Here's my most recent comprehensive newsletter with a look at the market,
bonds/interest rates and currencies, commodities and precious metals,
and of course our trade ideas which have been outstanding.
You can view the newsletter here.
Also please take a moment to check out our special sale on BPT membership!
AAPL - Chart Link - As you know, the general stock market (SPX and Dow) have taking a beating recently and is down strongly once again today. However here's a 60 min chart of AAPL, as you can see, a potential bullish inverse H&S pattern is currently setting up, the pattern has a neckline at 566 - 567, with a measurement to about 620. APPL is holding up well today considering the sell off in the general market.
If you've been following my blog, you will recall that I called for a sell off in AAPL back in April as a very well-defined bearish rising wedge had formed with negative divergence (see the left side of the chart), clearly this pattern played out well for a short. Now let's see if this potential inverse H&S can play out. However this pattern needs to play out fairly quickly because otherwise the RS will become too wide with respect to the left shoulder.
Something to watch for anyway, we'll see.
And of course the General Stock market remains very weak because of the situation in Europe and the rallying US Dollar. Please consider subscribing to our newsletter to get full access to all of our market analysis and trade ideas.
Here's my commodity newsletter, it's very detailed as always, please take the time to review and listen. I hope everyone enjoyed their long three day weekend! Also many thanks to our Veterans both past and present
GDX - Chart Link - Our GDX Renko Mechanical system went long GDX last Friday at a price of $41.62, so far so good! This is a pure mechanical rule based system.
Sign up to Breakpoint Trades and get access to this system as well as others.
Here's our comprehensive market newsletter for
Tuesday May 22nd 2012 Newsletter
also please consider signing up for a free trial to our website!
$NYMO - Chart Link - here's a follow up to my NYMO indicator, as expected the market put in an decent oversold bounce today with the SPX rallying 21 points and the Dow Jones rallying 135.
$NYMO - Chart Link - The NYMO is now quite oversold and the 2 RSI closed at 0.24% on Friday, therefore the market is probably getting close to some kind of oversold bounce soon. But again what kind of bounce will it be? Take a look at the history and notice that it was quite a bit lower in August of last year and in May 2010. Also notice that happened during those times is that the market put in an oversold bounce, but then pulled back again to form a lower low. Also notice during those two times that the NYMO formed a positive divergence i.e. it formed a higher low while the NYSE formed a lower low.
Perhaps we'll see something similar this time around i.e. an oversold bounce soon, but then another pullback to form a lower low, while the NYMO forms a higher low
$NYMO - Chart Link - The NYMO is below its lower Bollinger Band
Yesterday the RSI 2 closes below 0.5% on the daily chart. Here's the statistics going back 36.5 years. This has only occurred 6 times in 36 years!, that is exceedingly rare.
100 % winning trades if you hold until the 2 RSI closes back above 60%. The average hold time is 9 days, 16 hrs. Average trade profit is 1.5%
As you know, the market has recently had a strong correction, here's our most recent newsletter along with our detailed charts and thoughts going forward. Very Detailed.
NEM - Chart Link - here's a weekly 20 year chart of NEM gold stock with the standard 14 period RSI. As you can see, over the last 2 decades, the weekly RSI doesn't get oversold (below 30%) very often, and generally when it does, it's due at least for an oversold bounce. In 2008 of course the pullback was the most extreme and the RSI become the most oversold, however prices eventually resolved to the upside. Notice that even during the late 1990s (1997 - 1998) that price was in a strong downtrend, however the RSI getting oversold always caused a decent bounce in all cases, even if prices continued lower afterwards.
Currently RSI is oversold again on the weekly chart. This doesn't mean that it can't go lower, I'm just pointing out that historically it's getting oversold.
$SILVER - Chart Link - As you can see from this chart, Silver is testing a long term uptrend line from 2008
$SILVER - Chart Link - Here's a second chart, as you can see the $26 area is important support as well
$SPX - Chart Link - here's a weekly chart of the S&P 500, watch this important trendline from the 2007 highs to see if it can act as support on this correction.
$SPX - Chart Link - we posted this back in March, amazing how price is following the parabola trendline
In the past I've posted a chart showing the HUI Gold Bugs index with my custom indicator which shows the percentage away from its 200 day MA.
Here's a chart of YG Gold futures. Back in August of last year I showed a similar chart of gold when I warned of a top and a pending correction in gold since it was over 25% away from its 200 day MA. As you can see past highs have occurred in the 20 - 25% range above the 200 day MA.
However since gold is in a bull market (let's assume that it still is) the most of the corrections have been shallow falling only about -4 - 5% below the 200 day MA, except for the 2008 correction when gold fell to -18% below the 200 day MA.
Currently gold is -7.9% below the 200 day MA, therefore it's below the mean of the past corrections, so the question going forward will be how deep does it go.
Also here's the updated HUI gold bugs chart, currently the HUI is -23.2% below its 200 day MA, which is slightly below the 2004 and 2005 corrections, and of course well above the 2008 major correction lows.
It will be interesting going forward....
needs to hold there to hit that downtrend line of 1365 area on SPX
I forgot to mention this in the newsletter, but the RSI 2 closed below 2% on the S&P 500 today, this has only occurred 25 times over the past 23 years when the SPX was above its 200 day MA. As the Statistics show, the odds of getting a least a short term oversold bounce are high
$HUI - Chart Link - HUI 2001 - 2003, very easy trading during these times simply following the HUI/GLD ratio, MACD crosses, and histogram
$HUI - Chart Link - HUI from 2003 - 2008 - Notice how the HUI started to under perform relative to the metal way back in late 2007 and early 2008 before the big crash, this was a warning sign. Now look at the ratio on the next chart, it stated down trending early last year!
$HUI - Chart Link - HUI from 2008 - current - Notice that gold stocks started to under perform and trend down relative to the metal before the HUI topped in early 2011, this is similar to what happened in 2008. Anyway, the HUI is now at a 50% Fib, we'll see if it can hold in here or not.
This is why I follow the HUI/GLD ratio, the GDX,GLD ratios etc, I've found them very useful for the last 11 years.
Hello Everyone, with the recent elections in France, here's an
in-depth review of the world foreign markets. Earlier today Steve Nelson
did a review of the US Market, and later this evening I'll send out a
3rd newsletter reviewing Commodities.
Best to your Week! Matthew Frailey
World Market Review, May 6th, 2012
Here's a quick discussion on two of my RSI 2 strategies.
The common RSI 2 strategy that goes long when RSI 2 closes below 10% and above the 200 day MA and short when RSI 2 closes above 90% and below the 200 day MA will not be going long today, as the 2 RSI is currently at 14.65%, it needs to close below 10%. This strategy is single version, i.e. all in 100%
The second RSI strategy uses a scale in version of 4 parts: 30%, 20%, 20%, 30%. So it's not always fully invested. This one uses a 2 RSI as well, however I'm using the BPT EMA RSI. This strategy will be going long today at the close for a 30% position
again eventually I'll make these strategies available in our BPT store for Tradestation and Multicharts users
Here's a 60 min chart of BOIL, a pullback here could form a Right Shoulder of an Inverse H&S pattern.
Also options are trading quite high for this ETF, here's a list of call and put options for May, June, September.
for example one could sell June 8 call options for 0.75 cents, with the spread I was able to get filled at 0.85 cents
For September you get $1.6 - 1.8, assuming you get $1.6, that's a 20% return if you are called out. Also this lowers your cost basis down to $7.6 - $1.6 = $6, therefore price has to fall below $6 before you start losing money. Of course your potential gain is capped, if by Sept BOIL is trading at $10, you have to sell it at $8, but you still make your 20%
