Monthly Archives: June 2013

28th June 2013 — A tough call on the Dow

Earlier in the week I posted a chart, which indicated a possible Head and Shoulders pattern forming on the Dow.  This fitted in line with my view that a major top is in place for US indices and the next significant move will be down.  With the outlook for American QE having changed considerably since last Wednesday’s press conference with Ben Bernanke, this seems a logical enough bet.  It is also a bet I am sticking to for now, although the pace of developments this week has left me slightly wrong footed.

 

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27th June 2013 — $1,200; Gold’s last stand

Just over a month ago I suggested that gold was attempting to complete a double bottom.  At the time I warned;

“If the developing double bottom pattern proves false and the price of gold fails to rise from here, then strap in because there is nothing but fresh air underneath. Gold could easily shed another $150/oz.”

And so it’s come to pass.

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24th June 2013 — More signs a major top is in place for US stock indices

I’m going to be a little lazy with today’s blog, but I have serendipitously come across two charts in the last few days, both of which strengthen my view that a significant top is in place for the major US indices.  

Before going on, I want to clarify that I don’t believe this is the end of the bull market for US stocks, but rather the beginning of a healthy pullback (remember those?! – I’ll give you a clue… they used to happen on a fairly regular basis before the money printing operation began!).

 

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18th June 2013 — Between a rock, a hard place, another hard place and yet another hard place!

Yesterday’s trade on Wall Street demonstrated there is still a good deal of bullish sentiment out there.  Going against this is usually a sure-fire way to trading oblivion but, I am still sticking to my guns.

Given that the outlook for stocks is pretty much interlinked with the outlook for QE, the two day meeting of the Federal Open Markets Committee has the potential to be a crucial one.

I don’t expect any major fireworks until about 7pm tomorrow night, when the Committee’s statement is released and “Helicopter” Ben Bernanke gives his press conference.  If you can face living through an hour or so of the world’s leading central banker fielding questions and answers, this could well be worth a watch (it is usually streamed live on http://www.bloomberg.com/tv/).

What will be interesting is how Mr Bernanke answers the inevitable questions concerning the Fed’s plans to unwind the latest bout of QE.

 

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17th June 2013 — All eyes on the Fed Part (I) – positioning ahead of the decision

The Federal Open Market Committee starts its two day June policy  meeting tomorrow. Although it is unlikely that there will be any immediate specific policy shifts as a result, Ben Bernanke is scheduled to give a press conference on Wednesday in conjunction with the release of the Committee’s statement.  Whatever he says is likely to have a significant bearing on stock markets for the rest of the summer, particularly coming on top of the “taper caper” that has put a brake on markets in recent weeks.

If there is the slightest hint that the Fed is planning to scale back its programme of QE, then expect to see a good deal of selling over the rest of June and July.  The next FOMC meeting after this is in 6 weeks.

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17th June 2013 — Naughty Ariana

Michael Spriggs, the chairman of Ariana Resources (AAU), should be sent to bed without any supper!

This morning Ariana updated the market about its equity swap with Lanstead Capital.  This complicated deal is a variation on the SEDA arrangements AIM investors have come to know and love.  In fact it is perhaps best described as a “reverse SEDA” i.e. the company issues the shares now and gets paid for them over 24 months.  In summary the deal states;

 

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15th June 2013 — Has the Hindenburg Omen signalled a market top?

Originally published on www.spreadbetmagazine.com

On June 3rd my Google Alert for the “Hindenburg Omen” was triggered.  Since then I’ve received daily “Hindenburg Omen” updates as the technical indicator has continued to give signals and this has come to the attention of more market commentators . (An explanation of the Hindenburg Omen can be found here).

I originally set this Google Alert up in August 2010, when the Hindenburg Omen was last in the news. At the time, the warning of an imminent collapse given by this indicator was a big story and featured across many major financial publications and websites.  The Dow was then at about 10,000 and there was an expectation that the lows of early 2009 could well be retested.

Of course they weren’t and the Dow has since powered forward, adding over 5,000 points.  How foolish advocates of the Hindenburg Omen looked.  After such a terrible read last time around, who in their right mind would trust this indicator today?

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9th June 2013 – Nikkei APR2013 support fails but bull market still intact

Another week has passed and there has been more drama on the Nikkei.  The wild swings have continued, but the overwhelming move has been down.  At one point the Nikkei had fallen 23% below its 15,942 intraday peak set on May 22nd.  In so doing it also categorically took out the fledgling APR2013 support.  This was disappointing as the initial indications were that this support line could be valid.  However once it was clear it was not, it was time to move on.

MIDAS Method Overview
Stock/Index/Currency/Commodity Nikkei 225 (Japan)
Support Launch Month NOV2012
Level of Support 1st
Price of Support 12,251

To the casual observer the Nikkei’s plunge looks catastrophic.  Not so to the MIDAS user.

Although APR2013 support did not hold, NOV2012 support did and the Nikkei’s fall halted just above this level.  Below is the MIDAS chart showing data from Friday’s close.  NOV2012 support was at 12,251.

Nikkei 225 APR2013 Support 9_6_13

 

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1st June 2013 – The Nikkei continues to teach

The Nikkei continues to provide an excellent live case study in some of the most important lessons for successfully using the MIDAS Method.  Along the way it has also set up some highly profitable trading opportunities, demonstrating how prices can often behave when at key points of MIDAS support or resistance.

Writing today the most important issue is whether or not the APR2013 support line is valid.  After yesterday’s end of day sell-off in America, which dragged most major indices around the world with it, the Nikkei finished about 4% below 14,025 (APR2013 support’s latest reading).  The further the Nikkei falls from here the less likely it is that APR2013 will be confirmed.  Even so it is too early yet to make a definitive decision.

If the Nikkei resumes its march higher, then this could be a fantastic opportunity in the making. If it falls, then the obvious thing to do is to look where it might next find its footing.  Either outcome is acceptable to the MIDAS user.

 

MIDAS Method Overview
Stock/Index/Currency/Commodity Nikkei 225
Support Launch Month APR2013
Level of Support 2nd
Price of Support 14,025

 

Before anticipating what next week might bring here is a quick reminder of what has happened.  APR2013 support’s Launch Point is set at April 4th 2013.  This is a slightly unconventional Launch Point as it occurs significantly above the previous support line.  Usually Launch Points are set just below support or just above resistance, depending on whether the market is going up or down.

Nikkei 225 MIDAS 1_6_13

 

However in the case of the Nikkei, April 4th should prove to be a seminal date, which fundamentally changed the nature of the Japanese stock market.  This day marked the beginning of the Bank of Japan’s (BoJ) aggressive Quantitative Easing Campaign.  If the BoJ follows through on its commitment to purchase ¥7trillion of financial instruments per month for the next two years, this is more than likely to stimulate a fierce bull market in Japanese equities.  That is if recent history is anything to by. Continue reading