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U.S. Dollar Break Triggers Sharp Moves in Financial Markets

Stock-Markets / Financial Markets 2009 Nov 26, 2009 - 09:57 AM GMT

By: Jay_DeVincentis

Stock-Markets

Best Financial Markets Analysis ArticleWow

Wednesday break of the dollar triggered a lot of strong moves...


Stock Barometer Analysis

The Barometer remains in Sell Mode. However, it is turning higher at an extended level. We're very cautious here with our key reversal date on the 30th. I would prefer to see the market move sharply lower on Friday and Monday and that should mark a bottom.

The Stock Barometer is my proprietary market timing system. The direction, slope and level of the Stock Barometer determine our outlook. For example, if the barometer line is moving down, we are in Sell Mode. A Buy or Sell Signal is triggered when the indicator clearly changes direction. Trend and support can override the barometer signals.

Stock Barometer Cycle Time

Friday is day5 in our DOWN Cycle.

The Stock Barometer signals follow 5, 8, 13, 21 and sometimes 34 day Fibonacci cycles that balance with 'normal' market cycles. Knowing where you are in the current market cycle is important in deciding how long you expect to maintain a position.

Potential Cycle Reversal Dates

2009 Potential Reversal Dates: 1/20, 2/11, 3/7, 3/15, 4/8, 4/16, 4/27, 5/7, 6/8, 7/2, 7/17, 9/14, 10/2, 10/10, 10/24, 11/12, 11/30, 12/9, 12/21, 12/29. We publish these dates up to 2 months in advance.

We initially believed thatthe market would move lower into 11/30, our next key reversal date. However, prices could hang up here into that date, setting up a larger retracement. What happens in the next couple of days is very critical to how December plays out...

My Additional timing work is based on numerous cycles and has resulted in the above potential reversal dates. These are not to be confused with the barometer signals or cycle times. However, due to their past accuracy I post the dates here.

2008 Potential Reversal Dates: 12/31, 1/11, 2/1, 2/13, 3/6, 4/5, 4/22, 5/23, 6/6, 6/27, 7/13, 9/2, 10/3, 10/22, 11/10, 12/11. 2007 Potential Reversal Dates: 1/10, 1/14, 1/27, 1/31, 2/3, 2/17, 3/10, 3/24, 4/21, 5/6, 6/15, 8/29, 10/19, 11/29, 12/13, 12/23, 12/31, 1/11/08. 2006 potential reversal dates: 1/16, 1/30, 2/25, 3/19, 4/8, 5/8, 5/19, 6/6(20), 7/24, 8/20, 8/29, 9/15, 10/11, 11/28. 2005 Potential reversal dates: 12/27, 1/25, 2/16, 3/4, 3/14, 3/29, 4/5, 4/19, 5/2, 6/3, 6/10, 7/13, 7/28, 8/12, 8/30-31, 9/22, 10/4, 11/15, 11/20, 12/16.

Spread Indicators

Use the following spread/momentum indicators to assist in your trading of the QQQQ, GLD, USD, USO and TLT. They are tuned to deliver signals in line with the Stock Barometer and we use them only in determining our overall outlook for the market and for pinpointing market reversals. The level, direction, and position to the zero line are keys in these indicators. For example, direction determines mode and a buy signal 'above zero' is more bullish than a buy signal 'below zero'.

QQQQ Spread Indicator (NASDAQ:QQQQ)

The QQQQ Spread Indicator will yield its own buy and sell signals that may be different from the Stock Barometer. It's meant to give us an idea of the next turn in the market.

Gold Spread Indicator (AMEX:GLD)

Want to trade Gold? Use our signals with the Gold ETF AMEX:GLD. Gold gives us a general gage to the overall health of the US Economy and the markets.

US Dollar Index Spread Indicator (INDEX:DXY)

Want to trade the US Dollar? Use our signals with the Power Shares AMEX:UUP: US Dollar Index Bullish Fund and AMEX:UDN: US Dollar Index Bearish Fund.

Bonds Spread Indicator (AMEX:TLT)

Want to trade Bonds? Use our signals with Lehman's 20 year ETF AMEX:TLT. The direction of bonds has an impact on the stock market. Normally, as bonds go down, stocks will go up and as bonds go up, stocks will go down.

OIL Spread Indicator (AMEX:USO)

Want to trade OIL? Use our signals with AMEX:USO, the OIL ETF. We look at the price of oil as its level and direction has an impact on the stock market.

Supporting Secondary Indicator

We daily monitor hundreds of popular and proprietary technical indicators that break down market internals, sentiment and money flow to give us unique insight into the market. We feature at least one here each day in support of our current outlook.

Summary of Daily Outlook

Weremain in Sell Mode, looking for a move lower into 11/30. However, if prices hang up here, then we'll see more selling in the beginning of December.

The EIOVR suggests we're on the verge of a larger move higher.

Here's a chart of Nasdaq Cumulative Breadth - Note the relative low level of breadth in relation to the move higher. This could mean two things. Either the market advance is on narrow leadership and that's bearish. Or (and the one I like better) the advance is in its early stages as there are many more stocks to start participating in this advance...

Humans are an optimistic bunch, and we like to lean towards the positive outlook...

Or you could joint the perma bears out there (can you say Prechter?) and call for a move down to dow 2000... Sure, during bear markets the bear story sells really well and you can hang your hat on being right, but it gets old when you're 9 months into a bullish advance.

The move in the dollar triggered some other sharp moves - i.e. gold cranked yet again, GAZ is finally moving higher off a base, TMF broke resistance to initiate a continuation of the move higher and USO flashed a bullish engulfing. I'm looking closer at the oil trade, but it's unfortunate that they stopped trading in DXO (2x oil bull ETF). I don't think it had anything to do with the previous advance in OIL - but who am I to say. But if DB is out there listening - please bring it back :) I would be thankful for that...

Hope you and yours have a happy thanksgiving.

If you have any questions or comments, email me at Jay@stockbarometer.com.

Regards,

By Jay DeVincentis


Stock Barometer Premier Membership Receive 5 Newsletters, including the Daily Stock Barometer, Stock Options Speculator, QQQQ/Rydex Trader, Market Chat & Explosive Stock Alert FOR ONE LOW PRICE.


Important Disclosure
Futures, Options, Mutual Fund, ETF and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.
Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.
In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.
For a complete understanding of the risks associated with trading, see our Risk Disclosure.

© 2009 Copyright Jay DeVincentis - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

truthhurtsss
26 Nov 09, 16:52
Broken clocks and monkeys

Since you mention "pearma bears", I could not resist repeating this here for the benefit of those who miss this elsehwere.

Have we not heard of the saying: "Even a broken clock will tell the time correct twice a day".

Another gem from Nassim Taleb's book Fooled by Randomness:

If one puts an infinite number of monkeys in front of typewriters, and lets them clap away, there is a certainty that one of them would come out with an exact version of the Iliad.


Nadeem_Walayat
26 Nov 09, 18:12
Nasim Taleb and Bogus Black Swans

There are flaws in the Nassim Talebs understanding of the financial markets.

Which i will touch on in a future article.

But basically are along the lines of the markets being manipulated towards outcomes that have already been accumulated into.

This was most evident in the shorting of bank stocks into bailout oblivion, as per the actions of Goldman Sachs and JPM.

Remember Bear Stearns was busted by JPM in March 2008 the evidence of which is listed on their derivatives books as they drove GOLD LOWER to force bear Stearns margin calls.

Yes there are Black Swans, but NOT as many as Nassim Taleb thinks there are especially where the financial markets are concerned.

Atune yourself to what the dark pools are upto and you get a window into future mega-trends.

For instance tax payers will fund the banks to infinity which signals forward inflation ! Nothing to do with black swans!


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