The good Doctor has agreed to contribute and share both his superb technical skills and some fundamental articles. I think you will find that he understands the fundamental situation quite well, that he communicates his points well, and that he just makes better charts than I do! As you’ll see, he “goes into battle” with his money as his “troops,” and him as a general orchestrating the war (this is a terrific analogy that I’ll leave up to him to explain more fully)…
Stocks. I don't think we could have ended up anymore in the middle on the ES. A perfect indecision point in the markets heading into next week. The key trenchline for the bears to hold is around the 842 pivot. The bulls must hold 800. My count has wave 2 starting with the rally at the beginning of this week so we are only a little more than 3 days into it compared to the 10 day decline for wave 1. We also haven't even made it to the 38.2 so you would expect more extension both time and price wise on wave 2. A powerful 2 that retests the bottom of the broken pink channel (the former uptrend line from the NOV lows) also remains a distinct possibility. Break 800 however and the rout is on. The market may be indecisive right now, but the battlefield map and important trenchlines look clear. I'm going to continue to lean into position shorts while daytrading with a long bias to hedge off any wave 2 strength.
Bonds. Is this a wave 4 before one more final push in the 30 year bull in bonds, or did bonds already turn into a bear market when the calendar switched to ‘09? Short-term it doesn't matter. I'm short and plan to remain fully short until the bond bulls muster the strength to break both the pink nano and main yellow trenchline – for now, the bears remain in control for more short-term downside. I've also got fibs up on this one from the bottom of the parabolic launch… We still haven't even retraced 50% of the launch from October despite the big selling since the beginning of the year. Something to consider before you start calling this a bear market in long-term government debt.
Gold. Not so fast on your breakout goldbugs. You are knocking at the door, but you haven't kicked it in yet. The gold bears simply have to hold this string of lower highs on gold right here, or you are going to see a major breakout. If the bears do manage to hold for now, then it might be the bulls turn to have to defend their uptrend line (that has led to this assault on the major bear line). At the very least gold has to consolidate a bit before breaking out, right? If we get that consolidation then I might look to initiate a play. A straddle at the convergence of the 2 major trendlines would be one interesting way to play it. By the way, my long-term count for gold has this giant triangle as a wave 4 of the bull run for gold over the past decade.
Look for more of the Doctor’s contributions in the future. Mark’s strengths are clearly in channeling the latest moves, analyzing chart patterns, and developing strategies for profiting from them. It’s great to have a team where different people contribute their unique strengths. Be sure to welcome Mark by clicking the “cool” button below and by adding your comments and additions to the team on this and the daily market threads. Together, we can all work the markets to be Heroes!
David Bowie – Heroes:
Very cool Bowie tune to crank the volume – btw, it’s the hero theme I’m going for here – lol!