Category: INO.com Contributors

Financials Setting Up An Island Top Formation

Posted on by Chris Vermeulen

As we continue to scan the charts for setups and trigger to alert our followers, we’ve come across a setup that may be more ominous than what it appears. Recently we’ve posted articles about how the SPY and the NQ have pushed into new all-time high price territory and how Gold is setting up for a momentum base that should launch precious metals to near highs. We’ve also discussed how we believe the current upside price bias in the US stock markets should last another 10~35+ days before new price weakness sets up – possibly pushing prices lower in late May or early June 2019.

Our research team has been scanning the charts looking for anything that could give us an edge to the potential setup for this price weakness in the future. We believe the Transportation Index and the Financials could be keys to understanding how far the upside rally can continue and when a price peak may begin to warn of a potential price top or rollover.

An Island Top is a pattern that sets up with an upside price gap followed by sideways price action above that gap. In theory, this type of setup should promote the gap to be filled with downside price action before any further upside price move can continue. Although, gaps to the upside are fairly common in strong uptrends. Given the strength of the earnings data released early this week and the expectations that we have for some continued upside price bias over the next 10~35+ days, we are watching these Island Top formation in the Financials for any signs of weakness to alert our followers. Continue reading "Financials Setting Up An Island Top Formation" →

Goldilocks Now, But She'll Be Vanquished

Posted on by Gary Tanashian

Just one look at the daily chart of SPX tells us - in hindsight - that this may have all been about gap acquisition. I was completely right and righteous to be bullish on the Christmas Eve massacre low, right on up to the 50-day moving average, which was the original target.

After that, I was compelled by the market’s technicals to be bullish for a drive to the SMA 200, and then 2815 resistance, and then… a top-test. I not only felt not righteous with these compulsions, I felt a little soiled. Hey, it’s just a human (as opposed to a newsletter writer/market commentator) talking about human feelings.

There is a difference between being contrary and willingly bullish and being compelled to be bullish. I don’t like the feeling of that second thing very much. Anyway, there is a gap and do you know what? Last summer’s rally filled a similar gap (not shown here) from late January 2018, proceeded upward into a nice bull trap, and then October happened. FYI. The bears were disoriented and thus pissed all last summer. But any self-respecting bull trap would by definition piss the bears off because it’s the same psychology that traps the bulls, only in reverse.

spx

So SPX is finally at its top-test limit, with its leadership chain (SOX>NDX>SPX) still strong as NDX is at new highs and SOX is well into new highs. We also have the scenario of SPX to 3000 (+/-) open if it is to hit point 5 on a potential Megaphone. Continue reading "Goldilocks Now, But She'll Be Vanquished" →

World Oil Supply And Price Outlook, April 2019

Posted on by Robert Boslego

The Energy Information Administration released its Short-Term Energy Outlook for April, and it shows that OECD oil inventories likely bottomed last June at 2.806 billion barrels. It estimated stocks fell by 18 million barrels In March to 2.829 billion, 23 million barrels higher than a year ago.

However, throughout 2019, OECD inventories are expected to rise rather quickly through November. At year-end, EIA projects 2091 to be with 2.915 million barrels, 53 million more than at the end of 2018.

For 2020, EIA projects that stocks will build another 70 million barrels to end the year at 2.985 billion. That would push stocks into glut territory.

oecd oil inventories

Oil Price Implications

I updated my linear regression between OECD oil inventories and WTI crude oil prices for the period 2010 through 2018. As expected, there are periods where the price deviates greatly from the regression model. But overall, the model provides a reasonably high r-square result of 80 percent. Continue reading "World Oil Supply And Price Outlook, April 2019" →

S&P 500: Drag & Drop?

Posted on by Aibek Burabayev

Last August I was thinking of the S&P 500 index and wondered if its uptrend had been exhausted on its way to the upside. The price was at the $2833 level, and it failed to break the earlier top of $2873. The RSI showed the Bearish divergence and the index started to drift lower. I thought it was a complex correction and another drop to hit the lower bound of the $2533-$2873 range was considered to be imminent. The majority of you supported this idea.

Let’s check the updated chart below to see what happened next.

Updated S&P Daily chart tailored in August 2018.

LLLL
Chart courtesy of tradingview.com

As we can see from the chart above the idea itself was good as the price not only retested but just smashed the so-called “bottom” of the range. The actual CD segment, which initially was thought to be equal to AB segment, had reached the ratio of 1.75 exceeding the next most common after 1:1 ratio of 1.618 (Fibonacci ratio) amid the panic sell-off. The trigger, which was set on the downside of the blue uptrend, was right as the index didn’t look back until the very bottom after it fell out of that blue uptrend. That move was accurately confirmed with a breakdown of the 50 level on the RSI sub-chart. The predicted zigzag structure of the drop also appeared to be correct as it is natural market behavior when one market stage changes the other. And talking about where we were right, I also would like to show you the ballot results on the timing of the bottom of the drop. Continue reading "S&P 500: Drag & Drop?" →

Precious Metals: Wash, Rinse...

Posted on by Gary Tanashian

Before the promotional corners of the gold community start with the conspiracies, excuse making and general placing of blame everywhere but where it belongs, let’s simply note that this correction was indicated (by sentiment) as far back as February 22nd. On that day I made a post quoting three anonymous sources within the community, firing up the troops to be hyper bullish… as in a gold price of $1400 promptly before a “parabolic slingshot” on the way to $3000 off of a “gargantuan pattern” (that had not even appeared yet and was but a figment of a fertile imagination).

The quotes and targets were compliments of different sources melded together for a mouthwatering smorgasbord of greed for gold bugs to sink their teeth into. It was a classic contrary indicator as the sector was touted far and wide while already overbought and obviously bullish. It was confirmation of the greediest hopes of the greediest and/or newest, most naive gold bugs (putting aside for a minute that gold itself is not a price play, but a value play within the leverage-rigged casino called the financial markets).

We are all wrong at times. My point here is that you can state your case humbly, be wrong and try to do better next time or you can state your case in an emotionally charged manner, suck in some newbies, be wrong and then do it the hell again!… and again… and again. That is what I have observed over nearly 20 years of closely watching the sector. The spin cycle repeats over and over because new marks are being minted in the markets all the time. Continue reading "Precious Metals: Wash, Rinse..." →