Stock and ETFs - COF

Capital One popped up on Friday due to the "better than expected" earning report. The entire daily candlestick jumped out of 2 standard deviation Bollinger Bands. The same situations happened twice, but not very bull friendly based on the chart, the two red circles.

Friday's price closed below 61.8% retracement, which is $40.66. Friday's intraday high reached upward trend line from May 2009, and it is the 4th time. Price has been cornered between two upward trend lines - something big is going to happen!

And also the negative divergences are forming on both MACD and RSI.

Dollar Story (3): Silver Triple Negative MACD Divergences ®©

Until early this week, as Dollar traded down to find its bottom, Silver had risen sharply into the resistance zone at $16 to $18 range. Investors became very excited about the prospects for Gold breakout a symmetrical triangle to new highs. The process became very overbought on Silver's daily RSI indicator shown in the chart. Traders seem to forget the pain when Silver declined 61% last year. I am not sure that Dollar has already bottomed out, but Silver's top seems already in.


I started to build short position this week as MACD cross down signal got confirmed. You can clearly notice a 15% to 20% decline after MACD cross down in early this year from 9-month daily chart. More important, as Silver price marched three higher highs from $14.45 to $15.78, and to 17.26, MACD just could not make a higher high at all. This is my favorite "Triple negative MACD divergences". Another negative technical indicator is that Silver's price is way ahead of its 50-day moving average.

From Elliott Wave perspective, Silver's wave pattern seems to be completed at 17.26 high with a three (W) (X) (Y) corrective waves: wave (W) ended at 15.78 with a clear ABC in it; (X) = 12.27 and (Y) finished at 17.26. It is not a text book perfect wave shape. But combining with above mentioned other technical indicators. I pulled the trigger!

BTW, just found out that there are only 4,880 results when I search "Triple negative MACD divergences" on Google. So I decided to trademark it. Here we go! :)

Triple negative MACD divergences ®© by Elliott Waver

Dollar Story (2): Bottom is Imminent

[update: first chart is updated version of the second one]
Dan just updated his count. haha...... did he read my blog?! :)
My primary count: the green (i)(ii)(iii)(iv) will be followed by a small green (v) to finish 5 of (C)
My alternative count: the pink (i)(ii)...... play out to lower target $74

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Let me use Daneric's $USD daily chart to show you why I am saying dollar's reversal is imminent. The primary black [2] correction wave has 3 intermediate subwaves, red (A), (B) and (C). Once intermediate wave (C) finishes, so does the primary wave [2], and then we will start a upside primary wave black [3].

We are in the final stage of minor 5 of (C), blue 5 in chart. The minor 4 is a symmetrical triangle, green [a]...[e]. I explained how to calculate targets for the symmetrical triangle breakout.

Conservative target price
= 78 - 0.66 * ([a] - [b]) = 78 - 0.66*4 = $75.36
Check my "Gold and US dollar" post for details

Today's low is $76.00, and we can easily reach $75.36 this week considering we had a gap down this morning on UUP (Dollar ETF), which opens a more down room for next few trading sessions.

My primary count:
Dollar is going to reach $75.36 target and maybe a little lower this week, or early next week, to finish minor 5 of (C), and then starts to go up. The major reasons for this count are: (1) we have seen 3% dollar bulls since last week, bears are too crowd; (2) minimum down target is met; (3) the minor wave 5 of (c) may be completed, or very close to end. You can count 5 minute impulsive waves down inside this minor 5 of (C) wave: start from green [e], you can see one black OHLC bar for minute wave [2] bounce up and 3 bars for minute wave [3] retrace up, where Dan has (ii) for his count.

My alternative count:
Minor 5 of (C) wave will decline lower to reach normal symmetrical triangle breakout target:

Target price = 78 - ([a] - [b]) = 78 - 4 = $74.00

You can see $74 is also a long term support price, green line in chart.

Conclusion: dollar's bottom is imminent with target range $74 - $75.50. Keep in mind bullish US dollar is not good for stock market.

Dollar Story (1): Gold and US Dollar

I agree with Kenny's count for Gold (ETF GLD). Gold breaks up a symmetrical triangle pattern, green [a] [b] [c] [d] [e] in chart.

Based on pattern expert Bulkowski's research: symmetrical triangle is one of the reliable patterns in stock market. The percentage meeting price target for up breakout is 66%.

Now let us calculate the target for this symmetrical triangle up breakout pattern:

Triangle Height = [b] - [a] = 96.97 - 84.92 = 12.05
Breakout price = ~ 94.50

The breakout price is the price when stock breaks up triangle's [b] [d] line, and in GLD case it is also the gap up price, making the breakup more impulsive. Now we can calculate the target price:

Target price = Breakout price + Triangle Height = 94.50 + 12.05 = 106.55

In Bulkowski's website, he also adjusts the target price by multiplying "percentage meeting price target", making the Adjusted Target Price more conservative:

Adjusted Target price
= Breakout price + Triangle Height * percentage meeting price target
= 94.50 + 12.05 * 66% = 102.45

Keep in mind, one share of GLD is 1/10 OZ of gold. So Target price for gold is $1065.50 and conservative target price is $1024.50. If you check gold price, you will find out that gold price reached $1024.20 on last Thursday, September 17, 2009, only $0.30 point shy of my conservative target price. Amazing, ha? Math works fine on stock market as well, right? At least for this case! :)

Will it go up to $1065.50? It may, if dollar has one more down leg, or it may not if dollar's bottom is already in. We will see soon.

I will update a dollar chart later this week. I am pretty sure dollar is at a critical turning point right now. I am not bearish dollar at all, at least at this moment.

Good Luck!!