Counter-Trend Trading

By: Erik Swarts | Fri, Apr 5, 2013
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Silver continues to closely follow the 92' Nikkei unwind, finding support today where the comparative had expected it would. It seems reasonable to us that the precious metals sector could find further countertrend strength next week - while the equity markets play catch-up on the downside.

1992 Nikkei 2013 Silver (SLV)
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1992 Nikkei 2013 Silver
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This would be reflected in the silver:gold/SPX performance spread coming in over the short-term - as it has in the past after the equity markets have pivoted down.

Silver:Gold SPX Performance Spread
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We do not expect the euro to continue the countertrend strength it enjoys today; rather, anticipate it to perform poorly in a broader risk-off environment. This would be a character change as well for the US dollar - running against the grain of the equity markets.

2011 Euro 2013 Euro - A Mirrored Pivot
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Euro:US Dollar Index
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Euro:Silver
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BKX vs GDX
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Like the miners, Apple may find a countertrend bid in the face of broader equity market weakness as it flirts with its 150 week SMA. In the past, the 150 week SMA has proved to be initial support with the backside unwind of the parabolic mega-caps (see Here). While we had anticipated a deeper weekly RSI imprint for a tradable low, we are open to the possibility that similar to the miners - the positive divergence extends as the asset stair-steps lower over time.

2013 Apple
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RUT:SPX 1992-1997 2008-2013
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As always - Stay Frosty.

 


Recent Market Anthropology Reference Notes:

* All stock chart data originally sourced and courtesy of www.stockcharts.com

* Subsequent overlays and renderings completed by Market Anthropology

 


 

Erik Swarts

Author: Erik Swarts

Erik Swarts
Market Anthropology

Although I am an active trader, I have always taken a broad perspective when approaching the markets. I respect the Big Picture and attempt to place each piece of information within its appropriate context and timeframe. I have found that without this approach, there is very little understanding of ones expectations in the market and an endless potential for risk.

I am not a stock picker - but trade the broader market itself in varying timeframes. I want to know which way the prevailing wind is blowing, where the doldrums can be expected and where the shoals will likely rise. I will not claim to know which vessel is the fastest or most comfortable for passage - but I can read the charts and know the risks.

I am not a salesperson for the market and its many wares. I observe it, contextualize its moving parts - both visible and discrete - and interpret.

I practice Market Anthropology - Welcome to my notes.

Erik Swarts is not a registered investment advisor. Under no circumstances should any content be used or interpreted as a recommendation for any investment, trade or approach to the markets. Trading and investing can be hazardous to your wealth. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This is strictly for educational and informational purposes only. All opinions expressed by Mr. Swarts are subject to change without notice, and the reader should always obtain current information and perform their own due diligence before making any investment or trading decision.

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