I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Tuesday, July 24, 2012

July 24

The projection for the continuation of the move up that I discussed on Wednesday and the subsequent turn seems to have worked out. So with that a sell signal (sub-cycle top) was issued on the 60-minute system on Friday and we finally got a Down Cycle signal today on the 60-minute system to correct the Up Cycle signal that began on June 8. This was a pretty average Upcycle duration and so if we have an average Downcycle duration, it will last somewhere around 15-20 days.

Based on the performance of the 60-minute system this year, feel free to use that as a contrarian indicator if you wish :)

Sunday, July 22, 2012

Gold Projection Update

First things first: My thoughts on gold are very different from most gold investors. For those thoughts refer to my last post on gold (nearly a year ago) here: Gold. I think the inflationary (and especially 'hyperinflationary') thoughts that most gold investors espouse are mostly if not completely wrong. I think the macroeconomic thoughts that most gold investors espouse (especially regarding government 'debt') are mostly if not completely wrong. For my thoughts on these macroeconomic issues, refer to this list.

But for many reasons as outlined in the first link, I continue to be bullish on gold. In fact, I think the the next rise in gold will likely be due in part to the misconceptions that the majority of investors have about gold and macro. So when QE3 comes (which is a huge monetary non-event, is not inflationary, and actually removes income from the non-government sector) and misperceptions and emotion abounds, it will be fuel for the more legitimate reasons that gold continues to be in a bull market.

With that, here is my updated long term count on gold:

Wednesday, July 18, 2012

July 18

This corrective wave continues to be inscrutable to me.

The 60-minute system is still getting faked out / thrown around. Because we keep getting spike bottoms and tops on no divergence. So I am getting no normal exit signals and only emergency signals.

Oddly, my 15-minute system (which I stopped publishing in Oct 2011) is working quite well in this environment. There is just enough volatile non-trending movement with divergences that manifest on the 15-min timeframe that it can take advantage of and is giving clear signals.

The last few signals from the 15-minute system:

S/L           OPEN      PRICE        CLOSE      PRICE   GAIN
SHORT   5/30/2012 9:45  132.17  6/4/2012 14:30  127.91  3.22%
LONG    6/4/2012 14:30  127.91  6/7/2012 15:15  132.45  3.55%
SHORT   6/7/2012 15:15  132.45  6/14/2012 11:30 133.15  -0.53%
LONG    6/14/2012 11:30 133.15  6/20/2012 9:45  135.49  1.76%
SHORT   6/20/2012 9:45  135.49  6/25/2012 15:15 131.41  3.01%
LONG    6/25/2012 15:15 131.41  6/28/2012 9:30  132.25  0.64%
SHORT   6/28/2012 9:30  132.25  6/28/2012 15:45 132.79  -0.41%
LONG    6/28/2012 15:45 132.79  7/5/2012 9:45   136.82  3.03%
SHORT   7/5/2012 9:45   136.82  7/12/2012 14:00 133.75  2.24%
LONG    7/12/2012 14:00 133.75  7/16/2012 10:30 135.06  0.98%
SHORT   7/16/2012 10:30 135.06  7/17/2012 12:15 135.98  -0.68%
LONG    7/17/2012 12:15 135.98  open

Based on the phasing of signals, I would expect a roll-over in the next couple of days. This would be consistent with my 'corrective' 60-min MACD setting in the chart below.

I still think the move up is very corrective and this is my best (and likely incorrect) guess as to what's happening.

Thursday, July 12, 2012

July 12

Big mess taking place right now on all my charts and systems. I haven't commented recently because I was out most of last week and this mess has been largely inscrutable (to me anyways).

But despite the large rally since the beginning of June (right when my Daily Trend system issued a sell, ugg bad timing) the Daily System never got back into buy mode. It almost issued a buy in June, then the selloff reset the buy criteria. And then it almost issues a buy in July, but not quite. So despite the rally since June, my system has not yet transitioned long.

Is it broken? Possibly.

But I am not gravitating to that conclusion. The duration of the cycle from Oct 2011 to June 2012, while exiting due to emergency conditions and not normal conditions, was very close to average. And so there is no reason to expect the down cycle to be abnormally short in duration, which it would have been if the June low had been the low of the correction and the cyclical bull had continued from there.

But that doesn't ring true to me. For this reason and many more on my charts, I think the correction is not done, and do think we will be revisiting the June 2012 low before the correction is done and the cyclical bull continues on to new recovery highs (and likely new all-time highs IMO).

For anybody that cares....

Here is my EW count that fits with what I think is happening and would fit with a much more average downcycle duration on the Daily System timeframe.