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Wednesday, May 27, 2015

05/19/15 Review of US Dollar Index

US Dollar
The professional investors must profit by anticipating future trends and events rather than chasing old news. This is done by following the invisible hand or message of the market. That message, the simultaneous study of the the cycle of accumulation and distribution (trend), the distribution, movement, and participation of leverage (leverage), time/cycles, and human behavior void of opinions is defined below:

US Dollar Index has been sending a message of caution since November 2014. This message finally transitioned from mark up to cause (building) in March. As long as cause reigns, plenty of bears will be yelling TOP!

Insights follows interplay of price, leverage, time, and sentiment (click for further discussion of Reviews) to help recognize the transition from cause (building) to mark up or mark down for subscribers.

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05/19/15 Review of Cocoa


Cocoa
The cycle of accumulation and distribution defines cause (building) within mark up for cocoa.

Ghana and Indonesia, leading producers of cocoa, reported a poor harvest due to a mixture of bad pesticide control and weather. Contracting supply from the world's leading produces, an outcome that has producers of chocolate scrambling to meet demand, has sent the price of cocoa higher recently. The poor harvest could send the price of chocolate based foods higher through the remainder of 2015.

Bullish trends of price, leverage, and time could have cocoa jumping the creek (of cause) this summer.

Insights follows interplay of price, leverage, time, and sentiment (click for further discussion of Reviews) to help recognize the transition from cause (building) to mark up or mark down for subscribers.

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Buying When No One Else Wants To

News
Bernanke, the former Fed chairman, either cannot read or publicly discuss global economic trends. Either way, his feel-good headline interpretations must be deemed entertainment only. Solutions to the monetary and debt morass will be debated only after smart money has started buying when there's blood in the streets.





Headline: Bernanke sees no risk of hard landing in China, bullish on U.S. economy

SEOUL (Reuters) - Former Federal Reserve Chairman Ben Bernanke said that China's economic slowdown should not worry markets as there was no risk of a hard landing, and emphasized that a move to raise U.S. rates should be viewed as a positive sign for the world's largest economy.

Bernanke, who participated in an open interview at a private-sector forum in Seoul on Wednesday, said the expected U.S. rate hike would be "anticlimactic" when it happens and that there would only be minor negative impact on South Korea.


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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.

05/19/15 Review of US Treasury Bonds

US TBonds
The cycle of accumulation and distribution defines cause (building) within a broader mark up phase for US Treasury Bonds.

A 25 basis point (bp) interest rate cut, the third reduction in six months that follows 100 bp reduction in the reserve requirement a month ago, extends a coordinated effort to spur economic growth throughout the global economy.

While coordinated 'stimulus' supports a countertrend rally of commodities foreshadowed by negative concentration discussed months ago, it won't reverse defensive global capital flows regardless of the hype. Defensive money flows likely includes US Treasury bonds until the wolf pack culls the herd of weak European and Asian debt. Only after the herd has been thinned will it focus on the US. Today's largely technical and countertrend decline should reverse and return to mark up as the global economy turns down. Gentleman could very well prefer government bonds, notes, and bills at least in the initial stages of the next panic.

Complacency towards longer duration bonds, however, should turn to fear. What Mellow omitted is that investors prefer the public sector (bonds) when confidence in the private sector (stocks) is failing. Investors preferred bonds in 1929 because confidence in the private sector was failing. While gentlemen could prefer bonds in the initial stages of the next panic, they'll like turn on them as confidence in the public sector falters from an already shaky position. This will turn complacency into fear rather quickly.

Insights follows interplay of price, leverage, time, and sentiment (click for further discussion of Reviews) to help recognize the transition from cause (building) to mark up or mark down for subscribers.

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Trend

Negative trend oscillators define a down impulse and decline from 129.44 to 122.47 since the fourth week of April (chart 1). The bears control the trend until this impulse is reversed. Last week's oversold lead short-term profit-taking as expected.

A close above 126.28 extends the rally within cause, a close above 134.57 jumps the creek and extends mark up. A close below 118.73 defines what the headlines would recognize as a deeper 'correction' and smart money as a confidence driven rotation from long to short duration government paper.

Chart 1


Leverage

The flow of leverage defined a bull phase since October 2013 (chart 2). A DI2 close above its July 2014 high reverses the phase. A DI2 close below its January low confirms continuation.

A diffusion index (DI) of 31% defines mild accumulation and bullish bias within cause. A capitulation index (CAP) of 65% defines concentrated fear and supports the bullish bias (chart 2A). This setup, a bullish combination of short-term flows and extreme concentration of sentiment, tightens risk management for the bears and until unwound.

Chart 2


Chart 2A


Positive leverage oscillators define an up impulse that opposes the bull phase but supports the bear trend (chart 3).

Chart 3


Time/Cycle

The 5-year seasonal cycle defines weakness until first week of May (chart 4).

Chart 4


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Tuesday, May 26, 2015

05/19/15 Review of Silver

Silver
The cycle of accumulation and distribution defines cause (building) within a broader mark down phase for silver.

While seasonality often defines the summer transition as a low, it could produce a high in 2015. A decline that includes the possibility of capitulation (selling) is unlikely long as the capitulation index (CAP) flows from extreme fear to complacency in gold. Continued causing building in US stocks could support a broader rotation that supports highs into the summer transition.

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Insights follows interplay of price, leverage, time, and sentiment (click for further discussion of Reviews) to help recognize the transition from cause (building) to mark up or mark down for subscribers.

Please join us.





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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.

Monday, May 25, 2015

05/19/15 Review of US Stocks

Nasdaq
As long as the US Stock rally defies the logic of the majority, bearish calls will continue growing. The cycle of accumulation and distribution defines cause building within broader mark up that jumped the creek in 2010. Technology stocks (QQQ), a key leadership sector of the market since 2008, display accumulation under a backdrop of skepticism.  This combination favors continued strength despite calls for choppiness for US stocks.



Insights follows interplay of price, leverage, time, and sentiment (click for further discussion of Reviews) to help recognize the transition from cause (building) to mark up or mark down for subscribers.

Please join us.





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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.

Sunday, May 24, 2015

05/19/15 Review of Lean Hogs

Lean Hogs
The cycle of accumulation and distribution defines cause (building) within minor mark down phase for lean hogs.

While a sharp rally over the past few weeks could trigger some profit-taking over the short-term, traders must be careful to place the selling within the context of extreme concentration.

Insights follows interplay of price, leverage, time, and sentiment (click for further discussion of Reviews) to help recognize the transition from cause (building) to mark up or mark down for subscribers.

Please join us.



Trend

Positive trend oscillators define an up impulse and rally from 73.25 to 83.73 since the fourth week of April (chart 1). The bulls control the trend until this impulse is reversed.

A sustained close above 80.34 jumps the creek and extends the rally within cause. A close above 133.83 marks the return of mark up. A close below 58.6 breaks the ice and confirms resumption of mark down.

Chart 1


Leverage

The flow of leverage defines a bear phase since June 2014 (chart 2). Leverage's negative flow since February's bullish setup reflects at least an attempt to change the phase. A DI2 close below its June 2013 high reverses the phase.

A diffusion index (DI) of 43%, a slight decline from the previous week, defines accumulation. A capitulation index (CAP) of 61%, the definition of extreme fear and accumulation, supports the bullish message (chart 2A). This setup, the flow of leverage and sentiment from fear to complacency, favors continuation and tighter risk management for die-hard bears.

Chart 2


Chart 2A


Positive leverage oscillators define a down impulse that opposes the bear phase and supports the bull trend (chart 3). Last week's bullish crossover confirmed the bull trend (see trend).

Chart 3


Time/Cycle

The 5-year seasonal cycle defines strength until the fourth week of June (chart 4). This supports the bulls until the summer transition.

Chart 4


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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.