blue supportline of rising trenchannel - up trend is broken.

2 Negativ test of channel

3.Second test + test of resistance area and upper median line of pitchfork. Can't break through green neckline of inverted H&S

4. Breakdown through supportline

5. Weak test of break. Hitting resistance att cluster and fibonacci resistance. Outside bearish day.

How about some astro to top this off?

What we see below is a chart of crude oil with "planetary lines" (a Gann discovery).

The red lines are Uranus lines and the green lines Venus lines.
Lately it seems like Crude has responded very well to these lines. Note especially where the lines cross.
The next cross is March 15 at $70.
No resistance in between.

A seasonal chart of crude oil (cash), reveals that we have seasonal up preasure until May.



More on astro

We have a solar eclipse on March 3rd.
and
Sun Conjunct the planet Uranus
+
we have a gigantic cluster of other planetary aspect March 16-March 25, including a solar eclipse on the 18th, 2 two days before Spring Equinox. Spring Equinox being notorious for dramatic moves/tops/bottoms in financial markets - especially currencies (dollar). (check your charts - sep20/fall equinox is similar)
OK - I'll do it for you.......



If - if - this will take place, I doubt it will go un noticed by the stockmarket.
Especially since March 24 is exactly seven years from the 2000 top.

Fracman on Fearless forecasters is suggesting breakdown in the Dow on March 5 +- 3 days, using Fractals.
http://en.wikipedia.org/wiki/Fractal

Using fractals in TA is new to me but sounds logic and fascinating when explained by Hank at
http://www.elliottfractals.com/

I can see how fractals works in everything living and expanding like the fibonacci ratios. It seems to me he is on the right track to something new (?) in Technical Analysis. It's fascinating!


For those who need fundamentals I have something here, from a recent Peter Schiff article on the stockmarket.

http://news.goldseek.com/UnionSecurities/1172262473.php



--------------
But setting aside Taiwan, the real other risk sitting in the background waiting to explode is Iran. Despite all the usual denials, all the signs point towards a conflict by the US against Iran.



Recall that Iran now accepts only euros for oil and gas and is actively encouraging others to follow. On March 21, 2007 Iran will no longer officially accept US dollars for any transactions. Iran has entered into discussions with Russia to form a gas cartel. Russia and Iran are the world’s number 1 and number 5 gas producers, and they are numbers 1 and 2 in natural gas reserves (holding possibly half of the world’s natural gas reserves). The currency moves threaten the US dollar’s position as the world’s reserve currency, and a cartel would be anathema to US interests in the region.



Consider that there has been a heavy build-up of nuclear aircraft carriers off of the coast of Iran. There has been a large build-up of US troops and warships in Dubai in order to protect the Straits of Hormuz. There has been considerable unrest in the Iranian Kurdish zone, the Iranian Azerbaijani zone, and as well with the tribes along the Pakistan/Afghanistan border. The US and Britain have been arming all of these groups (Eric Margolis – Count-Down to War with Iran? February 5, 2007). The US has been arresting Iranian officials in Iraq and blaming Iran for numerous ills against the US in Iraq. The Iranians have been conducting elevated military exercises and there has been a speeding-up of armaments from Russia to Iran. The Iranians have a natural interest in the goings on in the region and remain close to many of the Shiite leaders in Iraq. Naturally, Iran’s interests and influence in Iraq comes into direct conflict with the interests of the US.



An explosion in the Mid East would be a shock to the markets, as the markets do not appear to be taking the possibility into account. The markets wavered slightly on February 22 when Iran failed to meet UN deadlines to suspend uranium enrichment. Naturally, oil and gold prices jumped. Granted, we are nowhere near an actual conflict and we suppose there is a chance it may not happen, but the build-up and the sharply rising rhetoric from the US (coupled with heightened denials) are saying that something is going to happen. All it needs is a spark.

A US housing market in sharp decline; rampant speculation in a bubble-like mania in China; growing clouds of war over Iran. These are the elements of the gathering “perfect storm”.

For a more detailed discussion on the stockmarket the Feb 14 blog below takes care of that - it's in swedish though......

För en mer detaljerad genomgång av aktiemarknaderna så skrev jag om dom den 14 Februari. i bloggen nedan

Ingenting har egentligen förändrats sedan dess, så jag menar att den bloggen är ett komplement till denna blog

Good luck.

Vad gör vi nu?

I mitt sista inlägg för nästan exakt en månad sedan gav jag uttryck för att toppen inte var nådd. En av argumenten var en artikel i Berlingske Tidende den 11 Januari, med titeln: Är aktiefesten forbi"
I teorien omkring "Contrary thinking" beskrivs det hur man ofta ser denna typ av rubriker på avesernas första sidor, som beskriver ett fenomen (topp eller botten), som i backspegeln visar sig vara 180 grader fel.
Och mycket rigtigt två dagar senare bryter OMX ut över sista toppen och stiger, vad man nästan kan kallas hysteriskt.
Och där är vi nu en månad senare och 7% högre upp.
Vad så?
Har vi NU nått toppen?



(Om man klickar på bilden så blir den större.)
Kurs tom 12/2/2007)

Låt oss se på USA. Svaret kanske finns där.

Vad vi ser är Nasdaq daily chart, med en flott trendkanal från juli 2006.

Break down i December, med den sedvanliga testen av kanalen den 16 Januari 2007. I det efterföljande fallet ned till 26 januari bryter vi den (gröna) parallella suppotlinjen som sedan testas samtidigt med den röda motståndslinje. Där kursen av visas med kraft.

Upptrenden är alltså slut och frågan är om nu är i en topp formation eller konsoliderings situation för fortsatt uppgång.

I chartet nedan gör vi en close upp studie av situationen. Följ de blå siffrorna. Det kallas "chart reading" (vi följer utvecklingen i kursen och försöker tolka situationerna efterhand som dom uppstår) och det kan ge en idé om den underliggande kurbevegelsens "personlighet" och intentioner. Det som kan ge idéer till utvecklingen är vad kursen INTE gör...

Då gör den oftast det motsatta av vad den "skulle" ha gjort.

Logiskt?

Om chartet ovan ser ut som en konsolidering med negativ bias (kan bero på att vi använder Candle stick charts för att beskriva pris) så ser vi nedan en toppformation. Ett "close only" chart. (utan high low) visar här att vi har brutit hals linjen i en Huvud skuldra formation. (I close only-chart har vi rensat utvecklingen för utsving och visar bara den vigtiga lukkekursen). Båda charten visar nasdaq daily.


I det korta perspektivet kan vi alltså göra ett antagande att vi har en topp formation.

Historiskt sett så kan vi se den senaste tidens kursutveckling i nedanstående chart för Dow Industrials. Det verkar som om vi befinner oss i en, historiskt sett, extrem situation.

Låt oss se på den långsiktiga situationen. För enkelhetens skull delar vi upp charten i flera analyser.
Nedan kan vi se en regressions (grå) kanal i S&P 100, med 2 standardvariationer. Regressionslinjen är centerlinjen (den matematiskt genomsnittliga kursutvecklingen, beskriven som en linje). Vi kan se att vi ligger i toppen av kanalen - samtidigt ligger vi strax under "det gyllene snittet ( fibonacci 61,8%) av hela nedgången från 2000, vilket också skapar motstånd i kursutvecklingen



I chartet nedan har jag lagt in 2 Andrews Pitchforks (blå och lyseröd). De korsar precis där kursen är idag, vilket skapar motstång mot fortsatt uppgång - dessutom hav vi fler fibonacci nivåeri samma område (vågräta linjer), som förstärker motståndet. Relatioenerna kan avläsas i texten på chartet.



Tidsmässigt har vi en "Fiboncci spiral"(blå) samt en Fibonacci projektion (fib cykel - eller dynamisk cykel) som slutar där kursen är idag. Dett skapar också "motstånd". Man ser ofta kursändringar (topp/botten) vid dessa projektioner.



Sammanfattar vi det hela ser det ut såhär. Jag har dock lagt in fler Fib cyklar, vilket förstärker sansynligheten för trend förändring. det vill säga, sansynligheten för att vi befinner oss i en toppsituation.



Nedan ser vi DAX index. Situtionen påminer starkt om S&P indexet i USA. Förutom fibonacci cyklarna, har vi motsånd över kursen och ser vi på utvecklingen så har vi ett breakdown ur den stigande kilen som vi inte lyckats komma in i igen. Vi har legat under den understa linjen och har i dagarna kommit upp till Apex av kilen, där kurserna ofta vänder nedåt.


Citat fra Berlingske Tidende i Fredags:
"Aktiefest for fuld musik
Private småsparer vælter penge ind i danske aktier og sender kurserne op med rasende fart. Årsagen er blandt andet, at festen på boligmarkedet er ved at klinge af, og prisen på både sommerhuse, lejligheder og ferieboliger i udlandet er under pres.Det får stadigt flere private investorer til at vende blikket mod danske aktier ."

I chartet nedan kan vi se vad som ofta sker i slutfasen av en Bullmarket. Kursen stiger rakt upp i fullständigt okrontollerbar fart, som spränger de flesta gränser för normal "utveckling".
Med tanke på "Contrary Thinking" så såg jag förra veckan framsidan av "The Economist", där det stod: "We have never had it so good".
Hmmmmmmmmmmmmm

Låt oss slutligen se på MaerskB:

Efter break out ur inverterad SHS formation har kursen exploderat upp till motstånd där jag förväntar rekyl. Faran är att kursen inte skall högre. Längden på de gröna pilarna ger mig mistanken att vad vi ser är en korrektion mot huvud trenden.

Ett längre perspektiv underbygger tanken att vi ser en korrektion upp, mot huvudtrenden som i så fall är ned (långt perspektiv). Vi ser också i detta chart nedan, hur de gröna pilarna har ett geometriskt sammanhang i stället för fibonacci (det geometriska sammanhanget ser vi ofta vid korrektioner). Observera också den cykliska (tid) uppdelningen av kursutvecklingen från 1999. Den indikerar att vi befinner oss i en viktig tids situation, långsiktigt. Den röda Andrews Pitchfork är också en del a Puzzlet (den genererar motstand).


I detta sista chart har jag lagt in 2 Andrews Pitchforks (långsiktigt perspektiv). Att de korsar kursen där vi nu befinner oss, är en vigtig signal, som betyder att vi i under alla omständigheter, med stor sansynlighet skall få en korrektion i storleksordninge 11%-12%.

Om vi fortsätter under 55000 vet vi ännu ingenting om.

Jag har tidigare abonnerat på "IInside Track" ( http://www.insiidetrack.com/ ), där Eric Hadik har varit rätt precis i sina förutsägelser. Numera får jag några "teasers" (där han visar hur duktig han är) i hopp om att jag skall abonnera igen. Sådan en "teaser" låg i en mailbox som jag sällan använder. Jag såg den härom dagen och delar gärna med mig eftersom han igen prickat in en topp. Nasdaq high kom den 16 Januari.

"It also brings to light a very important and very significant cycle that has governed the Nasdaq 100 for many years…It is, quite simply, a 360-degree cycle (360 days or 1 year) that has helped identify significant highs in January for several years.
In 2001 - in the midst of its major bear market - the Nasdaq 100 rebounded into January 22--26th before entering the 2nd sharpest 10-week drop of the entire 2½ year wave down.
In 2002, the Nasdaq 100 bounced into January 7--11th before entering its final 9-month wave down. After setting a low during the October 2002 cycle low, the Nasdaq 100 bounced, retraced and bounced again - leading into January 13--17th, 2003. This particular January high only held for 15 weeks, helping to corroborate analysis for ‘the greatest rally seen in many years’ (following the Oct. 2002 cycle low).
The first major rally (67 weeks in duration) stretched into January 19--23, 2004, when a 9--10-month high was set. It took until November 2004 for the Nasdaq 100 to break above this January peak…
Once it did this, the NQ rallied into January 3--7, 2005, when another 9--10-month peak was set. And, just as in 2004, it took until November 2005 for the Nasdaq 100 to break above this previous peak.
So, what followed???

A rally into January 9--13, 2006, when the Nasdaq 100 set…????
You guessed it - a 9--10-month peak that was not broken until November 2006!
And who said the markets do not adhere to cyclic patterns?!?!?
Could another peak be set in January 2007… and usher in another significant, intra-year setback? I think so.
This is recently corroborated by the NQH weekly LHR pattern that portends an intermediate high no later than ...For now, 2-3 month & 3-6 month traders & investors should be exiting intermediate longs & waiting for confirmation that a reversal lower is unfolding.
...the SPH, which hit and held its daily LHR on Thursday. This pattern indicates that a 1-2 week high should take hold no later than Wednesday, January 17th.
This is interesting since the end of the coming week and the beginning of the following week (the individual trading days between Jan. 18th--26th) provide reasonable potential for the SPH to turn its daily 21 MAC back down. The DJIA will have a similar opportunity during that time frame...the SPH & DJIA would have to drop below xxxx.x & xx,xxx on Friday, January 19th in order to turn these channels lower...
....the SPH is developing a synergetic combination of weekly HLS levels at 1386.5--1389.7. While this level could be tested in the coming week, all the other factors point to Jan. 22--26th as a more likely time. This would be reinforced if the SPH set an intra-week low - in the coming week - around xxxx.x. The DJIA could set up a similar pattern with an intra-week low around xx,xxx. Trading Strategy: 1--4 week traders should..."

När allt detta är sagt vill jag visa ett chart som också är vigtigt.
Vad vi ser nedan, är en liknande analys jag gjorde i November 2006. Där jag också antog att kursen skulle korrigera ned.
Som vi kan se så uteblev nedgången och man kan då, helt rigtigt, fråga sig vad man skall med denna typ av analyser till.
Man bör då veta att resultatet och slutsatsen inte är en sanning, men en sansynlig beskrivning av verkligheten och att osansynliga händelser sker med jämna mellanrun.
Vad som också är bra att veta är att chartet nedan beskrive ett starkt motstånd över kursen och för att driva igenom ett sådant starkt motstånd behövs en kursbevegelse med stor energi. Kommer vi igenom ett sådant motstånd, försvinner inte denna energi. Energien transformeras till rörelseenergi, som oftast förorsakar en kraftig, hurtig kursbevegelse på andra sidan motståndet (samma sak gäller för support/stötte). Chartet nedan ger en klar bild av en sådan situation.
Rent emotionellt är det svåt att utnyttja en situation som denna (att byta från positiv syn till negativ eller vice versa), men som kan ses i chartet är det vid dessa tillfällen man finner hurtiga kursbevegelserna.

Det är därför det är vigtigt att i den kommande tid hålla ögonen på Nasdaq. Situationen är den samma idag, och bryter vi det kraftiga motstånd vi har över kursen, tror jag vi kan förvänta en veritabel kursexplosion.
Det gäller alltså att ha en handlingsplan för ett bull och bear scenario. Det finns risk för att hamna på "fel" sida om man inte följer utvecklingen nogrant framöver. Jag tror vi befinner oss i en period där kursutvecklingen för en längre period, skall bestämmas.
Vi står i liknande situatior mht Guld och valuta och det är möjligt att vi skall studera dollar kursen nogrant framöver - det har tidigare hänt att det är på valutafronten man först ser tecknen på vad som skall hända med aktierna.