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Despite the crazy 20% and 40% upswings and almost-as-wild downswings over the past two weeks, the VIX is beginning to stabilise.
We are not seeing the wild, intraday mood swings in the size of the bars. Of course, they still have a long way to contract and decline before they move back to anywhere near a “normal” mode.
Nevertheless, all four of our technical indicators point to a continuing decline in volatility. In short, we remain within dangerous market conditions until this fear gauge declines into its normal daily range and falls below 30 … and stays there.
Political reading: Be aware of the danger that might bring on a “scorched earth” policy in a bid to limit Barack Obama to a single-term Presidency.
Dow Jones Industrials[click for complete printable PDF report including all charts]
The rapid two-day slump following the election has not inflicted major damage on the technical indicators for the DJI.
On a purely technical level, the index remains vulnerable to another slump, perhaps even a resumption of the downtrend.
I opened last week’s report by saying both Bullish and Bearish scenarios remained alive in the short-term – and we were treated to a display of both.
The index still remains vulnerable to Bear moves because it has failed to take out and hold the early October spike High.
Nevertheless, the Bullish case also remains open – because we did put in a higher closing High, we may be forming a lower Low, and uptrend lines in the indicators have not been damaged too significantly.
I indicated last week when showing the planetary price crossing charts that if the 500 rose to 1010 on Monday or Tuesday and could not break through, there was a danger for anyone holding Long positions.
On Tuesday, the index hit just above 1007, which is within the three points regarded as a precise hit – and withdrawal from – the exact planetary price crossing (the “A” point). Interestingly, only the 500 hit the price crossing because it put on a slightly higher percentage gain than the DJI or the Nasdaq Composite.
I have marked the Venus/Pluto conjunction price point at “B”. The 500 must not close decisively below this on the day, or it would tend to suggest the index will continue following the 1st Harmonic Venus mirror downwards.
I have put a 3 and 14 day RSI indicator on this chart – simply because the RSI 3 is a good guide to very short-term direction. Note, that both it and the more normal RSI 14 are following a rising trendline, despite the sharp downward price moves.
It suggests further rally days – at least into a possible short-term trend change at the Full Moon.
Nasdaq Composite[click for complete printable PDF report including all charts]
While the DJI and the 500 clearly broke above the lower High of mid-October, the Nasdaq Composite did so only marginally.
We’ve discussed many times how reading the Nasdaq and the ASX 200 as ‘leading’ indicators points to whether upside, or downside, moves are really valid. The underperformance of both during the sudden rally from late October was clearly a warning the rally was not to be trusted.
I know arguments can be made the ASX is unduly influenced by resource stocks and the Nasdaq has its own limitations. But, the performance of these two indices at key points in market movements is just too reliable to ignore.
No significant damage to the techs here – and gaps to aim for, depending on the strength of future rallies. One possible early-warning sign of weakness, however, is that the short-term blue CCI dropped deeper, despite the higher prices, than it did on October 24th.
And, unfortunately for the index, leaving another hole behind at 4018, which the index spiked down to fill on Friday as it bounced off the Support line at 3964, which has been emphasised on our weekly charts for some time now.
We now have another hole further down – and two to be filled on the upside. The one at 4144 is likely to be filled Monday.
The CCI uptrend line continues to hold, and the points marked as “B” and “C” are reasonable targets for any medium-term rally.
ASX 200 price crossings[click for complete printable PDF report including all charts]
I suspect the Venus/Pluto conjunction crossing is too far out of range for the 200 to hit by Wednesday. Both the normal lines and the “mirror” lines are close to each other.
Because it is a conjunction, the Venus/Pluto price crossing also shows up using “trine” lines. It may not be hit either if the index rallies for a day or two. However, the price is 3895 and if the index comes down into that on Wednesday and bounces up from it, it would suggest the short-term shift indicated by the Full Moon is up. If it closes decisively below that point, the downtrend may be resuming.
Also of interest are the Jupiter/Saturn trine lines. The aspect becomes exact again late next week. The prices outlined on the chart are a couple of dollars off exact – but those two price points will need to be watched for either Support or Resistance if the index hits them on Friday week.
This week they need to be watched for any potential upside limit, assuming the lower line is broken above on Monday/Tuesday as the index closes the price gap.
For the moment there is no need to change this chart.
As we can see … it still leaves both Bullish and Bearish scenarios alive. We’ve had three huge spikes higher that left the bar with a negative close … and one spike lower that left the bar with a positive close.
And we are still, after a month, no closer to a clear resolution of this pattern.
What positive divergence had been building for many months in the CCI has been broken and the red line could be turned down from the underside of the former uptrend line.
The Stochastics are trying to climb out of the Bearish zone – but are not giving a clear signal they’re about to break free.
And while the MACD signal is showing some indication of turning higher, there is no such lead from the slower, red line.
And despite the markets’
wild rides, the FTSE continues to behave impeccably. Last week,
it managed to break free of the downtrend line to challenge Resistance
inside the “spacing” zone which kept the downtrend intact
after the rally out of October 10
Not only that, it managed to do it with all four key indicators confirming the push north.
I’d have more faith in the FTSE’s performance if it had any history of acting as a “leading” index. But, it doesn’t.
Nevertheless, none of the uptrend lines on the indicators has been breached – and price itself has made a higher High and may be about to put in a higher Low.
We are getting early signs of a shifting mood change … clear signs of weakness are starting to emerge in the Bearish outlook....
Short-term pessimism and medium-term optimism
Let’s just recap a little …
The political situation in the United States has compounded the short-term dangers and potentially improved the medium to longer term outlooks.
The Plunge Protection Team operates as an arm of the US Federal Reserve and is now having a big sulk.
Non-US readers need to understand the Federal Reserve is not a central bank as it is in other countries. It is a privately-owned institution created as a way of getting around the US Constitution prohibition against paper money.
USA paper currency is not produced by its government; that would be illegal and unconstitutional. It is created by the Federal Reserve, which is owned by a couple of the big Wall Street banker/brokerages.
It acts as a quasi-government authority, its membership is government-appointed and it is subjected to Congressional oversight.
Nevertheless, it is not the same sort of independent national guardian as are the government-owned central banks of most Western countries, most of which were established with extraordinarily strict rules against interference by the government-ofthe- day.
And that means the US Federal Reserve quite often displays all the characteristics of a political animal; the appointments are political; and pressure can be applied with a single phone call from the White House or the Capitol.
During the transition period, the PPT cannot be relied on to engineer rallies or throw out a safety net.
There is, therefore, a very strong risk of sharp downside moves on Wall Street in the weeks ahead. The economic data in the US is awful – and the astrological conditions in the period to mid-December feature an overwhelming number of hits to Uranus, the ruler of stock markets and company profits.
Uranus hits, as we’ve
seen in the past few weeks and over the past few months, tend to
provoke extremely wild price swings. Without PPT intervention likely,
the wild swings are more likely to be to the downside, since rallies
are now more likely to become step-bystep,
Overall, though, technical indicators are starting to show real positive divergence from recent price action, a sign the internal conditions are slowly recovering. Coupled with a potential worldwide mood change flowing from a sense of relief that there will not be another four years of the Bush/Cheney/Rove/Rumsfeld style of decision-making, early 2009 is beginning to look like a significant rally phase.
It may, or may not, take the Doomsday Scenario off the table. But it does change the game that was being played.
*NOTE: Jeanne Long, professional trader and a leader in the research of financial astrology, was a student of the works of W.D. Gann. She has authored several books on financial astrology and developed the principles used in all the Galactic Investors Astrology software. Randall's technical charts and the planetary price line charts included in this report are created using the Quick Harmonic Trader Software, by P.A.S. Astro-Soft, Inc. makers of Galactic Investor Astrology software.
The World At Large is delivered in advance to Astrological Investing Premium Member subscribers. Randall Ashbourne is a former journalist and political strategist who trades the Australian market..
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