IT APPEARS TO BE HANGING IN THE BALANCE OR IS IT?
As our fearless leaders muck it up over this ridiculous debt debate, I think we are now setup for a decline right now. This view is just based on technical stuff I use. I am sure if we go down it will be blamed on the debt talks, but that will not be the real reason. The news reports are never accurate on true causes of things other than when a tornado blows a house over. We know that is correct only because we can see the film footage. However, this does not mean a whip saw cannot happen. I think the Bernanke 2000 is where shorting should be done, and tonight we had a huge down gap due to debt talk rumors. Although Sunday night opens at times can be screwy, rarely are they this big. On a daily chart basis I am not crazy about Fridays bar, followed by a gap down opening. We do not see many big down moves that start with a pattern like this. Most from what I have found bounce a day or two or move sideways, then break, if they break at all. What I am looking for is a reversal of this back up but not too far, then a sell below the lows of the days that bounce. Will it happen? That is anyone's guess, but I have a plan and that is better than what most people have.
We do now based on this opening have a confirmed lower swing point high as per the exchange I have been having with Don on this. Trading by the strict rules of swing points on a short term basis, one would be short tonight stopped above Friday's high. That might very well be a huge winning trade. However, I am dead convinced that the Republicans will give in on this just like they did last time, and when they do, that will be when we will bounce. That is merely an opinion and not something I am trading off, I just find it ridiculous that anyone thinks otherwise. Barry has the media locked up so he cannot lose the PR campaign over this. It is still surprising to me that liberals think spending more than you make and then maintaining a ponzi scheme to pay the bills by stealing money from people with high net worth, is a viable long term plan. I don't know when the time will come, but I do know it is coming, when the million dollar trade will be to bet against these idiots. We have to be careful though because they do control the FED right now, and as we have seen the FED can rally the DOW 6000 points if it wants to. QE3 will get launched the minute trouble starts, so it will be very interesting to see if they can stop a big decline if one starts to shape up.
For now we still have mostly up trends in most commodities which means dips are buys on the weekly charts. Whether or not we will have trend changes or not is yet to be seen. If we do get a downward move in the stock market, we are going to see commodities change trends also. The world is still one trade basically.
Someone who got my email from somewhere was touting a buy signal last week in China. The above chart is the daily stock index of that country. Do you see a buy signal there? The short term market structure is up but barely. If the low of about a week and a half ago gets taken out I think you can turn out the lights there for a bit. I think sometimes people get so tied up in hyping something to make money off the monthly newsletter fees, that they throw out one thing after another to see if anything sticks. His premise is that he is a commodities bull, and China is going to drive the whole world demand higher. Of course he has to find buy signals, because if that country is going where the index appears to be, there is not a strong likelihood that huge demand will come from there in the near term. If we were to take out the recent high things look good in the near term, so we need to watch here. However, I certainly do not see a buy signal confirmed yet since we basically closed on the weekly lows last week. Trust but verify, remember that including anything I spit out.
I am still bullish on Bonds here, the next chart will show why. I feel a bit guilty in that Larry Williams just earlier today put out a video on this, but I was talking about this before today as readers know. Also, since I am a student of his and use many of his tools, my views on market setups tend to be pretty close to what his are most of the time. That is the way I like it.
You can see on this daily chart my COT Synthetic indicator is showing insider buying at a pretty high level here. This does not happen too often, normally a larger dip is required for this to happen. This is bullish. The next chart, which is the weekly, also shows COT Commercials buying steadily here on this small dip, again somewhat unusual and very bullish. Also on the weekly chart you can see where we are basically at the seasonal low. One of the most consistent seasonal patterns in all the markets, is for Bonds to make a low in July, and rally for the rest of the year. As with anything else, this does not always happen. Do your own studies of Bonds in July and you will see how often nice lows form during that month. We have not retraced much, so maybe we will dip a little more I am not sure. I do know that the next good sized move should be up here.
Weekly setups are just setups, they are not necessarily immediately actionable spots. They are zones where I look for daily entries. The daily chart does not show an entry for me Monday, so I an waiting to see how my daily indicators line up in the next couple of days here. The daily chart actually shows that if we were to break for a few days and rally, it could be a pretty good daily sell setup. Since the two are not in sync at the moment, I do not have a trade.
I also think Copper if it were to close higher on Monday could be setting up a sell for Tuesday, as could Cattle.
That is it for now, good trading to everyone.