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Fibonacci Impulse Trading and Investing Strategies

PostDateIconSunday, 04 September 2011 08:49 | PostAuthorIconWritten by Administrator | PDF Print E-mail

Stock Market

We repeat our call for no new lows at this juncture, despite Friday's drubbing. In fact, the large cap OEX actually closed higher on the week. One caveat: An OEX close on 10/3 of 496.25 or lower, would bust the Bullish Momentum Divergences that are forming, and would have us rethink our position. The SPY should find Fibonacci Cluster Support at 112.37. Sentiment is the main reason for our short term bullishness, which saw a 5 week low in our Call/Put ratio, with an historic all-time low on 9/28. Odd Lot Shorts/Volume was extreme at a 21 week high. When these line up at extreme levels a decent rally is not far behind. Market breadth, based on NYSE 52 week Highs/Lows backed into neutral, but still has not turned bearish. CONCLUSION: Longer term, we expect significant new lows, based on our bearish Volume Demand Index (VDI). The rally once underway, could stretch to the end of Oct -- but not much more.

Fibonacci Cluster Resistance levels on SPY are 116.39, 117.52, 119.14 and max 120.98 (low probability), about a 4-7% rally.

Gold

Several factors point to a bottom forming in bullion and the gold stocks. Based on the price action in the GLD (bullion), a short term bottom is forming. A rally over the next few weeks should carry GLD to a max 173.76 (which would close the gap prior to the big sell off), but more likely is 170-171. The actual bullion low was hit in Hong Kong at 1549, bringing the correction to 20%.
Bullish factors for bullion:

 

  1. Bullish Weekly Squat
  2. GLD made 10 week low.
  3. Friday's close (158.86) was over the mid-point of Weekly Range.

Bullish factors for gold stocks:

 

  1. Downside Volume did not match weakness in the shares, taking our VDI from bearish to minor bullish. The first in 9 weeks.
  2. Bullish Weekly Squat (minor).
  3. XAU in the process of building Bullish Momentum Divergences.

Therefore the rally will be choppy with GDX Fibonacci Cluster Resistance showing up at 57.43, 58.33 and 59.22, or about a 6 - 9% rally.Recent longs should take profits as levels are reached. As the stocks back and fill, Price Improvement (PI) trades should be taken.

Dollar (UUP)

After an early drop, the UUP rallied sharply on Friday. Important resistance is 22.47, with a final blow-off objective 22.65. From there, expect the bear market to resume. It will take 3 consecutive Weekly closes over 23.15 to break the bear stranglehold.

Interest Rates (TBT)

The TBT rallied 10% from the low only to give-back 4.5% Friday. We expect interest rates to follow the market higher, with the 10 year Treasury rising to 2.65%, with TBT reaching 30.

Bernie Mitchell
480 393 0671

 

Last Updated (Sunday, 02 October 2011 08:31)

 
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© 2010 B. Mitchell PBSP LLC - ALL RIGHTS RESERVED. This commentary is published for private investors and friends of PBSP. Transmitting this information electronically or graphically by unauthorized third parties is strictly prohibited. Stock Trading, Futures Trading, and Shorting Involves Risk and is Not Suitable for Everyone. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY FUTURES, INDEXES AND/OR SECURITIES MENTIONED. INVESTING IN FUTURES, INDEXES AND/OR SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS COMMENTARY IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN CONSENT OF BERNARD MITCHELL. THIS MATERIAL IS PREPARED FOR GENERAL CIRCULATION AND MAY NOT HAVE REGARD TO THE PARTICULAR CIRCUMSTANCES OR NEEDS OF ANY SPECIFIC PERSON WHO READS IT. THE INFORMATION CONTAINED IN THIS REPORT HAS BEEN COMPILED FROM SOURCES BELIEVED TO BE RELIABLE, BUT NO REPRESENTATIONS OR WARRANTY, EXPRESSED OR IMPLIED, IS MADE BY BERNARD MITCHELL, PBSP LLC, OR ANY OTHER PERSON AS TO ITS ACCURACY, COMPLETENESS OR CORRECTNESS. ALL OPINIONS AND ESTIMATES CONTAINED IN THIS REPORT REFLECT THE WRITER'S JUDGEMENT AS OF THE DATE OF THIS REPORT, ARE SUBJECT TO CHANGE WITHOUT NOTICE AND ARE PROVIDED IN GOOD FAITH BUT WITHOUT LEGAL RESPONSIBILITY. TO THE FULL EXTENT PERMITTED BY LAW NEITHER BERNARD MITCHELL, PBSP LLC, OR ANY OTHER PERSON, ACCEPTS ANY LIABILITY WHATSOEVER FOR ANY DIRECT, INDIRECT OR CONSEQUENTIAL LOSS ARISING FROM ANY USE OF THIS REPORT OR THE INFORMATION CONTAINED HEREIN.

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