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Everything posted by Mercury

  1. LOL! Yeah I don't give advice, just share what I'm thinking and doing to see if anyone will shoot it down with a better idea... Question, why do you take options instead of just trading the DFB on spreadbetting platform? Just curious. My bottom of oil target is closer to $20 (Brent) but no real justification for that, just where I think it is trending. I think Morgan Stanley also forecast $20 a while ago. I'm not much bothered how low it goes at present, just that it will make fresh lows. But, plan for the worst and hope for the best is my motto... I'm liking the shape of the current price action on Oil for a turning point down with lower lows and lower highs after a number of bear indicators.
  2. On a quiet post Easter Monday, having reread the Big Short over the weekend, I was pondering what actually drives a big market crash. I don't mean sentiment etc, though obviously (at least to me) it is sentiment that does it, but what drives the sentiment? I looked back to the past few big news crashes and the scandals that accompanies them to see if I could observe any commonality. The first thing that struck me was how puny the 1987 bond market driven crash actually was compared to what has happened since. This is the crash that started on the so-called Black Monday and shocked the financial world at the time and triggered (or presaged) a 7 year recession and housing crash (in the UK/London) at least). The core of this was the bond market excesses of the 80s, driven mostly by Salomon Brothers, and the move to take financial firms public (they had been mostly private partnerships until then) - check out the book Liars Poker for an entertaining read on this era. It was essentially an explosion in corporate debt issues and ultimately defaults. The 2000/02 crash was at face value all about the internet bubble, those of us in the corporate world back then will remember the crazy valuations and a technology unable to deliver on the promise. I don't have data on it but I bet there was a lot of debt out there to finance all the new businesses. In addition, and perhaps more importantly, the central banks went into overdrive to stave off the worst of the bubble bursting with low interest rates and it i snow widely acknowledged that the law of unintended consequences kicked in at this point resulting in a boom in home buying through cheap mortgages and set up the conditions for the credit crunch. 2008/09 credit crunch needs little commentary, debt fueled greed. Again the central banks and Treasury departments stepped in to bail out the spivs and tried to stimulate the economy with low interest rates but this time added QE. All that happened is that the money flooded into the stock markets and the spivs took the opportunity once again to get rich quick. 2015/16???: we have massive debt, it has gone up not down in terms of government and corporate debt. In some areas (US in particular) personal debt has gone down so consumers are not playing ball with the Fed! Corporates have leveraged up, not to respond to demand, which has way lagged the stock market, not to invest in the future but to do crazy M&A and share buybacks. Tech stock valuations are more crazy than the first internet bubble (Last year a stock picker tried to justify why Amazon at a P/E of 500 was a great buy!!!). CAPE levels at all time highs (at least in the US). Governments can't pay back their debts. ZIRP/NIRP! Totally bananas and economists trying to tell us how this is the "new normal". Of course they are in the pay of the banks... Debt, Debt, Debt. Is the writing on the wall for another crash, or maybe even a catastrophe? Even if you are a naysayer on this how can it be a good time to buy anything? Unless you believe in the "new normal" hypothesis...
  3. Hi Condor, There is a watch out! Much as I am bearish on this I am not sure on the timings. There are 2 possible scenarios (other than the - we've hit the bottom one). One suggests we have completed an A-B-C and now should drop to a lower low to hit bottom. The other that we have only had a Wa and will get a strong Wc after a reasonably chunky pullback. While I am short Oil (and Shell Oil) I have close and BE stops in place and will be watching this one carefully. I will probably employ a split bet strategy here and take profits on at least have my positions, holding the highest ones only at BE against the latter scenario. The beauty of this approach is that you cash in some to keep your account ticking over and can always top up if the market does indeed turn down, while stops at BE on the rest avoid any losses - always a good plan.
  4. Hello Luckymaybe, Welcome to the forum, can you let us know your rational for your forecast? I tend to agree with the general direction, though I'm more reluctant to be so accurate with the levels. There is a truism about 3rd time of asking being the one that breaks support/resistance but not sure there is any science behind that one...
  5. Hi Donald, I trade this pair infrequently and usually only at major turns. At present I am unsure whether we have seen a bottom and the beginning of a long rally or are in a long term Wave 3-4 (my preferred option at present). If the latter is correct then we are nearing the end of the Wc. The question in this scenario is whether we have had the W4 or Wc yet or not. For now I am sitting it out and waiting for more data. I am stalking this one for a major turn higher up to complete the long run down. It is likely that this would coincide with a similar set up in mining so keep an eye on major miners and Dr Copper. I don't think Oil is as much of a factor here a metals. Oil is a big factor for USDCAD though! Here is my chart: 
  6. Agreed, has hit 76% Fib and bounced off today. Could still get a further rally yet but I think the likelihood is for a significant drop from here for a while (Non Farms on Friday may have a say, at least temporarily...) I'm short at the 62% fib on the way down today (2043) with a stop just above the 76%. BTW, this is also posted on the US markets thread. Here is the chart: 
  7. Hi Condor, First of all, of course it is ok. So long as one is open minded and looking to learn or get diffferent perspective via open discussion then anything goes (except abuse of course...). I'm always delighted to hear someone disagree with me or offer insight I don't have. I'm sorry you are finding it hard to follow my posts/charts, I'm trying to be as comprehensive as possible but have to assume a certain level of knowledge or it becomes too cumbersome and there are plenty who don't like posts longer than a few lines, but hey they don't have to read them right? I agree with ChrisB re the Dow but it is still a heavily traded market so worth following. The S&P is more balanced and the biggest market in the world, I think, so probably the best overall benchmark. I prefer to trade the S&P and FTSE for long term strategic trading because they are big diversified markets (though watch out for the 33% or so of mining/oil in the FTSE...). I do like the Dow as well but only trade the Dax as a swing trader. Regarding Elliot Waves, most people seem to use Elliotwave international ( http://www.elliottwave.net ) but if you search for books there are loads on the subject. I am not a 100% EW aficionado myself and only use the most basic parts of the theory. My feeling is that there are too many exceptions (e.g. truncated Wave 5s that don't actually make a higher high but are still counted as a 1-5) and too much time spend trying to make sense of complex formations (e.g. W3-4 complex retraces). I prefer to recognise it as complex and leave it alone until it breaks the Triangle. Like everything, I think one can get too locked into a particular theory or method so I take what I can make sense of and use and add it to other pieces (e.g. Fib retrace; tramlines, support/resistance and key indicators) to build an overall picture I can manage with my small brain. The best set up is to get on the start of a long term Wave 3 but a Wc can be good too, as you say. The trick for me is to understand that at most times there are at least 2, often more, possible scenarios and to constantly reevaluate until you have virtually no doubt and then place the trade. I call this "stalking the trade". You should be able to create a routemap to both your trade entry point and likely exit points in this way but have to refine that routemap as you get more data. As to the S&P500 today, it has bounced off the 76%Fib retrace from the recent high/low and is heading back down. I took another short at the 62% level on the way down with a close stop just above the 76% level It could be that we have seen the W1-2 of larger W1 down (most likely in my view) or perhaps not yet completed the small W1 down (either way it goes down). There is always a chance that the whole thing will explode back up (hence the need for close stops and moving to break even as soon as possible, without getting shaken out of a good set up). One thing at least seems clear, we have finished with the Triangle formation and this bodes well for a drop. Here is the chart: 
  8. Interesting area, which I have too much bias on to trade in. Massive bull run in line with the rest of the market since 2009 but also fueled (in the UK at least) by government and BoE policy and, in London, foreign buyers using new build as a safety deposit box (not even letting out their properties in many cases!). There have been many articles on why property will never fall in value, which is enough for me to think it will. Recently some negative ones have crept in but there are 4 (maybe more if I think about it) factors that I believe will govern what happens next: Prices are totally out of kilter with incomes - people can't afford to buy Cheap money has driven the market - remember 2008 in the US??? There is a massive impending mismatch between supply and demand for new builds (especially in prime locations at high value) as house builders swarmed into the market The politics has changed - there are more voters who want to buy but can't now than home owners to protect and even many of the latter want prices to fall so their kids can leave home... Government policy has targeted this market in the past few years and this will get worse for house builders, foreign owners and the buy-to-let crowd It may not happen soon, property will probably be the last asset class to fall but fall it will and hard. given the performance so far it is hard to justify not cashing in and there is now case for investing now I feel. Put another way, if I won the lottery I still would buy a property yet! For the record, I use to own property but now rent and am awaiting the best opportunity to buy my long term home for 20 years to emerge...
  9. All true but the only thing that will stop oil soaring again is a new fuel source! A lot of chatter about new tech emergence is out there and maybe it will come off but for now it is science fiction. In the medium term (next few years) I expect oil to soar again because it is fundamentally a scarce resource but also expensive to get out of the ground. Once the weak companies are killed off the remainder will drive the price back to profitability levels for them and there after speculation will take over... The issue for me right now is whether we have seen oil (and metals) bottom yet or not. My current take is no, based on classic EW analysis techniques and the fact that the wider markets have not yet followed commodities down. I believe this has to happen before commodities bottom out and signal a major turn. If you look at the last 2 major cycles (2000/02 & 2007/8) you can see this trend. I'm not smart enough nor do I have sufficient data to make judgements on Oil or metals from fundamentals so I look for a narrative, based on history, that supports my technical analysis and I think I have found several that support my bearish views in the medium term.
  10. I understand where you are coming from but I don't trade like that. I think, correct me if I'm wrong, that you are broadly taking a hedge fund approach, maybe not consciously. Hedge Funds are trend followers and are very good at it, until the trend ends and then they are rubbish... My method is to identify the major trend turns and join the trend for the longer term. To do this the reverse of your statement is true for me, I sell strength and buy weakness. Of course it depends whether we are defining strength and weakness in the same way. I don't have the issue you alluded to with your sugar scenario as I don't attempt to value the markets. I couldn't care less whether sugar is cheap or expensive, only where I thing it is in the market cycle. Is oil cheap or expensive right now? How can you tell? Value is merely what the market is willing to buy and sell at. Fundamentals are not consistent in their impact on this, the impact changes, why? Sentiment is the key driver of the market place in my view and that is partly fundamentals (at least contextually) but mostly about the twin emotions of greed and fear. When these two are out of balance we get a move in the market. When significantly out of balance we get a correction or major turning point. When off the wall crazily out of balance we get a bubble followed by a crash or catastrophe! I am a bear but I'm not sure on the timing and when it comes I think we have a good chance of seeing a catastrophe this time! If this happens then most, if not all, trading and analytical methods can be thrown out and just ride the collapse. The trick is to identify it and time it...
  11. Hi Donald, Thanks for your perspective. I wonder whether you could share your analytical method (in principle) to support your views. I must admit I am a bit on the fence with USDJPY as it could have completed a Daily chart 1-5 EW down on Mar 17 and there is a fairly strong Positive Momentum Divergence at this point on the Daily chart. On the other hand we may still be in a Wave 3-4 Triangle formation with another leg down to go. The patient thing to do would be to wait for either this final leg down to go Long OR a significant retrace to go Short. Price hit my Pink lower Triangle line with a kiss and I got stopped in to a Short at this point but am not fully convinced of its merits yet so will be moving stops to BE quickly on this one. There is a Neg Mom Div on the hourly to support the short but not a strong one. Could easily see this moving back up to the upper Triangle line and at that point I would need to reassess. Here is te chart: 
  12. Hi Condor, Welcome to the forum, did you do a welcome post to let everyone know what you are interested in and how you analyse the markets? Useful to do. I'll keep Shell and Brent Crude up and maybe we can exchange views as we go, always good to get other view points, especially contrary ones. As I indicated in my posts, I think the bottom hasn't yet come but if you are already in for long term investment then that should be fine in the long term so long as you are happy to see it go red for a while. You can top up as we go lower and if we have indeed already seen the bottom you are in good shape. Cheers, M
  13. I don't know about you but my studies of past market movements and comments from industry experts lead me to believe (correctly or not!) that most major Bear markets seem to begin with commodities and that commodities also lead out of the Bear into the next Bull. Does that resonate with anyone? Take the Credit Crunch Bear for example: High Grade Copper turned in May/June 2008, Brent Crude in July, whereas the S&P500 turned in October 08. For the current market Oil and Copper peaked in Spring 2011, whereas main indices turned only last year in May 2015. Of course there is still some doubt as to whether we are in a Bear market for stocks yet and I believe we would already be if not for central bank interference (arguable, they can't impact commodities much). If all that is true then it makes sense to watch commodities, even if you don't trade them. I have posted on both Oil and Copper elsewhere and Shell Oil as a proxy for Oil generally. On both Oil and High Grade Copper (AKA Dr. Copper), which incidentally many commentators say is THE leasing indicator on this, my analysis suggest another leg down is indicated (many commentators think we may have seen the bottom of both and we may have but I doubt it...). Take Rio Tinto as an example of a proxy for metals (BHP is another interesting one but has about 20% of its business in Oil so is a bit distorted whereas Rio is a good all around miner (excl precious metals). For predominantly copper Antofagasta is a decent player). All these are FTSE 100s (no wonder the FTSE is more distorted than the other indices...). Anyway Rio, using EW counts, Fibonacci retrace lines and Tramlines supported by Momentum I have the following views: On the Weekly chart we can see the sharp 2008 drop followed by a 1-5 retrace rally (could also be an A-B-C), which hit almost exactly on the 76.4% Fib with a Neg Mom Div. Since then we have seen a complicated Triangle pattern culminating in a Wy in Feb 2014. This is all part of a large A-B-C (could be a strung out 1-5 yet but let's see. From Feb 2014 I think we are in a run down to Wc (Purple label) in a 1-5 pattern (currently completing W4 of this). Convergence of the 2008 bottom and the lower tramline comes in Autumn this year (maybe August even). That is a decent target for the end of the whole move at this stage Looking at the Daily for a bit more granularity: I have a strong tramline pair off the Green W2 (2 March 15), a good count down to the Blue W3 with strong Pos Mom Div on the rally back too the top tram. Here it gets interesting, there is a possible A-B-C to a W4 on the top tram but no Neg Mom Div. Ideally I like to see large scale tramlines run on the large EW count (i.e. Blue W2 to Blue W4). Also ideally one would like a clear Fib hit and the 38% has not yet been attained. Therefore the market could run up another leg to the Fib 50% even and the recent turn could be a Wa. Alternatively if we have had the W4 then we could get a strong pullback in W1-2 form to the Red Tram before the final leg down. The Hourly shows the possible A-B-C with a marginal Neg Mom Div between the Green A-C but also a Pos Mom Div on the current move down (W1). In the coming days we should see if this develops into a strong move back up to a new high (W4) or turns at the tram. I'm not trading Rio at present, I'll wait for the final shoe to drop and then consider a long term investment rather than a trade (probably both...) but for now I'll be watching this plus Dr. Copper itself for signs of recovery or a final leg down, which would presage a wider stock market crash in my view. Add Oil and we have a plan... Enjoy the extra days off! here are the charts: 
  14. Ok got it, so basically we are both Bearish and looking for shorts on the US markets but you are either neutral or Bullish on the Dax while I am Bearish. I am not sure what technicals you are using but I think they are different from mine so maybe it will be hard for us to compare our positions. Also I don't believe in fundamentals moving the markets, although I do like a decent narrative to support my technical analysis (I have posted on this topic in the Fundamentals section). With respect to Fundamentals and news/data releases I subscribe to the "buy the rumour, sell the fact" adage (or vice versa of course) and avoid major data release points until the dust of extreme swings has settled. I'm always interested in the approach others use though so if at some time you would care to outline your analytical method I'd love to see it in more detail. Cheers, Mercury
  15. It does make sense. Thanks for pointing out the D-E, I didn't think of it but had chickened out of my Short at 62% anyway due to relief rally likelihood on the main indices and Oil/Copper. If we do get such a relief rally soon (I'm thinking a small W3-4 on that) then USDJPY will likely rally a bit too, which brings your A-E formation into play nicely. My current take is 1-5 down in line with my Bearish stance on indices and commodities but I have not discounted the A-B-C scenario as you can see from my charts. Either way I think we will get another leg down to complete the C/3 and then we will see from the shape of the following rally which way this is going. My motto is, If in doubt, stay out! (wish I adhered to it more thought...) I might take a cheeky short next week depending on what I see else where and the rising Triangle line (pink) might be a good place to chance it if we get a kiss, let's see. However I will continue to swing this market so am really waiting for the W3/C to bottom out before taking the W4 Long and then we will see what to do from there.
  16. Hi Welshman, yes I think the set up is more or less the same on S&P and DOW, although the latter has a few peculiarities. For my money I'd want to see the Triangle on both plus Russell 2000, Dax and FTSE (this one can be different because of the large number of miners and Oil companies!). The next few weeks should clarify the picture a bit more although until we have another down/up/down we won't really know. This is all likely to happen within your Triangle, which is very large, and so I'd be looking for corroborating evidence elsewhere as the Triangle along may not help you identify the trend. Re EURGBP, yes I agree. I got in way too early on that one and it looks like your view (I think it was you) that we would get a new high was correct. I can make a 1-5 up but the W5 is not strong so the issue is whether this is really just a brief retrace before a final push up to stronger resistance. I'm seeking to exit my too early positions at B/E with a position at the turn compensating for the error but will keep an eye on both vs USD to tey and get some steer.
  17. OK so are you Long or just standing aside for now? I'm always interested in the logic people have for taking a position that is the opposite of mine. I am firmly short and in the money with B/E stops on Dax, S&P500, Dow, FTSE and Nikkei. Expecting a small relief rally before a big drop (see my post on S&P500 earlier today for details of my analysis on all these markets (using S&P500 as a proxy for all). Also interested in your Fundamentals point, are you of the opinion that until interest rates go up and/or QE stops that stock markets will stay buoyant? Is it a withdrawal of QE and rising interest rates that will give you a sell signal (your wet paper bag analogy)?
  18. At present I see all 3 of the main US indices I follow trending together (indeed trending will all the other global markets as well...) so I thought I'd start a topic to cover these markets together (S&P500, Dow, Russell 2000). I'll use the S&P 500 as a proxy for all of them to get started but all three show similar trends (albeit that the Russell 2000 seems to lead the other 2 larger Caps). Overall my long term analysis on the weekly chart indicates that we have seen the top of the bull run from the 2009 credit crunch Bear and have begun a new Bear descent (W1-2 complete and W1-2 of W3 also complete). BUT, there is as always a possible alternative that predicts new all time highs before the Bear actually starts. Presently I think that latter scenario is more unlikely but one can't rule it out just yet. If and when the Bear does get going it will be a monster in my view as I think we still have fallout hanging over from the Credit Crunch that was delayed not avoided by the central bank shenanigans! Stochastic is nearing over bought territory in the weekly as well. Looking at the Daily chart the EW counts are persuasive (the alternative is still there too). We had strong Pos Mom Div at Pink W1 which resulted in the very strong rally we have been in of late but that rally has had few retraces and we are overdue a big one (these markets always go in waves and such a strong rally is not sustainable). We have Neg Mom Div between Wa and Wc (Blue labels), a classic EW bearish signal, and bearish signals on Stochastic and RSI as well. In addition the price action has just missed (a couple of points) the 76% Fib from the all time high to W1 bottom and fallen in between the 76% and 88% retrace of Purple W2 high. In addition the market turned right on a strong down trending tramline with a strong corresponding lower tram line. All this adds up to very strong resistance at 2057. Even if the Bear market is in play there are at least 2 possible scenarios from here. Either this is a completed A-B-C retrace to W2 (my lead option), which will result in a W1-2 before a big drop begins OR we have just had a Wa and will now get the B-C to complete. I would expect an earlier turn back up in the former scenario (maybe almost getting to a double top) but in the latter this current drop should be very heavy indeed (min 62% Fib with 76% very likely). The shape of the drop will give us some clues as well and if we do get a B-C I don't expect the Wc to be much higher than the Wa (otherwise the all time highs scenario is in play). Looking at the Hourly I see a clear rally wave end and turn. A breach of an ending Triangle formation with a kiss back. A breach of a possible secondary Triangle with no kiss back this time and we are currently in a small W iii of small W1 of 5 (perhaps unless it is a Wb of course). Very strong Neg Mom Div to match the Daily one and now perhaps coming up on a relief rally of the Wiii (could be the small W1 already, time will tell but either way a relief rally before a larger drop is indicated). As I write the market has dropped further. Hold on to your hats, this could get very interesting and very lucrative. If you are not in Short yet there will be more opportunities but practice good money management and stop protection as the all time high scenario is still out there... Please do comment is you agree/disagree. Here are the charts: 
  19. So you are saying this is just a small wave down before the "buy the dips" boys come back in and push the markets further up all driven by the fundamentals of cheap money but eventually it will all collapse?
  20. I think when you get camera you are signed in and when you get image, which doesn't appear to work, you are not signed in.
  21. You are talking about the Dow? I have 1-3 count only at present so am expecting a small retrace to 4 then 1-5 completion. This would only be a "small" W1 or a larger W1. I'll do a more detailed post on my US markets post in a bit to show you my chart route map. Cheers, M
  22. Even with analyst expectation low company news isn't great. Here is an excerpt from Hargreaves Lansdown this morning - "In company news, Renishaw's shares fell after the engineering company issued a profit warning due to a downturn in Asia. Next slumped after warning the year ahead could be the toughest since 2008 as it reported is full year results. The fashion retailer issued new guidance for 2016 that includes the possibility that profits could decline as much as 4.5%." What caught my eye about this is the reference to Asia (I believe China economy in particular is worse than official figures) and China is still seen as the global hope... In addition the news at home is not great with Next, a darling of the 2009 to 2015 bull market, giving negative guidance. If you are a fundamentals follower, which I'm not, then this bodes ill. The last vestige is the "bad news is good news" brigade who will be calling for even more central bank stimulation. But here's the think about that, at some point it stops having any effect and in fact signals a greater worry, that the global economy is about to slump. If you are virtually giving free loans and consumers are not taking them, the same consumers addicted to their credit cards for the past 15 years or so, there there is a problem. If companies are taking them and instead of investing in their company they are doing high priced M&A and share buybacks then there is a problem. In short, I may not be a fundamentals trader but I do like a strong narrative behind my technical analysis. Contrarian traders aim to identify trend changes, which are driven by sentiment change in the market and for that you need a narrative. I think I have one... What's your?
  23. The USDJPY pair seems to follow the main stock indices because, if received wisdom is to be believed and why not in this case, investors fly to the Yen as one of their safe havens (also gold and US Bonds). If you mapped this pair with the S&P500 over the recent past you can see similarities in movement. Not a reason to trade it but a decent backdrop narrative for technical analysis. This pair has fallen sharply of late and I think it still has a little bit to go (200-300 points) before a relief rally and another drop. It is not exactly in sync with the S&P500 in terms of EW counts, just moves in similar waves. Right now the price has just bounced back from the Fib 62% resistance after a short rally and is set to fall with the S&P500 in my view but only a few hundred points before a stronger rally is likely. Long term I think it will drop heavily if the main indices also go very bearish. I'm short for a quick trade at the 62% fib. Here are the charts: 
  24. Doesn't look like there is much interest out there in Shell (stand alone or as an Oil proxy) but I'll just complete the thread and then call it a day on this one. Shell opened today with a break of my lower Triangle line (I had gone Short previously) driven I guess by falling Oil and FTSE100. I am expecting a relief rally in Oil, and maybe in the FTSE100 as well so there is a decent chance Shell will retrace for a kiss on the Triangle before a bigger drop. As with all the markets right now I can't tell whether a full retrace has completed or we have another leg up to go but that is often the way at this juncture. the next few weeks ought to tell the tale. I remain bearish and my medium term view is that Oil (and Shell) has another leg down to go to reach bottom before commodities begin the slow process of recovery. That could take a good while (reaching the bottom I mean) so for now my outlook is Bearish for the majority of 2016. Here is the hourly chart: 
  25. Yep, "the trend is your friend..." "...until the bend in the end!" It's the latter that I look for and that is what I am beginning to see with my analysis. It is not confirmed yet of course but I have some clear signals I will be looking for over the coming weeks to decide on whether we will get another leg up of have begun the drop. In all of my scenarios the current trend from 11 Feb will be broken. Of course it depends oon how you define trend. I use tramline pairs for this and on that basis the trend is already broken. If you use MA (dependingg on which setting) there is still a bit to go but the next day or 2 will tell the tale on MAs.