Please see the commentary below as a guest post from TradingPub Contributor and fan favorite, Tony LaPorta.
Ladies and Gents,
There are quite a few indicators telling me it is about to get ugly out there:
1. The Dollar refuses to come off. Someone knows more than we do and has been buying the Dollar for 12 months.
2. The treasuries refuse to come off. Someone knows more than we do and has been buying the treasuries the past three weeks/fourteen months.
3. The Yen caught a Flight to Quality bid this week as Wall Street took a 213-point tumble. When Wall Street rallied on Thursday gaining 181 points, the Yen refused to come off. Someone knows more than we do and has been buying the Yen this week.
4. In 2008 when Wall Street fell hard, Gold’s initial move was a 34% break from $1,033.90 down to $681.00. Gold refuses to rally of late. Another 34% break this time around from let’s say $1650.00 puts Gold at $1089.00. I would bet we see a few stops hit if this is the case. Food for thought…the all-time high in Gold traded last September at $1,923.70. A 34% break would put Gold at $1,269.00. A 50% break would put Gold at $961.00. What are you smoking TLP? Gold at $961.00? It will NEVER go that low???
5. The Euro Currency has Possible H&S Top formations of the daily and monthly charts. A H&S Top is a Reversal Pattern. The breakout lower on the daily chart is only 50 points below Friday’s close.
6. On a monthly basis, ZNM has been trading sideways for six months. March saw the bears take their stand and sell it hard. The end of March was all about how the shorts were forced to deal with a market which ran out of sellers. The whole of April has been about a snap-back rally which is ripping the faces off the shorts. This market should have fallen out of bed in March. Instead, someone knows more than we do and has been buying the treasuries aggressively for the past three weeks.
7. Here is a fun fact…on Feb 9, 2011, ZBM traded 11626 and ZNM traded 11718. On the same day the DJIA closed at 12,250. Fourteen months later, the DJIA finished at 12,850 (+4.9%). But the 30-yr bond and the 10-yr note are through the roof. Someone knows more than we do and is avoiding the stock market opting to invest in US treasuries for the past 14 months. This statistic, that being the DJIA is ahead ONLY 4.9% in the past fourteen months I found very hard to believe. If I was forced to guess I would have thought higher by 10% to 15% easily. 4.9% is one bad week. May I reiterate? Never ever underestimate the power of the bear. The bear can undo years of hard work in a matter of months. The bear can undo months of hard work in a matter of weeks. The bear can undo weeks of hard work in a matter of days.
8. Apple has a Bearish Divergence in place signaling 4-5 weeks minimum downside to come. Google has a Possible H&S Top in place. If the neckline at $569.00 is broken, this stock can trade another 19% lower to its $462.00 objective.
Most of my long-term readers know…I LOVE WHEN THE LONG-END LEADS. One look at the bi-weekly stats will show you why I will remain bullish the treasuries and why I will remain long ZBM. The 30-yr bond (ZBM) is leading the way again…just the way I like it. If/when ZBM fills the rollover gap above at 14223-14316, then we look to go positive for 2012 with a trade above 14426. Above 14426 we look at the 14611 breakout level. Two consecutive closes above 14611 will signal a Double Bottom objective of 15716…Just Sayin!!!
They all thought I was nuts when I was calling for DJX at 8,000 in 2008. They all think I’m nuts for being bullish the treasuries in 2012. I think they are all nuts for wanting to be short. I prefer to stand alone and remain the lone treasury bull in 2012. Let’s play.
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