Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
Stock Market Time to Go All-in. Short, That Is - 19th Oct 17
How Gold Bullion Protects From Conflict And War - 19th Oct 17
Stock Market Super Cycle Wave C May Have Started - 19th Oct 17
Negative Expectations, Will the Stock Market Correct? - 19th Oct 17
Knowing the Factors Affect your Car Insurance Premium - 19th Oct 17
Getting Your Feet Wet In Crypto Currencies - 19th Oct 17
10 Years Ago Today a Stocks Bear Market Started - 19th Oct 17
1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - 19th Oct 17
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17
Q4 Pivot View for Stocks and Gold - 14th Oct 17
Gold Mining Stocks Q3’17 Preview - 14th Oct 17
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold - 14th Oct 17
Yuan and Gold - 14th Oct 17
Tips for Avoiding a Debt Meltdown - 14th Oct 17
Bitcoin Hits New All-Time High Above $5,000 As Lagarde Concedes Defeat and Jamie Demon Shuts Up - 13th Oct 17
Golden Age for GOLD, Dark Age for the Stock Market - 13th Oct 17
The Struggle for Bolivia Is About to Begin - 13th Oct 17
3 Reasons to Take Your Invoicing Process Mobile - 13th Oct 17
What Happens When Amey Fells All of a Streets Trees (Sheffield Tree Fellings) - Video - 13th Oct 17
Stock Market Charts Show Smart Money And Dumb Money Are Moving In Opposite Directions—Here’s Why - 12th Oct 17
Your Pension Is a Lie: There’s $210 Trillion of Liabilities Our Government Can’t Fulfill - 12th Oct 17
Two Highly Recommended Books from Bob Prechter - 12th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Stock Market On the Edge of Something Very Big, Crash?

Stock-Markets / Financial Markets 2010 Jun 09, 2010 - 07:02 PM GMT

By: Anthony_Cherniawski

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleU.S. stocks lost their gains Wednesday as Federal Reserve Chairman Ben Bernanke voiced cautious optimism about the economy and the central bank's Beige Book also noted modest improvement.

"Everything is universally moving in the right direction, but we already knew that," said Jeffrey Kleintop, chief market strategist at LPL Financial of the Fed's June report, which noted improvement across all 12 districts.


Backlash at BP

The cost to protect BP Plc’s bonds against default soared to a record, more than nine times the level before one of its wells exploded in the Gulf of Mexico, as pressure on the company to suspend its dividend intensified.

Credit-default swaps on BP climbed 126.1 basis points to 386.9 basis points, according to CMA DataVision prices. More than 40 U.S. lawmakers called today for the London-based company to suspend its dividend and Interior Secretary Ken Salazar told a Senate committee that “significant additional” safety requirements will be imposed on oil and gas companies drilling in the Gulf.

Why Did The U.S. Refuse International Help on The Gulf Oil Spill?

(ZeroHedge) Despite the vow by President Obama to keep the Gulf oil spill a top priority until the damage is cleaned up, 50 days after the BP rig exploded, a definitive date and meaningful solution is yet to be determined for the worst oil spill in the U.S. history.

So, you would think if someone is willing to handle the clean-up with equipment and technology not available in the U.S., and finishes the job in shorter time than the current estimate, the U.S. should jump on the offer. But it turned out to be quite the opposite.

The VIX tested intermediate-term Support.

-- All of the see-sawing in the VIX confirms the uptrend, even though it closed below short-term Trend Support at 34.19 today. The rally in stocks that completed today was at a smaller-degree than the rally which topped on May 12th. However, the VIX is giving this pause in the decline a higher-degree pullback. This is something that I have only observed for the first time, and suggests a very strong move is about to happen.

The CBOE Put-Call Ratio for equities ($CPCE) stayed neutral at .92 today. The pros have increased the $CPCI to 1.62 (more bearish) at the end of the day. The 10-day average is still 1.52. The NYSE Hi- Lo index closed down 32 points today to -108. The Hi-Lo index remains in bearish territory. Bullish territory starts at 95.

SPY retested short-term Resistance.

Action: Sell/Short/Inverse -- The saying goes, “The markets always rally before a crash.” SPY is no different as it approaches the Head and Shoulders Neckline illustrated in the chart. This will be the third attempt to break 104 since the Flash Crash in May. It may just be the charm.

The probability of some event causing the market to gap through support overnight is very high. The H&S pattern sets up a target of 86.64, which is very close to the July 8 low of 85.77. My model suggests that we may see the markets meet their downside targets early next week.

QQQQ makes its lowest close since February.

Action: Sell/Short/Inverse -- QQQQ closed lower as it traces out a complex Head & Shoulders pattern with a neckline roughly corresponding to the lower trendline of the Broadening Top formation. It appears that the very next target for QQQQ will be the lower trendline of the Broadening Top. However, I am looking for a “normal” wave 3 that may cut through the trendline on its way to 37-38.00 or lower. A likely target may be its (last) July low at 34.17.

XLF is prepared to plunge through its neckline.

Action: Sell/Short/Inverse -- XLF now appears ready to drop below the Head & Shoulders neckline which gives us a target of 10.50 – 11.00. Head & Shoulders patterns work best at the beginning of a third wave, which describes the situation perfectly. The July, 2009 low was 10.73, which is the next support level.

The brief spike to 14.37 this morning before XLF turned back down played out as expected. We are now starting the most powerful move of the series today.

FXI appears ready to cross intermediate resistance.

Action: Buy/Long -- FXI rallied briefly above intermediate-term Trend Support at 39.40 today. It also had an upside breakout, even though it settled below Trend Support at the close. This is very bullish action and should be encouraging for those who have doubted the upside reversal until now.

$SSEC made a pretty substantial move today, as well, closing just below short-term Trend Resistance at 2590.

GLD stumbled, but maintained its uptrend.

Action: Maintain Longs, looking for an exit -- GLD stumbled after its breakout, but is still advancing in a “wave c” of a probable final zig-zag on its way to my model target of 126.00.

Yesterday’s breakout is still being tested, but a more convincing emergence above 122.24 should bring the buyers back. It is doubtful that the volume will increase appreciably, however, since it will be the retail buyers pushing up the final spike in price. GLD is already in nosebleed territory, so it may not be wise to stay too long. I will keep you posted if a reversal pattern emerges.

USO is completing a wave (ii).

Action: Sell/Short/Inverse -- Today’s rally in USO cleared up the wave pattern as it spiked toward intermediate-term Trend Resistance at 35.93. This has two implications. First, it may spike even higher as it completes a higher degree (to 35.93, perhaps?) second wave. Second, wave (iii) may take USO below 18.00 in wave (iii). There is no “alternate count” in USO at this time.

TLT has finished a pullback to short-term support.

Action: Maintain Longs, Look for an exit early next week. -- TLT found support at the shortterm Trend Support at 97.25. It appears that the next rally attempt should break above the prior highs and potentially target the 103.00 area. Once that target is reached, it may be advisable to start taking profits, unless you can watch the pattern like a hawk.

The U.S. is now one of the top 5 sovereign deriskers as CDS activities are picking up. This does not bode well for our bond market. The perceived risk of default is now rising.

UUP also finds support at the 13-day moving average.

Action: Buy/Long -- UUP pulled back to its short -term Trend Support at 25.44 instead of accelerating as I had expected. Nothing has changed, though. Wave iii of (iii) could go substantially higher, targeting somewhere above 28.00 in the move immediately before us.

Tomorrow the pivot window for UUP opens, so we may see fireworks starting in the next move higher.

Have a great evening!

Tony

Traders alert:  The Practical Investor is currently offering the daily Inner Circle Newsletter to new subscribers.  Contact us at tpi@thepracticalinvestor.com for a free sample newsletter and subscription information.

Our Investment Advisor Registration is on the Web

We are in the process of updating our website at www.thepracticalinvestor.com to have more information on our services. Log on and click on Advisor Registration to get more details.

If you are a client or wish to become one, please make an appointment to discuss our investment strategies by calling Connie or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

Anthony M. Cherniawski, President and CIO http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife