USING THE US DOLLAR FOR STOCK DIRECTION

Central Banks around the world continue to fight natural market forces. They continue on the one hand to print funny money and junk bonds to float the insolvent banks while on the other hand stealing from their countries citizens life savings and pensions to pay for it.

The problem the Central Banks have is the world has a system of natural performing markets that price in risk and reward according to the reality of today or tomorrow.

Foreign Bond yields for insolvent countries like Spain and Italy and commodities have overcome manipulatation by Central Banks.

Central Banks have thus far been able to hold currencies at bay and keep stocks a float. As will see with the US dollar charts, this leg of deception is also quickly ending.

The 1st US dollar chart represented by the ETF UUP is a daily, volume by price chart. Volume by Price charting gives us an indication of where the largest amount of purchases/sells are; in other words resistance or support. The chart indicates strong support and potential short covering above the $22.75 price point.

The dollar found resistance at the 50% retrace of the June hi-low range-normal for all tradable assets. Expect this to be resolved higher after a one to seven day consolidation of the no QE3 bounce.

Next we look at a weekly, multi year time frame. Note the Inverted Head n Shoulders formation that has taken over a year to establish. This lends credibility to the market winning out over the Central Banks.

Duration of time is the key technical; true trend changes take months, in some cases a year or more. If this pattern were of a fast nature, then it would be void. The validity of a pattern depends on the larger trend.

Trends take time to change and the US dollar trend is now up; despite the best efforts of the FED.

Here we are looking at a daily one year time frame. The key technical take away here is higher lows and higher highs.

Conclusion:

The US Dollar trend is up. Only QE3 will put a stop to this, but stocks are too expensive and Presidential election too close to allow the FED to begin a massive printing campaign.

A rising US dollar will sink the US market and corporate earnings when S&P 500 companies have to repatriate foreign earnings back into a value increasing US dollar.

Tim Kathlina

S&P JUNE 25TH TIMING UPDATE

On June 5th I posted this chart, indicating we had completed FIB day 13, and to expect a significant change of trend on FIB day 21, or June 19th. At the time, the current best EW count led me to lend strong weighting to the probability of FIB 21 day, June 19th, bringing in a significant low and completion of EW wave one.

The next chart shows on June 19th, the exact FIB 21 day, did not bring in a low, but a significant HIGH.

The market found support at the 200 day moving average, and then retraced 61% of the April to June high to low range-ending exactly on June 19th, with a significant distribution day.

I have indicated that I do not believe the EW count is correct and will need to be adjusted. I am still of this opinion. I do not believe EW1 has completed-thus I have not listed those counts up on the current charts.

The significant low came at 60 days from the April high and squared with price at the 200 day moving average. The next significant point in time is at the 90-99 day from the April high, or the first week of July 1st thru the 10th.

My expectation is for the index to complete EW1 within this July 1st thru 10th time frame. There is a lower probability of the index completing a significant lower high within this time frame; but as of this writing, the odds favor a final exhaustion into a low-somewhere between 1220 and 1180 for S&P.

Conclusion:

The FIB 21 day of June 19th, brought in a significant high-61% retrace from the 60 day low.

Based on Slow Stochastic overbought condition, FIB 21 day, and RSI(2), the index now sets up to complete EW1 at the 90 day time frame from the April 1st high, or July 1st thru the 10th.

Expected low range is between 1180 to 1220-extensions of varying degrees from the 60 day low.

Tim Kathlina

GOLD 1ST WAVE BEAR COMPLETED

On March 19th I indicated the GOLD bull run was over for now.

The following chart showing a bearish reversal, with a bear wedge and downside EW1 target of $1500 was posted.

We technically chart GOLD on year over year, week over week. Doing it this way will pull out some recurring patterns.

A 21 week Fib sequence chart, June/July 2011 to June/July 2012 shows significant highs at Fib weeks 5, 8, 13. Expect Fib week 21, the next Fib week in the sequence, to also bring in a significant HIGH, not a low; consistent with the previous week cycles. (Notice I have marked the EW counts in Roman numerals, showing the completion of EW1)

Slow stochastic at the 50% and 80% levels marked previous FIB week highs. We will watch for this to line up with FIB week 21; along with calculated retrace prices between $1590 and $1680.

Once these targets are hit, EW wave 2 will be completed and impulse EW3 down will begin. I will provide downside targets at that time.

The put/call ratio backs up our bear market in GOLD thesis. As the price has moved lower, the put to call ratio has gotten more BULLISH; which is the opposite of what brings about bottoms.

This extreme bullishness in GOLD will help end EW2 and usher in a EW3 sell off.

Conclusion:

Put/Call ratio suggest GOLD has much more room to fall.

Our EW1 low projections from March came in near the exact price. Now we are awaiting EW2 to work off some oversold conditions before a major EW3 impulse down move takes GOLD substantially lower.

Tim Kathlina

SPY TECHNICAL VIEW JUNE 7TH

This 1st SPY chart considers the possibility of a 1st wave EW1 completion.

Noted in my last post, the overlap and sub wave numbers do line up for this probability. My concern for this is the FAST move back towards the 50% retrace level. This is day 3 and markets have already retraced 38% of the 5 sub waves.

Any trend allows for one to four day counter trends; even up to seven days. Therefore, the market is still within this allowable range, yet has already retraced a distance that a normal second wave would take at least two weeks to a month to complete.

In other words, what I am saying is the time and distance doesn't sit well with me to validate this count.

Short term traders use RSI<2>, overbought above 90, oversold below 5, for potential early warning of turns.

This fast move, within the 4 day counter trend allowable time frame, already overbought at 90 on RSI<2>, and reaching close to 50% retrace; feels more like a fast counter trend and not a completion of EW1, moving into EW2.

Next SPY chart I have noted a trend channel, with RSI<2> +90 tops and <5 lows. Since EW is conflicting at this point, lets stick with this trend channel until proven otherwise-leaving off any EW counts.

If this market can get past 7 days and take out 61% of the decline, this is not a bear market.

Tim Kathlina

S&P TIMING UPDATE JUNE 6TH

Yesterday the markets got CNBS to call for complete bail out of Europe and a leading FED official to call for massive stimulus accommodations.

No surprise this morning, despite back tracking from other FED officials and the ECB doing nothing, futures risk-on is still in play.

The question: Have we reached EW1 bottom?

EW suggest that sub wave five can or will equal sub wave one-as one clue. Looking at SPY we can see wave i was 7 points, and wave five has moved down 7 points to the 200 day moving average.

We have to assume it is possible that WAVE 1 has been completed.

In May, I posted this KAGI chart of the 2008 SPY bear move; suggesting that this is the road map that we should consider.

In 2008, a Presidential election year and the last bear market, the markets topped in May, and moved lower into ending WAVE 1-end of June, first of July. 

Fibonacci sequence noted on the next SPY chart, suggest the 2008 scenario is still in play.

Starting at the top, day zero, the 8th day completed sub 2, the 13th day completed sub three.

The next FIB sequence is 21 days, which counts out to June 19th. Per FIB theory, SPY trend change wont be until the next FIB ending date of June 19th; 21 days past the last FIB ending time, 13 days.

Conclusion:

EW theory allows for completion of EW1 when sub one equaled to sub five.

The 2008 bear road map and FIB number sequence suggest EW1 completion sometime around June 19th or early July; this is still our preferred scenario.

Tim Kathlina

THE FED VERSES THE MARKETS-CHART REVEWS JUNE 5TH

The question: Will there be QE3?

The answer to this, maybe can be determined by looking at Mitt- New World Order - Romney's, top campaign donors list. Shocking I know-but we can see EVERY BIG NWO Bank that the FED ANSWERS TO is backing Romney.

Did the FED pump up asset prices long enough for their BANK buddies to get out of their long positions and get short the world markets for the coming implosion?

I believe the answer is yes. I also believe in order for Romney to win; they don't want the DOW up 200 points everyday.

Now lets quickly run thru some charts. What will be obviously clear-MARKETS downward slope pressure on assets-verses FED induced rising true trend lines.

The MARKETS will win this game-not the BANKS.

DIG-Note the downward slope of the 200 day weekly, verses the higher lows induced by the FED. These two forces are quickly getting close to a major battle-THE MARKETS WILL WIN.

MDY-S&P mid caps, more American revenue based companies. Here I have a FIB retrace fan that spans the QE, QE Lite, and Twist programs.

Despite the Trillions of DEBT created by the FED-slowly one by one, the FAN lines of support are being removed.

SCO-Most my focus is on ENERGY related ETF's because ENERGY is the one true WORLD product that despite race, color, religion-we all use, rich or poor. (Sorry Apple)

SCO is the short energy product. The FED pulls their tricks, this ETF rolls over and goes down. Notice how this year is a much different technical picture from last year.

Last year, SCO was stopped cold by the 50 day, struggled to get above it, then rolled over; because of anticipated FED action.

This year, the MARKET FORCES blew SCO right past the 50d just as if it wasn't even there. WHY? Could the MARKET anticipate no QE3?

Part of the FED un-stated mandate is to suppport S&P multinationals earnings power by crushing the US Dollar.

This serves a few purposes: allows the continued export of JOB's to cheap labor Foreign lands-which then artificially supports Company profits thru repatriation of Foreign dollars to US dollars.

Gone are the Henry Ford ideas of putting Americans to work making the companies products; paying workers a living wage so they can afford to buy the companies products.

The US Dollar, or the UUP shows two patterns: A FED induced Head N Shoulders pattern, which has played out, and a MARKET induced Inverted Head N Shoulders Pattern, which is now in play.

As the dollar rises-WALL ST screams for more QE. Why? 

A rising dollar means lower profits as all these hit and quit it Company CEOs have staked their fortunes on Free Trade Agreements, SLAVE CHEAP LABOR, and REPATRIATION of money.

UYM-Another Energy play, same story. Downward 200 day slope, Head N Shoulder pattern--all despite FED action over last 3 years.

Conclusion:

Wall St. power elite and the FED are in direct opposition to MARKET natural forces.

Every week, money flows out of the stock market and into other investments that are not worthless paper. Currently their are 23 million people on Food Stamps, 100 million people NOT IN THE LABOR force and the biggest tax base is the baby boomers; putting their money under a mattress.

Extend and Pretend has an end and it is coming soon.  

Tim Kathlina