Thursday Jan 26, 2012
Bonds are up for some foolish reason but I just saw a 1.31 print on the Euro on CNBC.
The Dollar
Another day, another new low for the safe haven Dollar. Can you feel the momentum building? Despite all the hype about a European meltdown, the Euro continues to slowly rally, it is now picking up steam as it sails past the 130 resistance.
Many technicians are saying this is just a blip on the Euro, I don't think so this looks much more like a fifth wave low on the 2011 daily chart for the Euro.
Euro ETF
See the break out above the 130 level? The logical target becomes the previous fourth wave high at yes 140. If I am correct this analyss should be confirmed in the action in other markets, so let's take a look at the money politicians cannot print from trees.
Gold ETF
First FLD has broken above a clear downtrend line from its August high, the rally begins again.
Second, GLD has taken out both the 50 and 200 day MAs, so quant programs will be generating more buy signals. That, along with the FED meting yesterday (which leads which?) eplains the big jump yesterday.
Remember gold typically leads stocks, it seems that we now have
gold, then stocks followed by currencies and oil lagging but still in a reverse head and shoulders formation. By the way our recommendation for GDXJ is outperforming GDX.
GDXJ GDX RIG GM
GDXJ is outperforming GDX. GM in blue has been a good call as has RIG in black, we sincerely hope you are participating in this rally.
We are going to experiment with adding an audio clip this weekend and look forward to your feedback on that idea.
So for now yes the overall stock market is over extended on a technical basis, that is what bull markets do. As weary bears throw in the towel and cover stocks get the fuel to power higher.
1358.59 was the high close April 29, May 2. At doay's 1330 we are a mere 2.2% from taking out that level. Even a leisurely 1 percent a day move gets us there in three days. With the dollar weakening and gold leading the way, the surprises are likely to be to the upside. Point being, the quant programs that power hedge funds will reverse their short positions and go long on a close over 1360. Note in the chart that there are other resistnace levels from May below that number. We cannot know where the tipping point for most of these chart programs are, but it is certainly immediately ahead. While the daily chart is quite overbought the weekly suggests we can power higher. Note MACD in the bottom panel just getting underway.
We hope you are finding TMP to be educational, profitable, and just plain fun.
I will address a constructive question from a TMP reader on when to exit, how long to hold
this afternoon.
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