Next Big Trade In Search Of Bull Markets

21Dec/10Off

Divergence Between New Low in Bond Rates and Momentum

The 5-year treasury rate made a new low in 2010 but a positive divergence has setup between the new low and the momentum to the downside. What this means is even though a new low was made there is less downside momentum than there was when the previous low was made. This produces the divergence between the new low and the momentum. Divergences in momentum can sometimes lead to trend changes, and since there is a lot of talk of the bond bull market being over this could be an important technical indicator to watch. Another interesting thing to note is this appears to be the first major occurrence of a divergence between momentum and price that has occurred on this chart in 16 years.

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15Dec/10Off

Dollar Still Hovering at Critical 80 Level

The U.S. Dollar continues to consolidate right at the 80 level, which is roughly the midpoint of the trading range the dollar has established since bottoming in 2008. The trading range has narrowed with each successive rally and correction in the dollar, and appears to be forming into a symmetrical triangle pattern. The monthly MACD is at zero, which seems to be a good dividing line between bull and bear markets in the dollar.

Commodities and recently the bond market seem to be suggesting the dollar is more likely to breakdown into a renewed downtrend when this consolidation ends. Commodities as represented by the CCI Index are almost back to their former highs:

Copper is hitting new highs:

Oil is continuing to make new highs:

And the long bond has made a lower high that will have to be reclaimed in order for the uptrend in bonds to continue:

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14Dec/10Off

Cup and Handle Pattern in Oil

While oil and oil stocks are sitting at new highs for the year it appears they may have just completed bullish cup and handle continuation patterns. Oil has also formed a bull flag at the 88-90 level while oil stocks have moved higher the last few weeks.

The logical target of the completion of the cup and handle pattern would put oil stocks right in a resistance zone from 2008.

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10Dec/10Off

John Stewart’s Hilarious Take on the Bernanke 60 Minutes Interviews

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Filed under: Video Comments Off
10Dec/10Off

John Hathaway from the Tocqueville Gold Fund

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Filed under: Gold, Video Comments Off
9Dec/10Off

Bonds Turning Lower

Starting from the long end of the yield curve and working backwards, bonds have started moving lower.  The first chart shows TLT, an ETF that tracks long term government bonds.  The price of TLT has moved below the 30-week moving average once again.  Another thing to note is the big increase in volume without a significant move in price.  Often times when a market churns on heavy volume and doesn't continue advancing, especially at the end of a long rally, it can signal a top forming.

The next chart shows IEF, an ETF that tracks 7-10 year treasury bonds.  IEF made another new high recently unlike TLT, but it is also showing the same churning volume pattern at the recent high.  IEF has also broken below the 30-week moving average.

Finally we have IEI, an ETF that tracks 3-7 year government bonds.  Like IEF, IEI has started to break below its 30-week moving average this week.  IEI has done very little trading below the 30-week moving average so a break below it that holds would be a technically significant event.

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8Dec/10Off

Reversal in the Greek Stock Market?

The Greek stock index broke down at support at the end of November and made a new low for the year.  Since the beginning of this month, however, Greek stocks have rallied strongly and now the index is bumping up against downtrend resistance.  A break out above the resistance line would help assuage the fears over the Eurozone financial problems.

The Irish stock index has also bounced during December and needs to get above 185 to break out of the trading range.

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7Dec/10Off

Coal Stocks Breaking Out to New Highs

The Dow Jones U.S. Coal Index broke out to new highs for 2010 last week after being in a trading range for most of the year. This is the highest level this index has hit since 2008.

The next two ratio charts show coal stocks compared against the S&P 500 and against oil and gas stocks. Coal stocks are currently at the top of the trading range against both of them. A breakout would signal continued outperformance of coal stocks versus the rest of the market and against oil and gas stocks.

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7Dec/10Off

Einhorn: Fed Should Raise Rates to Help Economy

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Filed under: Video Comments Off
7Dec/10Off

Mark Cuban Discusses the Tech Sector

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Filed under: Video Comments Off
6Dec/10Off

Oil Starting to Break Out of Multi-Month Consolidation

Many commodities have been rallying strongly since July. A notable exception has been oil and oil stocks, who just this past week may have finally started to break out of multi-month consolidations. Oil has been in a trading range since the beginning of 2010, while oil stocks have been consolidating for over a year now, since October 2009. The following charts show oil and oil stocks starting to break above their multi-month consolidations as they rallied strongly again last week.  A rally in the energy sector would give an added boost to the current trend higher in commodities.


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