Well, the markets are relentless in their dramatic (yes think that word is just) poise that makes the normal bull look seemingly feeble.
I have to admit I have been fairly in-active over the past week or so, but from tomorrow things will be changing.
We know that European officials have got until the end of Wednesday to get their act together and this is about the time we should see a shake-up in general in and around the marketplace.
Matt Shaw sets a barometer for trading volume and more often than not a trend follows.
What do I see this coming week…?
(wrote for layman’s update on 24th Oct)
‘I see a small (rather minor) pullback, followed by a further rally to highs beginning of Nov THEN the sell-off will begin in ERNEST as soon as the 2nd week of Nov appears; it may even come a few days sooner than that, but this is what I have on my cards right now.
The high for these markets should come in around the time Mr. Fawkes gets roasted once again. I don’t know how that guy keeps going – No pun intended!’
In terms of the S&P and Dow (just so you have an idea) I am talking levels of around 1290/1300 and 12200/12300 respectively for the highs.
Until we see those named levels I firmly believe the market has more legs, but we could slip before that and I genuinely profess that if we knock around below 1215 before 1290/1300 is breached for the S&P, then the top is already in and get ready for lower tides. Or should I say higher tides at lower levels?
I just want to note two things about the Dow before I move on and trade SOMETHING – It needs to break its 200-day Moving Average.
If the Dow fails at the very first attempt then that could be the top right there; however if the test of the 200-day MA happens before the 1st November, I will allow the Dow one more attempt at breaking that 200-day (black line on chart) before I look to call anything short.
The last point on the Dow is that even if the Dow does not test the black 200-day MA line, by the 1st Nov I will be selling this market regardless. I will do this by placing High No Touch trades via my Fixed odds account and selling £50 per point with my spread betting bookie.
However, as the Dow is now trading over 11900 it looks highly likely that the Dow will AT LEAST test the 12000 level (200-day MA (200-day MA is resting just below 12000) before witching hour.
Please note, DO NOT pre-empt any trade here on the stock indices. Even though with my guidance you sort of know what levels to watch out for and the targets in mind, it does not mean that it will happen.
You always need to wait for confirmation like particular levels being tested then failing and simply markets hitting a brick wall then selling off, or even markets testing a higher level and bolting through by picking up even more momentum to the upside so you can jump on the bandwagon and ride to victory.
Money is only lost when traders try and second guess what the market is going to do, even when sometimes it looks so obvious what is going to happen.
Onto the £/$
Cable (GBP/USD) has been well capped (gains have been measured and resistance at higher levels has held) since breaking the previous support of 1.571, with rallies extending into the 1.600 zone.
The measured move objective for the pattern projects additional gains into the 1.610 area.
However, I see great resistance above 1.61/1.615 into the 1st week of Nov. If we do break the 200-day MA by this time I will be forced to buy the market.
However (my preferred plan) is that we will see the market rally up toward 1.61/200-day MA hover there for 1-2 sessions and sell-off.
Or we may even bounce immediately from this level if touched/breached.
Either of these two scenarios will bode well for a High No Touch through my fixed odds account and a short spread bet with a stop around 1.615.
If I see a bounce directly from 1.61 or indeed the 200-day Ma itself, I will short immediately.
As noted on the chart, if none of this takes place by Oct 31st, I will be shorting regardless, down to the point of potential upside reversal of 1.5715 or the simple 20-day MA (green line). If that breaks into Nov, I will short further down to 1.54.
What am I seeing for the market as a whole?
Well, Gold is still stuck in its trading funnel of $1600-$1700 and with Monday’s close above its 10-day Moving Average at $1655 I strongly believe we could see a thrust up toward $1700 and potentially break this resistance zone soon enough, especially if stock indices sell-off nicely into the middle of November.
As we enter 2012 and stocks slump quicker than my great Gran into her favourite armchair, Gold will most definitely surpass $2000 by Spring blossom.
Earlier this week, BP’s profits slumped but shares are priced higher, how many times do I see this? Far too many for my liking!
BP reported lower underlying third quarter profits this morning, despite high oil prices, but production had fallen due to the selloffs in the wake of the disastrous Gulf of Mexico oil spill.
They only made just over 5bln and that is after paying out several more billion to people and businesses affected by the spill, so maybe it’s not so bad in market terms and that could be justified as to why BP is trading higher by 4.5% at the time of writing.
Just to bear in mind, which something that can linger in the back of your mind while we prepare for the mother of all selloffs that should be due to hit a screen near you, very soon.
The total U.S. state debt, (including pension liabilities) could surpasses $4 trillion, with California owing the most and Vermont owing the least, according to an analysis released.
The housing bust/recession and the financial crisis overall has indeed caused states’ tax revenue to plunge and as a result, bloody great big holes have emerged in their budgets over the last 3-4 years.
All states (bar Vermont) have been forced to cut spending, hike taxes, borrow and turn to the federal government for help. Oh, are the ‘federal reserve’ going to do their bit again for the security of mankind?
Gees, if that’s the case I won’t be looking to purchase another home anytime soon or indeed invest heavily in bonds or stocks. The next overdone market condition will undoubtedly be to the downside; but measured against the true value of the overall economy… It cannot ever be that oversold. Eight trillion worth of debt fo the global economy when less than 900 bln is in circulation – you do the MATH – Shaw has!
Today, on Thursday 27th Oct, stocks are rallying amazingly on the back of the Euro zones leaders increasing the fire power of the regions rescue fund.
This deal has now blanketed Greece with a $1.4 trillion wind shield, as those frantic European leaders persuaded bondholders into accepting 50 percent write down of Greek debt.
There are obviously still some key points that have not been finely addressed.
However, I suppose it’s something the market can burn in the meantime, while many traders&investors get excited by throwing more money at the markets, only for the fat cats to absorb before the inevitable ‘crash and burn’ scenario that is hurtling toward the global economy finally arrives.
Please be careful investing anything other than BETS on the markets or indeed solid PHYSICAL commodities.
Matt $haw
Fixed odds Success
