Long Term Perspectives

December has arrived and once again it is time to revisit our long term charts. The fastest moving sector by far are equities which managed to stage a rather impressive reversal off their mid November lows:

The point & figure chart expresses the velocity of the November drop & pop rather well. At this point the bulls have a lot going for themselves, let’s review: For starters the SPX satisfied the bearish price objective and then some. This was followed by a merciless short squeeze which two weeks ago triggered a low pole reversal warning. That pretty much put the bearish case on notice but there was still hope for the grizzlies until 1400 was reconquered during a low volume Thanksgiving Friday.

Although I have short term reservations (see my Friday update regarding a possible short term shake out on the horizon) the long term picture is looking pretty positive right now. On the weekly panel we completed our second week above the 25-hour SMA. On the monthly the bulls managed to finish November in the plus – but just barely.

This however slightly changes my 2009 – 2012 bull market chart as the new count only leaves October as a monthly lower close. And that means the current leg of the long term uptrend has now completed its sixth candle. I am yet unsure about the implications and I reserve final judgement until I see how much follow through we get after Christmas.

Seasonally we are now heading into week 49, a.k.a. as the ‘pre-Santa-Rally-shake-out’. Based on what I saw on the volatility front I expect a bit of a pull back before we dash off into the final weeks of the year, which obviously are traditionally very bullish.

Something that has puzzled me a bit during the recent shake out was the complete lack of volatility. Complacency among investors appears to have returned to pre-crash territory. Astonishingly we never even closed above VIX 20 and the overall consensus among equity bulls seems to be that Fed has their backs, no matter what. Admittedly the sell off only lasted for about 130 handles but the utter lack in response on the volatility side is a bit concerning. I have made this point before – a market without bears is a very dangerous environment to be bullish in. For when things hit a snag there is nobody in between to soften your fall. Black swan events don’t happen when everyone is worried – they strike when everyone has forgotten about them. Curiosity may kill the cat but complacency is what does the bull in every time.

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Cheers,

This entry was posted on Sunday, December 2nd, 2012 at 8:51 am. Both comments and pings are currently closed.



  • Ivan

    Howdy … perhaps an even longer term view may reveal the patterns … log scale naturally … additionally I am sure many/some are aware of the Presidential Cycle as well … slowly the dots join up … rock on volatility!

  • http://evilspeculator.com molecool

    The presidential cycle charts I have seen suggest a leg higher followed by a sell off next year. Do you have data that supports that?

  • Skynard

    Sweet analysis, that’s one hell of a hammer on the monthly charts for equities.

  • Rightside_ot_trade

    /GC looks like an RTV Buy on the Daily chart
    The spike low on Wednesday was 10 days from the prior low so that condition is met. 
    The only question is whether the recent low qualifies as a significant low. thoughts?

  • Microwave_Prince

    Initiating CL_F launch sequence.

  • AMCabrera

    is anyone seeing currency movements yet? I havent seen any movement normally there is. Just wondering if it is a oanda server issue or not.

  • Skynard

    t-7min

  • http://evilspeculator.com molecool

    Bearish hammer candles only have a moderate to weak probability.

  • Th3_Acist

    Shorting GBP/USD 

  • AmazingLarry

    “For when things hit a snag there is nobody in between to soften your fall.” Love it. Permission to use freely as long as proper parenthetical notation is given, please. 

    Crude monthly BB has just crossed under the last break low of 78.88. The 25 day SMA (closes) is holding and I think I see it closed above the daily NLBL on Friday?

    Copper is up 5.7x since early 2003 while gold is up only 5.3x and gold is in a “bubble.” Who makes this crap up?

  • AMCabrera

    http://www.youtube.com/watch?v=FgzHe4KKJnE
    Men of this beloved blog may your mind stay clean so that your body strikes will purity. Short aud/usd short aud/jpy and long gbp/chf.

  • bravenewworld2011

     A chart with no legend (at minimum) and no commentary isn’t that useful to a lot of us…

  • Ivan

    On the same page with that one.

  • Skynard

    What’s up with TOS Forex? 

  • Th3_Acist

    It’s not updating for me either…

  • Skynard

    That’s unusual, that does not happen very often.

  • Ivan

    All is not lost … the Cheat Sheet contains some clues … additionally you get a chance to discover for yourself … as well as seeing a view that most never see … inter-generational fortunes can be made with this approach as opposed to just intra-generational returns.

  • newbfxtrader
  • Skynard

    Ya, this one can hurt:) Let R rip!

  • Th3_Acist

    Back on for me.

  • Skynard

    Yep, plugging in to the Matrix now:)

  • Skynard

    No reaction on the /ES, trying a long from the lower BB:)

  • AMCabrera

    boom..

  • Skynard

    Here is a shot of the daily:)

  • Skynard

    Wow, /HG going ballistic past few days!

  • Skynard

    Keeping an eye on LBS:)

  • http://www.facebook.com/profile.php?id=100001131611045 Exar Kun

    shorted euro at 1.3045 and taken 1/2 off at 1.3035. Let’s see if there is at least a 2 days shake-up.

  • Microwave_Prince

    A spike in crude would destroy AUD. 

  • itcomesupinwaves

    Careful, looks like it needs to hold and break above 1418.

  • AmazingLarry

    Dr Copper lead oil and the PM’s last time. Let’s see if the trend continues.

  • http://www.facebook.com/profile.php?id=100001131611045 Exar Kun

    covered all. quite scary – looking like consolidation.

  • Skynard

    Hard to believe that we are only 50 points from the high. Fireworks look to be on the horizon:)

    Ediy: BloooooowOfffffff! Mwhahahaha:)

  • http://dartht.blogspot.com/ Darth_Gerb

    have you seen the spx:gold ratio?
    hovering around 1991 levels.
    numerical games.

  • Hinkognito

    I believe you should be counting candles, not days.  Esp considering the short Thanksgiving week.
    Based on my interpretation, I would not consider this a valid RTV signal.

  • bravenewworld2011

     Does that mean your method won’t pay off until after I’m dead?! :)

  • Ivan

    Another interpretation is that one could make more than one could spend in one lifetime!

  • itcomesupinwaves

    I find this hilarious..  Kathy Lien on CNBC, November12: Sell the low of EURUSD at 1.2715 with 1.26 target.. The kicker is  she suggests a stop loss of 1.29.  So she suggests risking 185 to make 115, completely irrational! LOL!

    http://video.cnbc.com/gallery/?play=1&video=3000128024

  • Ivan

    Unless the ruleset has a strike rate above 85% or so … then very valid as a concept.

  • http://www.facebook.com/profile.php?id=100001131611045 Exar Kun

    I am long euro now! Its Exar vs Kathy! =)

  • itcomesupinwaves

    That may be.. But it makes sense to enter a trade as close as possible to where one would be incorrect.

  • Ivan

    Sense it makes … only if the entry is the most important part of success in trading … campaign management, money management and self are far more significant to the outcome.

  • http://evilspeculator.com molecool

    Entries do not matter – the exit does ;-)

    Well, doesn’t keep me from trying though…

  • http://evilspeculator.com molecool

    Ivan – I think your new nickname should be evilyoda. Just use the verb at the end of the sentence and good to go you are! ;-)

  • Ivan

    We both agree that the entry is just part of the equation, eh what!

  • Ivan

    Name the currency!

  • Ivan

    3hr E/u is presenting a nice opp imo.

  • AMCabrera
  • AMCabrera
  • AMCabrera

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/486a0a40-abca-443c-8f59-ee724e6e65e7/2012-12-03_0400.png
    not so hot either again usd/chf probably to blame which means eur/usd strength for now.

  • AMCabrera

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/77c660b9-04f0-436c-9773-65160f9cd747/2012-12-03_0402.png
    “And I looked, and behold a pale horse: and his name that sat on him was Death, and Hell followed with him.” Revelation 6:8

  • itcomesupinwaves

      Looks like a potential Gann’s rule of 4 on the daily, nice find.

  • I Bergamot

    Roman Empire? Dinar or something

  • AMCabrera

    Ive pulled aud/jpy and rearming for nzd/usd at .8200 also aiming at eur/usd if it gets below 1.3030. USD/JPY is making me wary for now.

  • AMCabrera
  • I Bergamot

    If it is, i just remembered that at some point there was no coins minted in Roman Empire at all ! Thats how money printing stops. Governments don’t change their monetary policies, governments don’t learn – they collapse.

  • AMCabrera

    cleaning my book and only keeping gbp/chf long.

  • AMCabrera

    positioning in aud/usd will be tricky I have a sell order ready at 1.0500 and 1.0400

  • Joe_Jones

    That, I second

  • http://dartht.blogspot.com/ Darth_Gerb
  • Skynard

    Spoos on the move!

  • AMCabrera

    surprised, Im not that why I just kept my gbp/chf long and will sell the rallies in aussie thats why I pulled all orders I had last night..fresh aud/usd short just a moment ago was stop but it was no biggie only 10 pip loss.

    Edit; short aud/jpy again with stop at 85.90

  • http://dartht.blogspot.com/ Darth_Gerb

    i’m starting to see a channel, 19th to today.

  • http://dartht.blogspot.com/ Darth_Gerb

    1 of the next 1000 trades.

    is the Zen Cabrera back?   :-)

  • Skynard

    Playing /ES upper BB on the hourly 25 (1435) then will short:)

  • AMCabrera

    I wish I could reach zen. In the meantime though I will go long usd/sek while closing gbp/chf longs.

  • http://dartht.blogspot.com/ Darth_Gerb

    previous highs were around 1430, I’ve got an overhead fibfan around 1432.50

    I would be surprised to see 1435.

  • AMCabrera
  • AMCabrera
  • AMCabrera
  • AMCabrera
  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨ 
    ¨°º¤ø„¸F R E S H „ø¤º°¨ 
    ¸„ø¤º°¨ M E A T“°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • Skynard

    Bucky looks to have found some support at the lower BB hourly.





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