Tuesday Sept 25 2012
Mark Hulbert finds the Transports are a contrary indicator. This suggests we were wrong in identifying Transport weakness as market weaness recently.
Paul Farrell tends to be a perma bear but in this instance I agree about his long term view. And he has an interesting list of 17 wrong predictions all made in the same sort of time period we are in now, after a long extended market climb.
GDXJ The Final Parabolic Move Begins
I sincerely hope I have been clear to readers. After an exit last Tuesday I clearly stated that I thought I was early but that the difficulty of calling a top as our holdings began a final parabolic rise made this all the more difficult. So I eixted several hundred thousand dollars of holdings and substitued some modest single digit calls on gdxj and puts on TLT. My thinking was that I still have upside potential but have capped my potential loss.
Above notice how the blue 50 day MA is experienceing an increasing rate of change. That signals the final move up. At bottom the RSI has pulled back. Note that GDXJ was down 4.32% just yesterday; that is in keeping wiht the Monday pullbacks we have consistently experienced. This two hour chart has been a reliable indicator of the stair step action of the market on the way up. Another reason for the two hour chart is that the daily chart indicators are now of limited to no value, take a look.
The commodity channel index, and just about another indicator is maxes out. It is like driving 100 mph with an 80 mph speedometer, it ceases to be of value beyond its maximum reading. This in itself is an indication of a coming top but hardly any help in knowing when to exit.
NYSE Summation Index
Here too the CCI has maxed out. We can see the MAs are headedd higher but of course they are lagging indicators, the top will be well past once they turn down. ABout all one can assume is that NYSI will re-visit its former top over 1200. While that seems reasonable notice it did not tarry long there in November or February, it's the Neighborhood of the Quick and the Dead over 1200 so to speak.
We plan to keep you posted, plan on visiting often. Thanks for reading The Market Perspective.