What an absolute mess to try and analyse this morning. How can the Dow be down nearly two hundred points and the S&P only eight. Yes, well obviously the Dow was hit by a couple of stocks but it is this sort of thing this morning through all the markets. S&P tried to fill the gap it left yesterday but couldn’t quite make it.
I looked at the chart of crude and it and the rest of the energy section weakened except natural gas which shot out the top of the pattern - an important indicator of the energy section.
Same with grains. No use trying to analyse beans as one day they can’t produce enough but the next it is stories of them sitting on docks in China not being unloaded. For this reason I would rather look at wheat and it was better again together with oats so the story on grains is still bullish with its obvious repercussions.
US dollar the same. The Aussie went higher but came off but today it was the Swissy that took my eye this morning. Looks like a turning point there. I do not like the chart of the US dollar at the moment. But rates look to me as though they want to go higher.
Metals - gold has done very little but silver and platinum have had a good week. But today it really was copper’s turn to take the winning mantle.
Yesterday it was my view that we were seeing a wave of buying through a number of markets that to me had serious ramifications for us all. Not seeing the same excitement today but don’t dismiss it. Yesterday I would have liked to see the finance section in the US confirming such a picture but that section was very weak. Today it is stronger when everything else was weak. Has the world gone completely mad!
And just to round things off nicely - FTSE. I think I am prepared to say that this index topped last night! It has gone up one thousand points in the most unbelievable uptrend. Unless the laws of physics have changed, I think we might get an equal move in the other direction.
We came off sharply yesterday. On Monday I made this comment – “Looking at the hourly, I now have a really nice rounded top pattern. Need to pull out of this fairly quickly – I mean rally – otherwise we will be seeing a sizeable correction”. Unfortunately we didn’t pull out of it and the XJO has followed this curve lower. Another hundred points takes it back to the beginning of this formation. And now today, I am back to having to worry about the iron ore price. Can’t afford to weaken much further here. We do need to watch this.
Our gold stocks retreated again yesterday. Was the recent strong rise a false move in our gold index? Well it did outperform gold sectors anywhere else because of the weakness of the Australian dollar/stronger Aussie gold price, but I still believe that the patterns that have been built up over recent months are bullish. However, as I said over many days, they got very overbought so now we have to have the correction to balance that position. I still think this is what is happening. Also don’t forget that I have the commercials at the end of last week with the lowest net short position since the low in December. As well, silver has managed to break its downtrend with the gold/silver ratio. This is a really encouraging point. To me – it all got very overbought and we are having the subsequent correction in this sector.
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