BONDS SHOWING SOME LIFE?

Here is a market I have been talking about and been wrong about also. I have been looking for a buy in this market at it has continued to crater. We still have this big time divergence in the POIV indicator here, which at some point is going to provide a base for this market. It could be now. The bottom indicator is a new project I have been working on that I won't reveal other than just to display it. There is an expanding pattern in it which should indicate a low is here. I never know if the low is just for a short term move or a larger one with this indicator, but it has been a pretty good predictor of short term highs and lows. Today as I type this we are up nicely in this market, so we may be forming a low here. Ideally we will drift here for a week or two, then breakout upwards. That will be where I will be looking to get long, if that happens.

There is not as of this week much in the way of commercial buying coming into this market at all, and we have changed on the weekly from up to down. As a result, I think this low will be just a bounce and the next large move is going to be another leg down. As per what I usually say, there is no way of knowing if this will play out or not. It is just what appears to be developing here. It does tie into the equities January dip I am looking for. Since these markets trade inversely for the most part, if equities are going to dip, this market should rally.

The next chart is one I have shown many times before, but wanted to show it once again. Look at the incredible link between GOLD and Stock prices. I continue to be amazed at this, but I watch it intraday at times and am amazed how every little move in the ES prompts a move in GOLD. This is just so bizarre but it is what it is. You can see this pretty much started in 2008, prior to that this relationship did not exist.

Since it does not appear a big equity crash is anywhere near, it is likely Gold continues to be strong based on this relationship. The Dollar is in an interesting spot right now. On a weekly basis we are still in a downtrend, yet the daily has had a nice little bounce, leaving these two time frames somewhat out of sync with one another.

Now that today has taken out this area indicated on the chart, it make this picture a bit unclear to me, hence no trades to make. The Aussie dollar does appear to be setup for a buy on Monday as do a couple of other currencies, so maybe this is still a sell here, but it is not clear at all at this point.


I have noticed recently my readership here has been increasing, so I wanted to say thanks to those of you that read my blog everyday.

There was a question about what a reversal bar is. That is simply a bar that trades down below the prior days low and closes up for the day or vice versa.