Markets and Overview
It has been a very action packed number of weeks on, and let's admit it, in an already red hot market. I
can go on and on about the Federal Reserve, The Wall St Hedge Funds, the overinflated majority of
stocks on (any) market today. But, is that really that much fun? I would be (to many of you) preaching to
the choir, and saying nothing new.
I thought that I would focus more this time around on individual stocks, indices, currencies, commodities
and crypto. If we can agree that the market is over inflated, it is then even more speculative than before
and even more detached to business or company fundamentals. Graham and his school will always have
a place, but I pontificate.
So to hit it off, let's go from the top! I will analyse some interesting requests from some of you - I just
love technical analysis. And especially when I get my predictions right.
Indices
SnP 500
Yes, the elephant in the room is that the Fed has had a hand in propping up of this index, despite
multiple bearish signs all over the place in the lead up. But let's take another look at where we are at
now.We have crossed the Moving Averages (200, 100) a while back, MACD and Stochastic indicators are
bullish on the daily chart, confirmed by the weekly. And ofcourse they are! We had nothing but propped
growth for the last so many months. Go the Fed! For subscribers of Elliot, we might be in Wave 5 of
impulse. This is the last impulse wave before consolidation.
The bottom line here is that this thing will probably continue to rise and rise before consolidating again.
The market does not give a damn what I happen to think, but I do not see this thing retesting the
moving averages, let alone that support back in March. I did say that SnP was probably going to move up
the last time I did this newsletter, and it did. It was back in the Wave 4/5 junction I surmize. If I use the
data from March til today, I still think that SnP will continue to rise, but we are in the last throes of the
impulse and that is why I do not see myself putting money into this right now.
QQQ
QQQ is a progressive, relatively more volatile index composed of tech corporations. Apple, Google,
Microsoft are among many others that are in this index. Generally, QQQ is a net driver to SnP. And so
knowing that and knowing where SnP500 is at right now I am expecting this thing to be doing just fine.And surprise, surprise - it certainly is! Pretty much the same picture as with SnP, with bullish moving
averages, MACD. RSI is about to hit 70 on the daily, however. We have just had higher lows on the daily
and have just surpassed what I think is wave 3 of Impulse, meaning that we might just be at the
beginning of Wave 5 now. In SnP500 we were anywhere but the beginning of Wave 5, whereas here we
are anywhere but the end. I could fathom putting some money on this, but it would have to be a quick in
and out believing that I am in the ultimate phase of impulse here. The last time time I looked at this
thing was back in June surmizing it was likely to grow, which it did. A lot.
Commodities
Oil (West Texas Intermediate)
The last time we glanced at oil, it was 35-37. I don't remember what I said the last time I analysed it,
but I did not think it was going to cross that moving average (eMA200). But it did. And it was right to do
so, because, ladies and gentlemen, the market is always right. Crossing the MA on the daily is good news
for the bulls. Stochastic is upgoing and we just crossed major resistances, also approximated by the
Fibonacci retracement there. Again, it appears to me that we are in Wave 5 of Impulse, if that flat plane
was a seriously protracted 4th Wave. I think it will continue to rise and get resistance tested around 45.
We shall see.
Would I buy Oil right now? No. Here's why - we might be turning to bullish trend on the daily, but we are
still very, very bearish on the weekly. And I never go against the market trend. In my mind, going
against the trend is akin to trying to catch a falling knife with your open hand. It just ain't worth it.
GoldWow, what a move! Moves like that are worth a parade! The last time we looked at Gold, I did say that
Gold was still going to move up, which it did. Most indicators are expectantly bullish (very much so!), but
the RSI is 87 on the daily and 81 on the weekly. Gold is overstretched -bigtime! And a consolidation is
imminent. I would expect gold to drop soon and will not be putting money on this thing. It's way too hot
right now. Elliot seems to agree, and Elliot in my books is an Oracle of the highest order.
Silver
Silver too has been absolutely kicking ass! Last time, I looked I recall being bullish on Silver, and well, it
absolutely skyrocketed. Same picture, as with Gold, however now. Indicators might be bullish, because of
absolute wins in terms of price action, since around March, but it might all be coming to a close very
soon. RSI is 82 on the daily and 84 on the weekly. This market is overstretched and should bounce back.
Newton is right, and gravity is real.
I just wanted to show you one more thing here that is absolutely spectacular.This is the setup of a graph from my last Newsletter. As I predicted, we did break the triangle on the
downside, and, well, this is just throwing more oil to the fire that the turnaround for gold is nigh.
Currencies
The Aussie
This is the very same chart that I shared with you in my last newsletter. The green arrow is where we
were at the time, and just look at the gains. This is another testament to why I use technical analysis.
And why momentum, volume, fractal based indicators really work and why there are a lot of rich guys
that are traders in places like New York. Obviously, very bullish on the indicators because of the run up,
even RSI does not look too bad.
I don't know how far this will go. We might get resisted by the moving average on the weekly, or this
might be a Wave 3 of impulse, rather than a Wave 5. Now this being FOREX, different rules apply than
those of the stock and other markets. FOREX is traded very differently to equities generally speaking.
People generally have very short lasting, comparatively very small gains per transaction with positions at2%-3% of their trading principal. FOREX rules apply to all currencies worldwide, as far as I am
concerned.
The Kiwi
Similar picture with the NZD/USD pair. Looks bullish. Indicator seem to agree with Elliot. MA100/200
cross is significant of that as well. We might be in the beginning of Wave 4 here of impulse and I expect
this thing to grow a bit more, possibly getting resisted by the moving average 200 on the weekly.
The Loonie
Still in impulse on the Canadian dollar, crossing the moving averages and seemingly testing that key level
at ~0.75 . I suspect we are still in Wave 3 and l am looking for this thing to grow quite a bit more before
consolidating. For me, long term holds are a bad idea in FOREX in my mind. This is a hard and fast
market and probably the biggest one on the planet.C
rypto
Bitcoin
Bitcoin has been absolutely stellar. Last time we were below 10k, and I predicted that eventually we
would climb above it. We finally broke the 10k barrier, drew out the impulse and are now consolidating.
We are in a consolidation triangle. Technically (Parabolic SAR, Volatility Stop, MACD), we are bearish and
well above the MA. I believe this coin will keep consolidating, possibly breaking out on the downside with
the support around 10k.
It's just beautiful how the fractal nature of markets works. My mentor in this space once said something
along the lines of, "When you can understand the fractal nature of the market, you will better understand
any market you trade. What's more, it might even change your perception of how the whole world works,
because it is too is a fractal." I am still letting that sink in. Anyway let's have a look at more Cryptos.
It is pretty much the same picture with Ethereum, Ethereum Classic and Ripple. I expect most cryptos to
consolidate for a bit now, since the bullish run up over last week. I want to talk about a few that I believe
show potential for growth.
Tezos
Introducing Tezos! A new coin in the alts space that is open source.Why this one sparks joy is shown by how it escape a down trending channel and demonstrated a reliable
support at previous resistance. I wanted to show you this one also because here I use something called
Fibonacci Extension to see where the ceiling might be if we do have a proper run up after breaking that
resistance. This is around 3.45 in this case. Let's see what happens.
Binance
Introducing Binance! I know, I know - there will be a whole lot more introductions in this space. It is a
coin by the guys of the Binance Exchange - an impressively anonymous exchange registered in Malta
(yes, that is significant) that offers a depth of coins, options and a whole bunch of derivatives in the
crypto space.
www.binance.com
Again, here we see ourselves escaping the uptrending channel that I believe to be a part of the larger
Elliot Wave 3. To be honest, I probably jumped in a little early into this one, as I like to see if it is a true
escape first. "How do you do that?" I hear you ask. Well, it's all a matter of seeing if the new support is
true after seeing it get tested once first. That simple strategy helps to minimize putting positions down on
potential fake outs.I am especially excited about Cryptos for a different reason altogether. Decentrilized Finance or DeFi is an
emerging concept here with a series of tokens. I am currently watching a few: Khyber Network, Ren,
Lend, and Compound. More on this space in future reviews.
I wanted just close this one up with how invaluable technical is in this age of crazy speculation. As some
of you might know I dabble in Crypto a bit, and use nothing but strategies involving technicals. Although
I found that some people, after speaking to them, might have a bit of difficulty understanding the how
and the why I combine certain indicators together to land a profit on a position, I want to show you that
it can be done.
Above you can see that with 41 trades ( not all shown) over the last 7 days, I grew my principal by
5.51%. This is absolutely huge! For comparison SnP500 might grow 8% over a year, a good Investment
Advisor might make 10%-15% per year for you. Mutual funds at best might make you 20%-25% per
year as well. Over the last so many months this average has been around 3%-3.5% per week, every
week. I'll let you do the maths on that one.
It's cool - I have already given myself a pat on the back. It's a trite expose I admit, but I do not care. I
just want you to know that anyone can be proficient with TA and other forms of financial analysis and
make money (big and small - it doesn't matter!) on the side or as a main gig even, trading any market.
This is just a side gig for me that I can do on my Chinese Android tablet running off a smartphone
Hotspot.
Understanding how markets work after seeing the forest for the trees is key. If I was to sum it up, the
magic is in the beautiful fractal nature of market behavior. It is especially exciting to see a major
downturn before it actually happens or to close a position in the Green. It is stressful and risky to do,
yes! But even riskier (and, heck, stressful) getting somebody to do it for you. And absolutely rewarding
when you get it right. And before I roll the Endspiel, don't give me your money, I won't trade for you.
Roll the Endspiel!
Just a reminder to everyone, none of this is financial advice per se. I do not know your
financial situation (well most of you, that is :D ) and cannot in all honestly do a personal
recommendation. All views above are my own only. Think for yourselves! Money Managers
do not give a damn about you or your money. Alw
