Romeo and Bernanke

Courtesy of Allan at AllanTrends

“What’s in a name? That which we call a double dip recession
By any other name would still mean a depression.”

With apologies to Juliet Capulet (or William Shakespeare if you want to be a stickler), the mountains of written analysis and doctoral level economic analysis serves less as a guide then as a confusion. The markets have been falling since early summer, and there is nothing and no one in the trenches or the mansions, the streets or the guarded penthouses of Central Park South, that can stem or redirect the momentum of a market that has been set in motion until that market finds an irresistible force to change its mind. 

With such unanimity in the presence of hard down-trends across a broad sampling of sector trend models, assets of all sizes, shapes, colors, it is laughable that so much is made in naming, describing, labeling or categorizing the forces at work, or not at work, in the global economy.  It is dropping, tumbling, falling, declining, contracting and for all intents and purposes, shorting the future as far as the ides of quantitative easing can see, or reach, or contaminate.

These are not the conclusions of orthodox economic mumbo jumbo.  These are the conclusions, or more accurately, the observations and directions of lines on charts. Lines that track prices, prices that track the economy and these lines, prices and the economy have been pointed hard down since May.  Trend Following exploits the dominant trend of the market, its a traders' game of follow the leader. We want to place our bets in the direction of that trend, that is the house advantage, and its open and free to all. It is the path of least resistance and no matter what the G- (pick a number, any number) decide to do in the secrecy of their heavily guarded meetings, grumblings and manipulations. It was that television icon of the 1980?s, Martin Zweig, the father of all trend following, who summed it up in pop-tv eloquence, “The trend is your friend, not Ben.”

So what are those lines on charts telling us?  Here's some recent examples. 

Volatility - VXX

Here is a VXX 120 minute chart with a set up for a Wave Five Buy Signal.  VXX trades inverse the market, so a valid Buy Signal here will send the market lower. 

VXX_120 MInute Wave Five BUY Signal

We need to see a few more bars here to confirm the viability of this set-up, remember, some of these don’t work as well as others, but some are just stellar.  We should know soon enough.

Gold & Silver

First, on Gold, I don’t get CNBC in Charleston, but a friend of mine told me that Cramer was “buying Gold” this morning on CNBC.  Our trend models are solidly SHORT GLD along with Glenn Neely, who said earlier today that the Gold bull market is over. Cramer vs. Neely & AllanTrends?  Place your bets.

SLV SHORT Signal on Sep 22nd

As for Silver and SLV, we got a SHORT on SLV on September 22nd. SLV closed that day at $34.92.  ZSL, the double leveraged short SLV fund, is suggesting a move to the low-to-mid 30?s.

ZSL target low-to-mid 30's

Snapshots of Trends as of the close on Sept. 26, 11

Despite today’s rally, there is little doubt that the equity indexes are in SHORT trends, while volatility indexes (VIX & VXX) are in a LONG trends, and that these trends still solidly in place.

We know from experience that the market rarely goes in the same direction or with the same velocity every trading day. Days like today are a part of the game.  It brings the start of the next leg down a little closer, as there are just so many counter-trend days out there and the more we put behind us, the better the chances for the dominant trend to re-assert itself, and notwithstanding the drawdowns, it will be worth waiting for. Elliott Wave analysis suggests that the worst of it, the sharpest and steepest part of this decline, is still ahead. It will leave days like today in the dust.

Meanwhile, there are other markets where the action is fierce and in sync with the trends. Bonds (TLT) and Dollar (UUP) are LONG while Gold (GLD), Silver (SLV) and Oil (USO) are SHORT.  All are generating very nice profits while we wait for the big one.  It’s a good time to be trading and an even better time to be trend following.

TLT

UUP

GLD

SLV

USO

SPX

Learn more about AllanTrends here. 

Comments

[BayAreaAlan]

Dunno 'bout y'all but I am DCA-ed in gold around 1200 and silver around 20 - BUT - I won't feel like a bull until we are back to last week's numbers.

[caerus]

gann was right

[chirobliss]

Well, yes you are probably right but tonight down under it is "risk on baby, yeah!!"

AUD up almost 3 cents and the All Ords up 3.46%. Here comes the squeeze, here comes the insanity.

It might also be the start of the mother of all tape painting pushes for the end of quarter, if so I'm goin out fer popcorn coz its gonna be one heck of a moon launch!!

[blindman]

they say the past is the key to the future
and all trends are derived from elements of the
past plotted against time. but ...
none of this addresses causation or replaces
the required thinking and will of people.
we can't isolate anything from the whole,
chart it, and then conclude we know where
this leads if we forget the basis and context
as they relate to the human element. also,
there will be a tomorrow and one after that and
after that. all lost in complexity, incomprehensible
and we never even understood the present moment. now.
so, usury has a life span. that is it.
end the fed. or let it end itself its own way,
but, it will probably take you out first as part of
its fumbling along solution to extend ignorance and
stupidity, sold as brilliance, as a means of covering
up its profound and invisible crime, in broad daylight.
usury.
...
any horror or crime can be openly committed by man so
long as it falls under the protection of the narrative
of the predominant myth of the culture. people, indoctrinated
in the culture, will never even notice.
have you ever noticed this?

[Joy on Maui]

Sadly, yes.  Part of the "human condition", I guess.

[LowProfile]

"Our trend models are solidly SHORT GLD along with Glenn Neely, who said earlier today that the Gold bull market is over. Cramer vs. Neely & AllanTrends?  Place your bets."

Short term?  Sure.  Long term?...

Sorry, you lost me at "Gold bull market is over.".  Good luck with that.

[rcintc]

Wrong as usual....