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Dr. Stocks-PHD Twenty year Wall Street veteran. Hollywoods direct line to Wall Street. Specialize in market timing and predictive modeling. Follow my updates via twitter/tkathlinastocks and at my blog
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    During the 1st hour of trading on Feb 16th, I posted on Twitter that I was exiting TVIX trade; citing DOJI at resistance and FED Speak. I then posted this chart on the blog.

    The question now is, when to get back in?

    This 1st chart is of TVIX daily-1year. The left and right side declines I have marked with the appropriate Elliott Wave counts.

    The A-wave in June 2011 retraced the entire 5th wave. (Common A-Wave retraces are 1, .618, .5) This retrace helps confirm our EW count is correct.

    Standard days of retrace typically are 9 to 13 days. Notice the A-wave was 13 days up, B-wave was 13 days down. (Again, confirming the count)

    Moving forward to today, the A-wave retraced 50% of the 5th wave. (Confirming the EW count)

    I do not know if B-wave will be an irregular move, making a marginal new low, or retrace the standard .382 or .50 of A.

    Assuming a strong blow off top in the broader indexes next week; I am looking for a marginal new low in TVIX.


    Next chart we zoom in on this A-wave action and note the 9 days up into volume resistance. (Standard pattern)

    I am now looking for 9 days down to complete B-wave.

    Next we look at cycle time using 1 year chart. Using our FIB number ratios, we note the highs and lows of this cycle are lining up perfectly to the corresponding FIB time frame. (We look for pattern changes at Fib Cycle Times)

    I have counted from the FIB 13 week, each week up until now. We just completed FIB week 19. FIB week 21, where trend changes occur, is the week of FEB 27TH.

    I expect TVIX to put in a cycle bottom the week of FEB 27TH, in other words, completion of B-wave. (Most likely the end of the week or 9 trading days)

    This low could be a 1/8th extension of the 5TH wave bottom $14.26x1/8= $12.54


    Based on Fib Time analysis and EW counts; I expect TVIX is putting in a significant bottom in price and time.

    I look for this bottom process to extend out to March 9th in a possible A-B-C-D pattern, with the B-wave being the absolute low price; the week ending FEB 27TH.

    At this time, I feel like the major indexes are in a 3rd wave, not a 5th wave. If this assumption is true, then I believe TVIX will complete its next 5 waves up in 4.7 weeks, or sometime early April.

    Tim Kathlina

    Tags: TVIX
    Feb 18 10:05 AM | Link | Comment!
    Yesterday I got asked a GREAT question: Is it true that if Greece fails, GOLD will move higher?

    Without any technical analysis, my reply was no this is not true. The reason is, the bailouts are not for Greece, they are for the BANKS; this is important to understand. If Greece defaults, the "derivative contracts" are due and payable to the counter parties that purchased this "insurance" against a Greek default.

    Because banks are leveraged, meaning loans extended, verses cash on hand, over 60 to 1 in many cases, the Banks simply do not have the money to pay. What that means is, the BANKS, of which US Banks own 97% of the worlds derivative contracts, would be immediately insolvent.

    Margin calls would be issued, and I surmise the Banks would be forced to SELL THEIR GOLD. (All of this assuming Greece defaults, and it is ruled a default by the ISDA)

    Today from CNBC we get:
    Gold Demand Hits New Records as Europeans Stockpile. Demand for gold hit an all-time high in 2011 as European, Indian and Chinese demand soared. Total demand around the world rose to 4,067 tonnes, worth around $206 billion - the first time annual demand for gold has risen above $200 billion.

    Lets get technical:
    First thing I tried to do is establish a time line. I have explained before about Fib Time Frames, the universal law of numbers in relation to each other. If we over lay a Fib Time sequence on a yearly chart, GOLD in a yearly cycle, starting at zero in Feb 2011, the numbers line up PERFECTLY.

    The expectation is to look for direction out of each Fib time frame. Notice GLD went up into FIB 5, down into 8, up into 13, consolidated into 21, which is THIS WEEK ending. Remember for the SPY, we have FIB 13 week ending next week, 24th. Which way will GOLD go?
    I do not know. But, having this time frame we can propose, which ever way it breaks, up or down, the trend will extend out for 34 WEEKS.

    Here wave GLD daily. I have elected to use ICHIMOKU CLOUDS as our technical indicator. Reason is they offer a wider range of resistance and support calculations and GOLD is very volatile; many fast trends within the big trend.

    The daily for now shows NO OBVIOUS SIGN of weakness in Gold. We are above the support cloud, consolidating/distributing from Fib 13 into Feb 21.

    This could very well be nothing more then a 2nd wave or 4th wave EW pullback in a larger uptrend. I will say 21 weeks is a very extended time frame for any 2nd or 4th wave EW consolidation.

    21 WEEKS suggest a DISTRIBUTION TOP pattern; but I can't say for sure.

    So, next step in our quest to answer the GOLD riddle is to compare it to something else; then look for CORRELATION. Try to find another tradable asset that seems to move lock step with GOLD.

    I ran gold up against, Wal-Mart, big global player, IBM, Inverted GOLD Short etf and the EURO-BINGO!

    GOLD/EURO correlate over the last 3 years almost perfectly. It seems the fortunes of the Europeans, has a direct correlation to GOLD. (Which goes back to my reply yesterday, so goes Greece, so goes GOLD)

    Notice the 1st indicator is the correlation %. Stays above zero line, and many months above 50% line. The only below zero, was when the EURO and GOLD were in a correction, but the EURO corrected longer. Either way, both were correcting and both moved higher out of the correction.

    Currently both are in a correction and the correlation is very high.

    Having established the relationship between the EURO/GOLD; lets drill down and take a look at the EURO.

    To compare apples to apples, I overlay the EURO with the same ICHIMOKU CLOUD. This time the picture is the opposite of the GOLD daily picture.

    EURO for now, is not consolidating, but in a confirmed downtrend; noted by being BELOW THE CLOUD combined with several other sell signals.


    Gold chart is still bullish, above the cloud, and doesn't provide any conclusive evidence of a trend change.

    The amount of time spent consolidating, 21 weeks, is much longer then a typical wave 2 or 4 pullback, suggesting distribution, not consolidation.

    Euro and Gold are confirmed to move lock step with each other over the length of my chart sample, 3 years.

    The EURO for now is in a confirmed downtrend. No time analysis was offered for this, but I have to assume since its been going up for years, we are possibly in the EARLY stages of this trend.

    I expect GOLD to move decisively in a direction within the next 5-10 days; this direction to be maintained for 34 weeks.

    Tim Kathlina

    Tags: GLD, FXE
    Feb 16 8:43 AM | Link | Comment!
  • Before The Bell-S&P Timing Update Feb 11th
    Q: Where are we at, and where are we going and for how long?

    To get our compass correct, I have below a 3 year SPY chart, overlayed with Fib Time Zone analysis.

    Numbers tend to move in relative consistent time distances from their previous calculated number. This holds true in all the Universe.

    Fibonacci Time Zones Defined:
    A series of vertical lines that are spaced at the Fibonacci intervals of 1, 2, 3, 5, 8, 13, 21, 34, etc. The first line is placed at an extreme point on the chart and the lines that follow are spaced at increasingly wider intervals in accord with the Fibonacci sequence.

    I began the Fib count in 2009 at what would be the completion of Elliott Wave 1. Fib count starts at 0.

    Notice in 2009/2010 at intervals/weeks 2, 5, 8, 13, 21 brought in a low of some sort.

    After week 5 low, the market advanced 2 more weeks, before consolidating downward into week 8.
    We can see this exact repeat in the 2011 sequence from week 5 to week 8.

    In 2011, the exact high, was the exact FIB 21 WEEK. (NASDAQ:COOL)

    2009 Week 13 low, is the 4th wave in a 5 wave up pattern. Notice SPY pulled back 3-weeks into 2010 week 13, and the same repeat pattern into 2011 week 13.
    The FIB retrace however, was smaller in 2011. (This would be because of the month of November, setting up for Bull Christmas run)

    Going forward to my current Fib count, since we have not reached week 13 yet, this implies and gives credence to my estimation noted last week, that we are in a complex wave 3, not working a wave 5 completion of trend. (THIS POINT IS VERY IMPORTANT)

    THE REASON this point is SO important to understand is, the next move out of wave 4, will be UP into wave 5 completion and if FIB Intervals hold true, which I believe they will, this WAVE 5 move will be 21 WEEKS in length. (WHICH MEANS U DO NOT WANT TO BE SHORT FOR 21 WEEKS OF A MARKET ADVANCE OR YOUR PORTFOLIO WILL GET KILLED! YES I AM YELLING THIS POINT)

    Last week, was down-week 1 is complete. If history repeats we have a move lower coming of 2-3 weeks, into Feb 24th or 1st of March, before embarking on 21 WEEKS OF A BULL RUN to complete the 5th wave and bring in the worst BEAR MARKET any of us have ever seen.

    Q: How come you didn't begin this last count at the very top of the range, the last 21 ending day in June? A: Because the Numbers don't line up to any significant turn points. But when I start from the secondary high in July, the FIB weeks line up.

    Important--If my count is incorrect, this suggest we have completed week 13 and are working the 21 week leg. If that is the case, then week 13 completed around Christmas, thus week 21 would be in MAY!

    I just cant see us rallying from here until may after already moving between 10-45% depending on the index or sector. So, I will stick with for now, we have begun wave 4 pull back; it will be fast and furious and complete quickly.

    Q. What is the expected pull back price? A> Retrace minimum is 1/8th or .12. That gets us to 1193, around 1200. Support one on weekly currently is calculated at 1090. I believe somewhere between these two figures. Because of time of year, the pullback can be more extreme.

    Tim Kathlina

    Tags: SPY
    Feb 11 11:35 AM | Link | Comment!
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