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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...
please read my full Disclaimer at this link.


...If the dots don't connect, gather more dots until they do...




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Tuesday, July 18, 2017

Gridlock in Washington and the Impact on Equity Markets

Gridlock in Washington (with the utter failure to pass any kind of new healthcare reform) is the theme, so far, in 2017...with Republicans unable to agree to support their party's latest bill, which is now completely dead, and Democrats simply obstructing everything in sight.

It looks like everyone is tired and unable to do what they were elected to do.

If everyone's tired, how will this failure affect the progress of any other political items that President Trump has on his agenda?

And how will this affect equity markets for the remainder of the year? The SPX has looked pretty tired since March.

It's anyone's guess, I'd say...

Notwithstanding what I wrote on July 16th which describes new "BUY" signals in the SPX and the World Market Index, the last chart posted in that article (see Monthly chart of SPX below) shows that price is currently up against major resistance, formed by a long-term Fibonacci fanline (40%) and dating back to 1990, and is approaching an external Fibonacci retracement level of 200% at 2485 (taken from the highs of 2007 to the lows of 2009).

So, in the shorter term, we could see a "bull trap" occur prior to a decline in equity markets.

Combine this with today's announced failure of healthcare reform and the Fed's gradual removal of the low-rate punch bowl, and you can take your pick as to short-term market direction -- up, down, or sideways -- mixed signals in equity markets.

Monday, July 17, 2017

Where's the Froth?

Today, it's in the Chinese markets.

We'll see if today's selloff continues, in light of my comments of June 29th, and whether it eventually negatively affects other world markets.

Source: http://www.cnbc.com/world-markets-heat-map/

Source: http://www.indexq.org/

Sunday, July 16, 2017

World Market "Buy" Signal Triggered

A new "BUY" signal has just triggered on the World Market Index. I last wrote about this index on June 29th.

Price punched through 1900 (which will now need to hold as major support), the RSI has broken its latest downtrend and is back above 50, and there are new bullish crossovers on the MACD and PMO indicators, as shown on the following Daily chart.

While the SPX has broken above near-term resistance of 2450 and closed at another all-time high, it's a nano-breath away from also triggering a new "BUY" signal.

If price remains above 2450, if the RSI remains above 50, if the recent bullish crossover holds on the MACD, and if we get a bullish crossover on the PMO (imminent), we'll see this trigger erupt, as shown on the Daily chart below.

The SPX:VIX ratio has also broken above near-term resistance of 250 and closed at a new all-time high, as shown on the Daily ratio chart below.

Inasmuch as the RSI has broken its downtrend and is above 50, and bullish crossovers have formed on the MACD and PMO indicators, this ratio is confirming that a new "BUY" signal has triggered on the SPX. However, to see this through to fruition, we'll need to see price remain above 250 and volatility remain at all-time lows.

The following 1-Year Daily chartgrid of the 9 Major Sectors shows that Industrials and Materials are leading the pack, followed closely by Technology, Health Care, Cyclicals and Financials.

Utilities and Consumer Staples have slumped the past couple of months and Energy has been in a major downtrend all year. I'd keep a close watch on these three Sectors to see if buyers begin to dip their toes into these anytime soon.

If so, and, if the other six Sectors can hold their own, we will, no doubt, see more new records set in the SPX, with buying continuing in the World Market Index (the Year-to-date graph below shows that 8 of the 9 Sectors have decent to healthy gains, so far this year, while Energy is at -12.05%).

* P.S. July 16th

If we get a bull run like we had in the 1990's, then the SPX could reach 2700 by the 2020 Presidential election, as forecast in my post of November 26, 2016.

A level of 2700 represents approximately the next major long-term Fibonacci extension level (1.618%), as shown on the following Monthly chart of the SPX.

However, price is currently up against major resistance, formed by a long-term Fibonacci fanline (40%) and dating back to 1990, as shown on the Monthly chart of SPX below, and is approaching an external Fibonacci retracement level of 200% at 2485 (taken from the highs of 2007 to the lows of 2009).

So, in the shorter term, we could see a "bull trap" occur prior to a decline in equity markets...keep a close watch on the above-referenced Major Sectors for further signals and any evidence of weakening.

Tuesday, July 11, 2017

Financial ETF Up Against Major Resistance

The following Monthly chart of XLF shows that current price is up against major long-term Fibonacci, channel and price resistance.

The Daily ratio chart below of XLF:SPX also shows that price is up against major short-term price resistance.

The year-to-date percentages-gained graph below shows that XLF has been holding its own, so far this year, compared with the other 8 Major Sectors.

We'll see if 25.00 can be overcome and held (to potentially propel it to 30.00, or higher), or whether traders get cold feet on this ETF in the near term.

Wednesday, July 05, 2017

The Fed and the SPX: Catalyst Fizzle

The minutes from the last Fed meeting, released a few minutes ago today and summarized as follows (courtesy of Nasdaq.com), present a mixed view of the economy...

So far, market reaction to this report has been muted and non-committal, as evidenced by the long tails on both the tops and bottoms of the candles of the following 5 minute intraday chart of the SPX.

This lack of commitment by traders is also prevalent in the day-to-day action since June, as shown on the following Daily chart, which is consistent with what I reported in my post of July 2nd (which presented an outlook for longer timeframes for this market).

So, if traders were looking for any type of catalyst from the Fed to move this market higher (or lower) in the short term, I'd say this report wasn't the ticket.

Sunday, July 02, 2017

SPX: Q2 2017 Market Wrap-Up

Each candle represents a period of one year on the following Yearly chart of the SPX.

So far, this year's candle is a bit less than half of 2016's trading range and the Momentum indicator is almost as high as it was in 2014 (this year's trading range is about 60% as high as 2014's).

What this tells me is that, on an annual basis, 2016 is fairly strong at this point and could perform well in the latter half of the year.

Each candle represents a period of one quarter on the following Quarterly chart of the SPX.

The trading range of this year's Q2 candle (which closed last Friday) is about 80% of Q1's range. While the Momentum indicator on this timeframe has been in a moderate downtrend since mid-2014, it rose in Q1 and has dropped a bit in Q2.

So, on a quarterly basis, I'd track the next candle to see whether momentum can surpass and hold beyond that achieved in Q1 and whether Q3's trading range exceeds that of Q2 to indicate firm bullish conviction (assuming that price continues to advance higher).

Each candle represents a period of one month on the following Monthly chart of the SPX.

The trading range of June's candle is about 72% of May's and is a "shooting star" (which is, generally, a bearish signal after a long run-up, such as we've seen since December 2016). Momentum has been flat after dropping in March this year.

However, June's close is higher than May's, so one candle does not necessarily indicate that a trend reversal is imminent. We'd need to see a lower close in July to assess the situation at that time on this monthly timeframe. But, although the close was higher, it was done so by traders with a tepid appetite for equities.

Each candle represents a period of one week on the following Weekly chart of the SPX.

Momentum has been falling since the end of January this year and a great deal of profit-taking has been occurring since March. At the same time, this index has been inching upwards to new highs in a roller-coaster manner.

The close of last week's candle was not lower than the close of the May 30th candle, so I would not call the candle formation, since then, a "tower top" reversal. I'm getting mixed signals as to short-term weekly trend, so am reluctant to forecast further weakness ahead, apart from saying that buyers have been unenthusiastic and non-committal, not only in June, but also in May, because of the extensive amount of consolidation occurring during those months.

Keep an eye on momentum over the coming weeks to see it continues its recent rally on further price advancements, as a confirmation of strengthening buying conviction. Otherwise, we could see a summer selloff ensue, as I described in my post of June 29th.

Thursday, June 29, 2017

Volatility Heats Up...Summer Selloff Ahead?

The following three ratio charts compare the strength of the NDX, RUT, and SPX with their respective Volatility Index.

The following NDX:VXN ratio chart shows that NDX is sitting in a precarious spot at a rising trendline, but well below what is now major resistance. All 3 technical indicators are still in "SELL" mode, as rising volatility outstrips price performance.

Compare that to where the RUT:RVX ratio is sitting...just above major support, but all three technical indicators are signalling weakness in the RUT, with the potential of rising volatility. We'll see if Small Caps get hit by sellers next.

Similarly, the SPX:VIX ratio is sitting just above major support, but all three technical indicators are signalling weakness in the SPX, also with the potential of rising volatility. We'll see how Large Cap stocks fare over the coming days/weeks.

Although volatility is much higher on the NDX at the moment (no doubt driven by the recent selling in the Tech FAANG stocks), it's still outperforming Small Cap and Large Cap stocks in percentages gained year-to-date, as shown on the comparison chart below. However, if it breaks and holds below the rising trendline mentioned above, we could see quite a selling domino effect occur in all equities.

The last chart grid shows that all five FAANG stocks are immersed in their respective consolidation zones, but have fallen to either their 50-day moving average or price support levels. If these break and hold below support, this could, indeed, confirm overall weakness in equities and begin a summer selloff in earnest.

World Market Index: 150-Point Gain Since March

* See UPDATE below...

When I wrote my article on March 10th, the World Market Index was trading around the 1750 level. Today (Wednesday) it closed just shy of 1900, where it faces the next resistance hurdle, as shown on the following Daily chart.

Inasmuch as the RSI is above the 50 level, I'd watch for a bullish crossover to occur on the MACD and PMO indicators to confirm that any breakout above 1900 has enough support to reach the next resistance target of 1950, or even 2000.

Failure to regain and hold above 1900 could negatively impact U.S. equities.

As can be noted on the Daily chart of the SPX below, price is currently stuck in a tight trading range between 2425 and 2450.

Any break and sustained hold above 2450 should be confirmed by the formation of new bullish crossovers on the MACD and PMO indicators, as well as the RSI holding above 50.

So, which major world indices are lagging in terms of percentages gained year-to-date?

The following graphs are presented without individual comment, as a glance at each will show those laggards, the most notable being Brazil, Russia, China, Canada, and Australia.

I've included a graph of the major commodities, and WTIC Oil and Brent Crude Oil are -16.72% and -16.09% year-to-date, respectively.

As I mentioned in my post of June 22nd, it's worthwhile watching Canada's TSX Index, along with WTIC Oil, to see if their subsequent rallies above 15,250 and 43.50, respectively, are now sustainable.

We'll see whether the indices that have gained the most, so far, this year can hold onto those gains, and whether the five laggards mentioned above are able to gain support to push the World Market Index above 1900 and propel the SPX to new all-time highs.

* UPDATE Thursday, June 29 @ 2:00 pm ET:

The following table of World Market Indices shows that traders favoured Asian markets overnight (Wednesday night) and have plundered European and North American markets today.

We'll see if this selloff continues, and whether it includes Asian markets, by Friday's close...which also marks the close of Q2 of 2017.

Source: http://www.indexq.org/

Thursday, June 22, 2017

Canada's TSX Index Teeters at Major Support/Restistance

After reaching all-time highs earlier this year, Canada's TSX Index has dropped to around the 15,250 level, as shown on the following Monthly chart...an important long-term major support/resistance level.

The latest drop has been halted by a very high volume spike around the 200-day moving average, shown on the Daily chart below.

This index has, historically, been tied to the price of crude oil, as can be seen on the graph below, although it didn't experience the same dramatic drop as oil did in 2014.

So, as I mentioned in my post of  June 21, if oil can regain and hold 43.50, and if the recent high-volume spike on the TSX was an indication of capitulation, we may see a rally ensue in both of these markets. Otherwise, weakness in one may drag the other down, as well...two charts worth watching in the short term.

Wednesday, June 21, 2017

Crude Oil Down 60% Since Mid-June 2014

Crude Oil has fallen a massive 60% since mid-June 2014, as shown on the following graph.

Price today (Wednesday) fell below 43.50, which I identified in my post of June 3rd as a major support level, and closed at 42.53, as shown on the Daily chart below.

Increasing volumes are either signalling continued weakness ahead, or some buying stepping in between this level and 50.00. Since another bearish moving average Death Cross has formed recently, the first scenario may be favoured in the near term.

Unless 43.50 is regained and held, we may very well see a retest of 35.00, or lower. In that case, I'd watch for any extreme volume spikes to signal a potential capitulation and price reversal.

Sunday, June 18, 2017

SPX: 100-Point Rally Ahead?

From the Monthly chart below of the S&P 500 Index (SPX), we could see it rally another 100 points, or so, to around 2525, before it stalls or a meaningful pullback occurs.

That price level would surpass a 200% external Fibonacci level at 2473.34 and intersect with a +1 standard deviation of a long-term regression channel from the 2009 lows.

June's high-wave candle on the following Monthly ratio chart of SPX:VIX shows that volatility has been creeping in, as equity traders become more cautious on the upside.

However, the Momentum indicator is at an all-time high on this timeframe, signalling that bulls remain in charge, in spite of a slight rise in volatility. As such, this ratio chart is worth monitoring, if the SPX continues its rally to new highs. Depending on how June's candle closes, along with the level of the Momentum indicator at that time, we may be able to determine future strength or weakness of the SPX.

Stay tuned...