Reflections of Reality

Greenshoots for a temporary bounce ?

2012-05-20T03:13:00.000-07:00

Mr. Market got a beating and refused to bounce which are clear traits of a bear.

...but there is some hope for a relief ,....like in the EURO

....also bear in mind that at some point for some period GOLD will become the safehaven which results in a later topping in GOLD relative to the risk trade. This period seem to have started last thursday ! It could be a wild ride in the Prec. Metals for some months !

The fact that the monthly DeMark Sequentials are falling also supports the notion of no immediate disappearance of the bear.

Even a BEAR needs a break......

2012-05-20T02:56:00.002-07:00

What do you call a market that refuses to bounce...right .... A BEAR!

...but even a bear needs to rest some time to retest his ambition.

A scary picture

2012-05-16T22:47:00.001-07:00

The Bradley Model seems to have a pristine view on this year's market. Even more amazing is the fact that the model calls for a downdraft into the Greek re-election.
According to the model June-July will offer the last chance to get make some money on the long side.

We are getting to fairly oversold levels....some interim bounce is to be expexted

2012-05-15T21:11:00.001-07:00

EURO in the final exhaustive Move ?

2012-05-15T08:17:00.001-07:00

Is the Euro the canary in the coalmine ? Some OptionPlayers are getting in position to play a bounce, while retesting important levels.

What's Silver telling us ....?

2012-05-13T09:10:00.001-07:00

More signs that Mr. Market wants a bounce and just waits for some random catalyst ...

MONEYFLOW MOMENTUM deviates from the Price MOMO....

2012-05-12T14:26:00.001-07:00

...for the key large Cap. institutional portfolio....

...and for the Prec. Metals portfolio....

...which should give further signs of a potential impending bounce, or better ...it will not take much to bounce from here!

Our TimeCycles also suggest some possibility of a bounce

2012-05-12T14:16:00.001-07:00

Commodities could rise....

...as the Dollar could consolidate....

...while the Euro sees some short covering...

....elevating the MINERS...

...and the rest of the RISK TRADE like Large Cap 'safehaven' stocks.

...for maybe a month or so, retesting the solidity of the recent bear action.

The bears had the chance and they took it...

2012-05-11T22:35:00.002-07:00

Last wee we spoke from epic battles and the latent desire of Mr. Market to go lower. The fact that we jumped the chance of a bounce seems like a strong medium term signal. At this juncture though , still against a backdrop of a more bearish outlook, the market feels oversold and could/ should bounce from here.

The Euro got really hit hard and represents the core of our epic battle theme. What looked like a faked break down actually became one and now looks oversold. Anything can happen here.

See an update on our TREND picture for the Small Caps....

Tech...

and the VIX.

A bounce seems possible outside an ARMAGEDDON

2012-05-11T22:27:00.001-07:00

"fast moves follow false moves" - episode EURO

2012-05-07T10:14:00.002-07:00

Crosscurrents of the epic battle

2012-05-06T02:36:00.000-07:00

Apple has seen big outflows to a degree that one could expect a bounce from here.

The EURO, despite of getting hit last week, still looks for a final bounce....

...as does the DXY....

...the levered Bull ETFs support the take on AAPL above....

...and this is all taking place against the backdrop of medium-term bearish outlook !!

Mr. Market wants to see a deeper correction

2012-05-05T13:38:00.000-07:00

The leading commodity powerhouse in LatAM wants to show the way.

....but we experience an epic struggle of the forces...

....with maybe a consensus in the late bloomer GOLD that likes to top months after the equity markets in these kind of environments....

....all others seem in sync....

...and even the 20yr TSY looks tired...

....while the VIX is getting stronger by the day....

Mr. Market missed the opportunity to rise ?

2012-05-04T22:24:00.001-07:00

Mr. Market is hoping for some sun in May

2012-04-27T23:13:00.000-07:00

Forget any downgrades of Spain, everybody is betting on Super Mario and Heli Ben. So even the Euro catches a bid...

...like AAPL brought life back in the Q's..

...and OIL likes May.....

...but something has to give...Sorry VIX

...will the leading Materials warn us of a 'FLASH in the PAN' ?

The DXY and the Euro are in sync for MAY.

...as are the small caps.

Look at Dr. Copper who likes to do some seasonal play of his own around May which aligns with our TimeCycles model.

Bounce gets legs....

2012-04-26T10:15:00.000-07:00

Some forces are pushing up the market!

CBOE and ISE expect a bounce

2012-04-25T05:52:00.000-07:00

The Index Options - primary hedging vehicles - have already reversed.

CBOE is in limbo-land....

and the ISE line is approaching a Support-Trend-line.

Base Case: Bounce

Risk Case: failed Bounce and 'Sell in May'

Medium term Sentiment turns more brearish and Liquididty could deteriorate soon

2012-04-24T22:58:00.001-07:00

Our Liq. Index is usually a leading/ coincident Indicator that seems to top around here. This only indicates a looming top not specifying whether we will see it in the near future of whether we have already seen it....

The Summation_Vix had flipped some days ago (see post from April 11) and continues to project more downside as we enter the 'sell in May' season.

2008 was the last time the Miners were bombed out like today !

2012-04-24T08:14:00.000-07:00

Euro rollercoaster ride: What fake move is real...?

2012-04-23T21:42:00.000-07:00

Did we have a 1.32 head fake last friday or did we see a breakdown fake yesterday ? Although the bears made their point yesterday the answer is still out.

What's the secret sauce in the TREND Indicator

2012-04-22T05:17:00.000-07:00

Let's take some random input indicator, be it a MOMO or a OPTIONS or a Open Interest or a EXHaustion or a Money Flow MOMO Indicator and decide how we want to interpret a reading.

Below you find our approach:

We look at an Indicator and observe the following:

Is it moving down (or up) = Trend <0 (>0)
How close is the current reading to a recent medium term extreme (call it Overbought or Oversold) and calculate a weighting based on that observation from 0% to 100%

We include the following Indicators in our TREND Indicator and give 50% weight to the MOMO and FLOW indicators and 50% to the Options and Option Open Interest ones.

Indicators taken into account:

And this is the RESULT:

The Case for a BEAR follow through

2012-04-22T03:40:00.003-07:00

The Miners seem to need more time.

The Gold/Silver ratio works as a proxy for the CREDITSPREAD and indicates more consolidation.

And then there is OIL.

The convoluted overall picture will hopefully get much clearer next week !

The Case for an extended Bounce

2012-04-22T03:28:00.002-07:00

Following our timing model we see the following in the EURO, SILVER, GOLD and the Small Caps. All models want to see some more weeks of bull action.

Weekly update: Risk off vs. Commodities on ?

2012-04-21T13:21:00.003-07:00

The Euro could be on the verge of some quick upside action. Next week will tell if we can see any follow through..

The Miners look hopful supporting the story showing from the EURO...

...as does Gold...

...and Silver

...and OIL...

BUT on the other side we see that Tech has reversed...

..and Vola seems on the uptrend...

...with the leading Materials looking bearish

Bottom line:
We can make both cases at this juncture. The bounce can run for another week or the Prec. Metals can decide to ignore the risk trade and become more of a safehaven trade or the Euro reverses again.
Correlation trades might break. Let's see what happens after this wild OPEX week ... that was historically one of the most bullish weeks in the season and wasn't.

QE or NOT will be the question for the weeks to come unless you believe that a fix for Spain is in.....which we don't!

Bullish argument of the week: THE EURO

2012-04-21T02:36:00.000-07:00

The TREND indicator has turned up (Thursday's chart before Friday's up-surge close to the weekly DeMark trendline).

And the Cycle chart foresees a LOW right around here with a 3-4 week up bounce conceivable.

Maybe the Bounce has more tricks up his sleeve or maybe the EURO disconnects from the RISK TRADE.
We will see next week.