CLARK'S GATE TIMING SYSTEM ©
Thursday 29 October 2009
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crises should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
- Ludwig von Mises.
INDEX VIEW: Housing-Related Issues
Ok. We had some damage done today. How much? Let's look at housing related indexes to get a sense of what is happening. We start with the Banking Index, BKX, and we see the BKX's last rally (from the perspective of our M5/M5Average Diff Sum Plus indicator, top pane, blue) was a spike, one day up, and then down again -- indicating unsustained buying. In fact, momentum has been mostly negative since the first of September. BKX broke support yesterday; and we should be making new lows now for a time. Looking at our second pane, the M5 Average is in a bearish position when it is above M5 and decline, as it is now. The ideal position for a rally (M5 above M5Average and climbing) wa in place last in early July. Next support is at 35.17.
The HGX, Housing Index, also broke support yesterday on a down-gap and is looking very weak at the moment, with the next support level at 73.10 (it is at 93.26 today). That's a pretty good fall in store -- almost 22%. The rally in HGX hasn't had real momentum support since early August. Slender rallies (M5/M5 Average Differential) show unsustained buying power, even though the price appreciation also shows the lack of seller strength also. The price went higher; but there really wasn't much conviction.
CUT, the Timber ETF, also fell through a support level yesterday. It is also showing a very weak rally, in terms of momentum. It's going lower.
FIO, Industrial/Office REIT, is breaking down also, as evidence of the commercial real estate melt-down that is happening (and coming).
UHN, Heating Oil, shows a topping in this energy issue.
And UUP, the Dollar Bullish ETF, shows a rallying dollar (short-term) -- but we see nothing in the chart indicating that the dollar rally will be sustainable. We may be wrong about this -- but no trend change at this time signalling a real rise in buying strength. Momentum is up; but there will be no turn-around until the trends reconfigure.
Looking at the selling in the last day or so has made us wonder about the claims of some experts about markets 'de-coupling' from the American warship going down. The idea is that the whole global market is ok, except perhaps America. But we're seeing global selling at the moment, including 'star-markets' like AORD, All-Ordinaries Index, and BVSP, Bovespa, Brazilian Index. Both of these indexes are now looking toppy, sinking toward support, with momentum breaking down.
Asian markets -- HSI, Hang Seng; KS11, Kopsi, South American; TWII, Taiwan; N225, Nikkei Index, Japan; SSEC, Shanghai Index, a bit less so -- really fell apart today, crashing through support as downside gaps appeared almost everywhere. This freefall will need some time to sort itself out. Korea and Japan look badly damaged. Shanghai has been working VERY hard to get back into a bullish pattern; now that index is looking like a double top that will decline back toward old lows.
American indexes: Both the RUT, Russell 2000, and the SOXX, Semiconductor Index, broke support and seemed destined to test support at lower levels. Again, recent rallies have not been accompanied by momentum strength.
One of our better trading systems, M2F ALT LT 2, gave a lot of signals today, some buy signals, and a slough of sell signals.
|M2F ALT SUM PLUS LT 2|
|FXY_D||Japanese Yen ETF||109.37||Enter Long||91.43|
|PFE_D||Phizer Drugs||17.21||Enter Long||581.06|
|BMY_D||Bristol Meyers||22.16||Enter Long||451.26|
|KO_D||Coca Cola||53.51||Enter Long||186.88|
|M2F ALT Sum Plus SystemClosed Trades|
|Issue||Close @||Position||Open @||Date||% Gain|
More information on this system can be found at
A draft of the book Turn Out the Lights can be found at the website below. This book is a description of the metaphysical causes of the economic cycles of expansion (Day) and contraction (Night).
Michael J. Clark's Gate Timing System
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