S&P 500, Gold, Silver – August 11, 2011 - BMO

This is a 60-min S&P futures

This thing has not been behaving impulsively. The volatility has remained and it is quite probable that what we have had from recent lows is an ABC up as I discussed with 15-min chart last night’s Market Time Premium post

Last nigh we had futures green and now we have red and the swings are quite large. 20-3-40 points every few hours is not stuff of bull market. The may lead to a bull as that type of activity may be a part of a bottoming process. Or they may be part of an ongoing correction in bearish phase. What I know is that index has a lot of technicals broken and if I wanted to err on the side of caution, I either would not go against prevailing trend or would do so small and guarded.

Sometimes, the situation is so depressed that a bounce is very, very likely, and that’s why I posted the supporting curve range when futures were hitting 1080-ish.

That trade was low risk with stop below 1070 and has paid and whatever is left is now securely hedged.

Now, with the depressed conditions having had a bounce (from 1085-ish to 1170-ish), and with index behaving not very impulsively, one is left with the possibility of a new long being open to a sudden bout of selling or a whipsaw in wide ranging Yo-Yo’s. That is how it is and any new long knife-catching gamble should be aware of that

So far, since the recent 11170-ish peak, futures have had a lower high and lower low situation. At the very minimum a move above 1150 (1153 cash) is needed for any new long trade, setting whatever low that came before it as stop. That is 40-points at this moment, and that is the risk of betting anew on a long for any trade.

I am not trying to scare anybody, and, even if it is a counter bounce from recent low, this may turn and do series of ABC’s on the way up all the way to 1200+. I am just laying out the risks that one may have to face going against a market with broken technicals, broken structure (as discussed using MAI and OEW indicators), and wide swing volatility.

On the opposite side we have the smooth rise of gold

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S&P 500 – August 6, 2011 – Intraday

We had monster bounce on Friday off the sharply spiking lows





And we had this



Neither is a surprise, thought, is it? Markets can become very volatile in the course of heavy distribution and US debt rating has been under a lot of pressure and speculation for some time

The combination of the two, however, leaves me to wonder if the sharp bounce out of the low of Friday was not to drag in some bidders on hopes of a reversal only to gap down and squash them Sunday evening in the futures markets

So, was that monster bounce just to drag the last of the hopefuls in to wash them out penniless?

Lots of people will have a weekend of angst. That is why I am so keen on risk identification and management

I Hope Sunday evening stays benign and a time of reflection, but, till then, this is going to be a weekend of indigestion for many


Risk management is the only play of this game, everything else is throwing darts no matter how skillful the dart thrower technically or fundamentally. folks only the liars and the delusional know the future and any forecast, however sincere and learned, is just a probabilistic model. Models fail and it is our job to at least think about the ways they might break.

In the previous post of August 1, here in this free blog, I wrote that:

"this is a market under distribution and headed for a mid-term trend reversal to the downside unless buyers appear en masse and buy for a couple of days at the very least"


And that is exactly what has happened.

How did I make such a good call?

How was I able to warn readers of Market Time Premium of possible nastiness in the market?


It was not knowing the future, it was just a case presented based on the weight of the evidence. Let's see the evidence as I collected from the time S&P was above 1340

-- We lost the prior short-term uptrend without at least making a higher high on the swing

-- We lost 1290-1300 which send me into defense

-- We saw deterioration in Structual integrity of the index as I gauge by mid-term OEW and Market Alignment Index Indicators

-- We lost key weekly moving averages

We lost .............

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Investing in the financial markets can involve considerable risk. Past performance is not necessarily an indication of future performance. All information included in Market Time Premium reflects ongoing thoughts of Market Time authors about market-related issues, and is prepared for educational purposes, and is presented as authors’ observations, and is not a solicitation, or an offer to buy or sell any security or use any particular system. Information is based on historical research using data believed to be reliable, but there is no guarantee as to its accuracy. Market Time Premium, its author(s), and its affiliates do not represent themselves as acting in the position of an investment adviser or investment manager. Market Time Premium, its author(s), and its affiliates shall not provide you with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio or securities, transaction, investment strategy or other matter. From time to time, Market Time Premium, its author(s), and its affiliates may hold positions in securities mentioned, but are under no obligation to either divulge or hold such positions.

S&P 500 – August 1, 2011 – Intraday

In the BMO post, I said:

“A knee-jerk reaction here can involve a good dose of squeezing the late, news-drive shorts. Question is whether bulls can carry after that has settled?”

In the BMO post of July 20, I said:

“I had mused that some (or perhaps all) of gold strength and equity weakness was due to political theater of US congress and that a resolution to that show might get a reversal, at least, temporarily in the order of things. I have not really checked if a deal on US debt ceiling is announced or not. If my hypothesis is correct, market is moving ahead of it. It may become a buy-rumor-sell-news thing.”

Sell the news it was but not much buying the rumor other than last night’s pump.

Anyhow, none of this changes my analysis that this is a market under distribution and headed for a mid-term trend reversal to the downside unless buyers appear en masse and buy for a couple of days at the very least

Here’s a 60-min chart of S&P futures

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Investing in the financial markets can involve considerable risk. Past performance is not necessarily an indication of future performance. All information included in Market Time Premium reflects ongoing thoughts of Market Time authors about market-related issues, and is prepared for educational purposes, and is presented as authors’ observations, and is not a solicitation, or an offer to buy or sell any security or use any particular system. Information is based on historical research using data believed to be reliable, but there is no guarantee as to its accuracy. Market Time Premium, its author(s), and its affiliates do not represent themselves as acting in the position of an investment adviser or investment manager. Market Time Premium, its author(s), and its affiliates shall not provide you with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio or securities, transaction, investment strategy or other matter. From time to time, Market Time Premium, its author(s), and its affiliates may hold positions in securities mentioned, but are under no obligation to either divulge or hold such positions.

S&P 500 - Aug 1, 2011 - BMO

This is 60-min SP futures

Sunday evening session, futures had a gap up and have held strong so far.

Headline, courtesy of marketwatch.com, reads this

and this

This is the URL to the article

http://www.marketwatch.com/story/washington-reaches-sweeping-budget-deal-2011-07-31

This, so far, overnight, has been the knee-jerk reaction that I have been mentioning and expecting. If it holds, the current mid-term uptrend can gather energy and try to resume. If it fails, it may get really scary, at least in the short term, in the equity market.

A knee-jerk reaction here can involve a good dose of squeezing the late, news-drive shorts. Question is whether bulls can carry after that has settled?

Friday’s low is a must hold. That said, a steady hold of 1290 area can be a sign of strength

More important is to get the swing and short-term uptrend as I discussed on weekend’s post

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Investing in the financial markets can involve considerable risk. Past performance is not necessarily an indication of future performance. All information included in Market Time Premium reflects ongoing thoughts of Market Time authors about market-related issues, and is prepared for educational purposes, and is presented as authors’ observations, and is not a solicitation, or an offer to buy or sell any security or use any particular system. Information is based on historical research using data believed to be reliable, but there is no guarantee as to its accuracy. Market Time Premium, its author(s), and its affiliates do not represent themselves as acting in the position of an investment adviser or investment manager. Market Time Premium, its author(s), and its affiliates shall not provide you with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio or securities, transaction, investment strategy or other matter. From time to time, Market Time Premium, its author(s), and its affiliates may hold positions in securities mentioned, but are under no obligation to either divulge or hold such positions.

GDX - July 29, 2011

In the post of July 22, I wrote this about GDX at Market Time Premium

“Any price advance from here before a correction may be associated with negative divergences on McClellan. That may be OK and price may ignore it but it makes new positions vulnerable to snap pullbacks and corrections”

That proved to be a spot-on assessment and GDX behaved exactly as that

It did a bit of more advance and made divergence on RSI

Notice that GDX could not overcome the broken 2008-2011 uptrend line. Also notice that it ran to an area between the broken trend line and the top line of the black fork and then dropped. This is very routine technical action to me.

Now, if GDX is really hot and if we are dealing with a super-charged, super-bull gold environment, then it should soon stabilize and run up and make a higher high.

Daily MAI had a nice run up, but it has been correcting

Notice that weekly MAI did not get positive during the recent swing up. That is not very good and a if the daily MAI drops to negative.

So, I shall keep an eye on price against support and on daily MAI to see if they stay positive as this correct correction runs its course

Metal ETFs, GLD and SLV have held a lot better than mining ETFs, but, the fact that miners are correcting may be a warning that metals may soon see correction as well .......

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Investing in the financial markets can involve considerable risk. Past performance is not necessarily an indication of future performance. All information included in Market Time Premium reflects ongoing thoughts of Market Time authors about market-related issues, and is prepared for educational purposes, and is presented as authors’ observations, and is not a solicitation, or an offer to buy or sell any security or use any particular system. Information is based on historical research using data believed to be reliable, but there is no guarantee as to its accuracy. Market Time Premium, its author(s), and its affiliates do not represent themselves as acting in the position of an investment adviser or investment manager. Market Time Premium, its author(s), and its affiliates shall not provide you with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio or securities, transaction, investment strategy or other matter. From time to time, Market Time Premium, its author(s), and its affiliates may hold positions in securities mentioned, but are under no obligation to either divulge or hold such positions.