My life is so hectic during the week that I love the weekends since they give me time to catch up on the larger picture of what is going on across the board. Let's see how things look.
The stock market is sailing merrily along and aside from short term things I have mentioned in the past week which are good for only quick in and out trades, I see nothing alarming here that tells me a major peak is near. There is net commercial selling but this type of activity is meaningless. The traditional seasonal peak time period begins in May, so that might be a time to look for something in the way of a reversal. We can argue all we want about whether this should or should not be happening, but the bottom line is this is a rock and roll major trend move up. Fighting trends like this is not wise. This is just creeping along slowly and steadily. These are the hardest moves of all to time reversals in from my experience. The key level of 1040 is now established so nothing bad happens until price gets below that. I have stated I think 1235 is a layup and have not changed my mind on that. There is nothing that says we will stop there if that level is reached. That price zone is the .618 retracement of the whole down move, and these levels often become self fulfilling prophecies.
There is no doubt that what Chairman Barry is doing here will at some point completely wreck the economy and the stock market, but it may take some time. As I have mentioned earlier, shifts to communism and socialism have not immediately wrecked other countries stock markets, so there is not a precedent for saying that this obvious shift will do that here either. I am looking from a short term perspective to trade the short side here but just looking for a minor correction.
Here we have the dollar weekly chart and the uptrend is evident. What is also evident is again how the COT data would have led people astray here. First we have 2 instances of huge increases in Small Spec longs which should be bearish. In each of these instances the market has exploded higher. We also have a record net short position by Commercials which again has been worthless to know. We also saw this same situation in GOLD during it's runup. It did eventually foretell of a major top but took so long that I would call it worthless as a timing indicator. I am looking to get long on a pullback in this market, we have a lot of upside left here.
With the Dollar being bullish you would think Gold would be bearish. However, we are in a weekly buy zone right here. Price has found it's way right into a strong support zone. If it holds here we could see a very nice move upward and the Gold bugs will be dancing in the streets. However, if we do not hold this level I do think a huge collapse will happen here. I still for the life of me cannot understand the logic of buying something because it has already risen 300%. The summary then is that we are at a key inflection point here and I think a large move in either direction could happen. You could say well what the hell good is that you can then come back and say I told you so either way.
Anyone who reads here regularly knows I never do that and rarely make a call like this where we could break out in either direction. I will not do that here, I do not have a strong view on direction in this market right now. My calls along time ago for a monster decline in this market were based on COT data that I think was manipulated. There has to be a reason out of the norm why that data has become worthless after being great for so long. I do not know what that reason is I just know that it is no longer of much value in predicting market price movement. I am not one to stick to a view on something forever stubbornly. I do feel the whole premise for a huge upmove in Gold is bogus, but I trade price and we are in a zone where we could move higher. As a result I will take short term trades in either direction here.
The Euro is pretty self explanatory, major downtrend sell rallies. We do have again huge commercial longs at record levels and similar record shorts with small specs. However, we have no sign yet of a trend change.
Crude Oil is an interesting situation. We have a sideways market with rising Open Interest, generally a bearish situation. We also have a good amount of commercial selling now that we have risen back up to the top of the trading range. This is a situation where generally the COT data should still be of help. Let's see if it holds true here. My view of this as a result of this is that I am looking for lower prices in the energy markets. I have traded the short side of Heating Oil this month and caught a nice 700 point down move there within the last week.
That is all for today, have a great weekend