Friday Pre Open

Extremes not seen in 26 yearsBefore I go sleep off my Thanksgivikkah feast, I wanted to highlight some charts (courtesy of my friends at EWI - make sure you click on each chart to see the expanded view, and sorry for them not being in perfectly straight lines...) that tell a story of egregiously overbought extremes in bullishness that haven't been seen since 1987.  No, I didn't mistakenly write 1987 when I meant 2007.  It's actually true that extremes of bullishness last seen 26 years ago, and not since, have returned.   The first chart shows the Dow above the Spx, using two different measures of bullishness; both at 26-year highs.  The survey for the Dow shows nearly 4 times as many bullish advisors as bearish ones; extraordinary!

Dow at 2000-2007 upper trend lineThe second chart shows the Dow reaching into the upper channel line from the '09 low, as well as the massive upper channel line drawn off the highs of '00 and '07; extraordinary!

Blue Chips just an up day open awayChart 3, another double stack, shows the Dow and Spx with the potential for an up open Friday, or even an up close, into measurements that would act as wave-ending actions.

One Dow component already shows 5 down and 3 up and rolling overChart 4 shows the Dow Utilities having already fallen off their Spring '13 highs in 5 waves, and having corrected in an Elliott, 3 wave, ABC pattern, which just rolled over this month, and is now plunging over 4% in the past seven days alone.

Dollar looks like THE trade of the coming yearChart 5 is the dollar, preparing to explode higher in a big wave 3 rally, while chart 6 is the Euro, which is about literally slide off the continent into the 1.20's.

Euro shows 5 down and 3 upFinally, chart 7 is that of gold, where the foot print of at least a rise toward 1325 +/25 is preps for biggest rise since June low

There you have it; the setup for an imminent rise in the dollar and gold, slide in Euro, potentially shocking declines in the Dow and Spx (but after quick, small, fake-out rises Friday/Monday).




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About twwadmin

Ken Goldberg is a Registered Investment Adviser, and is the president and chief market strategist at Trading With Waves. Connect with me on Google+
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