Entries by Peter Brandt

Gold is Pausing

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While I believe Gold has experienced a cyclic bottom, gold is pausing here. I have for several months openly expressed my opinion that the advance would be choppy at best. In recent Factor updates (premium service) I have highlighted the significant problem with the composition of open interest – the commercial interests with a record short position and the large specs (hedge funds and large traders) with a record long position. The Gold market gained way too many friends too early. I am not surprised by the lack of upside follow through in Gold. I might be interested in buying a retest of the falling wedge on the weekly graph in the 1170 to 1180 zone.

Factor Alert – Forex and other markets

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This Alert provides my current thinking on the overall technical condition of specified markets.

U.S. Dollar Index
The sustained advance from the 3 May low in the DX is EXACTLY what I would expect from a major bear trap. The shorts are trapped and the market senses blood in the water. This explains the nature of the recent rally -- not allowing shorts to cover on a reasonable break. The second chart shows that the large spec shorts (funds) remain heavily short while the commercials remain heavily long. DX should remain relatively well bid until prices reach 98 to 99. I expect major resistance at 100 to 101. Factor is fully long the Dollar Index.

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Long Term Euro Charts Point to Trouble Ahead

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For a considerable period of time I have held a very negative opinion on the Euro. The Euro currency has a complicated history. The Maastricht Treaty of 1992 obligated certain Euro nations to adopt a common currency – although it was not until Jan 2002 that currencies such as the D-Mark were officially replaced by the Euro currency mechanism. It is possible to create a proxy EUR that dates back to 1992. In fact, IMM and proxy price data exist back to the early 1970s. Several technical developments on the EUR graphs are worthy of note.

Misc Stock Index Markets

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Greetings from Berlin Germany.

The stock index markets are becoming quite interesting from a classical charting perspective.
The DJ Euro Stoxx chart displays a possible continuation symmetrical triangle pattern. This triangle is arguably serving as a retest of a H&S top. I say "arguably" because a H&S top ideally should reverse a previous advancing trend. As seen on the weekly graph, it is hard to argue that the advance from the 2009 and 2011 lows is hardly the type of bull trend that normally precedes a major top pattern.

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Stock Market Updates

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It is with some discomfort that I am always pointing out potential tops in the U.S. stock market indexes. But, I must call them as I read them. The S&P daily chart has made ZERO upward progress in 18 months. A possible complex H&S top formation is under construction. Also note the appearance of a 7-week H&S top pattern. I am willing to short this smaller H&S pattern if given a well-defined risk point. I will give up on a bearish interpretation of the S&Ps if a new high is made – but this does not mean I would have any interest in being long in new high territory.

Bullish on the US Dollar Index

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I remain a long-term bull on the U.S. Dollar. Like every other chartist in the world, I am well aware that the DX penetrated the important line of support at 93.00 this past week. I had absolutely no desire to short the apparent breakout of this level. In fact, I believe the decline below 92.00 was a gigantic bear trap – bringing in new shorts and washing out stalled longs.