XAU again

xau june 27 2014

It is taking it’s time but is following the script. We have had a few near disasters, another war in the Crimean area of the Ukraine,  the complete undoing of the good work in Iraq by Bush and Cheney and the potential of a total conflagration in the area, a few territorial skirmishes between China and it’s neighbours, the ongoing civil war in Syria and the breaking of ranks by Fed. president Bullard, GDP revised to a negative 2.9% and so on. Nothing seems to matter all that much and if it does, counter forces come into action the same day to neutralize the effect. This should all change soon as the RSI in the chart is already very high.  The big picture path might look like this once the world starts to realize that central bankers are not omnipotent.

xau june 27 2014 b

Once the low is in it should be followed by a terrific bounce. If a new high will be made years down the road remains to be seen. Some believe a 5th wave will do just that and others would view this bounce as a B-wave to be followed by a new low. At this time I have no idea and for the next little while it does not matter much..

SOX update

The 600 August puts are trading at 5.30 t0 6.20 so they are now $4 cheaper than two weeks ago. If it was a buy then it should be even more of a buy now. Here are the updated charts;

sox june 23 2014 bsox june 23 2014 s

The count is by no means clear but there are two nice triangles, the big one as a B-wave and the small one as a 4th wave. Both RSI and MACD are screaming sell more loudly than at any time in the past three years or more. On the bigchart the c is almost vector equal to the A and, at 600 plus the SOX has retraced about 62% of the drop from slightly above 1000.

C, Citygroup

c june 21 2014

Back in the early seventies this bank was known as FNCB, First National City Bank. It was admired, envied and used as a role model for aggressive (commercial) banking. It’s CEO for almost twenty years, Walter Wriston was considered the eminence grise of banking. Once , with a group of about eight people, I had the pleasure of having lunch with him. He was definitely made from the old patrician, aristocratic benign despot mould. Then there was Sandy Weil who believed in one-stop-shopping and built a not so cohesive empire accordingly. Jim Reed was another one, perhaps best known for his remark that you got to keep dancing as long as the music goes. Rubin was right up there as well and together with Greenspan was instrumental in making all this possible by getting rid of Glass-Steagall by repealing it in ‘99.

In short this bank, once the biggest  in the US, was always in the limelight. It also managed to trace out a spectacular Elliott Wave pattern, that of an A-B-C. The time between the top and the second top is about six years, about the same time as this market has spent doing the same thing. In fact in Canada it was precisely six years to the day! The B-wave in this case lasted about four years and had the same “feel” to it as the markets have had over the past few years. Under the circumstances it is difficult to stay focused unless you have a good look at the C-wave. Typically it is about 1.618 times the size of the A wave.This may be exactly what the markets have in store for us soon!