Silver and Bonds Look to Have Completed "Blow-Off" Tops

Both silver and bonds have recently spiked into a common type of blow-off top pattern, some off which I have highlighted on this blog in recent years.

Sentiment and large trader positioning is ripe for a trend reversal or stall.

If you are one to get caught up late in a trend when it is obvious, my suggestion is that this trend has run its course.  And now is time to exit on an intermediate term basis, certainly NOT to get sucked into what WAS a strong trend.

Pete

Chances of a "WipeOut" Move This Week.....

I have scanned current market data from several angles in comparison to the last 22+ years of data in effort to estimate what is likely to occur in the wake of this week's decline and technical set-up.

In short I estimate about 25-50% chance of a wipeout type move occuring by this Wednesday.  By that I am meaning something on the order of 5% loss or more.

Based on the several factors I would estimate that SPY could easily carry down to 247 by April 3-4th. 

Click on Chart to Enlarge

The chart above here shows a typical time and trend channel pattern for a "flat" correction.  This would project a move to the lower trend channel at April 3-4th which would be ~$247 on SPY.
That would be 4-5% below current levels and based on several scans comparing to past similar declines, that would be reasonable in the next 3 days to 2 weeks.

Points of note here are that the hourly chart currently does not have a bullish divergence occurring, so it seems more likely with this intensity of decline, that we will see either a divergence develop or a large capitulation gap down like 2% or more gap down as at least a temporary capitulation/spike low.

Also SPY is perched right at its 200 day moving average as of the close Friday.  As I have noted many times in the past, these key moving average points will typically be met by gap ups with gains after the open shortly after the average is challenged.  We saw a sharp rebound off the average on Feb 9th.  However, the more times price comes down to touch the average, there is implication of weakness and the possibility of a sharp break down in prices.

Part of the idea here is that certain key averages factor into program trading and if the buying thrusts off the average are weak and re-tested, there may be a major break down through the average.  The average and the space below it may be stop loss triggers or even trend following short trigger points and result in a large and sharp price movement.

If we are to see that occur here, the chart concern is that there is not a major chart support region until down at the $240-220 region of SPY which would be a pretty major decline.

From a chart point if prices are to break clearly below the lower channel line of the chart above, it would be indicative of longer term trending action to the downside rather than corrective activity of the bull market.

As a side note but maybe of significance, bond prices have rallied weakly off the recent lows, and as of this coming week, the key time cycles in bonds are peaking and indicate downward pressure into early or mid May.  Given that prices are marginally above MAJOR horizontal support, it seems possible that a major breakdown in prices could occur on a break to new lows for the bear market in bonds.

Long Term US Bond Market Technical Analysis - TLT ETF

Long Term Bond Technical Analysis
This bond market analysis video covers the US long term treasury bond fund TLT.  Technical analysis of the bond market suggests that bond prices have made a measured correction off the August 2013 low and that the rally is mature and may be near a peak.  Ideas for short selling TLT are given based on trend lines and technical indicators.  The momentum indicator is reviewed and the weekly chart head and shoulders pattern target is also reviewed.
Additionally, if this is a bear market in bonds, which I do believe it to be on many counts, I would expect a weekly time frame bullish divergence pattern to develop in the technical analysis before a possible bottom in bonds.  That has not occurred to this point, and so with a measured correction against the downward trend, this appears to be a time to be looking at possible short set-ups.

Bonds, Interest Rates, and Commodities Technical Analysis

Bonds, Interest Rates, and Commodities Technical Analysis
This bond market update video covers multiple time frame technical analysis of the TLT etf as well as the 10 year and 30 year US treasury yields.  I give opinion on chart patterns and indicators of what to look for for trade and investment opportunities.


Also I discuss the correlation between interest rates and commodities and take a detailed look at a harmonic pattern on the DBC etf which is displaying a trade opportunity.
Some of the techniques such as price logic, divergence patterns , and reversal patterns are taught in my free stock analysis course.

Bond Market Update - TLT ETF

Bond Market/TLT ETF Update  11-14-12

Monitoring for a tradable topping pattern and technical set-up.  Likely at least a little more upside in store.

Multi Market Update

9-29-12 Market Update

The video covers stocks, bonds, gold, oil, CoT data, AAPL.  Tighten stop or exit long equity holdings.

Stock Market Analysis 9-16-12

Stock Market Analysis 9-16-12

This video covers multiple time frame technical analysis on stocks as well as CoT data.  Stocks could be making a major top here.  I suggest tightening stops on any long positions and growth stocks.  Check the video out for further details.

Longer Term Investment Outlook

Click on Chart to Enlarge

This video contains charts and some further details regarding stocks and bonds specifically.  The outlook and advice is pretty simple.  Sell all bonds and move to cash.  Understand that after the 2008 stock market decline, big money has flowed to bonds and that is the class of assets that your investment adviser or financial planner will currently feel safe recommending and be able to show you that has positive returns over the last few years.  But as investors, we have to be savvy and see the risk or potential BEFORE it actually happens, and be willing to act with little to no confirmation from FACT that we have chosen correctly.  THIS IS ONE OF THOSE TIMES.

Additionally the smart money commercial stock futures traders took a big jump in selling this according to the CoT data, and I think we will see that they sold even more heavily through this past week's jobs/unemployment data.  My suggestion is again to sell stocks and move to cash.  The pattern and real money data are becoming increasingly clear that a major market movement is about to take place to the downside.  If you need some initial PROOF, then I suggest that a daily close below 1310 on the S&P 500 be your signal that this current bull market is over, and we will see a rapid price decline.

Again this is investment time frame advice.  So understand that while I think that we truly are very close to seeing a major market shift to the downside and unwinding of some of the "bubble" activity in stocks and bonds, it may be 2-4 years for things to really play before possibly re-investing in a major way.

Market Update - Stocks, Gold, Bonds

Market Update 7-17-12

Check out the video for chart patterns and indicators that are informative for the directions of stocks, gold, and US bonds.

Long Term Bonds, Interest Rates, and Implications

Bonds and Rates 6-3-12

Long term US bonds are likely nearing an major top.  Technical analysis, pattern analysis, and CoT data are suggestive that this current rally may be the final leg up of this bull market.  Wait for daily chart technical divergence to develop before considering short entries.