Tuesday, August 26, 2014

Gold and Oil on the Verge of Something Big

Everyone has been calling for a bottoming Gold the last year. But the fact is that gold and gold stocks are still clearly in a bear market. Just look at the 200 day moving averages. The previous trends were down and prices have been moving sideways for the past year.
A lot of newsletter and analysts are calling a bottom. Technically it's just a consolidation pattern. Consolidation patterns are a continuation pattern, meaning if the previous trend was down, which it was from 2011 till now, the odds favor price will continue lower after this consolidation.
If this consolidation does happen to be the bottom then we can classify it as a stage I base. Gold and gold stocks will start a new bull market, but price needs to break to the upside of this consolidation pattern. Until it breaks to the upside, it is still in a down trend.
Gold topped out over three years ago. And I am in no rush to try to pick a bottom and be a hero here. I'm just going to continue waiting on the sidelines until price confirms either a new bull market has started or for price to breakdown and we get another leg lower.
Oil Outlook
Taking a look at the big picture of crude oil the chart looks bearish. It too has been trading in a range since 2011 and the price is nearing the apex of a consolidation pattern.
It's important to know that a pennant formation which is what crude oil has formed are the most predictable when price breaks out of the pattern within the first 1/3rd of the formation.
The longer price consolidates and gets squeezed into the narrowing apex of the pennant pattern, the more unreliable. The trend breakout will be, and it becomes at best a 50/50 bet.
Crude oil's previous trend was up, but it's been consolidating for such a long time that price is now squeezed into the apex. This negates that bias for the previous trend to hold true so we have no idea which why it will breakout but when it does expect an explosive move.
A breakdown in crude oil will send price to the $70 or $75 per barrel range, and that will hammer on the Canadian dollar also. I can see $1 USD being equivalent to $1.20 Canadian in a year.
My Gold and Oil Conclusion
Looking at the US dollar, it has been rising partly due to the euro falling. This strong dollar will put a downward pressure on commodities overall.
Gold and oil have not been that exciting for investors since 2011 when they topped out, but both are setting up for massive moves that should last month, if not year or more. Once these new trends emerge expect to see them in the headline news every hour.
It does not matter which way these commodities breakout of the consolidation patterns. With the dollar continuing to rise and the bearish chart patterns for both gold and oil there is a good chance much lower prices are ahead.
This will catch most investor's off guard. It's human nature to try to predict tops and bottoms in the market. But this is why most investors get caught on the wrong side of the market. The market always has a way of catching the majority of people on the wrong side of a position.
I am happily sitting in cash with some of my investment capital waiting for gold and oil to breakout of these large patterns. I would not be surprised if we see $900 gold, gold stocks like the gold bugs index $HUI to be at $150, and $70 per barrel for crude oil. I am not saying this is what I want, but you should be mentally prepared so you can get back into cash position and so you can take advantage of falling prices with me.
Big money will be made on the next price movements in these commodities. Whether we have to go long the market or short sell the market. Either way, we can make money. So don't be a hero and try to pick a top or bottom, just wait for confirmed breakout then invest with the trend.
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Embry – We Are Headed For A Financial System Apocalypse


kingworldnews.com / August 25, 2014
Today a man who has been involved in the financial markets for 50 years warned King World News that the world is now headed for a financial system Apocalypse.  John Embry, who is business partners with billionaire Eric Sprott, also included an ominous quote in his fascinating interview below.
Embry:  “We just hit a new high on the S&P today. I can’t say I’m surprised because there’s been so much intervention in these markets as they attempt to maintain confidence in the system.  All the economic releases in the United States are being falsified….
Continue reading the John Embry interview below…
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Chart of the Day - Apple (AAPL)

The Chart of the Day belongs to Apple (AAPL).  I found the stock by looking at the All Time High list and then used the Flipchart function to review the charts,  Since it signaled a buy on 8/13 the stock gained 4.42%,

Apple Inc. is engaged in designing, manufacturing and marketing mobile communication and media devices, personal computers, and portable digital music players. The Company's products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and Mac OS X operating systems, iCloud, and a range of accessory, service and support offerings. It sells its products worldwide through its online stores, its retail stores, its direct sales force, third-party wholesalers, and resellers.

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July New Home Sales Tank

by David Kranzler
Investment Research Dynamics


July is typically the 2nd or 3rd best month of the year for home sales. This should especially be true this year given that mortgage rates are at their lowest in almost a year and the banks are relaxing credit standards. But today’s new home sales report showed the lowest monthly rate of sales since March and it was well below the sales rates reported during the so-called “polar vortex” months.
I have presented a detailed analysis of new home sales which you can read here: July New Home Sales
Continue Reading at InvestmentResearchDynamics.com…
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S&P Makes History On Lowest Volume Of The Year


zerohedge.com / by Tyler Durden on 08/25/2014 16:05
As we noted early on, by the time the cash markets opened this morning, the narrative of compliant Kuroda and drug-peddling Draghi had been painted as worth more than a yellowing Yellen’s hawkish comments. And so it was that stocks, despite weak macro data this morning in the US - bad news is great news – surged as cash markets opened and tagged S&P 2,000 for the first time ever. However, once Europe closed, that exuberance faded in stocks. Treasuries rallied (30Y closed -2bps) with the front-end weakening very modestly. USD strength (on notable EUR weakness) sent oil and precious metals modestly lower on the day but Copper had a good day (+0.6%). Today was the lowest S&P futures (non-holiday) trading of the year as the Nasdaq rose for the 9th day in a row.
So to summarize – Bonds Up, Stocks Up, USD Up… But VIX Up, Oil Down
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Short Callaway Golf Co (NYSE: ELY)

Callaway Golf Company, together with its subsidiaries, designs, manufactures, and sells golf clubs and balls. It offers drivers, fairway woods, hybrids, irons, wedges, and putters. The company also designs and sells golf accessories, such as golf apparel and footwear, golf bags, golf gloves, headwear, towels, umbrellas, eyewear, and travel gear under the Callaway Golf, Odyssey, and Strata brand names. In addition, it licenses its trademarks and service marks for use on golf related accessories, including golf apparel and footwear, prescription eyewear, golf gloves, umbrellas, and practice aids. The company sells its products directly to golf retailers, sporting goods retailers, and mass merchants; and to third-party distributors in the United States, as well as in approximately 100 countries worldwide.
Take a look at the 1-year chart of Callaway (NYSE: ELY) below with my added notations:
1-year chart of Callaway (NYSE: ELY)
Over the last 10 months ELY has created a key level of support at $7.50 (blue) and that $7.50 level is also the “neckline” support for the stock’s head and shoulders (H&S) reversal pattern. Above the neckline you will notice the H&S pattern itself (gray).
Remember, patterns such as an H&S need to confirm to have the meaning that they imply. Confirmation of the H&S occurred when ELY broke below its $7.50 support.

The Tale of the Tape: ELY has confirmed a head & shoulders pattern. A short trade could be entered anywhere near $7.50 with a stop placed above that level. A break back above $7.50 could negate the forecast for a move lower, thus a long position could be entered instead.
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