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Welcome and thank you for visiting!

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.

Winter

Winter

Events

UPCOMING (MAJOR) ECONOMIC EVENTS...
* Tues. Dec. 13 ~ 2-day FOMC Meeting Begins
* Wed. Dec. 14 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts + @ 2:30 pm ET ~ Fed Chair Press Conference
* Fri. Dec. 23 @ 1:00 pm ET ~ NYSE early close for Christmas holiday
* Mon. Dec. 26 ~ All U.S. markets closed for Christmas holiday
* Wed. Jan. 4 @ 2:00 pm ET ~ FOMC Meeting Minutes
* Fri. Jan. 6 @ 8:30 am ET ~ Employment Data
* Wed. Jan. 18 @ 2:00 pm ET ~ Beige Book Report
*** Click here for link to Economic Calendars for all upcoming events

Sunday, December 04, 2016

EUR/USD Nearing Critical Support Level

As the EUR/USD Forex pair continues its rather steep decent during the past couple of months, it is approaching a critical major support level around 1.04, as shown on the Weekly chart below.

Not only will a drop to that level form a potential triple bottom pattern, it will also hit a triple confluence of long-term price, trendline and regression channel "mean" major support.

A drop and hold below 1.04 could see a catastrophic price plunge to levels (0.8827) not seen since October 2000. We may, however, see price overshoot and drop below 1.04 briefly, before a potential bounce occurs.


In this regard, it may also be worthwhile keeping an eye on the European Financials ETF (EUFN). As shown on the Daily chart below, price has recently managed to pop back above a major resistance level at 18.00 on a high volume spike.

If price can remain above 18.00, if the RSI can remain above 50, and if we get bullish crossovers on the MACD  and PMO indicators, it may have a positive influence on the Euro.

But, major weakness in the Financials sector could bring about a catastrophic drop in the Euro. In that scenario, we'll see whether the ECB has any bullets left in its monetary armory to prevent such an event.


Thursday, December 01, 2016

Market Forecast for 2017: SPX at 2400 by End of Year

On November 26th, I posted an article which outlined a hypothetical scenario of the S&P 500 Index reaching 2700 by the next U.S. Presidential election in November 2020.

I realize that this is only one of many possibilities that lie ahead for the SPX. However, given the aggressive economic, tax and fiscal agenda that President-elect Trump is currently promoting, it could, very well, materialize without too much resistance.




In keeping with the trajectory and velocity associated with that premise, I anticipate that the SPX could reach 2400 by the end of 2017, as shown on the Monthly chart below.

Monthly SPX

In last year's market outlook for 2016, I anticipated a rise of around 5-6% in equities, in general, in a run-up to this past November's Presidential election.

As of today's date of December 1st, you will see that the S&P 500 Index has gained 7.2% Year-to-date, as shown on the first graph below, while the Dow & Nasdaq Transport Indices and Russell 2000 Index have gained the most. The Nasdaq 100 Index has been the weakest.

The second graph shows the steep rise of the Dow & Nasdaq Transport Indices and Russell 2000 Index from the day after the election.



The third Year-to-date graph shows the percentages gained/lost for the 9 Major Sectors

Energy, Industrials, Financials and Materials have gained the most, while Consumer Staples has gained the least, and Healthcare has lost 4.16%, so far, this year. 

The last graph shows the steep rise of the Energy, Industrials, Financials and Materials sectors, and the decline of the Healthcare and  Consumer Staples sectors, since the election.



CONCLUSIONS

Assuming that volatility will be kept low (which can be monitored in a manner as described in my post of November 26th), I'd project that equity markets, in general, will gain around 11% in 2017. That would place the S&P 500 Index at just above the 2400 level by the end of the year.

In that regard, I think it will be important that Financials, Large-Caps and Small-Caps stay strong and that market participants continue to favour the riskier sectors over their more defensive counterparts. As well, I'd like to see Technology firm up and gain strength to support such a bullish outlook.

~~~~~~~~~~~~~~

P.S.

By the way, for those who have pooh-poohed the validity or value of my forecasts, I would, respectfully, mention that forecasting is a useful tool for any serious trader/investor to implement in order to track, assess and learn from one's future successes and failures on a short, medium, and long-term basis.

And, they can read my prior years' forecasts at this link and determine their merit for themselves.

Wednesday, November 30, 2016

Beige Book Report: Current Conditions Do Not Support Dec/16 Rate Hike

This summary of today's release of the FOMC Beige Book Report (courtesy of Nasdaq.com) is hinting that current soft economic conditions may not be supportive of an FOMC rate hike in December.

We'll see what current (and any anticipatory) factors may have been considered that would warrant a rate hike, if one is, in fact, implemented...hopefully, they will be clearly spelled out in Ms. Yellen's 2:30 pm press conference that will follow the Fed's rate announcement on December 14th.


Saturday, November 26, 2016

SPX Outlook to 2020 U.S. Presidential Election

I've written about the SPX:VIX ratio many times in the past. I've mentioned, as recently as November 13th, that it will be necessary for the bulls to hold price on this ratio above the 150 level in order for SPX equities to continue their rally with little volatility to impede this rise.

This post will take a look at one possible scenario that could see the SPX reaching a price of 2700, or so, by 2019, in anticipation of the next U.S. Presidential election in 2020.

As shown on the Monthly chart of the SPX below, price has rallied this month from the "median" of a long-term regression channel (which begins at the lows of 2009), and has broken out to all-time highs (above an almost two-year consolidation/congestion level) since Donald Trump was elected as President on December 8th.

It looks poised to continue this advance in a manner similar to that which occurred after Barack Obama was re-elected as President in November of 2012. If it did continue on that trajectory and at that velocity, we could see price reach the "+2 standard deviation level" on this channel at 2700 by November-December 2018. After such an advance, price could very pull back to around the "-1 standard deviation level" to around 2370, then bounce back to 2700 by the next election in November 2020.

Of course, that hypothetical scenario would depend on a lot of factors -- especially whether President-elect Trump's ambitious economic/tax/fiscal agenda can be supported by Congress and implemented, together with whatever future monetary policy measures may be enacted of the Fed -- to merit such an exuberant advance in equities.

Monthly SPX

As can be noted on the following Daily, Weekly, and Yearly (each candle represents a period of one year) ratio charts of SPX:VIX, it will be critical that bulls hold price above the 150 level, which is defined as a major support level, not only by price action, but also by the daily and weekly 50 and 200 moving averages.

The RSI, MACD and PMO indicators are hinting of further short-term strength in the SPX on the Daily timeframe, and crossovers are either imminent or have just occurred on the MACD and PMO on the Weekly timeframe, with an RSI holding above 50, also hinting of medium-term strength.

Price action on the Yearly timeframe is, currently, extremely bullish for the SPX (a massive bullish engulfing candle is forming), and, depending on its close at the end of this year, it may forecast whether the hypothetical longer-term scenario that I've described above is realistic and has begun.

Daily SPX:VIX Ratio

Weekly SPX:VIX Ratio

Yearly SPX:VIX Ratio

CONCLUSIONS

We'll see whether a Santa rally is currently in play...or whether a lump of coal surprises the markets this year. These charts are worth monitoring as part of your crystal ball-gazing activities -- in the short, medium and longer terms -- leading up to the next Presidential election.


Thursday, November 24, 2016

The Plight of the World Market Index

As can be seen on the following Daily chart of the World Market Index, price has fallen below both the 50 and 200 MAs and is, once again, nearing a critical major support level of 1600.

Even though price is trading under the bullish influences of a moving average Golden Cross, all three technical indicators are hinting of further weakness to come.

Watch for a bullish cross-over of the MACD and PMO indicators, as well as a price reversal and bounce, break and hold, firstly, above 1700, then above 1750, as a potential signal of clear support of higher prices for world equities, in the longer term, including that of the SPX.

Conversely, a break and hold below 1600 could very well forecast a large downdraft for all world equities in the near term.


Wednesday, November 23, 2016

The Trick to a Stress-Free Thanksgiving ;-)

I wish my neighbours to the south in the U.S. a happy and safe Thanksgiving and hope that you get to share it with someone you love.

China's Shanghai Index: Its Role in World Markets in 2016

I last wrote about China's Shanghai Index (as part of a comprehensive review of major world markets) on January 29th. Since then, and, until June, the road to recovery from its lows of the year has been volatile and rocky. The last half of this year has seen a fairly steady, if choppy, advance to its current level just below its next resistance level of 3250, as shown on the following Daily chart.

In that post, I had mentioned that a rally to (and hold above) 3000 could thwart a major downdraft, as was being threatened by an imminent break of a neckline of a massive Head & Shoulders formation.

A break and hold above 3250 could see price continue to rally to its next resistance level around 3400-3500. This index is trading under the bullish influences of a moving average Golden Cross, so a break and hold above 3250 is critical to continued success of further advance; otherwise, a drop and hold below that level could very well see a major bear attack ensue, sending price to new lows of around 2500, or more.


In my above-mentioned post, I also made the following conclusion (relative to world markets):
     "In particular, watch Japan, China, Brazil, the Russell 2000 and the Nasdaq 100 Indices for committed leadership..." related to any real success or failure of the S&P 500 Index and equities, in general.

As noted on the following 1-year Daily charts of these indices, they've all risen above major consolidation/congestion levels this year, with the exception of the Nasdaq 100...the one to watch, along with the Shanghai Index, to see whether their movements (either strength or weakness) influence, or have an impact on, the other indices in the days and weeks ahead.


Saturday, November 19, 2016

Two Social-Issue Posts Worth Repeating + a P.S.

The following two posts are worth repeating (I wrote the first one on July 26, 2011 and the second one on August 2, 2014)...

~~~~~


The "Holy Grail" and "Maslow's Hierarchy of Human Needs"


Unless the rules of the logical brain are sprinkled liberally with the ideas of the creative mind whose joint purpose is to seek benefits for ALL of mankind, then each of us might just as well pack up and move on in search of our own "Holy Grail" separate worlds...because the disjointed and unbalanced way things are going in today's world tells me that the search here on Earth will end one day...no one will be left to light the flame, let alone make the wick.


Sunday, November 13, 2016

The Rocky Road of the SPX:VIX Ratio

Well, since my last post on the SPX:VIX ratio, we find that, after true-to-form recent volatility in between 150 and below 100 to just above 90, it has, once again, spiked upward, broken and closed above 150, as shown on the following Monthly ratio chart.

The Momentum indicator has rallied and is, again, back above the zero level, which now favours the bulls on this longer term timeframe.


As I've said many times over the past several years, a hold above 150 clearly favours equity bulls. Watch for an SPX breakout to new all-time highs in the near term (last new high is 2193.81).

For confirmation of such a move, keep an eye on whether the MACD and PMO indicators (which have both just crossed over to the upside), as well as the RSI indicator, break their respective downtrends, as shown on the following SPX:VIX Daily ratio chart.

No doubt, markets are likely buoyed by more unity in all three U.S. Washington political houses subsequent to the Trump/Republican win last week. While traders will pay attention to the future policies, implementation, and effects of those policies, this ratio should provide a good gauge of market sentiment and momentum conviction, as well as the strength and velocity of volatility.


Saturday, November 12, 2016

World Market Outlook Post-Trump Win

This post will look at where "outliers" are sitting in a variety of world markets, as of the close of the week that saw Donald Trump win the race for U.S. President (those instruments sitting at relatively high or low price levels compared with their respective counterparts and in relation to major support/resistance levels).

They will be shown on the following 1-year Daily chartsYear-to-date gains/losses comparison graphs, and several 5-Year Ratio charts, and will be grouped in the following 10 categories:
  • Major U.S. Indices
  • 9 Major Sectors + Homebuilders
  • Major European Indices
  • Emerging Market & BRIC ETFs + BRIC Indices
  • Canada, Japan, UK, Australia + World Market Index
  • Commodities + US $ + US Bonds
  • Major Currencies
  • SPX vs World Market Index
  • Financial ETFs vs U.S., European & Chinese Major Indices
  • Retail ETF vs SPX