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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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Sunday, April 23, 2017

EUR:USD in Battle to Redefine Resistance as Support

As can be seen from the following Monthly chart of the EUR:USD Forex pair, after today's (April 23) first round of the French Presidential election, price is currently in a battle to regain a foothold above major resistance at 1.09.

A break and hold above this level could see a further push to the next major hurdle around 1.15. At the moment, the Momentum indicator is still below zero...watch for a confirming break and hold above that level on such an upward push. Otherwise, failure to break above 1.09 with conviction could see a retest of 1.03, or lower.

We may not see a clear path forward until the runoff election, which is to be held between Marine Le Pen and Emmanuel Macron in France on May 7.


Friday, April 21, 2017

Tech Sector Holds The Key

As of mid-day on Friday (April 21), and during the past couple of range-bound months, the Technology sector is outperforming the large-cap and small-cap stocks, as shown on the following charts.

It's still sitting above both its 20 and 50 day moving averages, while the Dow 30, S&P 500, S&P 100, Nasdaq 100, Nasdaq Composite and Russell 2000 Indices are below their 50 MA, with bearish 20 and 50 MA crossovers.

I'd watch for any signs of major weakness developing in Tech as a potential precursor to any significant drop in equities, in general. Otherwise, we could see a continued non-directional bias in the markets for some time.





Monday, April 10, 2017

10 & 30 Year Bonds Versus Equities

As can be seen from the following long-term view of 10 and 30 year bonds (monthly charts), each is facing an imminent decision...whether to break fairly substantial major support at their current levels and, potentially, fall to levels not seen since the 2008/09 financial crisis, or resume their flight-to-safety bounce to retest prior highs.



Further to my comments of March 25, it's my opinion that if market players catch even a whiff of resistance by the majority of Congress to support and advance President Trump's ambitious agenda, particularly as it relates to tax and regulation reform, infrastructure spending and national security, in a timely manner (i.e. by August or sooner) (not to mention a potential government shutdown after April 28), we'll see money flow flood into bonds and out of equities.

For example, watch for a break and hold above the 50 day moving average and near-term resistance at 0.065 on the following daily ratio chart of 30 Year bonds vs. SPX.


In the meantime, it's difficult to ascertain what will move equity markets one way or the other, as they're mired in a consolidation format after having made 3 Trillion dollar gains in four months (from the November 2016 election), as opposed to what would normally take about a year to achieve (as I had forecast for 2017 in my post of December 1, 2016).


Perhaps, with little major overhead price resistance, equities will form a new leg up, slowly and choppily, until such negative political alarm bells begin to ring. However, we may get an advance warning with bond money flow, as I've outlined above.


Sunday, April 09, 2017

It's What Makes The World Go Round

Since I have nothing further to add from my posts of March 25 and 30 regarding stalled markets, I'll, instead, post this gem from this week's "smile file"...


Thursday, March 30, 2017

World Money Flow - March 27 to 29, 2017

The following five percentages gained/lost graphs show, at a glance, which countries and currencies gained the most, so far, this week (Monday, March 27 to, and including, Wednesday, March 29).






Of particular interest to me are the gains made in Australia and in the Aussie Dollar.

As noted on the following Daily chart of the Australian Index, price has shot up in the past few days and is, once again, facing major resistance. It's worth keeping an eye on this index, as a firm breakout and hold above its 2015 highs could also accompany a rally in the Shanghai Index. Price on that index is also facing major resistance, as shown on the second Daily chart.



My post of March 10 and update of March 19, spoke of an interdependent relationship of the SPX with the World Market Index and the SPX:VIX Ratio.

All three of these are grappling with major resistance levels, as shown on the following Daily charts.




CONCLUSIONS:

We'll see if Australia, China, the SPX, the World Market Index, and the SPX:VIX Ratio reach new highs, either by the end of this week (to close out Q1 for 2017 with higher gains), or anytime soon in April, and whether any short-term weakness or strength in any one of them influences the others, in kind.

Saturday, March 25, 2017

3 Trillion Dollars Now at Risk...and More

Three Trillion dollars gained in the U.S. markets since the Presidential election in November 2016 are now at risk...and more.

With the recent failings of two attempts by the President to implement temporary travel restrictions from several foreign countries via his executive orders, and the failure of Republicans to reach a consensus on passing a bill that would have repealed and replaced ObamaCare, one has to wonder whether Republicans can, in fact, ever reach agreement on any of President Trump's economic, fiscal, national security, tax and regulation reform, and immigration reform agenda.

Combine these recent failures together with ongoing intelligence investigations of election activities and of the President and his campaign officials, themselves, as well as the Senate's inability to have confirmed a full Trump cabinet and a new Supreme Court Justice, to date, and we're left with a big question mark in that regard.

Unless Republicans pledge their complete loyalty to the President and become united in their efforts to seriously move that agenda forward as a professional governing party, nothing will be accomplished in the next two to four years. They are risking three trillion dollars that have been pledged by market participants in their faith that they would, in fact, do that very thing...and, likely, much more is at stake.

If they simply attempt to stumble forward, like a bull in a china shop, with fractured ideas and methods without, first, addressing and fixing that problem, they are assuring continued failure of this President and their party. In fact, I'd suggest that their future as a viable governing party is at risk at this very moment and they'll be doomed to limp along forever as an infantile opposition party.

So, the time for individual political posturing and gamesmanship is over. It's time to put your constituents' livelihoods and that of your country's ahead of your own agenda, roll up your sleeves and hammer out solutions with your fellow party members and that of your leader. That's what successful societies do.




Make no doubt about it...markets will make their own interpretations as to how serious politicians are at coalescing and advancing this ambitious agenda. Right now, they're at a crossroads, as evidenced by the pause that the S&P 500 Index has taken this month, as shown on the following Monthly chart of SPX.

Price is sitting just above a 161.8% external Fibonacci retracement level, after hitting a new high at 2400. A drop to the next Fibonacci level would see price hit somewhere around 2200. That would also tie into the next support level (provided by the median of a long-term uptrending channel), as shown on the next Monthly chart of SPX.

Such a drop could be sooner rather than later, as well as swift, and, perhaps, be the jolt that makes Republicans finally sit up and take notice of how their actions (or inactions) are affecting more than just themselves. We'll see if they're willing to take that risk, or whether they can act more quickly than markets.

Monthly SPX

Monthly SPX

Finally, my post of March 10th and update of March 19th mentioned a level of 200 as being an important "new bull market territory" level on the SPX:VIX ratio.

The following Monthly ratio chart of SPX:VIX shows that price has fallen below that level. As long as price holds below that level, we'll see an increase in volatility in the equity markets. We could see price on this ratio drop as low as 150, or lower, if the SPX does drop to 2200.

Any further setbacks for the Republican administration in the near term would, likely, compound existing political problems and contribute to such a drop.

Monthly SPX:VIX Ratio


Friday, March 10, 2017

SPX: New Bull Market Territory Awaits

* SEE UPDATE BELOW...

In my post of February 9th, I mentioned the importance of the World Market Index breaking, and holding above, 1750, as a potential signal of support for world equities, in the longer term, including that of the S&P 500 Index (SPX).

Since then, the World Market Index has, indeed, broken above and dipped back below 1750 several times, and closed out this week (March 10th) just above that level, as shown on the Daily chart below.

The RSI is in downtrend, but popped back above the 50 level, while the MACD and PMO indicators have yet to form bullish crossovers and remain in downtrend.

Daily World Market Index

The SPX was, at the time of the above-referenced post, languishing just below 2300. It closed out this week at 2372.60, after my projected December 2017 target of 2400 was hit, 10 months early, on March 1st (see my same-day post here), as shown on the Daily chart below.

Short term resistance lies at 2400 and longer-term major support sits at 2300. At the moment, price is within the upper one-third (above 2366) of this resistance/support zone and remains above the middle Bollinger Band (2361.37) on this timeframe...favouring the bulls above these levels.

The RSI remains in uptrend and above the 50 level, while the MACD and PMO indicators have just formed a bearish crossover.

Daily SPX

As shown on the following Daily chart, the SPX:VIX ratio has been swirling around the 200 level since January of this year and closed out the week at 203.48...favouring equity bulls. My last post on this ratio referred to this level as a new bull market territory for the SPX. So far, attempts to hold and advance much beyond this level have been short-lived...an indication that volatility is threatening to increase.

The RSI sits just above the 50 level, while the MACD and PMO indicators have yet to form a new bullish crossover, although downward momentum seems rather muted, so far.

Daily SPX:VIX Ratio

As I mentioned on February 9th, I'd re-iterate that a longer-term sustained advancement (with conviction) of either the S&P 500 Index or the World Market Index is likely interdependent on each other's success. The important (bullish) levels to be held are 1750 for the World Market Index, 2366 for the SPX, and 200 for the SPX:VIX ratio. As well, since the technical indicators remain mixed, I'd like to see all of them form, and maintain, new bullish "BUY" signals on any such rallies.

Exactly how much of an influence U.S. political policies, Presidential executive orders, and new pieces of legislation that may be enacted, as well as forthcoming Federal Reserve rate decisions, may have on such sentiment going forward, remains to be seen. We may get a hint of that when the FOMC announces their next interest rate decision on March 15th, with future guidance and forecasts provided by the Fed Chairperson during her press conference to follow.

* UPDATE March 19th:

With price spiking up well above the 1750 major support level on the World Market Index last week, bullish crossovers have now formed on the MACD and PMO indicators, and the RSI has slightly broken above its tight downtrend with its latest push upward, as shown on the Daily chart below.

World Market Index Daily

There are, potentially, bullish signals forming on the SPX:VIX Ratio, as well, with price attempting to remain above 200, the formation of a new bullish crossover on MACD, and an imminent formation of a bullish crossover on PMO, as shown on the following Daily ratio chart. However, the RSI indicator remains muted, but remains above the 50 level...still a positive sign for equity bulls.

SPX:VIX Ratio Daily

We'll see, however, whether the SPX can remain above its 20-day moving average, if the above two charts firm up in bullish activity. At the moment, it's sitting just above, as shown on the Daily chart below.

*** Perhaps we'll see another push higher over the next couple of weeks, as equity fund managers look to increase, not only their end-of-month profits, but also their Q1 profits for 2017.

SPX Daily