Here is what I see coming for next week
One of my favorite markets to trade is Silver due to how much volatility there is in this market. I have diagrammed the exact trade I will try to make Monday here. We do have to travel a ways to get filled on this since yesterday was a big up day there. Sometimes I like these the most because it will take a strong move to get me in. You can see if we get down there we will also break the dominant trend line in place here that is containing price. On my wish list I would prefer to have move accumulation/distribution divergence ( green and purple lines ). However, that is not a requiste for me to take action.
Big picture in the metals, I still do not have a great feel either way. The historic bearish fundamental setup that was in place when the top was made has been worked off some without price completely crashing. That was no small feat. However, you will see in a second on the next chart what bothers me about this rally. Maybe this is the trade that Dr. Laura, G Gordon Liddy, and Glen Beck and a few 9 yr olds all get right. However, I just can't make a habit out of taking investment advice from that Motley Crew. The end of the world as a premise for a trade is not likely to be one I will ever pull the trigger on. That is what bothers me the most bigger picture here. I just don't like the company I would be keeping on the long side of this market for a run to $3000 or whatever the latest target they have is. They might be right but as I have stated over and over, this is the most crowded trade in the history of the world. The markets have not historically made a regular habit of proving the majority to be right.
This is a GOLD chart not Silver, but the two basically trade together. As you can see from this chart, the buying that is going on is once again the Small Speculators, while Commercials are selling. We are now approaching again the record levels of the positions in these two categories again. I continue to think that there is something amiss in the COT data lately as I have stated in here repeatedly lately. Although I do think it is Small Specs and not big players hyping and buying this, something just feels very wrong about the COT picture here. All else being equal, when we hit the historic positions at the end of last year, we should have cratered in this market. There should have been a much larger drop than what we have seen and historically with this data this has been the case. In fact I cannot recall one single example of where historic positions were achieved like this that did not represent a major top in prices. Not one single time.
Since I have seen other markets where this has also happened recently ( Lean Hogs to name one ) it makes me very suspicious of who is getting categorized as what here. I have no idea why anything would have changed in this regard and maybe it has not. However, when something that is a fundamental indicator that has worked for decades all of the sudden stops working, while at the same time we have record dishonesty from the government on so many fronts, it makes me suspicious they are playing with these numbers also. In addition to this, the great readers and experts of this report can't pick a winner to save their life in the last year using this information. That tells me something is definitely amiss but I do not know what it is. For now I am looking to short this market in the next couple of days. If we explode up through here more than a couple of days, my sell signals will be invalidated. If it is going it should go right now.
Here is another market that I think is setup as a short but needs to go in the next couple of days.
Here is a weekly chart showing the Flat Lining down trend. This is kind of surprising in that the price chart does not appear to reflect the same thing. This momentum line is derived over a long period so as not to move too quickly. As a result, it does not show trend changes on wiggles. This situation tells me to still look for sells on the daily charts. Now to the daily.
Most of the trend indicators are saying down here and we have a bounce. A sell below Fridays low will be an entry for me here. If we were to blow through the recent highs on the Weekly chart, this market could really be off to the races. Until that happens, and my indicators say to sell, that is what I will do.
There is alot of talk about rising interest rates, but as you can see here they are not rising, they are dropping the last 3 weeks. This is the 30 yr bond chart and we have a nice little rally going on here. We have now had a couple of down closes which has setup a buy opporunity. All the trend indicators are up and the accumulation/distribution indicators are racing ahead of price a bit. This looks good as a buy to me right here if we trade above Friday's high. We are right into a weekly sell zone here, so this is a critical level that needs to be broken for bulls to be right. If we just roll over from here, the downtrend obviously stays intact on a weekly basis. I kinda wish we had a sell signal here on the daily becuase it would tie into the weekly better. We never seem to get everything we want!
That is all for now, we will see if any of these play out next week.