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Long Term Perspectives
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Long Term Perspectives

by The MoleJune 24, 2012

Valencia was hosting the Formula 1 today and although I didn’t make it to the beach it was very exciting to watch Fernando Alonso score a sensational victory for Ferrari. Also glad to see Schumacher get to the podium after his comeback. And if that wasn’t enough reason for those Españolas to keep me up at night: Spain also scored a clear win against France and it looks like they’ll make it to the Euro Cup playoffs. Viva España!

Of course if you live in the United States chances are you don’t even know what the Euro Cup is or why you should be excited about it. Having lived on both sides of the Atlantic this was always a big mystery to me as even South Americans seem to get what all the hoopla is about. Until a friend of mine suggested a possible reason – we yanks (I think it’s fair to count me in after 20 years) love complicated scoring systems, plus a 90 minute game is clearly not enough time for spending a Sunday afternoon with the boys. And then there’s the fact that football (a.k.a. ‘soccer’) does not allow for video replays. Personally I am siding with the fans and not with FIFA on this one. I mean, come on  – it’s 2012 – I really don’t see a reason why it makes sense to do without.

On the charting front we’re going to slow things down quite a bit however – way down, as it’s time again for a long term perspective. Nevertheless we’ll look at quite a few photo finishes. The only two daily chart today cover the spoos. Quite interesting that we touched our volume hole on Friday and bounced right back. A lot of things can happen over the weekend (and the futures are not open yet on my end), so let’s see if we stay below on Monday.

I’m still a bit skeptical about a full scale sell off and will remain to be until we get closer to 1312 – more about that below. In the meantime we have the potential for a admittedly messy but plausible IH&S formation – the resolution of which, as you may be aware by now, often is preceded by a final shake out attempt.

Alright, on to the long term (LT) then. The weekly shows us below the NLBL as well as below the 25-week SMA. The monthly panel however still has us above a monthly NLSL. It is important that we’ll remain above or I would consider this a big LT sell signal.

The SPX P&F clears some of the noise and shows us a soft diagonal support line that intersects near 1310. The NLSL mentioned ont the chart is not what I showed on the previous spoos chart – remember fair value. I am always a bit conflicted about which signals I should follow on the Net-Lines chart – the spoos or or the SPX. Personally I prefer the spoos as we simply have a lot more activity per day – 24 hours vs. only 6.5 on the cash index.

On the long term side however I think that SPX 1310 and then of course 1300 is a clear separation point. Considering current fair value of ~6.4 SPX 1310 roughly equals 1303.5 on the spoos.

With equities out of the way let’s mosey over to the evil lair currency and commodities dungeons. Quite a bit more below for my intrepid subs:

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More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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AUD/JPY has managed to climb above it weekly NLBL – on the monthly side we also see a snap back after touching the NLSL at 78.079.

CAD/JPY shows us a nice bounce off the monthly NLSL – next resistance area on my map is the 100-week SMA near 80.5.

EUR/CAD may give us a inside month candle – assuming of course we’ll stay in this range until the 29th.

Cable bounced back at its 25-week SMA and remains below its monthly NLSL. If that keeps up until the 29th then I think we may have ourselves a nice LT sell signal here.

Last month the NZD/USD conquered its weekly NLBL and it seems June was a good opportunity for a retest. A good LT buy if it holds the Net-Line.

USD/CAD kissed its weekly NLSL and thus far has been holding. Not a bad LT buy here if it stays above the line.

Ole’ bucky shows us a nice weekly support line which is now approaching the 81 mark – I consider this the do or die line of the current upside trend.

Speaking of the Dollar – here’s the long term P&F chart. I am being a bit liberal here by replicating a similar support line – nevertheless it also suggests that 81 does indeed hold meaning. Also note the bullish PO of 84.5 – for purely selfish EUR/USD exchange rate reasons I personally hope ole’ bucky can keep up the mojo and get us there.

Well, we’re just getting warmed up – let’s head over to commodities and mix it up with P&F and LT interval charts:

Gold has been wasting everyone’s time now for months. But it’s now starting to run out of time as we it is approaching its 25-week and 100-week SMAs. There’s also a weekly NLSL at 1532.8. A breach below that would be a smashing short opportunity – but until that happens we should sit tight or consider a long setup. Which however may just burn your time if this sideways pattern continues.

The P&F chart is crystal clear in indicating why 1530 is important. The chart says ‘monthly NLSL’ but it’s actually a weekly one – sorry about that.

Dr. Copper dropped all the way to its monthly NLSL and then bounced back. That is bullish – assuming we stay right there until the EOM.

I guess the P&F is pretty clear – we did basically fulfill the bearish PO of 3.2 (plus a few ticks) and I am thinking long here unless of course we breach through the aforementioned monthly NLSL. That would be super bearish and possibly spill into equities as well.

Wheat – excellent short here with very little risk if you place your stop above that 100-week SMA – plus there’s a NLBL that lines up almost exactly. I live for these types of setups. And you all know that I’ll be long if stopped out – this may actually the more profitable setup.

Soybeans have been rejected at the weekly NLBL three times now and we got another two weeks to go. Could have been a good short if you got in near the Net-Line. Not sure if I mentioned this last month but if you’re short be out at near the monthly NLSL as I see a little bounce there.

Natgas – right at its weekly NLBL – bullish, especially once we make it above last month’s highs. Maybe worth a handful of contracts but be aware that there may be a retest.

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Finally a chart that has been really irking me in the past two years. We are looking at gasoline vs. crude here and the reason why I’m posting it is the exploding delta between those two recently. It’s not the first time that this happens – we saw the same the previous summer: While crude prices were tumbling consumers of gasoline (i.e. you and I and everyone else) continued to pay relative high prices at the pump.

They can tell me about refinery problems all day – bottom line is we are being systematically ripped off. Well, not me recently as I have abandoned driving a car altogether and am now using a Vespa here in Valencia – that thing basically runs on fumes. Not something I’d try in Los Angeles but that’s one of the many perks of living in lovely España 😉

Cheers,


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • wvobiker

    Formula One engine stroke:bore ratio seems to thrive on Fibonacci numbers. Over the last couple of decades or so they changed from 0.62 to 0.5 to 0.382. Last time I checked, Formula One cylinders measured Bore = 100mm and Stroke = 38.2mm (300cc or 18.3 cui. individual cylinder displacement).

  • Fibz

    Props on the Vespa. I’m looking to get a small dual-sport one of these days for city commutes.

  • http://evilspeculator.com molecool

    They don’t call it the golden ratio for nothing!

  • http://evilspeculator.com molecool

    EUR/USD and AUD/JPY open lower.

  • StrikeFirst

    How a BMW is made, start to finish. Amazing, really.

    http://www.youtube.com/watch?v=libw1rV2McY&feature=player_embedded 

  • wrc1k

    The gasoline vs. crude chart is truly evil . . . 

  • beentohardknocksU

    /HG moving up while dollar moving up and /ES moving down.  Not what I would expect to see in the risk-on risk-off play of the last little while.  

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

    My child’s black gerbil pet died today, 3 full years.
    Tis a sad evening.

  • Joe_Jones

    Sorry to hear it. I lost my 6 year-old cat last week. It hard when a friend goes. Sympathies to your kid. Get him a dog if you have the space.

  • Joe_Jones

    Great Post Chief. Saw the Spain GP on TV, and were wondering if you weren’t on board of one of those giant yaaachts on the right side of the track. You say you moved the evil lair? 😛

  • Joe_Jones

    nice short on aud jpy if vwap doesn’t hold now

  • Joe_Jones

    Barry Taylor sticks his neck out in his last Thu vid. Re-enactment of 2008?? Or ego about to be bruised?

  • Fibz

    Who’s Barry Taylor?

  • Joe_Jones

    Sorry, the guy that runs emini-watch dot com. His trading algos allegedly I.D. professionals activity. I check his vids once in a while. Good stuff. 

  • Fibz

    Interesting. I’m personally looking for a shakeout of the people who bought on the break of that “head and shoulders”, but not 2008 style just yet.

  • http://evilspeculator.com molecool

    Oh you are the one who sent me that…

  • http://evilspeculator.com molecool

    BTW in case you forgot – please no pimping of other commercial sites. Thank you.

  • Skynard

    Back at it, by the looks of it we have tested support and have made an attempt to recover. Today’s open will likely back test. Put some longs back to work. AUDJPY and /ES on this pull back.

  • AMCabrera

    good morning lads. Alright Im going try a short USD/NOK, long AUD/JPY low tolerance of both.

  • Skynard

    Adding /ES long on the weak 5 min signal.

  • Schwerepunkt

    FWIW: Der Spiegel now calling Euro currency collapse “a very likely scenario.” 

    And we’re just a short dump away from Mole’s sell lines. 

  • Skynard

    That turned ugly fast. Stop just below at support.

  • Skynard

    1308-1310 good support. If lost will flip the trade.

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

    mornin.
    I’ll be on vacation in LaJolla, CA this week.
    so excited to get the family out of the 110 heat, and sit at the 70 beach.
    rumor is there’s a illegal wifi on the hotel roof, and you need the secret handshake to get in.
    so my typical chatter will be at a minimum! (*positions at neutral to slightly bearish, the only coasters I want to ride are physical.)
    -Ciao

  • raised_by_wolves

    :-(

  • raised_by_wolves

    I hope you take my “like” the right way. 😉

  • supervilin

    It held! closed my morning short at 1309.50 due to weak selling and some large buy orders coming in at those levels. (and ur comment too!)

  • MrMargin

    CL retested the 200w and dropped.

  • supervilin

    testing again.. but on weaker zero so far. thinking long

  • Skynard

    Good timing mate! 5min diverging now with the current candle being the trigger:)

  • Joe_Jones

    Sent you what?

  • http://evilspeculator.com molecool

    Yo’ momma

  • Joe_Jones

    Wasn’t my intention Mole. There is no other blog such as ES on the net, but sometimes looking at what other do, especially if it isn’t mental masturbation like the Slope, reinforce our trading strategy. Anyway, I’ll refrain from mentioning it in the future.

  • Joe_Jones

    wasn’t me

  • supervilin

    hmm starting to look like a downtrend day.. sitting this out for now.

  • Skynard

    Still long placed SL just below. If taken out have sell order placed.

  • Skynard

    Yikes! That is some what bearish.

  • AMCabrera

    Just know I will miss you.

  • Skynard

    There is our div on the  5 min. See if it plays out.

  • gsavli

     which ticker? ES?

    also AUD/JPY hint of divergence on 5 min.

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    One of my favorite place to surf is Winansea in LaJolla.  I trek from LA to Encinitas on most weekends to surf.  One of the best scenic drives in california is between LA Jolla to Encinitas.  Have fun.

    http://www.youtube.com/watch?v=gKecIbi06mI

  • Skynard

    Yep, /ES. 1308 now resistance playing hard to get.

  • tradem4alpha

    not even a -1000 tick…which shows no exhaustion…hope you guys who are long are just scalping.

  • tradem4alpha

    and there goes that small IWM outperformance…

  • Drew1985

    Laddy dadi dah….

    Short ES from earlier this morning at 1308…and just going to see where this goes. Stop at 1313.

  • Skynard

    Stopped out long, now short

  • Skynard

    ya, don’t see much dip buying here. Maybe 1300

  • amokta

    looks like spx 1310 turns out to be porous limestone support!

  • AMCabrera

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/8bcbed2c-95ab-4668-b819-31562e06d9bd/2012-06-25_1215.png
    da pair says get ready for a quick break. I’m more inclined that that red line will hold but who cares? I sure dont I will trade accordingly  Also based on that chart I’ve increase my tolerance on the trades I had earlier the AUD/JPY and USD/NOK (long,short) I no longer hold any NZD/USD short positions they are all gone.

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    we maybe back on track for the 1225 target if 1300 gives this week.

  • http://evilspeculator.com molecool

    I think the lesson we have been learning over the past few weeks is to ignore Mole signals during trend days. Alas it was only a low priority one but clearly they rule on non-trend days and are only good for small candle scalps during trend days – if that.

  • http://evilspeculator.com molecool

    With water infiltration.

  • AMCabrera

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/39c79157-1d41-4e16-b739-f146efa543d5/2012-06-25_1231.png
    more than likely 1300 will give. it would be too easy if it did not. Then maybe 20 more points will do the whole convincing factor thing. (deep breath of boredom) then from there (1280ish) we track back to 1375 back lets see where we end up today first uh. 😉 

  • amokta

    This market is making luncheon meat out of even the vegetarians :-)

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    ok will see if we get a “W” off the 1280 or if we see a “D” move down on the weekly.  

  • Skynard

    Flipped again long, bull flag 5 min.

  • mothwhoflysbackwards

    Hope your kid is doing o.k. If the gerbil was as happy as the “cute picture” gerb looked in the pic he had a good gerbil life.

    Feel better, have a nice vacation and watch out for radioactive debris!

  • captainboom

    Agreed. Would be good to put that observation on the cheat sheet.

  • http://commodmarkets.com/ volar

    I guess i look at the WTI differently

    here is WTI- Brent and products- WTI.

    http://content.screencast.com/users/wprosser/folders/Jing/media/d206f26f-c047-4e80-ac2d-447c3bf6b101/2012-06-25_1118.png

    WTI is virtually irreverent when comparted to gasoline. UGA is gaining huge roll yields right now as market is inverted.

    Cash brent, cash retail gasoline

    http://content.screencast.com/users/wprosser/folders/Jing/media/49010e9b-77bf-4966-b3e6-0fc6b8bef127/2012-06-25_1120.png

    Gasoline curve (RBOB)

    http://content.screencast.com/users/wprosser/folders/Jing/media/da463a39-eaa7-4637-9a64-c95a7bdf5e92/2012-06-25_1122.png

    and here is contango of RBOB vs. UGA and RBOB strip

    http://content.screencast.com/users/wprosser/folders/Jing/media/96b96ee0-efb8-4207-acd6-d19ccfbb9610/2012-06-25_1128.png

    Just saying energies not black and white as used to be

  • newbfxtrader

    Welcome back!

  • Joe_Jones

    Same here.

  • Skynard

    Thanks! Back in the saddle.

  • newbfxtrader

    Nice! hope you got some good strong gloves! We are going to need it. Want to try crude longs?

  • Skynard

    Anticipating the Marines showing up at 1430:)

  • newbfxtrader

    Sequential buy on crude on daily. Take a look.

  • Skynard

    Was looking at that last night. You could be right with travel/vacation season upon us. Saved 75 level and may see where it’s at tonight.

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    rick rule is looking for 55.70 target on the 80 breakdown.

    http://www.rickackerman.com/2012/06/price-of-crude-set-to-plunge/

  • Joe_Jones

    If VWAP fails, the EOD should be interesting

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨ 
    ¨°º¤ø„¸  N E W  „ø¤º°¨ 
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • http://evilspeculator.com molecool

    I know where you got that Brent/gasoline chart from 😉

  • http://commodmarkets.com/ volar

     ya i can be lazy at times

  • http://evilspeculator.com molecool

    You are right – BNO seems to be a bit more in line with USO.