Tag Archives: chart

Rumors of dollar’s death greatly exaggerated

Posted on by
Reply

Sentiment is still very anti-dollar (though not as extreme as last February-April), but the index is no lower than a few months ago, nor even a few years ago. Despite all of the dollar-crash and hyperinflation hysteria in recent years, early 2008 still marks the bottom.

MACD and RSI also seem to back up the case that the next big move is more likely up than down:

3 year daily chart:

stockcharts.com

5-year weekly chart:

bigcharts.com

10-year monthly:

futures.tradingcharts.com

The 10-year chart says it all: the dollar has already crashed, and as is typical in the financial markets, few noticed or attempted to take action until the move was already over.

Relief rally coming?

Posted on by
Reply

We’ve got a clear divergence on RSI now, as each impulse lower over this week has been weaker than the last. This is a sign to tighten up stops or close shorts. You could make a decent case for a quick long trade here with a stop just under the lows, but on a wider time frame market risk is still very high.

Here’s a chart of SPX futures:

TD Ameritrade

Swiss franc and euro look long-term weak, but extremely oversold.

Posted on by
Reply

Note the lack of divergence in RSI this time around, compared to late ’08 to early ’09 when CHF and EUR were preparing to rally (see my red arrows on the bottom of this chart).

This suggests that any rally that develops here (and I suspect that one will soon, since they are very oversold on several weeks of dismal trader sentiment) will not be as strong as what we saw in 2009, and that King Dollar is going to reign for a long time yet. Click the chart to enlarge:

TD Ameritrade

Double top in Gold, like July-March ’08?

Posted on by
2

-

Very high sentiment readings last week, up to 20:1 bulls:bears. Quite a change from a few weeks ago, when traders were bearish by 4 or 5 to 1.

If the tide is turning back to the deflation trade, expect a rout in commodities like the second half of 2008. Yes, gold rose as stocks and other commodities fell last week, but it did the same thing when it first broke $1000 in early 2008 as stocks fell into the Bear Stearns crisis. The corellation with stocks could easily switch positive again as it did in ’08.

Strong bonds, strong Yen, weak commodities = little confidence in stock rally

Posted on by
Reply

In stocks, this whole gap/ramp sequence is something we’ve seen at a lot of tops in the last six months. Just compare it to January:

Prophet.net

We’ll need a solid break of Monday’s high to suggest that we’re not going down here. No matter what happens, remember, this is not 2004. Try to remember what 2004 felt like. The credit machine was still humming away.  Today, the bubble is dead — this is just a giant bear market rally in a giant bear market.

Line in the sand

Posted on by
8

S&P 500 e-mini futures, including overnight trading, 1-month view, 1-hour bar:

Interactive Brokers

-

The story here is that nothing is confirmed yet. The megaphone pattern (expanding upward wedge) hasn’t been busted, so we could still make a new high here, though the strength of such an advance should be weak. Each leg up for the past several weeks has sported weaker internals, such as a lower advance/decline ratio.

Based on internals, sentiment indictors and the action in other asset classes, I think the top was made about 10 days ago, but you never know. Don’t get caught in a bear trap.

By the way, this is what a busted megaphone looks like (Eurostoxx 50, 1 month chart):