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Monthly Archives: May 2016
Market wrap: Is the daily cycle low complete?
I think there is a good chance yesterday’s FOMC minutes were the trigger for the stock market’s daily cycle to bottom.
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CHART OF THE DAY – DUST
DUST – Gold Miners Index BEAR 3X Shares
Over the next 4-6 weeks we’re about to see just how idiotic this theory about gold avoiding an ICL (Intermediate Cycle Low) will turn out to be.
This always happens at major tops and bottoms. People become stupid and all common sense goes out the window.
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CHART OF THE DAY – $COMPQ
$COMPQ – Nasdaq Composite Index
The Nasdaq is not topping. It’s forming a huge bull flag (or cup with handle) that will ultimately breakout of this 16 year consolidation.
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SENTIMENT IN OIL IS STILL TOO BEARISH
Even after an 85% rally, sentiment in oil is only at 37% bulls. Everyone is stuck in the so called “fundamentals” and they still can’t see that the fundamentals have already reversed. Before this rally is finished we are going to see excessively bullish sentiment and oil will test $60. Sentiment in gold hit 73% last week, oil should at least match that before topping.
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CHARTS OF THE DAY
I’ve seen this chart surface recently as proof that a bear market has begun. However, the author didn’t bother to back test it further than the last 16 years. If he had he would have discovered that the simple moving average has delivered multiple false signals over the past 36 years.
A much more dependable signal is generated by the exponential moving averages. If price quickly recovers the exponential moving averages catches it and aborts the sell signal. The exponential has delivered no false signals over the past 36 years.
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HOW TO LOSE MONEY: TIGHT STOPS
CYCLE LOW NEXT WEEK
Stocks should make a daily cycle low early next week.
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