Will the Dow top around next week’s Vernal Equinox?

Last time, I told how I managed to nail a Dow high on Monday 4 March around the 26,000 region but was not sure if this was the start of the long-anticipated wave 3 down. Recall there was a large non-confirmation in the two senior indexes which at the time was a bearish signal.  But I was willing to give the rally one more chance to push up before checking for the top.

In fact, I am now expecting another non-confirmation in the major US indexes in the next few days.  And that scenario would fit it beautifully with my forecast for another Equinox Top.  Yes, the strong March winds are reminding me that the Vernal Equinox is due next week.

So what?  I hear you ask.  For the very good reason that major trend changes in several markets have often occurred around this time (and also around the Autumn Equinox).. Here is the Dow from 2016 and shows that at or around every Equinox, a significant high has occurred.  Isn’t that curious?

Also remember the Credit Crunch low in 2009 fell in March – right at the time of the Vernal Equinox.

In fact, the last one in late September marked the precise high (I pointed that out at the time).  So will next week repeat that trick?  Hmm. If it does, and we see another non-confirmation between the S&P (new high) and the Dow (not new high), the outlook will be for a very hard down phase.

As I write the S&P is only 15 points off a new high, the Nasdaq is already into new high ground – and the Dow currently is a whopping 600 pips off a new high (that should not be made).

Is Brexit directing traffic in sterling?

If you read a lot of MSM financial journalists, you will be in no doubt that Brexit takes centre stage in how GBP/USD is playing out.  A ‘deal’ is in sight?  Sterling rallies.  Or maybe hopes are dashed?  Sterling falls.  A currency trader following the news feed would have had whiplash this week as volatility shot to the moon.

But did the market rally move in a knee-jerk fashion to the political developments as night follows day in a cause-and-effect manner?  For the conventional ‘news makes the market’ mind-set, the market would have to rally only after any ‘bullish’ news emerged.  It is intellectually dishonest to claim otherwise.  If the market rallied hard before any ‘bullish’ news emerged, the link between the news and the market move is broken.

Of course, it is always claimed that something else moved the market before the good news was released – or the fail-safe excuse that the market moved up ‘in spite of the news’.  We often read this kind of lazy journalism in headlines such as: “Sterling moved up despite weak data”  

Here is the chart of GDP/USD on Monday showing our buy at 9 am under 1.30 well before any ‘good’ news

and when the news of a possible breakthrough emerged, the market was already up two full cents in a magnificent short squeeze that I was anticipating.  It actually spiked to the 1.33 area for a huge 4 cent profit.

And overnight, PM May’s deal was shot down again and did sterling crash below the recent low as might be expected from the gloom-and-doom scenarios painted in the MSM of a no-deal outcome?  Of course not!  That is because the trend is up – Brexit or no Brexit.

And moments ago, the UK OBR issued its forecast for 2019 GDP growth to a multi-year low of 1.2%.  Did that hurt sterling as would be expected by the ‘news makes the market’ crowd?  Of course not!  It is up over one cent today. Why? Because the market is in a minor third wave up – and these take no prisoners.

Yes, the Brexit panto has been mildly amusing but is having none of the ‘usual’ effects on the value of sterling.

As Bill Clinton once almost said: “It’s the waves, stupid.”

VIP Traders Club members remain long.

Gold ans silver continue rally – will we see new highs?

Last time, I noted that gold dipped to my target at $1280 which was a major support zone.  And this week, the bounce has continued as the dollar has moved off its recent high. But does this golden surge have legs?

The bottom line is that I doubt it.  The bounce has carried to the Fib 38% at $1305 and may reach the Fib 50% at $1315 before turning.

Is Tesla still a buy?

We trade many UK and US shares for my PRO SHARES service and one of my recent trades has been in the pioneering EV company TESLA.  Many will be following the antics of the erratic Mr Musk and the travails of the car company he founded.  It is fair to say that sentiment is on the bearish side of the ledger as many expect the company to run out of money before any meaningful profits are achieved.

But running over the charts recently, I noted that the trends remain up – here is the weekly

The chart goes back to the early days in 2013 – a mere six years ago when electric vehicles were just glints in the eyes of many.  And in that short time span, herculean efforts in battery technology have been exerted to where such vehicles have become almost mainstream.

Of course, Tesla has made little or no profits but the shares are held aloft by hope that a breakthrough will occur and dividends will eventually flow.  But what interests me here is the position the shares are in – they have fallen right back to the major blue trendline support.

The series of higher lows (and stable highs) means the trend is up.  But the swings are huge and swing trading techniques are appropriate here, rather than ‘buy-and-hold’.

By using the usual rule to buy near an up-sloping trendline, that is what I am doing.  Here is the daily:

The decline off the latest hit on the $380 resistance zone is in a series of highly overlapping waves – and that is typical of corrective action. Also note the momentum divergence on the way down to the lower support area at $270.

The bottom line: I expect the rally to continue and perhaps go back to test the $380 resistance zone.

That would be a surprise for the many bears (Tesla is the most shorted stock in the Nasdaq).

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