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Saturday, December 11, 2010

Week-end Observations!!!

Roy from the Elliott Wave Practitioner is still very Bullish on Gold and Silver and shows the charts of the South African Rand in various time frames to make his point. By using this ticker, he is essentially comparing the price of Gold, to that of the US Dollar. You can view this short clip by clicking here!!!
These are the three options I have been watching on the Dollar, I first posted these counts back on November 7th when I thought the Dollar had bottomed. Since then the Buck has strengthened giving the Red and Blue options the highest odds. The Green option is still not off of the table, but the sell-off down to $75.63 looks much more corrective then impulsive, this does not support the Green option because it should be an impulsive wave for the Green option to play-out. With the way the Government is back to throwing money around again nothing is out of the question, things could hit a snapping point and a really large sell-off in the Dollar could occur.
Score one for the Dollar, it did manage to close above the 20 week MA pushing the odds to the Bullish outlook(Red and Blue options) with the MACD and STO both in a Buy mode.
The TRIN is still dropping into extreme over-bought conditions, I went back twenty years on the above chart and there were no readings as low as we have now. The lowest was in the fall of 1996 and that reading was only .72, close to the same as in March 2009 on the above chart. There are two ways to read this, either we are at a major turning point, or we are starting the strongest Bull market in history, the 3 of 3 of 3 scenario, Hyper-inflation!!!
I am leaning towards the major turning point because the Dollar is still gaining strength, a break down below $75.63 on the buck would push the odds towards the Bullish view.
This chart should be VERY worrisome to the Bulls, the markets are not running on all eight cylinders and things are getting worse. As the indexes are pushing to new yearly highs, the number of new 52 week highs are going in the opposite direction, DOWN. With fewer and fewer stocks participating in making new highs this rally cannot be sustainable. The other part is the number of stocks making new 52 week lows, this is escalating to the upside, again this is not a sign of a healthy market with across the board participation.
Just in case you were wondering what stocks were making new lows, here are the results from MSN Money. I bring this up because some people have mentioned that the only stocks making new lows must be the bearish ETF's, that is not true in this case as there are quite a few companies involved here, and not just small caps, but some larger caps including Big Lots Inc. at $2.145B.
The way this chart is trending, odds are really high we could see another Hindenburg Omen with-in the next week!!!
Trend Finder II has been updated with both the Weekly time frame as well as the Dailies.


  1. City group seems a good buy right now. i predicted the current upthrust back on November 26th on my blog :

    Also, check my latest pick Cardiome Pharma Corp. (CRME):

  2. Michael
    I took a hard look at Roy’s chart and find his trend channels subject to argument, if you draw a top trend line down from May’s high to his A label at the end of Oct. then Draw a fresh trend line up from his one label in mid Oct. through his Aug. 3 label you see his chart in a whole different light and that’s that the South African Rand has broken out and just finish its 2nd wave up (tested support) and is about to move up in to a larger 3rd wave with the Dollar. In fact it would be interesting to overly the two charts the Dollar/ South African Rand. Maybe you could modify Roy’s chart with my version. Go long on the South African Rand is what I see.
    Jack C

  3. You need to understand that stocks like Citicorp (C) are having huge influence on the TRIN, given that it is trading over 700 million shares a day. Bank of America at 225 million shares a day is also having the same effect.

    Just look at the most active list from Friday.