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The charts and comments in my Blog (posted in Eastern Time) represent my technical analysis and observations of a variety of markets...
*World Indices *U.S. Indices *Futures *U.S. Equities & Sectors *ETFs *Commodities *Forex
...an expanded version of the "Observations" section in my private Daily Trading Journal.

N.B. to my readers: Although I stopped trading in July 2013, I still take a peek at the markets now and then and post the occasional article here on my Blog.

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Happy Easter!
"Be yourself; everyone else is already taken." -- Oscar Wilde

Saturday, 5 April 2014

The "FROTH" Awaits...

Since my last post of March 1st, the ES has made a new high, after experiencing a tremendous amount of volatility, as shown on the following Daily chart.

You can see that price nearly reached a 100% Fibonacci Extension level on Thursday, before declining on Friday. This extension was measured from the 2012 lows. For the most part, price has remained within the lower half of its channel from those lows.

Any further price movement above the 100% extension level would bring it into, what I've dubbed, the "FROTH" area, and would, potentially, be subject to even greater volatile price moves than we've seen since the lows of 2012. I've projected (on the ES) what, theoretically, could take place by September (albeit that would happen within the typical "Sell-in-May" Spring/Summer trading period),, if we see large-volume buying occur in its corresponding SPX large-cap index.


We may track the relative movement and rotation of stocks from one index into another by watching the percentage movements of the 5 Major Indices, namely, the Dow 30, S&P 500, Nasdaq 100, Russell 2000, and the S&P 100 on one Comparison chart, as shown on the following Daily chart.

You can see that, from the 2011 lows, the Russell 2000 index has made the most gains on a percentage basis, followed by the Nasdaq 100, S&P 500, S&P 100, and the Dow 30.

Should we see the spread begin to narrow, with more money funneled out of the small-cap stocks (and/or possibly Tech stocks) and into the larger-cap stocks, I will assume that there is still a general buying bias in the markets. However, if we see all 5 indices begin to decline on accelerating downward momentum, then the markets could be in for a major correction.


You can see from the following Daily charts of these 5 Major Indices, just how much they've gained from their 2011 lows. All of them are well above a 100% External Fibonacci level since then. However, the buying momentum has begun to wane, perhaps signalling a reluctance or insincerity on the part of traders/investors. In fact, the Momentum indicator has fallen below the zero level on the Nasdaq 100 and Russell 2000 and is close to zero on the S&P 500 and S&P 100.

By the way, the S&P 100 has recently made an all-time closing high, but not yet an intraday high. We may see evidence of money flowing into that index sooner rather than later, if market participants begin a rotation into large-cap stocks.






The last chart I'll show is a Daily ratio chart of the SPX:VIX. There is still room within its channel from the 2011 lows for further gains to be made in the SPX. I'd watch to see if the Momentum indicator falls and remains below the zero level as one gauge of possible further weakness to come.


SUMMARY

So, we may either see all major markets continue their volatile intraday swings until they break and hold above their recent highs, we may see one or more index become weaker than the others due to a rotation of buying, or we may see a general market correction. The above charts will tell the tale in due course. We may not have seen a general market top yet, as conditions don't appear to be particularly "frothy" or parabolic yet, but, who knows?

In any event, I believe that more volatility is sure to be the name of the game in the coming weeks/months.

Best of luck in the markets for the coming week!

Saturday, 1 March 2014

Big Sustained Volumes Now Needed

According to the following 4-Hour charts of the YM, ES, NQ, TF & NKD, we'll need to see big sustained volumes enter to push and hold these markets over their resistance levels (on the YM, TF &  NKD) and keep them above their resistance levels (on the ES & NQ).

As you can see from their respective Volume Profiles along the right-hand side of the charts, volumes have been steadily decreasing on this last major leg up. Just how much new money is committed in this latest rally and will it be sufficient to fend off any major profit-taking that may occur and still keep prices elevated at or above their current levels?






The following Daily ratio chart of the SPX:VIX tells me that although the ES has made a new all-time high on its price chart, the conviction buying is not evident on this ratio chart, as no new high has been made there...echoing the lack of conviction depicted on the Volume Profile.


Meanwhile, Oil continues to push higher, as shown on the following Weekly chart and has reached one resistance point...its upper Bollinger Band...but still remains below its next Fibonacci retracement level of 106.30, where there is also a confluence of resistance on its Volume Profile, as shown on the following 4-Hour chart.



The following Daily ratio chart of WTIC:SPX shows a higher high has recently been made, indicating that Oil has been slightly stronger than the SPX lately...look for this to continue if we see profit-taking enter the SPX and for the Momentum indicator to drop below the zero level on the SPX:VIX ratio chart noted above. Near-term support on this WTIC:SPX ratio sits around its 50 MA (currently at 0.054), while near-term resistance lies at its 200 MA (currently at 0.058), followed by price resistance at 0.060.


SUMMARY

The foregoing comments are, basically, in line with what I reported in my last post on February 16th. If tensions continue to mount between Russia and the Ukraine, we may see volatility begin to elevate in the coming week(s) in, both, the Major Indices and Oil. The question is, which will the markets favour in that instance?

Sunday, 16 February 2014

Valentine Review

Here are a few thoughts and charts of several markets that may be worth monitoring over the coming days and weeks to gauge potential market strength, sentiment and direction...

The first charts are Daily charts of the YM, ES, NQ, TF, & NKD.

You can see that 3400 is an important level for the NQ to hold on any future decline that may lie ahead. As well, the TF will have to break through and hold above some resistance at 1150 to re-enter its major rising channel. The ES is nearing an all-time high, while the YM has a bit further to go yet in that regard. Volumes have been much higher lately.

The NKD will have to hold above 14000, lest it be the subject of a further major correction (as confirmed on the next Weekly chart of the NKD, and as I mentioned in my post of January 2, 2014)...one that may bear a close watch to see if such a scenario also drags the US futures indices down, as well, along with the next Weekly chart of the USD/JPY forex pair...a drop and hold below 101.00 on this pair would suggest further weakness ahead).




Each candle on the following chart of the EEM (Emerging Markets EFT) represents 3 days. The current candle began last Thursday and will close this Tuesday. It has approached a major confluence of resistance at a double mid-point of two regression channels around the 40.00 level. There have recently been extremely high volumes, signalling a potential large move in the making, one way or the other. A rally and hold above the 42.00 level could signal further strength ahead, while a failure to gain a solid foothold above 40.00 could signal great weakness ahead.


The following Weekly chart of the EUFN (European Financials ETF) shows that this ETF has been climbing along a rising 50% Fibonacci fanline since April of 2013 and is approaching a recent all-time high. A failure to continue rising at this steep pace around this fanline could signal that the steam has run out of this move and that buyers are taking profits. High volumes over the past several weeks suggests that a large move may be imminent, one way or the other.


I've written several posts recently concerning ratio charts of the SPX:VIX. The following updated Daily ratio chart of the SPX:VIX shows a "crack-and-snap" market action below and back above major support around the 100.00 level. A failure of this ratio to hold above the immediate shorter-term 130.00 support level could signal a retest of 85.00, and a failure to hold this next major support level could signal a much larger correction ahead for the SPX and a re-ignition of the momentum of fear to accelerate to or surpass all-time highs, which was nearly the case a week and a half ago.


The following Weekly chart of Oil shows that price is hovering around a major resistance/support level of 100.00. It has quite a distance to rally to around the 115.00 level before it even re-enters the major rising channel that began in 2009. Watch for any further rallies on higher volumes to, potentially, push price up to such a level.

The next Daily ratio chart of WTIC:SPX shows that a rally and hold above 0.0550, with a subsequent rise to test the 200 MA at 0.0581, may confirm the beginnings of such a rally in Oil, a decline in the SPX, and possibly a rise to 0.0700 or higher on this ratio chart.



All-in-all, we may see quite a volatile year ahead for the major indices with some wild swings in both directions. The SPX:VIX ratio chart should be a good general indicator as to whether fear is overtaking or overshadowing any buying in the SPX...a drop in the Momentum indicator on my chart will indicate that fear is outpacing the buying. At the moment, the following 60-day 60-minute ratio chart of the SPX:VIX shows that fear has been outpacing the recent buying since February 7th.


Best of luck for the coming short week (Note: US and Canadian markets are closed due to their respective holidays on Monday).

Tuesday, 11 February 2014

5-10-30-Yr Treasuries

No charts to show (not on my main computer tonight), but if the 5-Yr, 10-Yr and 30-Yr Treasuries can rally and hold above their respective Daily 200 MA, then I think we could see some serious buying enter the bond markets, and, ultimately, see a bullish 50 MA crossover of the 200 MA...just my 2 cents' worth...

Sunday, 2 February 2014

Accelerating Fear and 10-Year Yields

Further to my post of January 27th, the Momentum indicator on the following 3 Daily ratio charts shows that fear has continued to accelerate in comparison with the SPX, RUT and NDX Indices, even though price hasn't yet broken and held below their major support levels.

A failure of these markets to hold and snap back at the current level would see a continued rise in momentum and could send them into a much deeper correction territory.




A failure of the following Daily ratio chart of TNX:SPX to rise and hold above what appears to be a fairly critical 0.015 major support level (and possible Head & Shoulders neckline), could send 10-Year Treasury Notes much higher in an investor "flight-to-safety" scenario, if the above 3 Major Indices fail to rally. If the Momentum indicator rises and holds above the zero level on this ratio chart, we may see some stability enter these indices...whereas, a break and hold below its last pivot low could spell trouble for these markets.


These are 4 charts worth monitoring over the coming days/weeks as one gauge of where (and how fast) investor money is flowing.