The setup for the big trade

11670 posts / 0 new
Last post
Tue, Jan 21, 2014 - 4:58am
ivars
Offline
-
Riga
Latvia
Joined: Sep 26, 2011
3982
25150

Quote:Pray tell, how does the

Quote:
Pray tell, how does the market cap of stocks go up without increased money flow if there is not a corresponding gap?

The velocity of money invested in stocks increases? This way same amount of money leads to higher prices. If money circulates fast, with the same amount of money higher prices of goods traded with this money will be. 

That is from the equation : Total funds (Money) for stocks* Velocity of Money for stocks= Price (increase) of stocks* Transactions number in stocks/time of these transactions

To get prices up with the same amount of money the average transaction size has to get bigger as well; other wise increased velocity will only mean increased number of transactions. 

Velocity of money for stocks = 1/average time of money supply unit (USD) meant for stocks is hoarded

May be this was not the question at all..but it is an interesting equation MV=PT per asset class by Irving Fisher

Any future development must involve changing something which people have never challenged up to the present,and which will not be shown up by an axiomatic formulation. P.A.M.Dirac
Tue, Jan 21, 2014 - 7:37am
redwood
Offline
Joined: Aug 9, 2011
5309
10895

FWIW, typical of holiday

FWIW, typical of holiday periods to bring metals down into the open, all the while holding during the holiday day. Quite recurrent and why I cautioned on Friday. However, metals are showing upward movement for now and I don't think this will last. May even rebound by open or by tomorrow. GLD must hold above 121 to be convincing. WS.

Tue, Jan 21, 2014 - 9:15am (Reply to #4672)
ACAD
Offline
Joined: Mar 1, 2012
41
92

Ivars - wouldn't your

Ivars - wouldn't your explanation mean that volumes should be increasing? I.e., isn't volume a proxy for velocity? If it is, then I don't think velocity is increasing. A chart of S&P volume from the last few years shows a decline.

Tue, Jan 21, 2014 - 9:45am (Reply to #4672)
Offline
-
Dublin
Ireland
Joined: Jan 20, 2013
3661
24465

ivars wrote:That is from the

ivars wrote:
That is from the equation : Total funds (Money) for stocks* Velocity of Money for stocks= Price (increase) of stocks* Transactions number in stocks/time of these transactions

Ivars: two questions if I may.

What if the quantity of stocks, or the asset, is variable, and you are not privy to the realtime amount of "float"?

What about money which can leave the market which is one universe of stocks, move via an FX carry trade to another country/currency where interest rates and interest rate derived valuations of stocks are different and buy stocks there. And what about other external carry trades bringing incoming money from other less desirable markets to this home stock market? Or to rephrase that, what if the quantity of money is variable, and you are not privy to the realtime amount of money, or it's realtime rate of change.

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Tue, Jan 21, 2014 - 12:03pm
ivars
Offline
-
Riga
Latvia
Joined: Sep 26, 2011
3982
25150

Have we not seen in the last

Have we not seen in the last 2 days the divergence of miners and metals IAM was predicting? PMs were nicely down today, but GDX for example up 1,8%. 

If so and if it holds metals or at least gold bottom is around 3-4 months away, coinciding with other thoughts about its potential timing. 

Any future development must involve changing something which people have never challenged up to the present,and which will not be shown up by an axiomatic formulation. P.A.M.Dirac
Tue, Jan 21, 2014 - 12:54pm
ivars
Offline
-
Riga
Latvia
Joined: Sep 26, 2011
3982
25150

Fisher formula

Money (USD) *Velocity (1/time) =P (USD) *T (transaction number /time) 

I understood from IAM that there are no net money inflows in stocks. So the only other variable in this formula to raise price is velocity if transaction number is fixed. I am not myself sure how it works as there are 3 variables provided M=const.

To increase price by faster circulation of money from stock stock Transaction number has to be constant or lower, since if transaction number ( and so traded volume) is higher, prices will be lower, according to formula, if M = const. That is why I thought individual transactions must be bigger. But if volume has dropped, they may be the same usual average size, just less transactions. Because velocity means that the money that is involved in stock buying selling (M) most of the time is invested in stocks, and spends minimum time outside stocks as cash in trading accounts. Less transactions means that stocks are hoarded relative to money and so there is never enough stocks (until some higher price) to satisfy demand, so price rises.

I am not sure if this explains anything or how that can be technically managed by traders who wished to increase prices and had sufficient resources to do that. And how it relates to futures then.

AM i do not know how that happens what you say..would that not mean net money flow into stocks? Are you saying its happening we just get no data?

Excuse me for confusion, I wanted to figure out how this formula works and why:). Did not succeed it seems... But its interesting formula for inflation. Obviously hoarding stuff vs hoarding money meant for this stuff will increase the prices of stuff as it gets more difficult to obtain.Even if money supply does not increase or decreases.

Any future development must involve changing something which people have never challenged up to the present,and which will not be shown up by an axiomatic formulation. P.A.M.Dirac
Tue, Jan 21, 2014 - 3:50pm
redwood
Offline
Joined: Aug 9, 2011
5309
10895

Well metals went up this am

Well metals went up this am as per routine but GLD has not yet pierced 121, so I think we may get a small setback tomorrow. But trend is still up though for now. If GLD violates 117 to the downside then direction has changed, but that may not happen until the fireworks implicit in FOMC and debt ceiling talks of Feb. 7. Too far ahead and I really don't know what will happen. I try to stick to one day at a time.

Wed, Jan 22, 2014 - 7:37am
Offline
-
Dublin
Ireland
Joined: Jan 20, 2013
3661
24465

Big Pic Gold Update

 This is important now we're in the new year and formulating generalized strategies for 2014 capital allocation.

First two charts are the original roadmap chart, updated, and retuned slightly to take account of how things have evolved so far. This roadmap is hanging together still, though in a week or two we will be a year since I posted the original chart.

Variant One is suggesting that the next inflection deflects price downwards to make final lows. This is saying take care of breaks to the downside as they could take out the recent lows to really shakeout the stale bulls in gold one last time. The analog is 1998, and resembles recent price moves in a reasonable fashion when one stands back to view, though there is a month or more variation of swings.

Variant Two is a better fit from Jan to July 2013, but breaks and is a more subtle fit after that time. I like this analog which suggests that gold is almost at the half way stage of base building, with a medium term low and buying point coming soon, and a rally after to the upper side of the trading range which will constitute the base formation.

 Variant three (I left the historic analog off for better clarity of the other items) is saying that gold has already passed the half way stage of the trading range, and already has put in the low associated with this. It suggests a rally is about to experience a pause, but then the rally will reassert itself, taking gold to the upper part of the trading range.

I have superimposed an Elliott Wave count on the variant three chart, and it also has three EW variants, two of which are saying we are in a wave 4 rally which will take out a significant overhead resistance level, the levels are shown with black horizontal lines marked "4". That will be a premature break, and gold will then have to make a last new low to destroy the old gold bullish sentiment, making a false (wave 5) break to the downside, before going upwards and out of the range for the long term.

The EW counts I have observed allowsfor a more bullish alternate possibility (alt count in blue, and the higher black swing lines rising upwards) whereby gold already completed the bear, and the new rallies will staircase up and out of the trading range gold is presently within.

As is usual with EW, no count is reliable while corrective price action can be seen, and it can, so the EW highlighted with red swing lines is a best guess based upon the use of the analog together with all the possible EW counts I have observed. The red swing lined EW count might be called my preferred EW count, but I really don't have a favourite, just one which I suspect has slightly better odds than the others.

I tried to make the red swing lines match up with cyclical times, not shown today, but inversions can add or subtract a swing from the all, however they're about the best I can do here in such a visual chart.

So if the third chart comes to pass to a greater degree, then the rallies from here on will be sharper, bigger, more fearful for the bears. I think we are already seeing a little progress in this direction. 

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Wed, Jan 22, 2014 - 8:09am
Offline
-
Dublin
Ireland
Joined: Jan 20, 2013
3661
24465

I should add, if you are

I should add, if you are going just by analogs, the first chart looks the most symmetrically similar. But that is because it is the 1998 bear. The reason I chose that one to illustrate what might happen last year was that I was looking at deflation for a while, with bond market protections by central banks. The other gold bears can all be used in an analog fashion, but some are more inflationary gold bears, some come after a rise which followed decades of sideways base building, and this time does not (to me) seem to be similar in that way.

There is a gold bear in the late 1940s after WWII which also looks good.

Here it a link to the excellent ChartsRUs website:

https://www.chartsrus.com/index.php

and their 1950-55 gold bear chart (not mine):

Basically, a similar looking bear, with a base building period after, before rising again to new highs. Martin Armstrong has (I think) made references to that gold bear in the past.

The underlying reasons are similar, huge national debts, financial repression, etc.

Please also note the smaller gold bear on that chart at 1945-1946. It came after a sharp gold bear which has a resemblance to the 2008-9 gold pullback. There was no lengthy base building process because the underlying bull trend was still in place. That would be the equivalent of the bullish variant in my third chart above, the one with the EW count in blue. It equates to a 68 year cycle, rolling over again this year. 68 years = 2 x 34 year bond cycles, so bonds are synchronized too after a fashion.

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Wed, Jan 22, 2014 - 10:54am
foscotanner
Offline
-
UK
Joined: Aug 28, 2012
554
1681

recent trends

Should recent trends continue, then the price of metals should rise Friday beginning at some point tomorrow. Outside danger of rise starting today but tomorrow most likely.

Wed, Jan 22, 2014 - 10:59am (Reply to #4681)
redwood
Offline
Joined: Aug 9, 2011
5309
10895

Thanks fosco, thinking the

Thanks fosco, thinking the same thing. Always good to hear another opinion.

Wed, Jan 22, 2014 - 11:08am
Offline
-
Dublin
Ireland
Joined: Jan 20, 2013
3661
24465

Weekly SLV

Did anybody, when reading the above post, add 68 years to the 1948 high? smiley

~~~~~~~~~~~~~~~

Here is weekly SLV:

The daily chart looks less clear by the way, the TA in me says one more (daily) downswing still based on it. However, on this weekly chart of SLV the harmonic projection still fits evolving weekly price movement nicely.

Dates are for the week, not for the day. Assuming the projection keeps holding, if it doesn't get some height in soon, that downswing into June could break recent lows, (and stops). So price gains of size during the next 4 weeks are very important.

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Wed, Jan 22, 2014 - 11:45am (Reply to #4682)
foscotanner
Offline
-
UK
Joined: Aug 28, 2012
554
1681

this week

my thinking on the outside risk of things starting today revolve around the expectation that Friday will rise and tomorrow could see start. Normally the buyers show up a little earlier to get ahead of the curve in each instance of the trend.....

Wed, Jan 22, 2014 - 12:23pm (Reply to #4683)
foscotanner
Offline
-
UK
Joined: Aug 28, 2012
554
1681

Argentus

 So price gains of size during the next 4 weeks are very important.........

Sounds like a good RNP video. What do you think is required....... Where will the resistance be...... What would be warning signs it will not happen...... Implications?

Wed, Jan 22, 2014 - 1:29pm (Reply to #4685)
Offline
-
Dublin
Ireland
Joined: Jan 20, 2013
3661
24465

I'll see what I can do on

I'll see what I can do on that in the next hour or two.

I'm also working on FTSE. The expected bear cycle downtrend did swing one down, but at 2nd swing has now rallied into an inversion point, could flip causing third swing to possibly be a bullish one. So this is a big week, if it gets through this week and holds, it sets itself up until a late May high (that's from memory not precise).

I'm also working on a 4 min-5 min timeframe Eurostoxx trading system. The hours and days are flying by! That's why such variation in times of my posting here last few days. 

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Wed, Jan 22, 2014 - 1:41pm (Reply to #4684)
redwood
Offline
Joined: Aug 9, 2011
5309
10895

I think buyers are already

I think buyers are already showing up. If gold holds above 1240 this afternoon, it should be a strong close. WS.

Thu, Jan 23, 2014 - 5:27am (Reply to #4687)
foscotanner
Offline
-
UK
Joined: Aug 28, 2012
554
1681

weekly

There has to be a strong chance that we have now seen the last dip (argentus comment re one more swing down) overnight. I think low on gold was around 1231.

Hopefully low in for week. Today should see nice rise and then momentum spills over into tomorrow for strong weekly close......

Thu, Jan 23, 2014 - 7:15am (Reply to #4688)
foscotanner
Offline
-
UK
Joined: Aug 28, 2012
554
1681

Armstrong observation

Did anyone make any sense out of Armstrongs Gold confusion / clarification messages over the past week?

I can only go by what i see. When i look at my spot gold prices, i have 1180 as low with dec being a retest at 1182.

Trying to calculate a derived spot price from a future price to give an interest free price seems a bit dodgy when in this modern age - there is a spot price and a futures price.

The spot price is buyable on exchanges, the physical is based on it.

It sort of feels a bit as if he is starting to get worried that the bottom is in, whether it is June or December and that he is trying to justify his analysis...

His suggestion that there is more than one way to read the cyclical turn point as a result of his derived numbers are quite poor. Maybe i just do not understand his language.

Thu, Jan 23, 2014 - 7:22am
It's a mystery
Offline
Joined: Feb 19, 2013
610
2892

Not what I want to see but here's what has happened

Gandhi from the ruling party has asked that the tariffs on gold go away more or less. Gee, elections only 4 months away.

#INDIA'S #GANDHI SEEKS IMPORT DUTY REDUCTION ON #GOLD - @CNBC

The other is of course our driver which is the dollar yen. Is it coincidence that physical is almost nowhere at these prices and Japan sounds somewhat hawkish causing the $/yen to dive. Tough for me to say but I keep waiting for the divergence where gold rallies irrespective of $/yen.

Thu, Jan 23, 2014 - 7:47am (Reply to #4690)
foscotanner
Offline
-
UK
Joined: Aug 28, 2012
554
1681

$/yen & miners

i wonder if the $/yen will be the last divergence to fall....

when i looked at the miners yesterday - i thought oh gosh. that was not pretty. but actually the action was okay. If i look at PVG.TO as an example. Yesterday saw the back test on the daily 200ma which was broken and exceeded mon/tues. Some of the other stocks i watch have either back tested or set themselves up nicely for rise today. It could all be blown out of the water in 40 mins or so with crimex open and data but i think we are set up nicely here.

Become a gold member and subscribe to Turd's Vault

Contribute

Donate  Shop

The TFMR Silver Round
Buying Gold

Recent Comments

by Outback, 2 sec ago
by lakedweller2, 12 min 7 sec ago
by fluxplus, 21 min 25 sec ago
by Green Lantern, 28 min 2 sec ago
by Dr Jerome, 34 min 46 sec ago
randomness