Saturday, October 18, 2014

Energy sector (XLE, KOL) short-term bounce

Oil sector stocks (XLE) had a big drop (-20%) with huge volumes, breaking down from an uptrend established since 2012.

Price bounced at around 80 and now is moving towards 90+/-2, where there is a strong resistance area(red circle).There XLE will probably reverse and resume its downtrend.If it breaks below 79 then next targets will be 73 and then 64$

Coal sector stocks (KOL) are in a long time downtrend since 2011 already -70% down from their highs.

KOL after consolidating for about a year between summer 2013 and late summer 2014, broke down and bounced at aprox 15,5.We believe that it will move towards 17 and then resume its downtrend.Possible final bottom for KOL at around 13$

Monday, October 13, 2014

Gold and miners Update

Gold bounced at 1190 support and now is moving towards 1240-5.Currently between 1245-1260 (red circle) there is a significant resistance area.For bulls to have a chance they need to see gold to move above this area.We believe that for the next few days gold will move sideways between 1225-1240-5(blue rectangle).If gold breaks 1190 then 1150 and 1100 are next targets

Gold Miners(GDX) are in a similar situation.Overhead there are 2 strong declining resistance trendlines (black lines) currently at 23 and 25,5.We lean towards a sideways move for GDX for the following days between 20,5 and 22,3$.A break below 20,5 will lead price towards 19,5 and then 17,8

Friday, October 10, 2014

Turkey (TUR) at crossroads

Turkey is currently in front of multiple crossroads: Geostrategic(Kurdistan,Syria,Iraq,ISIS),  Political(Erdogan-protesters)  , Economic(Between the West and the East).This situation is reflected in the chart of turkey etf, TUR which is also at a crossroad.

Turkey (TUR) during the last 5 years is moving within a wide trading range between approx 40-70$. From mid-2011 to mid-2012 TUR made an inverted H&S formation with a measured target of around 60$, but TUR managed to overshoot this target and stop at around 75$ where was the previous high of 2010.

After the 2013 top at 75$ TUR moved again towards 40 where it found support from 2012 year-end bottom.There it reversed again towards 60$ and slide gradually at 50$ which is the current price.Again TUR seems like forming an inverted H&S(neckline at 60$) as long as it manages to stay above approx 45-47$ (where is  currently a supporting trendline from 2009 bottom) and then breaking up the descending trendline from 2013 .Additionally bulls would like to see RSI14(weekly) stay above 40.The measured target for this iH&S formation is 80$(just above the previous double top at 75$)

The inverted H&S scenario is dead if TUR moves below 45-47$.In that case TUR will probably move towards 40$

Sometime in the near future TUR will break the trading range formed since 2010.Will it be up or down?What will be the future of Turkey?Time will tell (and the charts of course...)

Thursday, October 9, 2014

Uranium and Crude update

Uranium (URA) after breaking down from its support line at 14 is now moving fast towards 11,5 where we believe that there is a good possibility for a bounce towards the descending trendline at around 13-13,5 or even a push towards 15.

Crude Oil ($WTIC) is in a clear medium-term downtrend.It didn't manage to break above 95 and is now moving towards 84 where we think it will bounce towards  88.If support at 84 fails then next target for crude will be 77,5 where there is strong support.

Thursday, September 25, 2014

Oil ready for a bounce....?

Oil ($WTIC) is moving downwards but there is a building RSI and MACD divergence(Blue lines).If oil manages to breakout of the descending trendline(black) then next target is 97,7$.Not breaking the trendline will lead oil prices towards 87,5$

Saturday, September 20, 2014

USD index 2008-now:A continuation or a reversal pattern?Use of Mass index as a guide

There is a striking similarity of the price action of USD index between 1988-1997 and 2008-now.In both cases, after a substantial decline, USD formed a trading range pattern(blue boxes).Apart from the visual similarity between these two time periods, we believe that there are important quality-technical differences up to now.


  • Time:9 years
  • Mass index signals: 4 buy signals(green arrows){buy=Mass index>26 and USD in downtrend) and 2 sell signals(red arrows){sell=Mass index>26 and USD in uptrend}The 3rd sell signal was in mid-1997 after price outbreak from the descending black line(blue circle).During the final bottom of this trading range there was a buy signal and after that an extensive USD uptrend that resulted in trading range breakout(blue circle) and a top at 120 in 2001-2002.

  • Time:6 years (not completed pattern?)
  • Mass index signals:1 buy signal at the beggining of the trading range(2008) followed by 3 sell signals (2009,2010,2013).Currently there is no buy signal and USD price is still inside the trading range.
Taking a closer look to 2008-today formation:

-USD is in a steep uptrend (RSI overbought)
-There are 2 overhead resistance trendlines(black) currently at 86 and 88-89(top of trading range in pink).
-No new buy signal from Mass index at the beggining of the current upmove
-Mass index is starting to climb gradually.

So, for the time being we suspect that USD will stall at either 86 or 88-89 possibly along with a Mass index reading of >26.After that USD might retreat towards 79 or even 72-74.
We believe that 

  • In order for USD bulls to see a sustained USD rally above 89 first we need to have a downmove toeards the lower part of trading range along with a Mass index>26(buy signal)
  • In order for USD bears to see a breakdown of USD bellow 72 we need to see first a bounce of USD price at 86 or 89 along with a sell signal from Mass index during the current upmove and an absence of a Mass index buy signal during the following downmove.  

Bullish Scenario

Bearish Scenario

Wednesday, September 17, 2014

Various asset class prices in oil barrels and What do they reveal...

-"Oil makes the world go round"?
-Oil is the most valuable commodity for the entire economic activity worldwide.In the following charts we can see the price of various asset classes in oil barrels.Oil exporters are producing wealth with which they can buy different asset classes like precious and basic metals, equities or bonds.Let us now see in terms of oil barrels which of these assets are now expensive and which of them are cheap


Gold is currently expensive.Not a buy.
Platinum is fairly priced.Not a buy.

Palladium is expensive.Maybe a sell
Basic metals
Copper is relatively expensive.Not a buy.
Equities are fairly priced.Still not expensive but near a resistance line(middle horizontal line) and maybe that's why near a correction.
F)30 year Bond price
Bonds are still cheap and in a downtrend.However bonds might be ready to break the descending trendline from 1999 and start an uptrend.That would be another buy signal for bonds.

Let us now see what it would have happened if we had traded these assets when they were cheap(buy) or expensive(sell) in terms of oil barrels. 
Not bad at all!We can see that in many cases buying or selling various asset classes based on their historical oversold or overbought condition in terms of oil barrels  is an interesting although relatively long-term market timing strategy.
We can also see that the only two asset classes that are currently on a buy signal are SPX and Bonds(bonds last buy signal in 2005, and SPX last buy signal in late 2011).