GOOD AS GOLD

Gold and Silver continue to climb and at this moment there is no strong reason to be shorting Gold, Silver is weaker and is a tad different.

Notice on this chart that one momentum oscillator is diverging and one is not. This is typical in trend moves, oscillators constantly telling you to fade the trend. They are merely tools and need to be used selectively. The 930 - 937 area is a significant resistance zone that if cleared could have this market really off and running.

I have to admit I am rooting against this market due to the ridiculous stream of people telling you on the radio that you have to put your money into GOLD. They cannot find a single world event that in their opinion will lead to anything other than a rapid rise in GOLD. It is no small coincidence that these same people happen to sell gold coins. However, they have been right recently.

British Pound

This chart image is fuzzy, sorry. It is a Daily chart of the Pound. You can see we are in a downtrend with a little bounce happening. A rally up to the 1.4500 area should represent a good short sale opportunity here. I have some propietary indicators not shown, that are lagging this bounce showing underlying weakness not reflected in the price. As a result this market appears due for another drop if we rally another 300 points or so first.

BONDS

My post on bonds was very timely as you can see what happened after my "Sellin Time" comments on this market. We are following the seasonal pattern to a T right now. We are into Weekly support at this point so it would not be a surprise to see a rally here. Some oscillators are diverging at this low so this is a possible long entry area. Bigger picture I think we go down but a bounce should happen in this area give or take a smidge.

GOLD

Instead of me bragging about how great I am as in the last post, in this market although I have traded it profitably, my views of where it was going have been lousy. The red S followed by the dotted line down show the last trade I made which was a short with a nice profitable exit which is the bottom line. However, I have been expecting lower prices in this market and we have not gotten them.

The Weekly chart still shows lower highs so until that is broken we are in a downtrend, but a very choppy one that is hard to trade. There is not alot of commercial selling going on yet so that is one bearish factor that is not in place. If we look at the whole metals sector however, there is an overall bearish position by the commercials.

Ideally for me here I want a push up that serves up a false breakout that reverses down to get short or I will just sit and wait for this to clear up somewhat. There are always opportunities elsewhere. I want to shoot fish in a barrel not in the ocean, and this market is just sloppy right now.

Strong Dollar



Indicated on the chart to the left was my call for a rally in this market, I happened to get the low exactly which I was not trying to do, just lucky. However, I know there is a longer term upcycle in this market that should last several years, and we were in an uptrend that had a pullback, so it was not really that lucky.



This is where actually being a trader vs an economist or some big picture theorist trying to sell you Gold coins on the radio comes in handy. I cannot afford to have some macro economic view that may or may not be correct, I need to be able to determine when and where the moves are going to occur, so I can position real money in the markets and benefit from it. This is a prime example of watching what is actually happening and getting past being hung up on what should happen. The fact of the matter is that the Yen and the dollar have become the flight to quality vehicles in this stock market wipeout, so why would anyone believe that stocks and the dollar will decline together? That is not what is happening, they are moving inversely from one another. Until that changes don't make investment decisions based on a dollar decline if you also think stocks will decline, they are moving in opposite directions.

Today we are having a huge breakout to the upside in this market not shown on this chart, further extending this rally.

SELLIN' TIME



This is a follow up to the post I had on 30 Yr Bonds. We have gotten this rally up I had indicated I thought would take place. If you notice the oscillator at the bottom is severely lagging this price action, a bearish indication. However, even without that we have had the bounce that has set up this short opportunity. It also coincides almost perfectly with the seasonal pattern. As a result it is time to look for whatever entry patterns you might use to get into this trade.



I will not disclose all of my proprietary entry patterns in this venue, but I will say that I have not shorted this yet, but will be looking depending on how today closes, for a short entry tomorrow. I do not believe in just entering on strength when looking to sell so most of my entries require some short term move in the direction I am looking to enter, but the patterns vary depending on the situation. The stock market crash that is happening right now is supporting this market for the time being but if we got one day of stable stock prices that could quickly change.

How do you like me now?

Obviously my post on the Stock Market was pretty timely. I did say to wait for a break which came the next day indicated by the yellow line at the top and confirmed by almost any oscillator one could have looked at.

I have maintained all along that we are nowhere near done on this decline overall and there is certainly nothing here that indicates anything different to me. I hate having that position because it is the common view unfortunately, but it is what I study tells me.

I see no reason to buy this index or stocks at this juncture even though we are now clearly short term oversold.

WHAT THE BUCK?

Here is a weekly chart of the US Dollar Index. It is clear the uptrend that we have been in and also equally clear why I have been bullish on this market. Notice the blue line indicating the commercials buying the market during the recent pullback in price. This is exactly what we want to see the go long a market.

There are alot of geniuses out there citing one reason after another as to why the dollar is going to take a mighty fall. They may be right, but for trading purposes all that hyperbole is worthless. It comes down to having a way of knowing what your signals are and tuning out the noise. This was a buy signal at the recent low, and I was outspoken about this in many forums including the piggington blog where I post occasionally. This chart shows why. At times I may trade short term against these types of setups, but big picture, these are what you want for large moves in the markets.

First off, Joshua thanks for the nice comments!

Today I have a daily chart of 30 Year Bonds displayed. The historic upward move is clear to see, just for some perspective, 112 to 142 is $30k per futures contract in a market where in the past a good trade was $2k per contract or thereabouts.

We have had a sharp break down from an odd flat ledge at the top. If we couple this with the strong seasonal bearish tendency in January, we should be looking for a rally as indicated by the arrow to setup a shorting opportunity. I do not know if we will get it but I think we will. As far as translating this into actual borrowing rates, that is a waste of time. There has never been the degree of disconnect between Mortgage rates and the underlying longer term bond yields than there is right now. There is so much gamemanship going on with banks pricing in outrageous margins on loans, which I suppose they justify with an anticipated increased default rate. Mortgages should be 4% right now or less based on the underlying.

Following up on yesterdays commentary, the rally has continued. One of the things I have learned the hard way over the years is not to fight trends. The short term trend is decidedly up so even though there are reasons to look for a short sale, until we get some type of breakdown I am staying out of the way of this.

Some of the shorter term timing things I use have already failed to pick this top and we are working on 7 consecutive up days in the SP 500 pit contract. Contrary to popular belief that does not indicate a good short sale entry. We are having extended bounces in most markets right here, energy, grains, currencies, softs, metals. I think most of these are shorting opportunities the challenge is timing them properly.

I have been away for a long time working on several different things. With all that is happening I thought it might be a good time to resurrect this blog.

As we head into 2009 this is how things look in the S&P 500 Index. The most important thing to note is how the commercials in the bottom graph have been on the short side of this market for quite some time. This has been typical during long bear markets in this Index. There is no reason to look for big rallies as long as this condition exists. If I had displayed the other indexes, they are much more bearish with the commercials than this chart shows with the SP 500. What this means is that rallies are shorting opportunities. January has had a recent tendency to have early upward moves which started Friday. The Vix is indicating low relative levels now which is bearish, so this rally on a short term basis could rollover at any time. I would suggest using whatever short term timing techniques you use individually to time shorting this market, it is time to be looking.

I will post some things on other markets soon. I am looking to short Gold on rallies this month, it is not setup quite right yet. Also, although a short term sell is setting up in the Dollar, longer term I am bullish on the Dollar going forward.