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Tuesday, October 5, 2010

A New Japanese "Zero"

 I learned an important lesson this morning about the Elder impulse system - don't anticipate sell signals. Yesterday the bar was red all day, until a small rally at the close turned it blue (and I missed it because i idn't check it after the close). I probably wasn't alone - today had the feel of a short squeeze. The credit for the rally was the Bank of Japan going to ZIRP, dropping the yen and igniting a rally. However, the yen quickly reversed, the market didn't, leaving me with the conclusion that several bears got caught by yesterday's drop. We have now broken out through 1150, putting 1170 as the next immediate target, and my ultimate target of 1180 withing reach. 
 Overbought gets more overbought. Gold and silver are both in a hellacious rally, and may be in the beginning stages of a blow off move.

 The trading range for oil, which was from 60 to 80, appears to be moving up. We are just below 83 and are appearing to be establishing a new trading range, which we will establish the top of soon. The bottom appears to be around 74. You can thank "QE" for rising gasoline prices in the face of declining demand.

The TNX is fighting to stay above 24.50, but, as the Borg would say, "resistance is futile". The last gasps of the housing market may be drawing near, and Bernanke is throwing the kitchen sink at it, trying to save it. The problem is, when he fails, he takes us down with him,.

Speaking of housing, here is today's implosion of the day. You may have read about the developing foreclosure crisis (banks caught red handed forging foreclosure documents), and apparently these guys are involved up to their eyeballs. Denninger has been all over this (he was on it long before it hit the mainstream media, and is one of the reasons for his reputation as a "kook"). Just like the subprime crisis, this one is being touted as "contained" in the media, so be on your toes. It will hit the market as quickly, if not quicker, than the subprime crisis.

The global currency war may be starting. Look at the bright side: when the dollar goes to zero, the Dow will go to infinity.

I will have the new highs update shortly.

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