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Wedges And Triangles: Big Move Ahead?
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The central bank high is euphoric, the crash and burn equally epic.
Just out of curiosity, I called up a few charts of key markets: stocks (the S&P 500), volatility (VIX), gold and the U.S. dollar (UUP, an exchange-traded fund for the dollar). Interestingly, all of these charts displayed some version of a wedge/triangle.
In a wedge/triangle (a formation with many variations such as pennants), price traces out a pattern of higher lows and lower highs, compressing price action into the apex of a triangle as buyers and sellers reach an increasingly unstable equilibrium.
As price gets squeezed into a narrowing band, the likelihood increases that price will break out of the triangle, either up or down, in a major move.
So which way will these markets break--up or down? One thing is fairly certain: the S&P 500 (SPX) and the VIX (volatility) are on a see-saw--both don't soar at the same time. If the VIX soars, stocks are plummeting as fear takes hold. If the VIX stumbles along the bottom of its range, market players are complacent and stocks loft higher.
Many observers see the same inverse relationship in gold and the U.S. dollar--when one is going up, the other is weakening.
I tested this widely accepted truism by aligning the charts of both the U.S. dollar and gold, and found that there were lengthy periods during which gold and the U.S. dollar rose in tandem: About That Supposed Correlation of the U.S. Dollar and Gold.... (July 8, 2013)
My conclusion: each is influenced by a number of factors, some shared, some unique to each asset. As a result of this complex confluence, at times both go up together and at times there is a negative correlation (see-saw effect), and during other periods, there is little correlation, i.e. they act entirely independent of the other.
Let's look at the charts. Nothing fancy here--just clear wedges/triangles and declining MACD indicators.
Interestingly, gold rose when the VIX was elevated--that is, when market participants were nervous or fearful. If volatility breaks to the upside, stocks will fall and perhaps gold will move up as the flight to safety/fear trade replaces central-bank administered complacency that stocks can loft higher regardless of fundamentals.
Since the dollar also tends to strengthen when the herd is stampeding in a flight to safety, perhaps we can look to the VIX as the bellwether for what will likely happen to stocks, gold and the dollar.
If the risk-on central bank monetary cocaine trade continues, stocks may loft higher and the VIX, gold and the dollar may all drift lower as volatility and lower-risk assets are avoided in the quickening chase for yield in a negative-interest world.
If the risk-on trade evaporates and risk-off trades gain favor, stocks will be sold off hard, volatility will rocket higher (something we've almost forgotten can happen) and gold and the U.S. dollar will benefit from the flight to safety/central bank cocaine crash trade.
The central bank high is euphoric, the crash and burn equally epic. Be careful what monkey you invite to latch onto your back....
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Unleash the money printers!
remember folks- The 700 Billion TARP funds were supposed to trickle down to Main Street.... when Chimpy was still in office... How can the American consumer consume and prosper if these motherfucking cocksucking every other vulgar word assholes won't lend????????????????????
The rates are at Zero... but you can't have any credit...
HOPE. CHANGE. ANAL.
It's not that they won't lend - you can't lend your way to prosperity. It's the fact that the money is being hoarded at the top, rather than being spent into the economy. "Trickle Down" is just another phrase for money circulation.
If I could create as much "money" as I wanted out of thin air or have acess to all the money I want for fucking free (zero interest rate policy) yeah, I imagine I would be pretty fucking "successful" too.
don't overthink this folks.
Full faith and credit...
tick tock motherfuckers.
Unleash the monkey printers...
The printing press is going to be replaced by cashless societies, so they can steal more, and faster....
http://galeinnes.blogspot.com/2014/06/preparing-for-cashless-society.html
Good luck with that...
Once the majority of people's expenses are essentials they actually demand delivery.
Not far off now, tick tock motherfuckers...
They've created a huge number of hammers and now they are wondering where the nails are at, but not to worry, they'll find something to hammer on....
Trickle down is the 1% telling the 99% to bend over.
Credit? Fuck credit!!! That's what caused this mess in the first place.
Work, period, build/create capital.
fuck all the useless motherfucking paper-pushers, execute every last one of them.
They are nothing but uselss fucking middle men anyway. Get rid of them and the real producers and their customers in the real fucking economy can get going again. At this point I really don't if we start trading fucking chickens, cows, and PMs again.
"Full faith and credit"
end the fucking fiat money bullshit, period. It's it the fucking source of all the fucking fraud globally dumbasses.
Don't confuse "banks won't lend" with the TRILLION+ in consumer-public debt piled on since 2008, virtually NO DELEVERAGING! That debt is counted as positive GDP, perhaps without it GDP contracted.
In layman's terms "mark to fantasy" accounting. Just wait until everyone uses it...
moral hazard is a real motherfucker like that.
I freelance over th? internet and earn about 80-85$ an hour. I was without a job for 7 months but last month my paycheck with big fat bonus was $15000 just working on my computer from my home for 5-6 hours. Here's what i have been doing... www.globe-report.com
Is CHS really just now figuring this 101 shit out ?
As Enron employees eloquently put it; Burn baby, burn.
Mr. Lay, are you smoking crack?
Ask Clifford Baxter. Did you smoke the last portion of his cigarette?
Closed California Walmart Built On Former Military Industrial Complex Site
We have read this book over and over and the ending will never change.
Don't unload a 9mm on a HFT computer in the alley. They're people too.
/sarc
Let me repeat myself. There will be no market crash. It will simply vaporize and TPTB will close the doors to the casino. Game over man.... game over!
https://youtu.be/dsx2vdn7gpY
And when that happens, they are going to nuke the middle- and upper-middle class once and for all. With derivates. From space. It's the only way to be sure.
sell everything !!
Be careful what monkey you invite to latch onto your back.........
This is a monkey that needs to be spanked
Triangles have a 75% chance of being a continuation rather than a reversal pattern.
However, has anyone looked at the CME 30-year bond chart? It looks like it is ready to get slammed meaning higher interest rates.
Look at 7 year for housing recovery.
You don't need to be a claivoyant to know which way that last chart is going to break...
Trunk Monkey for President 2016!
Fifty percent chance of rain?; so why bother reading a weather forecast. Charts don't mean anything in a manipulated market. Melt up, or melt down, it's still Monopoly money.
Gold just got a wedgie........................
Are we running out of room to store gold? LOLOLOLOL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Paper gold/silver storage doesn't have a vault big enough to store IOU's.
Bits in a computer are infinite. No one wants gold and silver.
Print monkeys to infinity. So they think.
Here is all you need to know. Wedges always go up in stock inducies. Wedges always breakdown 1st in gold, before they resolve higher or lower. But first, the paper gold market always gets pushed down before anything else happens. Gold breaks out from breakdowns, if it is going to break out at all.
Shhhh, don't tell them the secret to RICO loopholes. Good job. Blythe Masters will look like a saint.
Cool part about technical analysis is that you can always draw lines anyway you like, and prove anything you would like to prove :)
How would you draw those lines 1 month ago, 2 months ago :)
BS bankster talk :P
I've been watching the same thing, but in gold and silver, there is also a massive head and shoulders formation that could kick off and take silver down to $13 and gold to $950.... at which point would make for an extraordinary buy. This would be in the July August period. But it could certainly break out to the top and go on its merry way. But the markets are never on the easy side and never quite do what they're suppose to do... do they?
The problem, we have been off the Bretton Woods gold standard since 1971. Hidden is rebuilding SDR backing. What are your thoughts?
Depends on exactly what is "backing" that SDR and what the mechanism for insuring (rule of law) that backing is fucking real.
what's backing the SDR? "because we say so" of banksters. sure, they say there's some yello backing it, but its mello yello urine, sure, just like "the USA" supposedly has the world's largest gold reserves. maybe the people that own the FR, and they just include it on the US's balance sheet to make it look good.
there's guns and bombs backing it just like the $
So, same as it ever was until it isn't...
yawn...
hedge accordingly.
unfortunately I cant both upvote and downvote you simultaneously
up, because content>messenger's verbiage
Markets? We don't have no stinking markets! Only interventions.
Wedges & Triangles? Hell no, I see a "gnawing bunny formation" which is so damned bullish I can't stand it! BTFD or STFR - whatever.
www.traderzoo.mobi
Wedges, flags, and triangles angled UP favor a sell-off while those angled down favor a surge up.
<Technical analysis is science
< TA is astrology with numbers (and charts!)
"...as buyers and sellers reach an increasingly unstable equilibrium."
As we wedge, so does equilibrium. UNSTABLE equilibrium is the wider points. We wedge INTO equilibrium and a break of that pattern is then the opposing move, as sellers or buyers out-weigh the other, moving price.
Did I have to do this? YES, indeed.
More finely balanace equilibrium, not more stable equilibrium. The more finely balanaced the equilibrium, the more easily it is unbalanced and the more intense the intitial move. If we move from 5, to 4, to 3, 2 market pairings, then we can surmise even 1 very out of balance transaction will drive the auction price farther from the equilibrium than 5 paired transactions, each one out of balance cancelling others out of balance in opposite directions.
Falling wedges imply upward breakouts, reverse for downward wedges. Symmetrical triangles often break in the direction of the larger trends in which they are contained OR present the possiblity of reversal. I cover some of that in my free series of "TA Emails" off my blog. http://denaliguidesummit.blogspot.ca/
I will just predict the S&P hits 3000 or more before the big decline happens. There are still too many people shorting at every opportunity. I think you will see a huge move up late in the Summer to break this pattern.
I just watch all of this with a sick sense of fascination.
I usually read the t-paper when I wipe my ass to gauge the market. Since I usually don't pinch a loaf until around noon, these correlations are not much use in trading.
When I get a really solid stool, what I like to refer to is as a no wiper, the market will end the day in the red but, since these occur late in the day I have missed the morning upside and it's to late to enter the market to cash in.
If I get lucky with morning, premarket, mud butt I will go all in on the 3X UPRO because I know I can catch the morning upside and get out by Noon.
I have started to see good correlations when I change the cat litter too! I have just started to construct a points system on speadsheets to see if I can take advantage of this informatio since my cats usually pinch a loaf while I sleep and I can get the readings premarket.
Unfortunately my wife travels a lot and is not regular enough to get good data. Plus she will resist when I try and stop her from flushing. She will yell at me me and say "put that smart phone away"! I keep telling her I can make good money but, she will just grab her mace and I'll have to run away real fast. That stuff burns!!!!
Just had to wait a couple of hours after this drivel was posted to see how it played out. More suckers taken out. The end will come when idiots stop trying to predict when their poor investment decisions will finally come good. Going by history, that day will never come.