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Everything posted by Mercury

  1. Meant to add to the above that Google share price hit $1,500 today and rebounded back off it in a daily pin bar spike that is part of a current long term channel overshoot. If price falls back inside the channel and continues down this could mark the top for Google and with it the whole tech market. Again not yet conclusive but stocks are nothing if not sentimental and maybe 1500 is a psychological limit from a valuation POV. Valuation? Hahahahahahahahahahahahaha.
  2. To answer your question directly, FWIW, I don't think the rally is over yet. I am tipping USD to rally further more generally so this USDCAD rally is consistent with that thesis. There is a technical scenario for a turn at a potential trend line about now but oscillators and other indicators do not align for me and until all or most of my indicators align I wait. At this point a retest of the down sloping trend line is more likely before another bear phase. That said let's see what happens tomorrow at the current possible resistance point... I would want to see a definitive turn down and close below to get interested in risking my capital here, the risk is high against a Short and the exposure level is also too high for me, I mean where do you put the stop?
  3. So the Dax put in a new ATH and one could be forgiven for getting bullish, I did think about it for a nanosecond then saw the Dax promptly drop back below the previous ATH. Significant? Could be if that was a double top. The FTSE remained bearish despite the US large cap and Dax fresh ATHs (except for the Dow, hmm...). The Hang Seng continued its bearish direction too, as did the Russell 2000. The Nikkei put in a US large caps led rally but shopped short and reverses with the Dax. Smells like a breakdown of correlation perhaps. Late today even the might US large caps took a little tumble, nothing serious yet but landslides do start with a few pebbles... As always it is not so much the candle action as where it occurs for me. The FTSE100 failed to make a higher high and so did the Nikkei and the tiny new ATH on the DAX solves a technical issue for me on the last major bearish phase, rendering it a clean A-B-C retrace. The Nasdaq is perhaps the most interesting just now as it has spiked and rebounded back off a confluence of a daily upper channel line and a very long term resistance trend line. Not conclusive but compelling enough for a low exposure Short. In addition all of these markets have significant NMD at recent turns across multiple time frames and EWT lines up for rally ends. The Dax still has a potential ending channel in play. It is a truism that market tops happen without any bells tolling, that occurs much later. Usually the tops come in and turn on no negative news and lots of bullish sentiment, the bull just runs out of steam, and/or there just isn't anymore "good" news to drive it further and confidence wains sufficiently for the buyers to evaporate gently. Perhaps this such an event, perhaps it is just another correction before the madness begins again. Either way it is worth a cheeky Short with tight stops.
  4. Nice chart @CharlotteIG, is this something IG publishes and how often is it updated? If we have access can you point me to where on the site it is?
  5. Interesting one BAT. A family member asked me about this and some other stocks recommended for this year by a well known bank. Almost all of them fell into the defensive category: Tobacco, obvs; Utilities; Property; Pharma; Oil Insurance; Telco and big brand FMCGs. Seems the big banks are a bit worried... I have some friends at BAT and did some consulting work for them back in the day and one thing that is abundantly clear is that the tobacco firms are losing customers and have been making up for it with price hikes and share buy backs. The notion that vaping is in anyway "safe" is a red herring like "clean coal" and this will in any case not reverse the market decline, insiders think the market will never be more than about 15-20% of the total tobacco market. Once tobacco firms reach the limit of their business model's ability to generate sufficient cash to offer those divis that everyone has been chasing in absence of any decent interest rate return elsewhere, which occurred a few years ago IMO, the game is up. Perhaps this has been spotted by the market and that is why we saw the market top and sharp reversal. So fundamentals are bad for the long term. After a major move markets typically put in a relief move. This will not eclipse the previous highs if the market is now in a long term decline so how high will it go? Let's look at the technicals for that: The monthly chart shows the market top after a strong rally reversed with a channel breakout in early 2018. There was strong NMD on the weekly and daily charts and a clear EWT 1-5 rally to the top. After the channel breakout the market dropped swiftly to the long term supporting trend line and consolidated but then broke out to the down side and stopped just short of the Fib 62% off the ATH and then reversed. This is more likely to be a large scale A-B-C rather than a 1-5 down owing to the depth of the first bear phase and wave Bs are tricky to track but this seems convoluted enough, so far, to be a wave B. As far as I can tell it looks like we have had the A-B (pink), something I posted on previously, and are now in the final wave C. And this looks like it is a wave C or a larger wave C (i.e. the wave C - pink - is itself in an A-B-C - blue) On the weekly chart you can see the most likely turn and drop areas: the first is at the Fib 50%, which coincides with the LT trend line breakout zone; the second is the Fib 62%, which coincides with a retest of that LT trend line. The wave C (blue) rally is looking strong and taking a 1-5 shape so far. It looks to me like there is another bearish retrace (3-4 - green) to go, which could occur at the Fib 50% (i.e. now) before a final wave 5 run up to retest the LT trend line. There is no NMD on weekly or daily yet (may not get one on weekly but should on daily). Net therefore I think this stock is in a relief rally that is taking the form of a wave B. When this tops out it will be downhill all the way to the bottom. I think there is a bit more to go and favour the Fib 62% level for the turn but will need to see all my signals align, which they do not as yet. So there could well be a few 100 points in the rally but the big game is catching the drop. The reason this is interesting is that it may act as a guide to the wider market. Once the defensive stocks fail the game is up, remember defensive stocks (and indeed also things like Gold) go down in a crash, they just go down less and still pay good divis.
  6. NY Sugar looks like it is breaking out of a so-called inside bar price action configuration. This is where subsequent candles are contained within the range of the first candle in the series. It is simply a way to visualise consolidation that is not a retrace but part of an ongoing trend. If the price breaks out in the direction of the major trend then trade with it. If it breaks below then reassess if it doesn't fit your route map. There is a catch, as always, you can get a fakeout that reverses so close stops required but in the main this is signalling a continuation of the rally that my route map supports.
  7. Overnight bearishness in Asia is often where the first move comes. The Nikkei turned without putting in a higher high, you could call it a double top perhaps. The Dax did likewise, vs its ATH, and may also be tracing out an ending channel (A-E). If correct then we should see a fairly swift test of lower channel lines and horizontal support. USDJPY has been sluggish about posting higher highs and turned down with the Nikkei. USD seems to be stuck at a key resistance point with some short term bearishness, we may see this break out into a rally if stocks plummet, even short term. Interestingly Gold/Silver has turned bearish short term but there is no need for these markets to rally on stock drops or vice versa, especially is USD rallies hard. I have a strong scenario for Gold/Silver bear phase (see separate thread). The bigger picture on the Hang Seng looks bearish long term with a potential Bull ending wave 5 back in early 2018, followed up by a 1-2 (pink) and a second with a lower lower last night (1-2 blue), both turning at key Fib resistance zones and on NMD. If we see this sustained to a lower low then game on! Finally Apple seems to have put in a short term double top (not something I would usually credit but maybe "this time it is different?"). I will be interested to see what happens on actual US opening and key will be a break back into the daily channel, which would set up an overshoot (or fakeout). I am Short off the wave E turn and break lower. Let's see if we get the customary complacent buy the dip rally back or something else...
  8. HGC turned at the Fib 76/78% off the most recent high. If my alternative scenario (red A-B-C) is correct then this market should plummet for a while and may signal a bearish phase for stocks.
  9. Maybe they are not looking at a price chart there @dmedin. I was talking to a friend over the weekend, who is not at all into financial markets, who suggested Boeing must be worth a buy given all the negative news and how much the share price has fallen. You hear this kind of thing all the time these days, which is a sign of that complacency I keep mentioning. If you look at a chart though and apply some simple analysis you see a different potential picture: A Head & Shoulders top (note a true H&S only occurs at market tops and bottoms, at trend reversal points) Oscillators massively over bought at the ATH and NMD on the Monthly and Daily at the ATH. Credible wave 1-2 (purple and blue) - see daily chart NMD at the wave 2 (purple and blue) on the daily chart Now price is apparently breaking through the neckline after a failed attempt to punch back above it. A confirmed break lower here would lead us to a major zone of support between 27,000 - 30,000. If that fails then the next strong zone of support is at the Fib 76/78% off the whole long term rally down at 10,000...
  10. Another retail administration in the UK: https://www.bbc.co.uk/news/business-51176418 And a major shopping centre owner is looking shaky after a failed merger attempt with Hammerson last year: https://www.bbc.co.uk/news/business-51173668 If you look at a chart of long term mortgage and US 30 year treasury rates you will see a direct correlation and it doesn't take a genius to see one major reason why property prices have soared during this time. A lot of people take about the ongoing Bond bull market, now in it's 35th year, in similar terms as the hype in stocks, although it gets a lot less press coverage. Just as with stocks there are bond bears around and it is a fallacy that bond prices go up when stocks fall. In fact it is often the case that a bond market reversal presages a stock market crash, which is certainly what occurred in the late 80s. Another interesting factoid is that the Fed tends to raise base rates into a market top and cut into a trough. This is perhaps intuitive as the are supposed to act to stave off or soften recessions (not so much financial markets although the thinking seems to be that these are two sides of the same coin these days, which they are not). If you look at a chart of Fed rates with recessions overlaid you can see the pattern in most cases was rate rises and cuts just before the recession bit. Of course the recession gets called well after it actually occurs so we could already be in one and the Fed have started to cut after recent "normalisation" rises and are currently signalling more cuts. Why would the Fed be cutting again if the economy is strong one has to ask? Answer is that the economy is less than strong and the Fed knows it so they try to get ahead of it and cut to stave off the recession. History, via the chart below, tells us they fail... Add this to the bond inversion indicator and the fact that stocks and bonds are in cloud cuckoo land and certainly central bank rates are too (I mean negative rates..!) and it is only a matter of when not if. Sometime you can have a recession without a GDP recession. Sometime you can have a mere correction in the stock exchange during a recession I think we are going to get the lot this time. Look out below! <a href='https://www.macrotrends.net/2015/fed-funds-rate-historical-chart'>Source</a>
  11. EURUSD is breaking lower. We could see a bit of a bearish move to punch through near term support. If price gets past circa 11,050 then I would expect a test of 11,000. I think 10,950 is the key test. If price finds support here the bullish scenario could be on but a firm break and we can expect a test of the lower channel line around the 10,800 mark probably. I see similar set ups on GBPUSD where there is a gap to be closed just below current price action in the short term.
  12. Weekend price action on Bitcoin is suggestive of a wave 1 turn that may produce a wave 2 retest of the H&S neckline or channel line. Thoughts of a test of the key resistance level of 10,000 ,may be suspended until this retest occurs and produces a strong rally.
  13. On Tuesday 7 January 2020 Gold commitment of traders made an all time high Long position (or at least as far back as 2007, which is kinda the same thing). The net position wasn't an all time high but was close, the ATH was on 3 Sept 2019. Remember what happened next? Why is this relevant? When it comes to markets like Gold and Silver the commercials hold all the cards. They know the market dynamics better than anyone and certainly better than Wall St. I trade with the Commercials on Gold/Silver and the COT data is screaming over bought as the non commercials appear to be all-in Long. When a market is imbalanced like this, one of two things happen: we get a massive moves in the direction of travel as everyone tries to pile in but there are no sellers so the price gaps up and up until sellers return (unlikely on Gold at this point IMO) OR we get a sharp reversal as buying evaporates. If we think about fundamentals we may consider the following: Geopolitical tensions have eased a bit (although nothing is resolved) There is a trade deal between the US and China (hurrah!) although it is a largely face saving "phase 1" deal of little real consequence. Let's see what happens in phase 2..! Brexit is now resolved, it is happening (but exactly how and when is not clear) The stock market is on a rocket to the moon and the Fed is pumping in $50 bil in overnight Repo operations every night into the banks (what could possible go wrong???) The USD is rallying again The ISM non manufacturing data is still making positive noise (well it's all about services and the internet these days right? Who needs nasty manufacturing and actual goods???) If I consider the direction of travel (rate of change) of key economic indicators for the US (and for a moment suspend my belief that many of the measures are defunct, like GDP) I am not at all confident in the US economy and expect we will see a recession declared (post hoc) as having started in 2020 but we are not there yet. If I consider the emerging zeitgeist on Gold (it will beat previous highs; it will get to 5,000; it will get to 10,000) the hype is matched only by that seen in Bitcoin and stocks. When MSM start talking up a market you can be almost sure it will do exactly the opposite... If I consider classic charting techniques, a head and shoulders neckline breakout, such as we have seen on Gold, is typically followed by retest of said neckline, this would suggest a retest of the 1,350 area. So the scene is set for Gold and Silver to put in a significant reversal. in defiance of the chatter. The techncials on Gold look as follows: After a massive rally to 2011 tops price has dropped in a complex A-B-C retrace to the Fib 50% (78% on Silver) then put in a Head & Shoulders trend reversal spanning just short of six years before breaking out to the upside and leaving behind a classic U shaped base from which a long term rally would be the expected result. The rally has stalled of late at the Fib 62% resistance area, which brings up an alternative scenario (and A-B-C - Red labels on monthly chart). However the more conventional scenario is for a retest of the H&S neckline in a 1-2 EWT form bearish phase, with monthly oscillators all over bought. Zooming in to the weekly chart we can see that the rally up from pink 2, the right shoulder of the H&S and a failed retest on the long term supporting trend line, is in a 1-5 form and turned on NMD with a significant pin bar price action, the second such event of late. An A-B-C bearish retrace is now indicated with a target of at least the 1,350 level where the neckline (weekly chart) an ice line converge. An alternative neckline drawn on the monthly chart targets more like the 1,300 level and depending on when this happens this could eventually produce a retest of that long term supporting trend line but that is a ways off yet. Shorter term the daily chart shows a small 1-2 (brown) after a major bearish reversal off the over head resistance that may yet have another leg up in it before a bearish wave 3. to a larger wave A. Looking at Silver I think we have yet to see any major breakout rally as price is contained within a long term Triangle off a double bottom. Unlike Gold, Silver did not put in a higher high so the price action looks to be entering a wave 3 down, which will likely travel much lower, relative to Gold, and probably put in a large flag consolidation at some point. A retest of the bottom of the consolidation Triangle and lower long term supporting trend line would not surprise me. So net my lead scenario is for a bearish phase now for Gold/Silver, which may require a small further rally to prime the pump but when it hits will be a hard run down in an A-B-C form to retest key support levels before the much talked about and desired massive rally, which would only occur when geopolitical and economic tensions reemerge, fear creeps into the markets generally, perhaps also with a USD bearish phase and stocks also and ideally rising inflation as well. Right now the case for the long term bull market in Gold/Silver just doesn't seem strong enough, although it should be...
  14. Sure, why not... My posts are not about NOT being long, they are about keeping an eye on the potential end. Traders are only bearish or bullish in the moment if they are swing traders, it is the perma-bears and perma-bulls you want to watch out for, their bias has then by the short and curlies... For sure I am long term bearish but not yet short term as it obviously hasn't turned yet but I prefer to be Long other markets in general rather than having to sweat a big reversal on stocks, that only works for day traders, which I am not. This way I get a good nights sleep not sweating over an overnight Asia crash and don't have to sit glued to the screens all day...
  15. Mercury


    Possible top out and A-B-C retrace to a failed test of the breakout zone? A break back into the channel (blue line) is still the key with a lower low and test of the lower channel line around 29,000 being required for any possibility of a sustained drop (correction or otherwise). 31,000 is the first target then 30,480 is important too.
  16. A bear can dream... That maybe one day (maybe today) the markets will realise that all the QE4 repo operations in the world wont paper over the cracks and the cracks are likely to be structural...
  17. Great piece on RealVision today with an economist called David Rosenberg, who has recently started up his own firm (aged 59). One thing he states, which is a belief I hold, is that economists who wok for large firms cannot go out on a limb as this is a career threat so they hug the consensus. In other words the consensus is self-fulfilling and therefore will also hug the trend and never spot the major turns. For that you need something else...
  18. Watch out Bitcoiners! Quite a bit of resistance at 9000 at present with a possible 1-5 up completed and NMD on the 1H chart. We could see a bit of retrace price action down here with 8500 and 8300 in focus for a turn back up for another, stronger, assault on 9000. The Daily still looks LT bullish but a break of 9000 with a daily close above is needed for a follow on.
  19. The spike up and reversal (on retail data release) hit the Fib 50% off the wave B (brown). If this is sustained then I would expect a test of the 12950 and the 12900 in fairly short order. Watch out for a short term bullish retrace, which would offer a route for a Short. This is currently consistent with EURUSD but I think GBP will fall further as the EURGBP pair is signalling a rally for a while at least.
  20. Agree, that is the obvious target for any bearish turn now, although a run up past that and fall back that coincides with stock over exuberance can't be ruled out.
  21. Russell 2000 has hit an interesting point with US large caps just into fresh ATHs. Price has hit and rebounded back off the top of a daily narrowing channel just after the Fib 88% off the ATH. There is NMD on Daily and 1H charts and a credible 1-5 EWT labeling for the rally, that would be a wave C of wave C. Not conclusive until we see a small 1-5 down, A-B-C retrace and then a fast drop but an initial sequence may be in play on the 1H. One to watch.
  22. That's how it starts, especially for a retrace as opposed to a motive move. After a sharp jump with a gap and then close of the gap with a strong bearish move (1-5) there was a good chance of a relief rally. Price bounced off the Fib 50% on positive momentum divergence after a credible EWT 1-5 so the chances were high of a relief rally. 2 ways to trade it: Preemptive early Long after a small 1-2 with a stop just below the previous low for a very low exposure trade and excellent risk reward, which is what I did because wave Bs are tricky so the earlier you are in the better as whipsaw can easily stop you out Wait for a break of short term resistance, but as I mentioned this leads to greater exposure and leaves you at the mercy of that unpredictable wave B. There is a third way, which is to wait for the wave B to end and get short. Soon I will move my stop to BE and sit and wait for the move to play out one way of the other.
  23. One thing you can be sure of is that beginning of year forecasts for where the year will end or what will happen during the year will not be accurate... Still if we take it as an indicator of the near term then that would support my thesis for the next quarter at least...
  24. I can't remember a time when Oil remained in such a tight range... I suggest the Journo who wrote this may not actually know much about markets in general, never mind Oil... I remain with my LT target around the $85 level on Brent. Form a purely technical perspective the price action is consistent with a complex retrace such that we should expect a move back toward the $60 level before a strong rally. Short term price is getting held at the Fib 50% level just now and after such a sharp drop we might anticipate a relief rally to maybe about $68-69 before a resumption of the bear move to $60. There is strong PMD on the 1H chart at the lower point in the drop. But it's oil so anything can happen, as we saw with the drone strike...