Are we there yet!

EURUSD broke below resistance as predicted (now where is my crystal ball again...) and is currently languishing lower waiting to either crunch lower in a wave 3 or extends it current rally. My feeling is you guessed it......................crunch lower. First the counter-trend wave two has to finish the C leg up which could potentially take it just above 1.47.

The count I have above looks a bit iffy and we could potentially be in wave 4 up now with a wave 5 subsequent to make a new low before wave 2 up starts.

Trend changes also tend to start with impulse waves and this one objectively does not quite look impulsive enough - need to refresh your memory on the definition of impulsive ?

[If you are reading this and wondering what mumbo jumbo is this guy talking about,  the only waves I know are those lapping up onto a beach - well educate yourself on Elliot Waves. Search on Google and you are bound to find a million hits.]

I know, I know the blog is titled SA Equites Trading not FX Trading dumb ass! Remember though that markets are highly correlated and FX markets tend to give clearer signs...... would you like a really clear sign........ remember USDZAR was not quite confirming the EURUSD break out. Well have a look:

My theory is simple: USD up = Stocks down. Why? Less investing in risky assets (such as emerging markets) as investors climb back into their safe USD shells.

SA Equities markets today were fairly directionless with the ALSH closing up a measly 0.22%. With the USD now heading up from extremely oversold levels with sentiment only sitting at 3% Dollar Bulls as measured by DSI - equity markets will come under pressure and I foresee further downside as long as 23526 on the TOPI holds.

Are we there yet! As the title asks - well the selling might only just be starting......hold on, once wave 3 down starts it will be fast scary ride.

Edit: Also  if you are long gold I would get the hell out now. Long term I am VERY bullish, right now we could be heading down Fast with a capital F.

Bulls not dead just yet

Lively day yesterday - first we plunged then rallied as the good old USA pulled us up on their open. Yesterday is Yom Kippur and traditionally a low volume day in the States - so don't garner too much from the price action yesterday. I have a feeling we will race out of the blocks this morning only to fall back in the afternoon.

I'm still bearish as long as 23556 on the TOPI holds, this potentially could be wave 2 up followed by a sharp wave 3 down. Wave 2 probably will be stopped by the upward sloping support now turned resistance if this is the beginning of a decline as surmised.....

USDZAR not confirming EURUSD breakout....

As stated in the previous post here we go.....

The week ahead

The market seems to be setting up for a sell off....if we are setting up for the big one (which I believe will make the first sell of look like a whimper) I don't know. Mr Market has a way of ensuring only a select few benefit from its travails. If I I'm reading things correctly - the current opinion tends to a correction is required before the market steams ahead to the upside. Therefore playing contrarian: we are either continuing relentlessly upwards, decimating all Bears (are any left?) for say another 20% or we crash through all support to the downside and never see these highs again - at least for the foreseeable future.

Being the grumbly Bear I am, I lean towards the latter. I tend to feel those sitting long currently sleep at night with one eye open - if downside does start gathering momentum and your classic Fibonacci retracement levels are steamrolled (38.2%, 50% etc) - these guys will jump out faster than you can say "Desmond Tutu!"

Here is a close up of where we are - pevious support turned resistance (turncoat!) - classic technical analysis. The other bearish sign is the rising wedge - it has not quite gotten as tightly compacted as one would like - although beggar bears cant be choosers.

Here is a long term view of the ALSH - can anyone say parabolic!

Now if you were an investor pre when the crash happened and did see this chart would you not have felt ever so slightly queasy.... Kind of like climbing Kilimanjaro without properly acclimatizing and doing the mandatory "descents" to properly adjust to such rarefied atmosphere.

My view is quite obvious based on the above long term chart since 1960, this puppy got a bit carried away (kinda like our property market) and we are headed back to long term support currently sitting at ALSH 10500. Obviously the trend line rises over time and I can't see us dropping to 10500 over the next couple of days :) So more than likely finding support at the May 2002 high of 11665.

Bearish? You betcha. Everything goes through cycles and markets that have turned cyclically bearish tend to reach a bottom when there is no hope left and a general feeling of revulsion pervades. Think we are there yet? Not a chance.

Don't be fooled by bank Analysts, Portfolio Managers and CNBC or Summit - these people have it in there best interest for people to stay involved in the market - have you ever heard someone say SELL/get out the market while you can.....!!!

Will post updates as the week progresses. Keep your eye on the EURUSD as stated previously - short term support has been broken lets see how far the Buck rallies. Interestingly enough USDZAR has not broken resistance as yet and as a beta FX cross, USDZAR tends to lead EURUSD. Therefor the break might have been a false one... lets see how the week pans out.

Pre-market open, post holiday update on EURUSD and markets in general, and some more jibber jabber to make this title REALLY long.....

Well having a peek this morning and seems like EURUSD has broken the short term support line and seems destined to head lower on the immediate term - possibly after retesting the break which would be an ideal shorting opportunity.

Looking longer term on a monthly chart this is the point where EURUSD probably heads lower over a multi month possibly year basis. Pretty brave call Kick when the rest of the world have buried the dollar for good.

This call is largely based on my deflationary outlook for the world economy as a whole - but more on the deflation and inflation debate later.... take note, you better sort this out in your own head for the sake of your investments. Read more on this with Mr Deflation himself Mish: Is pent up inflation from Fed printing waiting on deck....

The Nikki has followed suite this morning and is as of this writing 2.2% under water. I always feel the Japanese are a bit more astute than the rest of the world being through a deflationary nightmare for the past 20 years. Hang Seng (biggest casino in the world) down  0.5% ...only - wait till this puppy start gathering some steam to the downside.

Other news is the G20 are wrapping up what Bankers will be paid in the future (great when you end up getting a government salary) -"World leaders are poised to crack down on banker pay and better coordinate economic policies as they seek to temper the excesses ...." G-20 Nears Agreement on Banker Pay, Policy Coordination as Crisis Recedes
If you are in the banking business you better start looking at ways of squeezing more money out of the retail side - high risk exotic derivatives and the like are probably heading for the dust heap as conservatism becomes fashion. High bank fees here we come - our local big 4 have already starting squeezing this rock with 30+% increases coming through over the past year.

Expecting the JSE to open lower this morning and play a bit of catch up - yesterday being an off day. Let's see how Nedbank pans out today after my short punt: Short Nedbank ?

Date correction

Seems like the date is cached by the Blogspot editor if you keep the window open - the previous post is for Thursday! Wish the hols started yesterday already - LOL! :)

EURUSD seems to have reached a 5 wave top and the rising trend line is in danger - when the USD rises the stock markets fall - so keep them peeled...

Happy Holidays are here again - doo di di di da da da ....

Heritage day in South African so markets are closed. I'm off tomorrow as well to make a well deserved long weekend! For fellow South African  Traders that have also indulged enjoy the break! Especially if you have been bearish the last couple of months and have had your head handed to you :) ....that's me.

I will peak in tomorrow and post some commentary as I feel we are on the cusp of a large turn down - yes this time for real. ;)

Short Nedbank?

Here we go - I shorted this puppy way to early and sitting with blood on my hands. Although now it looks way too tempting to pass.

It is arriving in an area where there will be severe technical resistance with a downward sloping resistance line from the 20 April 2007 (158.10) to the 7 November 2007 (151.50) - this is providing resistance in the 128 area - not far from today's close of 122.85.

Do I think it will get to the higher resistance line - no. Nedbank has rallied close on 100% after dropping fairly spectacularly to 64.92 on 9 March 2009 - overdone......you tell me?

Note on chart - Oh yes I unashamedly use OST - Standard Bank's Online Share Trading - hey OST do I get something for punting you guys...........

Why don't I like Nedbank fundamentally? Take note I am not a fundamental trader but I do keep tabs on things

1. smallest of the big 4, 
2. no big plans to expand into Africa or abroad into China, India etc, 
3. and the clincher........roll the drums.......offering R750 if you open an account with them -does that sound like desperation stuff to you or what.....?

Hello Fellow South African Traders

This is my first post (hopefully of many) as I try to disentangle my thoughts and put out there what is in my head. The problem of today is an overload of information making it nigh impossible to synthesize and come up with some form of coherency.

The plan is to post daily and let you know what is going on in my head. I will not be posting trade recommendations nor publicizing my current open positions. Although I reserve the right to change my mind later on this... :) And no I'm not a woman...

Read my bio to know more about myself and my trading history - what I will tell you here is I have an unquestioned, unstoppable, "bubbling-over" passion for trading !

So come in, take a seat and actively participate by adding commentary which is thought provoking and encourages knowledge sharing in this most challenging of endeavors.