Market Commentaries

The 2nd quarter filings from these 2 firms have been delayed (way too much delay but no legal actions from the government as usual). Now we learned that both dumped their gold ETFs.

http://www.bloomberg.com/news/2013-08-14/paulson-cuts-spdr-gold-stake-53-as-soros-sells-out.html

That explained the 2nd leg flush by the end of June.

Very good sign for bulls.

What we need to see another flush to clean out the early birds who picked the bottom and do not have the holding strength necessary for the retest of the low made in June.

Of course, people sometimes get lucky as it is possible for some worldwide crisis to happen in the near future driving gold price higher without a pullback. But that is not the norm and not something we can depend on.

A even better sign for bulls is that Paulson and Soros giving up all their gold holdings, turnaround to short gold and publicly pronounce the death of gold. That will be a good driver for gold going up to $1600 quickly.

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In an unpreceded move, Bank of England's Mark Carney has tied the ultra low interest to the country's unemployment rate. This action has one and only one reason to be put in place - to avoid / manage the stock market worldwide together with the United States. It is essentially promising infinite money printing as unemployment rate will never dip below the prescribed threshold of 7 percent ever.

Why I am so sure that the 7 percent rate will never be touched?

A blank cheque written by a central bank like this enables the government to continue its path on financial irresponsibility. It is common sense that governments are always wrong in terms of resources allocation. Instead of improving the economy, the government will do whatever is necessary to make sure the unemployment rate never decreases to the threshold so that money printing will continue forever.

If Bernanke is really the devious genius I believe he is, United States will reap the biggest benefit from this global QE maniac by being the first to wind it down. Last time, being the first to start QE, the United States has successfully exported its problems to the other countries. Now, the other countries including United Kingdom will have to pay for the consequence again.

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Monthly update on market internals.

The current snapshot of S&P 500 3-Day Advance Issues, Tick16 Short Term + Long Term as of 2013 July 19 close.

Reading

1. Long Term Tick16 (yellow line) well below neutral zone going sideway

2. Short Term Tick16 (red line) drifting in overbought area

3. 3-Day Advance issues (green line) bounced off neutral zone with S&P just made a new high

Inference

a. #1 is bearish pointing to a major top in the making

b. #2 points to a short term top in the making

c. #3 divergence top setup for short term top in the making

Last update I was looking for a flush low to create a powerful squeeze and I got that right on.

A powerful rally like the one we are having does not stop easily until something break the rhythm. Thus a series of pullbacks will have to be in place to create the long term top, if such a top is going to be formed at all.

The weakest scenario is that S&P can start its pullback now and limiting its Long Term Tick16 from recovering to neutral zone. Timing for an immediate pullback is within next few days.

The strongest scenario is that S&P although weaken its Long Term Tick16 keeps recovering to neutral zone. That will produce a decision point where S&P can gun for long term upside breakout or a total collapse. The outcome of this scenario will depends on the aggregated bets made on the market by the time it reaches the critical moment. Timing for this complex top formation will take 2 to 3 weeks.

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