I like to try to catch the exact bottom or top of things. That is just my hobby and the only reason I am bold enough to even attempt this is because I have the Elliott wave tool to help me. I don't always get it right but I do get it right pretty often, far more often than is possible using gut feel, and when I am wrong I know it pretty quickly.
But people who do not have time, inclination or understanding to do this should just be cost averaging into commodities, metals, miners, oil services. My models called an exact bottom on commodities back on Aug 28th. I used silver as the benchmark but obviously gold and oil services and other related things did not have to be in perfect locked step. They could be off by one small wave but when wave 3 of 3 expresses itself in silver, all commodities are going to go up at the same time.
Not all birds in the flock of starlings turn at exactly the same time. It takes time for the herding signals to be understood by all. Likewise not all fish in a school turn simultaneously. The various commodities are no different. But wave 3 is that point in time when the overwhelming majority now agree on the new direction and it tends to pull in 99% of the stragglers.
So when silver confirms gold's breakout, all Hell is going to break loose in everything commodity related. Oil services are probably going to be one of the most dramatic percentage gainers since they have actually put in a lower low since Aug 28th. But silver is holding the line per the chart model below and I see this as positive divergence. We are very likely at the cusp of a direction change and very few days will transpire before it becomes obvious to a much larger percentage of the herd.
Right now the silver chart has a very ugly series of declining double tops. Unless and until these can be broken out of, the commodities slaughter is not over. Most traders would be very bearish if not short this chart. But I would not short this simply because of where it likely lives in the wave count. A fall below cyan 2, which is only 20 cents on a $14 stock, would immediately invalidate this count. But I'm thinking that the more likely action would be to gap up above that falling grey trend line. If this happens it will be an important data point in validating my bullish model because the 3rd of 3 often sees a gap. If we see this, the trading plan is easy: buy the first three wave dip and then set your stop loss for just below that grey line. At that point you don't need to watch it all the time. Just let it go because you will either get stopped out for a minuscule loss or you will see this thing begin to take off skyward.
For those would would rather have higher risk / reward there is always RSX, RUSL,GDXJ and JNUG. And please keep the oil services guys like ORIG in mind. ORIG makes a ton of cash, is profitable, is at its 52 week low after putting in 5 waves down which match a model a put out some time ago, and which is known for paying big percentage dividends. ORIG might not be done so spend 1/3 on Monday, 1/3 on the following Friday, etc to cost average in if you like but if SLV gaps up then ORIG could have bottomed already. Again, if SLV goes into a 3rd of 3rd it is going to be a herding signal seen by everyone.
Below left is the monthly chart of RUSL. It has all the hallmarks of an inverted owl. The first confirmation will be the break back up above the lower rail and the second will be when the top rail is taken out. RUSL is not a long term buy and hold but the owl generally sees a rapid direction on the right hand half of its neck and body. Below right is the 230 minute chart of it and you can see how it has broken out of the falling resistance line and is now back testing it. Unlike the RSX which RUSL is the 3x options based time value present version of, RUSL will never actually bottom. It will run and then at each inevitable pause, it will bleed time value. So while it is not completely vital to market time RSX, it is completely vital to do so with RUSL. It cannot be thought of as a buy and hold. But right now I see it as a strong buy with obvious stop loss trigger right below that falling red trend line.
5 comments:
That or the Chinese explosions or Volkswagen scandal or the ill Chinese short sellers or Russia, Syria ... but never, oh never the central banks, central planners or god forbid the gov.
Something is definitely happening, within the last 2-3 weeks our public television, here in Ontario, out of the blue, has been broadcasting multiple documentaries on gold as money, US abuse on privacy, E. Snowden, Martin Armstrong and his imprisonment and abuse by the gov, crash of 2008 and the banks and yesterday on the .1% and the growing inequality and destruction of middle class...
Not long ego all of those were highly unpopular if not considered conspiracies. I try to look at them as if they were propaganda in disguise; one thing that strikes me is that they try to blame everyone except the 3 major players I mentioned earlier, or at least never explicitly; only as a result of a well intended policy that turned wrong...
Best regards,
L.
Last message was meant for your : "I wonder how much Janet Yellen is insured for." post
L.
Hi L,
I was interested by your observation that those things which used to be unreportable in the name of being politically correct or not terribly complimentary to government are now emerging from the media. It tells me two things which are in line with my model about a new conservative wave hitting the sub-conscience of the group think herd. First, media has no independent thoughts, it just repackages out to the herd what the media itself is sensing. It wants ratings. If you want the approval of your audience, give them what they want.
But of course media is very dependent on government as well. Government a-holes can impose rules, fines and other things that are bad for business. So either government backed down on this front in a visible way or the stations are losing viewership left and right and have decided it is more important to kiss the audience's ass than the government's.
Either way is it significant because it means government is losing control of the herd. The only control government ever had was that given to it. If the herd has determined that government is useless and irrelevant, government will change. It is really the only forcing function available.
I truly wonder if all of this doesn't have a higher purpose, it is, after all their intention (TPTB) to unite world economies under a single banner and what best to accomplish that than a financial crisis and a divided, revolted population; awaiting a pre-made solution from their beloved central planners, in the form of a single electronic currency, banned "criminal" cash or "terroristic" yellow hard assets, all under "control" enforced with new laws voted in emergency that no one with a sane mind had time to revise or criticize... I believe it s been called "the shock doctrine", by Naomi Klein.
It s hard to believe, that there are enough people changing camp to justify such a turn in political views... at least I don t see it around me, everyone is complacent and swallows the cool-aid. Which brings me to believe that the TV network (TVO) is not appealing to a demographic but instead try's to steer opinion into a certain direction. They don't name the true culprits of the financial debacle, they don't offer educated opinion, they don't propose any solutions. They just raise awareness that something is wrong and seems to only blame the rich. Polarizing the population, creating dissidents within the "middle class", which later will be fought against, or will turn against those of the upper middle class... I don t consider a lifetime mortgage, precarious employment, constant surveillance, no savings, no retirement, no time for politics or family life to be the lifestyle of a middle class, that s slavery and unfortunately it is today demographically the most common.
If you fallow some of the Canadian politics, the conservative party is being harassed from all sides, with the economical down turn they might not lead in this election... all we see and hear is the patsy Justin T. of the liberal party, it is too obvious how the media favor him, maybe he is doomed to fallow Hillary's footsteps, time will tell it will be interesting to see. Unfortunately, here in Canada, we do not have a true conservative option, the one you defined, nor would it ever get any representation within our political system.
Anyway, what I meant is, if this is the top of liberalism, shouldn't the TV networks lag not lead the herd? Or maybe we are just lucky to have a more enlighten public TV station here in Ontario, in which case I should probably show them my support :)
Cheers,
L.
I don't think that politicians lead the herd. IMO the people are turning conservative and the media and politicians are following. They need the herd whereas the herd doesn't need them. I am woefully ignorant (or perhaps blissfully so) of Canadian politics even though I try not to be the typical US-is-everything American. So I just have to accept your comments at face value but I do believe that the conservative wave is global and that Canada will move right. To what extent, I do not know. But a general shift is called for. Perhaps it has to see the US move right and the good things that come with it before the Canadian herd commits to a visible direction shift.
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