Indicators Shouting : "turn Alert!"
The signals are coming in various markets
=============

For me, these charts are saying to be very alert for possible turns:
UP in Gold, DOWN in stocks, and DOWN in London property.
I am giving you these before the turns are confirmed- so you still have time to ponder their significance
to your trading and investing activities. (No guarantees the signals will be accurate. So DYOR.)

For those that like to LISTEN ::
Try latest:
CW Radio : http://www.CommodityWatchRadio.com (go to the latest broadcast, last section)
Or Bob Hoye on Howe Street : http://www.howestreet.com/

Or to read, there's a summary here:
Comments to go with CW Radio broadcast : http://www.greenenergyinvestors.com/index.php?showtopic=1978

LATEST RATIO charts:

HUI/Gold ratio signaling upturn, and possible slingshot underway

(Gold stocks ie.HUI start moving up before Gold, and lead both higher.)

SPX/TLT ratio set to signal possible peak in SPX (it needs to break uptrend)

(the idea here is that rising LT rates, will undermine the stock rally)

Still waiting for a break in BDEV channel (any day?) to signal property slide is underway

(If/When BDEV slides through 1060p with volume, that signals break of confidence in London property.)
...But do be careful. If it bottoms instead, there could be further upside in London prices

No one listened to either broadcast, I take it?

Blimey, give us a chance, its been hot and sunny, and we've been out all day !!!

I was 'avin a fag (before it becomes illegal).

nah more of the same I think......

were still going higher on the SM from a macro perspective

http://stockcharts.com/h-sc/ui?s=$DJW...id=p23716433087

I agree in stocks, this mania will end before the end of august, but most likely the end of the month 'cos the rally is so stretched. I think UK RE has already turned, dont know about london. Disagree on gold, gold needs a pullback at least, so the herd becomes more bearish.

The SM crash of '87 was followed by Great Crash 1 about 18 moths later. It's different this time as property is perhaps more overbought than stocks which means, IMO, that the two will crash more or less at the same time. A SM crash will lead to a prolonged bear market which means City jobs will be lost by the tens of thousands as in '87.

When?

I am 80% in cash and watching the other 20% nervously. If it lasts past September I will be surprised. GC2 will spread across the US economy and Ben has admitted its worse than most think. Recession is a certainty and bursting commodity bubbles will follow. The question is: is gold one of those commodities?

GC2 is already lapping against the shores of this nation with 4 regions reporting falls and many stalling. The property market and stocks are on borrowed time and I think its case of who moves to the exits first knowing that any sudden moves will spook the herd. Foxtons are out, the other Property Spiv sold up in January--what more do we need to know?

Great show you did there, you came across very well.

I can't claim to understand a lot of it, but I certainly hope your prediction for the housing market is right!

Very inforamtive, thanks.


Lib

Loved the JR interview!

Sorry for the grumble, and thanks for the comments.

Frizzers is next doing a CWR show on property, and is looking for names of people you would like to hear interviewed.
See:
http://www.greenenergyinvestors.com/index....c=2000&st=0

I'd be careful with this kind of analysis. Firstly. it has been very wrong for the past two three years, during which the stock market has continued its bull run. Any setbacks, like May 2006 and February 2007 were short lived and the highs were subsequently surpassed. The stock market is in a clear bull market trend. There is nothing to suggest this trend is coming to an end. On the contrary, sentiment still remains largely bearish, and the US retail investors have barely begun buying this rally. That alone is going to be good for another 20-30% rise.

Sure, there may be the odd 5-10% correction once in a while, but it is impossible, I repeat, impossible, to predict when, and you will only lose money trying to time it. Just get on the bull ride while it lasts, and last it will, I reckon, for at least another year.

I fall somewhere in between RealistBear (80% in cash / "nervous 20%" invested) and Bubble Pricker "ride it while it lasts" .

Perhaps it is best to follow Warren Buffet's advice ... don't see opportunities where none exist.... wait for real ones to come along.

But with companies like Climate Exchange (CLE) rising 20 % last Thursday/Friday, it is hard not to keep the ball rolling.
Maybe the best strategy is to leap in on short term rises, then retreat to cash holding.

Nerve-wracking, but potentially rewarding.

BP, i disagree with virtually all of what you have just said (!!)

I am using these indicators, measure overbought, and overstretched markets.
And also to time entry points for Gold-related trades.

IN the past year, we more or less nailed the September/October 2006 turn in gold, and identified on CW broadcasts the upwards thrust in rates (while most comments were talking about falling rates.) We also spoke on about put-buying just before the late-Feb peak, and covered those puts at between SPX-1370/1390. //NOW: The trades I am focussed on right:: The YEN is at a potential turning level now (Y122-ish), and I am adding to gold longs again. I am also short BDEV awaiting a more definitive break in support.

Meantime, I ceratinly agree that it has been virtually impossible to make money on the short side in stock indices. The overbought dow continues to get overbought, and the best way to trade it, has been with core longs, and smallish put bets, where one has a limited amount at risk. In defense of my indicators, we have not yet seen a break in the upward spike in the SPX-to-TLT ratio, and so that would argue that stock market longs still make sense.

Frank Barbara on FS is talking reducing core longs into strength. Since I am mainly long gold shares, I will be awaiting a possible push above $700, and maybe $750 before doing that aggressively.

Nice summary.
If you are riding-it-while it lasts (in SPX), I strongly suggest you watch the SPX-to-TLT ratio, which is warning of a very overstretched market.
The is especially dangerous while Bond yields remain in an upthrust. Over the years I have seen many bull markets killed by rising bond yields.
This one looks highly precarious on this important indicator (please note: if you were watching it closely, it might have got your OUT in late Feruary, and back IN a few weeks later.)



I dont know anyone else who watches it closely, by I do think it can be of great value. I do talk about it on CW radio, and may continue to use it if it continues to work well. I would describe it's action as : "Spike and Die" and we are in the high spike part of that move

I genuinely appreciate your taking time to give advice..... just haven't a clue what it means...

I like the sound of "upthrusting bonds" (as long as it's legal in this country).

Seriously.... what is the SPX/TLT ratio .... if you have time to elucidate.

I only do shares, not CFDs or Spread Betting or currencies...... shares are scary enough.

My comments were more geared towards the general indices. Yes, I agree on gold. I am long gold also. However, your thread headline somewhat suggests you are predicting a general fall in the indices, although the three specific charts you post do not do that as such, but convey specific messages.


You did indeed ride the Feb falls. However, what I find somewhat unfair is that you only ever highlight that particular put-buying at that time. I have been following your trading from August 2006 to now on GEI, and you bought puts on about 10 occasions during that time, of which only one (the February one) was a clear success. It is slightly disingenious to only highlight one's profitable trades. In any event, perhaps you are still up overall, but the more general point I am making here is that, in my view, trying to call tops and trade them is a loss-making strategy, because it is impossible to predict them. You will be wrong 9 out of ten times, so you need a profitable trade at least 9 times bigger than the average loss. So I would rather just ride the bull-market, with controlled step-stops in place so as to secure one's profits should the market tank tomorrow.


Yes, these are interesting trades. What I am wondering though is that on the Yen, you argue a reversal at the trendline, whereas with BDEV you argue a break of the trendline. Is that not inconsistent? Could not, equally, BDEV reverse back up at the trendline and the Yen break out above 122? I would say that with either trade one should wait for confirmation.

Click to view attachment

I'm no genius technical analyst but looking at the chart id prefer not to be going long of any yen

there is 475 basis point carry and thats just against the US dollar
the yen has just broken out lower versus so many other currencies
the line of least resistance is clearly still for an even weaker yen

while the hedge funds and investment banks continue to take advantage of the free japanese money betting the other way is like riding a bycile into a steamroller.

Long Yen as a pure currency trade is madness. The carry will drain the blood out of your account like a leech. One way to bet on the Yen appreciating is to just invest unleveraged in Japanese stock market funds.

I have to say, the immiment unwinding of the Yen carry trade has been announced by the Yen bulls, who invariably are stock market bears, for years - and it has so far not happened. It is very similar to the stock market whose demise has been prematurely announced many times also. Fundamentally the Yen looks undervalued and the US$ should collapse, given the FED's expansionary monetary policy. Problem is: it just isn't happening, against all good reason. One day it probably will, but once again, it is impossible, I repat this again, it impossible to predict when. Try to bet on it and you will lose your money. Meantime, I am running a nice JPY/USD carry trade, earning 450 basis points every day and with a stop at entry.

yeah "fundamentally" domestic chinese stocks are overvalued - but "fundamentally" 1 million chinese a day cant be wrong !.

I wonder how many novice sailors are going to lose their heads when the boom comes flying across. My guess is up to 1,000,000 people in trouble.

Two points:
+ I started buying March 2007 puts in October 2006. And the Feb-March drop came soon enough to bail out several of my put-buyimg forays. And when I "harvested" those puts in March, I used some of the cash generated to buy gold and energy stocks. And a small portion went back into put-buying in April. That April foray was not successsful, since I bought May puts which expired worthless. Net net, I have not made any significant money buying puts in 2007

+ The puts I see as a hedge. So as long as my overall portfolio is up, I dont mind if I give up some of my profits on this "insurance" cost. I am still significantly ahead for 2007 as a whole. Maybe about 15%, even after those May put losses.

We may be setting up for a nice rise in gold shares, which has either just started, or may come a bit later this year, if thise current good start peters out. I am sticking with most of my gold shares. Although i has switched to a higher percentage of energy shares (including coal). and have in recent days put some spare cash into gold mining and exploration shares. (Here are some examples of what I have bought in recent days:

- Nevsun (NSU.t) : chart : at C$2.13
- Spartan (SRI.v) : chart : at C$0.29

I havent started buying yet.
Actually, i plan to buy Yen indirectly thru purchasing Japan investment trust quoted in London.
There's a thread on GEI about this :
http://www.greenenergyinvestors.com/index.php?showtopic=1821

The long term Yen chart shows the critical level we have reached:


As BP asked, Am I inconsistent in the way i look at the Yen chart versus the BDEV chart??

THAT is a very fair point, and I can understand why you would say that. However, to me the charts have some important subtle differences. I think the BDEV volume is suggesting that a break of the lower end of the channel is possible. We are seeing rather heavy volume on/near the low, with the market making little headway off that low. As Tom Obrien would put it, I believe we are "building cause" for a possible further breakdown in BDEV. I am short from higher levels, so I have some cushion to wait a while, and see if this breakdown occurs.

For the yen, I am currently waiting for a show of strength in the Investment trusts and/or the yen before intiating positions. The low on some of these IT's might have been last week. If I had hadmore time to research, I might have established initial positions already, with the intent ofadding after there is a clear show of strength. Let's see if I can get positioned before the yen runs. Before I leave this idea, I have to point out, there's a possibility I will be wrong, and the yen will breakdown instead, moving above Y122 to Y124-125 or worse. So if you are going to try this trade have an alternative exit strategy in mind. Mine will be to lighten up on any IT that I buy if the yen breaks down

Hey, thanks, that was a very useful response. I see now where you are coming from.

Technicals aside, if the UK housing market follows the US into a dowturn, there is no question where BDEV and the other builders will go, chart support or not. Just look what happened to the shares of Spanish builders. If on the other hand, it can somehow be rescued again - I have no idea how though - I guess the builders will bounce back.

Have you noticed that UK mortgage banks are way off their highs. I don't have time to post charts right now, but both Northern Rock (NRK) and Bradford and Bingley (BB.) are way off their highs, made in December last year, notwithstanding the FTSE reaching 7-year highs. I have already turned a short in NRK from 1150p to 1045p, and now BB. has started moving down as well. Investors in those shares at least must be getting nervous about the mortgage debt.

Did you listen to the CW Radio broadcast?
I think it is well-explained there. Do iI need to repeat it?

Actually, the fundamental story is an important part of the reason that i have stayed short BDEV.
I saw it unfold before amongst the US builders



Yes. NRK and the others are worth watching too. Here's the NRK chart

Look at how the 252d.MA is "rolling over", and beginning to point downwards,
as the 76d.MA is set to drop below it, confirming the trend is down

NRK's : 10-year chart : has been in an uptrend since late 2000, and the rolloevr in the 252d.MA would be FIRST since then

This is a new experimental indicator based on the BoE approvals data that estimates the much more timely *monthly* seasonally adjusted HPI without being buried by the noise associated with differencing the monthly price indices. Also shows what the reported YoY will look like six months down the line.

It’s indicating a turning point in HPI in late-06/early-07.

Comparison: estimator (red line) against the LR-HPI monthly series (blue line).

Great, Spline.
I always find you charts intriguing. This one says alot:



Look how:
+ HPI went slightly negative in mid-2005, and within 2 months, the BofE had cut rates,
and they now admit that was a mistake,

+ Before year end-2005, HPI was shooting up again, bringing what I am calling the "last gasp rally"

+ HPI now looks set to breakdown, and very soon

Hi DrBubb,

Very interested in your views. Am I right in thinking that you are trading options? I am very curious to find out a bit more about how the average man in the street goes about trading them. I can see that there will be some good opportunities in shorting arising in the near future (as you describe), but have only ever spreadbet as a tool for shorting. This doesn't work so well for medium term trading. Might you be able to recommend any websites/brokers?

Thank you.

Am also very interested in your TA but have to be honest, goes a bit beyond my more basic knowledge. Where do you obtain the data for your analysis?

Thanks for your perspectives - good thought provoking stuff!

Hi Hair Bear,

I dont want to mislead you, or anyone else, making money trading just options, and shorting through spreadbets is a very tough game, which few will win. My "easy money" has come from being long microcap mining and exploration shares in a bull market. (As I am fond of saying, "Everyone is a genius in a Bull market. So find a bull market.)

If you want to see how some folks who take it seriously are doing, check out:

My own website : http://www.GlobalEdge.com
Tom Obrien's.... : http://www.TFNN.com (daily podcasts)
Also................. : http://www.FinancialSense.com / http://www.HoweStreet.com / http://www.KEreport.com

Thanks, DrBubb. And that’s nice informative markup of the chart.

Err, how about the general stock market?

Haha.
Ride it if you like. Not my sort of bull- too old and tired.
Reminds me of its brother in 1999/2000 and a cousin in 1987.

If you can make money with this sort of bull, more power to you.

When's the next data point due?
And will it follow BDEV (and KGN, which is already collapsing), I am wondering

Kensington/KGN

Why did I not short Kensington? I could kick myself. The oversight of the year...

What about shorting the big suppliers to the builders?
Any chartist got an opinion on Wolseley?
They are heavily exposed to the US housing market and currently shedding jobs and restructuring in the UK, all a bit of a mess really.
However, the share price doesn't seem to reflect this.

Good idea.
Charts suggests that WOS is a plausible short.
But needs a bit more study, for me, before taking action

BB.L could bereak its neck line soon....

I know what shorting is but could anyone direct me to the easiest/most cost effective way to do it? I have only purchased funds so far, so don't even know where to start.

Barratt is going south!

Yesterday: 1,064.00p Change: -31.00 // Percent Change: -2.83%

High: 1,106.00 Low: 1,062.40
Volume: 5,878,323

That's big volume, suggesting the buying appetite has dried up.
We could see soem further push down in teh days to come

This is giving me the confirmation I wanted that BDEV (& probably London property too!)
is breaking down, and we are headed into a slide.

Of course, it may instantly bounce back- but i do not expect that.
This is a much clearer break than we saw back in Sept.2005- so it should be the real thing!

You could open a spreadbet account with one of the big providers, like IGIndex or Cityindex. They allow you to go long or short idividual shares, often at per point amounts that you determine. So you could take out small spreadbets to try shorting without too much risk.

Dow crash risk for August????????????

imo the top will now come in august @ dow 14000ish.

1930s timing model suggests august.

1930s

BREAKDOWN ... UK held rates, but US Tbond yields jump to 5.1%...

BDEV : 1,035p - 5.00 , Percent Change: -0.48% // yr.high : 1310.0p , off -21.0%
PSN- : 1,240p -47.00 , Percent Change: -3.65% // yr.high : 1544.0p , off -19.7%
WMPY : 576.0p - 9.50 , Percent Change: -1.62% // yr.high : 756.5 p , off -23.9%
BBY- : 430.5p - 5.00 , Percent Change: -1.15% // yr.high : 499.75p , off -13.9%

TNX- : 50.99 +1.29 , Percent Change: +2.60% // yr.low : 44.04 , up +15.8%
*note: TNX is the US 10 year T-Note rate x10

The www.spreadfair.com housing market seems to have turned! People are going short on both London and UK at the moment.