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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

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Friday, June 29, 2012

Money Flow for June Week 4

Further to my last weekly market update, here is a summary of where money flow ended for Week 4 of June 2012.

The Weekly charts below of YM, ES, NQ & TF show that they all closed higher than the prior week (the ES, NQ & TF formed a bullish engulfing candle, while the YM came within a few ticks of forming one as it opened slightly higher than the prior candle's close)...all four on slightly lower volumes than the prior week. They've popped up and closed above the downtrending channel at their middle Bollinger Band and above the current month's Volume Profile POC (yellow horizontal line). The YM closed at its 1-Year Volume Profile POC (red horizontal dotted line along the right edge of the charts), the ES  closed slightly above, the NQ closed well above, and the TF closed just below.

They're not out of the woods yet, as a wall of resistance waits immediately above price. Any advance up to their upper Bollinger Band would likely produce some higher volumes due to short covering...I'd be worried about any sort of convincing and sustained push higher above this year's highs if volumes drop off during such an advance, as I'd wonder about the ratio of serious buying versus simple short covering (especially on overnight advances).


As I mentioned in my weekly market update of April 13th, I'm assigning a weekly bullish or bearish rating on YM, ES, NQ & TF until the end of the year. Please refer to that post for the parameters, and to the Weekly charts below. As of this past week's close, the ratings for next week are as follows:
  • YM = mildly bearish (bordering on moderately bearish)
  • ES = moderately bearish (bordering on mildly bearish)
  • NQ = mildly bullish (bordering on moderately bullish)
  • TF = mildly bearish (approaching bearish/bullish cross-over to mildly bullish)


The 4-Hour charts below of YM, ES, NQ & TF contain two sets of Fibonacci fan line drawings. Near-term horizontal support on this timeframe sits along the line which bisects both intersecting 50% Fibonacci levels...namely, 12460 for YM, 1327.50 for ES, 2578 for NQ, and 778 for TF. It's important that price hold above this level, lest they fall prey to dropping down to or below the June lows.


The Weekly chart below of the NYSE Summation Index shows that a third higher weekly close was made to confirm a BUY signal for the SPX on this timeframe, as per the Stochastics crossover. This should, however, be viewed in the context of what happens next week on the above charts, based on my comments, as noted.


The three Daily charts below depict support and resistance levels on the percentages of Stocks Above 20-Day, 50-Day, and 200-Day Averages.

Stocks Above 20-Day Averages closed higher than the prior week at 79.09%.


Stocks Above 50-Day Averages closed higher than the prior week at 60.03%.


Stocks Above 200-Day Averages closed higher than the prior week at 57.81%.


I'd conclude that, in the short term stocks are bullish, in the medium term stocks are mildly bullish, and in the longer term stocks are mildly bullish...as has been the case for the past fourteen weeks, all are still on negative watch for further potential weakness...especially as long as the Major Indices remain below near-term major resistance.

The VIX declined by 16.19%, as shown on the graph below.


Further to the comments in my last weekly market update, the Daily ratio chart below of the SPX:VIX shows that the SPX declined and retested the 50 sma, then bounced to close higher than the last swing high. After declining somewhat, the RSI, MACD, and Stochastics indicators have hooked back up again, and the MACD histogram is beginning to increase after Friday's large gap up. Major resistance sits around the 90.00 level, and near-term support at the 50 sma at 66.59.


The Daily chart below of the VIX shows that price closed just above a near-term support level of 17.00. The next major support level is 16.00, then 13.99. Most of this week's price action has been contained in June 21st's large bullish candle, which was the day after the last FOMC interest rate announcement/economic outlook/press conference...an important candle, as any advance and hold above its high  of 20.48 could send the VIX soaring...one to watch in view of major resistance hovering above the SPX and ES (and the other Major Indices), as noted in my comments above, my comments in my post of June 29th, and my comments in my post of February 28th.


As shown on the graph below of the Industry Groups, the largest gains were in Oil Services, followed by Brokers, Semis, Banks, Internet, Pharmaceuticals, Retail, and Biotech. Gold/Silver were basically flat.


As shown on the graph below of the Major Sectors, the largest gains were made in Energy, followed by Industrials, Materials, Financials, Consumer Staples, Technology, Health Care, Consumer Discretionary, and Utilities...a mixture of advances in risk and defensive sectors.


As shown on the graph below of some of the ETFs, the largest gains were made (once again) in the European Financials ETF (EUFN), followed by Emerging Markets (EEM), Chinese Financials (GXC), Agriculture (DBA), Commodities (DBC), and U.S. Financials (XLF).


The Daily charts below of EEM and the BRIC countries show that price gapped up on Friday on EEM to close above its 50 sma, and the others closed higher on Friday, as well. The Shanghai Index is still below its major support level of 2300...any further move down could send it to this year's low just below 2150 (which happens to be a three-year low). These indices are worth monitoring to see whether they advance or decline compared with the U.S. Major Indices, in particular, the Shanghai Index, in order to determine whether global confidence is increasing or decreasing in market stability at current levels (since they all face major overhead resistance)...especially in the aftermath of this week's EU Summit.


The Daily charts below provide an update on price action on DBC and AUD/USD since my last weekly market update. DBC has rallied and now sits below its 50 sma. The AUD/USD forex pair bounced around in between its 50 and 200 smas and closed at its 200 sma and below the next resistance level of 1.0274. The MACD, Stochastics, and RSI indicators are all trending up on both charts. However, they are both still trading under the bearish influences of a "Death Cross" formation, and, as such, will likely continue to exhibit volatile (and potential choppy/whippy) price action for awhile...ones to watch in the days/weeks ahead, as they will likely affect equity markets, as well.


As shown on the graph below, the largest gains were made in Oil, followed by Copper, Gold, and Silver.


The following four Weekly charts of Gold, Oil, Copper, and Silver show support and resistance levels...ones to watch, particularly Oil and Copper.





As shown on the graph below of the Major Indices, the largest gains were made by the Russell 2000, followed by the Dow Transports, the S&P 500, the Nasdaq 100, the Dow 30, and the Dow Utilities. There were gains made in the Emerging Markets ETF (EEM), the High Dividend-Paying Stocks ETF (DVY), and the Corporate Bonds ETF (JNK). The Index to continue to watch for any increasing volatility and weakness is the Russell 2000 as the "canary in the coal mine."


As shown on the currency graph below, money flowed out of the U.S. $ and Japanese Yen, and into the Aussie $, Euro, Swiss Franc, Canadian $, and British Pound.


The Daily ratio chart below of the SPX:U.S. $ shows that the SPX rallied to close just above its 50 sma at a prior swing high. Major resistance is at 17.00 and major support is at 16.00, with both the 50 and 200 smas in between...one to watch to see if buying pressure continues in equities compared to the U.S. $, and whether the MACD can cross and hold above the zero level.


The next chart of interest is the Weekly chart below of the 30-Year Bonds (ZB). Price closed just below its confluence of trendline and Fibonacci levels. but still within a high-basing consolidation range...one to watch, since the markets haven't yet completely divorced from this Bond.


FYI, and further to my last weekly market update, I would just say that a bearish "Death Cross" is nearer to forming on JPM. Here are updated lists as follows:

List #1 ~ Recent "Death Cross Formations:
  • GS
  • EEM
  • CAT
  • EUFN
  • MS
  • BID
  • GXC
  • C
List #2 ~ On Negative Watch for possible "Death Cross" Formations:
  • JNK
  • BAC
  • XLF
  • JPM
All stocks/ETFs in both lists are subject to potential volatile intraday swings, and are important ones to watch over the next days/weeks, especially as many of them are financial. Please refer to the updated Daily chartgrid below showing all the stocks/ETFs in question.


In summary, I'll be watching the Major Indices, Commodities (especially Oil and Copper), the U.S. $ and its currency counterparts, Bonds, Emerging Markets and the BRIC countries, VIX, and, of course, European countries (which I've not reffered to in this post) to see whether this past week's rally continues next week and, if so, under what circumstances (be they technical, economic, or political), and on what kind of sustainable conviction.

Enjoy your weekend!