Stocks Hit Resistance In Reach To TAF Rally High
Friday, 30. May 2008, 06:49:53
Financial market activity for Thursday May 29, 2008
Today, the stocks hit resistance in their reach to overcome the TAF rally high.
The Russell 2000, IWM, retraced to its TAF rally high today; and the Nasdaq, QQQQ, approached its TAF rally high.
However the Dow, DIA, and the S&P, SPY, have a long, very long way to go reach their TAF high.
A volatile oil price, USO, and falling industrial metal prices, JJM, took energy, XLE, energy service, OIH, alternative energy, GEX, and the metal and mining producing stocks, XME, lower.
Falling commodity prices, RJI, turned the steel, SLX, coal, KOL, and basic material, IYM, stocks lower.
The EUR/JPY, FXE:FXY, is continuing to move upward to 1.650 indicating that the Yen Carry Trade is still ongoing; those with access to Bank of Japan loans have abandoned the BRICS, EEB, but have rotated to invest in a broad range of sectors including health care, VHT, transportation, IYT, biotechnology, XBI, water infrastructure, FIW, internet, BDH, software, PSJ, retail, XRT, Israel, EIS, retail, XRT, and telecommunication, IYZ.
The US Dollar, $USD, rose to $73; it could easily rise to $73.75, before the bear market downturn in stocks and bonds, turns it lower once again.
The financial sector, IYF, "held from going lower today", the Banks, KBE, and the investment bankers, KCE were up marginally for the day.
The overall stock market to bank ratio, VTI:KBE, is 3.67; this leverage of stocks over credit cannot be maintained.
Banks and investment bankers are chernobyls that are very soon, going to take the stock market down as risk aversion to their level two and level three assets reemerges.
The Investment Application
On May 19, 2008 the TAF, TSLF, and PDCF rally failed as documented by the dragonfly candlestick and the topping out doji of the overall stock market ETF, VTI, and subsequent parabolic downturn: a bear market is underway with confirmation seen in the chart of volatility, $VIX.
I recommend that one choose either a short selling investment strategy, or to 'dollar cost average buy gold' over the next three weeks at BullionVault.com. I strongly recommend the latter, as I see a financial emergency coming from any number of causes, which is going to stabilize the price of gold, and then send it higher. Gold, $GOLD, fell today to close at $878; it could easily fall to its 200 day moving average of $840 or even lower to $820 before heading higher again.
My investment maxim is: "in a bull market be a bull; in a bear market be a bear. In a bull market, one buys on dips; in a bear market, one sells into strength". There is a bull market in both the Proshares bear market ETFs, and in gold. Thus on a day like today, one buys SFK, TWM, EWV, or adds to one's position in BullionVault.com.
Of note, the daily chart of the US Treasuries, TLT, shows 'three black crows' which is a pattern that comes when ever there is a strong market sell off -- a 'run on the US Treasuries' is well underway that has rewarded, and will continue to reward, those who are invested in the Proshares Bear Treasury Bond ETF, TBT.
Today, the stocks hit resistance in their reach to overcome the TAF rally high.
The Russell 2000, IWM, retraced to its TAF rally high today; and the Nasdaq, QQQQ, approached its TAF rally high.
However the Dow, DIA, and the S&P, SPY, have a long, very long way to go reach their TAF high.
A volatile oil price, USO, and falling industrial metal prices, JJM, took energy, XLE, energy service, OIH, alternative energy, GEX, and the metal and mining producing stocks, XME, lower.
Falling commodity prices, RJI, turned the steel, SLX, coal, KOL, and basic material, IYM, stocks lower.
The EUR/JPY, FXE:FXY, is continuing to move upward to 1.650 indicating that the Yen Carry Trade is still ongoing; those with access to Bank of Japan loans have abandoned the BRICS, EEB, but have rotated to invest in a broad range of sectors including health care, VHT, transportation, IYT, biotechnology, XBI, water infrastructure, FIW, internet, BDH, software, PSJ, retail, XRT, Israel, EIS, retail, XRT, and telecommunication, IYZ.
The US Dollar, $USD, rose to $73; it could easily rise to $73.75, before the bear market downturn in stocks and bonds, turns it lower once again.
The financial sector, IYF, "held from going lower today", the Banks, KBE, and the investment bankers, KCE were up marginally for the day.
The overall stock market to bank ratio, VTI:KBE, is 3.67; this leverage of stocks over credit cannot be maintained.
Banks and investment bankers are chernobyls that are very soon, going to take the stock market down as risk aversion to their level two and level three assets reemerges.
The Investment Application
On May 19, 2008 the TAF, TSLF, and PDCF rally failed as documented by the dragonfly candlestick and the topping out doji of the overall stock market ETF, VTI, and subsequent parabolic downturn: a bear market is underway with confirmation seen in the chart of volatility, $VIX.
I recommend that one choose either a short selling investment strategy, or to 'dollar cost average buy gold' over the next three weeks at BullionVault.com. I strongly recommend the latter, as I see a financial emergency coming from any number of causes, which is going to stabilize the price of gold, and then send it higher. Gold, $GOLD, fell today to close at $878; it could easily fall to its 200 day moving average of $840 or even lower to $820 before heading higher again.
My investment maxim is: "in a bull market be a bull; in a bear market be a bear. In a bull market, one buys on dips; in a bear market, one sells into strength". There is a bull market in both the Proshares bear market ETFs, and in gold. Thus on a day like today, one buys SFK, TWM, EWV, or adds to one's position in BullionVault.com.
Of note, the daily chart of the US Treasuries, TLT, shows 'three black crows' which is a pattern that comes when ever there is a strong market sell off -- a 'run on the US Treasuries' is well underway that has rewarded, and will continue to reward, those who are invested in the Proshares Bear Treasury Bond ETF, TBT.
WIDGETIZE