Long Term Perspectives

How far we have come over the past few years whilst getting absolutely nowhere. I mused just yesterday that it feels like as if we are living in one giant economic, cultural, and social bubble in dire need of a needle. Everywhere I look I see nothing but rapid inflation and boundless exuberance. What once may have been a slow and barely perceivable progression into an utopian brave new world, where nothing matters and everything carries a price tag, has at this point become utterly pervasive and is now rapidly making its way into all aspects of our personal and professional lives. But the most recent and increasingly bothersome symptom of what I deem to be a de facto generational social disease is the firehose coverage of daily drama dished out across various social media watering holes. 

The slow demise of the main stream media over the past decade implicitly resulted in the death of objective and common sense journalism. Taken its place increasingly are corporate clickbait farms which scour the planet for any scandalous or shocking material that can be turned into a juicy headline. The more outrageous the better and it’s not like they are about to let truth and objectivity get in the way of generating a few more percentage points on their traffic stats. Looking at a newspaper or even online post from just a decade ago feels like I have traveled back in time a century or two when substance and objectivity still were at least virtues worthy living up to. I can literally see you smile cynically whilst reading that sentence.

Now the reason why I’m bringing all this up here on a trading blog is because the financial media and its social media pertinent contenders are following in the same footsteps. On Quantopian the other day I looked at some algos that allowed quants to use social media sentiment for their stock rebalancing. The basic idea has merit but a few quick backtests suggested that these signal algos probably need a bit more work. Which casts doubt on whether all that daily drama can even be harnessed to produce a minimal edge. In the meantime the onslaught continues and I can’t pop up my twitter feed without taking a double dose of anti-depressants. At minimum can we at least agree on ditching the frivolous use of upper cases? Just because you’re shouting doesn’t mean your post has any value. If it did I’d obviously be posting in upper case all the time  

I can only guess where this is all heading and don’t want to ruin  your late spring day with pessimistic visions of the future as you’re getting more than enough of that already. But the word unsustainability does seem to be popping in my head on an almost daily basis. Call me a contrarian or just plain old stubborn, but when I see everyone run in the same direction whilst apparently getting poorer and more miserable then I have a tendency to look the other way for an emergency exit.

Alright now on to our regularly scheduled programming, I promised you long term perspectives:

Let’s start with precious metals. I have been patiently following gold’s recent slide with much interest, waiting for the right moment to strike. We’re getting closer but what I need to see is a drop into 1233.6 followed by a convincing long pattern on the short term panels. Long term this chart has to potential paths – and obviously this is not a prediction. The odds support a drive higher and an eventual LT trend change. But if it drops through its recent monthly lows near 1133 then I expect a drop toward the 1k mark.

Silver looking very bullish on a long term basis. Just look at those formations which suggest a LT floor pattern is in the making. However like with gold there is still a very real possibility that it’ll stagger and fall much lower, perhaps even into single digits. The good news – like in gold we should know this summer which way we’re heading.

Crude once again has become suicidal and is now approaching its lower 100-week Bollinger. Which isn’t exactly the old Berlin wall or anything and a cross over is possible. However if it manages to stabilize then we may start looking at short term entry setups. Don’t worry, as always the Mole will be on the case and as soon as something plausible turns up I’ll let you know.

Bonds continue to whipsaw their way higher, somewhat mirroring the monthly panel. The new upside trend is just now starting to gain more credibility and I in particular like the massive cluster of Net-Lines that has been accumulating below. Quite some valuable context and if bonds revert back lower I’d be very much looking for long entry opportunities. But all good things take time, patience is key.

On the forex front the EUR/USD has dropping a tiny bit which helps a little at the ATM. But on the LT front the weekly panel in particular is still looking pretty bullish. That’s quite a Bollinger compression we have here and if it this one resolves higher than it could get expensive for me over here in Europe. In the interim playing the swings seems to be the most productive approach.

The AUD/USD is also pretty coiled up after two years of sideways churn. Although the pattern is supposed to be bearish I have doubts as to whether this one will resolve downwards. We seem to be making higher lows and the 100-week SMA is about to turn up. Worth watching only for now IMO as it’s tough to get involved at this stage. Perhaps on another drop to the green support line. Of course if you’re bearish then now is a great spot to be short.

Speaking of currencies, here’s a juicy potential setup for my intrepid subs:

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