Sentiment after the break-down

A lot can happen from here....

The Great Battle in GOLD

We promised you an Energy Field in Gold and here you have it. 1250 still seems like the line in the sand for the BULL and the BEARS. This was also the 3rd retest which ususally is the last. The next stop could be 1220 and then maybe a quick test of the 1170 area.

Bear in mind if we pass 1250 (confirmed) Gold can launch like a rocket....

Mutual Fund, ETF Flows and Margin Debt update

Margin Debt Message:

1. basic signal is bullish (positive ROC, still rising)
2. ROC has reached a level where we either go parabolic (think 1995) or where the animal spirits get tired and that in turn will limit the move
3. a lower (high) ROC reading could signal the turn

MUTUAL FUND FLOWS are negative...
...but shorter term trading vehicles like ETF are positive , which aligns with our MARGIN DEBT message.
The least we can say is that Mr. Market looks tired.

Bank Lending & CP update

Below you will find an update on the lending markets. A picture says more than a 1000 words. Besides all the QE in Europe and in the US the genuine credit market has never recovered. De-leveraging has been the name of the game.

The Great Reflation: How Investors Can Profit From the New World of Money

I've just finished The Great Reflation: How Investors Can Profit From the New World of Money which provides a nice summary of the current precarious situation.

The book has been praised by Mark Faber and John Mauldin which I found tempting that you find an Inflationist and a Deflationist endorsing the same book. Tony Boeckh known from his work at the BANK CREDIT ANALYST spins the story around his major theme of the CREDIT SUPERCYCLE which makes it a complete compendium.

I enjoyed the reading....

Exhaustion Watch

Last week we saw a transition shaping up which continues this week. Which looks at first sight chaotic needs to be seen in a temporal context, in other words you need to see it as a flow.

in Col 1 I highlighted the potential flip candidates resulting from our flow analysis from col 3+4 as last week. Here we have mature correlations that are about ( like the DIA) or have just flipped (like XLF in col 4).

Col2 is marked by exhaustion readings.

Col8 still shows that most of the trends have not reversed (but could soon).

Col 12-15 show some high probability turning candidates like GLD, TLT, XLF (!!). What will happen to the 'Flight to quality trade' ?

Col 18 & 19 also stress the journey aspect where we are long term negative and still med term positive

If you need a case study to learn just look at GLD because there you have it all....

Col3: mature

Col6: Overbought

Col7: cycle extended

Col9: neg Div!!

Col11: Exhaustion

Col12-15: turn has a high probability

Col16 &19: med & long term positive

Conclusion:

The next weeks will bring more clarity whether we will fall back into the BULL mode or whether the BEAR can manifest himself.

----------------------------------------------------------------------

Explanantions:

Column #

1. Name
2. Ticker
3. large Trader/ Price Correlation
4. large Trader/ Price Correlation days
5. 
   
6. Bollinger Band (50d, 2 STD) Position between 0-1
7. relative Time Analysis of the SMA5 to the SMA50
8. Active Boundaries TREND (MOMO)
9. Divergences Act. Boundaries
10. Candle Signals
11. Exhaustion
12. potential Turning Days
13. weighting
14. potential Turning Days
15. weighting
16. last weekly pivot
17. last short term breakout
18. last med. term break out
19. last monthly pivots

SUSI WEEKLY UPDATE

Monday was the key day where after the "good chinese reevaluation news" the market popped and turned.

Most SUSI signal are on SELL and all wait for confirmations from the CTI.

Golden5: Breadth

Our Breadth Chart based on a Institutional Investor "must hold portfolio" tells it all...

(A) Momentum (aka. MOMO) has turned negative

(B) The faster 20d NEW HIGH/NEW LOW Indicator had already turned up because of the spike in the NH's (see (c))

(B) The Demand/Supply Pressure Indicator is neutral

(d) The neg. Div's with both timeseries the 20d NL (New Low) and the Selling Pressure had both nicely led the recent bounce

(e) All eyes are now on the developping 20d NL and Selling Pressure and whether these 2 Indicators can exceed recent HIGHS. (another lower low would be bullish)

Golden 5: Sentiment

Our 2 Vix Oscillator variations are both hinting at some unfinished business on the downside.

Timing Idea for the Spyder

Gold Headfake update

When you look at yesterday's recapturing of the 1250 Zone against the backdrop of our FibTime Cluster analysis (I took the one we posted last week) you will find that the spike takes place where we expected a turning point. If Gold confirms on Monday/Tuesday this shortterm high (by not exploding upwards) then we could see a nice correction into Jul 6.

This scenario jives well with our TLT analysis earlier given the correlation btw. Gold and Treasuries.

Alternative Scenario: Gold MOMO gets energized by the current energy field and runs up into the Jul 6 time window.

Monday/Tuesday will tell....

Reflections of TLT

Thanks Jason_70 for you kind remarks. Following your comment on the TLT (20yr Treasury ETF) I had the idea to look at the current market through the lense of the TLT .

Let's start with some timing ideas for the next potential energy field or turning point:

...looks like the next 2 weeks will have some soul searching to do.....

Now let's examine the Chart and where we see at #...

1a) + 1b): The TLT is oversold which could limit the move on the upside

2) We see resistance around 100-101

2) We also see a finished Gartley 222

2) Gartley could also extend to the 61.8% Fib level

3) a solid uptrend

High probability case:

• a turn in the next 1-2 weeks (we need a down week better even with a lower high as confirmation) => up to 1-2 weeks weakness in the Equity markets => 1-2 weeks Dollar weakness & Euro strength......
• potential turn level either the area around 100 or 104
• correction could test the upward sloping trendline where a major support around 90-91 is waiting

Sentiment Rhymes

The VIX/Vix Future Chart sets up for a possible encore of 2008.

Interpret A-B-C as follows:

A) Correction could come maybe tommorrow

B) ....gee I think it's coming now...

c) ....no, not now...

The 2nd "not now...." means complacency and indicates the chances for a HIGH and for some severe punishment....

Gold Headfake ?

Concerns from observing a weird OPEX, Dr. Copper, LIBOR

Increasing Pressure from the Interbank Market (TED= LIBOR - T-BILLs)

Dr. Copper again leading the way

Chart 1: 10day Call/Put ratio

Chart 2: Call/Put ratio

This was a weird OPEX this go around because we had a nice bearish setup as seen in Chart 2 which resolved in a bullish melt up. What is surprising is the fact that the bullish action did NOT change the sentiment picture as we would have expected, meaning if you get creamed with your put positions you liquidate it ( think triggered Stopp Losses) rather then rolling it over (= sticking with your life insurance even if the premium has just gotten more expensive).

We notice the same in Chart 1 that continued to trend down (more life insurance buying) in a bullish move rather then seeing a solid upwards move into the area of the upper envelops (which would show conviction...).

The above is just an observation where something doesn't jive with a healthy market. This also adds to our concerns we see in the interbank market and copper....

SUSI WEEKLY UPDATE

Muddled picture where the short term is fighting the medium term trend. The next weeks should resolve this situation.

Exhaustion Watch

This time we will do things a little differently. At first look at ActB Trend vs Exhaustion which is at a 100% at odds meaning the current trend is down but all timeseries are at an exhausted level. The same message you find with our Score Indicator (MOMO summation Indicator where neg. values mean oversold and vice versa) and even our weekle TD & Pivot (W_TD_P) Indicator. This is very normal for the final stages of a countertrend rally.

What I do want to highlight this week is some of our FLOW and TimeAnalysis we do. Pls look at LgTR/P Cor (Large Traders Flow correlation to Price) which by default cannot grow beyond100%. Normally if we see Institutional Flow completely aligned with the Price action then we tend to be close to the strongest part of the MOVE.

When we have a Correlation better then 85% and see Institutional Money slowly move away from the price action then (which we measure in days with LgTR/P TimeAnalysis: Value > 0: # of days with an improving correlation vs. Value <>

I marked all critical candidates in Orange/White. You will find that all key ETF are in that group.

A final word to Gold: Yes, Gold is in the just mentioned group as well and is close to the 50d Bollinger Band and the uptrend in terms of seeing the 5d SMA (simple moving average) above the 50d SMA in terms of DAYS also seems to reach some extremes, meaning.....Gold goes parabolic (up) or take a break here soon....

Jim Rogers bets on a bounce in the EURO...

The weekly $/Eur Chart looks ready for a reasonable bounce. Even if you believe like your humble blogger that a deflationary period (which will ultimately lead to an inflationary period) will bolster the USD, we still have to respect the EXHAUSTION in the Euro.

1. On the top of the Chart you see the RSI14 which has registered a reading below 19 on the weekly (!!)
2. followed by the weekly MACD which sports a positive divergence
3. The weekly bars show a weekly pivot LOW (higher Low & higer High in a 3 bar pattern)
4. and we notice the beautiful textbook Gartley 222 pattern (search for Larry Pesavento for more) with a symmetrical AB=CD (A move below 1.16 will kill the Gartley!!)

Conclusion:

If we can get above last week's High (let's say >>1.2430) then the Gartley should carry us to the 1.30-1.35 area. It can go higher (much higher) but we will get a better picture once we are there.

This scenario should also affect the liquidity that went out of the Euro to hide in Gold....

Timing Ideas: Watch GOLD !!

Let's start with SPYDER that has a date with another energy field next week. Remember that is is the bigger field comapared to the one last week where the SPYDER decided to accelerate (rather then turn). Given the maturity of the Chartpattern (of the correction) this could well be a good turning point....

Gold set a new all time high, but the high has not been confirmed by Silver, Goldminers and Gold in Euros. Against this backdrop look at the MONSTER energyfield here in GOLD which is 3x the power of the SPYDER-field in a market that seems exhausted.

1. Gold could top next week and pull back into early july...
2. ..or go parabolic to 1300-1350 and pause/break in early july...
3. ..or use both energy fields and go crazy straight to the moon (1500)

Golden 5: Sentiment & Breadth Update

We foresaw a binary week around the MONDAY/TUESDAY. The moment the Market could NOT turn it just exploded upwards.

How much longer can a potential countertrend rally run ?


VIX_OSC has already flipped..

...or seems close..

...and BREADTH still views the current move as a countertrend rally.

Exhaustion Watch: Bipolar Scene in the Twighlight Zone

This week you see a Market where the medium & long term (M_TD_P & W_TD_P see explanantion ) stands on the opposite of the short term indicator readings. Normally we give the longer term indicators the benefit of the doubt and interpret the shorter ones as countertrend moves. If that's the case then you want to wait for good new short entries on top half of the table and for good new long entries on the bottom .

I've marked the upside Exhaustion here with green (rather than red what you would expect!!) because Exhaustion has a tendency to sustain and accelerate until it flips. Compare it to a campfire which is burning really hot and you know that it will die over the foreseeable future, but for the time being it seems close to the biggest heat that could even go further just one more notch/ degree.....

ActB: Active Boundaries Trend (MOMO concept based on 55d avg. ROI)
MSP: selective Candlestick signals
Vic2: false breakout trade signal
W_TD_P: weekly TomDeMark Sequential Counter and weekly Pivots are aligned
M_TD_P: monthly TomDeMark Sequential Counter and monthly Pivots are aligned

Monday and Tuesday should give us some clues where the Market will go, given that we are in the OPEX week, have a bearish bias and a good turning opportunity.

If Mr. Market decides to ignore the set up then expect some wildly bullish action into the remainder of the week, a.k.a. "melt up".

SUSI WEEKLY UPDATE

Susi is currently in NO-MAN's-Land given that we are just seeing a countertrend rally in a bear situation. In order to become a correction in a bull market the market has to rally much more. Golden5-Breadth & -Sentiment &-Context (look at the widening TED-Spread) & -Volume &-MOMO still paint a bearish picture.

Just to bring back to your attention, when you have 2-3% gains on a single day (Thursday) with breadth of 10 or more winners to loosers , the experienced technician will think "short squeeze", because this does NOT normally happen in healthy cyclical bull environments!!

THIS IS A VERY BEARISH SIGN.

There was a short term bounce in the making....

...but it didn't change the intermediate outlook.

Pls. see all the (A) markers that all show Divergences where you have lower price lows with less New 20d Lows or less Selling Pressure 1 & 2.

On the other side the cummulative Gages that determin the intermediate Trend (see (B)) have NOT changed!!

Further note that the blue line representing a Momentum gage based on the deviation from the 50day Moving Avergage has reached a new low area since the beginning of the MONSTER-RALLY in Q1, 2009.

OPEX Mambo ahead of us.....

It's OPEX time again and we might have an interesting set up.

1) look at our latest timing post which alludes to the possibility of a temporary high around Monday with an intermediate Pivot around the end of the month. This resonates nicely with bearish OPEX outcome for next week

2) The ISE Equity options activity has not flipped to the bullish side which we could have expected given the level the pink curve was earlier this week...

3) The BIAS is negative !!

4) Our VIX_OSC had a strong move and looks long in the tooth and ready for a flip...

5) Our VIX_OSC 2 also deems to indicate a flip

6)...as does the CBOE Options data

Bottom line:

Monday should be the tell. If Mr. Market can sustain the upsaide momentum on Monday then we could even see an upside melt up. The chances clearly hint at a downside draft !!

Golden 5: Sentiment Update

The strength of the bounce now will determine if the bearish character will sustain as it looks right now...

Timing Ideas

So we promised you on May 28 that the 1. week of June could be of special interest and interesting it was. The Analysis back then also hinted at a High for Gold around June 6 and another TimeCluster for the Spyder around the end of June.

let's look at the update:

SPYDER: still looking at the end of June
Gold: Gold seems to have the next Cluster around mit June. It all depends whether we've seen a failed break out yesterday or not. Mid June can therefore be a High or a low.

20 yr Treasuries: ...also look for mid June most likely for a High (?)