Hello everyone, I hope you are enjoying your long Easter Weekend!
Here's my weekend commodity newsletter for you to peruse when you have time, it's VERY comprehensive
*CLICK HERE* to view the newsletter
Again happy Easter,
Matthew Frailey, Breakpoint Trades.com
I've updated the table for the 1st quarter market statistics: This table shows every year since 1950 where the Dow Jones posted positive gains by the end of the 1st quarter; the table is sorted from highest to lowest Q1 change. For additional information I also included the gain/loss for all the quarters, and also include the presidential cycle.
As you can see, 36 out of 38 years (95%) the market has closed out the year with strong gains, with only 2 exceptions (1981 and 2002), even 1987 still managed a 2.3% gain for year despite the large 1987 crash! To put this into context, if the 1987 crash hadn't occurred the Dow would have gained about 20% for the year.
This year the Dow gained 11.3% for 1st quarter 2013
The second chart shows the statistics for the year after a strong January gain of 5% or greater.
Therefore I think the odds favor that 2013 will close out the year end with strong gains despite what the ultra bears think.
However I don't expect it to be all steady eddy. I think that we are going to experience another sell in May or late April event just like we did last year and recent years as the Sell in May and Go Away Statistics play out once again. The 3rd table shows our Sell in May and go Away Statistics.
Currently it appears the that S&P 500 is attempting to form a H&S top just like it did last year, here's our fractal chart - currently working on the head (chart 4). We are also very close to all time highs on the S&P 500 and the Wilshire 5000 is nearing it's upper 13 year trendline (chart 5). However in the short term once the head of this H&S completes I would expect an initial sell off and then another bounce to form a lower high in April.
I think this year the market will experience another sell off like last year, then chop around in the summer time frame, and have another rally end of year. Then I think 2014 will begin another bear market that retraces 50 - 62% of this current cyclical bull market - the last chart shows the monthly SPX chart
As you know it was another good day for the market, however as I have been showing, the all time high on the SPX is so close now, it's almost like an itch that needs to be scratched
here's two weekly charts of the S&P 500 and the Wilshire 5000 index
As the general market strengthens and the S&P 500 nears its all time highs at 1576, gold stocks continue to struggle.
Here's a daily chart of the HUI Gold Bugs Index, notice the bear wedge pattern which I have been showing since Monday of last week.I'm not surprised to see weakness in gold stocks, however my question is, does the HUI make one more new low or simply retrace some of this wedge and form a higher low?
The second chart shows a daily chart of the GDX ETF, notice that it logically stopped at the May 2012 lows, remember in technical analysis broken support becomes resistance.
Here's our most recent newsletter which briefly covers the general market, commodities, and trade ideas
CLICK HERE to view the newsletter
Matthew Frailey
Here's two weekly charts, one for the S&P 500 and one for the Wilshire 5000. As you can see, the S&P is very close to its all time highs, why not test them. Also the Wilshire 5000 is very close to the upper trendline which connects the 2000 and 2007 highs.
Short term these indexes may want to tag these areas or get very close to them, however then I'll think we'll get a decent pullback and sell off in April and May in the Sell in May effect as the RSI indicators are sky high.
However I don't think the ultimate TOP will be in place, I think the market will then chop around in the summer time frame, then go and make new highs again in the fall and end of year, however I think think that a bear market will begin in 2014 that will last 1.5 - 2 years and retrace 50% to 62% of the bull market move - see the last chart
AAPL - Chart Link - AAPL has continued to follow through from the divergent daily low, the 50 MA has now been taken out and the downtrend line
$NDX - Chart Link - possible H&S top setting up on the weekly chart of the Nasdaq 100. Clearly AAPL weighs heavily on this index, however the pattern is something to take note of
Here's some of the gold/silver charts I had in the weekend newsletter that, I've also included daily and 60 min charts, note that a lot of the 60 min charts have potential inverse H&S patterns. Also keep an eye on the ratio trendlines (watch the video below)
Also Here's a short video on using the Ratio as a tool for trading the PM stocks
Here's our most recent newsletter, however just a word of warning, it's quite detailed and 40 min long, but it provides a good education
Click Here to view the newsletter
Here's a weekly chart, getting dangerously close to that upper trendline with the RSI overbought as well
Hello everyone, here's my commodity newsletter, this one really only talks about Precious metals with a big focus on the individual stock setups
You can view the newsletter here
Best to your week! Matthew Frailey
TZA - Chart Link - as you know, the SPX missed the all time closing high by a few points. Here's a 60 min chart of TZA, the -3X ETF for the Russell 2000. It has a bull wedge appearance that may provide an initial trade on a quick market pullback.
One of you below asked "when is the bottom gonna fall out of this market"
therefore in response to this, I made this quick 3 1/2 min video which I think provides a good education
http://breakpointtrades.com/jing/2013-03-12_1403.swf
Hello folks, the energizer bunny crack fueled market continues! Here's my recent newsletter which discusses the market, as well as GDX, DBA, and some trade ideas
Click Here to View Our Market Newsletter
have a great week! Matthew Frailey
Today the Dow Jones closed outside the upper Bollinger Band 5 days in a row, this has only occurred once ni the last decade, so obviously it is quite rare. Credit: Ryan Detrick
Here's a weekly chart of NEM that I first posted back in 5/17/2012 of last year (click here to see my previous post) when the 14 length RSI became oversold below 30%. As you can see via this 20 year chart, whenever the weekly 14 length RSI became oversold on NEM, it was only a matter of time before some kind of bounce occurred.
As you can see from the chart, sometimes it signaled a major bottom, and sometime it simply produced just a bounce in a downtrend, however some kind of tradeable bounce always occurred.
Currently the weekly 14 RSI is now slightly below 30%, which is technically oversold. Let's see if some sort of bounce will begin soon.
Below I posted some longer term views on the market, here are some shorter term views:
The first chart show our 30 min S&P 500 chart which we showed last week as an inverse H&S pattern - clearly this is playing out perfectly and appears to be subdividing into a wave 5 structure, once wave 5 is complete, then I would expect some kind of pullback/correction in the market.
the second chart shows a daily view of the S&P 500 - this chart shows a fractal and how the SPX may be in the process of forming a Head of a H&S pattern which is VERY SIMILAR to last year! I would then expect a similar pullback once it is complete
The 3rd chart shows another view of the H&S pattern that is in the early stages of formation, the left shoulder is in place and the head is now forming. Once the head is complete, I'd expect a pullback (which will get the bears exited) however then I would expect one more rally and push higher, however it should form a lower high, which will form the Right Shoulder of the H&S pattern - then finally the market will be set up for a larger pullback. It will the Right Shoulder where traders should look to aggressive short the market.
take care and have a great weekend folks!!
Matthew Frailey
I haven't commented on the market lately here on our public blog, however things are pretty much lining up like we projected! The first chart here shows a daily S&P 500, last year in December we showed this inverse H&S pattern (in green) which projected to about 1550 on the SPX - well the S&P hit that target today!!
The second chart shows a monthly chart of the S&P, this is one I posted a while back as well - honestly I don't see how the SPX won't eventually test the upper long term trendline going back to 2000.
Otherwise shorter term, our thoughts are that the market is carving out a head to a H&S top for a sell off in April or May as the 'Sell in May and go away' will likely play out again this year. however after some summer chop and consolidation, I would expect the market to then do well in the fall and end of year. Then perhaps a bear market finally begins next year?
As I promised earlier, here's some additional thoughts about the recent action and some comparison to past action - there seems to be a lot of emotion with some of you gold bugs so I thought it was important to go over this again in more detail
http://breakpointtrades.com/market_analysis/legacy.php?nl_id=1461
GDX - Chart Link - I keep getting pm questions about GDX, but honestly there is nothing new to say that I didn't say this morning. First of GDX stopped at the downtrend line (in black), that's resistance on the daily chart
GDX - Chart Link - the 60 min chart broke out of the wedge, I think the pullback is OK and could form a higher low, I want to see it stay above the broken downtrend line
GDX - Chart Link - 15 min view, stopped cold at the 61.8% Fib and has now retraced about 50% of yesterday's move
Hello everyone, normally I don't send you
too many intra week newsletters, however gold stocks finally rallied
today and I think they could be at a decent tradeable bottom, therefore I
discuss them quite extensively - I think you can get some follow
through for swing trades
click here to listen to the newsletter
Here's a weekly chart of the HUI gold bugs index, first off notice that price tested the 61.8% Fib. Also take a look at the weekly 14 length RSI, it is the most oversold since 2008. Prior to this the only time it was more oversold was in 2000.
But there are no old, bold traders!
A tale of a 33 year old trading "whiz" that lost $400k of his own dough, and $10million of investor money. Crazy story -- he ONLY traded AAPL!
http://tech.fortune.cnn.com/2013/03/04/apple-zaky-bullish-cross/
It is also important to note that broad market money flow has not kept pace
with recent price appreciation. Please observe the chart below.
The orange circles on the chart above highlight the latest comparison of the
S&P 500 Index (SPY) to our proprietary measure of broad market money
flow (MF). The arrows illustrate the inverse direction one has to the
other. This is further indication that a pullback in stocks is forthcoming as
MF leads price.
As you know GDX has been quite horrid. 2 weeks ago the RSI 2 oversold system went long as the RSI closed below 2%. The system had a quick but winning trade as price bounced back to the mean - which was nice because GDX then sold of hard and has made new lows. However the system is actually very close to taking another long position because today the RSI 2 closed at 3.26%, and if GDX had another good down today tomorrow, the RSI will likely close at 2% or below, which would cause the system to go long again.
First off I hope everyone had a nice weekend!
Here's my weekend General Market Newsletter,
I cover the general market and my thoughts, however this newsletter is
longer than normal because per request I go over my Long Term views on
the market in an educational manner - please take the time to revew
You can view the newsletter here.
Matthew Frailey
