TIMING UPDATE: SIGNS TO WATCH FOR FEB 29TH

On Feb 15th, I posted this chart of GOLD and indicated the FIB ENDING WEEK OF  FEB 21; the week ending FEB 24TH, was a significant time to watch for change in GOLD.

I indicated the move out of this FIB week would be of importance going forward for 34 weeks after.

Today, exactly 3 trading days beyond the FIB ending week of the 24th, GOLD DECLINED $100 dollars. The decline was on heavy volume, filling up gaps and creating a BEARISH ENGULFING PATTERN.

On FEB 15TH, I also pointed out the close relationship between EURO investment and GOLD investment. I also indicated that it is my belief, that a credit event either with a bank or country, could force the hand of banks or countries to unload their GOLD stock.

The EURO today saw heavy selling on increased volume, creating a lower high on daily chart.

The US Dollar found solid support at the 200 sma on daily; creating a bullish engulfing pattern.

It is my contention based on history, markets can not find bottoms unless the DOW:GOLD ratio moves closer to 1 to 1 or 1 to 2.  Currently it takes 8 Oz's of GOLD to buy ONE SHARE OF THE DOW.

This chart divides GOLD by the DOW and shows the relationship is testing an uptrend line of significance.

Conclusion:

The DOW/GOLD ratio is directly affected by the action in the EURO and the US dollar.

The parabolic move in GOLD has been quickly taken back and might foreshadow the next move in the indexes.

FIB WEEK analysis suggest the move by GOLD  after 21 FIB WEEK ending 24th, could  foreshadow the next leg in GOLD.

GOLD/DOW ratio shows the broad indexes can not move higher; if the commodity indexes are moving lower. A compression in GOLD, will mean a compression in stocks.

The EURO and US dollar play a pivotal role in the direction of GOLD and the DOW. Both currencies are at make or break pivot areas.

Will GOLD/DOW be supported at the up sloping trend line? Will the EURO hold its pivot?  Or will the US Dollar break higher and DOW/GOLD break below its upward trend setting up a new trend?

Tim Kathlina



AFTER THE BELL-OIL TO $120, SPY, EURO/DOLLAR UPDATE JAN 11TH

ZeroHedge Jan 11th-Iran Interest Rates Raised To 20% To Fight Hyperinflation; Iran Nuclear Scientist Killed In Street Bomb Explosion.

Americans will not support an invasion of Iran without provocation by Iran. History is well documented that governments in order to achieve an objective will create circumstances, under the radar, to pressure an identified enemy to make the first attack.

As FDR did enticing Japan to attack Pearl Harbor, George Bush urging Saddam to attack Kuwait, Obama is now boxing Iran in to entice them to attack US interest. Nothing helps re-election like war; foreign and domestic: Oklahoma City-Bill Clinton, 911-George Bush, Iran-Obama.

Looking at Light Crude, the daily chart seems to have an Inverted Head-n-Shoulders pattern. IF this pattern breaks the neckline upward, then the calculated upside is between $110-$120. If this breaks the neck line based on Iran/US military encounter, sky is the limit. Either way, as of today, it seems the path of least resistance for OIL is HIGHER.

December thru many fund managers under the bus because the decoupling of the Euro from the S&P. Prior to December, fund managers could count on the currency to move lock step with the US index. The majority of fund managers missed the 1290 S&P upside that we called for due to this decoupling.

Looking at the Euro, the chart looks to be in a bear wave 3 on the daily chart. I project the ending of this 3 wave between $123-125. Generally a 3-wave, an impulse wave, will extend 61% of wave one.

Wave one was 12 points top to bottom. 1.61%x12 is 19. Subtract 19 from wave 2-top of 142, gives us a price target between $123-125. At this price, we will buy the Euro.

Here the dollar/spx in December began running together. Again, this shows the appetite for all things US. Money will always go where its treated best.

Conclusion: Inverted H-n-S pattern in oil, plus Obama desperate to win re-election, almost ensures escalation of Iran conflict towards war, and higher oil prices. (Nothing is ever a sure thing)

For now, money is flowing into all things American, its the lesser of two evils. The question is as everyone seems to be all in USA, will the EURO bottom as we project, money move out of US stocks/US dollar; moving into EURO, GOLD, OIL, SILVER, etc? Or will a rising tide float all boats, and everything goes higher on extreme bullishness? This we do not have an answer to yet.

So, we will go long the EURO at the calculated bottom, wait for the response by US equities. Our next TVIX insurance purchase is coming within days.

Tim Kathlina

After The Bell-The FED and 2012 Stock Market Jan 1st

Sept 22nd 2011--NEW YORK (CNNMoney) -- The Federal Reserve announced "Operation Twist" Wednesday, a widely expected stimulus move reviving a policy from the 1960s.

So, how are all these Fed programs working out for Americans?  Lets look at the data:

Americans begin going back to school and living off their credit cards to maintain standard of living



As Free trade agreements get passed sending jobs overseas and more money gets printed by the Fed causing food inflation, Americans can no longer afford to eat



The housing collapse should have had a reaction effect by lowering the cost of gasoline based on lower demand; however, the Fed money printing machine made sure while Americans went broke, rich oil executives continued to get paid more

As more and more laws and executive orders get signed limiting the constitutional rights of Americans in order to pump up the Military Industrial Complex, and the Fed prints more money pushing up cost, Americans lose jobs

Wars and Keynesisan Voodoo Economics push more people into despair

As more and more people get a college degree, taking on more and more debt, Americans incomes go lower and lower

To try and get a handle on 2012, we have to look at bonds vs stocks their reaction to Fed actions; then make a guess as to what the FED will do next.

Here we have TMF, which is the 20 bond bull etf, overlayed against the S&P. I have marked on the S&P the QE and Operation Twist beginning times. Its clear that without FED money pumping the S&P would have continued its collapse from the housing bust. What we also see is, when the FED takes foot off the gas peddle, the S&P begins to move lower, which is the natural order of markets reflecting actual real world economies. The FED is determined to go against the Laws of Natural Order. Its clear the FEDS mandate is to keep stocks up beyond all other objectives, and at all cost, no matter how destructive to the real world economy.

The latest Fed action, Operation Twist, has done nothing more then create a bear wedge in the S&P, a reaction to the action of a Head N Shoulders top. Notice TMF has closed outside its upper Boilinger Band and the ADX is signaling this extreme upside move in TMF induced by FED action is now beginning to change course. Same as with all other FED actions, the positive results are short lived and come with a long term destructive cost.

The TMV is the 20 year bear etf. As the FED continues to pull out his bag of tricks, the TMV suffers along with the American public. However, TMV is showing divergence of trend in RSI and is at a Bear extreme in ADX. Once again we are seeing FED action having a temporary effect that has about run its course, soon to move out of the way for the markets to price in reality.

The UUP represents the US Dollar. As the FED prints more dollars, the value of the product moves lower, by extension Americans standard of living. Notice QE1 as it runs its course, the effect on the dollar begins to lessen and natural order takes over. In other words, the dollar begins to price in inflation. The S&P does a Head N Shoulders pattern and thus triggers panic phone calls from Wall St to the FED. The Fed responds with QE2, sending Americans into further debt leverage abyss, but pumping up corporate profits and stock prices. Notice the same Natural Market Selection begins to take place, another Head N Shoulders forms and the dollar bottoms; more calls from Wall St to the FED, here you go, Operation Twist.

Conclusion: The path of total destruction of America and the constitution is set on a path of no return. The short term fix/kick the can will always be the path taken. Expect inflation and depression to continue to squeeze America until WW3 is finally declared. Expect QE3,4,5,6 until the final collapse.

Most of all, Natural Order will prevail. Expect markets to price in the reality of run away inflation, jobless, homeless and starving world populations, under Fascist dictator rule. Rome is burning once again and history is set to repeat.

Tim Kathlina

After The Bell-Mid-Day Update Risk On TMV Dec 20

These days when setting up your next swing trade, a trader has to look at EVERYTHING. By that I mean everything: Europe, Asia, Currencies, Bonds, commodities, headlines, etc. It's not enough anymore just to go thru earnings reports for US companies and make your picks.

This market rewards EXTREME Reversals and nothing else. The name of the game today is being ready to FLIP FLOP just as the EXTREME sentiment for a particular direction sets in.

TMV is a BEAR ETF that moves in inverse fashion of the 20 year T-Bill. As the market sells bonds (risk off) in order to buy stocks (risk on) TMV moves higher.

Going thru dozens of ETF stock index charts-the frustrating thing is they are directionless. Both the BEAR and BULL ETF trackers trade basically right down the middle of their ranges. So for trading clues, we have to look at other stuff.

TMV is currently showing a nice divergence in the direction of the stock, which is down, verses some technical indicators.

Looking first at RSI<2>, a short term indicator we use for swing trading, we are seeing the same divergent set up as in Winter 2010. Notice in 2010, the extreme low readings in RSI<2> began to rise, even as TMV price continued lower. This was your first clue to the weakening downtrend and possible reversal.

ADX(the black line) in our next indicator was our next clue. As the TMV downtrend progressed, the ADX line that was neutral, began to pickup momentum. ADX reflects strength of trend up to a certain point. Remember trends tend to exhaust into completion, so extreme ADX readings, signal a trend that is coming to an end.

OBV indicator gives us no signal.

Bring forward to today, winter 2011, we see the exact same set-up forming; although a little latter in the year.

The last move was 5 months up in 2010, however that was with QE2 at our back.

Here we are looking at the US dollar ETF to try and piece this puzzle together. The reason I point this chart out is because of the ADX. Notice unlike TMV, ADX for UUP has not signaled a direction change.

Conclusion: TMV seems to be forecasting a change of current trend, risk off, to a risk on trend. This also backs up my SPY forecast to move higher into 2012. The question becomes, if correct, is this another 5 months of upside as in 2010?

UUP adx however just points to a simple pull back and then continuation of uptrend. This will continue to be the trigger to bring about wave 3 sell off.

I stick with my forecast for a strong impulsive down wave soon; the biggest bull trap in 90 years.

Tim Kathlina

After the Bell-Before The Fed Dec 13th QE3 or No QE3?

What happens when the FED monetizes things? More dollars are printed and chase after the same amount of product, thus increasing the products price and decreasing the value or purchasing power of the money.
So, in a QE3 scenario, that would mean Gold goes higher, US dollar goes lower against a rising Euro dollar.

Stocks and Bill Gross from Pimco and other Wall St players are convinced the FED is soon to begin QE3. But as we see in the charts below, GOLD investors, and currency traders so far seem to think otherwise.

So who is correct??????????? Your guess is as good as mine.

Tim Kathlina