Before you all get all loose wheeled and boot-rollicky because Timmah Geithner decided to extend the last few remaining TARP nickels to carnival midway operators, portable potty lessors and, oh yeah — bullshit life insurance companies, let’s keep in mind it’s the Transports ($TRAN) that run this market.
And the Trannies look a little ailing …or to be less dramatic — fatigued:
Note how we’ve broken through the 20-day EMA that’s been support since the March lows? After such a massive (9 week run) a pullback here to the 50-day EMA would not be unusual and in fact is a healthy circumstance… if it’s just a pullback to the 50 day EMA. Anything further and we could be talking a wholly different Devil Dawgian scenario.
But for now let’s let the Zone of Indecision be our guide since it so fits with our EMA’s and support levels. Below that level, there be dragons I fear.
The weekly $TRAN chart gives me pause too. Check out this bearish engulfing somnabatch:
And right off the 34-week EMA too! I expect we should flirt with that support level at least, and if we break through it, it could get far nastier. I have already hedged my largest transport position — UPS, but in the event of a break of that support at around 2900, I will be getting short in everything save the Core Porfolio in a much larger manner.
Now let’s look at the $SPY weekly chart one more time for synthesis:
As expected we did pause in that 940-950 area, and are in fact retracing to what looks to be the 13-week EMA, which has been support for almost six weeks now. Whether we head back to our second target zone (in the 1010 area) will depend on the bounce, or lack thereof, left in the 13 week EMA here.
Personally, I think we head back up one more time after a pause, but that’s almost as instinctual a call as it is a chart reading one. In any case, we can continue to use the reliably signalling Trannies, as well as the above $SPY weekly, to provide us a rough guideline for the weeks ahead.
Happy Preakness, and Victoria’s Day to our Northern neighbors. I should be back tomorrow with a weekly update on the Core. Best to you all.
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Nice work.
One question – why use the 34 week?
This is the only spot I’ve seen that metric used is all.
Hey Jake, remember when you, Cuervos and I used to grow TARP? Man those were good times. I didn’t realize you’re a Dow Theorist, all bout the Trannies, egh? Let me ask you a question about the weekly charts, why a 34 period MA? More broadly, why would a moving average be a support or resistance level anyways? I understand the psychology of a stock running up to a previous price (horizontal trend line) and people who bought that high before, just wanting to get out even, so it acts as resistance, but why do moving averages work? And why a 34 period MA? Also you are pointing to the overbought/oversold indicators on those weekly charts, scholastics or whatever, but look at how many times these markets were “oversold” over the last few years and how wrong it would have been to buy them. The ol’ Chart Addict pointed me to a Bloomberg article about the failings of TA over that last little while and it was mostly a bullshit article but it did shed some light on one thing, trending indictors have been the shit while overbought/oversold indicators have really been shitty. Those MACDs still looking good on the weeklys. Yes? No?
JAKE.. funny pix..ya had me at trannies LMAO..nice post but a bit of a reach ? next week will provide a little more clarity. I feel the bulls were taking profit and possibly reloading..but it s an exercise to try and predict such a difficult market. Thanks for your time and I enjoy your articles.
I’m guessing that the 34 is used because it’s a Fib number? For what it’s worth, I use it and also the 55 instead of the oft used 50d ma on daily charts.
oscillators arent great as things become more overbought and oversold.
3 Questions:
1. I think I know, but I want to ask you why you honor A Jackson above others?
2. Should the deflationary spiral sentiment return in the form of another market plunge, do you think the miners and metals will go right down with it?
3. In your opinion, why do Canadian’s cherish the Maple Leaf so much?
Jake, Re Eric’s questions:
One and two (especially) are valid queries right in your areas of expertise, so your response would be, without a doubt, invaluable. But please, as a friend (or at least as a neighbour), don’t even attempt to answer question number three.
I thought you might find this interesting. It’s an excerpt from First Majestic’s Q1 2009 report. It’s not so much the co. I am interested in as the ‘real’ (retail) price of pm’s,
” In the quarter ended March 31, 2009, the Company shipped 996,595 silver equivalent ounces including 67,620 ounces of coins, ingots and bullion at an average price of $17.52 per ounce (US$14.07) compared to 1,019,490 equivalent ounces in the quarter ended March 31, 2008 at an average price of $15.94 (US$15.87) per ounce. The Company has been successful in realizing an average selling price of US$14.07, higher than the average trading price of silver in the quarter of US$12.61 per ounce (Source – London Bullion Marketing Association). ”
Note the difference between ‘selling price’ and ‘trading price’. Does that fit the idea of ‘leading indicator’? I wonder what other pm’s this sort of gap might apply to too, hmmm? Either that or First Maj. just has a top quality sales team.
Thanks for all the questions. The 13 and 34 week moving averages are relatively common long term trending “tells” and I’m kind of surprised I’m getting so many questions about them.
While Edwards and McGee didn’t start out (in their famous Bible) using moving averages, they have taken the “trending” ball and run with it. I just find for the longer term trades — like those related to the Core, they are the most indicative of the trend. And yes, 34 week average is a fib number, but I’ve been using that line since before I started using fib charts.
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Sorry I didn’t get my Preakness picks up, but the heavy favorite won anyway, so no big.
Congrats to the filly, Rachel Alexander (with the nice name), and to the peppy little engine “Mine that Bird” who gave her a real race, doing his last to first act (almost) once again.
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I dunno what happened to my post about the 34 week moving average but I’m not retyping it.
Short story– read up about technical analysis, long term trend trading and fibonacci numbers. These days you can even google all that in less than an hour.
The 13 and 34 week MA’s have been very reliable tells for me — and especially w. regard to the “golden cross” when the 13 and 34 cross in a rising trend. I find long term trading (“investing?”) to be more lucrative for me in the, well… long run.
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With regard to the oscillators — these are very much “secondary indicators” — and even “tertiary” in my book… price and volume carry far more weight for me.
I use them only in the sense that sometimes they are additive in a “preponderance of evidence” fashion.
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1. I think I know, but I want to ask you why you honor A Jackson above others?
I don’t know how far back you can go in these archives, but if you go to my initial posts, I explained it there.
Jackson was something of a maverick, but he believed in the Constitution, the Union, and sound money. Most of all he knew the evils of fractional banking and how a central bank (Bank of the United States) could destroy the fabric of the nation by devaluing sound money (there was tons of historical evidence even by the 1830’s).
He kept us from having a “Fed” for the next seventy years. Only when the “progressive” Wilson came to power was that monstrosity allowed.
2. Should the deflationary spiral sentiment return in the form of another market plunge, do you think the miners and metals will go right down with it?
I think the industrial metals will get honked, but the PM’s will be seen as a flight to safety and sound money. Those miners with good management will increase in value as well.
3. In your opinion, why do Canadian’s cherish the Maple Leaf so much?
Do you mean the gold coin? It’s the only physical gold I own. I love the purity.
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But please, as a friend (or at least as a neighbour), don’t even attempt to answer question number three.
Why not?
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Okay, I answered the moving average thing twice and it disappeared twice… I’m going to kill Jeremy, basically.
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Well done Jake…very well done, indeud.
Jake:
Have you taken a peak at the commercial numbers for this week? Looks like the big boys (GS and JPMorgan) are up to their old tricks and bumping up their shorts in gold and silver. Puts a Hurt on the bull case IMO.
Jim
“Do you mean the gold coin? It’s the only physical gold I own. I love the purity.”
Wow, great answer. Not at all what I had expected.
Signed,
Pleasantly Surprised
Jim,
I note that the Blees ratings have been off for two weeks on both gold and silver. Gold was never really high (in the mid fifties) and it’s drop has been smaller (proportional really) than silver’s.
Given the POG, the strength of this miner rally (in the face of the downturn in almost every other segment of the market), I’m not ready to abandon this trend quite yet.
JP Morgan be damned. 😉
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Goin’,
I have to admit I’m nonplussed by your continuing misunderstanding of me.
That said, I’m not overly concerned about it, either.
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I think we are headed for the Devil Dawgian scenario. LOL. New SPX low in early July.
This is the gayest blog ever penned by a tabbed iBC blogger. Congrats.
No offense to faggots, of course.
And using the word “penned” instead of “written” doesn’t also say something?
Spoken like a true Crooklyn degenerate with identity “issues.”.
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Eric.
No.
Jake:
Coming from a LAWN EYESLAND native, I am not insulted. Actually, people of your ilk are known to run around with trannies.
jake, did you put the picture of the tranny up in honor of harvey milk day which is about to pass in california?
let’s take a day out of our curriculum to teach our kids about homosexuality, transgender, etc….sounds awesome 🙁
Coming from a LAWN EYESLAND native, I am not insulted. Actually, as people of your ilk are known to run around with trannies.
First, it’s “Lawn Guyland” — there is no excuse for you getting the accent wrong, given that its largely Crooklynese-based.
Completing that thought, I agree with your supposition, given that Lawn Guyland is full up with second, third and even fourth generation Crooklyn-derived degenerates.
Not as undiluted as Staten Island, mind you, but close.
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Dan — are you shitting me?
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Jake celebrates HARVEY MILK DAY as if it were Christmas.
He even exchanges gifts with his neighbors. I can go on all day.
So you know of this “Harvey Milk Day,” Fly?
Interesting, if not surprising.
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