Sentiment projects more downside

Our workhorses (VIX_OSC Indicators) have shown us the way. (see last post)

The next targets indicate that we have not seen the bottom.

Here is a chart we post occaionally that shows the relationship btw. paid VOLA vs experienced VOLA. See for yourself...
The ISE and CBOE chart confirm the above.

Let's not forget what Dr. Copper is subscribing to Mr. Market: PAIN

Dr. Copper was warning us all along and is now confirming what OIL is telling us.

OIL looks like a failed trade.....

While everybody is looking at the US$ (which we were expecting) or GOLD and SILVER, I would like to draw your attention towards OIL which seems in serious trouble. (look our earlier post here).

OIL has been one of the key leaders and weakness here should translate into other risk assets.

We promised a SILVER flame-out and a subsequent dive...

...and see what we got ...

ANATOMY of a Sick Market

We went through all of our Exhaustion readings and were looking for previous and new leaders and bombs.

LEADER with pos. Momentum ('wind in their back')

• Silver
• Gold
• Euro
• OIL
• Aussie Dollar
• Cat

BOMBS (weak + 'wind in their face')

• MORGAN STANLEY
• GOOG
• Target
• BoA
• Wells Fargo
• Rimm

So we have the tech wonders and the banks in the doldrums and the shiny stuff flying, this is NOT healthy market action !!

What is the Spyder up to?

The timing model is beautifully aligned and hinting at a TOP!

MOMO and Flows sport neg. Divs in the face of a breakout which could mean we see some 'ending action'.
The Options saw another shortsqueeze which catapulted the market up another time. The extend of the previous failed short smacks of ending action too...
Medium term we face an exhausted SPYDER that needs a break.
All in all we seem to stretch the rubberband further and further until this game comes to an abrupt end...

APPLE: What is the alpha dog of the beta monsters doing ?

AAPL has been the ultimate lead dog in this speculation infused rally. AAPL controls the NASDAQ, AAPL controls most of the OPTION FLOWS and AAPL has silently said GOOD-BYE !!

If you only want to look at one indicator look at AAPL.

1995 in the DXY again

Let's look at our Cycle model first that could indicate a LOW for the most important of all timeseries, the DOLLAR!

More interesting though is the comparison with 1995 which followed a distinctive roadmap that seems to repeat today.

It all starts with a failed set up in the weekly Exhaustion indicator, that leads to a waterfall A-B-C exhaustive sell down with shows in a final extreme in the daily EXH indicator. The final spike did not set a new LOW in the US$ price.
1995 was the archetyp situation where everyone was on the same side of the 'boat'/ trade which in turn lead to a reactionary rally that ran 40 points!! The rally went for 6-7 years !!

1995 was the result of currency manipulation (=read Dollar depreciation) after the 1985 Plaza Accord which forced Germany and Japan to strengthen their currencies which did help US manufacturing jobs in the 1986 to 1995 period.

So if you were long the US$, you were literally fighthing the almighty BUNDESBANK, so nobody did. They did this to help create jobs in the US.

......this should all sound very 2011 to you !!!

Breadth in the MINING STOCKS bodes ill for GOLD

Breadth is NOT supporting the Price action

We are getting Oversold and could correct from here. We also could interprete the recent move as the right leg of a Divergence Pattern of larger extend. Mr. Market will tell what he will do with this deteriorating participation of the key large Cap Names in the latest rally....

End of Move SPIKES

Normally we experience 2 kinds of VIC_OSC Spikes occuring towards the end of extended bull or bear campaigns namely...

1. the bullish kick off resulting from short coverings towards the end of bear markets like in 2003 and 2008
2. the bearish exhaustion spike after a long bull run.

As you can see below this is NOT a kick off SPIKE so you do the math. Pls don't forget that this spike can also be part of topping patterns that can form neg. Div's over time, meaning they can coincide or lead Tops ...

What is Dr. Copper doing if all is great....?

....has someone forgot to tell our lead dog that Benny Bernanke has a third mandate, namely to inflate assets to pretend that all is great....

Posting will be light this weekend, but check earlier posts that all hint at some key pivot date around the end of april or the beginning of may....

Reality will catch up with financial Markets some day

Listen to this exceptional interview which givesba great summary of the state of the markets.

Guest: Satyajit Das explains what is going on with the EuroZone crisis as well as how governments around the world continue to kick the can down the road. Bernanke may be signaling an end to the ultra-easy monetary policy and some thoughts on silver. Also, earnings season is part of this episode along with what to watch for in the coming weeks.

Silver update

Please read this article on a parabolic rise in silver and the rising probabilities of a 20% 2 day crash, if the exchange does not start to initiate a controlled break........

Is it already to late?

Silver tests the $50 and Shanghai tumbles

This will be a very interesting week.

Silver has now tested the $50 which should be a major resistance (expect at least another test). Last time Silver went parabolicly up to $50 it crashed afterwards..... watch 48.50!

Shanghai on the other side of the risk trade looks weak.

Reality will catch up with the financial Markets at some point

Pls be invited to listen to this exceptional audio interview.

Summary
Guest: Satyajit Das explains what is going on with the EuroZone crisis as well as how governments around the world continue to kick the can down the road. Bernanke may be signaling an end to the ultra-easy monetary policy and some thoughts on silver. Also, earnings season is part of this episode along with what to watch for in the coming weeks.

The Fixed Income Picture supports a Dollar Rally

Long-therm Treasury could rise from here. The daily EXH normally goes all the way up rather then flip at a level of 0.75. This means US$ buying !!If the daily EXH rises then the weekly will als move upwards.

The High Yield market looks heated with an historic reading on the weekly EXH and a neg. Div on the daily EXH. This hints at some risk for the RISK ASSET classes.
Make no mistake, the charts above allude to DEFLATION with lower yields and falling Asset Markets.

What are the other Currencies telling us about the DOLLAR

The Yen is at a crossroads. If the yen break down through the lower boundary of the wedge pattern then expect some serious change in the YEN, i.e. weakening. Until then we should watch how things play out. A weaker Yen would indicate severe GDP weakness after the FUKUSHIMA incident due to collapsed exports.

The Euro resembles the DXY (Dollar INDEX) chart and looks ready to roll over. If the Weekly neg Div. fails (big red decending line in the Weekly EXH chart) then we should expect some temporary acceleration of the Dollar devaluation !!! The Base Case expects the neg. Div. to hold entailing some EURO weakness.
The AUSSIE as the ultimate Commodity FX seems also ready to roll over, which bodes ill for the Commodtiy complex.
The above confirms our statement that all Markets are ticking to the same tune and this ticking has accelerated like a bomb trigger......

The Gold/Silver Ratio (GSR) rings all alarm bells

A RSI reading in the GSR above 80 leads to some correction. A reading around or above 90 is a rare event and should entail some shake out.

The Exhaustion Picture tells exactly the same story. It also shows how a trend can accelerate when a good set up fails....
The TimeCycles also seem in sync with the Price chart and hint at end of April +/- 1 week or 2.
The GSR acts as reliable indicator on speculation and now it is red hot at decade extremes. We should pay attention.

The Dollar will not die (yet)

This is how a typical Capitulation looks like! The rats are jumping ship and the Sentiment becomes lopsided.

Technically this looks like a great set up for a monster short squeeze. Maybe we will only get that , a squeeze, a good run to 81 or 88/9 before the end will come and we will enter the 60ties .....

I'm not religious about that, but what I do know is that given the structure in SILVER, OIL, GOLD that a minor US$ squeeze could trigger some serious correction.

We ran 2 different independent TimeCycles models ( which show that we dealing here with probabilities ONLY, just some indicator that is supposed to beat the rolling of a dice...) and both seem to hint at the possibility of a turning point coming.

The key message today is that all markets are completely aligned with the Dollar like Equities, Commodities etc. The degree of positive correlation is a systematic sign of the lack of REAL liquidity in the Market. When this Market dives there will be NO diversification, just a black hole. This is the biggest fear of the Centralbanks and this is the reason why they fight the tide. The only problem the have is that the more speculative the market became the stronger the tide turned they try to hold back.

It's a ponzi house of cards on steriods which will crumble by its own weight when the day arrives, which could be next week .....