Jeff Pierce's  Instablog

By Poly

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The waterfall decline I've been expecting has essentially now been satisfied (Red line). The Cycle has run into the 25 day range and is more than ready to print a Daily Cycle Low. Technically gold is oversold to the level where DCL's have comfortably formed. From this point forward it should be argued that a Swing Low would hold a very high chance of confirming a DCL.

But my overriding problem is with the shape and feel of this decline. It's a waterfall alright, but it's a controlled one, and that is not normal. This 7 straight day losing stretch has knocked off over $100, but it came with little panic, average volume, and a lack of capitulation selling. I want to see this positively, so it could well be a low volume and diverging (technicals) retest of the April 16th,$1,321 lows. But I honestly can't say that for sure, my experience with gold Cycle Lows tells me this is too tame. For this reason we could see one or two more real capitulation sessions (Green Line) that pushes gold down into the $1,200's, and that should mark the final ICL.

This as is an excerpt from the Midweek's premium update from the The Financial Tap, which is dedicated to helping people learn to grow into successful investors by providing cycle research on multiple markets delivered twice weekly. If you'd like to receive real time alerts as well as the most up to date reports, you may want to take their FREE 15-day trial to fully experience what they offer. Coupon code (ZEN) saves you 15%.

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The following is an excerpt from the weekend premium market report by All About Trends. Enjoy a free 15 day trial to their service to get daily stock picks, market analysis, and a complete trading plan.

"While we all know the indexes are severely overbought in all time frames and frequencies the last 4 days has been more of back and forth with no real progress."

And then came the famous "Into The Close " Pump that blew the whole sideways consolidation out the door with the break into a new high again. IBM had a lot to do with that as it was up pretty big on the day and makes up 17% of the Dow. That's in the short term. What about the bigger picture?

Last week one of our subscribers said:

"DOW & S&P are also in new territory. We've never been here. No map. No idea how high we can go. No technical guidance."

Yes, right he is however. Technically speaking under the surface from a chartists point of view we actually do have a pattern to work off of. Albeit rare as they only show up at the end of major runs in the markets and that means major runs to the downside and major runs to the upside and they are called a few different things. Namely climax runs or blow off tops.

Let's take a look at a chart from the past to see if there are any similarities to the current run.

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Think about it this way. We all know most airplanes have what are called ceilings. That's the point at which a jet engine gets starved of oxygen due to too high of altitude. Ever hear of the phrase "thin air up there"? Same deal. At some point (sooner rather than later) the air is going to get real thin up here. We've seen it before and we'll see it again. A point in time will come where the market sells off and in doing so wipes out WEEKS worth of gains in short order.

Good we say as it allows for actually being able to buy names that have came down to lower risk entry points ala support or has everyone forgot that word these days. So don't be fooled into complacency here that the market is never going down just because it hasn't yet. We at this point are going to let cooler heads prevail at this point and BE EXTREMELY SELECTIVE WITH A REALLY SHORT TERM LEASH on anything new on the long side.

Sure when one looks at the headlines it's looking pretty easy to make headway. BUT try putting NEW money to work. The extended stay extended and that's where the drive is, all the extended names with ZERO LOW RISK ENTRY POINTS TO BE HAD.

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By Jeff Pierce

Both of these index charts could pullback to green moving average (68) and remain in a very strong uptrend. I'm not suggesting that is going to happen as the correction could just as easily be that of a sideways nature, but the markets will have to digest these gains one way or another.

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The mere fact I'm even looking at Gold through bullish tinted glasses is a monumental shift in bias from the past 3 months. I don't think it's a buy here, but I think it could be getting close. Don't interpret my hint as bullishness as an all out load the truck signal. Far from it.

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Deep thoughts here. I liked this passage so I thought I'd share.

The Universe is not of itself suspended aloft without sense or reason or guidance, nor is there one reason which rules and guides it by rudders, as it were, or by controlling reins,but, inasmuch as Nature brings, in this life of ours, many experiences in which both evil and good are commingled, or better, to put it very simply, Nature brings nothing which is not combined with something else, we may assert that it is not one keeper of two great vases who, after the manner of a barmaid, deals out to us our failures and successes in mixture, but it has come about, as the result of two opposed principles and two antagonistic forces, one of which guides us along a straight course to the right, while the other turns us aside and backward, that our life is complex, and so also is the universe; and if this is not true of the whole of it, yet it is true that this terrestrial universe, including its moon as well, is irregular and variable and subject to all manner of changes. For if it is the law of nature that nothing comes into being without a cause, and if the good cannot provide a cause for evil, then it follows that Nature must have in herself the source and origin of evil, just as she contains the source and origin of good. ~ Plutarch "Isis and Osiris"

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