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Michael J. Clark was born and raised in Sinclair, Wyoming. He is a poet, novelist, artist, historian, and market analyst. His fine arts portfolio can be found at the following address: http://www.hoalantrangallery.com/MJC2.htm His writing portfolio can be found at:... More
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Clark's Gate Timing System ©
  • CGTS Daily For Tuesday 18 August 2010: CURRENCY EDITION. Aussie Dollar topping? US Dollar Bottoming? Japanese Yen King-of-the-Hill. 18 comments
    Aug 17, 2010 8:08 AM | about stocks: HAL, RHT, CLI, ELNK, FXA
    CLARK'S GATE TIMING SYSTEM
      FOR: 17 AUGUST 2010
    - TUESDAY

    A.  MARKET MOMENTUM

    CGTS VIEW: We have a stabilization of the momentum in the stock markets.

    Our key short-term momentum indicator -- numbers hitting +1 (positive) or -1 (negative) is now 15% bullish, up from only 9% bullish. 

    The key intermediate-term Momentum Trend (those in the positive zone of 1-0 versus those in the negative zone of 0-negative 1) continues to lose ground, now only 58% bullish, down from nearly 90% last week, and down from 62% on Friday.

    The Advance-Decline Line (most recent moves up or down) bounced up to 33% bullish, from a very low 18% bullish on Friday.  Stocks registering an uptick from -1 to 0 show up on the Advance side of this line.

    Only 20 issues meet our criteria for a long trade (+1 M4 Sum Plus and Intermediate trend positive) -- up from 14 on Friday -- while 75 meet our criteria for a short trade (-1 M4 Sum Plus and IT Trend negative).  This is only 21% bullish

    The intermediate-term trend of most issues are still positive (191 to 117), but this is had a change of -27 from Friday, indicating that this trend is still breaking down.

    August 17, 2010
     
     
     
     
     
    Positive
    Negative
     
     
    Key Short-Term
     
     
     
     
    TRADING MOMENTUM
     
     
    % Bullish
    PLUS ONE OR NEGATIVE ONE
    26
    151
     
    15%
    Yesterday's Reading
    19
    189
    45
    9%
     
     
     
    diff
     
    Key Long-Term
     
     
     
     
    MOMENTUM TREND
     
     
    % Bullish
    ONE/ZERO OR ZERO/MINUS ONE
    180
    130
     
    58%
    Yesterday's Reading
    192
    118
    -24
    62%
     
     
     
    diff
     
     
     
     
     
     
    ADVANCE/DECLINE
     
     
    % Bullish
    UP OR DOWN MOST RECENTLY
    103
    207
     
    33.23%
    Yesterday's Reading
    58
    252
    90
    18.71%
     
     
     
    diff
     
     
     
     
     
     
     
     
     
     
    % Bullish
    LONG TRADE VS SHORT TRADE
    20
    75
     
    21.05%
    Yesterday's Reading
    14
    74
    5
    15.91%
     
     
     
    diff
     
     
     
     
     
     
     
     
     
     
    % Bullish
    Intermediate-Term Trend
    191
    117
     
    62.01%
    Yesterday's Reading
    204
    103
    -27
    66.45%
     
     
     
    diff
     
     






    Comments on GSPC chart:

    The short-term momentum indicator (M2F Alt, Pane 3 from above, brown line) is oversold, so, short-term, we will be approaching an an attempted bottoming.  As the chart notes, an oversold (or overbought) condition can last a long time and move against its own description -- i.e., in late June GSPC reached an M2F alt oversold condition at 1092 and continued to decline another 100 points or so before turning back up to try to establish a bottom.  This is a secondary indicator.
     
    M4 Sum Plus (bottom pane, brown line) -1.  This confirms the selling trend.
     
    M4 Sum Plus Trend (bottom pane, black line):  The intermediate Momentum Trend  is +1  -- positive.

    M5 3 Momentum (second pane from top, brown line) This key indicator has broken support and is suggesting we are at a major top and will have a substantial decline.  The difference between my call two weeks ago for the end to this rally and today is that two weeks ago M5 3 was not in a freefall.  Today it seems to be entering a freefall.  Time will tell.  It is breaking support, which usually means selling is coming.
     
    T5 Short-Term Trend (second pane from bottom, red line) is in a positive trajectory but a slightly negative pattern (lower low); but it has taken out overhead resistance, which is a positive.  Trends tend to change more slowly and always after momentum indicators change.
     
    T11, Intermediate-Term Trend (second pane from the top, red line): negative.  It is hard to sustain a rally in the opposite direction of this trend line.
     
    Overall: negative at the moment.  A look at a couple more charts helps to explain the negativity.

    Second GSPC chart:

    Watch the top pane, the black line, M5 3 Test Average.  This is a long-term overbought/oversold momentum indicator, moving between (about) +100 and -100 ranges.  Positive 50 is overbought; Negative 50 is oversold.  When this indicator is topping and is overbought, it is proclaiming a top.  Look below to the second pane from the top, at the black line, M4 Sum Plus: when this indicator is -1 for two days in a row (ignore spikes up or down), this confirms the sell signal.  The bottom pane has two other indicators that measure intermediate-term momentum.  The DJIA is giving a short-sell signal now.  We expect more selling.  The black line (top pane), to reach a bottom, must cross the corresponding brown line (M5 3 Avg Differential) AND M4 Sum Plus (Pane 2) must confirm the bottom with two days at +1.

    CURRENCIES

    One of our readers challenged our view that the US Dollar was bottoming.  He writes:
    Ha, so you were wrong two weeks ago, and you are probably wrong again. The first thing I note is 'the dollar is rallying.' Hm, the yen hit a new high and may test the all-time high of 79 yen to a dollar. And how can the dollar rally is the central bank just promised it would pump more dollars into the economy?
    I replied:

    It's not the first time I've been wrong -- and I will be wrong again.

    How CAN the dollar rally? It's a paradox, isn't it. Because the European contagion is going to rise up again. Because Japan knows that it has to buy dollars and sell yen or they can't compete in terms of exports.

    Take a look at the recent action in UUP, US Dollar Bullish ETF, and tell me it's not beginning a rally.

    All the currencies of the world are flawed -- but some are more flawed than others. And the Euro seems to be the most flawed at the moment, with such an ill-considered union pasted together with a naive approach to 'national/federal' interest rate policy.
    This led me to wonder about presenting some currency charts, using our longer-term momentum indicator (M5 3 Average) just to see how the complex looks.  Remember, in these charts, the green line in the top pane is the currency price; the black line in the top pane is M5 3 Average, the key indicator in these charts; and the brown line in Pane One is the M5 3 Indicator, a short-term momentum indicator.

    First, the Australian Dollar has been very strong of late.  This seems to be ending.  Here's a chart of AUD vs. Canadian Dollar.  The Canadian Dollar has also been strong -- except against the Aussie Dollar.  M5 3 Average is overbought now, and beginning to turn down.  M4 Sum Plus in the Second Pane down does not confirm a sell yet -- but M5/M5 Average ASP in the bottom pane is confirming a top.




    AUD vs. Chinese Yuan also looks to be topping.  The picture is very like the AUDCAD chart above.



    The AUD has struggled against the Japanese Yen (as have all currencies) -- but that struggle might be ending now with lower prices guaranteed. 



    The AUD upmove against the New Zealand Dollar is still intact.  There is no sign of exhaustion here yet.



    The Aussie Dollar has held up remarkably against the Euro ("everything is fixed with our banks and our new austerity will make everything alright") Rally.  It looks like a sneeze in the chart, not a rally.  And the Euro is coming down again against the AUD.



    The The Aussie advance against the US Dollar also seems to be nearing its top.  Note, the bottom pane is already showing sell AUD setting in.



    How does the US Dollar look against other currencies?  Well, it has rleady topped against the New Zealand Dollar.


    USD vs Swiss Franc.  The dollar is trying to make a bottom, a wide sweeping bottom.



    USDollar vs Euro.  The bottom seems in place.



    USDollar vs British Pound.  Dollar seems to have put in a bottom.



    All the currencies are struggling against the Japanese Yen.  The Dollar is, as well.  When it was supposed to be bottoming it was sinking lower.  It is 'trying to bottom'; but this bottom has not been confirmed by M4 Sum Plus below.  We need to see M4 Sum Plus tick up to +1 as an indication that progress is being made in this bottom-building process.



    What about the Euro?  We read that it is carrying out a kind of inevitable death sentence?  Do the charts show this?

    Well the Euro rally against the Canadian Dollar has been feeble; and it is apparently topping now.



    The Euro rally against the Swiss Franc was also lame, and it has already vanished.  An M5 3 and and M5 3 Average that are so far above the price in the chart is really a negative sign indicating a lack of sustained buying power.  More selling is at hand I think.



    Euro vs China?  Again, no contest.



    Euro vs British Pound.  A lame rally by the Euro, followed by a TKO in favor of the pound.



    Euro-Japanese Yen.  No rally at all -- and topping.  Price of Euro seems guaranteed to make a new low versus the Yen.



    Is the Pound simply pounding on another weakling when it hammers the Euro?  No.  The Pound has been strong against the Swiss Franc in recent weeks.  But that strength is topping out now.



    Can the Pound stand toe-to-toe with the Japanese Yen?  Of course not.  A feeble rally that is now ending in favor of the Yen.



    How about the New Zealand Dollar?  How has it done against the Yen?  Not so great.  A little better than the Pound and much better than the Euro and the US Dollar.  The Canadian Dollar didn't do very well against the Yen either, although it did show strength at times against the other currencies.



    The Japanese Yen is clearly the winner in terms of currency strength.  But trading the currency markets isn't about one winner, since it's more like a tournament in which every team gets to play against every other team. 

    Japan is squirming and screaming about its own currency strength, which makes it more difficult for Japan to compete as an exporting nation.

    Sometimes a weaker currency is a benefit -- and Europe can take some comfort from this -- Germany at least. 

    THOUGHTS ON THE ECONOMY

    After the tech bubble Alan (Mister Magoo) Greenspan stepped in and pumped up the housing bubble to save the stock market -- of course, the housing bubble destroyed the global economy. After the housing bubble popped, Ben (Gentle Ben, Uncle Ben) Bernanke stepped in to pump up a commodities bubble, by further emasculating the US Dollar, and arranging free money for world bankers.

    It seems that all our leaders can do now is to try to blow bubbles, inside of which they tell us we can store our illusions about the world being a safe place, with growth and development of civilization guaranteed to expand for ever.

    Now Gentle Ben can't stop (Gentle Ben was a bear if I remember correctly). He's kind of a modern hood robbing the poor to give to the rich -- claiming that he's saving civilization for us. The rich have robbed the poor for ever -- and they have also claimed for ever that they were doing it to foster civilization.

    Humans don't change much. Corrupt white collar criminals don't change much either. The difference between bankers and mafiosos is that the mafioso is the banker at the BEGINNING of his career....


    Stocks have topped short-term.  We'll see if the buy-the-dips philosphy continues to work.  I believe stocks will seek a much lower bottom, based on an economy that can't be fixed, and a Fed Chair who has run out of ideas and ammunition.


    Some pictures tell a thousand stories -- this picture tells us two.  (1) Ben Bernnanke is running on empty. And (2) he is running out of time.

    C.  TRADING SIGNALS

    Stocks we love to hate (at the moment).  We're pretty convinced these stocks are going lower.

    CLI, Mack-Cali Realthy Corp.  Everything seems to be breaking down.  See the short-term trend, blue line in Pane Two from above.  It is negative; and it just made a new low, breaking support.  This is the kind of confirmation we love when looking for a stock to short.



    Earthlink, my very own ISP -- I hope they don't burn down my house.  It is NOT a bad-looking chart, except for that big round M5 3 Average top it is making.  It is going lower -- I'm not sure how much lower.  Probably down to 8.25 anyway.



    FXA: look at that Aussie Dollar coming back around again.  It's had a great run.  Is the run ending?  We kind of think it is, based, as well, on the other charts above.



    HAL, Haliburton.  Look how the M5 3 is free-falliing (top pane, brown line).  Note also, that the short-term trend (blue, Pane 2) has broken support and made a new low.  This one would be my favorite short of the group tonight.



    RHT, Red Hat: similar situation.  New lows on the short-trend.  It should test old support around 28.25.  That support may or may not hold.  We'll have to see what happens to the patterns in the mean time.







    More information on the CGTS systems can be found at:

    http://home.mindspring.com/~mclark7/CGTS09.htm

     

    MICHAEL J CLARK
    Clark's Gate Timing System
    Hanoi, Vietnam

    84 4 221 92210









    Disclosure: No positions to disclose
    Stocks: HAL, RHT, CLI, ELNK, FXA
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Comments (18)
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  • tinshins
    , contributor
    Comments (84) | Send Message
     
    I see the USD-AUD and USD-CAD and USD-ZAR charts all look similar of late. And it seems the dollar will rise against all of them. Do you have any views on the ZAR and Africa in general ? I myself think Africa might just prove to be the investment surprise of this century. Thanks for any comments.
    17 Aug 2010, 01:39 PM Reply Like
  • Michael Clark
    , contributor
    Comments (8359) | Send Message
     
    Author’s reply » I agree that the Dollar looks very similar against the Rand. I know almost nothing about the prospects of Africa. Why do you like Africa so much? Which parts of Africa do you like -- and why? Which companies?
    17 Aug 2010, 02:37 PM Reply Like
  • tinshins
    , contributor
    Comments (84) | Send Message
     
    I live in South Africa. My investment thesis is more philosophical in nature. Consider that the tides of wealth have always followed a Westward direction. From Babylon to Greece. From Greece to Rome. From Rome to Europe. From Europe to America. From America to Asia.

     

    And from Asia this tide of wealth will pass through the Middle-East (peak oil methinks) to Africa.

     

    I doubt whether resource companies located in Africa will make you money in the future. If this is Night-time, and there is a preponderance of war then why not invest in defense companies located in Africa ?

     

    I suggest you take a look at <A HREF="en.wikipedia.org/wiki/..."> Denel </A> should they list in Johannesburg.

     

    I know Jim Sinclair is quite enamored with Tanzania. But why is he so quiet about South Africa ? It is despite its problems, the resident superpower on the African continent. The only question is whether South Africa will end up like Brazil or Argentina.
    17 Aug 2010, 04:26 PM Reply Like
  • Michael Clark
    , contributor
    Comments (8359) | Send Message
     
    Author’s reply » I am interested in the idea that civilization passes from east to west, as the sun passes from east to west. It seems to work if we ignore the Mayan, Meso-American civilizations.

     

    What is the political climate like in South Africa? Is the country more stable than it was five years ago? Is race still a boiling-over point, or are things changing? I ask because investment would be badly affected by a civil war.
    18 Aug 2010, 10:06 AM Reply Like
  • tinshins
    , contributor
    Comments (84) | Send Message
     
    What gives me hope about South Africa, is that everybody would rather slug it out with you in court than become violent. There is a Rule of Law in South Africa. There is violence yes, but at the higher levels they prefer lawyers.

     

    The former Minister of Police was tried and convicted for corruption. He got 15 years. His attorney was white. And our President has had his moments too.

     

    I think South Africa will do well due to the gold price. I have a friend working as an Actuary, and some of the models they are running, predicts a net decline in population due to AIDS.

     

    So all things being equal, with the same resources and shrinking population, there is more for everybody. So South Africa should do well.

     

    Our biggest problem, is illegal immigration, and a vast class illiterate young black men, that burned down their schools as protest against Apartheid.

     

    There is still a culture of non-learning in some areas, as in your ghetto's, but all in all, the black majority is even more passionate about education than they are given credit for.

     

    Come to South Africa should you have the time. I suggest Cape Town, and that during the season when the daisies in Namaqua-land are blooming.

     

    If you want read up on this country, start with the crime novels of Deon Meyer. He really captures the mood and scenery of this country beautifully.

     

    You should also know that many pastors in your country's Bible Belt did their Th.D's at the University of South Africa. It's a distance learning institution. And by far the cheapest university in the world.

     

    Nelson Mandela also studied Law through this university while a prisoner.

     

    Whatever may be said about your Bible Belt, I think they know the difference between a diploma mill and the real thing.
    18 Aug 2010, 03:18 PM Reply Like
  • Michael Clark
    , contributor
    Comments (8359) | Send Message
     
    Author’s reply » Housing bubble in Cape Town?

     

    I read several novels by JM Coetzee years ago: "In the Heart of the Country", "Waiting for the Barbarians" and "The Life and Times of Michael K". I liked them very much.

     

    Do you live in Cape Town?

     

    South Africa has a wonderful history and I hear the landscape is spectacular.
    18 Aug 2010, 03:26 PM Reply Like
  • tinshins
    , contributor
    Comments (84) | Send Message
     
    No, I live near George on the South Coast.

     

    You mention housing bubble. All I can tell you is that my neighbor sold her house for a net loss. And this house was in the Johannesburg area.
    18 Aug 2010, 03:30 PM Reply Like
  • tinshins
    , contributor
    Comments (84) | Send Message
     
    Here are some articles on a little known gem in South Africa. These articles are from British newspapers by the way. This vast stretch of arid earth is called the Karoo. I do believe you will fall in love with this place, should you ever come to see. it.

     

    I did.

     

    www.telegraph.co.uk/tr...

     

    www.guardian.co.uk/tra...
    19 Aug 2010, 05:37 AM Reply Like
  • tinshins
    , contributor
    Comments (84) | Send Message
     
    And some photos. But I suggest you just google Karoo South Africa for more & better pictures.

     

    www.travelpod.com/phot...
    19 Aug 2010, 05:45 AM Reply Like
  • Michael Clark
    , contributor
    Comments (8359) | Send Message
     
    Author’s reply » Thanks for the links and pictures. Stories were interesting. The pictures remind me of Wyoming, where I grew up, especially the great plains with the antelope.

     

    Do I need a visa to visit South Africa?
    19 Aug 2010, 07:15 AM Reply Like
  • tinshins
    , contributor
    Comments (84) | Send Message
     
    If you are a US citizen, or from any of the countries in the link below you can enter South Africa without a visa for 90 days.

     

    From the South African Dept of Home Affairs

     

    www.home-affairs.gov.z...
    19 Aug 2010, 09:02 AM Reply Like
  • Michael Clark
    , contributor
    Comments (8359) | Send Message
     
    Author’s reply » Thanks for your help. My wife and I (both US citizens) are on an adventure that has taken us to Vietnam (and Thailand). We are thinking we will follow the adventure East to West. We're looking for other places to live on this adventure. And rounding the cape seems to be built in to this quest. If so, Cape Town seems like it would be a good destination.

     

    Nothing decided yet -- but we're both interested.
    19 Aug 2010, 09:19 AM Reply Like
  • tinshins
    , contributor
    Comments (84) | Send Message
     
    Should you land in Cape Town, I suggest you drive straight to Piketberg. It's a scenic rural town about an hour's drive from Cape Town. You'll see Table Mountain on the way. You'll also avoid the difficult traffic in the Cape Town area.

     

    www.piketberg.com/
    19 Aug 2010, 01:01 PM Reply Like
  • tinshins
    , contributor
    Comments (84) | Send Message
     
    One more tip. Fly to Dubai first. The stop-over will be of help. There are regular flights from Dubai to Cape Town.
    19 Aug 2010, 01:23 PM Reply Like
  • Michael Clark
    , contributor
    Comments (8359) | Send Message
     
    Author’s reply » Thanks for all your help.
    19 Aug 2010, 01:37 PM Reply Like
  • NightRaider
    , contributor
    Comments (39) | Send Message
     
    Michael,

     

    How come SHLD did not come under your scanner?
    What the technicals say about it?
    Thanks,
    24 Aug 2010, 11:56 AM Reply Like
  • Michael Clark
    , contributor
    Comments (8359) | Send Message
     
    Author’s reply » Night Raider: I don't really follow SHLD. I ran a chart. It's had a big decline. It is right at support as we speak. I think it's going to break through support and go lower. Next stop could be as low as 62.28.

     

    If you're bottom-fishing, I think I'd wait. The whole market -- excepts the inverses, gold, and bonds -- are losing momentum rapidly.
    24 Aug 2010, 02:07 PM Reply Like
  • NightRaider
    , contributor
    Comments (39) | Send Message
     
    Thanks for running the chart and providing some insight.
    keep up the good work.
    24 Aug 2010, 02:51 PM Reply Like
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