Can we say, that in years to come 2 most distant components (Health Care and Apparel) will move toward the mean?
Friday, October 23, 2009
A close look at CPI
The chart bellow shows the evolution of CPI its self and some important components of US consumer prices index (CPI): Apparel, Energy, Food and Beverages, Housing (Rent), Transportation and Health Care.
Can we say, that in years to come 2 most distant components (Health Care and Apparel) will move toward the mean?
Can we say, that in years to come 2 most distant components (Health Care and Apparel) will move toward the mean?
Terra of Uncertainty
Precious metals continue to disappoint, while USD continue to sink. Looking at charts of gold and silver, it seems that we didn't complete the movement and have to push a bit higher. At the same time gold to silver ratio remains in the area of uncertainty
Should we cross the blue line and it will send a warning that liquidity is dissipating and the risk assets will be put under pressure.
In the equity space, big caps continue to outperform small ones and techs have clearly lost their leadership. Investors are still bidding stocks, but becoming more defensive.
Should we cross the blue line and it will send a warning that liquidity is dissipating and the risk assets will be put under pressure.
In the equity space, big caps continue to outperform small ones and techs have clearly lost their leadership. Investors are still bidding stocks, but becoming more defensive.
Thursday, October 22, 2009
Missed!
What a pity, the Composite missed the target of 2200 by less than 10 points. Hopefully, FX market gives us a chance to have another attempt before the real correction starts. In fact, USD is still looking like going to spike toward 74. That shall give ~1.52 target for EUR.
The volatility has suffered a powerful reversal following the sell off, but such a thing often needs a retest.
The volatility has suffered a powerful reversal following the sell off, but such a thing often needs a retest.
Wednesday, October 21, 2009
Leaving the techs alone
While still waiting for a thrust to at least 2200, I'm looking at the Nasdaq to Dow Jones ratio.
For the intermediate bottom, it has turned up well before the indexes actually did. So, now I will look at it in order to confirm the trend change as well. And, as for now, the ratio seems to be poised to plunge.
For the intermediate bottom, it has turned up well before the indexes actually did. So, now I will look at it in order to confirm the trend change as well. And, as for now, the ratio seems to be poised to plunge.
Tuesday, October 20, 2009
Mish on USD and Gold
An excellent post from Mish about the US dollar and Gold and where we're with it. Just wanted to correct his thoughts about the European banks:
1) European banks are arguably in as bad a shape as US banks because of loans to Latin America and the Baltic states.
We should add a higher level of leverage of European banks if compared with their American peers. The loans were given to the whole Eastern Europe, not only Baltic states. Much of them were spent on real estate speculations of all sorts and the bear market in many countries has barely begun. The problems in continental Europe exist as well but we didn't even see the beginning of their resolution. I'm very bearish on the European bank system in the long run and hence on the Euro its self.
Will the single currency become the deception of 2010?
1) European banks are arguably in as bad a shape as US banks because of loans to Latin America and the Baltic states.
We should add a higher level of leverage of European banks if compared with their American peers. The loans were given to the whole Eastern Europe, not only Baltic states. Much of them were spent on real estate speculations of all sorts and the bear market in many countries has barely begun. The problems in continental Europe exist as well but we didn't even see the beginning of their resolution. I'm very bearish on the European bank system in the long run and hence on the Euro its self.
Will the single currency become the deception of 2010?
How a real bottom may look like
After Google, Apple has delivered an excellent quarter, - hardly a surprise for those who plays with i-phones. Hopefully this news will squeeze some shorts and push Nasdaq Composite over 2200.
Now, I'd like to look at some long term charts. Do you know a lot of stock market indexes which have exceeded during this rally the levels of the summer '08. It's quite simple, an airline index which has sold off hardly during the last year oil run to over $140 a barrel, so the last summer they were already in ashes.
And if we look at the long time charts? Does this look like a long term bottom is in?
Now, I'd like to look at some long term charts. Do you know a lot of stock market indexes which have exceeded during this rally the levels of the summer '08. It's quite simple, an airline index which has sold off hardly during the last year oil run to over $140 a barrel, so the last summer they were already in ashes.
And if we look at the long time charts? Does this look like a long term bottom is in?
Monday, October 19, 2009
Elliott wave count for Nasdaq
Previously, I've given a target for the Composite of around 2200-2270. Now it's time to enter in some details. Firstly, the current count for the Nasdaq Composite.
I think this correction of the entire wave 1 will not exceed 61.8%. Playing with fractals, we'll find that at the beginning of this bear market not the 1st of I nor the wave I were retraced more than 61.8%.
As for the timing, in both previous cases of 1st waves, the correction has lasted about 61.8% of the impulsive wave. That gives us a target for the year-end. But, since we're already near an important juncture, I think we'll get Nasdaq topping in few days and other broad indexes (SPX, DOW, XMI) doing so in December, while Nasdaq will make a double top.
I think this correction of the entire wave 1 will not exceed 61.8%. Playing with fractals, we'll find that at the beginning of this bear market not the 1st of I nor the wave I were retraced more than 61.8%.
Thursday, October 15, 2009
Complacency and Confidence
The words associated with Wednesday's session.
The broad indexes are approaching critical levels of resistance, Intel beats the Street and ends near the lowest level of the day, - to say this performance was largely anticipated. The volatility index (VIX) make new lows, showing there really isn't much fear in this market. AlphaTrader has initiated a long position in volatility via VXX with a goal to stabilize the whole portfolio in case, just in case, everything is not that good the market seems to believe.
Silver and Gold were quite disappointing, failing to advance in this risk and inflation friendly environment. Looking at my favorite chart of gold to silver ratio, I find it looks indecisive at the moment.
To complete the pattern, the ratio should go at least to 55, which would give us 20 bucks silver with, say, 1100 bucks gold. In fact, the task is not impossible, given the current weakness in USD which, in my opinion, should shortly land around 74
Will precious metals anticipate the bottoming USD and decline in advance or will we have a spike provoked by the fear of the global inflation. Despite the appearance, this market becomes very tricky. The gold to silver ratio is the thing to watch very closely.
The broad indexes are approaching critical levels of resistance, Intel beats the Street and ends near the lowest level of the day, - to say this performance was largely anticipated. The volatility index (VIX) make new lows, showing there really isn't much fear in this market. AlphaTrader has initiated a long position in volatility via VXX with a goal to stabilize the whole portfolio in case, just in case, everything is not that good the market seems to believe.
Silver and Gold were quite disappointing, failing to advance in this risk and inflation friendly environment. Looking at my favorite chart of gold to silver ratio, I find it looks indecisive at the moment.
Will precious metals anticipate the bottoming USD and decline in advance or will we have a spike provoked by the fear of the global inflation. Despite the appearance, this market becomes very tricky. The gold to silver ratio is the thing to watch very closely.
Tuesday, October 13, 2009
Inflation's run
No surprise, inflation related staff is the best place to be at the moment. Just look at the chart of Brazilian ETF:
And the Russian one:
And, in contrast, the Chinese ETF clearly shows some signs of fatigue.
May we say : what is good for Russians is bad for Chinese?
As for the US stocks, the trend is about the same: energy stocks are clear outperformers of the broad market, especially if compared to transports and home builders. For last 2 ones I wouldn't be surprised if the tops are already in. In fact, the decline of DOW Transportation and Homebuilders indexes has unfolded in 5 waves from the top, meaning from the Elliott's wave perspective the trend has changed:
Monday, October 12, 2009
Are small caps weakening?
As was expected, the big caps are the leaders of this new wave up. The XMI - Major Market Index (20 biggest capitalizations) has closed last Friday at new cyclical high, while others (Nasdaq, SP500) are a bit lower.
An interesting chart for small caps - RUSSEL2000. We're approaching the previously strong support level of 650. So looking at the weakening momentum, it seems to be a good shorting entry point.
An interesting chart for small caps - RUSSEL2000. We're approaching the previously strong support level of 650. So looking at the weakening momentum, it seems to be a good shorting entry point.
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