Morning Corner 10.20.11

WTI (weekly info)
WEEKLY REVERSAL new high 87.04
direction=up (1 bar)
high= 87.04
rev= 79.44; mid= 83.24

Just when you thought WTI was previewing lower prices, it decides to have a weekly 3LB reversal up last week. It bested the SMA(13) and some of the minor retraces. This week has taken back some of those gains and is currently a bearish thrusting. It needs to continue lower to form at least a dark cloud cover to send a reversal signal.

ROUGH RICE (weekly info)
-no change (above mid)
direction=up (1 bar)
high= 17.96
rev= 14.23; mid= 16.10

Other than last week the prices for Rough Rice have fallen. This prevents riots in some countries. It's testing and failing the SMA(13) this week. It's also retesting the 61.8% retrace.

Palladium (weekly info)
-no change (below mid)
low= 589.00
rev= 817.45; 703.23

Palladium tried to hold its 50.0% retrace. It tested and failed the SMA(89). It had a monthly 3LB reversal down in September. That move higher last week has already stalled.


AmenRa said...

DJ & SP are up while YM & ES are down. Which set is correct?

AmenRa said...

So the EU put out the EFSF rumor before the market opens. There must be some serious infighting going on. The question is why couldn't they wait until an hour before the market close to plant the rumor?

ben22 said...

I think it's fair to address this:

"I BELIEVE IN GOLDEN RATIOS (you know - in architechture & mollusks & such)... But to apply such ARCHITECHTURE to [what I condider] realtively SMALL sampling sizes of FINANCIAL CHARTS based on prices determined in fiat currencies whereby INTERESTD PARTIES might have even a [less than double digit] input on the intermediate outcome of based on POLICY (& OTHER WELL & GOOD THINGS)]...

Well let's just say that my TRUST dissolves in those instances..."

I'm one of those bloggers that thinks otherwise.
It's not the sample size thats a problem, it's the way the vast majority of people apply fibonacci analysis to markets, which completely denies how it shows up in nature! Lets explain:

The logarithmic spiral that is created by the golden ratio can be observed well beyond the scope of financial markets as most people are aware, and I'm not simply talking about nature or the human body. For example, I recently read a long paper about human trafficking and wouldn't you know the numbers of human trafficking over the last several decades create an elliot wave, the baseline model of elliott wave is the fibonacci sequence. The article claimed, if anyone is interested, that there is a bull market in HT right now and there are close, not perfect, but close, fibonacci realtionships with the figures. Why? I don't know, lots of theories on why.

More important though, there is a reason that people view markets as gambling and stock operators do not, especially in the context of fibonacci ratios, getting back to how it's applied.

The nautilus shell is the most commonly used picture to depict the golden spiral/ratio in nature in any book on the subject, in fact it usually makes the cover of the book. Outside of this spiral galaxies or sunflowers are the most common pictures used. How close do you ever study the pictures? What does a close look reveal?

if one looks examines the nautilus shell they'll see that the curvature of the shell almost always tracks the math model to perfection closely up to the line for 21 units of length. then the curvature of the shell DEPARTS the math model by showing a tighter growth spiral than the ideal math projection.

Here's the important take-away:

The contraction is REALITY, it is what we can see and touch and feel and confirm. The math model is THEORY.

Constance Brown, a successfull stock operator and technician:

"Anyone that has ever calculated a fibonacci ratio by slapping a mouse pointer on a price high and defined the extreme end of the range at the price low, has missed the boat about what these ratios mean within the context of an expanding or contracting growth cycle. You may have thought Fibonacci doesn't work in the markets as a result. But Fibonacci ratios work no differently in markets from how they unfold in nature. There is always a contraction or expansion factor at play within the market price swings, and this forces you to depart from making a theoretical projection. If you learn to work with the laws of nature and change your expectations that markets will mirror theoretical perfection, you will find that all markets in any time horizon will respect your targets more often.

so, like, jump to your own conclusions based on the contrasting viewpoints above.

BinT said...

Anarchists and communists fighting each other in front of the Greek parliament before the big vote...and afterwards, the anarchists/socialists/communists are going to make nice and make Greece into a capitalist beehive of activity? Probably take the under....

BinT said...

Chinese company suspends rare earth production

China's biggest producer of rare earths is suspending production for one month in an attempt to stimulate the market.

Andy T said...

I recieved the following note from an old reader. It's of a technical nature on "gaps". I thot it was worth repeating here:

"Hi Andy,

It's nice to see that you're still posting updates to Scribd. You might be interested in an observation I made while developing charting software for the iPad/iPhone: of all of the gaps in SPY since 2007, only 4 remain unfilled:

132.63 - 133.03 (7/26 - 7/27)
117.25 - 117.67 (10/7 - 10/10)
105.98 - 106.66 (8/31/10 - 9/1/10)
98.09 - 98.11 (7/29/09 almost filled on 8/17/09)

I even double checked to make certain those gaps weren't from dividend distribution days.

Back in early 2008, the gap between 144.07 and 143.44 from 1/3 - 1/4 was filled on 5/19/2008 (high of 144.30) after Bear Stearns was sold and despite the imminent demise of FNM, FRE, etc. Even though it seems inconceivable that the market would fill that gap after all of the technical damage and ECRI's recession call, there is precedent for it. At minimum, it looks like the SPY will get back to the 200 sma and broken neckline of the H&S top. The Jan 2008 gap and 200 sma coincided at the May 2008 high, while this time the gap is higher. In 3/21/2008, the Investor Intelligence bears reading hit 43% (the most since 1998) before falling to 29.9% in mid-May. Early this month, the II bears hit 46%, a sentiment extreme that implies too many people are expecting the decline to start soon.

As you've said before, the waiting is the hardest part."

ben22 said...

Julie Dahlquist conducted a long term gap study recently and posted work at the MTA site, I think you can read it there for free

I believe it draws fairly similar conclusions.

Totally agree on those sentiment observations as well, throw put/call in there while you're at it...

Leftback said...

We put a modest sized hedge on today. Just in case Germany doesn't want to play ball.....

Not very bearish but there is time for one more big dump.

AmenRa said...

That move that started at 12:25 was enough for me to walk away from the computer.

Corner is up.

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