Posted August 27,  2008

Markets in a nutshell

•  Oversold Light Crude is jumping off and on the bottom of its up trend line.

• Oversold Gold has a similar pattern. . Let’s see whether the reversal pattern got legs. I think it has.

• Make sure you read the paragraphs on the Silver and Gold intervention under ‘PPT’.

• Keep in mind those guys on Wall Street as those running the Banks and the USA are no altar boys and that they have painted themselves in a corner. The small capitalization of the Gold sector (equal to the capitalization of a share like Coca-Cola) made such an action possible.

• Oversold Euro has a potential bottom and the overbought Dollar a potential top around 1.46 to 1.44. I am still hesitant whether this intermediate top will be reached. 

• Markets go up and come down. They always have and always will. When they do the old markets leaders are replaced by new ones.

•  We are sticking to the advice that funds invested in Financials (Banks, Brokers, Insurance & Re-insurance co’s) should be re-orientated towards other sectors.

•  We have issued a similar advice in the Past for the Real Estate companies and Retailers.

• Gold and Silver shares are historically cheap and a steal. Many are an opportunity to buy gold and silver below the official market price. Juniors are a steal and even better leveraged than options.

•  Fully integrated Oil shares, Oil exploration and Oil service remain excellent sectors.

•  All Gold & Silver indexes are building formations which are confirming the buy signals given during the past weeks.

•  The US Dollar could hold some nasty surprises. This is surely not the best time to buy some at these overbought levels. Dollar holders better protect themselves by using a stop loss. We (.77) are sitting in the top part of the 2^nd down leg with .58 - .50 as an objective.  This is 25% - 35% below today’s level. Expressed in euro terms, this means the Dollar will fall to 1.80 against the Euro.

•  Copper hasn’t given in a lot. It firmly stays in its huge top consolidation/accumulation pattern. An old banker once told me this is a normal phenomenon when there is War and when more Wars are to be expected. Copper is a very important war metal. It is used to manufacture the bullets the stupid idiots are killing each other with for ‘the glory of their country’. A shameless joke it has always been and it will always be.

•  Nice reversal on the CRB commodity index.

•  Platinum futures are jumping off their uptrend line. The objective is 1830.

• The next objective for the Dow Jones is 10,800

• The Dow Jones Utilities keep on showing a dangerous top/distribution formation.

• The Dow Jones Transportation is about to fall out of its top formation.

• The REIT (real estate) index dangerously sits in the top of its secular downtrend.

• The S&P 500 potentially could correct to1350 before it bumps into its secular downtrend. Caution is advised as it could also fall out of its rising wedge.

• The Shanghai index has fallen out of a consolidation zone and the next objective is 2,000

• The Nikkei has broken an intermediate uptrend line. Next objective is 12,400

• There is a HANGING man on the candle chart of the Footsie! It warns for a potential op reversal in a rising market.

• The DAX has bounced off its downtrend line. The next objective is 5,900

• Similar patterns are visible for the Swiss index, the Austrian index, the French CAC, the Spanish IBEX,  and even the Russian stock market seems to have reversed its trend.

• The Hong Kong Hangseng index used to show a lot of resistance. However, it is now also falling into a down trend.

• Euro yield shows a remarkable huge long term reversed Head and Shoulder formation.

• Watch out for the Pound Sterling if it breaks through the 1.25 level against the Euro

•  Whatever they are trying to make believe, the Bank and Financial stocks remain outright SELLS.

• Most Gold and silver shares have an objective that brings them back into the formation they fell out off. In other words, they confirm the FALSE (and probably manipulated) BREAK.

• The Oil index has built a nice bottom and many Oil shares are showing nice reversal formations. Now is the time to buy! 

Posted August 21,  2008

Markets in a nutshell

• Looks we may have finished a massive A-B-C correction for Gold. The $ 840-$850 gap has been closed. The next gap that may be closed now is the $ 880-$900 one.

• Crude Oil seems to be veering off the bottom of its uptrend line. There are several nice reversal formations on the Candle charts of Oil Shares (fully integrated, service and exploration) confirming our 'buy signals' issued over the last weeks. Many nice opportunities here.

• Watch out for the reversal of the Gold and Silver indexes as these can be violent and eventually bring the price back into the formation they initially fell out.

• The Gold miners index (GDM) has fallen back all the way to the bottom of the previous stair but is now building a ‘huge’ spring. Watch out as Gold & Silver shares can violently reverse their trend. Anglo American and Royal Gold held up extremely well during the past correction. The summer of 2008 will be another example of Human Behavior. People each time fail to believe one has to buy when prices break down and sell when they break out.

• Other metals like Platinum are kicking off their long term uptrend line.

• The Dollar index is showing exactly the same reversal formation Gold is showing but in the reverse direction.

• It still looks like the Dow and other indexes are/have fallen out of a wedge/down flag. Watch out for a confirmation over the coming days and weeks.

• The Dow Jones Utility index remains weak and it still in a process of deciding weather or not it will fall out of its top/distribution formation. If it does, it would spell ‘higher interest rates’ for the Dollar.

• The Dow Jones transportation index remains amazingly strong and is still holding well in its top/distribution formation.

• The correction of the S&P500 index is bleeding off as it is hitting its downtrend line. The bar chart has fallen out of the rising wedge.

• The Shanghai stock exchange index shows a nice up-correction in its down trend.

• The Shenzhen index is still falling and ‘en route’ to the base of the parabolic or 550.

• The Nikkei also doesn’t seem to find the energy to break out of the downtrend it suffers from since 1990.

• It is remarkable (or is it not?) that most indexes show very similar pictures.

• The Footsie firmly sits in a downtrend. A up correction to a level of 6,000 remains possible but not sure.

• The Dax has bounced off its downtrend line and fallen out of the rising wedge.

• The same applies to most of the other markets: Belgium, France, Switzerland, Austria (falling out of its top),…

• The Rand firmly sits in a downtrend against the Euro.

• The GS commodity index (agricultural prices) has bounced off its support line around 385 and is heading back to the 500 level. Looks like all the deflation pundits will be in for a surprise.

• There is no surprise about the S&P retail index and seeing it resuming its secular bear trend. All over the Western world, retailers are confirming the trend. The same applies to the Financials and Bank/Insurance/Re-insurance shares/Brokers. Going through the charts, one gets to impression of walking through a graveyard in formation.

• There is a mega reversed Head and Shoulders in the make for the European interest rates. The neck line lies around 4.8%. It can take months before it breaks out, however - when it does – you’d better be prepared and make sure the hurricane shutters are in position.

Posted August 11, 2008

This past week, there was a lot of noise and volatibility, but nothing really changed! Maybe the reason for this volatibility can be found in the paradigm shift we are living which is misunderstood by the investors. This ain’t 1980!!!!

•  Oil is oversold and sits in the bottom of its uptrend channel

• Last week Gold had a sell climax and $ Gold sits in the bottom of its tea cup

• The 64 week Moving Average is $ 820.

• €-Gold, Yen-Gold and £-Gold are all still in a Secular Uptrend

• Silver is oversold and sits in the bottom of its uptrend channel

• Gold indexes saw a sell-off climax and fell back to the MAL (Max. Act. Line) of their previous up step. The magnitude of the sell-off climax and the ‘break away’ gap could indicate we have a Bear Trap.

• Technically, leg 4 of the secular Elliott Wave downtrend of the Dollar ‘can eventually’ take the Dollar index back to the 80 level or 1.43€ (all time resistance level)….but I seriously doubt this.

• Be aware Friday saws a ‘break away gap’ for the Dollar (1.53€ to 1.51€) and that breakaway gaps are closed later on.

• The Reuters/CRB index has fallen back to the bottom up its uptrend.

• Beware of the dangerous BEAR MARKET correction we see on most stock markets. With the ugly state of the economy, I am at this point not prepared to take the risk to invest in Financials, Retailers, etc...because the Fed and the ECB could be flooding the markets with Fiat Money.

• No revival for Shanghai (SSEC) and the NIKKEI  though.

• The DAX shows a bearish reversal signal.

• Many Oil (FI, Serv. & Expl.), Gold and silver shares are flashing BUYS! Here, many break away gaps need to be closed too. Last year, all losses suffered by Gold and Silver shares during August were corrected  in a month’s time,

• Kinross sits in the bottom of its uptrend channel.

This is a short list  about what is happening in the US. One really has to be nuts to believe that with such an economy one can have and a strong dollar and a strong stock market. Time to wake up!

- Ann Taylor closing 117 stores nationwide.
- Eddie Bauer to close more stores after closing 27 stores in the first quarter.
- Cache, a women’s retailer is closing 20 to 23 stores this year.
- Lane Bryant, Fashion Bug, Catherines closing 150 stores nationwide
- Talbots, J. Jill closing stores. Talbots will close all 78 of its kids and men's stores plus another 22 underperforming stores. The 22 stores will be a mix of Talbots women's and J. Jill.
- Gap Inc. closing 85 stores
- Foot Locker to close 140 stores
- Wickes Furniture is going out of business and closing all of its stores. The 37-year-old retailer that targets middle-income customers, filed for bankruptcy protection last month.
- Levitz - the furniture retailer, announced it was going out of business and closing all 76 of its stores in December. The retailer dates back to 1910.
- Zales, Piercing Pagoda plans to close 82 stores by July 31 followed by closing another 23 underperforming stores.
- Disney Store owner has the right to close 98 stores.
- Home Depot store closings 15 of them amid a slumping US economy and housing market. The move will affect 1,300 employees. It is the first time the world's largest home improvement store chain has ever closed a flagship store.
- CompUSA (CLOSED).
- Macy's - 9 stores closed
- Movie Gallery – video rental company plans to close 400 of 3,500 Movie Gallery
and Hollywood Video stores in addition to the 520 locations the video rental
chain closed last fall as part of bankruptcy.
- Pacific Sunwear - 153 Demo stores closing
- Pep Boys - 33 stores of auto parts supplier closing
- Sprint Nextel - 125 retail locations  to close with 4,000 employees following 5,000 layoffs last year.
- J. C. Penney, Lowe's and Office Depot are all scaling back
- Ethan Allen Interiors: plans to close 12 of 300 stores to cut costs.
- Wilsons the Leather Experts – closing 158 stores
- Bombay Company: to close all 384 U.S.-based Bombay Company stores.
- KB Toys closing 356 stores around the United States as part of its bankruptcy reorganization.
- Dillard's Inc. will close another six stores this year.

In the EU almost half of the French and German stayed home during the holiday period. In southern Spain, the beaches of Marbella and Puerto Banus  are empty. Five star hotels usually selling rooms at € 500 per night, try - in an ultimate effort to cover fixed expenses - to sell them at € 120 incl. a free complementary car and a massage. Restaurants are discounting prices.  All other hotels sell rooms at discount prices. Realtors are closing up main street offices.  In France St-Tropez jet setters are spending a fraction of what they spend last year.

Posted August 4, 2008

Markets in a nutshell

•  $Silver sits in the bottom of its long term uptrend. Objective is still $ 23.75. The daily Candle stick shows a Hammer (buy signal) and the weekly chart a Doji.

•  $Gold sits in the bottom of its long term uptrend and on its Moving Averages. The Cup formation is still intact. A very bullish sign is that one Goldmine after the other is closing its Hedge book.

•  €Gold also sits on its Moving Averages and shows a Cup formation.

• The Dollar/Euro keeps on moving sideward (1.53-1.60). In case of a breakout the objectives are either 1.40 or 1.75

•  $Oil has fallen back all the way from its top to the upper limit of its secular uptrend channel.

•  Gold indexes as the CBOE gold index, the Gold Bugs index, e.o. have been very volatile but are at the same time very close to their Long Term support levels. They all show a positive staircase pattern.  (A similar, but negative staircase is visible for the Dollar/Euro). 

• Copper still sits in a Huge Reversed Head and Shoulders formation. It hasn’t been able to confirm its break through the neckline yet. This is an important chart to follow in order to be able judge the future developments of inflation.

•  The Dow Jones clearly sits in a secular downtrend (like most world indexes). However this index still can correct to the 12,000 level before resuming its downtrend.

•  Watch out it the Utilities index breaks below the 470. This would not spell a lot of good for the Dollar, the stock and the real estate markets. Not to mention the economy and the inflation. If it does, it could mean us interest rates may have to be increased to avoid a run on the Dollar.

•  For most other indexes (CAC, DAX, BEL20, AEX, NIKK, Footsie) we have established secular bear trends.

•  In the Canary cage of the banks and brokers, one canary after the other drops death. Any contagious illness by the name of Fractional Reserve Banking?  Not a place one would like to be right now.

•  Gold Shares haven fallen back all the way to the bottom of their secular uptrend channel. The July "Sales" have been extended into August.

•  Oil shares sit in the bottom of their formations and/or are moving sideward. All by all they show strength during the ongoing Garage Sale.

• Retail shares (Home Depot, Best buy, Macy’s) CLEARLY show the real spendable income of the consumer is being eaten away by inflation. The same applies for the Europe.

• Steel co’s and internationals as Colgate, Pepsi, Procter and Gamble, ATT,  Johnson, Monsanto, Potash and IBM haven’t really been affected by the Garage sale.

>back to markets in a nutshell
 

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