Chartomania!

I have been quiet for a few days – for one I was pretty busy and secondly there was simply too much noise coupled with little directional movement. When I find myself in a situation where I sense that the tape is gearing up to fake out both sides I prefer to take a step back, relax, and do nothing. It’s a good way to avoid getting too attached to your own perspective. Just shut your brain off – trust me – thinking about something without having access to sufficient information, or worse – being exposed to conflicting information, just leads to trading disasters. Of course our dark ego begs to differ and prefers to throw you into a mental feedback loop that keeps you guessing (and in most cases losing coin).

If you want to see the forest then take a step back so those damn trees don’t keep blocking the view.

Anyway when I started to poke around I started to pile up quite a collection. So, you better prepare your feeble attention deficit impaired minds – for it is Chartomania time!
[amprotect=nonmember] Charts and 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 subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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Let’s dive right in – here’s the NYSE A/D-D/A chart I have put up on occasion. No GTC fractal right now but that’s not all we use it for. I also look for prior precedence when it comes to assessing how sentiment swings may fit into the larger picture. What I’m seeing here is that the bears have made quite a bit of noise but have not been able to affect the tape much. Plus they are running out of juice.

The daily Zero seems to agree. If we are about to fall into a third wave to the downside then should we not be seeing a divergent signal? All I see is a sideways retracement.

Ole’ bucky snapped back a little – have the Dollar bears been psyched or is this a last kiss goodbye?

Even more long term this support line really must hold or it’s Weimar Republic time. But no matter which way it’ll go I’m sure this will get teased out a bit more. Nevertheless – this is a good spot for taking positions. The prior lows may get stopped out which is why I would put a stop below 76.

This chart is simply mind boggling – I have looked back 20 years and we are at historic lows in the gold:silver ratio. The black line is gold, which in comparison with silver has been unimpressive.

Here is silver on its own – this chart is very deceptive in that the current move thwarts the vehemence of prior short squeezes. I have previously stated that silver loves to squeeze the shorts and even I was not prepared to see it push to 36. However, what comes next is surely not a matter of if but when.

But the when is of course where the rubber hits the road. When I looked at silver against the gold:silver ratio that sudden drop looked very suspicious to me. So at a hunch I marked the re-emergence of Fed sponsored POMO auctions and it suddenly all made sense. Coincidence? I think not! It’s quite simple – and it’s of course what we have suspected all along. Systematic Dollar destruction by the Fed results in market dislocations – meaning equities and commodities are ramping higher. Gasoline in Los Angeles is now officially over $4/gallon – will it go to $5 or even higher? If that support line on the DXY is being taken out – you betcha!

More evidence of just the same. The inverted UUP (i.e. Dollar bulls) is leading equities – and thus far it’s not looking bearish. We usually see a divergence here first, so although I know that the boat is loaded with Dollar bears right now I have my doubts as to whether we see ole’ bucky snap back immediately. Maybe I should sell my car and get myself a Ducati.

I posted this CPCE chart last week – and it’s still clinging to that bounce line. Not looking very bearish to me. After having bubbled up for months, why are we not at 0.5 or lower?

The 20-day SMA version is in a similar spot – and again bodes the question as to why we have been pushing up (and not down) in the past few months. Could we be in side a big retracement that is simply not showing up due to Banana Ben’s printing machines? I just can’t see a monster drop when we are approaching medium term moderate levels.

My NYMO:BPNYA chart (medium term vs. long term momentum, albeit calculated differently) is similarly unimpressed. That buy line has been steadily climbing up and although we do have a little room to drop support should kick in fairly quickly should we actually fall from here.

The 10-day average of all SPX stocks above their 50-day SMA however seems to be falling slightly. Long term this may cause a bit of trouble – but let me show you something…

The percentage of stocks above their 200-day SMA has reached over 90%. And if you consider going short here then bear in mind how long it has taken in the past for a reasonable divergence to unfold before finally triggering a sell off.

So, has this been a narrow push higher led by a few symbols? Not really – the percentage of symbols above their 200-day SMA has been rather supportive. The circles indicate prior readings at identical prices.

Here’s the raw SPXA50 again but with a MACD slapped on it. Again, we are much closer to a bounce line than to a reversal line. Not that it has mattered that much in the past eight months. It’s all about the greenback in the end and as a results retracement are simply a lot more shallow, just like L.A. valley skanks. Bling bling!

Crude also has benefited from the Fed’s systematic Dollar destruction and if this channel line gives for good all hell will break loose in the commodities market. However, if it snaps back it won’t be pretty for anyone long commodities.

More short term here are the net-line buy/sell levels á la Chris Carolan. As you can see the tape has been careful about remaining within its indecision zone, with a slight up trending bias. I will continue to take contrarian trades with a stop triggering an inverse trade at the respective buy/sell zones.

Cheers,

Mole