Week 18 (3rd May-9th May): Wealth Moo River Watch

Cable (sterling/dollar)

based on 30 year data chart

Yearly

We are stuck in a flat bollinger trading zone, between $2.02 and $1.33 roughly, with a midline of $1.6688 which will serve as the key ceiling.

Momentum indicators are all over the place, not showing any bullish configurations so far.

Quarterly

On the cancles, one can detect a possible reversal pattern and some momentum indicators are bending upwards. The bollinger midline is near $1.8237, which will be a tremendous ceilingn for this year. No signs of confirmed reveral yet.

Monthly

Having collapsed from $2.12 top in 2007, cable is trying to bounce up and it is due for a massive pullback in any case. The price chart has a rounded bottom shape, though bullishness is dependent on the bottoming up process to break $1.60 at least. Some Momentum indicators are supportive, for example, Elder ray has a W shape and RSI and Repulse are supportive.

Weekly

The most interesting moo river is the downstream moo river on rsi from a few years back. We are currently crossing from the lowerbank to the upperbank, which still has some room for the upside yet. Repulse has a straight V shape, which is bullish and all momentum indicators are bullihed configured, signaling further continuation of the bull run.

We are climbing the ladder, first up is $1.52ish; next is $1.57ish; $1.66ish, but these figures need to adjusted as I only read them vertically, so it depends on the time we are going to take to go up and usually we do not shoot up vertically in normal circumstances.

Daily

This is where we can see most of the bullishness, with correlated upstream moo rivers across price and momentum indicators. And we have just tested the lowerbank again and we are pushing for a major top for this bull run in the not too distant future, somewhere into the $1.60's, which should complete the whole bull run, as by then daily rsi would have reached into 70's/80's.

I stay bullish for cable, as I can see British interest rate bottoming out and long term value investors might want to reposition themselves for this upturn of interest rate movement.


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Gold (SPOT)

30 year data chart

Yearly

We have had such a great bull run without a proper regurgitation, which is amazing. I am think maybe gold has overshot itself from its underlying norm value arond 500 dollars, but to date, the bullish run is continuing.

Quarterly

It is very clear that one can see a topping process here and bears are looking for bearish divergence signals, which are obvious across a few momentum indicators. Price is holding up well, maybe even a last dash over 1000 is not be ruled out to shape up an expanded triangle, a classical bull trap top, then the major collapse might take place. This is a very tricky market for a very volatile investment instrument. A break lower than 680 will bring throngs of bears out to play.

Monthly

The strong correlated bull run ran out steam in July 2008 when rsi fell out of the upstream moo river and has never recovered itself since.

Price is holding up well to suck in more late bulls, but the decaying of the bull run must be noted.

Near term, we are crossing in the new downstream moo river and a challenge of the former lowerbank of the upstream moo river near 73ish might not be ruled out, though it would be a fake rally to suck in more greedy bulls. when that fails, we will just start the next very aggressive Wave 3 down, taking price down towards 500 dollars.

Weekly

As we focus on this topping exercises, some bears are working on this double top possibility, though I quite like the expanded triangle scenario, where price cold potentially rise up to 1230 top, which would shock many and suck in further hesitatant bulls. Thus, with regard to leveraging and risks involved, it almost makes gold untradable for Private Investors, as the band will be too wide to trade, I would certainly suggest to avoid trading gold at all costs, or trade with compulsory or protected stops at all times. Gold is certainly not one instrument for averaging up or down, as this year it is going to break quite a few hearts.

Near term though, the momentum is downwards to fit in with the double top assumption by many. 1000 is pyschologically satisfying to be the top. Another dip towards 670 will get many bears excited, though that might just be the final leg of the current weakness.

Daily

We are stuck in the middle and could go either way in the ranges I have been talking about over long term horizons.

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Nymex (June)

4 hourly

Oil is the barometer for economic confidence, it seems, just as gold is the barometer of fear.

Oil has had a great run and now we are coming to make sure a top is in for this current bull run, a spike into rsi 80's would surprise many, but by then, it is time to tank big again. We are not going to go anywhere yet, so 55/60 dollar will be formidable ceilings this time round.

While gold is the untradable wild beast for 2009, oil might be quite tradable in a bascially flat zone between 35 and 55 dollars, we might meander up and down here as the economic confidence boom and wane and vice versa.

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VIX (May-09)

Hourly

Since I discovered the norm range is between 40-10 on the old moo river HQ, this one has been rather obliging. It finally crushed the 40's floor and has continued downwards. It would be interesting to have the VIX firmly rooted in the norm range, which would provide excellent guidance for trading oil and indices. We may even be able to work out some correlative relationships there.

Looking at the hourly chart of VIX is almost like looking at last year's index markets, waves after waves crushing floors after floors, relentless, ruthless, seeking the bottom of a very deep valley.

But we will stop somewhere, just look at the big numbers in 10's, like 30, 20, 10, or in 5's, 35, 25 and 15. We will stop somewhere and bounce and one can never rule out a final spike back up into 70/80's to shape up a long term double top (on yahoo yearly chart).

Vix is very volatile this year indeed, because it has charted its bull run for the past five years upwards so violently, now this tanking back down will be equally violent, almost a copycat of the stock markets for the past few years--it just proves the truth that whatever goes up will come down and vice versa.