For many months we have promised that July/September, centered at August(implication) would be when markets fall. Well, fall they did. I am calling this not a fall, but "FLASH TRASH". Now, needless to say, for many, dedicated readers (thank you) this is not news, that our outline (YBR=Yellow Brick Road for stocks, specifically) takes place with good accuracy. Nor is it a secret that those outlines are based on a "Quantum Mechanics" based formula, which is totally oblivious to the market fundamentals and or history.
All that I can do now, is thank the power of of those tools, imparted to me by the powers of higher authority and proceed to look into future to see what is coming our way. As you already know, we have many tools to fine-tune our outline based forecasts. One of the more accurate tools we rely on is our proprietary measure of market pressure, which previously was known under the name of MDS (million Dollar System). We do not use this tool as automated system any more but use in discretionary manner. It is showing that current decline is not done in time, and most likely in price. Knowing that confluences with other shorter term tools we follow, our current estimate is that market may not make the lows of this move until early September and longer. Nor is it secret to many of you , that once market goes over 16-17% decline, it usually, reaches, at least, a 22-25% level of decline. All that makes an easy arithmetic and points to low 1000 in SPX as an initial target for price. Of course, we will follow all our Short Term tools and act when time comes for the likely lows, not waiting for any particular price levels. Time is more important than price, said W.D. GANN and we never argue with him(:-
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Some of our Shot Term Tools, have a resolution of 1-2 trading days and those will be watched like a hawk.
We will soon write about other markets, but suffice it to say that "SELL AMERICA" we advocated will be coming soon, is already here. For that, we suggest you chart the Dow at http://www.stockcharts.com or any other site that allows ratio charts
Dow
Please chart it in CHF, SGD, JPY or even EURO and see what it shows.
Bonds
Of course, Bonds have rallied, but charting at http://www.stockcharts.com will show TLT against the currencies mentioned above. You will see that they are also much, much lower than their recent highs and expressed in CHF,SGD and JPY they are hardly showing much rise , in spite of huge rally in Dollar terms. Nevertheless, we did like to go long bonds right at the recent bottom, to be taken out for our total/absolute intolerance of risk(:-
Dollar
So, that brings us to Dollar forecast accuracy, which we are well know for. Just would remind you for now, that our forecast ( see "dollar collapse not so fast") was indicating a sideways gyrating market till August and Collapse thereafter. Well, USD/CHF, USD/JPY , USD/SGD have truly collapsed and even EUR/USD is holding up.
Gold
Has, finally broken higher in all currencies ( including, SWISSY). But has a very hard resistance at/near 1900 (AHAP3, Annual High Attraction Point, 3). This may lead to temporary rest to be resumed when... We have plenty of GOLD in our Asset Allocation Portfolios, but short term, we do not dare.
OIL
We indicated that our Seefuture, projection/outline, was not friendly to OIL. We cannot fault them either. Now, considering that oil and financials are one of the highest weighted components of S&P index, I would suggest that we do not look for oil to stop declines, before the stock markets do.
Please, note, all outlines and forecasts mentioned above are in many and specifically latest (2011) articles at this site. Link is http://www.safehaven.com/author/296/boris-chikvashvili
