Tuesday, 10 March 2015

The DAX has risen today while the FTSE 100 and Dow have been clobbered.

It’s interesting that the German DAX is up at the moment for today while the FTSE100 and the Dow are down heavily.
Currency depreciation in the Euro zone is making Germany very competitive indeed I would guess.
The UK doesn't produce anything much, so it is well into a permanent trade deficit, especially now UK oil production is in decline.
So even though the pound is down today, the FTSE is not going up; it has tanked today.
I have a sneaky feeling that the Germans are happy to string the Greek issue along and keep kicking the can while the Euro depreciates so they can compete with Japan, one of their major trade rivals in many areas, perhaps their number 1 trade rival that has trashed its currency since late 2012.
BMWs vs Toyotas, Mercedes vs Lexus, BMW motorbikes, vs Honda, etc.

I also added the Nikkei a day later and there was a little but not much negative action there.
These daily charts are from the excellent www.stockcharts.com Gallery views:

Monday, 9 March 2015

US Dollar bull markets - how long do they last?

I did a little research into the following  question: 

US Dollar bull markets - how long do they last?

Now we are in the zone of all the US dollar top callers who only a year ago were saying that the dollar bear market was going to restart while the dollar was under 80. Now it is 97 and they are already calling the top.

I thought that I would look at the long term US dollar chart here (10th chart from the top):


I have edited is as follows:

How wide are the bull markets? I looked at the width of these bull market peaks that occurred around 1985 and 2001. How long is it from the breakout to the time when the dollar index came down again to that level?

From the start of the breakout n(green circles), the peak widths were 5.7 and 6.7 years. This time the dollar broke out in mid-2014 at 80+ on the index, so one might expect that 80 level to remain exceeded until at least the start of 2020 and it may be early 2021.

I also looked at the width at half height of the peaks in the dollar which is a common thing to do in science.

This place halfway up the peak is during the second major leg up in the dollar in each bull market after there had already been a post breakout correction and a second breakout (purple circles). The widths here were 2.2 and 2.9 years. That would take us at least from now until mid-2017 until we even get down to where we are today at 95+. However we haven't even had a correction in this uptrend yet.

How long was it from the breakout in the dollar index to the peak in the last two dollar bull markets?

Well in 1985 it was 3.9 years and in 2001 it was 4.9 years. So starting in mid-2014 the next dollar peak might be expected between early 2018 to early 2019.

The distance from halfway up the bull market to the top in each case was 1.7-2.2 years. If we are halfway up the present USDX bull market right now (which is debatable), the peak could be expected in late 2016 to early 2017.

The breakout in this dollar bull is much stronger than in the 1992-2001 bull and much more like the 1980-1985 bull, which coicidentally was also accompanied by a sustained rise in US oil production and fall in oil imports. This time the USDX has also rocketed through the top line of a huge falling wedge.

Looking at these charts, historic precedent suggest a dollar top between late 2016 and early 2019. This is also in the zone of a potential peak in shale oil production. It also sugests that it will be between mid-2017 and early 2021 before the dollar bull market is well on its way down.

There is plenty of room time wise for the dollar to continue its increase given past performance.

Tuesday, 3 March 2015

Gold hit $1195 at the bottom of its uptrend channel this morning

Gold hit $1195 at the bottom of its uptrend channel this morning. It seems to be weakening within the uptrend and the trend itself is pretty shallow. It's a long way from the top of the recent little uptrend which would b at $1232.

The top of the now forgotten uptrend in force since November 2014 would be at about $1340, just short of the $1347 high of late Summer 2014.

Longer term there are several possibilities. This is a real turning point right now:

Sunday, 1 March 2015

Gold has popped up to $1220 overnight on Sunday into Monday - $1223 is an important level!

Gold has popped up to $1220 overnight on Sunday/Monday morning as of 0200 Greenwich mean Time after holding support near to $1210 at last last Friday's close (see previous post). Resistance has held on the upsloping line where the price is touching at about $1220. Can it break through?

This was the position on Friday evening a little before the close and the price held at around $1210 and then bounced early Monday morning:

Gold has reached $1223, above the level of the first upsloping resistance line but level with some horizontal resistance at 1223.40 and price has pulled back a bit after this strong early overnight move:

In fact, $1223 has been an important level of resistance and support since September 2014. Of course, it was also the level of the price peak in late 2009! I have also added three purple lines on the right hand side that may be a potential Andrews Pitchfork parallel to the existing slope: