GLITTER ABOUT TO COME OFF
We have had a nice bounce in the worlds favorite market which was nice to my bank account balances via the trade I posted in here. As you can see above we are now setting up the bigger picture shorting opportunity for what I believe will be a significant move down.
First, in the top graph we see Sentiment has quickly reversed back to bullish after a brief time in the bearish zone. This of course is bearish for prices. Even more disconcerting for bulls is the GREEN line in the second graph. This is the total net long of small speculators and you can see it has now made another all time new high yet price is well below the peak. This by itself it nothing else were going on would be enough to look at shorting this market.
Next we have the BLUE line which is hard to see but it represents Total Open Interest and you can see it is also very high. When you look at the RED line in the same graph which represents the commercials, you see that they are still very close to their record net short position. This tells us that all the buying is being done by groups other than COMMERCIAL traders.
Last but not least, is the last graph which shows the typcial seasonal pattern which shows we are right in the decline time zone. Larry Williams annual forecast also identifies this area as a significant top probability.
FOLKS IT JUST DOES NOT GET ANY BETTER THAN THIS FOR A SETUP FOR A MAJOR MOVE TO TAKE PLACE
Looking at Copper in the next chart we see basically the same story.
The only differences here are that we are not in sync here with the seasonal but also it shows a more bullish sentiment situation. The other thing that is different here is the Large Speculators have a larger net long position by far than at the all time high. This basically means they are out of fuel to keep driving this much further. This market is much stronger than GOLD anyway and you should always short the weak one. I just wanted to display it for a fuller big picture on this complex.
Now we have to look in the mirror at the Dollar Index, after all it should be bullish with this being this bearish to make this perfect.
I have alot of things market here so lets go through this one at a time. First, there is without question significant commercial selling during this rally, and the large speculators heavily long with price way below where it was the last time they had this position. This is without question bearish, However....
If you look at the 1, 2 and 3 areas labeled on this chart you will see something that indicates a trend change. I will not divulge what these lines are but basically in simplistic terms, once the gaps between price and the lines show up, the trend has changed and you enter on retracements. You can see the first one the retracement was an excellent buy. The second one was an excellent sell that got you the top, and now we have a buy on a dip setup. If we couple this with the seasonal low which typically is right at the first of the year, we have something big in the making.
There is no doubt that the heavy commercial selling is the fly in the ointment here. If you research commercial activity they often are opposite of the trend so this can in fact be bullish at times because it actually confirms a market turn by them turning on their hedging function. This will be confirmed to be the case if the recent highs get taken out.
Since the dollar index is a lightly traded contract this overall has less importance than looking at other markets. It is always important to get a context for bigger picture views so that is why I provided it. You can also see where I have indicated how the Dow ( black line on price chart ) has been trading opposite of the Dollar but might be coming back into sync with it. This relationship has varied enough recently that I think it is worthless because it is not doing what it fundamentally should be doing. I think it is basically noise to consider that now.
I mentioned that there would not be a public service announcement as to when the stock market might be topping, the opposite of this is true here. This is a rare opportunity to make a market killing that does not come up too often. In my 25 years of trading I have only seen a couple of setups that were as good as this for a major move. People willing to listen to what the market is saying and tune out all this insulting crap from all the celebrity pitchmen about Gold, are going to be able to make a market killing on this decline.
Are you going to be one of them, or be part of the herd being rounded up in the slaughterhouse?