Blogs

SILVER COULD BE ON ITS WAY DOWN

Silver presents a very interesting picture. On the one hand the gold and silver bugs are looking for a major bull market to unfold from here. And a number of Elliott Wave guys are suggesting that there is another corrective wave on the upside to come. And then there is InvesTRAC's short term model which has given a sell signal.

EUR/GBP TO REVERSE DOWNTREND

From its peak of .8754 made on july 31 2013, the EURGBP has fallen 10 percent to its low of .7891 recorded on July 23. But according to InvesTRAC's short term model there is about to be a reversal. The daily chart below shows that the pair has encountered the lower parallel channel line ...not shown but RSI has an impressive divergence which supports the case for a rally. A push through .7926 will allow a rise which could easily test the upper declining parallel channel line...and should it reverse this trendline it is possible that strength could continue until September 2015.

SELL DOW BUY TBONDS SIGNAL CONFIRMED

Today there is not much point in saying a lot about the technicals. I just want to show you that the Dow/Tbond ratio did indeed take out the support at 12.29 and looks ste to test the next visible support level at 11.89. So short term strategy should remain long Tbonds/short Dow unless of course the ratio should reverse back unexpectedly through 12.29.

 

DOW TO WEAKEN AGAINST TBONDS

Here's something to ponder. Many analysts are bearish on US interest rates. They point to the 10 year and 30 year yields and forecast that they will rise. I am not getting tinto the debate although I do have a view but I want to show you the DJIA/TBOND ratio (for the exercise I am measuring the spot Dow against the September Tonds). For the record InvesTRAC's OB/OS indicator is standing at 100 overbought (scale 0-100) with the daily Direction Indicator declining and the forecast showing a declining trend in the first instance to Agust 6.

DID THE DOW PEAK YESTERDAY?

The Russel 2000 peaked July 1 and Nasdaq comp peaked July 3. These two are leading the Dow lower ...just watch the break levels.

THE DOW MAY WELL HAVE PEAKED YESTERDAY

I'm not writing much today. I believe that I heard them ring a bell yesterday when the Dow made its's peak. So I'm just showing you the daily chart of the index...yesterday's high just nicked the two resistance lines we were watching but all InvesTRAC's indicators are not confirming the high...we measure how many of the 30 stocks are in a short term bullish confiuration and yesterday only 12 were rated bullish and 18 negative and this with the index making a new high!

HAS THE DOW 30 MADE A TOP?

Will yesterday's high stand as the top in the Dow Jones 30 Industrial index? An exciting time is about to unfold. Either the Dow takes out yesterday's high and moves substanially higher or else it drops through yesterday's low and rings a bell that the top is in place. Have a look at the daily chart below. You'll notice that earlier this month the index lifted off the combined support from the lower (red) channel line and the longer term lower (black) channel line.

DJ UTILITIES INDEX TO DROP FURTHER

I had a look at some of the major indices and was struck by the fact that the Russel 2000 was looking much weaker than the Dow 30 and wondered what else is behaving weaker or stronger. Interesting to see that the DJ Utilities index relative to the Dow 30 index looks particularly weak. In absolute terms the InvesTRAC short term OB/OS system did not reach the 100 overbought level but instead turned down at 73 and is now falling at 66.3...also the InvesTRAC forecasting model is pointing to weakness to continue until mid September.

PLATINUM TO RISE

The strike at South African platinum mines is over...Anglo American is selling its underperforming platinum assets...and the price of platinum rises. InvesTRAC's forecasting model is indicating a top in September so let's see what it can do. The daily chart below shows that the price has pushed through the first barrier and is on target to test the next resistance level at $1541, which if beaten, would open the way for a test of the February 2013 high at $1734.

DJIA COULD BEAT DJ TRANSPORTS IN SHORT TERM

Did you know that the Dow Jones Industrial Average has swung five times at an average of 29 percent against the Dow Jones Transportation index over the past six and a half years? Have a look at the weekly plot of the DJIA/DJT ratio which highlights these big swings. But this chart doesnt tell the whole story because whereas the peak in the ratio here was at 3.019 in March 2009 and the low at 2.061 earlier this month the extremes over a longer period have been 4.254 In January 2000 and 1.856 in September 1989.