Wednesday, 3 November 2010
WHAT THE CHARTS ARE SAYING
Here comes the continued Bernanke-financed rally. Actually, you and I are paying for this stock market rally. Nothing is coming out of Ben's pocket, although he is doing all of the spending.
What stands between a stock market correction and a stock market rally? Ben Bernanke and his army of inflationistas.
A US Dollar rally will signal the end of this world stock and commodity inflation -- we can call it a bubble, I guess. A bubble fueled by a lot of air, a lot of windy anti-Dollarism, and not much else, in truth. A promise to not let American stocks and bonds fall -- which promise is meant to keep American dollars from fleeing overseas.
The Dollar has been trying to bottom recently. As soon as it makes noises of a bottom, Dr. Ben steps in and beging cutting (paper cuts?) with his flacid tool again. Look at a couple charts we have today illustrating the Fed's infectious disattraction for the US currency.
One of our better trading systems (M5 3 ASP ALT LT2a) is giving a shortsell signal on UUP today, the US Dollar Bullish ETF. A shortsell on this bullish ETF means this system thinks UUP is going lower.
The same trading system is also giving a BUY SIGNAL on FXE, the Euro vs US Dollar ETF.
We are getting about 95% long-trade signals versus short-trade signals. We are going to show some of our short-sale trade signals, just to be perverse I guess.
A stock rally with a continuing Dollar correction means, for anyone trading in US Dollar denominated issues, money made in stock appreciation is being given away in Dollar depreciation. So Bernie is using American Dollars to generate bubbles in foreign stock markets and in commodities -- while American citizens essentially are paying for everyone else's party. Some might argue that it is about time for America to pay! And that case can be made. But why are we allowing this man to do this? Is this debt-party Bernie is creating for the world, really in America's interest?
Oh, we have another chart suggesting more Dollar weakness against the Euro -- if you needed more such information.
Is a weaker Dollar really going to make the American economy more competitive with the world? Or is it going to make Americans poorer, as it exports inflationary pressures all around the world and raises the costs of doing business (commodities are anti-Dollar instruments)? Is the plan to flood the world with so much Dollar-money that the world will turn around and buy American products and put an end to the Greatest Depression? Is that a fantasy? Is a world where no one wants to own US Dollar instruments except the Fed really a strong advertisement for investing in America?
Bernanke wants to spent another $500 Billion to get the American economy moving again. The first trillion and a half didn't do much, apparently, except to save the banks and to provide Wall Street bankers with even higher bonuses -- while millions of suddenly-poor Americans were losing their jobs and being kicked out of their homes.
I guess we know who rules America.
M4 ACCUMULATION TOP AND BOTTOM WATCH LIST:
Gold stock issues bottoming. Gold (Physical Gold) issues topping.
21 Issues bottoming; 64 issues topping. Two shipping issues bottoming; one shipping issues giving a short-sell signal (see Trading Ideas below).
|SYMBOL||CLOSE||T11 Diff||M4 Sum Plus||Issue Name|
|^HGX_D||97.24||-0.09||1||Philadelphia Housing Sector Index Daily|
|^HUI_D||527.17||1.376||1||Gold Stock Index Daily|
|^VIX_D||21.57||0.399||1||CRB Volatility Index Daily|
|^XAU_D||206.31||0.37||-1||Philadelphia Gold and Silver Index Daily|
|ABX_D||48.74||0.128||1||American Barricks Gold|
|ANV_D||25.27||-0.137||-1||Allied Nevada Gold Corp|
|CPA_D||50.8||-0.146||1||Copa Holdings SA-A|
|DHI_D||11.06||0.022||1||DR Horton Daily|
|EOC_D||54.86||0.107||1||EXPRESA NATIONAL DE ELECT.CHILE|
|FRO_D||28.85||-0.024||1||Frontier Limited Shipping|
|GAZ_D||7.89||0.079||-1||Natural Gas ETF|
|GMR_D||4.23||0.203||1||General Maritime Shipping|
|GSS_D||5.12||0.016||-1||Golden Star Resource Gold|
|KGN_D||8.01||0.109||1||Keegan Resources Gold|
|PPD_D||61.47||0.656||1||Prepaid Legal Services|
|QLTI_D||5.77||-0.018||1||QLT Inc (Biotech)|
|RGLD_D||50.07||0.105||1||Royal Gold Inc|
|SAN_D||95.63||0.323||1||Banco Santander Chile SA|
|TNK_D||12.18||0.014||-1||Teekay Tankers Ltd.|
|USSIF.PK_D||0.531||0.011||1||US Silver Corp|
|X_D||44.85||-0.096||1||US Steel Corp|
|SYMBOL||CLOSE||T11 Diff||M4 Sum Plus||Issue Name|
|^SMSI_D||1,104.40||2.098||-1||Madrid General Index Daily|
|BP_D||41.42||0.15||1||British Petroleum Daily|
|CHOP_D||6.01||0.024||1||China Gerui Adv Materials|
|COL_D||59.71||0.085||1||Rockwell Collins Daily|
|COP_D||59.34||0.124||-1||Conoco Philips Daily|
|EUFN_D||23.064||0.06||-1||Euorpean Financial Index|
|EWJ_D||9.99||0.008||-1||Japan Index ETF|
|FITB_D||12.44||0.035||1||First Third Bancorp|
|FNMA.OB_D||0.385||0.009||1||Fannie Mae Daily|
|GNK_D||16.42||0.036||1||Genco Shipping Corp|
|HMC_D||34.25||0.067||-1||Honda Motor Company|
|HME_D||54.92||0.14||-1||Home Properties Inc|
|HQS_D||3.35||0.016||-1||HQ Sustainable Maritime|
|JJM_D||43.38||0.108||1||Industrial Metals ETN|
|JOSB_D||42.85||0.146||-1||JOS A. Bank Clothiers|
|MRK_D||36.61||0.043||-1||Merk Pharmaceuticals Daily|
|O_D||34.24||0.058||-1||Realty Income Corp|
|PDLI_D||5.39||-0.01||-1||Protein Design Labs|
|PFE_D||17.45||0.039||-1||Phizer Drugs Daily|
|PTP_D||43.91||0.05||1||Platinum Underwriters Insur|
|RRGB_D||20||0.055||-1||Red Robin Gourmet Burgers|
|RY_D||53.66||0.155||-1||Royal Bank of Canada|
|SLG_D||67.32||0.201||-1||SL Green Realty|
|UPS_D||68.3||0.136||-1||United Parcel Service Daily|
|URR_D||31.57||0.087||-1||Double Long Euro|
We include a few charts below of issues we think especially interesting.
Black Line: M4 Accumulation: primary momentum indicator.
Red Line: M5 3 Test Momentum Indicator: leading momentum indicator, showing future direction of trend.
Orange Line: M5 3 Test Average (Moving Average of M5 3 Test Momentum Indicator).
Black Line: M4 Sum Plus Spike: +1 to zero: positive; -1 to zero: negative. Two consecutive days at +1 generally are bullish; two consecutive days at -1 are bearish.
Red Line: Intermediate-Term Trend.
Brown Line: M2F ALT: overbought +80; oversold-20.
Red Line: Short-Term Trend.
CHARTS OF INTEREST
Topping. Everything is tilting down. It would be a good time to take profits here.
DNDN, Dendreon Corp.
Seems ready to take off. Old high is within shouting distance. Trends are negative but trends always move last.
EOC, Empresa National De Elect. Chile.
Have to love this chart. An old high is ready to be shattered in this move.
GLD, Spider Gold Shares.
What's going on with GLD? M4 Accum says its going lower. M5 3 Momentum (red line, Top Pane) is trying to put in a bottom. M2F Alt (Bottom Pane, brown line) is overbought, and declining, suggesting lower prices. Gold has a wonderful power of its own today; and it's very hard to bet against.
IAU, Gold ETF.
Almost the same picture as GLD above. Should come down; but may not.
NFP, National Financial Partners Insurance.
NFP doesn't look good here. Seems to be breaking down. M4 Sum Plus is now negative. An attempted rally in M2F ALT (bottom pane, brown line) was pathetic.
WBD, Winn-Bill-Dann Foods
Price hasn't broken down yet. But it should (I hesitate to say 'it will', given the HUGE and unprecedented governmental support for the markets here). Should be selling today and for the next few days.
HURN, Huron Consulting.
We've been shorting HURN for much of the year. Another short-sell signal today. But, in terms of the M4 Accumulation Indicator, we should get a bit of a push up here. T11 is still negative (Middle Pane, red line) -- we can't have much of a rally until that turns up.
XAU, Gold/Silver Stock Index.
IAU and GLD above represent physical gold prices. They both suggest a top. XAU represents gold and silver shares. It seems to be bottoming here. Although it is short-term overbought and might come down a bit before it challenges new highs.
SPECIFIC TRADING IDEAS
FRO, FRONTLINE LIMITED SHIPPING. SHORTSELL SIGNAL.
HGX, HOUSING INDEX. SHORTSELL SIGNAL.
We had about 50 BUY SIGNALS today for every SHORTSELL SIGNAL. Why are we highlighting the shortsell signals? Sheer perversity perhaps. As I stated, we are about 95% long this market.
FRO, Frontline Limited Shipping.
More fallout from Shipping Terror or just more questions about the recovery? At the top of a tight trading range and ready to start down again.
HGX, HOUSING INDEX.
So, all the bad news in housing is not out yet. Please, never let us lie to ourselves and create another housing bubble. Stock market bubbles are hard enough to deal with -- but housing bubbles cripple a society for nearly two decades.
More information on the CGTS systems can be found at:
MICHAEL J CLARK
Clark's Gate Timing System
84 4 221 92210
Disclosure: NOTHING TO DISCLOSE
Disclosure: Nothing to disclose.