My OperaBear Market Gets Underway As Financials And Oil Falls Lower
Wednesday, June 4, 2008 6:44:21 AM
Introduction
Stocks continued to fall lower on bank woes, an unwinding of the yen carry trade, and a lower price of oil.
Banks and investment bankers fell lower
The TAF, TSLF, PDCF, and yen carry trade rally, that began on March 18, 2008 with the Federal Reserve assisted JP Morgan buyout of Bear Stearns is over, as the banks, KBE, investment bankers, KCE, are the major factor taking the US Stock markets lower.
Banks, KBE, have fallen below than their March lows.
Lehman brothers, LEH, plunged lower with "three black crows", on capital raising concerns. Lehman shares are down 55 percent so far this year, far underperforming the Amex Securities Broker Dealer index, ^XBD, which has lost 23 percent in 2008.
The yen carry trade continued to unwind
The EUR/JPY, FXE:FXY, which is the barometer for the yen carry trade, held at yesterday's 1.63. Risk aversion is definitely rising; and thus the yen carry trade is unwinding, as is seen in yen carry trade darlings, the BRICS, EEB, falling 3.3%, with Brazil, EWZ, falling 2.8%, and China, FXI, falling 3.48%.
Interest rate differential loans continued to unwind today, as the Loonie, FXC, and the Aussie, FXA, continuing to fall lower.
The price of oil, USO, fell.
The energy shares have keep the S&P, SPY, from seriously selling off; but now, with XOP manifesting a bearish harami, and XLE, manifesting a bearish hammer fall lower from an ascending wedge, the Proshares bear market SDS launched higher today in a full Elliott Wave 3 up outbreak.
Rising volatility suggests the wisdom of a short selling investment strategy
The chart of $VIX, shows volatility rising. Fear is rising to terminate calm and and confidence, so one could go short:
1) Go short with some of these 60 ETFs that I've selected as having the greatest falling potential.
One to go short is the Nasdaq 100, QTEC
2) Go short with these 11 bear market ETFs and ETNs.
I've recommended the financials bear SKF; but it's getting risky to enter, as it has already started to rise in a cup and handle pattern.
The China bear FXP and the Emerging Markets Bear, EEV, are doing well, reflecting the unwinding of the yen carry trade in the BRICS EEB.
The Nasdaq bear, QID, is rising.
3) Go short with these stocks, or even these stocks as well; here are a number of great short selling opportunities:
Bombardier, BBD/A.TO, as it is manifested the lollipop hanging man candlestick: it's the short selling opportunity of a lifetime, as this company doesn't make any profit, and was recently pushed higher on booked orders which given the high cost of fuel, and global economic downturn are likely to evaporate like water in the desert.
Railroad Union Pacific, UNP
Transportation sector leader, Ryder, R
Subprime automobile lender, Nicholas Financial, NICK
Semiconductor manufacturer, Intel, INTC
Graphics chip manufacturer, Nvidia, NVDA
Software Manufacture, Oracle, ORCL
Energy producer, Forest Oil, FST; it manifested three while solderers today.
Oil company, Conoco Phillips, COP; it manifested a bearish engulfing candlestick today.
Health care REIT, LTC
S&P mid-cap leader, and world class communication interconnect manufacturer, Amphenol, APH, its shooting star calls out a sharp turn lower for the stock market.
Software manufacturer, CRM
Consumer discretionary leader, Echo Star, DISH; it manifested an awesome bearish engulfing candlestick.
World class builder, Chicago Bridge And Iron, CBI
4) Today the energy services sector, OIH, fell from an ascending wedge pattern on the lower price of oil, USO.
Here is the daily chart and the weekly chart. One could sell the ETF OIH, or these individual oil production service companies: ACGY, BAS, BJS, CGV, CLB, DVR, FTI, LUKF, NOA, NOV, PDRT, RES, SII, SLB, SPN, TESO, TTI, WFT, WG.
Investing in gold to be better than short selling as an "investment demand for gold" is coming soon.
Having said all of the above, I do not recommend short selling as it involves having a dollar denominated portfolio. The TAF, TSLF and PDCF rally, which by today's action is definitely over, sent the US Dollar, USD, relative to the Yen, FXY, zooming up as seen in the Andrew Sheldon chart and article The USD-JPY On A Knife Edge
Gains coming from short selling will be quickly destroyed by a falling US Dollar. Yahoo Finance shows that the USD/JPY is basically unchanged from yesterday's 104.5 to today's 104.3; nevertheless the US dollar is "going to be going down".
I suggest that one 'dollar cost average' an investment in gold at BullionVault.com over the next three weeks, not only because the dollar is headed down; but also as I see a financial emergency likely coming via the current "credit crunch" morphing into "credit gridlock", as the banks and commercial credit providers conditions further deteriorate.
Negative factors for gold are falling commodity and oil prices.
I do not know if Commodity prices, $CRB, which is traded by the ETN, RJI, will continue to fall lower.
I do not know if oil, $WTIC, which is traded by the ETF, USO, will continue to fall lower.
The current chart of the gold EFT, GLD, courtesy of Jack Chan, shows gold falling from a pennant; prices usually fall from this type of pattern: gold could easily fall lower to its 200 day average of $840 or even as low as $830.
Therefore, I recommend that one 'cautiously' and slowly 'dollar cost average' buy gold at BullionVault.com over the next three weeks.
The value of gold relative to stocks GLD:VTI is stabilizing; as is gold relative to oil $GOLD:$WTIC. This stabilization is a positive indicator for an investment in gold.
Gold is for sure going higher over time, as the dollar continues to depreciate.
Suggested Reading
Corey Rosenbloom in Market Beginning A New Downswing writes: "the primary trend is still down".
Matt Trivisonno in Third “Fan Line” on S&P 500 Chart? writes: "One of the ways to spot the end of a bear-market rally is to use the chart analyst’s “Three-Fan Rule".
Keywords
investmentdemandforgold
Stocks continued to fall lower on bank woes, an unwinding of the yen carry trade, and a lower price of oil.
Banks and investment bankers fell lower
The TAF, TSLF, PDCF, and yen carry trade rally, that began on March 18, 2008 with the Federal Reserve assisted JP Morgan buyout of Bear Stearns is over, as the banks, KBE, investment bankers, KCE, are the major factor taking the US Stock markets lower.
Banks, KBE, have fallen below than their March lows.
Lehman brothers, LEH, plunged lower with "three black crows", on capital raising concerns. Lehman shares are down 55 percent so far this year, far underperforming the Amex Securities Broker Dealer index, ^XBD, which has lost 23 percent in 2008.
The yen carry trade continued to unwind
The EUR/JPY, FXE:FXY, which is the barometer for the yen carry trade, held at yesterday's 1.63. Risk aversion is definitely rising; and thus the yen carry trade is unwinding, as is seen in yen carry trade darlings, the BRICS, EEB, falling 3.3%, with Brazil, EWZ, falling 2.8%, and China, FXI, falling 3.48%.
Interest rate differential loans continued to unwind today, as the Loonie, FXC, and the Aussie, FXA, continuing to fall lower.
The price of oil, USO, fell.
The energy shares have keep the S&P, SPY, from seriously selling off; but now, with XOP manifesting a bearish harami, and XLE, manifesting a bearish hammer fall lower from an ascending wedge, the Proshares bear market SDS launched higher today in a full Elliott Wave 3 up outbreak.
Rising volatility suggests the wisdom of a short selling investment strategy
The chart of $VIX, shows volatility rising. Fear is rising to terminate calm and and confidence, so one could go short:
1) Go short with some of these 60 ETFs that I've selected as having the greatest falling potential.
One to go short is the Nasdaq 100, QTEC
2) Go short with these 11 bear market ETFs and ETNs.
I've recommended the financials bear SKF; but it's getting risky to enter, as it has already started to rise in a cup and handle pattern.
The China bear FXP and the Emerging Markets Bear, EEV, are doing well, reflecting the unwinding of the yen carry trade in the BRICS EEB.
The Nasdaq bear, QID, is rising.
3) Go short with these stocks, or even these stocks as well; here are a number of great short selling opportunities:
Bombardier, BBD/A.TO, as it is manifested the lollipop hanging man candlestick: it's the short selling opportunity of a lifetime, as this company doesn't make any profit, and was recently pushed higher on booked orders which given the high cost of fuel, and global economic downturn are likely to evaporate like water in the desert.
Railroad Union Pacific, UNP
Transportation sector leader, Ryder, R
Subprime automobile lender, Nicholas Financial, NICK
Semiconductor manufacturer, Intel, INTC
Graphics chip manufacturer, Nvidia, NVDA
Software Manufacture, Oracle, ORCL
Energy producer, Forest Oil, FST; it manifested three while solderers today.
Oil company, Conoco Phillips, COP; it manifested a bearish engulfing candlestick today.
Health care REIT, LTC
S&P mid-cap leader, and world class communication interconnect manufacturer, Amphenol, APH, its shooting star calls out a sharp turn lower for the stock market.
Software manufacturer, CRM
Consumer discretionary leader, Echo Star, DISH; it manifested an awesome bearish engulfing candlestick.
World class builder, Chicago Bridge And Iron, CBI
4) Today the energy services sector, OIH, fell from an ascending wedge pattern on the lower price of oil, USO.
Here is the daily chart and the weekly chart. One could sell the ETF OIH, or these individual oil production service companies: ACGY, BAS, BJS, CGV, CLB, DVR, FTI, LUKF, NOA, NOV, PDRT, RES, SII, SLB, SPN, TESO, TTI, WFT, WG.
Investing in gold to be better than short selling as an "investment demand for gold" is coming soon.
Having said all of the above, I do not recommend short selling as it involves having a dollar denominated portfolio. The TAF, TSLF and PDCF rally, which by today's action is definitely over, sent the US Dollar, USD, relative to the Yen, FXY, zooming up as seen in the Andrew Sheldon chart and article The USD-JPY On A Knife Edge
Gains coming from short selling will be quickly destroyed by a falling US Dollar. Yahoo Finance shows that the USD/JPY is basically unchanged from yesterday's 104.5 to today's 104.3; nevertheless the US dollar is "going to be going down".
I suggest that one 'dollar cost average' an investment in gold at BullionVault.com over the next three weeks, not only because the dollar is headed down; but also as I see a financial emergency likely coming via the current "credit crunch" morphing into "credit gridlock", as the banks and commercial credit providers conditions further deteriorate.
Negative factors for gold are falling commodity and oil prices.
I do not know if Commodity prices, $CRB, which is traded by the ETN, RJI, will continue to fall lower.
I do not know if oil, $WTIC, which is traded by the ETF, USO, will continue to fall lower.
The current chart of the gold EFT, GLD, courtesy of Jack Chan, shows gold falling from a pennant; prices usually fall from this type of pattern: gold could easily fall lower to its 200 day average of $840 or even as low as $830.
Therefore, I recommend that one 'cautiously' and slowly 'dollar cost average' buy gold at BullionVault.com over the next three weeks.
The value of gold relative to stocks GLD:VTI is stabilizing; as is gold relative to oil $GOLD:$WTIC. This stabilization is a positive indicator for an investment in gold.
Gold is for sure going higher over time, as the dollar continues to depreciate.
Suggested Reading
Corey Rosenbloom in Market Beginning A New Downswing writes: "the primary trend is still down".
Matt Trivisonno in Third “Fan Line” on S&P 500 Chart? writes: "One of the ways to spot the end of a bear-market rally is to use the chart analyst’s “Three-Fan Rule".
Keywords
investmentdemandforgold
