Wednesday, November 06, 2013

Making sense

Look at the bigger picture, if what you see makes no sense

Monthly 2013-11-06

You are looking at monthly charts (left to right, top to bottom)

EUR / Pound / Yen

Gold / S&P / Dow / Oil

These charts go from 2009 to 2013 and they tell a story.

The pound is rangebound, while the Euro failed to reach the channel highs, instead stalled below the 61.8% Fib

Euro monthly 2013-11-06

or not?

20 years Euro and GBP side by side

Euro and GBP monthly 2013-11-06

The Yen building a base for the next leg up. Look at 20 years of Yen trading to see it building.

Yen monthly 2013-11-06

Gold is another story. The once mighty has fallen from the grace …
There are two lines in the sand, and they are not so far away.

Like the Yen, Gold might be building the base to break lower, but while I see the Yen reaching above 125 on the next long term leg up, I see Gold struggling to break below support. I see Gold moving in a range between 1200 and 1450 in the years to come, supported by the realisation, that pysical gold remains finite, while paper can be printed (as long as others are willing to buy).

Gold monthly 2013-11-06

Can stocks go higher? Sure they can! Does it look so? Well, there is a 4 year trend now in place.

But let’s look at 20 years S&P

ES monthly 2013-11-06ES monthly 2013-11-06-2

We are at the 138.2% extension of the 2002 to 2008 leg up, which was followed by a “false” breakdown and move to new All Time Highs. Next target is 1937, lets call the round number 2000, which will provide a lot of resistance.

But to get there, we will need a base in the 1666-1602 area. And when we break down to this area, the newsies will call it the end of the world as we know it. Down is such a strange conception after 4 years up.

At last let’s talk about oil. It’s back into its year long channel. Its going down to 90-88 and will bounce.

Winter is coming

Oil monthly 2013-11-06

Enjoy it cheap, while it lasts and trade the range.