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Friday, 19 December 2014

EUR/USD: Doubt is resolved; downtrend to continue

Stuck at Support Line A for the last while, there was doubt as to whether the Euro would continue to fall against the US Dollar, as market pressures would suggest, or whether the chart would bounce off Line A. Yesterday's downswing brought the chart clearly through Support Line A. The doubt is over. The Euro will continue its dive (with occasional pausses) until it reaches Support Line B, at around $1.12.

Wednesday, 17 December 2014

EUR/USD: cautious expectation that downtrend will continue

Click chart to enlarge.

At the top of an upswing, the chart indicates the Euro today swinging down against the US Dollar.

Some easing of the rate of the downtrend is seen in the recent oscillations, shaded on the chart.

The security is now in a strong Long-term Support Zone, but economic pressure surely continues to strengthen the Dollar against all comers.

Today's FOMC meeting can hardly stop the trend. We wait to see how low the present Downswing will go: will its bottom indicate a strengthening of the downswing, or further evidence of a parabola bottom forming?

Monday, 15 December 2014

EUR/USD converging parabolas

Click to enlarge image.

Joining the graph bottoms gives a neat parabolic shape, indicating that the Euro downtrend against the US Dollar is gradually coming to an end. This idea will be strengthened if the coming week's downswing bounces off the parabola.

Joining the tops gives another parabolic shape, but not entirely parallel with the Supporting parabola. In fact, the two parabolas are converging. Obviously, either the Resistance Line (the top parabola) or the Support Line (the bottoms parabola), must be breached in the coming weeks.

I expect the downtrend to continue for a few more months due to the downward pressures on the Euro against the Dollar. My confidence in this prediction will be boosted if the Supporting parabola is breached.

Thursday, 11 December 2014

Euro Plunge Moderating?

Yesterday's rise in the Euro against the US Dollar forces us to have another look at our prediction that the EUR/USD would continue its plunge for several more months. The last downswing ended prematurely and yesterday's upswing broke through the One-year Resistance Line.

Joining the recent tops and bottoms indicates that the downtrend slope may be moderating, and perhaps a parabola bottom forming. Nevertheless, the Euro is to continue its ZIRP and QE, which the Dollar is forsaking..The EUR/USD will, of course, now swing down again, but it remains to be seen if it will break through the new Support Line and continue its plunge as far as the One-year Support Line.

Tuesday, 9 December 2014

Dow: watching for the Big Dip

DIA (Dow Industrials ETF) fell strongly over the last two days. My chart shows a Resistance Line and Support Zone based on performance for one year. The price fell only to the top of the Resistance Zone today. If this is just a downswing and not the commencement of the expected Big Dip, then the graph will bounce back from either the top or the bottom of the Support Zone. We watch to see what will happen next.

Monday, 8 December 2014

EUR/USD next stop $1.226 or $1.20

As the Euro drops back from its Spike of last Thursday and resumes its plunge, the next stop, I guess will be at $1.226, but this will be only a temporary holdup on its way to $1.20.

Thursday, 4 December 2014

Euro's bounce in response to Draghi's speech today is a mini spike

Today's bounce in the Euro, in immediate response to Draghi's speech, is, in my view, just a mini spike, caused by Bulls waiting for an excuse to buy. The graph has turned down at this minute in time, and will continue downwards.

Dow falls sharply: Wait and see if the Big Dip is starting

The Dow fell dramatically today. I wait to see if it will break through the Support Line before proclaiming (once again) that the Big Dip is commencing. Image shows DIA (Dow Industrials ETF), 3-month graph. Click on the image to enlarge.

Wednesday, 3 December 2014

Euro, as I predicted, plunges through long-term Support Line

Click to enlarge image.
Today, the Euro dropped dramatically against the US Dollar, breaching long-term Support Line A, as I had predicted. Next stop is Support Line B (at c. $1.1) or even Support LIne C (at c. $1.05)

Tuesday, 2 December 2014

EURO to fall, breaking out of the Support Zone

Continuing from my last post, this long-term chart shows the history of the Euro, against the US Dollar, to date. Shaded is its normal zone, over its lifetime, between $1.1 and $1.4. 

We get a Resistance Line by joining the tops and a Support Line from joining the Bottoms. Everything in nature forms patterns, and the normal  pattern for share prices is to swing up and down between these two lines, while following an overall upward or downward trend. The present Support Line and Resistance Line are converging, which means that the chart must break through one or other fairly soon, falling back into the constraints of the longer term trend lines.

Normally the chart would, at the present moment in time, bounce off the Support Line once more, following the amber broken line. However, the expectation that the US will abandon Zero Interest Rate Policy (ZIRP) sometime soon, while the Euro Zone will continue this policy, will probably cause the chart to break through the Support Line now following the blue broken or dotted line. The downtrend would then continue until the lower bound of the normal range is reached.

Thursday, 27 November 2014

Euro to fall to $1.20 now

Falling against the US Dollar since last May, the fall has paused during the last 10 days, within a long-term Resistance Zone established over the last 10 years. The downward pattern is strong. I predict that the EUR/USD will break out of the resistance zone in the coming 10 days and quickly drop to around $1.20

Tuesday, 11 November 2014

DOW wedge closes: we renew our short

Click on image for a larger view.

We shorted too soon (Friday last, 7 Nov) and our Stop-Loss Order took us out. Now we observe the wedge closing, a strong indication that the securiy will plunge at last. We renew our short accordingly, looking for several percentage points of profit, and placing a Trailing Stop at 1% rebound.

Monday, 10 November 2014

EUR/USD: This pattern happened before (in 1999)

This pattern has happened before (in 1999/ 2000): converging trend lines, chart hitting bottom of Bollinger Band, economic/ political forces putting Euro under pressure.
My bet continues to be that the Euro will plunge in the coming weeks. It will continue to decline until next March at least.

Friday, 7 November 2014

A punt on the Dow dropping

After this week's euphoria, the Dow will surley take a dip.

This may become the Big Dip, but a punt on a local dip is in order.

A Stop Loss in place in case we are wrong, and a Trailing Stop to anticipate the share pulling out of the dip sooner rather than later.

American markets to cool down after election euphoria

Click to enlarge image.

The pale blue triangle with which I previously depicted what I thought would be the top of the Parabola has been overpainted by the amber band which depicts the range of the present coninuing super up-trend.

The green band depicts the "normal" range of the Dow Industrials, based on long-term trend lines. The present trend has grossly overshot this range and is in for a fall sooner or later.

The amazing recovery from the recent bottom was sparked first by the FED asserting there would be no end of ZIRP in the foreseeable future, second by results showing that the American economy was entering a phase of self-sustaining growth, and, more recently, by election euphoria where electors appear to have temporarily believed that economic woes can be solved by giving the President a kick in the ass.

ZIRP (artificially imposed zero interest rates) will end when it is clear that the economic recovery in America is self-sustaining.

The election is over; the euphoria is abating and reality will now set in. Another dip is imminent. Could this one be the big dip?

Wednesday, 5 November 2014

Euro to plunge against the US Dollar

Click on image for larger view.

The EUR/USD has hit its Support LIne (Line joining Bottoms).

Chart logic would normally suggest that it should now bounce off this Line to have a rebound against the US Dollar.

However, since the Resistance (i.e., Top) Line and Support Line are converging, eventually there must be a break-out either upwards or downwards.

Good economic performance in America indicates an Imminent interest rate rise in the Dollar zone, while Europe continues its Zero Interest Rate policy. This can only mean that the Euro  will fall further against the Dollar.

A break-out through the Support Line could, therefore, be imminent, as the Euro plunges further against the Dollar.

Saturday, 1 November 2014

I was wrong (markets surge not plunge), but still ...

I was wrong. Instead of plunging, the markets have surged. Nevertheless:

1: The strong upward slope that brought us here, as I illustrated in a previous post, were caused by the policies of QE (Quantitive Easing) and ZIRP (Zero Interest Rate Policy). When the American economic growth is self-sustaining, these policies have to end, bringing a significant market correction.

2. The amazing recovery over the last week had two underlying triggers: the FED's assurance that ZIRP would end no time soon, and evidence that the American economic recovery is now self-sustaining. Ultimately these are two contradictory forces, since self-sustaining economic growth calls for an end to ZIRP.

3. I can hear the cocks crowing, which always happens on the eve of a market collapse. Bear voices are drowned and the market's champions encourage the fools with promises of even greater profits to come. The louder they shout the clearer the message becomes: we want to sell at the right price! See how the cocks crowed before the Irish property market collapse and then the bank collapse: the critics (within the department of Finance as well as the media) were silenced and we were assured there would be no hard landing and that the Irish banks were sound. Oh yes!

Thursday, 30 October 2014

As markets resume plunge, a neat parabola top is defined by 3 peaks

As the markets resume their plunge after a week of rallying, we note that the parabola top formed by the S&P 500 is defined by 3 peaks. Early in the summer I had surmised that their would be a double-peak.

Friday, 17 October 2014

Word that Quantitive Easing may be extended brings temporary market rebound

 Word that Quantitive Easing may be extended in order to quieten the Markets may have been the cause of today's great rebound. However, the trend is still downwards.

Perhaps the slope of the downtrend will moderate. On the other hand, once the Bulls see that the QE rumour is not bringing a full recovery, the down-plunge could become as sharp as before.

The fall of the SPX500, according to my graph, from 19 Sep to 17 Oct 2014 was 9.4%. The rebound over the last two days was a creditable 3.6%, but falling back as I type.

The problem with extending QE once again is that it would be another temporary respite. Unless they decide to make QE permanent, in other words, instead of raising revenue required for government by taxation, to keep on printing Dollars. The end-result would be to continuously increase prices, with a proportionate continuous decrease in value of money.

Thursday, 16 October 2014

Two weak signs of down-trend faltering

Two weak signs that the current Downward plunge of the markets may be faltering: A Break-out of the Resistance Line and a levelling of Bottoms. I guess today's vigorous up-swing was a reaction to yesterday's vertical plunge; that it will peter out and the down-plunge continue.

News Reports notice market fall and misinterpret

Yesterday's 3% or so drop in many indexes across the world made News Reports wake up to the fact that the markets are falling.

The Reports blame the slump on the Ebola virus and unsatisfacory reports on global economic growth. Alas, they are misinformed. These items in the news may have been an extra sitmulus to a correction that is already under way. Zero interest and Quantitive Easing pressed prices to their present unsustainable levels, from which they must fall irrespective of economic performance.

However, if the economic report continue bad, the bottom of the correction may be lower than we would otherwise expect. Well-performing economies would arrest the correction at around 1300, whereas economic bad news could do as it did in 2007-8 and send the price crashing through the long-term support line, wiping more than 50% off prices at the apex.

Wednesday, 15 October 2014

Recovery peters out over-night: sell-off continues

Yesterday's recovery of the markets was short-lived. Overnight, the down-turn resumed. The effect of yesterday's bounce-back was only to widen the range of the down-trend slightly. Line D of my previous charts shifts slightly to the right.

Tuesday, 14 October 2014

Markets to Bounce or Fall!

Let's recall how we got here:

There are many conflicting indications as to what will happen next. Recalling how we got here may have some benefit.

The economic collapse of 2007/ 2008 brought markets around the world to their knees. The vertical pink line marks the point in time that Quantitive Easing and Zero Interest Rate Policy were introduced.

These policies intended to put cash back into the market place and stimulate the economy. Whatever about that, a side-effect was that people took their cash out of bank accounts and bonds and put them into equities. The stock markets of the world responded positively. Share prices shot up without a sufficient increase of production to substantiate the rise.

Economies are now growing, and eventually production will catch up with prices. For the moment, however, what the market sees is Quantitive Easing ending and Interest Rates rising. Inevitably, equities must fall in proportion.

Yes, there is scope at the present moment for a bounce-back to answer the great slump of the last week, but this recovery, if it occurs, will be short-lived. I see the S&P returning to its natural upslope in due course after a significant correction. There is scope for the correction to happen suddenly or to be spread out in time.

Click on the image to enlarge.

S&P decline: a note of warning

As the American markets continue to plummet, it is no harm to listen to a note of warning (from Kazonomics on

After the drop we have seen for the last week, a sudden upturn could happen. However, I believe the fear factor will remain high for he present, as the market gears itself up for higher interest rates in the New Year.

The Stock Trader's Almanac 2015 (Almanac Investor Series) last year predicted that the Dow Jones would collapse by 30% or 40% at some time in 2014, and most likely in October. I believe that this correction is now in process.

Monday, 13 October 2014

Not a Black Monday after all, but markets continue slide

I thought that the Bulls would be panicked by Friday's late plunge. Instead, they fought bravely back, pushing prices up for a time before they fell back to Friday's closing level. The graph of the S&P 500 kept within the bounds of trend line D that I drew on this morning's chart, and the downward slide continues as strongly as ever. There will undoubtedly be a flood of defections from the Bull army in the face of the continuing downswing.

No sign of Black Monday today yet, but it's early

This mornign early (6.30 Greenwich Mean Time), the HANG SENG took a sudden dip, but quickly recovered to finish a little up. Later the DAX and the FTSE had a slight recovery. Outside of trading hours, the S&P at first had a good recovery (but ot now, at 3 hours before opening) is beginning to weaken. If the American indices are to follow the Euorpean and Asian, today will see a slight recovery today instead of a drastic drop I predicted yesterday. However, I guess the sharp drop will actually continue or intensify, in accordance with trending line D.

Friday, 10 October 2014

Announcing the date of Black Monday 2014: it's 13 October

Given the dramatic drop in share prices as closing bell approached today, 10 October, I guess we can now announce the date of the next Black Monday: it's 13 October 2014.

Nasdaq to drop back from outer space

Nasdaq 100 has a tendency to take wonderful flights into outer space, but ultimately to be brought back to earth. I venture that the orange-tinted polygon represents its natural range. The blue triangle depicts the amazing surge in the late 90s and its collapse right back to ground zero between 2000 and 2003. The green polygon represents the top portion of its present flight into outer space. Its emerging downtrend could be quite as dramatic a plunge as happened in 2000. There are two major spots of resistance on the way.

Range of the S&P downtrend

The green polygon indicates the proper range of the S&P500 Downtrend. The highlighted peaks fall outside the range and are aberrations. Because markets anticipate lowering interest rates, a breakout at the lower bound is more likely than one at the upper bound.

A Battle the Bulls can't Win

Click on image to enlarge.

This is a Battle
The Bulls won't win.
Each time they throw
More money in,
The Bears are back in town
Driving prices down.
Next step: the Bulls lose heart,
Throwing in the towel
And markets fall
Vertically down
Thirty or forty
Per cent.
What do you think of the poem?
Why do you think I sing
In face of this disaster,

What is the difference between the present dip and previous dips this year (Feb/ Mar and Jul/Aug) shaded on the chart? This time the markets know that reduction in interest rates is imminent.

Thursday, 9 October 2014

The Bulls fight back, temporarily halting the emerging downtrend

The green parabola shows yesterday's almost vertical upswing followed by today's almost vertical downswing, halting the emerging downtrend. However, since the Bulls are failing to raise the top, the halt must be temporary.

Wednesday, 8 October 2014

Strong market upswing, but down-trend continues

Betting on the S&P down-swings, I had a few small successes early in the day, but unexpected upturns took the wind out of my sale and left me down on the day.

I expect today's upswing to be followed by an equally-strong downswing tomorrow, as the trend identified in my last post continues.

Down-slope emerges as market swings wildly up and down

The Bulls have yet to throw in the towel. Each slump in prices is followed by a vigorous recovery, but the emerging trend is nevertheless strongly downwards.

Graph shows the emerging slope of the new (down) trend of the S&P 500. As it trends downward, the graph swings wildly and almost vertically up and down as the Bulls continue to put up a strong fight against the ever more triumphant Bears. The battle could calm down to a pattern of gentle swings, or the Bulls could throw in the towel and allow the index to head vertically down.

This morning's punt: Short on the FTSE

An hour and a half after the UK stock market opened this morning, it seems clear that the plunge of the FTSE is continuing. This morning's punt is, accordingly, against the FTSE100:

The chart shows the FTSE 100 since 2010. The uptrend that commenced  in July 2011 has come to an end and a downtrend commences from here. At present prices are plunging. The plunge may continue, or the index may swing back, to moderate into a more gentle decline. At the moment it looks like plunge continuing.

Euro to rebound

The Euro has touched bottom (i.e., Support Line) against the US Dollar and may be about to rebound. This is indicated by the Chart. Contrary indications are that the Sterling and US Dollar areas will be seeing increases in interest rates in the coming months, which should tend to depress the EUR/USD and EUR/GBP further. For the moment, the Euro seems to be finished its downtrend against the Dollar and may be about to commence an uptrend.

Tuesday, 7 October 2014

Market slide continues today

S&P oscillated up and down as it slipped down the slope of the downtrend today.

Although now at the bottom of the range of the present downtrend, I think I might leave a position open overnight, since by now the Bulls must be getting a bit nervous and the fall therefore likely to continue after hours.

Mild Monday market means meltdown coming

Monday 6 October was no Black Monday. After rising early, prices slipped back later to show a slight drop overall.

As astute investors pocketed profits after a long summer ascent, the Bulls did not believe the uptrend was ended, but saw opportunity in the reduced prices.

You and I have, however, sold our stocks and will see investment opportunity when prices fall forty percent, or level out at thirty.

Sunday, 5 October 2014

Review and renewal of Black Monday pledge

I expect the markets to fall this coming week.

This image shows the shape of the FTSE 100 since 1990. It has kept within the range described by the shaded polygon. Having reached another apex in line with the previous 2, it has commenced to drop along line D. Early in the week, I made good gains, but lost them when I was too eager to get back in on Friday before its little bounce-back had come to an end. In the  coming week, I must be ready to re-enter as soon as it resumes its downward movement, which could, as I speculated in a previous post, become a crash.

The S&P 500 faces an even bigger drop, having twice broken out of its polygon, first on the down-side and, this year, on the upside. It is not quite so clear that it has started the down-trend: as I indicated in a previous post, it may have a double or treble peak at its present level before dropping.

The rise of both indexes to their present highs was driven by quantitive easing and low interest rates. The Quantitive Easing programmes are being wound down, and interest rates mus rise from their present abnormal lows. Sterling has signalled that the interest rates will rise in 2015, but the American Fed has indicated that the low rates will be continued for the present.

The markets know that, whatever words issue on the matter, interest rates will rise. They won't wait, but anticipate. Therefore, I expect both indexes to tumble sooner rather than later.

As to forex - EUR/USD and GBP/USD:

My polygon suggests that GBP has more ground to lose against the US Dollar, before a rebound is due.

My polygon on the EUR/USD suggests that the present downtrend might be coming to an end. However, the raw facts that the Eurozone is only commencing a programme of Quantitive Easing and that there is no prospect of an interest rise in this zone for the foreseeable future, indicates that there will be another substantial movement to the downside, whereupon the polygon will need to be redrawn to show the previous extreme dip (from 2000 to 20003) as the normal bottom.

Thursday, 2 October 2014

FTSE downtrend has started

The FTSE downtrend has started. The American markets will follow suit, no doubt, when they open later today.

Click to enlarge image.

For 3 years the FTSE100 has kept above Support Line C. It has now crashed through that support, indicating that a downtrend is under way. The last FTSE Bear-market lasted from October 2007 to February 2009. The present one may be swifter than that, being, perhaps, a response to expectations of increased interest rates rather than economic recession.

Wednesday, 1 October 2014

Today's plunge in the markets presages a great sell-off

I have joined the bottoms for the last year on the graph, giving me a Support Line. Today the graph plunged downwards to kiss this line.

First day of October and already the Markets are plunging. However, it is not yet conclusive that this is any more than a down-swing within the range of the present uptrend.

The graph will either bounce off the Support Line, indicating that the uptrend will continue for the present, or break through the line, signalling the beginning of the great sell-off. If not now, undoubtedly the sell-off will take place later this month.

Only one Wager now: Black Monday to Win

October is a month when investors review their portfolio. After a sulggish summer, this often signals a new period of growth. However, this year the summer months have seen an exceptional rise in share prices. Many traders will now be inclined to take profits, a fortiori because Interest Rates are due to start rising soon. Should the sell-off drive the chart through Support Line S, there will be a massive exodus, reminiscent of previous Black Mondays. This may not happen on a Monday, but is coming soon. To have anticipated a Black Monday would be the punt of a lifetime!

Monday, 29 September 2014

The Few against the Many

My Sunday newspaper (Sunday Independent, attrib. Reuters) tells me "Stock markets set to keep rising well into 2015." After a sluggish end of week, "Nearly all the almost 250 analysts and investors polled in the past week predicted markets would rally, with several indexes reaching new highs."

I dare to take the opposite view.

They say: "Share prices are rising so they will keep rising." We have heard that before.
I say: "Share prices are inflated. Interest rates are deflated. Interest rates must rise. Share prices must fall."

Click to enlarge image.

This morning's downturn (with subsequent rebound) confirms the emergence of a new Resistance Line (R), as the Parobola-top, signalling the end of the present uptrend, takes shape. Junk bonds have already fallen significantly in price, indicating that the market is gearing up for higher interest rates and lower equity prices. The Sterling interest rate is to go up in 2015, which is not too far away now, and the USA will follow soon after.

Markets don't wait. They anticipate. We could even have another Black Monday next week, sez I.

Friday, 26 September 2014

Market Collapse imminent

I am convinced that the FTSE 100 index (index of 100 leading Great Britain shares) is about to suffer a severe correction. I also think an even more severe correction will hit American indexes, but possibly not so quickly. Click on an image for a larger view.

These charts predict a 15% falll for the FTSE (already perhaps begun) and a 40% fall for the S&P500 (wait for it to start).

Friday, 19 September 2014

Pound Sterling rallies a little after Scottish poll

The Pound Sterling has rallied against the US Dollar (GBP/USD) following the "No" vote in the Scottish referendum. It should not, however, be expected to carry the price back to the level it held before the debate on Scottish independence started.

Click on the image to enlarge.

The graph shows the progress of the Great Britain Pound (Sterling) against the US Dollar over the past 5 years. It has been trending up and down within bands marked by Trend Lines A and B. The Horizontal red line shows the position it held before the Scottish referendum on independence drove the price down. This slump, however, was just the continuation of an existing downtrend. The rejection of Independence has brought an upswing in the price. The strength of the American economy, and the political confusion over devolution of powers within the United Kingdom, however, will tend to continue the sentiment that supports the downtrend. Conclusion: it is unlikely that the present upswing will bring the price back to $1.66, held before the debate on Scottish independence started. The upswing will quickly run out of steam and allow the downtrend to continue.

Thursday, 18 September 2014

Significant events: today Scots vote, tomorrow Alibaba launch

Two significant events for share punters:
  • Today: Scot vote on Independence. If yes, GBP will rebound; if no, it will have a volatile period.
  • Tomorrow: Alibaba launch, in money terms the largest ever on the USA market.