Riding The Gravy Train

Beating the market is fun and profitable. This is how we do it.

Tuesday, April 02, 2013

Key Trends Soon To Be Broken: Russell 2000 - Small Caps Index, DJT - Dow Jones Transportation Average, Silver

Yesterday we warned that the Russell 2000 Small Caps was going to break down soon.  Soon may be "now". 

Yesterday large caps were essentially flat while small caps dropped materially.  Today large caps are up big while small caps are down again.  Here's a 6-month look at it:



And a 5-year chart.  It is reasonable to expect the index to eventually drop to at least one of the uptrends shown in green:




The NASDAQ should also soon tumble:



And rally days are likely coming to an end for large caps too, as the imminent breakdown in the Dow Jones Transports suggests.  The DJIA is up big today, while the Transports are dropping significantly:


Apple is down 40% in six months, and can't bounce even today when most indexes are way up.  Here's how the former darling stock of the world looks now:



We were virtually alone in warning it was "hypervalued" last year when "expert" analysts were climbing over each other to take credit for predictions that it'd soon hit $1000, and we remain convinced it'll go much lower in due time.  Admittedly we were bearish very early, but better than very late.

Silver continues to break down badly.  We remain extremely bearish on silver long-term, as we've been for a couple of years.  Please reconsider these most recent warnings:  "Silver Study" , "Silver Update" and "Look Out Below!".

For what it's worth, we were originally very bullish on silver back in 2006 at $11.50.  The trick is not just getting in ahead of the herd, but getting out before the lemmings carry you with them over the cliff.  Those who are currently rabid precious metals, commodities and equities bulls would do well to notice that they're not just running with the bulls, they're running with the lemmings. 

That said, here's an updated chart of ZSL, the ProShares UltraShort Silver ETF, showing its ongoing rally.  Notice the black line marking the upper end of the channel suggesting a bounce in silver, thus a drop in ZSL, may happen soon.  Disclaimer, we're long ZSL for the long term:







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