Posted Thursday Nov 21 2013
Our expected early Nov top for stocks took a bit longer to arrive but arrive it finally did. The FED minutes knocked bond prices down yesterday, the move to higher rates is on. A reader asks for an updated gold wave count so let's start there.
This seems pretty clear. Third waves are the strongest. The move to new lows in the RSI and MACD on the third wave label seems to confirm that designation. While the gold bug crowd wanted to call that THE low, they were wrong. We are headed lower into December. How low, I don't know but expect a blow off to the downside.
NASD 100
The NDX is way above the longer term MA and is beginning to look toppy. This does not mean it won't hang around up here until early this next year. But the MACD suggests the best of this party is now behind us. Our call on the current President assigning the look of the President 40 years ago has been spot on correct. It is one thing to promise insurance that is cheaper than your cell phone bill for those without, quite another to invalidate millions of contracts between willing buyers and sellers, which is what is driving his rating to 37% favorable. It will only get worse from here. That negative mood will eventually surface in financial markets.
The Bond Market - Much More Sophisticated than the Stock Market
Richard Russell frequently acknowledges that the bond market is much more attuned to what is happening than the stock market. I think the above labels and indicators tell us a great deal about what is happening. Consider these points
- RSI topped way back in late 2011. the FED has been playing rope a dope ever since hoping to goose the economy higher with endless QE schemes
- WE thought the stock market topped in April or May this year, no it was the bond market, note how fast bonds collapsed on just a hint of less bond buying at that time.
- That collapse took RSI below the 50% level
- Attempting to put the words back in ther mouth the FED then had Bernanke and Yellen claim they would not taper their bond buying. That rallied prices off the long term 200 week MA.
- But the crossover of the shorter MA to the downside had already begun.
- The red green line at 108 is now overhead resistance.
- The interest rate market has a habit of not looking back once it turns. And it is indeed turning.
Mirror Image Confirmation TBF
TBF is a 1x bear fund for bonds. As such it is the mirror image of the TLT chart above. We used the same indicators and substituted TBF for TLT. Where TLT has resistance, the support at 31 is clear for TBF. I have a position in TBF and am likely to add to it.
Thanks for reading TMP, we will update the markets for you this weekend!
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