Shared the combo chart below with Premium members on 9/8 and in this post early last week…(see post here) This repeating pattern has much to say about portfolio design and how “not to get hurt!”
CLICK ON CHART TO ENLARGE
Below is an update to the chart first produced on 9/8..
CLICK ON CHART TO ENLARGE
When the CRX broke support and the Dollar broke resistance at (1) in the chart above, the CRX index fell over 50% in 6 months. The CRX (Commodity) index fell almost 15% in value last week. Should the 15% decline have surprised investors? In my opinion, NO! I shared last week before “Operation New Twist” was announced, the above chart is the real key to portfolio design (see post here)
Should investors have been hurt by this decline last week? No! The CRX is due a counter trend rally after a 15% one week decline, yet from a portfolio construction standpoint, don’t over look this repeating pattern and what type of “hurt” it put on investors back in 2008!
Luke… With the CRX breaking key support and kissing the underside of resistance, it does appear at this time rallies are counter trend.
Interesting that SLV hit its 23% retracement level this morning and the underside of resistance, being the May lows.
Wonder if this could be a counter trend entry point for ZSL… again? 😉
Chris
This twin charts would imply that any rally in stocks\commodities is just counter-trend, possibly a trap for those who follow…
I’m I right? Thanks
It also appear to be on longer-term falling support.
cjk…could be. It hit its 38% retracment level a couple of days ago, which seemed to stop is rally. Now the Dollar is on rising support, big test.
Speaking of big tests…TLT was hitting the 2008 highs. Members are short TLT, via owning TBT. So far this morning, even though stocks are up in a good way, TLT is down just as much.
Chris
Is the dollar backtracking down to 22.00 to fill last thursday-fridays chart gap between 22.03 – 22.26?
Bill… Thanks for this comment/suggestion. 99% of the time I do a single chart, it is log. Sometimes when I do an combo the software only lets me do one in log. Per the Dollar/CRX combo, both are log.
Thanks Bill for your viewership and bringing this up,
Chris
Chris,
Would you comment some time on when you use log format with your charts and when you do not? This is an interesting chart as the CRX appears to be in log format and the dollar does not. Thanks!