Weekly charts and analysis: Point and Figure Long term updates

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Posted by Capital3X | Posted on 18-11-2012

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That time of the week where we get down to begin preparing for tmrw trading. Time to look at the point and figure charts for currency futures and SPX and Gold.

Point and Figure charts (Long Term)

The US dollar is now aiming at 86 on a medium term projection after the triple breakout at 26 Oct 2012.

The EU index has a bearish price objective of 121. The double bottom breakdown on 02 Nov 2012 is leading it down. Given how far the target is, I expect retracements no farther than 128.5 on the index which will correspond to 1.2995 on the EURUSD.

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Summary: The point and figure charts as seen above have had a key reversal moment for most currencies between 20Oct and 2 Nov 2012. We have seen how they have led on their way post those breakdowns and reversal as the case may have been respectively. Remember these are long term charts and exactly what Falcon daily (Captial3x bond indicators) is doing for EURUSD and EURJPY

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    • Intermarket Insights, YEN, UST2Y, DXY, EURO

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    Posted by Capital3X | Posted on 16-10-2011

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    Key counter trends this week has challened many of the established trends of the last 3 months. We will look at key pairs and intermarket to understand on their trends.

    YEN vs 2Y yield on UST

    YEN relation to US treasury Yield is well established. We see the rising YEN index against the backdrop of falling US yieldS esp on shorter end of the curve. But given that the US 2y yield has broken above the 50 MA, we may finally be in the early stages of YEN Index to have topped off.

    YEN Index

    Yen weakness is coming on the back of rising US short term yield curve as it breaks below the 50 MA.

    UST 2Y Yield

    The US treasury 2y yield gives a strong feeling that short term yield may have crossed over beyond the 50 MA for good this time as FED twist operation is pulling it away. A major casualty of the 2yYield is Gold and YEN both of which drive of the US yield curve.

    EURO Index

    EURO is set to extend and test 50 MA and even move to the 200 MA. The sheer velocity in the Index is expected to pummel euro to key crossover levels. The macro for such a move has been well priced in for the Oct 23 eur head meeting which many believe could give EU bonds a new sigh of life. Trichet has told FT that Treaty changes could be possible.

    Dollar Index Daily

    On the daily charts, we see the index, still above key levels but heading to test the 50 MA at 76.15 a level corresponding with the EURUSD at 1.3950/70

    Dollar Index Weekly

    The weekly chart reveal far more than the daily as we see the Index wedged between the 50 and the 200 WMA. These are key level and expect the dollar to test both levels.

    Gold Insights from Intermarket

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    Posted by Capital3X | Posted on 08-10-2011

    Category : Think Tank

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    We analyze Gold charts by looking at Inter-market analysis for the month of October. This is an update from our August Gold analysis and September Gold analysis all of which had noticed the stalling Gold at 1888 before we issued our shorts to catch the trend move to 1603.

    Some of our posts which had caught almost the entire risk aversion trend over August and september:
    Sept 9: Dollar King comes to take the Kingdom
    Sept 4: The world is slowing
    Sept 1: EUR Downfall coming
    Aug 28: Has Gold final Lap ended?
    Sept 14: USD/CAD pointing to sharp rise

    These are only part of the analysis and premium subscribers are constantly updated of new trends from the world of Inter-market analysis.

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    We have kept our commentary to as little as possible as the charts are self explanatory.

    Gold DAILY Charts

    • The double top on GLD charts is evident and such patterns can immediately lead to falls of more than 20% if not more. In case of Gold it corrected from 1913 to 1528 all in the space of one month obviously led by forced liquidation of EU banks which were forced to raise cash levels in Sept. CME too played it part by raising Gold margins by over 20%
    • On the daily charts Gold rests on its 100 dma at 159.18 while the 100 DMA stands at 160.3. To note the importance, Gold has never challenged the 100 dma in the last 8 months.
    • On the daily charts, there is scope for further rise but we will need to look at other intermarket analysis to understand Gold price action

    Gold WEEKLY Charts

    • Gold is clearly on a rising line as it is clear of all WMAs. The vortex, Stochastic while moderated are still above levels which are not yet threatening the larger bull move initiated 18 months earlier
    • The weekly MAs are still rising and therefore indicates a period of consolidation on weekly charts.

    Gold in itself has little significance, in a capital market which runs and drives on inter-market relationships. No asset can be looked at in isolation anymore and hence our focus on inter-market.

    Gold wrt to SPX Daily

    • Gold vs SPX has sharply fallen below the 50 dma and hence has been under-performing SPX.The good news though is that the MAs, are still on rising slope and hence we are not entirely sure of Gold underperformance with respect to SPX.

    Gold wrt to Dollar Daily

    • There is a hardly more analysed relation than the Gold Dollar charts. The ratio has now plunged below 100 MA and the support from Oscillators and Stochastic are building the bearish pressure.

    GOLD DOLLAR Weekly charts

    • There is a hardly a more analysed relation than the Gold Dollar charts. The ratio has now plunged below 100 MA and the support from Oscillators and Stochastic are building the bearish pressure.
    • While the daily charts are pointing to zone of strong consolidation with a possible test of the 200dma, the weekly charts are still pointing to gains.
    • It is vital to note that the 50 dma has started to slant down which will put further pressure on Gold.

    Gold and US Treasury 2 Year Yield

    • While Gold relation with dollar is important to understand, the dollar itself derives it strength from the US treasury yield curve. Therefore a comparison of Gold to the 2 year yield will provide insights which may be difficult to understand elsewhere. The chart looks anything but pretty. The Gold vs 2 yield has crashed even below the 100 dma thus reflecting the sheer amount of deleveraging in the metals space. The stochastic are at rock bottom while the vortex indicator is in negative territory. The Oscillators too are in negative zone. With such strong bearish pressure, we do not expect Gold to run away in a hurry unless price action suggests otherwise. Banks borrow short term, invest into Gold futures and then market Gold as precious haven and the ensuing rise gives them the quarterly MTM. The Twist operation which so wonderfully evident in the bonds markets and forecasted by us, has put an end to that game.

    Gold and Silver ratio

    • The gold silver ratio is a metric which is quite often used by traders but in itself is not very useful. The best lesson to learn from GLD:SLV chart is that during periods when Gold:SLV rises, it is wise to stay away from Gold. The ratio has zoomed past the 50 WMA and is now challenging the 100 wma.

    We do not expect Gold or Silver to outperform the US treasury as yet. The trends are now well established and October may see an extension of all Gold under-performance.

    But we need to watch the stochastic on the daily price and inter-market relations to see of any updates which will be issued to our premium subscribers.

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    Yield curve makes a run: Charts and analysis

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    Posted by Capital3X | Posted on 28-09-2011

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    Charts should be self explanatory as the 5Y yield makes a strong run for 10 dma, a level which while has been violated but has never been broken on a sustained basis. This time though we expect the break albeit after a pause here allowing Oscillators to break into positive and vortex (not shown here) to gather gaps. This pause will give dollar a chance to test its breakout and allow EURO that upside correction expected.

    5Y Treasury Yield strengthens to 0.98% up from .94% on 27 September. Rising yield on short term treasury support the dollar.

    The 2Y yield to Gold speaks volumes of the carnage in Gold. Something we predicted even before the FOMC given the strength in the yield curve. Rest of what happened is history.

    Gold continues to fall with respect to 2 year yield curve as it strengthens. Bernanke has clearly broken the spine here as he flattens the curve.

    The oscillators on Gold was blown sky high, never happened in the last 18 months in Gold rally. The correction was expected to be sharp. We believe there is more to come once dollar pauses tests it uptrend

    Charts and Updates on Dollar, Gold, CRB, SPY

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    Posted by Capital3X | Posted on 22-09-2011

    Category : Think Tank

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    Dollar Daily charts

    On the daily charts, DXY has broken in to an outright run but we also believe that we will see dollar stabilizing at these levels as we enter October before another move. The oscillators are now strongly advocating bullish moves while stochastic are resting at 70 levels. The direction indices are also pointing to bullish moves. However the pace of dollar move should now wane. ADX has moved to above 40 levels thus helping the trend.

    Dollar Weekly charts

    On the weekly charts, dollar, has now reached an important confluence point of the 100wma, 200wma and 50 wma. The 100 and the 200 are converging at the same point of 78.6 levels which is the level from which dollar paused.

    CRB Index

    The commodity equity index has broken through all support zones as warned by us here on 19 Sept 2011 of the coming blood bath. Our subscribers were well in knowledge of the coming rout even while chartists were pumping in bullish views about a SPY break of 1220.

    GOLD CHARTS DAILY (ISOLATION)

    Gold has knifed through 50dma. Expect a bounce back to close out the gaps but we have clearly now pierced the 18 months uptrend. This is why we believe Gold is just as leveraged as any other asset. By one stroke, Bernanke killed the entire asset inflation train or at least made an effort. Gold was a direct result of the short curve borrowing existent over the last 2 years. A must analyse are the inter market charts on Gold and 30 year bond prices and how they have broken support which implies large downside for Gold. They are provided here.

    Finally we come to the SPY Charts which are the easiest of the lot as SPY is pure derived asset play on intermarket.
    SPY Daily charts

    SPY is now aiming for 1194 level a break and we are going down to 1046 levels. SPY oscillators, Stochastic have only just about entered into an area of negative zone.

    More charts and analysis here

    Premium subscriber can see all our trades and analysis. We have scored 2300 pips of profit in September alone but more importantly have shared all our analysis with our subscribers.

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    Classic hedge Gold trade: Charts and analysis

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    Posted by Capital3X | Posted on 10-09-2011

    Category : Think Tank

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    This is a trade update for premium subscribers with some analysis for free subscribers.

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    Gold has been a tough chart to crack. It is well poised. I can assure you that not many in the hedge fund industry has a clue on where it is headed. While the outright bugs will not like any analysis on Gold topping process the bears have been too hurt to offer any kind of analysis at all. I am not too sure there are too many bears at all.

    There are some who believe Gold should just keep going up one way cause of the money printing almost always forgetting that a mere mention of margin hike corrects it by 15 % in 2 days, not a sign of a healthy bull run at all.

    To our portfolio, it does not matter where Gold is headed in the medium and long run. We are here to trade its every single wave and make as much as possible of it whether it goes up or down. We do not believe in long term holding of bars!


    The bulls will argue that Gold is in ascending triangle. We do not disagree. But the bears will look and say that mean reversion has to happen in every asset and therefore a correction to 100/200 dma should entail a 20% correction. But traders and hedgies will love this market. Way too much money to be made and lost.

    Right now the Gold charts are indicating a clear ….Rest of analysis on this is posted in premium section.

    This was the trade we suggested on 9 September 2011 and it stands intact.
    Trade

    The GDX charts are telling a story too:

    The GDX (Gold Miner ETF) is positioned as among the best ETF charts out….

    Rest of analysis and commentary

    Therefore combining the two Gold trades we have a near delta neutral trade.

    Trade can be found here in premium section along with full analysis and commentary.
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    “I lost everything and then I recovered everything” Capital3x Subscriber

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    Posted by Capital3X | Posted on 10-09-2011

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    Folks we thought this email from a fellow subscriber is not excess marketing and hopefully we are not doing anything wrong by giving ourselves a pat by putting this email up. It has been a good run since we began during which we have had brave a lot of hate emails, legal issues, charges of copying, identity thefts and many more issues. This email did make us smile and goes a long way in helping us continue what we do here: That is precision trading!
    We do not do paid marketing and therefore we expect our subscribers to let their friends know about us as we increase our base.

    Email from Subscriber named: Jas

    I am an experienced equity investor from Berlin, Germany. In January 2011, I decided to begin trading currencies with a small capital $5000 and levered it up 6 times. I was doing this of my own and through some blogs out there. I had never traded currencies before. I was attracted to currencies in early 2010 by the extremely high leverage available. If I could turn lucky I could make a million a year. How hard would it be as I was already conversant with equity trading? I did not really need anyone help. Always of the opinion that paid online trading firms was day light robbery. And hence gave every paid site a miss.

    Given the background in medium term investing I decided to start currencies, learning the trades and techniques available from the numerous free blogs available. Everything started to unravel in February 2011 as all my trades started to lose money. The reason was that on trades which made me money, I would not know when and where to take profit. On trades which lost me money, I would not know when to cut losses. By May 2011, I lost $32,000 of capital by May 2011 (I had increased my initial capital to loss fund my losses). And that was when I decided to quit and first learn or subscribe to high quality traders.

    I knew that a few hedge fund (PIMCO) traders were getting together to start Capital3x and I knew they were starting in July 2011. Had seen their posts at a few forums. I decided to give it a shot. Well It is 9th September 2011 a good 2 months after joining Capital3x, I have recovered $30,000 of lost money. I am still negative by $2,000 but I am hoping that the good run with Capital3x continues and I can justify my decision to trade Forex, S&P Emini, crude, Gold, Silver. They do put up occasional stocks picks. I did take their last Stock trade “short MS at 22 and target 16″. But they have been wrong as well at times. The Apple trade at 360 may just be wrong given that markets are going down. But you never know.

    For the record am also subscribed to Madhedgefundtrader, Ashraf Laidi, Stocktwits, HMS. I am happy with all of them but I trade on Capital3x and Madhedgefundtrader advise only as they seemed to be super accurate and sharp. Occasionally give Ashraf trades a try as well. I love his book on “Intermarket Insights”

    Thanks guys.
    And hopefully someday you will show your faces.

    Keep the performance going.

    Jas
    NY

    Dollar, the King is coming to take his Kingdom?

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    Posted by Capital3X | Posted on 09-09-2011

    Category : Think Tank

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    This is part of our premium section analysis which is provided to our members. Please subscribe to get full analysis. The members are also provided with daily Capital3x portfolio which have realized them over 1002,1408 and 1021 pips in profit in July, August and Sept (till 8 Sept). The performance is shared here.

    If you would like to read the full analysis:
    Full analysis and trade portfolio can be obtained here

    September continues to rake it in even with all the news flows and volatility attached with it, we have been reasonably successful in keeping our portfolio immune to high volatility. That said, it has not impeded our ability to generate returns.

    We believe that we have entered into a phase of a strong dollar against every currency including the CHF, YEN. It is almost as if king has come to retain his kingdom. But it may just last enough to wipe away a lot of short guys out before turning down on its fundamentals. Dollar is extremely sold against the CHF, YEN and the AUD. As and when the dollar turns back up, these are the currencies which will suffer the most. In fact CHF is already taking the lead in taking a beating. Read our analysis here which will not be found anywhere else (Not even the Big brokerages had a clue on CHF at least till yesterday while we were suggesting trades on CHF)

    The 6 month dollar chart arguing for breakout rally

    Dollar breaks through a tight range of 5 months. This is looking extremely similar to 2008 which after five months of tight range consolidation broke out in October 2008. We know what happened next. Will it happen this time? We do not know that and we advise our clients also not to speculate on such matters. You will always end up losing. The best way to play these is by analyzing price action on a daily, weekly and monthly basis. We at Capital3x maintain that all past and future movement of a stock/currency is embedded in today price. The question is whether one is competent enough to draw out the analysis.

    This is the dollar chart from 7 September:
    Full analysis. That is what we said then. We already a good 2% in dollar index from the time we put that.
    Three different time frames analyzed on the dollar chart
    Dollar Index daily:

    The dollar index is trying hard to rally. The daily chart shows the index jumping to 76 levels which is top range of 76.3 levels. Look for a pause and a break to affirm some kind of strength in the dollar as we approach Sept FED minutes.
    The Stochastic are now pointing to extension of the trend. Vortex too is now arguing for a strength in the uptrend.

    Dollar Index Monthly:

    The monthly charts are yet to show us any kind of affirmation of the strength and there fore we suspect that any dollar strength may not be multi month phenomenon. But having said that charts can change over the course of the month.

    Dollar Index UUP ETF:

    No major pickup in volumes as Volumes continue to fluctuate around the 50 dma (not shown in the charts). The Stochastic have picked and jumps to 91 levels pointing to strong gains on to 23-24 levels. Vortex is pointing to continued strength.

    Another pattern which is important is 4 months of consolidation in Dollar index which is similar to the five months seen in 2008.


    The last time in 2008, dollar consolidated for 5 months after touching all time lows. But once it broke through the consolidation, it was absolute carnage. The pattern this time is eerily similar with dollar now in the fifth month of consolidation.

    We do not believe in forecasting and speculating but we do believe in reporting what we see on our internal mathematical model which feeds off the technical indicators on price and volume all of which are pointing to renewed era of strong dollar.

    S&P Daily charts

    S&P500 continues to lack direction. We would have liked to say that S&P is headed 1120 and a break thereafter given dollar strong bias. But S&P indicators are not yet exactly disastrous. But given that markets can move 4-5% nowadays, do not expect the situation to remain exactly as reported here.

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    Full analysis and trade portfolio can be obtained here

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