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Top Again

By: Boris Chikvashvili | Friday, May 16, 2014

Dear Reader, I publish at this site not as frequently as in the past. I would love to do more, but time no more permits to do so.

In that sense, it is interesting that many of my posts, have coincided almost exactly with tops of significance in the stock market. I trust you will be able to peruse the past articles and correlate them with tops in past 6 years.

Now to the current status of the markets:


Stocks

Stock markets around the world have rallied considerably last 2 years and have reached valuations that are on the par or worse than at major tops of last 100 years. That is not a timing tool, but it already cautions us that bull market lifts all boats stage is over and one needs to be extremely selective if not outright defensive at this time. Please see the insert graph showing, our YBR (Yellow Brick Road) overlay over the market action last 8 years or so. As noted, YBR is not a precision tool, either but it seems to capture future market moves pretty good, years in advance.

YBR Chart
Larger Image


Bonds

While, long term trend in Interest rates, has turned up (we forecast that in 2008, at Safehaven, for 30 Year Bonds), it is hard to insist, that the move up in interest rates will be persistent and fast. Economies of the world are not in a position to generate fast decline in bond prices. In addition, if we are correct in our current status evaluation for the stock market, then it is even more likely that, in short term, interest rates may even decline. In our view, more stocks can be substituted with Treasuries, in mixed portfolios, during next few weeks, at least.


Dollar

Dollar index is mostly biased towards EUR/USD as EURO is 54 % of the index.

In that sense EUR/USD is the major pair we look at to figure out where the Dollar is headed. The EUR/USD came a long way up into 1.40 from its lows of crisis (~1.20 ) since 2012. Now we have advised to lighten up and even short it. The level of 1.40xx was our ANNUAL ATTRACTION POINT(TM) one. Recent high only 3 cents below that, has sent the EUR/USD in tail spin (also anticipated at 5/5/2014 +-3 trading days). And that is the type of action we, usually, expect at AHAP1 (Annual High Attraction Point One). Our outlook is for Dollar to rally some more into the end of this month and then correct lower for few weeks/months, before going into bullish move by mid/late fall of 2014.


Gold

We have anticipated (early in 2013, to members) that low of December 2013 was to take place and create a base for GOLD (came under 1200) (+gold mining stocks). We got that, and then collected gains between 1333-1375 as correction was expected. We are now, in a sideways consolidation period that shall last (mostly, but could spike down, as well) for next 2-5 weeks and then shoot up again.


Oil

Ordinarily, we would be somewhat bearish on OIL, with the short term outlook like above, but we are not. The reason is simple. War, or the war mongering, is looming ahead of us for a while to come and that could keep us from recommending any shorting in the OIL market.

Please note, all opinions above, are just that opinions. Real trading is based on figuring the risks and thus commitments to these ideas, as well as, the stops to prevent markets from hurting our capital (both mental and financial). So, please be careful in the markets.

We at Antisopitalist follow the motto of great Georgian Poet, Shota Rustavely
Your find what you give, all else is lost

 

Author: Boris Chikvashvili

Boris Chikvashvili
borisc.blogspot.com

In short... I was supposed to be a theoretical physicist (Russia+Jerusalem Hebrew University, MS Physics, with distinction, toyed with QUARKS). Somewhere on the road to PHD I have discovered, first the Computers - at Carnegie Mellon University (MS EE, Fathered UNIX, adopted WINDOWS), and second Finance on Wall Street.President ITI,(Computer/Finance Consulting Firm) Consulted AT&T,IBM,SUN,CITIBANK,JP MORGAN, LEHMAN, MICROSOFT. Designed/implemented Trading Systems - BLOOMBERG LLP. There is nothing more to say professionally speaking.

Please Note: The opinions expressed here are only for education purposes and do not constitute the advice in any shape of form.

Please note, we provide consulting services in Trading Systems Programming (BLOOMBERG/ TRADESTATION/WAVE59/EQUIS any/all others), Trading/Econometric Model Building, Trader Training, Technology ( Tele/Data Com, Programming C,C++ etc). DataProcessing Center and Internet Serivice Setup/monitoring etc. Also daily Attraction Point ( Potential turning point ) Alerts for number of Stocks/Futures of your choice. WriteTO: bchikvash@aol.com Dear Friends, Our relationship? no change.

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