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Friday, February 12, 2016

Stock Market technical update week ending 2/13/2016 - Bear trap Bull trap

Bear trap Bull trap

Stock Market technical update 2/12/2016 - major reversal
The public charts are a bit of a mess, but I figure I have all weekend to clean up that area. It's better to review the recent market action of the past few weeks with a thorough blog update. Thanks in advance for following along, and I'll be updating the public charts area as time permits. If you follow me on twitter you've seen the longer term charts, which all point to a major reverse, as we seem to be trading within patterns which may not be evident on a 15 min chart.
For example the NASDAQ seems to be trading in a contracting triangle pattern.   
Touching on a few points I made in the previous blog: Experienced market technicians, have always used the main stream media as a reliable contrarian indicator. Once it's widely reported that "gold is rallying" (for instance), the smart money is most likely already selling. This made a lot of sense when investors had to rely on what newspapers for their reporting, but once the news hit Main St., it was already old news on Wall Street. We'll it didn't take long for Wall Street to figure this out, so they bought all the networks, and now they use the financial networks to directly manipulate markets.
I watch nearly every sector and overseas, so it quickly became obvious to me Greece, and Italy, and the Euro banking sector were in free-fall, and talk of the London Bank abandoning the EU wasn't helping to calm markets, but was any of that reported? No. Oil was blamed.... Most of what was going on in Europe was never reported. That is, until the end of the, "global market sell-off", as it was being called.
Yesterday on World Wide Exchange (at 5:00 AM EST), none other than Dennis Gartman was once again seen spreading fear of a "global market sell-off", and talk of the Euro-banks in free-fall reached a fever pitch in the media. We'll guess what? This wasn't news to anyone who has been paying attention to the situation, and reporting it honestly. The same could be said for the recent rally in gold, which wasn't reported until very late in the game, and now the poor retail investor is likely to be caught in a bull trap.   
Today what is being reported - from CNBC to Bloomberg - is a parade of financial bulls, and the icing on the cake? Jamie Dimon's - $JPM - stock purchase. Bear trap set.
We're seeing futures up handily and as I said on earlier in the week, "it's better to miss the final leg down, than to be caught short here".
The sell-off was rather shallow with the NASDAQ, Biotech, the Russell 2000, and of course financials, suffering the worst declines. The good news is all these sectors have corresponding 3X ETF Bull funds. I'll be updating all these sectors in my public charts over the weekend, but in the meantime, I wouldn't waste any time pulling the trigger on any, or all, of these.
Biotech looks like a normal 3-3-5 zigzag correction - in a parallel channel - and the corresponding 3X ETF's are some of the best performing of all.
Very volatile, but not for the weak of heart.
As far as Gold and gold miners.
Looks like an irrational wave E/4 on the gold bug index. Watch for a violent reversal into an extended wave 5 (new lows). The reversal maybe not come until after OPEX, but you never know. Money has already been coming out of this fund, regardless of yesterday's blow-off top.
The stop hunt on the $HUI looks like the top of the triangle @ 154. Again the 3X gold miner funds are as volatile as they come, so use some extra caution. I shorted miners 3 days too early, and got my fingers burned!
You can follow me on Twitter, and my public charts are available using the link in the left hand menu on this page.
Have a great weekend,

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