Housing Index - technically ready for consolidation

Below housing index reached the 50% retracement of its last major drop...might be a good time for a consolidation. stocks are usually highly correlated...

Cocoa - bearish in the medium term

despite the recent drop i'm still expecting lower prices of at least around 27 in the medium term...

Gold and Silver

Technically Gold and Gold miners are ready to zoom up again; Silver has still a little step to go downwards. Additionally higher volume often indicates reversal points. Let's see...

JPY - still very bullish

I was a bit too early with my call last time on JPY. Now the technical setups improved a lot and my opinion is still the same. JPY should be ready for a major bounce to the upside soon. Most of the major JPY currency charts look like the one below. I actually expect NZD/JPY to cut through the lower light blue trend line in the medium term. NZD/JPY used to be highly correlated with equities. We might enter a risk-off phase soon again?!

AAPL - ready for a bounce

I guess the markets and apple are ready for a bounce. Hope to see at least 580...

Coffee - ready for reversal

Coffee looks pretty bullish to me now (daily and weekly chart)!

Further softs:
Sugar: looks pretty bullish too
Cotton: more bullish
Orange juice: not there yet, expecting at least USD 80
Cocoa: more bearish
Lumber: bearish

SP500 vs AUDJPY

SP500 finally caught up with AUDJPY again. I'm still pretty bullish on JPY. Let's see if SP follows (down)...

JPY - go long...BIG!

JPY charts look very bullish to me in the mid term

VIX Nov future in backwardation

Rare picture here: November Future is cheaper than the underlying!! Contrarians might love this picture as it shows that the market expects less volatility in the near future, i.e. people expect rising markets. I still stick to my November Long position for now.

UUP - USD stuck in tight channel

If I had to bet on one direction I'd go for the upside. This would put more pressure on stocks. Won't take much longer until we know...

EURUSD - expect further EUR correction

based on the technical picture i hope to see a further decrease of the EUR below the lower orange line. a reasonable target might be the 38% retracement at about 1.275. The yellow line in the top right corner is the target in the medium term. In the short term I see EUR a bit weaker and in particular JPY stronger. EURJPY should be a good short...

Coffee - should bottom out soon

A soft I'm pretty bullish on is coffee. sentiment is down and technically it looks good for a reversal. I'd like to see another little spike to the downside though first...

USDHKD - almost risk free trade?

The HKD is a controlled currency. Since May 2005 it's trading in between 7.75 and 7.85 HKD per USD. Right now it's traded at the lower threshold. If you believe in a stronger USD in the near future go long. Technically there is no reason for the rate not to go higher...

Housing Sector - possible correction

The housing sector is up by more than 100% from its lows in 2011. The housing index is highly correlated with the stock markets. We might see another spike to the upside. But below graph shows definitely the possibility of a bigger correction...

EURUSD, EURGBP, EURJPY - EUR ready for correction

In my opinion the EUR is ready for a slight correction. EURUSD and EURGBP look similar to the chart below. We might see EURJPY soon at around 101...

SP500 - short to medium term expectations

In the short term there's still some potential to go to the upside. the upper purple line needs to be broken to complete the pattern. However, short to medium term (pretty likely not to happen before the US elections) I expect the S&P to go down to the lower red line...

Miners vs Gold II

As long as we're closing (1st chart weekly, 2nd chart daily) above those two MAs I'm still supporting the outperformance of the miners compared to gold. Those two averages used to be a reliable support or resistance in the recent downtrend.

Miners vs Gold

If you're bullish on gold you should be very bullish on miners. I expect the outperformance we saw the last couple of months to be just the beginning of a longer lasting one. The crossing of and the weekly close above the 50d MA, the high volume we saw recently and the higher low and higher high pattern are VERY bullish signs for the longer term...

SPY vs IYT: Bet on Dow Theory

If the Dow Theory works my spread trade might end up with a gain. Right now IYT is trading on the three years low relative to the SPY...

SPY vs IYT - worth a spread postion

The big divergence lately might be worth a spread position: Long IYT, Short SPY

EURGBP - long term bearish for GBP

Now since Europe (EUR countries) pushed through some crucial reforms I'm sure the hot spots will be somewhere else in the next years to come. For the GBP (see 3D chart below) for instance I'm very bearish. We might see a another pullback however for the EUR first before we go higher. I'll wait a bit longer for a good entry point...

EURUSD - mid term expectations

Since May 11 the EUR is in a downtrend (red falling band). Rather sooner than later I expect the EUR to leave this trend resulting in a cross of the upper red and upper light blue falling trend lines from the downside. In the shorter term however I'd bet on a falling EUR leaving the short term dark blue upward trend to the downside.
This means that for now I'm bearish on equities in the shorter term but bullish in the medium term. Also once the USD is weakening we should see rising prices for precious metals like gold and silver. Let's see how that works out...

GLD vs SLV - silver to outperform gold?

Was today's move with slv being up 2.6% and gold being up only 0.3% only the beginning of a longer lasting outperformance? Technically it's all set up for such a performance...

USD - signs of upcoming recovery

There are more charts like the 4H USDCAD chart below (such as AUDUSD, NZDUSD, USDSGD) indicating a stronger USD in the near future...

DAX - negative divergence

At the current EUR levels I'm a big fan of the German indices - in particular with the second league index MDAX as you find many market leaders of niche products in here!! But I wouldn't be surprised if we soon see lower levels. For the SP500 I'm still bearish in the short term...

China - first signs of a reversal

The positive divergence with the RSI are first signs of a reversal of the downtrend...

TLT - are we there yet?

More and more signs that TLT is topping (see weekly chart below, negative divergence, decreasing volume). However, I think we are still not there yet.

SP500 - short term update

in the very short term we might see higher prices but I'm sure that the SP500 is trading at around 1330 soon...

SLV - bullish view

I already bought SLV a few weeks ago and increased my position today. There might be another short drop coming soon but fundamentals and the positive divergence (price - RSI) in the chart confirmed my bullish outlook.

EURUSD - quick update

Closed out my small short position in the EURUSD as we see positive divergence in both the hourly and in the daily chart. Wouldn't be surprised by if we see a correction to the upside before EUR turns down again. However, no reason to go long...there is still some crash potential in the EUR.

Europe - who works hardest?

The result of a recent survey. The Euro crisis definitely leaves its mark. Still some funny surprises :)

SP500 - short term bearish

Took a short today...expecting 1320ish soon.

Housing - stunning performance

The housing market was probably one of the best performing sectors within the last year (see weekly chart below). Since its 2011 lows it shows a stunning 70% increase. If house prices do well stocks usually follow. Whereas there is potentially still a lot of room to the upside I see this index coming down sooner or later again. The following months and years will tell the truth.

Regarding SP500 - short term bearish. I expect a retest of the 1320 levels.

Crude Oil vs Natural Gas

Since the April highs oil prices dropped by about 30%; Henry Hub natural gas prices on the other side gained more than 30%. There's not much correlation between those two energy products left lately.

It's getting interesting if we compare the pure prices by energy units measured in joule:

1 Barrel Brent Oil          -> around 5.86 Gigajoule    -> USD 93    -> 15.87 USD/Gigajoule
1 MMBTU Henry Hub  -> around 1.055 Gigajoule  -> USD 2.75 -> 2.61 USD/Gigajoule


That means Oil is more than 6 (!!!) times more expensive than Natural Gas in terms of energy. Sure, oil will always be more expensive than natural gas but in the long term I'd expect this huge gap to decrease.

SP500 - short term bearish

In the short term I see more downside risk. 1320ish would be my first target...Off for a nice Germany trip now - stay tuned! :)

Additionally, a lot of patterns are completed or close to completion like in the VIX chart and especially in the FX market. I wouldn't be surprised if the USD is slowly picking up speed again...although it is a crappy currency as well, no doubt.

USD Index vs EUR/USD

a few thoughts on the USD index. According to wiki the current setup of the USD index looks as follows:
It is a weighted geometric mean of the dollar's value compared only with
- Euro (EUR), 57.6% weight
- Japanese yen (JPY) 13.6% weight
-  Pound sterling (GBP), 11.9% weight
-  Canadian dollar (CAD), 9.1% weight
-  Swedish krona (SEK), 4.2% weight and
-  Swiss franc (CHF) 3.6% weight


CHF is basically tied to the EUR and GBP is highly correlated to the EUR. That means that more than 70% of the index is driven by highly Euro crisis related currencies. That's why the index is an almost perfect mirror of the EUR/USD exchange rate. 

Right now it's kind of tough to predict any targets for the EUR/USD based on a technical setup. But for the USD index my next target is still around 87. That's a 5% increase. Assuming that this move is only triggered by the 70% Euro crisis related currencies this results in about a 7% decrease of these currencies compared to the USD. Based on a current 1.25 EUR/USD exchange rate this means the EUR/USD would soon trade at around 1.16.
That wouldn't be good for stock markets...however, in the long run good for Europe...

The future of our paper money - one version of it...

An interesting article: The fiasco of fiat money - http://mises.org/daily/6065/The-Fiasco-of-Fiat-Money

Gold - several reasons to stick to it

There are several reasons why I stick to my gold related long positions...for now:
- sentiment was VERY bearish lately
- gold usually bottoms before bonds peak (i expect bonds to peak soon if they haven't yet)
- the last two candles in the monthly XAU chart look really bullish to me. Let's see how the June candle ends...
- fundamental reasons: QE3 might be on the way, central banks might keep on buying, gold might be considered as one of the safer investments soon (next to USD and treasuries or particularly once USD and treasuries peak or once aforementioned are not considered safe any more)

USDJPY - reaching interesting levels again

JPY is one of the very few currencies which clearly outperformed the USD in the past 5 months. Additionally it slowly reaches a big support level (see weekly chart below) where we've seen the latest Japanese central bank intervention (76.3ish). Will it happen again?

It might offer a good long opportunity soon. However, get out if the support level breaks.

USD and Gold both up - is it gonna happen again?

Gold nominated in USD is usually highly negatively correlated to the USD (obviously 100% negatively correlated assuming that either only USD or only gold is changing). However, in times of big concerns this correlation turns positive, as both currencies are considered 'safe' investments. These times were last seen in Feb/Mar 2009 (financial crisis) and as shown below in the beginning of 2010 when the Euro crisis began. In the past 2.5 weeks we saw a similar picture. Is it gonna go on like this?
An important factor definitely will be the decision on QE3 as it would put pressure on the USD (if it comes) which would further support gold going up...

Europe - Inflation over Austerity

If Europe decides to keep Greece, Spain, Portugal,... in the Euro zone there's probably only one way left: http://finance.fortune.cnn.com/2012/05/30/europe-inflation-austerity/?iid=HP_LN

And the winner should be: the German DAX

SP500 - short term update

I actually got rid of all of my shorts except for ORCL. However, in the short term I see more downside potential for the SP500. A turning point might be the 38% retracement at 1340ish. The markets will definitely have an eye on the US figures published on Thursday and Friday (GDP and unemployment rate)...

Gold vs. Miners

Particularly in the last three months gold outperformed its miners. However, in the mid term I'm pretty bullish for the gold miners. In the short term we might see some weakness, but not necessarily...

Bonds - increasing likelihood of lower prices

Chances of lower Bond prices are not too bad. Although the purple slightly falling wedge is usually more a sign of a temporary consolidation I took a long position in TBT yesterday. That's more a mid and long term position.

Gold - started to buy (long term)

I've started to build up positions in gold last week, since I'm VERY bullish in the mid and long term (not due to technical but more due to fundamental reasons). However, from a technical point of view I'd like to see prices of at least 1500 first. Based on the most important retracements traders usually use we might even go a bit lower to around 1430ish (38%) and 1300 (50%, wouldn't expect that to happen). Will buy more at these levels.

Let's have a quick look at the past developments timing-wise. We had 3 years of a bull market followed by a 1 year consolidation. Afterwards we saw the same picture again. I wouldn't be surprised if the consolidation is soon over and history repeats itself again...

SP500 - still bullish in the mid and long term

As can be seen in the long term Russel 2000 chart below (1. chart, monthly chart) we haven't seen lower lows since the latest bull market started in 2009. Since the correction ended above the previous low we might directly go over into a new bull market (although we haven't seen new highs as opposed to the SP500). I cannot see a scenario going below the 2011 lows in the near future.

This theory is strongly supported by a big support area between the current level and the 2011 lows indicated by the huge volume (2. chart, monthly chart, volume at price) in the long term SP500 chart.