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Playing the Ponzi
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Why “Playing the Ponzi”? I view the entire monetary and financial system as something of a Ponzi scheme. Starting with currency that is created as debt, and running straight through a global economic model that is based on infinite growth in a finite world. This won’t end well. I’d go a step... More
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Playing the Ponzi
  • Commodities And Emerging Markets Update 2 comments
    Apr 15, 2014 12:56 PM | about stocks: EEM, EWZ, JJC, DBC, JO, GDX, GDXJ

    Some very interesting action in commodities and emerging markets of late. The growth components of the story continue to look very vulnerable.

    The broad emerging markets ETF (NYSEARCA:EEM) has hit downtrending resistance and appears to be turning lower.

    (click to enlarge)

    Brazil (NYSEARCA:EWZ) is behaving in-line with that analysis, and appears poised to drop.

    (click to enlarge)

    Last month, copper (NYSEARCA:JJC) broke support that dates back to 2009. It rallied back to that trend line and is dropping again today (Tuesday). A new low would be meaningful.

    (click to enlarge)

    Coffee (NYSEARCA:JO) made some serious money for those who held it in the first quarter, rallying over 100% from its lows late last year. It may now be putting a double-top in place.

    (click to enlarge)

    One of the more interesting plays to me is gold miners (NYSEARCA:GDX) and (NYSEARCA:GDXJ). I have been long GDXJ for a little while now and am still holding. What once looked like a possible breakout from a bullish falling wedge has morphed into a possible inverse head-and-shoulders. Today's action (4/15) brings GDXJ down to a point of multiple support lines that would seem like a good line in the sand. If a large gap up (3%) should occur tomorrow, I would take that as a very bullish sign as today's pricing could be viewed as an isolated doji star.

    (click to enlarge)

    Disclosure: I am long GDXJ.

    Additional disclosure: I own JJC and JO puts.

    Stocks: EEM, EWZ, JJC, DBC, JO, GDX, GDXJ
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  • lecso
    , contributor
    Comments (150) | Send Message
    Well, yesterday EWZ had a breakout afternoon. I was not expecting it from reading the charts. Any idea what happened ?
    18 Apr 2014, 12:51 PM Reply Like
  • Playing the Ponzi
    , contributor
    Comments (143) | Send Message
    Author’s reply » My short answer to your questions is "no idea." Philosophically, I try not to worry about trying to figure out causality behind price movements. I just watch the price action as a proxy for investor sentiment and try to notice when it seems to have gotten to an extreme and seems likely to revert toward the mean.
    On one hand, last week's reversal in the S&P was fairly predictable. It happened right on a trendline that's support 11 reversals since 2009. On the other hand, a lot of individual action surprised me. EWZ broke above resistance, as you noted. For my own trading dollar, I would want to see another week (or two) of upside follow through to consider the resistance well and truly broken. It is not uncommon for a temporary break to occur. EWZ has broken above the same trendline (and closed the week above it) in the past. So to me, it's still an open case. If/when it does break out, it would seem there is plenty of room to rally before resistance. Same with EEM.
    GDXJ surprised me by continuing its beatdown, falling all the way to a double support line. JJC surprised me by rallying back to resistance. JO shocked me by rallying (6+%) back to resistance. But in all of those cases, the above charts reads are still in play. None of those reads have been confirmed or denied yet, imho. We'll see how they play out.
    18 Apr 2014, 10:15 PM Reply Like
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