Insights from a 30 Year Veteran

We are very excited to have Tony LaPorta provide three charts as well as his commentary on the overall market. In the past week, Tony has called a short on the Gold market with the price in the 1715 area (well ahead of this week’s sharp drop). In addition to that he had an excellent long call on the 10 year note from Sunday Evening on his call to pick up long positions in the Sunday Globex market.  Here are a few of his charts as well as his commentary on the market:

I have been writing about this Japanese Tsunami / European Tsunami set-up since the weekend. The similarities are too good to be true. We still have a few more days of play in it. Let’s get at it. An SPH chart titled “Tsunami Chart” has been included and well worth a look. Will history repeat itself? If it does, you look to take profits on Thursday.

Back to the Tsunami chart. The Thursday/Friday/Monday and now Tuesday chart similarities are far too in line. The only difference…we have not seen the significant move lower yet. I think that move comes tomorrow. This is no time to be picking bottoms. The markets are thin. With the Euro Currency acting very suspect, I feel the buyers will sit on the sidelines. The only support will come from short-covering.

If we get the big move, I will look to buy my shorts back when/if the second sets of gaps are filled. If we break hard, but don’t fill the second sets of gaps on Wednesday, these will be my Thursday targets. Posted below are both sets of gaps below the market. One day at a time…one gap at a time. One must always keep a keen eye out for a gap open lower tomorrow with subsequent lower close leaving Island Tops in place. All indices charts are self-explanatory. The gaps and support levels have been identified. I remain bearish. Let’s play.

INDICES GAPS BELOW THE MARKET WHICH NEED TO BE FILLED:
SPH….1203.00-1212.50 and 1171.25-1182.50

DJH….11613-11829 and 11339-11422

NDH…2240.75-2255 and 2182.5-2205

Also included this evening is an NDX cash chart with a sell signal from today. For the mega bear, this chart is a must look. Notice how today’s sell signal is reminiscent of the sell signal we received on August 1. Like today, the market had already turned from the highs on August 1. Then 4-5 days later the market opened higher and failed. This happened again today giving us a sell signal. If history repeats itself on this chart, we could be in for a very ugly 5-6 day move lower.

As you know, QID is the NASDAQ Ultrashort ETF. If QID goes up, the NASDAQ goes down. Also included is a QID chart with a buy signal on it from today. Keep an eye on a gap open higher. If this is the case and the market finishes strong, there would be a 10-Day Island Bottom in place. Islands are the strongest indicator technical analysis has to offer.

Lastly…the Possible Double Top in DJH cannot be ignored. There is a lot of room to run lower before the breakout level at 11148 is tested. In this kind of thin, whippy market, you know the story. Never ever underestimate the power of the bear. The bear can undo years of hard work in a matter of months. The bear can undo months of hard work in a matter of weeks. The bear can undo weeks of hard work in a matter of days.

On to my pick of the week…the treasury markets. The buy signals were spot on so far (refer to TYH and SPH charts provided). Moving forward nothing has changed with regard to my thought process. I am still keying on the severe ascent in the TYH market. Since the lows traded on December 2, to the naked eye this climb higher has been significant. This chart was talking to me over the weekend. It is still talking to me. TYH put in new highs for the move today. I am looking for an initial test of 13023-13024 tomorrow…or possibly tonight. I am looking for an eventual retest of the 13109.5 highs of the move.

FOOD FOR BULLISH THOUGHT…when the market gets in this kind of mood, I always look left on the chart to the old resistance levels. The high at 13130 is when this contract was December. After the rollover, the March always tends to go back up and test the old highs. If we get the sell off on Wall Street I am looking for, I think we could test the 13130 level by the end of the week.

USH (10 year note)…this market also traded to new highs for the move. Yesterday’s buy signal was a great indicator. The Fibonacci level at 14308 was spot on with regard to the level to take profits. It doesn’t get any better than that. And the old saying goes…you can lead a horse to water, but you cannot make him drink. If you did not make good money here today, those are your issues. I only write the bloody commentary. The chart provided is self-explanatory.

We get a 30-yr bond auction today. The 3-yr and 10-yr were graded A+. How could the 30-yr be anything but? Just ask yourself…where is the money going to go. European bonds? I don’t think so. Jon Corzine tried that and we know how well that worked out for him.

- TLP

PS. Fear and Greed run hand-in-hand. We have seen 25 years of Greed and since 9/11 only 10 years of Fear. The last time I saw proper capitulation was the Crash of 1987. Stay tuned.