NOTE: NEXT UPDATE WILL BE ON MONDAY, SEPT 24TH. TAKING A LONG WEEKEND CRUISE, SO WILL BE AWAY FROM COMPUTER. IF YOU EMAIL QUESTIONS I WILL RESPOND ON MONDAY.
The stock indexes were down today, with the small cap down the most, and the QQQQ down the least. It was enough of a drop to turn the very short term momentum indicator just barely down. Of more interest, on the QQQQ chart to the left, is the tail left on the candle yesterday. If you refer to the chart yesterday (9/19) you’ll see a huge double top with a high made on July 19th, with a similar upthrust bar. The tail on either bar isn’t huge, but it is interesting to see that tail left at about the same price level. Obviously if this price level can be overcome, a further leg in the rally is likely. But at the moment there is a small range bar at overhead resistance, with lower bars on either side. Today’s range showed indecision, as open and close were only 6 pennies apart, and the range from high to low is very narrow. The short term momentum in the lowest sub-graph just barely crossed down, causing that red dot. I always compare and confirm these downturns with the double stochastic in the middle sub-graph. There, the five period (white line) turned down through the ten period (black line), but the ten period is still pointing up. Prices are holding above the three day pivot, but have pulled back under the upper error band, and the standard error band regression channel is about as flat sideways as I’ve even seen. On Friday the three day pivotwill be at 49.99 on the QQQQ. Today the Qs closed a few pennies over that, so the three day pivot will be brought right up to where the market closed. If it opens and stays under that level, trading from the short side would be logical, at least for a scalp. If the overhead restance from 7/19 is taken out another leg up could result, but beware of a fake-out if the breakout doesn’t hold. Breakouts are insidious.
Gold gapped up on the NY pit session on the daily chart above. There is an upthrust on the price bar that is on its way to the moon on the very upper right corner. As I write this the after hours electronic session is up another $3, so the upthrust might be overcome on Friday. It appears that gold is going to blast through the all time high of around $850 any moment now, at least that’s what 100% of the analysts I read and hear are saying. I can’t find a bear anywhere. Some of the dormant gold stocks have come to life and made new highs. Maybe they are smart and selling forward some of their production at these lofty levels. I’m a long time gold bug, but when I see everyone on the same side of the boat, it makes me nervous. If you are new to the gold market and are buying here, fasten your seat-belts. If you are old to the gold market you know what to expect. In the sub-graph is the adaptive CCI, and as long as that indicator stays over the +100 line I have to assume the trend is still in progress. I only start to look for a sell if it goes back under the +100, preferably with a divergence. The +100 on the chart is the upper dark red line. The dark cyan line is the +200 level, which rarely holds for long. Have fun if you are long, but don’t get greedy. Let the other guy have the last few dollars. Pullbacks occur just when all the analysts say it’s going straight up. Dollar index gapped down sharply today. As with gold going up, the dollar looks to be in free-fall, and consensus is even more one-sided than it is with gold.