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Thursday, March 10, 2011

Timely and profitable analysis at Wolf on Wall Street

This article is from this morning at Wolf on Wall Street:

USO/Dollar Update

Both of these are moving in the direction that this week's analysis has suggested, interestingly it's because of the dollar that USO is down today. You may recall, my short to sub-intermediate outlook for USO has been down, my longer term outlook based on the problems in MENA (Middle East/North Africa) is for USO to gain.

The Dollar I just recently analyzed...
Here and Here

UUP has made a nice move up , well through the signal candle and has started a new leg up.

USO, I've updated several times a day so you should be familiar with my opinions on it. In fact last week I called for a trailing stop on longs that got hit two days ago to take you out of USO. The Trend Chanel will never take you out at the top or bottom, but it will catch the bulk of the trend.

Today USO is down nearly 2%!
In THIS ARTICLE that wrapped up the big picture, I mention the fact that the precious metals, gold and silver are likely to be taken down as well, they are both down today, -1.09% and -2.72% respectively.

It's no time for victory laps, although I'm already hearing from members that are at big profits this early in the morning, it's a good way to start the day.

Lets not let our guard down.

HERE IS THE BIGGER PICTURE ANALYSIS FROM THIS WEEK AT WOLF ON WALL STREET-This is part two only, part 1 was posted Tuesday of this week!

Mark Twain Said, History doesn't repeat, "it rhythms"

Here's a kind of part two to
LAST NIGHT'S WARNING POST. It's best if you read last night's post first so it's fresh in your head, again THE LINK

Now, here are some charts from April of 2010, the last really significant sell-off we saw which averaged about 15-16%. However, if you have caught my videos I have posted recently on how the market's structure has been seriously and progressively compromised and the effect it will have on any future downside event, you'll know that the next one will be more dangerous then anything we've probably ever seen.
Here's a link to my video channel (see the videos titled "Stock Market Bubble") and the last 5 or 6 videos have touched on the subject to varying degrees. Here's another link to all my videos.

Now, here are the similarities between the last major sell-off event and now...
The DIA-MAY of 2010-note the volatility in price and the large volume, it's even worse now.
The IWM at May, 2010 and again it looks worse now

The QQQQ at May, 2010-also looks worse now

The SPY at the same time

Here are the results-a 16% approximate decline. Remember, the market structure is severely impaired now and the QE/POMO melt-up has made things worse, I touch on the reasons why in the videos.

The VXX back then in May of 2010-look familiar?

The VXX now.

Remember I said to watch what Bill Gross does as he has acted as a Fed mouthpiece, telegraphing the Fed's intensions.

Here's some news out today...
PIMCO Drops ALL Treasuries and Raises the highest levels of cash seen. I hinted the other day that indications are that QE3 is a non-starter, this story would seem to confirm that and my advice to raise cash seems to be good advice, after all, Bill Gross just raised record levels.

With no QE3, which has been the ONLY thing supporting the market as the fundamentals behind the headlines continue to be horrible and independent sources are having a major disagreement with everything the government puts out, it would seem there is no more reason to stay long equities. In fact multiple asset classes that have been bought on speculative -nearly free money, should all decline. This may very well include precious metals. Oil is a different story as the fundamental story continues to unfold there. While I'm not saying "buy today", I do think there will be a time (probably sometime this month) to start loading up the truck in this asset class.

There are some other interesting news items out today as well...

"U.S. markets opened mixed a day after a prominent hedge fund manager said he would divest himself of outside investors in anticipation of a downturn.
Maverick investor Carl Icahn said he did not predict a downturn, but would return about $1.76 billion to investors due to the possibility of a market crisis after a sharp run up in the past two years."

It's been about a month since I started saying, "Something in my gut tells me this market is just not right". Ever since then, we've seen nothing but confirmation of that gut feeling. Don't panic, start putting your plans into place and into motion. Stay conservative, protect your portfolio, any drop will have significant opportunities, even if you miss the first leg.

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