Happy 4th of July

Hope everyone has a Happy 4th of July this weekend. My only request for the holidays is in regards to the Barbecue. If you see someone attemping to BBQ meat, and they smash the meat with the Spatula, please relieve them of their duties. Nothing ruins a summer event like a BBQ MEAT SMASHER!! zomg=fail@life



Today pretty much eliminated most Bullish opportunities for the rest of the year. The trend is almost certainly down at this point. Over the course of the next week, I expect a 5-wave pattern to become evident and should wash up around the S&P 1000 mark. I wont be able to post any charts until next Wednesday.



Another HUGE signal is moving averages. A significant amount of traders use moving averages to decide if we are in a Bear or a Bull market. Most denote a Bull market when the 50 day moving average crosses over the 200 day moving average. The cross is called the "Golden Cross." Likewise, if the 50 day moving average crosses under the 200 day moving average, the market is considered a Bear. The "Death Cross." Its just math.


Then we got the "Old School" technical analysis with a Head and Shoulders pattern. Top of the head to the neckline gives the target. In this case we are looking at sub 900 soon.

Gold toast - Market Toast???

Tonight it is pointing to yes. We will see tomorrow morning if the selling in Gold and the futures stick. The move in the Euro tonight tells me it just might.

Here is my Gold chart. I counted the move as being completed this morning, with confirmation selling through the 2-4 trendline. Another deep leg down should ocurr overnight or tomorrow morning.


And below is my S&P count. I believe we completed wave-2 up near the end of the day. My next target is about 80 points under where we are, with support being at 1000. If tomorrow opens deep red, we could get there even quicker than I expect.

Gold? Lol

Didn't your mother ever tell you that you shouldn't be doing what everyone else is doing? I did. While being a sheep in the herd can be quite comfortable, it can have some very negative effects. Not studying, partying in High School, buying stocks on leverage in the tech boom, reality TV, media driven politics, adjustable rate no down liar loans, buying into the "we are running out of oil and I need a new car now", global warming, believing banks are solvent, believing in bailouts, believing the economy is in good shape, and GOLD!!!

While going with the herd can be ok sometimes, it is best done while using your very own scrutiny and judgement. While partaking in a Bubble one doesn't have enough reference to recognize they are in it. The Tech Bubble, Real Estate Bubble, Commodity Bubble, and Gold Bubble are paradigms near impossible to recognize and it takes great confidence to stand tall.

That being said, I believe I am one of a few in the Deflation camp. Most people are under the belief that the USD will continue to fall. I believe it will strengthen, especially if the Fed ever does what is right and starts increasing interest rates. A strengthening dollar means one thing, destruction of asset prices through deflation and credit deleveraging. Commodities, stocks, and asset prices will decrease and there will be no winners. The USD will become the only true safe haven.

That being said, I believe Gold is approaching a possible tipping point. It is very difficult to call because there are countries literly falling apart. As their currency takes a nose dive, gold may still appear "safe."

Here is a three year gold chart:

The one year:

180 days with 4 hours:

180 days 1 hour:

The pattern is called a wedge. It is composed of 5-waves, all non impulsive. I believe $1266 may be the Gold high of this year. If the move is complete we should see a prolific breakdown shortly. A crash in Gold would also crash the stock market and all commodities.

As for stocks, my count is below. I believe Monday was the confirmation I needed to signify that the ten day move was over. I believe tomorrow we hit 1083 in the morning ending wave-1 down and head up for one or two days. The next leg down should help determine how deep this correction is really going to get. I still have all four longer term charts valid and in need of confirmation.

A Day of Weakness

Today can be called a "Gap and Crap" day. The market gaps up in the morning, it fills the gap, and closes below the previous day's close. This action is considered extremely Bearish.

I'll post my favorite count as of today's close. This is the combination pattern I have expected. It has just burned more time than I was projecting. Very few bulls have shown up in this sideways pattern. Any move over 1135 and I am wrong. The last little section of "E" tomorrow is hard to determine. I know anything below 1105 is a hard sell. We could easily fail over night, at the open, midday, or even at the close.

The count matches my expectations and my favorite indicators.

The S&P futures are currently having a near impossible time taking back their 1.5 year trendline. aka Big Red

The 800 pound Gorilla in the room is the FX market. Aka Fiat Currency trading. The swings in the world's currencies right now are astronomical. This last weekends news included China unpegging their Yaun to the US Dollar, short covering on the Euro at an all time high, and the Swiss deciding that it was no longer going to peg the Franc to the Euro. (Basically the swiss have been trying to back stop the Euro and just took on the biggest FX loss in history) Just remember that the rise in the stock market and commodities the last year are mostly due to inflation hedging, aka falling US Dollar.

I borrowed a graph from http://www.zerohedge.com/ This graph is the weekly change in Currency Contracts. This shows an uprecendented number of short coverings last week on the Euro. Basically the Euro put in new lows, Goldman Sachs put a 1.13 target on the EUR/USD, and short covering came in and lifted it to ~1.25 in just under a week. Quite an impressive short squeeze.

To me this looks very familar to an engineering phenomena called "Underdamped Harmonic Oscillations." Aka each cycle adds more energy to the system than the last cycle. I think you are most likely to notice this phenomena with wind, and associated with earthquake periods of building swaying. Below is a simple equation showing how it looks.

Most are more familiar with the end result...........................

One thing is certain, as you increase the energy into this system, the greater chance it has in breaking. I don't know how many oscillations the EUR/USD currency pair can handle, I have no clue of the final price locations, and I have no clue in the final direction. What I do know is that this is not a healthy pattern in nature and it can't be maintained. Every swing must add considerable energy. In this case, more money must be added on each swing to produce stability/equilibrium.

Attached you will find this similar pattern I found in early 2009 in the S&P. I recognized it immediately. I also added some fibonacci numbers. These showed how beautifuly elegant the market was moving. Most people wouldnt believe that we are pre-disposed to react predictably. Most people would not believe we are subject to such primal fear and greed cycles.

I must admit, I had a pre-concieved notion in what the effects were of undamped harmonic oscillation. While my principles were correct, my direction was wrong. ;)

No Confirmation Yet!!!

No Confirmation of the breakdown yet, but getting very close. The attached chart is my preferred count. This count is very much similar to the double combination and triangle termination pattern that I pointed out on the larger scale. (near the top around 40 days ago). Fractally it should behave very much the same.



All my technical indicators are rolling over here. Aka stochastics, hanging man candle, 50 day moving average is flat, etc etc. On the chart, the gold dashed line is my prediction of the next 3 days, should the pattern be confirmed. Once again, for the market to confirm this pattern, tomorrows open MUST be red. The question mark marks the juncture/decision point.



When analyzing the S&P futures for the last 37 trading days, it quickly becomes apparent how controlled the moves are within a channel. Usually when a channel bottom or top is thrown over, it suggests a trend change. And let me point out, that the final move is not always in the direction that it broke out in.

And below, I would like to point out the relevance of the red trendline we currently sit right under. It is a major support/resistance line stretching over last two years. The solid red trendlines depict the channel boundaries. Notice how it took many tries to get over this line? Notice how it took many tries to get back under it? Consider this line the rate of change in which people are fearful or would like to sell.

The lines, in between the two major red ones, each represent a Fibonacci retracement levels. It is my belief that Fibonacci retracement levels run perfectly horizontal when moving with the Primary Trend. It is my belief that Fibonacci retracement levels run at angles when moving against the Primary Trend.

Example is: These Fibonacci retracement levels appear to be working at this angle for the last 1.5 years. It is my belief that since this is an angled movement and the direction has been up, that the upwards movement has actually been running against the Primary Trend. If my theory holds, the Primary Trend is still a Bear. I definitely have more reasearch to do on this theory.

Wednesday June 16th, 2010

My calls/charts from the weekend were pretty spot on that we would rise most of the week on weak volume. We closed two days, barely above the 200 day moving average. This would normally be very Bullish, but I am feeling we did it on considerable weakness. We did it on very light volume and it just might be the final Bull trap.

I am hesitant to post tonight that we finished the seven day Bull move at the close of today's market because one last piece of verification is needed. A violent move downwards at tomorrow's open is needed to confirm. The extent of the move down will help further establish where we are.

The selling volume, the price movement, and the breadth of the market will determine if this is the move to 1040, or if we will experience more correction upwards on very light volume. If 1040 is broken next week, I dont have support until 900, which means it could get there in a hurry.





The Euro is still coordinating very nicely with our S&P futures. Tonight the Euro is looking rather weak. I am not too sure of "who" could ramp the Euro tonight, but I could wake up to once again see a strong Euro.

TA for Monday June 14th, 2010

To start off, I will keep my analysis very simple. The three things to watch next week are as follows:

S&P under 1040 = lights out
DOW under 9750 = lights out
50 day moving average crossing under the 200 day moving average = lights out
Euro making new lows = lights out







To complicate things, Elliott Wave theory suggests we are NOT impulsing up, which leads one to believe that large bullish moves upwards are most likely not in the cards. After retesting the lows at 1040 the volume just didnt pour in as one would expect for a bullish move. While prices can continue up, the signs of strength havent revealed themselves yet.

My counts suggest that getting short and staying short will be very difficult. The counts suggest this could really rip downwards at anytime, but my experience tells me that it will take longer than I am willing to wait. The only certainty at this point is the breach of 1040.

81 Failed Banks in 2010

We have a winner! That makes 81 failed banks this year. Everytime I see a Washington bank, it hits a little closer to home.

http://www.fdic.gov/news/news/press/2010/pr10133.html

Washington First International Bank, Seattle, Washington, was closed today by the Washington Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with East West Bank, Pasadena, California, to assume all of the deposits of Washington First International Bank.

As of March 31, 2010, Washington First International Bank had approximately $520.9 million in total assets and $441.4 million in total deposits. East West Bank will pay the FDIC a premium of 0.5 percent to assume all of the deposits of Washington First International Bank. In addition to assuming all of the deposits of the failed bank, East West Bank agreed to purchase approximately $501.0 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and East West Bank entered into a loss-share transaction on $418.8 million of Washington First International Bank's assets. East West Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit: http://www.fdic.gov/bank/individual/failed/

Technical Analysis for 6/8/2010

It is my belief that our Economy runs on 40 year cycles. These are feast/famine cycles that are mostly associated with birth rates. The largest population to watch is the Baby Boomer population. Their actions should have drastic effects on our economy as they go into retirement. Ignoring their actions could lead to drastic investment short falls.



With this in mind, I have spent a lot of time looking for the generational stock market crash of epic proportion. Aka the lock limit down day where trading is actually halted. Our current financial situation is very much similar to The Great Depression. Most people fail to realize that the stock market halved itself 3 times from 1929 to mid 1932. The largest difference between our recent Bear rally is that the Bear rally in 1930 only lasted 6 months. Currently the Bear market rally is around ~14 months, or longer if we are not done. Keep in mind, in 1930 there was hope that the economy was recovering. Politicians and business men alike praised that all was well. The true problems really started surfacing in October 1930. While there are currently signs that things are "ok," our insolvent banks show that they are very much not ok.



I still have four longer term counts that are still applicable. My preferences are the two more bearish scenarios. I am 100% short from 20 minutes before the market close on 5/28/2010.










We are in very critical waters while we remain under the 200 day moving average as per this chart:



And finally, and most importantly, is the 800 pound gorilla in the room. Aka the US Dollar. A stronger dollar means a flight out of Stocks and Commodities. My target on the EUR/USD is down $0.03 by morning, which could equal nastiness for tomorrows open.

September 25, 2008

This marks the date in which I started becoming vocal about the economy to my family and friends. No one likes the gloom and doom outlook. People look at you like you are crazy when you go against the grain. For me, it just made me focus that much more to make sure I was right.



From: blindskov@hotmail.com

Subject: Largest Bank Failure in U.S. history
Date: Thu, 25 Sep 2008 21:45:32 -0700

Wamu fails!!!

http://www.msnbc.msn.com/id/26893612

For the last year I have tried to avoid talking about the "gloom and doom" events because people just don't like to hear it. Plus it makes one sound like a nut job.

I pulled out all my cash from WAMU about 3 months ago. I am quite glad I did. Now I don't have to sweat the FDIC having enough cash to cover the debt. My sister was also able to pull a large chunk of her savings out. Unfortunately for the last two weeks, they have only been allowing $5,000 a day. I convinced my mother and father to pull out there 401k. Unfortunately it took me from August 2007 to March 2008 for them to realize the seriousness of the "writing on the wall." I calculate I saved them from 25% to 30% in their retirement.


I wrote the below e-mail on August 17th, 2007 predicting these type of events. It took 13 whole months for the events to come into fruition. Unfortunately I believe the economy will decline at a similar rate for the NEXT 13 months.

As a conservative, I hate to say this: "If you are not upset with your government, you are not paying attention." Your government continues to dump your tax dollars into failing private banks. A large sum has already been dumped without acts of Congress. As a taxpayer you should be furious. If you do not own a home, you should be twice as furious because inflation is devaluing the dollar to offset the large "price" increases in home equities.

This is the worst financial situation I have seen in the short 31 years of my life. I can just imagine my grandfather rolling in his grave, having seen this story all pan out before. He would be FURIOUS! At this juncture all I can say is protect your family, protect your assets, and God Bless all of you.

Bob Lindskov

August 17th, 2007

This marks the date when I first really started noticing the financial crisis cloud on the horizon.

I had been priced out of the housing market for a very long time, and seeing it go parabolic was just insult to injury. I remember driving down the street and seeing everyone driving Hummers and Escalades, pulling boats with decked out ski racks. And I specifically remember my co-worker telling me, "You should buy a home, real estate never loses value."

An e-mail from August 17th, 2007. While I discussed these issues extensively on www.tickerforum.org with others, this e-mail is one of my best records of my predictions. The rest became history.

From: "Bob Lindskov"

Subject: Re: MARKET = BEAR
Date: Fri, 17 Aug 2007 19:27:53 -0700
>I'm going to step out on a very far limb. I am looking at the DJIA
>charts right now for the year. In Edwards and Magee's Technical
>Analysis of stock trends I found quite an odd similarity to our Dow
>Jones on page 70. It is a graph of Union Carbide & Carbon in the
>UK. The graph is identical to what I see today. Union Carbide puts
>in what is called a Head and shoulders consolidation/reversal
>pattern. Oddly it finishes its pattern in October 1929.
>
>Dear God, please pray that I am wrong. Anti bank sentiment and
>distrust is increasing. Today people flooded Country Wide financial
>from their websites, phones, and in person. A significant amount of
>people started pulling their money out in fears that CFC was going
>Bankrupt. The quality of life just "feels" to good to me right now
>in Washington. Too many people are too well off. Its almost like
>we are living in the roaring 20's right now. I've lived my whole
>life trusting banks completely, but something feels amiss.
>
>Crashes occurred in 1987 and 1929. These were stemmed from distrust
>in the banking system. Everyone dove into banks to get their cash,
>but there wasn't the liquidity to even provide its customers with
>their cash requests. Wammo.
>
>I know a crash would be a 1,000,000 : 1, but for the first time in
>my life, I now feel like that outcome is actually a possibility.
>
>

Intro

I thought I would dabble in creating a blog. I thought it might be fun to share my technical analysis with others. Most importantly, I wanted to add accountability to my technical analysis and trading. By doing so, it forces me to work harder in fear of public humiliation. A tree that falls in an empty forest makes no noise. ;)