The Yen conveniently turned and burned the day after this post noting that it had declined to a big time support zone. Specifically “The Yen is now at its first major support area. If it finds support here and bounces I wonder if other asset trends would reverse as well.”
Here is the daily view:
Much like a gold mining index we know and
love hate manage risk against, the Yen has positive divergence but has proved nothing yet on this bounce because it resides below the EMAs 10 and 20 and is firmly in a downtrend. Now, trends have to end somewhere; either at zero or at a reversal point. But technically, Johnny Yen may only be doing a strip tease (song ref. folks).
In the balance hang all the other asset market trends as noted.
We all know the story. Bearish at 350, 420, 600 and so on. He was also bearish at 1900. But what I find interesting is that Bob Prechter has also consistently recognized and promoted two seemingly opposed ideas:
- Gold was in an over-loved bull mania
- Gold is real money
A cornerstone of my personal philosophy from day one has been to not worry about the price of gold, because it is not about price. It is about securing off the grid value within a system that has so obviously gone berserk. I see no change what so ever to that view currently.
But I also realize that a lot of gold bugs are (in my opinion) unhealthy players with too-limited, or single-minded viewpoints. Do you think it is bravado or reverse psychology when I write that gold can easily drop 100 or more bucks in a day or ultimately go below 1000? It is not. It is the realization that it is the propped up paper and digital world of highly gamed finance that is in motion, not gold. In that context, the value assigned to it can also rise to heights unimagined by today’s frightened players. So what? Gold just sits there. The system is in motion.
All of this said, you can get a free report on Prechter’s 5 arguments that refute the heretofore bullish case on gold’s price. The report is excerpted from the April Elliott Wave Theorist, to which you may recall, I subscribe. Here are the talking points:
1) Central Bank Buying
2) Fed Inflating
3) The “Crisis Hedge” Argument
4) The “Gold is Cheap” Argument
5) The Conviction that Post-Peak Lows were Support
For me, EWT is now much more about the stock market and the macro global economy in general within the context of rising deflationary pressures. But this report might be a bit of an intro for anyone interested. As usual, I’ll note that I am promoting the EWI service with this post. But it is a service to which I subscribe as part of a well-balanced market intelligence platform. I also subscribe to other services like Bespoke and McClellan for their unique perspectives on areas that are not within my core focus analytically.
So click the link above or not. It’s free with no strings, but – cue to jeers and mocking – I do now and always have valued Prechter since first reading 2002′s Conquer the Crash. But I think for myself at all times, no matter what other analytical sources I take in. I recommend Prechter wholeheartedly, especially now given my current view on the stock market.
SPX 60 minute chart is wedging up to 1660/1665 area resistance. RSI resistance is above around 50.
And the advancers vs. decliners does not seem inspiring.
If it gets above 1665 I’ll have to reevaluate.
You might say change is at hand. The Dear (Monetary) Leader spoke from on high yesterday and apparently something he uttered in response to a question served as a trigger to what needed to be; some bearish signs in alignment with a deplorably over bullish sentiment profile. The one that is an exact mirror opposite of 1 year ago when a bullish kickoff ensued.
One road map is silver, as we reviewed the other day via Eric Swarts’ blog post.
Now the stock market is not silver; but then, what is? Maybe crude oil circa 2007? Yet the SPX has obviously been the bubble bid recipient this time around. Yesterday’s reversal was the first crack and it will be interesting to see how this unfolds going forward.
We are in the time window for a turn. The only thing I’ll consider holding is [quality] precious metals stocks (bought off the big reversal on Monday) and even there, I am nowhere near ready to call them anything more than a trade just yet.
Beyond a potentially strong correction, the question of the cyclical bull market’s termination should be left for later because even an interim style correction should clean out the pipes of this over loved pig. There is a valid time window to next March in which the bull could extend pending the nature of a much needed correction around now.