Technical Analysis - Silver

Charts are expandable in most browsers.

The long-term chart of Silver remains intact right now.

As mentioned last week: Although the broader uptrend remains intact, a tradeable downtrend has emerged.  

This is a good time to reiterate risk management.  Remember not to get to wound up on directional accuracy.  Risk management should be the main focus.  If you cut losses short and let winners run; if you risk very little capital on each trade, then profits will take care of themselves over time.  In reality, the odds of your accuracy being greater than 50% over a long history of trading are very very low.  Some of the greatest in the business have accuracy rates under 40%.

  
Above are three charts: weekly, daily, and 60-min, which have a moving average channel and faster signal line moving average applied to them.  Such measures can be pretty effective trend following indicators.  The weekly bar chart remains in an uptrend.  Daily bar chart is in downtrend, and the 60-min bar chart is in an uptrend. 

The Dynamic Trailing Stop (DTS) trend indicator on the weekly bar chart is in downtrend mode.  Notice the DTS indicator, set with the tight parameters applied here, is much more sensitive than some of the other trend identification methods we look at on these pages.  


Speaking of which, the daily DTS is now back in uptrend mode.  Everybody uses different parameters for entry and exit.  Entry and exit are not as important as risk management. 


Below price action, we see the Directional Movement Index / Average Directional Index Indicator (DMI/ADX).  If you are a regular reader, you have seen these before.  As the name implies, the DMI/ADX is a trend following indicator.  On the weekly bar chart, this indicator signals a weakening uptrend.  On the daily bar chart, DMI/ADX says we are in a neutral / non-trending phase.  


Current Stance


Long-term:
Hold a mix of CHF, USD, Gold, and Silver in physical form as much outside of the banking systems as possible.


Intermediate-term:
Holding short against: 29.50 (futures)


Short-term:
Neutral

Egypt Riots, the Future of America?

Even though T.V. and mainstream news are two things I have not used on a regular basis for some years now, I can't escape news of the people of Egypt rioting.  from what I gather so far, they want President Mubark out of power.  After watching some live feeds from Al Jazeera over the internet today, it also occurs to me that some of the complaints they have relate to economic conditions -lack of jobs, etc.... 

So this makes me ask the question: Are these protests and riots what we can expect in America if the markets and economy turn down hard again?  Will our cities look like Cairo looks right now?

What makes this even more concerning is the fact that Obama's claims of recovery sound a lot like Hoover's did right before that depression got really bad.

Obama's Claims of Recovery Sound Like Hoover's

According to Business Insider, David Rosenberg has provided an interesting comparison between the words recently spoken by Obama and those spoken by Hoover early into the Great Depression.

Obama’s State of the Union:

“Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.”

Herbert Hoover, May 1st 1930, US Chamber of Commerce Meeting:

“While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover.”

Obama’s State of the Union:

“Thanks to the tax cuts we passed, Americans’ paychecks are a little bigger today. Every business can write off the full cost of the new investments they make this year. These steps, taken by Democrats and Republicans, will grow the economy and add to the more than one million private sector jobs created last year.”

Herbert Hoover, October 22, 1932, campaign speech in Detroit:

“It can be demonstrated that the tide has turned and that the gigantic forces of depression are today in retreat. Our measures and policies have demonstrated their effectiveness. They have preserved the American people from certain chaos. They have preserved a final fortress of stability in the world.”

Obama’s State of the Union:

“But now that the worst of the recession is over…”

  Herbert Hoover, June 1930, to a delegation requesting a public works project:

  “Gentlemen, you have come sixty days too late. The depression is over.”

Obama’s State of the Union:

“The steps we’ve taken over the last two years may have broken the back of this recession…” 

Herbert Hoover, State of the Union, December 6, 1932:

“The unprecedented emergency measures enacted and policies adopted undoubtedly saved the country from economic disaster…”

******
My question: we already know the government programs are immoral, but how can anyone who knows just a little bit of history believe in their efficacy? 

Tehcnical Analysis - S&P 500

Charts are expandable in most browsers

Basic Trend

 

Based on basic and parallel trendlines, the major stock market index remains in a price uptrend. 

If you are not familiar with the chart setup above, then review recent posts, where you will find in briefly explained.  What this chart is saying is that the long-term, intermediate-term, and short-term are all in an uptrend right now.  The Relative Strength Index (RSI) indicator is confirming this uptrend in all charts, but is diverging negatively against price in both the daily and 60-min charts.

In the dual chart above, The Dynamic Trailing Stop (DTS) indicator is in uptrend mode on the weekly chart, but recently entered downtrend mode on the daily chart.  Prices are re-testing the DTS on the daily chart.


The Directional Movement Index (DMI) / Average Directional Index (ADX) below the weekly bar chart to the left is in uptrend mode.  DMI/ADX below the daily bar chart is also technically in uptrend mode, but it is showing some weakness.  Daily +DMI is diverging negatively against price, and is dragging the ADX line down.  Meanwhile, -DMI on the daily chart has started moving up.  


Elliott Wave

While our currently top Elliott Wave counts have us looking for a possible top, price have yet to indicate such a thing.  More bullish alternate Elliott counts are also noted.  In the end, price is the final arbiter.   We will update labels as appropriate as new price action occurs.    


Sentiment


VIX:

The Volatility Index (VIX), provided by indexindicators.com, continues to tell us the market remains calm.  When the market is calm, the risk of a downtrend emerging is higher than would be the case in an anxious market.  VIX is a contrarian tool.   Such a reading as we see above gives more credit to the bearish Elliott Wave counts. 


Put/Call Ratio:

 Put/Call is pretty neutral right now.  


Current Stance

Long-term:
Out of the stock market for now.  Hold: CHF, USD, Gold, and Silver in physical form as much outside of the banking system as possible. 


Intermediate-term:
Long the S&P


Short-term:
A) Discretionary trading is neutral this market


B) Systematic short-term trading algorithms (not shown here) are still set up by filter to take trades to the short side.  This can easily change more rapidly than the posts at this blog. 


-Trade price, not news or stories.

Tehcnical Analysis - Gold

Charts are expandable in most browsers.

Weekly bar charts are a great way to take a look at long-term price action.  Basic and parallel trend-lines are a great way to measure price trend.  Gold's weekly bar chart above shows that a long-term uptrend remains intact for now.

On these pages, we often use a daily bar chart to take a look at a market's intermediate-term trend.  On the daily bar chart of gold above, we can see that gold is now in an intermediate term downtrend after breaking out of both an intermediate term uptrend that was followed by sideways trending action.  

The chart above is actually three charts of gold futures: weekly, daily, and 60-min with a moving average channel and a faster signal line moving average applied over top of price bars.  The long-term trend, represented by the weekly bar chart is neutral to bullish according to this indicator.  In the center, we see that the intermediate-term price trend is registered as down by this indicator.  Short-term, represented by the chart to the right, shows gold futures in an uptrend for that time frame.


The very popular Relative Strength Index (RSI) momentum indicator is neutral on the weekly bar chart, in downtrend range on the daily chart, and in uptrend mode on the short-term 60-min chart.  

In the dual chart above, The Dynamic Trailing Stop (DTS) indicator is in downtrend mode on both the weekly bar and the daily bar charts.  


Directional Movement Index (DMI) / Average Directional Index (ADX), a trend following indicator, is applied below the price action of each of the two charts.  DMI/ADX on the weekly bar chart is coming out of uptrend mode in that +DMI is below ADX and trending down after first diverging with price trend.  Likewise, -DMI is trending up.  Although, we this indicator has not yet signaled a downtrend for the longer time frame, we can definitely see weakness.  


On the daily bar chart, DMI/ADX is in downtrend mode.  -DMI is above +DMI.  ADX is also above +DMI, and trending up.  


Current Stance


Long Term (investing):
Hold a mix of CHF, USD, Gold, and Silver in physical form as much outside of the banking systems as possible.  There are professional non-banking storage facilities out there.  There will be a point when it is timely to be long-term bullish on the economy and markets again, and these funds will be available at that time. 


Intermediate Term (trading):
Sell


Short Term (trading):
Sell

Technical Analysis - EURO

Charts are expandable in most browsers.

Basic Trend

Above is a weekly bar chart showing EURO futures in a long-term downtrend.  Within this long-term downtrend are semi-long-term up and down trends.  Currently, the EURO is in one of the internal uptrends within the larger downtrend.  

The daily bar chart above gives us a better view of the intermediate-term trends.  Recently, the EURO broke an intermediate-term uptrend, registered an intermediate-term downtrend, and, most recently, broke back above and out of that downtrend.

Above are three charts in one: weekly, daily, and 60-min, which have a moving average channel and faster signal line moving average applied to them.  The channel is created by simply using two different moving average indicators of the same length to average the highs and then the lows rather than the closing prices.  The third, and faster, moving average is an average of closing prices.  Resulting from all of this is a trend following indicator applied to three different time frames.

Reading from left to right, the weekly bar chart on the left represents the long-term trend.  In the center is a daily bar chart to represent the intermediate-term trend.  On the right, the short-term trend is represented by a 60-min bar chart.  

With a quick glance, we can see that, according to this indicator set up, the long-term trend is currently neutral.  The intermediate-term price trend is up.  Lastly, the short-term price trend is neutral to up.  Such an indicator set up can be used in such a way that the intermediate term could be used to time entry into the long-term trend, and / or the short-term could be use to time entry into the intermediate-term price trend.  As I have said before, the best set-ups are simple, robust, and respect price trend.  

At the bottom of these same charts is the Relative Strength Index (RSI) indicator.  There are different ways to us this.  Probably most common is for people to look for divergences with price in what are considered overbought and oversold ranges.  Another way to use RSI is as a trend indicator is to use it as a trend indicator.  We use it in both ways.  You can learn about using it as a trend indicator from Connie Brown's book: "Technical Analysis for the Trading Professional".  

RSI on the weekly bar chart to the left is neutral.  Moving to the center, we see that RSI is in bull trending range for the intermediate-term.  Now look at RSI on the short-term.  Short-term RSI is diverging with price and is in the neutral zone.  If I were looking to go long (buy) the EURO's intermediate term price trend, then I might want to wait for the short-term to set up more favorably.  

On both the weekly (left) and daily (right) bar charts above, the Dynamic Trailing Stop (DTS) is currently in uptrend mode.  


Directional Movement Index (DMI) / Average Directional Index (ADX), a trend following indicator, is applied below the price action of each of the two charts.  DMI/ADX on the weekly bar chart is in non-trending mode.  ADX is below both +DMI and -DMI, and is trending down.  


DMI/ADX on the daily bar chart is in uptrend mode.  Daily +DMI is above both -DMI and ADX.  ADX is trending up.  One thing to keep an eye on is the warning sign that comes from +DMI currently diverging against the most recent price action.

Elliott Wave

 
According the the current Elliott Wave count, we could expect prices to begin trending down again soon.  A break of 1.2871 would work to validate this count.  A break above 1.4266 would negate the idea of the wave (2) of [3] being in place, but would not negate the hypothesis of the next degree larger wave [2] being in place.   


Current Stance


Long Term (investing):
Sell EURO short by holding a mix of CHF, USD, Gold, and Silver in physical form as much outside of the banking systems as possible.  There are professional non-banking storage facilities out there.  There will be a point when it is timely to be long-term bullish on the economy and markets again, and these funds will be available at that time. 


Intermediate Term (trading):
Neutral, but looking to possibly sell this market short


Short Term (trading):
Neutral, but plan to use short-term to time any intermediate-term selling.

Technical Analysis - Swiss Franc

Charts are expandable in most browsers.

 

Basic parallel trendlines applied to the Swiss Franc's weekly bar chart show a long-term (months to years) price uptrend to currently be in place.

Recently the daily bar chart for Swiss Franc broke down below a trendline, but it seems the intermediate-term trend has resumed as of the time of this posting.

Above are three charts in one: weekly, daily, and 60-min, which have a moving average channel and faster signal line moving average applied to them.  The channel is created by simply using two different moving average indicators of the same length to average the highs and then the lows rather than the closing prices.  The third, and faster, moving average is an average of closing prices.  Resulting from all of this is a trend following indicator applied to three different time frames.

Clearly, the long-term price trend represented by the chart to the far left is in an uptrend based on this trend channel indicator.  The intermediate-term trend (days to weeks) is currently neutral to down.  On the far right, we see the short-term trend (hours to days) is currently in an uptrend. 

At the bottom of these same charts is the Relative Strength Index (RSI) indicator.  There are different ways to us this.  Probably most common is for people to look for divergences with price in what are considered overbought and oversold ranges.  Another way to use RSI is as a trend indicator is to use it as a trend indicator.  We use it in both ways.  You can learn about using it as a trend indicator from Connie Brown's book: "Technical Analysis for the Trading Professional".

On the weekly bar to the far left, RSI is in uptrend range, but is diverging a bit from price.  RSI on the daily bar chart in the center is in bullish to neutral territory.  On the short-term chart to the right, we see an RSI that is certainly in uptrend mode, but is starting to diverge with price action. 

On the charts above (weekly bar to left, daily bar to right) we are looking at a Dynamic Trailing Stop (DTS) over prices, and the Directional Movement Index (DMI)/Average Directional Index (ADX) applied below price action.  Like many of the tools we use, both are trend following indicators.  


DTS on the weekly chart is in uptrend mode.  DTS on the daily chart is also in uptrend mode.  

DMI/ADX on the weekly chart is in uptrend mode.  One thing to be aware of here is that +DMI has moved below the ADX line.  However, ADX is still rising.  Ultimately, either price action will bring +DMI up, or the ADX will start showing weakness in trend.  

On the daily bar chart to the right, we have an uptrend signaled by both +DMI and ADX being above -DMI.   

Current Stance

Long Term (investing):
Hold a mix of CHF, USD, Gold, and Silver in physical form as much outside of the banking system as possible. 

Intermediate Term (trading):

Neutral

Short Term (trading):

Neutral

Remember: Trade prices, not news. 

Technical Analysis -Silver

Charts are expandable in most browsers

The weekly bar chart above shows that the long-term uptrend remains intact, for now.

Although the weekly bar chart shows an intact uptrend, the daily bar chart shows a more mixed picture.  While we could easily see that the broader uptrend remains intact, a tradable intermediate-term downtrend has also emerged. 

Above are three charts: weekly, daily, and 60-min, which have a moving average channel and faster signal line moving average applied to them.  Such measures can be pretty effective trend following indicators.  The weekly chart to the left is in a weakening uptrend, while both the intermediate and short-term charts are in downtrend mode.  


This trend identification stuff is pretty simple.  It is taking the risks that becomes difficult.  Being wrong and having to absorb losses as you seek the profits is what makes trading tough. 

More mixed trend signals for silver above.  The Dynamic Trailing Stop (DTS) trend indicator on both the weekly and daily bar charts is now in downtrend mode.  For some, this might mean that long-term profits are to be taken off the table.  


The DMI/ADX trend indicator on the weekly chart is neutral to bullish.  Will it catch up to DTS and become bearish, or are we just witnessing a price trend consolidation?  DMI/ADX on the daily bar chart is signaling more of a neutral than trending phase at the moment.  


Current Stance


Long Term (investing):
Hold a mix of CHF, USD, Gold, and Silver in physical form as much outside of the banking system as possible.  The goal is to put this to work at a better time in the future. 


Intermediate Term (trading):
Sell


Short Term (trading)
Sell

Technical Analysis - S&P 500

Charts are expandable in most browsers.

Basic Trend

Today seemed like a pretty big down day in the S&P 500, but the upwards trendlines on the weekly bar chart remain intact.  

Likewise, the upwards trend on the intermediate term chart (daily bar) remains intact, for now at least. 

In the chart above, from left to right, you have: a weekly, daily, then a 60-min chart.  Deployed over the top of the price bars on each of the three charts is a moving average channel and a signal line.  These channels are created by using a faster moving average against slower MAs of both the highs and the lows.  There are several ways to interpret the signals, but it should be pretty intuitive.  Like all moving average based trading rules, we are just looking at basic trend following indicators here.

The weekly moving average channel is showing a long term uptrend.  Moving to the center chart, we see that the intermediate term daily bar chart is also shown to be in an uptrend as per this particular trading indicator.  At the far right, the short term trend is now shown to have entered a down-trending phase.  
 
Below the price bars above is the Relative Strength Index (RSI) indicator.  This is not the same thing as relative strength measures between two different markets.  Here we applying the RSI as a trend indicator, rather than overbought / oversold indicators.  RSI is bullish on the long term chart.  RSI is bullish on the intermediate term chart.  RSI is bearish on the short term chart.  


The thought crosses my mind that some readers might be thinking this stuff is pretty elementary.  That's very true!  Keep it Simple Stupid (KISS).  I know most people out there like stories on why the market did this or that, but those stories are just fluff.  Most of the time, such stories are retroactive attempts to explain what has already happened in the market.  Trade price action, not stories.  The goal here is to build trading processes that are repeatable, simple, robust, and respect price action.  We will leave the story telling to others.  Our primary income stream is from trading, not telling stories.

The Dynamic Trailing Stop (DTS) applied to price action in the charts above is - you guessed it- another trend following indicator.  DTS is in uptrend mode on the longer term chart, but has just entered downtrend mode on the intermediate term chart. 


Weekly DMI/ADX is in uptrend mode.  Daily DMI/ADX is in neutral to uptrend mode.  


Elliott Wave

No doubt about it, our current Elliott Wave counts are pretty bearish.  For balance, there are some bullish alternates listed as well.  


Last week we noted the divergence in the Rate of Change (ROC) momentum indicator.  Is today's action the beginning of that diverging velocity being reconciled?  Only time and price action will answer that question. 


Sentiment


VIX

The Volatility Index (VIX) chart above was provided by indexindicators.com.  You can see that the VIX is showing a good deal of market complacency right now.  The VIX will spike when markets are anxious, while alternatively having a low reading when markets are not so worried.  Currently the VIX is where we would expect sentiment to be ripe for a downward correction.  A VIX picture like this gives more weight to the Elliott Wave counts above. 

Yup, pretty much the same as last week with the VIX -more ripe for selling than buying.

Put/Call Ratio

Just yesterday we posted the Put/Call chart and said it was a warning signal.  That seems to have been a timely post given today's action.  Yesterday the Put/Call indicator was ready .57 when the post went up.  Today, prices declined about 1% and the Put/Call has rebounded to .73.



Sentiment is more ripe for selling than for buying, but, as traders and investors, we ultimately have to defer to the final arbiter - price action.  We either do this by taking losses from fighting the trend for too long or by making money by catching and riding the trend's wave.    


Current Stance

Long Term (investing):
Hold CHF, USD, Gold, and Silver in physical form outside of the banking system.  When it is time to get long-term bullish on stock and other assets again, these funds will be ready to be put to work.  IMHO, that time is not now. 


Intermediate Term (trading):
Long the S&P tight stops moving along with the price trend


Short Term (trading):
A) Discretionary trading is neutral and using short-term to time intermediate term entries

B) Systematic short-term trading algorithms (not shown here) are now set up to start taking trades to the short side, after taking them to the long side over the past week.  This can change more rapidly than our posts on this market.

Technical Analysis - Gold

Charts are expandable in most browsers.

According to the application of the most basic indicator out of the technical analysis tool bag, gold futures are in a long term uptrend and an intermediate term sideways price trend. 

The chart above is actually three charts of gold futures: weekly, daily, and 60-min with a moving average channel and signal line applied over top of price bars.  The long term trend, represented by the weekly bar chart is still up.  Gold's intermediate term trend, in the center chart, is registering an emerging downtrend.  Short term, represented by the chart to the right, gold futures are neutral to up.  


The RSI indicator on the weekly chart is neutral to bullish.  RSI on the daily chart is neutral to bearish.  If the daily chart's RSI indicator turns back down from that lower horizontal line, that will be a sign of intermediate term downtrend.  Short term RSI on the 60-min chart is neutral. 

The Dynamic Trailing Stop (DTS) indicator is holding its uptrend on the weekly chart.  On the daily chart, representing the intermediate term price trend, the DTS indicator is down.  


DMI/ADX on the weekly bar is neutral to bullish.  Neutral because +DMI is now below ADX.  Bullish because both +DMI and ADX are above -DMI. 


Intermediate term, the DMI/ADX trend indicator is still neutral.  ADX is below both daily +DMI and daily -DMI, but is starting to trend up.  If it crosses above +DMI, then a downtrend will be indicated by this particular trend following indicator. 

Current Stance

Long Term (investing):
Hold a mix of Swiss Franc (CHF), USD, Gold, and Silver in physical form outside of the banking system. 

Intermediate Term (trading):
Neutral, and looking to possibly Sell Short

Short Term (trading):
Currently watching short term for Selling signals related to intermediate term.    

Technical Analysis - Swiss Franc

Charts are expandable in most browsers.

A long term uptrend is identified by the trendline drawn across lows on the weekly chart above.

On the daily chart, we see that a recent intermediate term uptrend has been broken.

Above are three charts in one: weekly, daily, and 60-min, which have a moving average channel and signal line applied to them.  The weekly chart to the left shows the Franc to be in a long term uptrend.  Intermediate term, shown via the daily bar chart in the center, the Franc is in a downtrend.  Short term, shown via the 60-min chart to the right, the Franc has reentered downtrend mode.


The RSI indicator on the weekly chart is in bull trend territory, but is negatively diverging against price.  RSI on the daily bar chart is in neutral territory.  The 60-min RSI indicator appears to be ready to enter downtrend mode.  

The Dynamic Trailing Stop (DTS) indicator is in uptrend mode on the weekly bar chart to the left.  DTS is bearish on the intermediate term daily bar chart to the right.   

The DMI/ADX trendfollowing indicator is showing a weakening uptrend to on the chart to the left.  Recent price retracement has led the DMI/ADX to be slightly bullish on the intermediate term chart to the right.

Current Stance

Long Term (investing):
Hold a mix of Swiss Franc (CHF), USD, Gold, and Silver in physical form outside of the banking system. 

Intermediate Term (trading):

Neutral - no position

Short Term (trading):

Neutral - no position

Put/Call Ratio Sends Warning Shot

Look for a full S&P 500 report coming sometime between today and Friday.  Chart above is provided by indexindicators.com.

Technical Analysis - Silver

Charts are expandable in most browsers.

Long term uptrend remains intact, as is witnessed by the weekly bar chart of silver futures above.

The daily bar chart of silver futures above shows the intermediate term price trend to be sideways.  An intermediate term uptrend was recently broken.  Prices are now either consolidating before resuming the longer term uptrend, or before beginning a new intermediate term downtrend.

 

Above are three charts: weekly, daily, and 60-min, which have a moving average channel and signal line applied to them.  The weekly chart to the left is in an uptrend.  The intermediate term trend, represented by the daily bar chart in the center, has moved slightly into downtrend range. 

In the last silver post, the short term MA channel had started signaling a downtrend.  In the chart above, we see that a downtrend did indeed develop.  It is still underway. 


RSI on the weekly chart is still in bull range.  RSI on the daily chart is in neutral to bearish territory.  RSI on the 60-min chart is in bear range.  

Dynamic Trailing Stop (DTS) on the weekly chart is still in an uptrend.  This is more sensitive that some of the other measures applied to some of the preceding weekly charts, but it is still holding up for now.  DTS is still in downtrend mode.  


DMI/ADX on the weekly chart is neutral to bullish.  Neutral because +DMI is below the ADX.  Bullish because both +DMI and ADX are above -DMI, with ADX still trending up for now. 

DMI/ADX applied to the daily bar chart is beginning to look more bearish.  Although it is not easy to see, ADX is now above +DMI.  So is -DMI.  

Current Stance

Long Term (investing)
Hold a mix of CHF, USD, Gold, and Silver in physical form outside of the banking system.

Intermediate Term (trading)
Neutral, but watching both the short term and intermediate term for any possible set up to sell short. 

Short Term (trading)
Neutral