A temporary blip it seems

I keep feeling like the market should be up pretty good given the dollar is down about .35%, but it's not. So i looked at the dollar/spx chart and sure enough the normal inverse correllation has disappeared today. Maybe that's a bearish indicator -- when the market "should" go up and doesn't you have to wonder.

LQD:SPX

This has given excellent signals in the past. 

Thanks Perthx -- I had not seen it -- that really is tight -- now if you would just let us know which way it is going to break that would be appreciated :-)

I added a red downtrend line and a possible red parallel and they all meet up

Edit -- and now that I look at it, it would be very bear flaggy

the SPX is looking more and more like a bear flag, maybe it wedges up long enough to let the oversold osicillators unwind before legging down again?

This is what happens

Your work is really helpful as I, and I suspect other members as well, continue to weigh how much capital to allocate to the system. As we all know, Matt's system dodged the Flash Crash, but I think we all have to allow for the possibility that we might not be that lucky next time there is a Flash Crash or some kind of out-of-the-envelope Black Swan. Also, we all know that the Flash Crash rallied back VERY quickly, so had the system been long going in to the crash, the ultimate exit from the trade would not have been all that bad. But had the system been long going in to a 1987-like event, then the loss could easily be over 20%. And using a 15% Crash Stop as Matt discussed as a possibility, might or might not help. We also know that many Crash stops in the Flash Crash actually executed WAY below the stop points. So given all this -- your 15% rule of thumb number seems like a very reasonable point of reference.

In trying to think through risk parameters for the system itself, we also have to remember that the system does not exist in a vacuum, and if we are long in other positions at the same time, then what we really need to be looking at is how much total capital we have in the market at any moment in time, and what is our risk tolerance for our entire portfolio position.

Thanks again for all your excellent work on this!

A few other members have posted this before (thanks to all, sorry can't remember who posted), but I did the ILF charts again, and it sure looks interesting.

Here's the longer chart going back to the '09 bottom:

http://stockcharts.com/h-sc/ui?s=ILF&p=D&yr=2&mn=9&dy=0&id=p54998957574&a=234444721&listNum=3

And here's a zoomed in version:

http://stockcharts.com/h-sc/ui?s=ILF&p=D&yr=3&mn=0&dy=0&id=p49819063108&a=234484366&listNum=4

Using Steve's chart here, looks like it's bear flagging

I was going through one of my chart lists and just spotted this. Looks like silver is finding some support on the broken parallel on the weekly.

I should have included the line off the tails, but i do think the line on the bodies of the candles is a more important line. But the tails TL could possible be a last line of support.

http://stockcharts.com/h-sc/ui?s=AAPL&p=D&yr=1&mn=0&dy=0&id=p39101286006&a=233939190&listNum=4

Besides threatening to break the TL, the MACD is crossing over (see link)

If AAPL breaks down, it will be very hard for the COMP not to follow.

I was looking at the excellent charts of the TSX that Kingpin posted, and i got the idea of laying the GDXJ on the TSX to see how closely they would track, and it looks like -- at least on the 15 min chart I did -- they are close to a perfect fit. I haven't tried other time periods yet, but if the 15 min chart tracks this closely I'd guess very close as well.

Thanks 8899 -- That gold-eagle piece sums it up really well -- clearly selected juniors have been the place to be, other than the metal itself.

I talked with a friend over over the weekend who had some fascinating research about how gold stocks dramatically  underperformed the metal by a lot during most of the huge bull market in the 70s, just as they have in this bull market. The stocks did not outperform until after gold had topped out in 1980. The big rally in gold stocks apparently took place during the rally back, after gold had dropped from over 800 to 450, and then rallied back to 750, before going into a very long bear market.

He said that Newmont, one of the leaders back then, did not better its 1972 price until late '79, which is just amazing. The incredible thing is that Newmont peaked in '81, AFTER gold had fallen from 850 to 450! Apparently similar action took place in the other leading miners. 

And then, almost like this info was suddenly in the air,  I listened to an interview with Jim Sinclair who made pretty much the same point.

Here's the Sinclair interview:

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/5/11_Jim_Sinclair.html

Given that the major miners have underperformed the metal throughout this bull market as well, maybe there is a lesson from the past. I can't say I really understand why this was the case then, or now (I know the theory about the hedge funds shorting the miners against the bullion now, which may be true, but there were not hedge funds back then). If anyone can add any insight on this it would be interesting. If nothing else, it sure raises an interesting historical insight into bullion vs the miners.

Congratulations Matt!

Good work Ditch! You've earned your Sherlock Holmes badge.