KISS... ASK A 5 YEAR OLD
I always shy away from interviewing 5 year olds because they are tough, every answer is one word. However, sometimes the simplicity with which they see the world can help us adults get a clue. The smarter we are the more we think we can create all these fancy techniques that will predict the future more accurately. Very few people are more guilty of that than I am. We have the COT data on the Silver chart above giving us all sorts of information to act upon. It certainly has been right at times and wrong at times. I bet if you asked a 5 year old at any point during the past 2 years to just look at the chart and tell you which way we would go next they would have told you up.
Unfortunately for me my 5 year olds are Saint Bernards and they have no interest in giving me an answer they would rather chase a coyote with all they got to see if they can finally get one just one time. That plight, that desperate raw instinct they have to want to shred one of those little dudes is like trying to fade big trends like this. We know it is crazy to do it but somewhere inside of us we get some faint hope that we will figure out a way to short the top of a move like this. Make no mistake about it when the top does come here be it tomorrow or in 5 years, the fall will be like nothing the world has ever seen. There is not one single commodity, not one, that has a long term chart that looks like the DOW average where it has just gone net up for that many years. Commodity markets swing up and down. They do have spectacular up and down moves, and those are what we as traders live for. The net price over time tends to be a median type of price.
I would not suggest anyone try to pick a top here it is just simply impossible. When it does happen to turn down find the closest 5 year old and ask him what he thinks. If he tells you down, get out of your longs. We are long this market currently with a trailing stop underneath. This market is just running so we will see where it goes, on to the next trade. We make lots of trades and they will never all be discussed in here, but here is one market we are looking for a big move in.
Here is a weekly chart of the Dollar Index which looks quite interesting to me. Here we are basically at the bottom of a massive trading range. As a counter to all the water cooler economists who think they are so smart popping off about how the dollar is getting killed, print this chart out and hand it to them. Net we have gone nowhere in 2 1/2 years here. That low on the left is August of 2008. The dollar index is at the same price as it was 2 1/2 years ago, hardly a massive slide. We have the commercials buying into this dip which you can see they have done when we have been at these levels before. Also what is interesting is we dipped just below that August 2008 low and reversed on a short term basis. It is way too soon to tell, but this could have been a trap.
I posted a daily chart recently showed this market and said it was setting up as a buy if it held. It did not hold at that level, and moved down to where we are now. Once again I will say the same thing, it is time to watch the daily chart for a long entry into this market. The COT data is overwhelmingly bearish in the individual currency markets here also, so although their up trends are still intact, it is time to look for the next big move to be up in the DX and down in individual currencies. The trick that is delaying that is the insidious inter market relationships between these markets and the stock markets. You can watch the tick charts and see them tick up when the SP 500 rallies. That may delay this move from happening, it has so far.
However, stay on your toes here.
As for the stock market, it appears as I stated yesterday that we are going to go sideways to up here in the near term. I think dips are buys again now.
Good trading to everyone and thanks for checking in. I have noticed the readership has increased quite a bit recently.