Knights, its been a bit of a frenzy. Yesterday Tokyo today Vancouver. Just arrived for the Sprott conference. Try to put out a recap over the weekend. But for now , I am grasping at straws and talking my book. Was that a super pop and drop? A phase III immediate decent into hell? Maybe, but I wouldn’t bet on it….well maybe with your money.
Personally, I bought major at the bottom Friday, so I am still in the money, but not by much. Although the Franco position was a port in the storm today.
I find myself haunted by my previous writings. Recall my characterization of the psychology of Phase III. No one gets out alive… It’s no longer about hope its about liquidation. Embarrassment is no longer an issue, its now about survival…. people who saved for a rainy day now sell, because its raining. So after being the author of these words, how can I be long expecting a bounce. I don’t know, maybe for the same reasons that people get married for the third time, the suspension of reality for hope.
I am not delusional, as I refer to the charts. No doubt we go lower here, I am just saying we are entitled a bounce from these extended levels. I think the final washout of phase III will entail comical selling. The type of selling we would likely have if we break Fridays lows. I just don’t think now is the time. Maybe today was just the test of Fridays lows. That’s my bet at this point. That is what today was all about. If we violate it, I am outa here.
So lets look at a few charts.
Volume: Is this what you call chopped liver?
This level of volume simply has to mean something very significant. You have all heard of a selling climax no doubt. Well this is what one looks like….yeah textbook. These just don’t come around every month or so. Golly gee if I wasn’t such a bear I might even try to make the argument that this was the end of the bear market. This chart is the definition of capitulation.
That was a weekly chart, now lets look at the daily. Since the fireworks began in this bear market (post POR) the two highest volume days came in this bear market last week. The highest down volume and the highest up volume. One must assign some kind of meaning to this. Again one must suspect some version of a selling climax (capitulation) and an upside reversal on the highest up volume yet in history…. again, just chopped liver?
Let’s now move onto the RSi. You will note I have expanded the scale so it is easier to see what this chart is telling us. RSI performs the function of limiting a move. On the upside when RSI reaches 90 its just not likely the market can keep extending its upward projection. Well its the same on the downside. We hit RSI 8 on Friday and that is simply extroidinary. That level limits the move! One can see on the chart that it is now acting like Notre Dames four horseman. Just not going to let you through.
Now onto the grasping at straws department. Given a certain amount of artistic license I am redrawing the line that Rambus assigned to the HUI. Maybe a different alternative for a BT may come in around HUI 130. We are just going to have to let the market draw the lines for us in the days ahead