My take on financial markets - been a long time

[Mygdonia]

XAO monthly.

This is a complex chart which does not make sense, so I tried to simplify it as much as I can. I guess we need to start in the past and work ourselves into the future. Firstly keep an eye on all fibonacci levels as I believe they are geometrically critical. We had a crash in 1987 with four years of sideways/consolidation movement. During this consolidation a double bottom was formed and a new bull market was born. The highs of 1987 was the resistance level for NINE YEARS, eventually it became support as all past resistance levels do... the reverse is true also; historical strong support becomes todays strong resistance, so keep that in mind. The September 2001 highs as I call it are absolutely critical in fibonacci language 0.618 is an important number in all life of geometry. When the September 2001 highs were broken an 'exhuberant rally' took place. SO where to now? According to the monthly chart, we are heading DOWN we may get a one or two month rally, but we are HEADING DOWN. My targets for the absolute bottom are not well defined, providing the geometry of the chart continues to play the same tune I may not be too far off the mark i.e somewhere in the vincinity of 2011 & 2012. History shall be the judge.



S&P 500 Weekly.

The S&P 500 weekly is scaring the Sh&^%$t out of me. That multi year double top is as bearish as you can get, the distance between the twin towers is eight years....keep that number in mind. 2008 + 8 years is not fun at all. In a trade perspective, SPX is trading in ABC patterns and I have highlighted them on the chart a likely scenario that may play out and possible targets. Picking the bottom on this one is virtually impossible.



Gold

Let it be known I am a gold bull and I had a head ache to peice this jigsaw puzzle together. It's a mess technically, but some elements of the chart do indeed share a story. Remember when I said, historical resistance becomes support? Well follow the two purple eclipse and toy shall see what I mean. That expanding wedge makes absolutely no sense, I can't work out if it's distribution or accumulation or whether it's Arthur or Martha..sorry I don't know what that thing is. All I know is one thing, gold found support on its geometrically correct 0.618 level, however short term prices have hit a snag as its head bumped on the 200SMA. What this means, we shall get a retracement, it is also highly possibly prices shall oscilate between the 0.618 and 200SMA.. we shall see volatility.



US Bonds - daily.

Hoorah, a chart that is fairly self explanatory and very easily tradeable. We have an uptrend with the MACD copping it in the neck. US bonds shall visit that uptrend line very soon, whether it will be time to buy US bonds and dump equities around that region is the tricky part, my guess considering the overall DNA of the chart, would be YES, buy on the trendline. What this means, is that stocks will get a lift until US bonds hit that trendline, when bonds hit that trendline keep a very close eye on the SPX, do you recall the ABC pattern on SPX? Well keep an eye on 'b'. It's all about that trendline



US$ index weekly.

Caution is certainly required for all USD bears and gold bulls, no doubt about it. USD index has broken its weekly down trend but has failed its first test to break through a major resistance level. The FOREX markets are very dicey, and I suggest you stay technically NEUTRAL. We need more information.



AUD - weekly

Finally the Aussie. This is another chart which I call geometrically perfect. That consolidating pattern from 2003 through to 2007 without any severe breakdowns is extremely bullish. It is highly likely prices of that period will act as support for the next four years or untill 2011. Yes there has been a severe sell off in recent times, but this is an opportunity to buy the dips IMHO the uptrend is undenible. The lows are getting higher, so for me it is time to buy.

[Foti66]

Dude! Your a guru! I have to tell you, your analysis is no different than top technical analysts in the biz. Nice job! I mean this!
Now I have to tell you my opinion based on 20 years of study. This method can be very subjective. Try this book.

Amazon.com: The New Science of Technical...
Amazon.com: The New Science of Technical...

It will help make your analysis more objective.

Doing this type of analysis does help you paint some sort of picture of the market you are analyzing. I still like to keep my trading simple though. (Is the market trending and how do I jump on board without getting hurt.) (Is the market coming out of a congestion? If it is I better not fight it because it should show some follow through.) (How is the market reacting to the current news that is out there. If the news is bullish and the market is reacting bearishly then I should think about going short. )

By the way, what you did above, this is part of Gruevski's educational background. I don't see why boxing and technical analysys can't prepare you to run a small country in the balkans.
Gruevski, Gruevski, he's our man.
If he can't do it, nobody can.

Now I think it is easier to understand why he is leading his country to ruin. He is simply not qualified to do the job he is doing. He might be sitting in his basement drawing charts and trying to predict a turn in FYROM's economy.

[Mygdonia]

Thanks Fots!

Hey man, that's a real intersesting book, is DeMark from OysterCatcher?

The difference between Gruevski and myself is that I do this for a hobby, I am Greek..Gruevski does it to ruin a country because he is a Skopjian.

I seriously believe if we are to match wits; I'll smash him to smitherenes, but only if you are in my corner.

[Foti66]

DeMark's fame came from working for Paul Tudor Jones for a while (A huge name in the trading and hedge fund industry. Paul Tudor Jones is a master trader.) I think DeMark now writes books and consults for various people in the industry.

[Mygdonia]

Sorry if I am not making much sense, I have drank half bottle of Vodka with red bull...and playing online poker so I am enjoying life at the moment

Hey man, how can I set up my own hedge fund, any ideas? I reckon I will do okay.

[Cadmus]

Sorry to break in again..but Foti do you beleive such a remarkable governmnet bailout plan of 700 billion work that magically? i know the USD is gonna drop on such a plan (deflation) but for me it sounds to Hollywood like: look we have created a materplan that will solve the credit crunch and also the housing market...magic isn't it?

[Foti66]

Cadmus, I think the US will function fine. There will be a solution soon but I don't think that it will magically cure the ills of the economy. It will take time. Also, what the government is doing is going to cause inflation not deflation. This is a complicated issue. In the US most people own their homes. Their homes are also where the majority of their net worth lies. Real estate is the best hedge against inflation. Inflation will help stabilize housing prices, but of course this will happen too late for the people who have already lost there homes.

Mygdonia, I like Vodka too.

[Cadmus]

Dear Foti!

Something is wrong with the bailout plan isn't it?
Right now the DOW plunges 700 points!

What do you think ? a free fall from now on?

[Foti66]

Originally Posted by Cadmus

Dear Foti!

Something is wrong with the bailout plan isn't it?
Right now the DOW plunges 700 points!

What do you think ? a free fall from now on?

A 10% move to the downside. I can't see a freefall. Everything is ok. I am sure there will be a solution found. I am sure we will come out of this stronger. In the meantime there are some great opportunities out there.

[zefs]

I am glad that the bail out plan was rejected by the House of Representatives.

Highlights of $700 Billion Financial Markets Bailout Plan9-28-08 6:34 PM EDT | E-mail Article | Print ArticleWASHINGTON -(Dow Jones)- Here are highlights of the "Emergency Economic Stablization Act" of 2008, according to a summary:


-ASSET PURCHASES: The Treasury Department could purchase up to $700 billion in troubled mortgages and other assets through a "Troubled Asset Relief Program" or "TARP." The $700 billion would be available in phases. The first $250 billion will be immediately available to the Treasury secretary. The next $100 billion will be available if the president issues a certification of need. The final $ 350 billion would come if the president sends a written report to Congress seeking it.

-EXECUTIVE COMPENSATION LIMITS: If the Treasury purchases at least $300 million in mortgage-based assets from a financial institution, that company would lose the ability to take a tax deduction on the amount of salaries that exceed $500,000 for its top five individuals. It also includes a 20% excise tax on golden parachutes payments triggered by events other than retirement.

-WARRANTS, EQUITY STAKES: The bill requires the Treasury receive "non-voting warrants" from financial institutions participating in the program. That would give taxpayers an ownership stake and profit-making opportunities in participating companies.

-MARK-TO-MARKET ACCOUNTING. The bill restates the Securities and Exchange Commission's authority to suspend the application of the Financial Accounting Standards Board "Statement Number 157" - or mark-to-market accounting - if the SEC determines "that it is in the public interest and protects investors." A study on the same topic is also required.

-TOXIC ASSET INSURANCE: The Treasury secretary is required to create a program "to guarantee troubled assets of financial institutions" purchased by the U.S. government. The Treasury is required to establish "risk-based premiums for such guarantees sufficient to cover anticipated claims."

-INTEREST ON RESERVES: Provides the Federal Reserve with the ability to pay interest on the regulatory reserves it requires financial firms to hold for capital adequacy reasons in 2008, rather than in three years' time, as it is currently scheduled to do.

-FORECLOSURE RELIEF: For the mortgages acquired by the TARP, the Treasury secretary is to implement a plan to "mitigate foreclosures and to encourage servicers of mortgages to modify loans through Hope for Homeowners and other programs." Hope For Homeowners was an anti-foreclosure program in the housing bill passed earlier this year. It requires the Federal Reserve, FDIC and Federal Housing Finance Agency to develop plans to minimize foreclosures.

-TAX BREAK ON FANNIE, FREDDIE PREFERRED STOCKS: A tax benefit to help, primarily, community banks that held Fannie Mae and Freddie Mac preferred stock. It allows them to treat their losses in preferred stock in Fannie and Freddie as ordinary tax losses, rather than capital losses.

-OVERSIGHT: Creates a "Financial Stability Oversight Board" to oversee the program, which includes the chairmen of the Federal Reserve Board, the Securities and Exchange Commission; the Federal Home Finance Agency director and the Housing and Urban Development secretary. Also requires the U.S. comptroller general to report to Congress every 60 days about the program. An independent inspector general will oversee the Treasury Department's decisions, which will be subject to judicial review. It also will require posting of transactions online for public view. . -By Rob Wells, Dow Jones Newswires; 202-862-9272; Rob.Wells

michaelsavage.wnd.com