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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...
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Events

UPCOMING (MAJOR) U.S. ECONOMIC EVENTS...
* Tues. Dec. 12 ~ 2-day FOMC Meeting Begins
* Wed. Dec. 13 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts + @ 2:30 pm ET ~ Fed Chair Press Conference
* Mon. Dec. 25 ~ U.S. Markets closed for Christmas Day holiday
* Mon. Jan. 1 ~ U.S. Markets closed for New Year's Day holiday
* Wed. Jan 3 @ 2:00 pm ET ~ FOMC Meeting Minutes
* Fri. Jan. 5 @ 8:30 am ET ~ Employment Data
* Wed. Jan. 17 @ 2:00 pm ET ~ Beige Book Report
* Wed. Jan. 31 @ 2:00 pm ET ~ FOMC Announcement
*** Click here for link to Economic Calendars for all upcoming events



Saturday, December 09, 2017

BITCOIN: Volatility on Steroids

* See UPDATES below...

Bitcoin lost nearly 25% of its value in the past 48 hours (a drop of 4400 points)...

BITCOIN 2-Day Hourly chart

...after going hyper-parabolic this year...now awaiting the real fireworks when Bitcoin Futures start trading on Monday.

How can anyone place a serious value on this crypto (definition: hidden or secret) currency?

BITCOIN Monthly chart

* UPDATE December 13...

(NB: Comment made at her last Fed Chair Press Conference Dec. 13, 2017)

Volatility is evident in wide swings made in just a 24-hour period, as shown on this 5-minute comparison chart of Bitcoin and CBOE Bitcoin Futures.


* UPDATE December 14...

Bank of Canada Governor Stephen Poloz

Wednesday, December 06, 2017

Potential Reversal of S&P 500 E-mini Futures Index Ahead

FYI: The appearance of this bearish "evening star" candle formation on the S&P 500 E-mini Futures Index (ES) is warning of potential lower prices ahead, as shown on the Daily chart below...


Saturday, December 02, 2017

Market Forecast for 2018: More Volatility & Political Uncertainty

In last year's market outlook for 2017, I anticipated a rise of around 11% in U.S. equities, in general, to place the S&P 500 Index at just above the 2400 level by the end of the year (my post was written on December 1, 2016, so my calculations and forecast hadn't incorporated a further 80-point rally that occurred during that month until year-end).

In my post of November 26, 2016, I was projecting a rally in the SPX to around 2700 by the next U.S. Presidential election in 2020. Markets have certainly been much more robust this year than I anticipated, as this level has almost been hit already. It rallied to an all-time high of 2657.74 on November 30 and closed on December 1 at 2642.22.

At the time of writing this post on December 2, you will see that, of the 9 Major Indices, the S&P 500 Index has gained 18.02% year-to-date, as shown on the first graph below, while the Nasdaq 100 and Nasdaq Composite Indices have gained the most, and the Russell 2000 and Dow Transport Indices the least.


With regard to the 9 Major Sectors, Technology has gained the most year-to-date at 32.84%, with six others at around 20%. Consumer Staples gained 10.77%, while Energy has far underperformed at -5.06%.


All of these Indices and Sectors are currently trading, either above, or well above, their 50-day moving averages, as shown on the following 1-year daily charts.



Without repeating myself with respect to three articles that I posted recently, I'd just direct your attention to the conclusions that I made here regarding the Tech Sector (XLK), Consumer Cyclicals (XLY) and Consumer Staples (XLP) in connection with strengthening/weakening consumer spending into year-end and next year, as well as effects from potential upcoming Fed interest rate hike(s).

Additionally, I'd re-iterate the comments I made here regarding world money flow in the U.S. Financials, versus European and Chinese Financials and their respective major resistance levels.

Finally, please note the comments I made here regarding the (actual past and potential future) effects of political legal machinations and political legislative drama on the SPX and VIX, and their price/technical levels to monitor in the week(s) ahead.

CONCLUSIONS:

I understand that tax cuts contained in the Senate tax bill (that was just passed on December 2) don't begin until 2019. If this time frame is agreed to by the House and ratified by the entire Congress by the end of this year, we may see markets take some hefty profits in early 2018, in protest, as, no doubt, they were expecting them to take effect in 2018, judging by this year's hot market.

If this scenario were to happen and, taking into consideration the uncertainty that next year's mid-term elections will bring, coupled with likely interest rate hikes, I'd project that we'll likely see volatility rise in 2018 and the SPX (and the other 8 Major Indices) gain only about half of what they gained this year. This would mean an approximate increase of 10% for the SPX. I expect Technology to remain fairly strong, and Small-Caps may struggle more than Big-Caps. Nonetheless, I anticipate that the U.S. markets will continue to outperform other World markets (keep an eye on the performance of their Financials, as I noted).

With respect to the S&P 500, Nasdaq 100, and Russell 2000 Indices, I'd watch to see whether the following major support levels can be held on the following Index/Volatility ratios (note their corresponding Monthly ratio charts below)...a breach of those important levels could produce the sell-off that I mentioned above:
  • SPX:VIX Ratio -- 200
  • NDX:VXN Ratio -- 350
  • RUT:RVX Ratio -- 80




Good luck next year!

Markets Roiled by Political Legal & Legislative Drama

U.S. equity markets experienced a volatile intraday trading session on Friday, as news unfolded throughout the day with respect to the ongoing DOJ Special Counsel legal investigation of the Trump administration and its potential involvement with Russian interference in the 2016 election, as well as to discussions and a final vote on tax reform/cuts in the Senate, as shown on the Daily charts below of the SPX and VIX.



With regard to which one most influences the markets -- political legal proceedings versus political legislative accomplishments -- Friday's action is indicative of a tug-of-war environment.

If Friday's close presents any kind of snapshot of which one holds the most sway among market participants, it would seem that, as it stands right now, the scales are slightly tipped in favour of political legal machinations, based on a lower close of the SPX and a higher close of the VIX.

Volatility has been increasing since October 25, as evidenced by the expanding-triangle pattern forming on the VIX. However, with major resistance sitting around the 12.00 level, it will be important that price break and hold above that level as a potential signal that weakness is creeping in on the SPX. If it remains below that price, we could very well see buying return next week, particularly, since the Senate passed its tax bill after midnight, Friday.

However, the SPX is mashed up against major resistance in the form of an external Fibonacci retracement level, as shown on the Monthly chart below. It's also trading above a +2 standard deviation level of a long-term uptrending Regression Channel (formerly major resistance/now major support around 2600). Such a channel breakout has not occurred since it began at its lows of 2009, so any further buying that occurs at/above these levels would be unusual and, potentially, lead to over-exuberant parabolic spikes.


I last wrote about the SPX:VIX ratio in my post of November 21.

Price on this ratio had briefly spiked above 280 (on November 3) to the upper edge of a long-term uptrending (green) channel, before it plummeted below that channel on Friday (to a low of 181.79) and spiked back up to close at 231.16, as shown on the Monthly ratio chart below. This represents a 100-point swing in the past four weeks (and a 65.41-point one-day swing on Friday), confirming that volatility is, indeed, on the rise (as social chaos continues to churn and expand, as well).

I'll re-iterate that it will be important for price on this ratio to reach and hold above the 280 major resistance level, and for the SPX to hold above its 2600 major support level, in support of a convincing argument that favours the sustained entry of the SPX into a new bull-market phase.

Otherwise, if price drops and holds below major support at 200, expect volatility to increase and weakness to set in on the SPX.


In conclusion, we'll see what happens with equities after the House has finished its debate on tax reform/cuts, which is scheduled to begin on Monday, and whether the ongoing political legal drama escalates/expands in the week(s) ahead.


Thursday, November 30, 2017

International Financial ETFs Versus 3 Major World Indices

It appears that several international Financial ETFs have, generally, performed well over the past couple of years and are, either approaching major resistance, or have already reached it, when compared with their respective country's Major Index on a ratio basis.

The first is the XLF:$SPX ratio, as shown on the 5-Year Daily ratio chart below.


The second is the EUFN:$STOX50 ratio, as shown on the 5-Year Daily ratio chart below.


The last is the GXC:$SSEC ratio, as shown on the 5-Year Daily ratio chart below.


The following graph shows the percentages gained by the 3 Major Indices and 3 ETFs during the past 5 years.


The next graph shows the percentages gained by the 3 Major Indices and 3 ETFs year-to-date.


It's evident that, during the 5-year period, the XLF has outperformed its European and Chinese Financial ETFs, on a percentage-gained basis. The $SPX has, not only outperformed the other 2 Major Indices, but also their 2 ETFs.

On a year-to-date percentage basis, China's ETF has far outpaced the other 2 ETFs. The $SPX has outperformed the other 2 Major Indices, but has lagged behind all 3 ETFs, especially China's ETF.

From this comparison, you can see that world money flow, while slowing in the U.S. Financial ETF this year, has accelerated, relatively-speaking, in the European and (especially) Chinese Financial ETFs.

Inasmuch as price levels on all three ratios are at or near major resistance, we'll see which market traders favour going forward into year end and 2018. These charts are worth monitoring to gauge the strength or weakness of these countries' financials. We may see a rotation of funds out of China's financial markets (and, possibly, out of Europe if full transparency is made available as to their banks' true vulnerability regarding accurate stress tests of capital requirements) and into the U.S., for example, as traders anticipate several interest rate hikes by the Fed (one this December and 2 or 3 next year).

Sunday, November 26, 2017

Bitcoin Moonshot

* See UPDATES below...

Presented without comment (link to prior posts)...


* UPDATE November 27...

Year-to-date percentage gains/losses are shown below for major currencies compared with Bitcoin (+918.37%) (the USD is -9.25%, so far, this year)...


...as it makes its way to 10,000 tonight...


* UPDATE November 28...

Moon landing achieved...10,000 tagged tonight, as shown on the Daily chart below...


So, where does it go from here...it's anybody's guess, but major support lies half-way down between 3000 - 5000, as shown on the Monthly chart below.


* UPDATE November 30...

Two consecutive "high-wave" candles have formed during the past two days, as shown on the Daily chart below. Price is down a bit on tonight's (current) candle (as at 11:05 pm ET).

According to its definition by candlestick guru, Steve Nison, one high-wave candle may signal a change in Bitcoin's upward direction...we'll see whether these two play out in such a scenario. I would have preferred if the second one had closed lower than the first one as a, potential, confirmation of trend reversal. The fact that it closed higher, may prove to be a false alert.

One thing's certain...volatility is increasing on a daily basis. Wednesday's trading range was 2,426.10 points as it spiked to an all-time high of 11,427.20, then plunged to a low of 9001.10  (a 5-hour drop of 21.24%).


Source: Steve Nison of Candlecharts.com