Tuesday Sept 185 2012
I posted this repsonse to a reader inquiry, There is enough here that it deserves a regualr co0mposition I think. We have spiked in the number of hits today so I am trying to put up a good deal of information.
I showed several indicators in the morning post that are well along in their upward move to tops. NOte the High Low and A/D volume charts. Note the weekly chart going back three years which shows a head and sholders top pattern.
Ramki originally had 1474 on the S & P as his projected high in the S & P. We hit 1474.51 as a high.
Ed Carlson is calling for a high today. I did not come to my conclusion based on his call but on the internals that I regularly report on. TLT and the Dollar are both looking like they have at least made a temporary low. In fact one can make a case the Dollar will find support at this 78 area. Will the Euro go much above 140, I doubt it. Will it get to 140, I don't know.
Since this morning FDX announced an expectation of lower earnings for 2013. I will post later but its YTD chart looks like a topping or distribution patter moving sideways with violent up and down fluctuations.
I don't know how much stock to put in it but this is the 25th anniversary of the Harmonic Convergence which preceded the sell off in 1987.
I may have made an error in exiting too soon but one advisor once told me one of his clients got rich by selling six months too soon rather than six days too late. AS GDXJ has advanced I too was excited to see the profits building in our accounts. But it may also be that commodities like the A/D Volume line are making a higher low before world wide deflation takes control again.
Recall I noted that the Utility Average may have already started down. Shangahi looks terrible. I may have erred but at least I erred putting money in the bank.
And it may be that owning at the money January 2013 calls on GDXJ vastly reduces one's exposure to poetential loss. Today I noticed the 25.63 January call at 2.00. That is a whole lot less to risk than 25.63 bucks per round lot. THe current market is quite similar to this time in 1987, I posted that chart for your inspection. Again perhaps I am early who knows but the internal indicators have come a long way.
Indications are that the dollar and bonds are about to at least short term rally. We can always buy back.