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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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* Mon. Dec. 25 ~ U.S. Markets closed for Christmas holiday
*** Click here for link to Economic Calendars for all upcoming events

Friday, September 14, 2012

Money Flow for September Week 2

Further to my last weekly market update, this week's update will look at charts and graphs for:
  • 6 Major U.S. Indices
  • 9 Major U.S. Sectors
  • S&P 500 Index, EU Stoxx 50 Index, and Shanghai Index
  • U.S., European, and Chinese Financial ETFs
As can be seen from the following Weekly charts and 1-week graph, all 6 Major Indices closed the week higher.



As shown on the Weekly charts and 1-week graph below, 8 of the 9 Major Sectors closed the week higher...Utilities had a minor loss. The majority of the gains occurred in the riskier, Offensive Sectors.



In light of Thursday's announcement by the Fed to begin a new round of open-ended monetary stimulus, in addition to their current program, and a commitment to keep interest rates low until mid-2015, I'll use a combination of Fibonacci tools to gauge where support and resistance levels lie as the markets react to the news over the next days/weeks/months.  For now, I'll look at Daily charts of just the Dow 30, S&P 500, Nasdaq 100, and Russell 2000 Indices to get a very broad view of the equity markets.

Included on the following four charts are two sets of Fibonacci retracement levels which begin at their June lows and at the September lows of this year. I've shown two additional levels...a 25% and a 75% level (yellow lines) since I also wanted to divide both of these Fibonacci ranges into quarters to see where price falls within each level so that I can determine the level of bullishness/bearishness in this timeframe. I also want to see how much time is spent in each quarter in order to determine the approximate velocity of sentiment...i.e. divide the number of days spent into the price range of the pertinent quarter, which is pretty evident by just glancing at each chart.

Price closed on Friday within the upper 1/4 of both the June and the September ranges. As such, they are short-term and medium-term moderately bullish. Near-term support lies at the September 25% level (i.e. 13484.20 for DJI, 1455.02 for SPX, 2835.10 for NDX, and 852.19 for RUT), followed by each subsequent Fibonacci level of that smaller range.

A break and hold below the 25% level of the June Fibonacci range (i.e. 13248.70 for DJI, 1422.57 for SPX, 2760.01 for NDX, and 833.81 for RUT) would then see the 40/50/60% Fibonacci levels come into play as potential support levels of that larger range.

You can see that the NDX has spent more time in its upper 1/4 of the larger June range than the others, suggesting that Technology weathered September's pullback better than they did.

On a long-term basis, and as can be seen from the first chartgrid above, the NDX is at a new all-time high since its dot-com high in 2000, the RUT is very close to setting an all-time high, and the DJI and SPX are approaching their all-time highs set in 2007, but still have more ground to cover. The markets may not pull back much until those highs are reached.





The next Year-to-date graph shows that the NDX has led in terms of overall percentage gained, whereas the following 10-day graph shows that the RUT leads, so far, for the month of September...two indices to watch to see if weakness enters either one in the short term to, potentially, lead the others down (particularly the RUT since it's just below its all-time high and subject to the forces of major resistance here).



The next Daily chart shows price action over the past 3 years on the U.S., European, and Chinese stock markets, as depicted by the SPX, EURO STOXX 50, and SSEC Indices. The Chinese market has severely diverged/lagged and is one to watch for either a turnaround or further weakness, potentially causing a drag on the other markets.

 
In this regard, I thought it would be prudent to monitor their respective Financial ETFs...XLF, EUFN, and GXC, which are shown on the following 3-year Daily chart. The Chinese Financial ETF is showing more signs of stability in comparison with its Index. In fact, it began to show signs of moving more in tandem with the other two ETFs from the June lows, as shown on the last three charts (from June lows, September's action, and the price action of the past two days).

I'll be following these three ETFs over the next days/weeks to looks for signs of weakness in any one which may influence the strength of the other two in order to gauge, in a broad sense, the market's global sentiment toward and commitment in equities. Any major financial crisis that may arise/worsen in either one of these three countries/unions may spark additional monetary stimulus by the Fed.





Enjoy your weekend and good luck next week!