range after range

This market is boring. Range after range. We stayed in 1173-1200 zone for a while. A rectangle or a descending triangle is forming. BUT it is nor exciting either. Outside of this one is a bigger range of 1150-1220.
Let's wait and see.

carry on charts.

Projection on SPX

Gold to 1325

It’s time to admit summer is over no matter how much I want to stop the clock.  Bye-bye good summer. It’s time to go back to work and get ready for the next vacation season.

Alright, it’s time to do an update. Gold gave us good return. I called for a mid-term reversal back in early August. My gang and I exit equity around 1120 and long gold at around 1170. SPX did a huge swing 1130-1040-1150 since then. We didn’t have any fun here but our experience with gold is good enough. We are experiencing the historical high with our longs. My current target is 1325 and I am expecting it this week!  What I am really saying is I expect the last spike then mid-term consolidation. Why I say that? Gold is priced in currency. It is true Gold is keeping on making new high. BUT, the new high is only in USD, not any other currencies. It is safe to say it is the crash of USD, and because of the imbalance among major currencies I upgrade my target to 1325 from 1305.

Next, will USD keep on dropping? I don’t think so. JPY hits historical low at 83? Tell those Japanese about it. Apparently they don’t agree, and they start selling their own money. Same thing happened in Korea, in Switzerland for what we know.

Even EUR. Since 9/10, EUR booked a gain of 6.25%.

Below is a report from Brown Brothers.

"After rallying about 6.25% since September 10, the euro may enter a consolidative phase before advancing into the $1.38-$1.40 area in the first half of Q4. However, the euro may then surrender those gains in the second half of the quarter, as QEII is discounted (or not delivered at all), and the loss of economic momentum in Europe, ahead of a 2011 fiscal contraction, keeps debt restructuring fears elevated. The increased possibility that the EFSF has to be drawn upon may also spur speculation that the ECB may not be in a position to remove its emergency liquidity provisions; and indeed may have to actually embark on either more bond purchases or take some additional measures. All this may leave the euro trading around $1.30, if not lower, by year's end."

I don’t totally agree with their conclusion, but I also think the bounce of USD is coming even if the QE2 crap is exactly as the market priced in (needless to say if there is any discount). I utilized my economic model and I also calculate the fair value of EUR to be around 1.30+. My guestimation system sees a mid-term top of EUR at 1.368-1.374.

Shanghai Shanghai

Mid-year Self Review

Per the request of my friend A.A, I did a self review here.

On Nov 16, 2009 I started this place with my very first post Reading of DOW.
In that post I threw in a chart like this
and I said "I calculated the upper limit to be 11245".










9 months passed by, here is how the chart looks like:

The peak is actually 11258. Damn, I missed 13 Dow points.
From the chart, I believe now is a good time to conclude P3 has already started.












Recently I believe I improved a little bit.

On Monday 6/28/2010, around 2:00 I made a post like this.

 The low was 1010.91. This time I miss less than 1 point.
~_*

Wave 5 target

I am back in town. Gold recorded a decent movement. Burst most bears by rally to 1230s. My friend, YJ Yang, had a serious fight with me on gold. It took him 150 points to admit it is impulsive.
Here is the chart I posted on a Chinese website on 4/25. I believe it is still in play. It is a comprehensive break out and retest confirmed pattern. Short term target remains the same at 1250.

At historical new high, where will we go further? Here is a wave estimation. (I am not saying it is a one way road.) The Intermediate target is 1450 based on this wave structure.

Also I found something interesting. That is SPX priced in gold. If we were still in Gold Standard, where is the equity at? TheChartStore updates this chart weekly. It didn't include this week's movement yet.

Trade well.
Live free.

Upgrade Gold to 1195

Rumor says China to raise RMB NEXT WEEK. USD will go down, commodities will go up.
Only problem is the rumor on interest hike. Me thinks it will not happen until late May. We still have time.

To be conservative, I may watch my stop carefully. If GC can close above 1162, I will chase more. Otherwise, it may retest 1120 support.  Anyway this will be a 40 points wave. I am so excited.

I don't disbelieve it

Gold is stronger than I thought again. I exit too earlier and missed about 20 points. Busy is not a good excuse. It is actually my bad judgment. I thought it could not pass 1130 which was the 3/16 high. Not to mention multiple MA, 50% since 1226 and 61.8% of this round all in 1140 neighborhood. Gold end up took the March high and is challenging 2010 high now.

Anyway the breakout need to be respected. I think 1175 is a good number as Andrew (purple), channel (orange) and fib all meet there. Should I take the trade? Yes I think so. The breakout is powerful, but the internal needs some work. 1155 is Jan high and 1160 is 61.8% (blue). With overbought condition like this, I don't think crazy bulls will push it thru. I expect GC stays in the range of 1135-1155 for a while. Any dip below will be a buy. Time series clearly says 4/16 top. It worked perfectly since last Oct. It should work this time as well. 

Dreamed plan: buy dip around 1135 friday, sell 1175 within 1 week.

Will the Wave5 of USD play out

$$$ is at critical point. If the reg channel holds, we may see a wave 5 up, otherwise everything else will be at large, Gold, ES, Oil, you name it.

The Fed "exit" policy may be implemented in the order: 
- first, pull out short-term liquidity tools, such as stop buy back of mbs; 
- further increase the discount rate, which is in rumor now; 
- after raise bank reserve, the famous Chinese way, (Are we Chinese now? Yes we are Chimerican now. Will this strategy work in the US? I doubt);
- last raise interest rate.  

Plan for this week

That's it