Friday, January 21, 2011

Gold as a Support Point, Bond Interest in Consolidation

Gold is at a critical support point. Very few if any other analysis methods would show this. The PRS177, which is a channel line extension, tells us something that very few can see, much less understand, much less act upon.

We have got a nice 11% profit on a mechanical trading system on GDX from BreakPoint Trades, however this PRS channel line has caused me to close out that trade. That is good enough.

The "Cable" British Pound / USD currency pair has 2 reasons to want to push higher.    The 78 Fibo and the PRS 177.   This would also push US equities higher, although the multi-year correlations may be now at risk of no longer working.    

Also, Expiry week is done.   The Monday after expiry often finds some good size fireworks to correct the antics of Expiry week.  Sunday futures will be interesting.  We banked some serious coin last Sunday playing the futures, which seemed to move in perfect 5 and 3 wave patterns, almost like shooting fish in a barrel.   Not that I will complain, any win is a win gratefully accepted.

Bond Interest Rates are at a 61Fibo, also looking a near perfect bull flag. Choose your own poison on how to play this. Perhaps TBT or even JNK? However, one concern is that there is so much media coverage about muni bonds being risk, and States being allowed to declare bankruptcy--defaulting on pension obligations and bonds. I have to take this amount of media coverage (it is large) as a contrary indicator--when they pimp it out that much, there must be some opposite plan coming a TARP for borrowing for State Governments.

This feeds back into my tin foil hatter theory of Fed Gov as the economic hit man, enslaving everyone, including State Governments with debt. What a great plan to consolidate power at the Federal Level. Time will tell.

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Insightful and Useful Comment!