weekend update

REVIEW
Stocks slumped for the second week in a row, SPX/DOW -3.6% vs. -3.5% last week. The DOW was the first major index to make new bear market lows, now -19% from the October 2007 high. Yet, under the radar, the KBE banking index has now fully retraced its entire 2002-2007 bull market. The NDX/NAZ dropped 3.8% as some started to realize that techs are cyclical too. Bonds gained 1.2%, Crude rallied 3.6%, Gold confirmed a new uptrend +3.1%, and the Euro gained 1.2%. Crude, the CRB (2.0%)  and CCI all made new all time highs. Economic reports continued flat to negative, and housing was reported down 15.3% year over year. The FED remained on hold.
LONG TERM: bear market
For a comprehensive review of the entire stock market from 1932 to present, please refer to last weeks weekend update. After the five year bull market topped in October 2007 at SPX 1576, the market declined in a series of waves into the March low at 1257. These waves all took one month each (Nov-Dec-Jan-Feb-Mar). A two month rally followed into a May high at 1440. After spending just two hours at that level the next wave (downtrend) began. We have labeled the Jan low as the orthodox OEW low Major wave A, and the May high as the end of Major wave B. An alternate count on the DOW charts, uses the actual March price low as a 5 wave Major wave A decline, then the May high again as Major wave B. Should the market follow the same pattern during Major wave C. We should expect another series of waves down (Jun-July-Aug-Sept-Oct). Upon completion this would terminate Primary wave A, of a potential five year Primary ABC, or Cycle wave [2], bear market. Our eventual target for the end of Primary wave A is just below SPX 1100. Upon conclusion of Primary wave A, an explosive counter-trend bullish like rally should occur, retracing as much as 61.8% of Primary wave A. Certainly a buying opportunity! For now, we will just continue to track Major wave C, which was confirmed by the DOW making new bear market lows this week. And when the waves and the technicals set up, a few months from now, we’ll turn bullish for that rally.
MEDIUM TERM: downtrend continues
From the SPX 1440 Major wave B high the first downtrend has been underway for about six weeks now. Many negative technical signals were displayed at the high. This downtrend appears to be unfolding in five waves, similar to the first two downtrends in the bear market, which bottomed in Nov (170 pts) and Jan (250 pts). The current downtrend reached 168 points at friday’s lows. So you can see that it is similar in length to the Nov wave, thus far. Counting from the high Minor wave 1 was 67 pts at 1373 in late May, and Minor wave 3 was 75 points at 1331 mid-June. Therefore Minor wave 5, to complete this downtrend, can be any length. Since Minor wave 4 ended at 1367, it has already reached 95 pts in length, longer than either waves 1 or 3. If we now take the total move of waves 1 thru 3, we find the length was 109 pts (1440 – 1331). Subtracting 109 points from 1367 provides the next fibonacci target of 1258. The SPX closed at 1278 on friday. When the SPX hit 1440 in May it topped right at our OEW 1438 long term pivot. Now if the downtrend bottoms near 1258, it will have also stopped at an OEW pivot 1261. The daily RSI/MACD indicators are close to downtrend low readings, as is the weekly RSI. If 1261 fails to hold next week, 1240 is the next support pivot.
SHORT TERM
Support for the SPX is at 1261 and then 1240, with resistance at 1287 and then 1316. Short term momentum is oversold, and the near term indicators are the most oversold they have been during this entire downtrend. From the Minor wave 4 high at 1367 we count two minute waves: Minute i at 1304 and Minute ii at 1334. Minute wave iii has already reached 1272 (64 pts), as compared to Minute wave i (63 pts). Minute wave iii came within 2 pts of the Jan 1270 low, a psychological support level. When Minute iii ends we should experience a quick 30+ point rally. The rallies during this downtrend have been 33, 38 and 32 respectively. Then minute wave v should complete Minor wave 5 and end the downtrend. Should the SPX set up holding above the Mar 1257 low, this would place a positve divergence between the SPX and the DOW. A similar positive divergence in March kicked off an uptrend. We would then expect an uptrend retracement back to SPX 1344 – 1364 before the next downtrend took out all the lows and closed in on 1100. Best to your trading!
FOREIGN MARKETS
The Asian markets are all in downtrends, as India’s BSE and China’s SSEC have made new lows.
The European markets are still in downtrends, following the western markets, and a nearing new bear market lows.
The Commodity markets are still mixed with Canada’s TSX in an uptrend, and Brazil’s BVSP in a downtrend. Expecting both to make new highs when the worldwide downtrends reverse.
COMMODITIES
Bonds, the 10YR rate has declined from 4.32% to 3.99% as stocks have dropped. When stocks bottom rates should resume their climb.
Crude made another new high this week trading over $140 as its bull market uptrend continues.
Gold certainly came alive after the FED failed to take any action at their FOMC meeting. It is now uptrending again in its bull market.
The Euro gained 1.2% this week and is close to starting another uptrend, not good for the USD medium term, nor long term.
NEXT WEEK
End of month and the end of Q2 occur on monday. The Chicago PMI is released on monday just after the open. On tuesday June ISM manufacturing and Construction spending, then ADP employment and Factory orders on wednesday, followed by June non-farm payrolls and ISM services on thursday. Friday is a national holiday in the US. The only FED speech on the calendar is FED governor Mishkin on wednesday in Israel. Best to your week! 

About tony caldaro

Investor
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64 Responses to weekend update

  1. egoldspot says:

    Tuesday have been bounce back days….after big sell of thurday look past history

  2. S2 says:

    Underscore,
    Good question. I\’m not real sure, but I wouldn\’t bet on oil and gold for that time period, although the last few days of the bounce could see some re-accumulation back into commodities with positive divergence. And, I think an 8-10 day bounce or even 11-12 days is more probable than 5-7 days although it should be an abc with a decent retrace around the 4-6 day time frame. You could buy an index or sector that has been down more than others (like Dow is down more than Nasdaq) since mid-to-late May. I\’ll probably do that with a partial position while preparing for my gold & oil trades and index shorts for the next down leg. I want to study Nasdaq and RUT and Transports to see if they might play catch-up on the next down leg to give me more bang for the buck. Good luck.

  3. egoldspot says:

    Thursday/Triche, any idea?

  4. Forkoholic says:

    Stu,
    who do you think will lead this upcoming 5-7 days bounce?
    which sector?

  5. S2 says:

    Looks like a perfect ED v of c of 4 just shy of 1290 as proffered. The retrace of "c" even went back to the end of wave ii of c which is common when wave v is short. The retrace also has 5 waves on a 1-minute chart with an apparent 3-wave .6 bounce to 1286.
     
    2 strong possibilities now.
    1. If SPX stays below 1286, it could be ready to launch wave iii of v of 5 down from 1440. Likely targets would be 1-2.6x wave i, which was 10 points. So, 1285ish minus 10 to 26 is 1250-1275 before a iv/v completes things. SPX could also be extending an abc to as high as 1288-1290 into end of day, but the results would be similar tomorrow.
    2.  If SPX moves above 1291 as stated before, it may have formed an abc-x-abc going to at least 1296-1299 probably by Tuesday morning before topping. This would make iv of 5 more equal in size to similar degree corrections as Tony has suggested 30 pts.
     
    I\’m not sure which to favor, but maybe a 1/2 short position in the 1280s and another 1/2 in the 1290s would work with a stop above 1304 tomorrow…if you want to play this last projected drop down. Good luck.

  6. Unknown says:

    B
    I
    U

    The Dow 50mMA is 11573.59.  Sure doesn\’t look like it\’s going to close at or above that level by end of day.  Means the Dow will have technically broken the 50 month MA.

  7. Forkoholic says:

    We think Amos was digging graves whole night

  8. Amos says:

    We went long Crude Oil this morning at 7:30 am sold the position today for  very nice profit.
     
    Might go long again on the next pull back.
     
    Equities are in Wave 4 bounce……when crude starts its next wave up…equities will fall in wave 5
     
    Low volume on crude indexs and RSI (5) suggests it will make one more low before going hgher..
     
    God bless Amos

  9. S2 says:

    From Friday\’s 1272 low, I can see an abc bounce so far.
    1272-1284 (a)
    1284-1275 (b)
    1275-???? (c)
     
    1287-1288 would have marked a perfect 1×1, but that has now been surpassed so I would look for c to equal 1.5x-2x wave a. That would be 1293-1299. Also, looking at the 1-minute charts, I think we are in either wave v or iii of "c". Since the potential wave i (1275-1284=9) is longer than the potential wave iii (1281-1287=6), the wave v would need to be <6 meaning it cannot surpass 1291 (1285+6). If 1291 is reached suggesting SPX is in iii of "c", the odds favor SPX should reach 1296+, which is the level at which waves i, iii and v of "c" would be equal. So, in summary, a 5th wave SPX pullback could happen at any moment since it has satisfied an abc bounce, but if c of 4 surpasses 1291, it will likely reach 1296-1299 which would also be close to Tony\’s 30-pt bounce estimate. SPX 1304 is needed by end of day to keep an ED pattern alive from 1367, but I\’m not leaning that way. The wave overlaps on the 1-minute chart in the last hour suggest to me we\’re either setting up for a mini wave iii explosion to the 1296-1299 area OR we\’re going to get an ED v of "c" just under 1291 as explained above…the next few hours should tell. Good luck.

  10. egoldspot says:

    if so many different analyis result from pros (OIL & GLD), I better find a easy trade then diffcult one, any idea?

  11. Prakash says:

    Stu, where do you see support for gold (GLD)? <90 seems to be the best we can get and I have limit orders in for DGP (dbl long gold) at <22. It does seem that oil and oil stocks are running in to some sort of small negative divergences, while gold is not even overbought and could fit the scheme of flat/marginally down oil and gold going up resulting in oil to gold ratio coming down…Thanks,Joe

  12. Prakash says:

    Stu, where do you see support for gold (GLD)? <90 seems to be the best we can get and I have limit orders in for DGP (dbl long gold) at <22. It does seem that oil and oil stocks are running in to some sort of small negative divergences, while gold is not even overbought and could fit the scheme of flat/marginally down oil and gold going up resulting in oil to gold ratio coming down…Thanks,Joe

  13. Frank says:

    looking at SPY may not be that obvious… but looking at qqqq, we might be in wave 4?  qqqq on 30 minutes look like a abcde bearish wedge… so we may get a blow off top to end wave 4?

  14. Forkoholic says:

    "…people who lend money to the government for the purposes of war."
     
    the lords of war? ;-)

  15. 3BEPb says:

    great quote Bud. Naturally Napoleon understands the nature of the people who funded his rise to power and his wars.who are these financiers? it is explained in Sue\’s quote. Connect the dots. They are people who lend money to the government for the purposes of war.

  16. Bud says:

    Understanding,  what is.   Here is a quote.   Maybe worth thinking about….
     

    “Money has no Motherland;
    financiers are without patriotism
    and without decency;
    their sole object is gain.”
    Napoleon
     

  17. Amos says:

    Isreal preparing 360,000 graves for its enemy soldiars…thats just awesome……I wish I ws in the middle east to help Isreal wipe the holy _______ out of their Islam friends….I feel this week is going to get very exiciting….I hope your getting long Crude oil..
     
    God bless Amos

  18. Amos says:

    Praise God and pass the aimo……
     
    ====
     

    Oil nears $142 on weak dlr, Israel-Iran tensions
    Mon 30 Jun 2008, 5:17 GMT

    [-] Text [+]
    * Oil nears $142 on weak U.S. dollar and growing Israel-Iran tensions
    * Iran says will impose controls on a vital Gulf oil route if the country is attacked. (Updates prices, China\’s CNPC to increase imports)
    By Fayen Wong
    PERTH, June 30 (Reuters) – Oil rose over $1 to near $142 a barrel on Monday, bolstered by a weak U.S. dollar and continuing tensions between Israel and Iran over Tehran\’s nuclear programme.
    U.S. light crude for August delivery <CLc1> was up $1.68 at $141.89 a barrel in Globex electronic trading by 0558 GMT, within range of the record of $142.99 struck on Friday.
    London Brent crude <LCOc1> rose $1.57 cents to $141.88.
    "The U.S. dollar is down and there are many high-level geopolitical news items, particularly in the Middle East, that are pushing prices up," said Mark Pervan, a senior commodities analyst at the Australian & New Zealand (ANZ) Bank in Melbourne.
    "Oil is now a very jittery and news-sensitive market that is running on rumours and concerns of future supply disruptions."
    Iran\’s foreign minister said on Sunday he did not believe Israel was in a position to attack his country over its nuclear programme, while an Iranian general announced plans to prepare 320,000 graves for enemy soldiers. [ID:nL29700100]
    The comments were the latest in an escalating war of words between the arch-foes that has helped fuel speculation of a possible Israeli attack on Iran, the world\’s fourth-largest oil exporter. The speculation has helped push oil prices to record highs.
    Comments from Iran that it would impose controls on shipping on a vital Gulf oil route if the country was attacked also added to supply jitters. [ID:nL28545577]
    The Straits of Hormuz, a narrow waterway separating Iran from the Arabian Peninsula, accounts for roughly 40 percent of the world\’s traded oil flows.
    News that top Chinese oil firm CNPC would increase imports of refined oil products in the third quarter to boost supply to the domestic markets also lent support to prices. [ID:nPEK137796]
    Oil prices have jumped more than 45 percent this year, extending a six-year rally, as supply struggles to keep pace with rising demand from emerging economies such as China and India.
    Additional support has come from a flood of cash from new investors buying up commodities to hedge against inflation and the weak U.S. dollar, which fell to three-week lows against the euro on Monday. [USD/]
    Analysts said dealers would be eyeing U.S. economic indicators due later on Monday as well as the European Central Bank\’s interest rates decision on Thursday for further guidance on the U.S. dollar.
    U.S economic indicators due Monday include the New York National Association of Purchasing Managers\’ index for June and a similar report from Chicago, due at 1300 GMT and 1345 GMT respectively. (Editing by Michael Urquhart) God bless Amos

  19. 3BEPb says:

    sue and frank,i absolutely agree with you both. peace and prosperity to all is the way. After the great war or great natural disaster that is coming, people who are left will realize that is the only way and civilization will take a new course. One that is more harmonious with nature.The middle ages were horrible and then came the plague and wiped out most of Europe. After that came the Renaissance. History will repeat itself again. I hope that we are all alive to see it. 

  20. Frank says:

    MCKennedy, so glad to hear damage was minimal… and Bud, yes, we need something like the movie "Independance Day" to unite everyone in the world…

  21. Steph says:

    Tony,
    I don\’t intend to fight strong oil and gold bull markets. However, let me express my ratio view in your OEW terms. Looking at your EW weekly charts for oil and gold, you believe that gold has completed a Wave 4 while oil has one upcoming soon. You also expect 3 more 4-5s in gold before major 3 completes (I apologize if "major" is not the right degree designation) while you\’re only expecting 1 more 4-5 in oil before a major Wave 4 correction should occur. Based on OEW, it seems likely that oil will take its turn correcting while gold rises (fund rotation?) AND/OR oil will experience larger Wave 4 corrections when gold experiences lesser degree Wave 4 corrections. This would fit nicely with a nice bounce in the historically low gold/oil ratio. If gold were merely to rise at a faster rate than oil to achieve a higher ratio, then being bullish on gold would be smartest while being bullish on both would be next best. However, if one believes oil is nearing a sizable correction or stagnation, a paired trade wins. Maybe the best move is to stay more bullish gold until oil approaches $150, then initiate a paired trade until the ratio mean reverts towards 10-12 at which point one could get equally bullish or even slightly more bullish oil. In this particular case, I\’m trying to get some protection if the oil and gold bullish thesis is wrong while achieving good returns and avoiding too much trading. Good luck and I appreciate any comments.
     
    6.6–>10.6 gold/oil ratio$2000/$189 = 5% BETTER PAIR TRADE VS BULLISH POSITION on both$1500/$142 = 29% BETTER PAIR TRADE VS BULLISH POSITION on both
    $1200/$113 = 44% BETTER PAIR TRADE VS BULLISH POSITION on both
    $1000/$94 = 53% BETTER PAIR TRADE VS BULLISH POSITION on both$800/$75 = 62% BETTER PAIR TRADE VS BULLISH POSITION on both

  22. Bud says:

    Thank You Mckennedy…..I like your style.  White for Prez….I think your on
    to something there.  I agree 100% with your view of the next 4-8 years.
     
    And,  I totally agree with the Indep.  stand as well.
     
    I am pleased by your very positive mindset.  You can take adversity,
    and raise it to a positive.  And, that is special about Americans, and
    people at large as well.  We tend to unite in times of natural trajedy.
     
    Thank you for your reply.

  23. MCKennedy says:

    Bud, I agree with your assessment of the quality of the presidential candidates.  I\’m of the opinion that the next president will likely flounder badly & FINALLY force the real talent out to fix our nation\’s problems.  I\’m in full support of Mayor Bill White of Houston (Democrat but who cares what party he\’s affiliated with) when & if he ever decides to run.  Now there\’s a guy that has the talent & the team to handle anything that\’s thrown at them.  As for this next election, geez, I think I am going to have to abstain from voting & concentrate on making myself as independent as possible.
     
    btw, Iowa is on the path to recovery.  We lost the bridge over the Cedar river near our farm but the I-80 & I-380 bridges survived.  As my farmer brother said, everyone was devastated by the fires out west but are now finding brand new plants emergying from the burnt ground that we never knew before because they were dormant in the overgrowth of the forests.  Similarly, we have been devastated by this immense flooding but……we do not yet know what new things will emerge.  Mother Nature works according to her own plan, and our best course of action is to always respect that plan, even when we do not understand it.  This disaster has brought families & friends closer together with very little loss of life & for that we are so grateful. 

  24. Chrys says:

    I use EW and channels and my work also shows support at 1259 in SPX. If that fails the next support is 1227 which is pretty rock solid.

  25. Bud says:

    Great Paradox…..GM….can\’t seem to build cars and sell\’em here, but.
     
    In China…..
     
    FORTUNE Magazine) – IN A MODERN INDUSTRIAL PARK ON THE EAST SIDE OF Shanghai, General Motors can\’t keep up with demand. Its plant is churning out new Buicks on three shifts, 24 hours a day, five days a week. The cars–compacts, minivans, and luxury sedans fitted with sunroofs and DVD players–wouldn\’t look out of place in U.S. dealer showrooms. With 4,000 workers producing 240,000 cars a year, says Tom Wilson, executive director of manufacturing, "we\’re pushing everybody to the limit."

  26. Amos says:

    Sue,
     
    I agree somewhat on there cn be no more wars on earth..IF everyone on this planet converts to islam….If we all joined the Islam faith..there might be peace as you say.
     
    BUT not everyone wants to be a slave to islam ways…
     
    Jesus Christ and Islam faith are at odds….the God of Islam asks for us all to submit to his will completely or be punished.
     
    The God of islam wants to force everyone to be good…..forcing everyone to obey Gods laws….
     
    The faith and techings of Jesus Christ is another story, You have free agency or Free will to be as good as you want to tob or be as bad as you want to become….Either way, Jesus Christ allows us to follow his teachings through his Prophets but with real harsh punishment for not hitting the perfect target….Islam God the axis of all evil, demands you become good…forcing you to join or die.
     
    Woman in Islam faith, don\’t have much a chance of growing in education.
     
    We will know them by their fruits….
     
    trust me islam faith is pure control and very much evil.
     
    The Islam faith teaches be no friend to Jew or Christian….Ifthey won\’t convert to Islam they must die.
     
    Now how can we not have wars with such teachings…
     
    Thats just one aspect of why major wars exist….people want to be free..and in islam nations you can be free…
     
    i know because my family came from Armenia…under Islam rule……its harsh world.
     
    technology in islam world is taboo..unless its used to start the holy war with Christian and jew.
     
    Now set out to change islam and you might just have no wars..
     
    Evil vs Good will always produce conflict…..
     
    Good brother vs evil brother who wants to force you to obey…
     
    America not perfect, but its soooo much better than any islam nation….by far.
     
    buy DIG….
     
    God bless Amos

  27. Steph says:

    Cristian,
    I don\’t know if your SPX count fits OEW, but that count, Tony\’s count or my count all suggest one more decent-sized up-down is needed and they all suggest a 5th wave of any length is possible due to Wave 3 being longer than Wave 1. The difference is that your count and Tony\’s should not bounce above 1304 while my ED count should slightly breach 1304 Monday. And my ED "e" wave should be 3 waves instead of 5 although it\’s sometimes hard to tell the difference especially if you get a failed 5th. I actually favor Tony\’s count as of Friday close, but the targets of all 3 of these counts are nearly identical and fairly wide-open. If SPX drops hard below 1256 next week before it bounces more than 10 points, we have to start giving weight to the doomsday count (1-2-1-2-1-2 with SPX in 3s) but an extended 5th would still be possible.
     
    One thing that I\’m contemplating is the significance of the huge H&S breach on the Dow at 11,600-12,000 (depending on how you draw it), and the 1974 and 1982 bull trend lines which are just above 12,000. On the way up, the Dow extended beyond most people\’s expectations once these levels were surpassed before any large correction was allowed to occur to retest the breakout. If the same thing happens on the way down, the Dow may need another 3-5% down to 11,000 or less in order for any decent Fib bounce to not go above the breakdown area. That would likely correspond with SPX well below 1256. Good luck. 

  28. tony says:

    Hi Cristian, your count arrives at the same general support levels and is certainly possible.

  29. tony says:

    Hi Stu, why short one bull market (crude) against another (gold)?
    As posted several weeks ago: buy during corrections to bull markets, and sell rallies in bear markets.
     
    Hi Sue, the people on Fast Money are all short term traders. Keep that in mind.
    In regard to Cramer. He worked for Goldman Sachs before he started his hedge fund.
    GS has not lost any money trading for the last several years, even though their public calls have been wrong.
    GS put out a buy, in May, near the top in the financials. Now this week they put out a SELL.
    Do you see the pattern yet? 
     
    Hi GKM, according to the data I post I do not see that triangle in gold, after friday\’s move higher.
    Since triangles do not really occur that often on the daily charts, I prefer to see them in hindsight rather than look for them.
    Gold is now uptrending, and the 8-dma and 34-dma should provide support.
    Agree about Crude. I have it in Minute wave iii of Minor wave 5 from the January low.
    Targets as posted: $147, $158 or $164.
     
    Hi Mr. DVD, that\’s too much work for this old man =) 
     
    Hi Barbera man, I\’m bullish on crude too.
    But $700 – $800 would create a major depression, by totally disrupting society at its very core.
    Around $400 over the next six years fits into the overall agenda for commodities.

  30. Bud says:

    Stu….Hi.
     
    Quote:
    Stu….people like you.  And if were to stay  long crude
    oil to 160-185 that is okay by me….
     
    I was just trying to be polite.  Let me rephrase.  People, Like you.
    that maybe is better.
     
    Bud

  31. Steph says:

    NoName, IMHO, EWI talks about the Dow:Gold ratio all the time because they are trying to explain away their excesive years of bearishness. Not that there isn\’t some truth to the Dow performance in terms of gold, inflation and the dollar, but I believe it\’s more cognitive dissonance, and less proper EW.
     
    Hey Bud, I didn\’t understand your comment to me. I\’m not trying to be dense.

  32. Bud says:

    My 2 Cents……
     
    It takes 2 to stop a war…  
     
    Man has not shown the ability to live
    in the planet without combat…
     
    When you think of peace,   you would be wise to remember
    Adolph Hitler.  And, how he grew to power out of an economically
    weak Germany. 
     
    Peace is maintained by strength.  Not weakness. (another
    reason I go this fall to china – learn marital arts).
     
    Stu….people like you.  And if were to stay  long crude
    oil to 160-185 that is okay by me….
     
    On a political note.   I can not a clue.  How this country is
    faced with Obama and McCain for presidential choices.
    I am amazed,  at the failure of better men to step up to the
    plate.  I can only feel,  the next 4-8 years are going to be
    some of the most difficult times of my life. IMHO….

  33. Cristian says:

    Sorry, this is the working link:http://i32.tinypic.com/20624is.gif

  34. Cristian says:

    Also, I drew a pitchfork from october\’s high on weekly chart.Interestingly, its median line runs at 1263 next week, again next to 1261 OEW pivot:http://i32.tinypic.com/20624is.gifGood luckCristian

  35. Cristian says:

    Just a possible alternative count from minor wave 2 high (1406):1406-1370: minute wave i of 3;1370-1404: minute wave ii of 3;1404-1331: minute wave iii of 3;1331-1367: minute wave iv of 3;1367-1304: minute wave v of 3;1304-1335: minor wave 4;1335-?: minor wave 5 currently unfolding.From this perspective, an equality 5=1 waves would put the target of the 5th wave at Tony\’s OEW 1261 pivot.Tony, is this count in accord with OEW theory?

  36. Forkoholic says:

    Actually, nobody tells you nothing, Stu
    Shorting oil (and commodities) at the right time will be one of the best trades this year!
    I honestly do not know if patterns work on ratios. But if EW/patterns do not work on ratios why EWI always tells us about Dow:Gold?

  37. Steph says:

    I\’m getting the feeling you folks don\’t want me to short oil. I feel so loved. No defenders of gold outperforming oil? I think most of you would agree oil will have a 25-30% pullback somewhere along the way. Even Barbera, with his $1000 target, seemed to expect one in 2008. I don\’t know when that will be but gold nearly pulled back 20% recently, which is reflected in the historically low gold:oil ratio. Trading a ratio gives me safety in factors common to oil and gold such as the dollar, terrorism, interest rates and global demand. I was told by EW experts a long time ago not to rely on EW or patterns in ratios.
     
    Why should I believe the gold:oil ratio will fall much below historic lows before mean reverting?

  38. Frank says:

    sorry I mean "you and Gann say is true…" not "yod Gann say is true…"  god I hate typo…

  39. Frank says:

    Sue, I truely wish what yod Gann say is true… but sadly, war, violent, hate is in human nature…  As I stated before, human is cancer of mother nature… we consume everything and destroy everythinng in order to survive.. survival of humand kind comes in great price… our population is growing at exponential rate… once we reach a point where earth\’s resource can not support all population, we either will have a GREAT WAR to destroy world population so the once who left survive from the war can keep on surviving… OR we will have some sort of Natural desaster to wipe out big portion of population… every has a balance point… just like stock market it\’s always reversion to the mean… So either human will consume Earth and then go find another planet to consume to keep on sruviving or we will destroy ourself or Mother Nature will destroy human…
     
    So going back to oil… if oil do come to a point where we couldn\’t invent (or we don\’t want to invent) another alternative resource, then nations would start a great war and fight for it… just like before… just like history… sadly…

  40. Forkoholic says:

    Actually, Sue,
    let me disagree with W.D. Gann. I can\’t even imagine how Gann can say such a thing, quite frankly. I\’m really shocked! To prevent something like a war you have to believe anything cyclical can be prevented. And this comes from the guy who studied cycles? It\’s like saying we can prevent Sun from rising or make 28 hours day. Although theoretically possible, practically not achievable, al least in the near future. It\’s like you try to prevent a person from been sad and make him happy all the time.
     
     

  41. hawk says:

    Hi Amos, I do not expect to short oil, maybe just take profits.
     
    The late W.D. Gann, the stock trader who survived the Great Depression and made money through it, wrote about economic depressions and wars in his book entitled, "45 Years in Wall Street." He wrote the following:
     
         Wars in any country can be prevented. People have the right and have the power in their own hands to stop war. If our lawmakers can be prevailed upon to pass a law that no governmetn can go in debt or sell bonds for war purposes, there certainly would be no war. If the government had to start a war out of its income, and not go in debt there would be no war. It has no right to go in debt, and to risk the people\’s lives and their money and mortgage their future. Nothing can be gained by war. This country needs to get on a cash basis and spend only its income adn let that income be an excuse for cutting down government expenses.
     
    How true Gann\’s words ring today with respect to Iran, Israel, Iraq and so many countries. I believe the greatest path to prosperity is peace and love for all of humankind.
     
    Peace, love, and prosperity to all, Sue
     

  42. Amos says:

    The lastest Ailanjian Poll has 38% of Americans in favor of Military attack on Iran and 54% in favor if gas prices move above $160 levels.
     
    The Ailanjian poll is plus or minus 1%
     
    Next week is going to be all about how high crude oil is going, the news media will help promote the speculation mania.
     
    ultra proshares allow you to reap 200% on the underlying index. DIG is just the perfect investment tool.
     
    God bless Amos

  43. Amos says:

    One way to make a good profit from Oils wave 3 thurst upwards is to just trade DIG..
     
    http://www.americanbulls.com   has a BUY IF on DIG..
     
    I feel going long DIG on monday you will very happy by thursday….
     
    God bless Amos

  44. Amos says:

    I might just keep playing DIG…ultrashare proshares of oil..
     
    Day trading it has been very good….
     
    =====
    OPEC Leader Khelil Says Dollar Will Drive Oil to $170 (Update1)
    By Ahmed Rouaba
    June 28 (Bloomberg) — OPEC President Chakib Khelil predicted that the price of oil will climb to $170 a barrel before the end of the year, citing the dollar\’s decline and political conflicts.
    “Oil prices are expected to reach $170 as demand for fuel is growing in the U.S. during the summer period and the dollar continues to weaken against the euro,\’\’ Khelil said today in a telephone interview. The leader of the Organization of Petroleum Exporting Countries also serves as Algeria\’s oil minister.
    Political pressure on Iran and the depreciation of the U.S. currency have caused a surge in oil prices, Khelil said. New York- traded crude has more than doubled in a year and touched a record $142.99 a barrel yesterday on the New York Mercantile Exchange.
    OPEC ministers generally say that oil output is sufficient, even as Saudi Arabia, the biggest producer, pledged to pump an extra 200,000 barrels a day next month to calm the market. “The market is completely supplied,\’\’ Venezuelan Oil Minister Rafael Ramirez said yesterday. Libya announced possible production cuts, calling the market oversupplied.
    The rising cost of crude is not linked to supply, Khelil said today. “There is more than enough oil in the market to meet the international demand,\’\’ added the OPEC president, who will take part June 30 in an international energy forum in Madrid.
    Prices, which are up 38 percent this quarter, are heading for the biggest quarterly gain since the first three months of 1999, when oil traded between $11 and $17.
    Declining Dollar
    “The decisions made by the U.S. Federal Reserve and the European Central Bank helped the devaluation of the dollar, which pushed up oil prices,\’\’ Khelil said.
    Oil may extend gains if the ECB boosts rates on July 3, further weakening the U.S. currency. The dollar has declined 15 percent against the euro in 12 months.
    ECB President Jean-Claude Trichet reiterated June 25 that policy makers may increase the main refinancing rate by a quarter-percentage point next month to contain inflation. The Federal Reserve left the benchmark U.S. rate at 2 percent on June 25. On Sept. 18 the Fed began cutting rates to bolster an economy already reeling from the credit crisis. God bless Amos

  45. Forkoholic says:

    Your local public library now has Digital E-Books/Audio Books and even DVDs  rental online for free. No need to go to the library, spend money on gas etc - download books online from your home.  PDF e-books can even be returned earlie so you can rent more. And if you\’re lucky to live in Singapore, Singapore National Library has much more  books on investing and technical analysis.http://search.overdrive.com/

  46. Amos says:

    Sue,
     
    Do not short oil…..crude oil is in the powerful Wave 3 upwards….it will hit $150 and then pull back to $147 and then off to $160 and higher to $210….
     
    The Queen of Britian wants her oil wells back from Iran..and thats going to produce supply problems for all of the world.
     
    Every Oil well in iran was once controlled by Britains B.P. Inc…..
     
    Britian governement is already as we speak, making plans to halt iran revenue stream from their OIl production. Britain is taking bolder steps way above and beyond what any security council or U.N. body is allowing….Britian is now playing a major hard ball game with Iran..and this will lead to all out nuke attack by the United States of America Air Force…
     
    Oil is something you don\’t want to bet against right now….
     
    Gasoline at the retail level, thats the pump price is going to hit in America $8.00 plus…forcing most Americans to get on the band wagon of a attack on Iran….
     
    Iran hs no idea what their about to have come their way. Britain sent the death coffins to America to kill the Indians and now they will send our Nukes to take back the middle east.
     
    Wake up and smell the coffee….
     
    God bless Amos

  47. Jenifer says:

    FWIW, since people are discussing Cramer, he advised buying short etf\’s on Friday on any upcoming bounce.

  48. Forkoholic says:

    Stu,
    also check Barbera\’s long term oil EW count
    http://www.financialsense.com/Market/barbera/2008/0325.html

  49. hawk says:

    GKM, ya, I agree with you. Cramer represents mass psychology. That\’s why you gotta love him. He\’s a good indicator for bears. :)Thanks!

  50. Forkoholic says:

    Stu,
    I checked Oil:Gold ratio and it looks like inverted Head&Shoulders
    I think we\’ll go to a Neck Line to kiss goodbye :) or maybe it\’s just a double top? Check it out
    http://picasaweb.google.com/Slash850/TACharts/photo#5217040324252301650

  51. H says:

    I had a very interesting conversation with a JPM guy who suggested the USO reversed on Friday putting in a topping tale very similar to that of the SPX on 5.19.  I don’t trade oil but am considering his analysis carefully.  It seems that selloffs in oil have been good for runs in SPX.  Either way this would be interesting confluence with the wave count iv 30 points Tony suggests in the near term.

  52. Bud says:

    NO  NAME……I have to hand it to you.  Your last write-up is the best
    and brightest idea coming from you.  You did good.

  53. Forkoholic says:

    I propose to open non-profit "OEW Research Institute" with Tony as CEO.
    Hire couple of programmers to write a software (which Institute can sell later)  to automatically label waves, do a patterns search – what kind of complex, zigzag corrections occur and correlations with seasonality factors and cycles. The Institute also will provide educational materials – Tony can record his course on DVD and/or make it available in iTunes type copy protected audio book or in form of live webinars, or even web lessons as part of financial edication for public schools etc

  54. Kurt says:

    Here\’s another one for you Sue:  guess who just called the likely near term top in oil and a stock PBT (At it again).  If you look at the chart for PBT, it\’s poised for a very nice juicey C/3rd wave.

  55. Unknown says:

    I sure miss the days of Elam asserting that Tony has no idea what he\’s talking about, there\’s no bear market, and the SPX is going to 1550.  I\’ll give you credit, Elam – you certainly called the very top.  Well done, mate.  My 3 favorite posts of all time:
     

    Elam  May 29 9:53 PM -  Amos, do you expect a failure at 1560 or a breakout heading towards 1600s. I have been hearing chatter about Dow 15k and 16k this year since Apr so that will mean SPX at 1600s. Curious if you think we fail at 1560 area and form a double top or actually breakout and go parabolic.
    Elam May 28 3:37 PM – I think this market is not going down without oil going down. End of story. Trading indices is probably useless in this environment since energy/tech are now highest % of the SP500. Financials weighting came down last week.  So we have multiple bull market sectors and very few bear market sectors
     

    Elam June 05 5:48 PM – I have been saying like a broken record for months, without crude SPX stands no chance and part of reason why it is headed higher. Crude to 150-200 will mean new highs in the 1600s for SPX since 20% of SPX is energy. All you need is for other names to be flat or down slightly and the 20% of names will rally the SPX another 200 points.

  56. Forkoholic says:

    Jake ("the Snake") promised us 40% drop in commodities this summer. As well as Aussie$ drop. On the other hand some elliotticians including EWI call for $160+ oil. Cyclically gold should top in April 09, with all commodities topping in 2010. Watch interest rates – the cycle bottom was in April 08. We should excect higher interest rates in years ahead

  57. hawk says:

    The thing about going long gold is that even though it\’s an "insurance play", when stocks really go into a panic sell and people start having margin calls, the only thing left to sell to meet those margin calls are the highly priced ags, gold and commodities. I could be wrong, but this is what it seems. thanks!

  58. hawk says:

    "Sue, JMHO but I wouldn\’t put a whole lot of stake in anything anyone on CNBC has to say unless its to take the opposite viewpoint.  Most particularly you can use Jim Cramer to call the tops and bottoms (Cramer is the Elliott Wave Embodied)."
     
    LOL! :) Ah, Cramer. You gotta love that guy.

  59. Kurt says:

    Tony, what are your thoughts on the fact that gold looks like it traced out an E wave of a B triangle as of Friday?  Can OEW distinguish so precisely in that case that this is in fact a new wave 3 (of 5?) and not the start of a C wave down?  The line in the sand would be $952 as any movement over that would indeed confirm a new uptrend but a break back will confirm wave C.  Either way the move will be explosive.My take on reviewing the Aussie, which many see as a proxy for gold and other commodities, is that it is set to fall precipitously.  It also looks like maybe we\’ve put in a top for soybeans and corn, but probably not wheat.  The yen is also starting to make 5 wave down patterns which to me indicates the great unwind is about to begin anew with money coming out of the ags, golds, and oily sectors (and into what?  banks, airlines, and mattresses?). For oil, if we\’re in a 5th wave extension in the 3rd wave, then the next logical target would be $152.  Maybe we get there this week around the ECB meeting.  If we spike on that, time to sell crude.Sue, JMHO but I wouldn\’t put a whole lot of stake in anything anyone on CNBC has to say unless its to take the opposite viewpoint.  Most particularly you can use Jim Cramer to call the tops and bottoms (Cramer is the Elliott Wave Embodied).

  60. hawk says:

    One additional thought on oil, it may break through $150 easily. The thing to watch for would be how easily, by how much, and for any resistance for about a day or so. Oil and gold are basically short dollar trades in my mind. Gold lags oil, obviously, because oil has more use than gold, but gold can drop just as quickly. I think gold would drop faster than oil. I think I may short either oil, or gold and go long stocks. Why go long gold when you can go long a stock? Interesting method, though. What ETF double shorts are you looking at?

  61. hawk says:

    Stu,
    Joe Terranova, CNBC, says if oil goes to $150 next week, the following week jump into refiners. I take this to indicate one method of shorting oil. I personally will probably not short oil directly, but could change my mind if I see it ticking downwards around $150, I may play long certain stocks as a way to short oil. Good luck!

  62. Steph says:

    NoName, 2-3 days is probably all this downtrend needs. Pop up  (or prop up, your choice) Monday followed by capitulation Tues-Wed. Looking back to 1994, the July 1-3 period has been up 11 of 14 times, sideways 1 of 14 and down 1-2% 2 of 14. The last trading day before July 4th is not quite as positive statistically but it is usually positive nonetheless. Volume has typically dropped July 1-3 as you pointed out. From 2003, July 4th has usually been associated with trend change while the previous 9 years it was primarily associated with trend continuation. The days after July 4th weekend have seen several selloffs since 1994 so they are not reliably positive. Of course, I would not trade based on these calendar stats alone, but they do support the other evidence for 1 more spike up-down in the next couple days. However, I will also say they do not favor my 1215-1230 target area but rather they support the 1256-1272 zone. One thing I will say about a potential hold at 1256-1272 is that might better allow for bullish sentiment to rebuild for the next large drop.
     
    IF SPX is going to bounce 8-10 days imminently, that means a mid-July high likely followed by another 6-7 week drop to match the last several making a late August to early September low. Then, another 8-10 week 1-2 or 4-5 sets us up well for the election time period. One ARM reset chart I saw showed August 2008 and spring 2009 as large spike tops likely aligning perfectly with SPX bottoms.
     
    Regarding gold, I see a potential count where gold is completing a "d" of a triangle which should not exceed $935.40 or it could be working on a "b" which would likely stall around $956. The up moves since the $1034 top have been 3 waves in my eyes making a triangle or abc still possible. I am VERY bullish gold in the next year. An 8-10 day SPX pop would work nicely with a gold "e" wave back down just below the 200SDMA (like other annual downturns) currently at $865.
     
    In any case, I\’d like your opinions (including Tony if possible) on a paired gold:oil trade. Looking back over 20-30 years, I see the average ratio has been around 12-14 and it has been as high as 10-12 in the last couple years. However, it is currently just over 6, around historic lows. In my mom\’s retirement account which I am managing, I am thinking about going long gold and short oil in either a 50%/50% ratio or possibly even a 60%/40% ratio given my belief in gold\’s future and the more parabolic nature of oil\’s rise. I am even considering ultra 2x funds for additional leverage. This would comprise about 20% of her diversified retirement funds. Thoughts?

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