Mercury

A Real Vision interview with Stockman. He is certainly a PermaBear but perhaps with good reason; and he certainly has credentials. He suffers from the "boy who cried wolf" syndrome, just a Roubini did before the credit crunch. There is a malaise in the economic/capitalise world such that anyone who questions the logic and veracity of the mainstream consensus is vilified. Happens on this forum too... But it is these contrarians that get it right, in the fullness of time. Challenge for the rest of us is to time it right and be prepared to take advantage. To do this we have to be open minded and at least listen to the alternative views. Not to do so is an extreme version of bias and is being exhibited across the patch right now. If the crash is never seen before it happens then perhaps it is this bias that is the reason (and BTW some few people do spot it in advance and make out like bandits!). It is human nature to deploy the ostrich tactic, we don't want to hear bad news and less so bad omens) and this nature repeats itself over and over again, which is why technical analysis, coupled with fundamentals assessment, works in terms of identifying these biases as zig zags and key turning points. The point of this thread is to show examples of bad omens and discuss, not to project a particular bias. In so doing perhaps we can at least be aware. Stockman has been banging on about this for a long time but that doesn't mean he is wrong, just that the resultant crash hasn't happened yet. Roubini was the same about the credit crunch and ultimately vindicated. For my money this will end the same was and perhaps this time it will be different but not in the way the mainstream keep trying to sell us... It's not like they don't have a vested interest in sell that particular world view is it?

Got a small retrace early doors but looking like a confirmed break of support now to me. I am looking for a test of the 8900 support zone next, where we may see a little consolidation price action if we get retraces on the primary pairs vs USD. My thesis for EURGBP major bearish phase was predicated on being kick started by overall USD weakness as GBP, having dropped harder vs USD, would rally harder. If the recent turns on both the primary pairs were indeed retrace turning points then a strong bearish move on EURGBP is my lead scenario. So far this has been playing out since I got Short off the overshoot. My strategy is for this pair to be a long term Short play while the primaries are medium term retrace rallies. After they complete USD should rally hard as all hell breaks loose but the Euro will do infinitely worse as the UK will be out of the EU by then and insulated from the structural weakness in both the EU and the Eurozone. GBP will see parity with the USD, maybe worse but for the Euro there could be an existential crisis in the form of countries line Greece, Portugal and Italy, maybe Spain withdrawing from the Euro in a bid to take back control of their failing economies.

Exact hit on the Fib 50% overnight as the Asian markets rally. US large cap futures do likewise but now making a sharp about face. FTSE100 is in the process of breaking down through the lower channel line after the Fib 50% hit and turn. This is about as classic a set up as you can get but unlike the US large caps, where we have seen a lot of whipsaw price action, the FTSE rally is off a clean low in a clean 1-5 form so there is a strong likelihood that his is a wave A, with a B-C to a wave 2 to come. If this plays out then the US large Caps will do something similar. Wave Bs are hard to trade as they can follow any pattern and not for pyramiding. I expect the retrace to be quite deep though so a decent, single trade move is on for swing traders. The bigger trade will be catching the wave C rally and then of course the big one..?

To complete the Triad analysis, EURGBP didn't retrace quite as far as I thought it might, which means GBP is stronger vs EUR and USD than I thought. We have a confirmed break of the channel and the next level support. If this is a wave 3 I expect it to run and run defying all the news bait GBP doomsday prattle.

As with GBPUSD, EURUSD has turned and rallied away from key support with a Pin bad candle and backed up with a strong second daily candle. I think we may see a retrace move on this pair sooner rather than later though, whereas GBPUSD may continue to rally harder. This is in line with my thesis for some time connected to the Triad pair EURGBP where I see GBP being stronger.

Pin bar trend reversal on a key weekly chart supporting trend line & horizontal support zone with Positive Momentum Divergence. Clean 1-5 EWT count in the daily channel, which is now in the process of being broken to the upside. Likely to get a pull back at some point, maybe a break and retest of the channel line or breakout zone rather than an internal channel retrace? A confirmed break above and rally away puts the retrace firmly on with a potential target of 14000 or thereabouts. It's all about the dollar.

FTSE 100 took another leg up and has turned just short of the Fib 50% and is now knocking on the door or a channel breakout. This is a broader channel than the previous one and there is NMD at the turn. Another leg up for a hit on the Fib 50% is always a possibility so need to see a solid break here to get Short. Anticipate only a retrace to a wave B, maybe to 7100 level so not a major move. However with Oil looking like a potential bearish move and these markets being correlated of late it could be a decent swing ahead of US NFP on Friday.

It is certainly in a consolidation pattern but can't see it lasting much longer (famous last words). Price had hit the upper triangle line and bounced back off it. Good place to chance a Short, unless you think Oil is going to breakout to the upside that is.

"Crazy as hell" sounds about right...

I wouldn't worry about that @nash3, all part of the game. As I said yesterday, your assessment was perfectly valid, given the price action. I had this as a credible scenario too but favoured the bearish turn because we were due one according to Elliot Wave Theory (markets move in zig zags); the resistance was very strong with the dual resistance trend lines confluence and my long term thesis is that USD will only rally hard when the financial house of cards collapses and we aren't there yet. Add to that the expectation of further Fed rate cuts and maybe more accomodative policy, surely elevated on the poor Manufacturing PMI reading (first below 50 in a long time I think), and the reason why investors are favouring USD is diminished, perhaps sufficiently to drive a bearish retrace of some significance in the medium term. Note that the above is a combination of fundamentals and technical analysis and my call was posted before the turn not after. Note also that my fundamentals thesis is predicated on an eventual hard recession or worse, hence the need to constantly assess this with data and price action, which is just sensible market analysis for me. While we may not wish to trade the exact turning point, for me it is about seeking to identify those potential turning points and being prepared to take advantage on confirmation. The earlier one can catch a move the lower the draw down exposure. In addition price action has to conform to my road map or I need to reassess my thesis. This is simply how my methodology work. Others do things differently, no problem for me. I find it most interesting comparing opinions with people who use different methods as it either confirms strongly my own or gives pause for thought. Alas we do not have enough of that on the forum at present. But we are not confirmed in the turn yet. I will want to see a short term relief rally that turns below the recent highs and then a strong bearish phase after than and ultimately a breakout below my weekly lower channel line. Not an unclosed gap on DX, probably we will see this closed before the bear gets going. I am seeking to trade on several FX pairs with USD so will be looking for similar moves to get Long, or add to Longs. Maybe this is the one I have been looking for, I hope so, not just for the excellent trading opportunity but also because it sets up the end game. The next day or two will be important to nail on the turn. The weekly candle at the end of the week will be telling too. The important thing here is not who was right and who was wrong on the specific call but that the directional trend turn is observed so we can all trade with the trend with confidence. Assessing this is helped by people with differing views discussing these view, based on their own methods, and considering all the options. It is about discussing what the market is telling us not critising other peoples methods just because they don't fit with your world view. Therefore I for one would encourage you to keep posting you opinion and get input on it to either support or suggest where you might be at risk. This, for me, is what the Forum should be about. It only works if people contribute and refrain from trolling.

Everyone focused on Trump Tweets and such like and then comes a ISM manufacturers PMI reading below 50... Is that a Black Swan? Probably not but it was sure not expected by the great Financial houses analysts (51! Oh Oh). Last time we saw ISM PMI readings for the US below 50 was in 2015/16 period, I am sure you will remember that this wasn't a great time for stocks. But the economists have already told us not to worry, this is JUST a manufacturing recession. So long as the consumer and services stay strong everything will be fine, yeaaaahhh... Oh and BTW, ISM reading less that 50 is supposedly bad for the USD and sure enough we are seeing a bit of a rally in currencies against the USD...

You may turn out to be right there @nash3, and certainly it is the right way to think of it in my opinion. However that is a daily chart you have posted and we have not, as yet, had a daily candle close above the resistance zone, which would be critical in my methodology to declare a breakout. Even then you have to watch out for fakeouts, of which we have too many these days, probably due to algos. In addition I have a weekly chart trend line that is above your daily and I think of the weekly as stronger/more reliable that daily in generally, plus my line has many solid touches, including a prior pivot, so until that is broken (weekly close above, barring fakeouts) I will not declare a breakout. A reversal here will be just as telling as a breakout. It is a crucial point for FX I feel.

@nash3 Based on?

Potential channel breakout to the downside in the making on the FTSE 100, confirmed breakout follows the wave B scenario road map.

USD - DX arrives at a critical juncture for me with resistance from both a long term down sloping trend line (potential Flag line) AND an up sloping upper Triangle line. Such confluences of trend lines are, in the main, especially important areas of S/R. A breakout to the upside here will result in me abandoning my long held retrace bearish move scenario, which would, in my opinion, also signal the beginning of the resolution to the current economic cycle. Personally I don't see that we are there yet but we could be and a resolution to this critical juncture will go a long way to helping me make up my mind on that one. I favour the bearish retrace still and we have strong potential NMD on all chart time frames and a credible EWT count up to the wave 1 (current turning point). EURUSD and GBPUSD are also at critical points and USDCAD is approach a potential turning point as well. USDJPY has been bearish for a while and I see that continuing, in fact this pair may even show stronger moves than the others. If these turns work out then DX will drop like a stone. Add to this Oil and Copper and we have an interesting mix right now that could drive some strong directional moves.

Looks like a break down bearish move on HG Copper is on. After a break of my lower channel (or flag) line we got a perfect failed retest and then a series of lower lows and lower highs. This morning we got a break of the recent low, which would seem to presage a faster drop now to the next support zone around 22000-23000. This is a crucial juncture for Copper in my view. Here we would expect to see a general market decision point: do we rally hard into an inflationary type resolution to the wider economic malaise or do we crash into a deflationary resolution? Could we even see a deflation everywhere except commodities as investors search for real value in a world where financial engineering is collapsing? There are plenty of people pushing multiple resolution scenarios, including the usual and always wrong "don't worry, this time it's different" scenario. One thing seems certain, after a period of sluggishness the markets seem to be coming alive today, wonder what US open will bring after a long weekend and a start of a new month... Of course the end of Sept will be more interesting perhaps, being a quarter end for the Financial organisations. Just to advise, I am Short Copper and Oil (see my previous Oil post).

Possible breakout of that 4H chart consolidation Triangle with a short term failed retest. Will need to see an initial break through the 5747 support level to be more confident and then the next one at 5580, after which there is nothing much until the crucial 5000 level.

Possible breakout of that 4H chart consolidation Triangle with a short term failed retest. Will need to see an initial break through the 5747 support level to be more confident and then the next one at 5580, after which there is nothing much until the crucial 5000 level.

Looks like the whip saw price action is set to continue if this mornings initial bearish direction is confirmed. The turn was on the Fib 38% and is consistent with a complex retrace on the FTSE 100. If correct we could see a drop down to something like the 7100 area for a wave B (brown) followed by a likely final wave C, although I wouldn't put it past this market to give us some whip saw on that final move too. Similar set ups on the US large Caps and the Dax, albeit more complex perhaps on the US indices. Here we could still see fresh ATHs OR a retrace to a lower low. So far the price action is consistent with what I was suggesting would occur IF this was a trend turning end point. Needs a bit more time to play out but again, watch out for that whip saw action...

Silver should also be considers in assessing what is happening with Gold right now. These markets are in a similar pattern but Silver dropped lower to the 2015 lows and has been more reluctant to breakout in the recent rally. I think the technicals on Silver are more straight forward than on Gold, cleaner, easier to read, and that is one reason I prefer it as both an analytical and trading vehicle. The big picture is very similar to Gold, except that Silver retraced all the way to the Fib76/78% zone in 2015 where as Gold only made it to the Fib 50%. This alone is one reason I don't buy the wave B scenario on Gold. On the daily chart I have a decent channel that provided the resistance for the top out last week (if it was a top and doesn't require another touch...). The NMD is there on the daily but marginal, it is clearer on the 1H chart. I like the 1-2 labeling for the Triangle (similar to Golds Triangle that I am more equivocal about - see previous post) and therefore a marginal NMD at an intermediate wave 1 if fine. Still we could see a fairly strong retrace here. On the 1H chart there are several potential ending channels within the wider daily channel. The first has been broken and the second survived a test on Friday but if this is broken early next week then a test of the lower daily channel line is on the cards, and this would result in a clear break of the equivalent channel on Gold. There is an unclosed gap in Silver around about the lower channel line test point - I expect the gap to be closed and the channel to be broken. If this all plays out then it just remains to be seen how far the retrace will carry.

You might be a monkey's uncle @dmedin, or at least it depends whether you are saying the move since 30 May is a wave 3 in and of itself or just the first leg (wave 1) or a larger wave 3 (BTW, I think you meant to say the strategy was to buy and hold the June breakout right?). Personally I see it as a wave 1 of wave 3 so we should see a wave 2 retrace before things really get going and that retrace bearish move will surprise and knock the confidence of the bulls, probably stopping them out of positions they had locked in as big winners. This is how sentiment changes and big moves are set up. FWIW, COT data is the most bullish since before 2007 (I don't have prior data so it might be the most bullish ever, it is more bullish than at any time during the massive rally up to 2011!). I think that is too bullish to be sustained at this juncture. As it happens buying the triangle breakout on May 30 was right and holding there will probably be alright, unless the alternate deflationary Bear scenario holds true. Some people view the current move as a wave B that sets up a further drop as deflation hits across the board. Personally I don't buy that one, not yet at least, although I can see it on the technicals. Personally I see Gold and Silver as a safe haven store of value when things start to get really ugly, its just that we are not there yet so I can't see a justification for this particular bullish move being the "big one". If stocks and bonds crater in the coming weeks then gold and silver are likely to rally hard. Does anyone who is buying into precious metals rip see the corresponding collapse elsewhere? Some people do thing the ATHs on US large caps as the top but even then it takes time for a collapse to happen. Perhaps rumours of the demise of the aged bulls are exaggerated, at this moment at least. And this is all the more relevant if you look at the price charts. Last week produced the first real bearish candle since that May 30 breakout. This occurred at a zone of considerable long term resistance, although the wave B proponents see 1590-1600 as the target level, this would be the Fib 62% off the 2011 ATH. Additionally, on the Daily chart, there is a potential pennant off the Triangle low prior to the May 30 breakout, which hit 2X the pennant mid point (1555) at this weeks high. And at the end of last week Gold poked through a potential ending Triangle and stayed below. If this breakout holds early next week then we could have seen that wave 1 of 3 turn I was referring to. The pre May 30 Triangle retrace is a bit of a problem for me. If it is a 1-2 then the subsequent rally is a wave 3 and the next move will be a 4 and then a 5 and then a larger 1-2. That's all a bit complicated, although it might fit well with the whip saw price action we are seeing on stocks. If the Triangle is not a 1-2, but just forms part of the whole single rally wave from July 2018 (ah! is that the July you meant? @dmedin) then the next bearish move would be a 1-2 retrace that would most likely test the H&S neckline and Fib 50% at 1350 (confluence of both these thing is like a magnet for price in my opinion). There is pretty solid NMD on the Daily chart at last weeks top. Summary: I think we have seen an end to the current rally but we may see a small retrace down now and another leg up for a slightly later "real" top out Either way we should see a strong retrace (now or after another leg up) to retest the 1350 support zone before the mega rally gets going in conjunction with other market disruption moves There is an outside chance that precious metals are only in a retrace and that a further bearish lower low than 2015 is slated but I don't give this one a high probability at present.

Well I wouldn't be too worried about the loss of the profit @dmedin, you have to go with your thesis for the trade BUT the learning is maybe to consider as many of the alternative scenarios as you can and protect yourself accordingly. Oil is in a consolidation phase right now and while I remain medium to long term bearish on Oil I am not sure we are quite ready for the next leg down. That said I cannot rule out a total reversal in trend, or at least a more significant counter trend rally. Oil seems to have been somewhat correlated with stock indices of late and if this continues, and as I am short term tactically bullish on stocks, then Oil may move up for a while. Bottom line is I don't have a clear definitive view on the short term move on Oil and in such circumstances I will stay out of the market until things clear up. I now have another alternative technical set up to my last post, which is that the consolidation is currently in a triangle form. Therefore I would anticipate 3 potential scenarios as follows: Price continues in the Triangle until it breaks out to the downside and the long term bear continues Price breaks the Triangle to the upside and retests the channel line and then turns down into that bear move (as per my previous post). The market breaks up into either a trend change or a much stronger relief rally I have laid these out in order of likelihood for me, although 1 & 2 are roughly tied in my opinion. And sure you can say this is just, "it may go up or it may go down" but that is always the case. The key for me is to have a road map laid out for each scenario and then monitor price action to see which scenario is winning out and then find the trading points to take advantage. Unless you have a massive bank and can therefore tolerate large draw downs I can't see any other sensible way of trading long term swings (that is to say not day trading or scalping - no need for day traders to comment, their whole approach is materially different and I do not comment on that).

A punt Short you mean..? I don't see where there is a Long here, unless you mean to play a short term scalp trade. What is your trading trigger here? Other than the fact it has dropped recently I mean and RSI looks over sold. I don;t see the thesis for any sustained rally so a Long would be counter trend and short term. Surely there must be safer better risk reward options out there? Anglo, and general mining more widely, looks very bearish to me. From a Fundamentals perspective the stuff they mine is losing value (except for Precious Metal miners). If and when there is a recession their business will be further hit over and above the political headwinds currently in play. If there is a deflationary phase they may get badly hit, unless there is a flight to real assets. I'd look at the price charts for the stuff they mine before drawing any conclusion, this is the key driver of miners share price. If you just look at Anglo long term you will see that the current rally peaked and turned at the Fib 62% off the all time highs, put in with a double top. Since then there was a sharp sell off (1-5 wave) followed by a strong retrace (A-B-C) and then another 1-5 drop. The recent rally looks like another A-B-C to me and price has recently broken down through the lower channel line of the rally. There was strong NMD at the wave C turn on that Fib 62% resistance zone. Now we may see a short term retest of the channel line or breakout zone but after than I would anticipate a further leg down. Could be a good short at that point, although there could be a second retest before the Bear really gets going.

Picking up on the recent comments in the SP500 one way bet thread: If you want to hear it from a professional desk trader, check out this Real Vision interview. You don't need to understand all of it to get the gist and realise that the whole financial system is effectively feeding on itself. The interviewee effectively says this himself. Throw in a dose of Trump and corporate buybacks and you get a clear picture of the rickety (is that a sub prime scandal type events I see before me?) nature of the financial markets. Also sheds some light on why so many moves on stocks indices seem to happen out of hours (i.e. the hedging occurs in the futures market rather than the real stocks market). Does talk about having a bet on the scenario where it all turns out ok and momentum gets a boost, interesting that the pros can call it either so have to play scenarios... And references the "beggar thy neighbour" stuff that is going on. And this trader seems to think that Fundamentals are not the critical factor. Seems to me like a hopeless case... https://www.realvision.com/tv/shows/investment-ideas/videos/the-late-cycle-contrarian Oh and watch out for October! It seems...

I agree that capitalism, in its current guise, requires never ending growth. Well at least the capital markets do, I don't thing main street does. For business owners, of which I am one, you need a means to make money for your family. You need a product or service that customers want to buy/consume. If you are better than the competition you succeed. If not you don't. Corporate Darwinism. Financial markets and politically driven economic policy is where the problem lies. We have discussed this before in another thread and I think we agree on it @dmedin. The policies of New Labour are a good example. Happy Clappy Tony open the doors of the UK to immigration on the mistaken premise that this would boost the population growth to make up for the fact that Brits were having fewer children. The Brits, and most other Western economies are doing the sensible thing, albeit potentially driven more by self interest of Malthusian economics rather than altruism, in seeking worldwide population reduction. This is the only way to ensure the survival of the planet. But people like Blair are short term thinkers who only want to stay in power. To do this they need to finance their crackpot policies and to do this they need a growing economy and for this they need an expanding population (or to compete successfully with their neighbours, which is one reason we are now seeing more "beggar thy neighbour" policies. So all in all this results in a bloated financial system that is being propped up by central bank/government policy (don't make the mistake of thinking these are somehow separate, much less independent!). In the end it will fail because it has to. Malthusian theory say it must, not directly but as an extension of the resulting reduction in population, either through managed means of through catastrophic means, it is obvious that the financial system has to fall and be reconstructed on a more sound long term footing. In seeking, even hoping for such a fall I and others who agree with me, are not seeking disaster but salvation and a credible future for our children, which right now I don't see, unless we get a grip of the real drivers of ecological degradation. That is over population, which has only been possible due to extreme urbanisation, which has only been possible due to the kind of financial engineering you are talking about. Where we disagree, if I am following your thinking correctly, is that you believe it will only fall when the "engineers" deem it the right time whereas I do not think they have any control over the fall at all and are fast losing control of the rise. Net, buy Gold (and Silver) I mean actual metal not paper.