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The charts and comments in my Blog (posted in Eastern Time) represent my technical analysis and observations of a variety of markets...
*World Indices *U.S. Indices *Futures *U.S. Equities & Sectors *ETFs *Commodities *Forex
...an expanded version of the "Observations" section in my private Daily Trading Journal.

*** N.B. to my readers: Although I stopped trading in July 2013, I still take a peek at the markets now and then and post the occasional article here on my Blog.
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EVENTS

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Monday, 30 April 2012

Soft Data for Canada and U.S.A.

Data released on Monday was soft for Canada and the U.S.A., most notably a decline in Canada's GDP, a rise in the U.S. Core PCE Index (which excludes food and energy...and Mr. Bernanke's been blaming the cost of gas for a rise in inflation...hmmmm), and a decline in U.S. consumer spending, as shown on the graphs below.








As I'm writing this during market hours, we'll see where the SPX closes relative to this uptrend line today, and ahead of total vehicle sales on May 1, multi-employment data on May 2, 3 and 4, and the Greek and French elections on May 6.

Friday, 27 April 2012

Money Flow for April Week 4

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

The Weekly charts below of YM, ES, NQ & TF show that all four closed higher than last week's high...in fact, this week's candle on the ES, NQ & TF are "outside" bullish candles with closes very near their high...highly bullish setup. The ES closed right at the lower uptrending channel and the NQ closed above its upper channel...we'll see whether the ES can re-enter and stay within the channel to continue a rally...I'd be looking for the ES to hold above this week's high of 1403 in this regard. Otherwise, a failure at this level could send the ES down to the middle Bollinger Band at 1338.


As I mentioned in my market update of April 13th, I'm assigning a weekly bullish or bearish rating on YM, ES, NQ & TF until the end of this 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 bullish
  • ES = mildly bearish
  • NQ = bullish
  • TF = mildly bullish
I'll re-iterate what I said in my last post about the NQ, namely: The NQ's volume in the Volume Profile from February onwards is very thin, which signals a potential weakness/problem in this e-mini futures index being able to advance much further and hold above its 2011 highs. I wouldn't be surprised to see price drop back to this level at some point and further buying volumes finally enter to support a convincing rally...no doubt this would have a negative impact/drag on the other three indices.


As shown on the 4-Hour charts below of YM, ES, NQ & TF, the NQ and TF broke above their downtrending channel and have formed a new uptrending one. The ES closed just below its current uptrending channel on this timeframe. All four have retraced more than 61.8% of their dip from their March high...an impressive run, so far. A drop and hold below each of their respective channels would weaken an argument for further upside potential in the short term.


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

Stocks Above 20-Day Average closed higher than last week to just below the 66% level.


Stocks Above 50-Day Average closed higher than last week to just above the 55% level.


Stocks Above 200-Day Average closed higher than last week to just above the 70% level.


I'd conclude that, in the short term stocks are moderately bullish, in the medium term stocks are mildly bullish, and in the longer term stocks are bullish...but, as has been the case for the past five weeks, all are still on negative watch for further potential weakness until they re-test and hold above their new support levels of  60%, 50%, and 65%, respectively.

The VIX dropped on the week (by 13.97%), 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 that the SPX bounced and closed above its 50 sma. The RSI, MACD, and Stochastics indicators are trending up...however, the Stochastics is a bit overbought. Near-term support is at, firstly, 85.00, then the 50 sma of 81.55...short-term resistance is at 90.00...important levels to watch.


As shown on the graph below of the Industry Groups, Retail was the big gainer, with gains made in all others. Whether consumers can continue to "carry the can" in boosting the GDP numbers for the next quarter(s) of this year remains to be seen, particularly with declining incomes, as noted in my post of March 1st.


As shown on the graph below of the Major Sectors, the largest gains were made in Consumer Discretionary, with gains made in all others...the smallest gains were made in the defensive sectors, so, the appetite for the risk trade grew this past week, with the presumption of a continuation next week...perhaps Monday's Personal Income and Outlays data and market reaction will set the tone for direction.


As shown on the graph below, the biggest gains were made in the European Financials ETF (EUFN), followed by the U.S. Financials ETF (XLF), the Emerging Markets ETF (EEM), the Chinese Financials ETF (GXC), and the Commodities ETF (DBC). The Agricultural ETF (DBA) was flat again this week.


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


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





As shown on the graph below of the Major Indices, they all gained, with the Russell 2000 gaining the most. Gains were made in the High Dividend-Paying Stocks ETF (DVY), EEM, and Corporate Bonds (JNK).


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


The Daily ratio chart below of the SPX:U.S. $ shows that the SPX strengthened in comparison to the $ and now sits just below major resistance at 18.00. The RSI, MACD, and Stochastics are trending up, but the Stochastics is in overbought territory. Near-term support sits at the 50 sma at 17.43...ones to watch to see if the $ continues to weaken against the SPX.


In summary, continued upside moves this coming week, regardless of positive or negative data releases, will confirm increased risk buying, which could send the YM, ES, NQ & TF to new highs for this year...which is quite possible in advance of the multiple Employment data releases due on Friday.

Enjoy your weekend!

Wednesday, 25 April 2012

The Dirt Under the Carpet

With today's Fed announcement out of the way now, we see that no new Fed monetary easing programs are underway.

Instead, the U.S. is still left with this...their growing national debt. This is something that the Fed cannot solve...it's up to the politicians, and, still, I've heard nothing this year that leads me to believe that any part of this is being tackled. Instead, it seems to be the dirt that is lingering under the carpet, never to be dealt with until, perhaps, after the November election, or, perhaps, not at all.


With issues such as declining Durable Goods Orders and Core Durable Goods orders since 2001 and 2002, respectively, as shown on the graphs below (data released on Wednesday), declining consumer optimism, and housing numbers still at 2009 recessionary lows, I would have thought that politicians would have acted more responsibly to reduce the debt while finding measures to stimulate their economy.


Instead, it seems that the real purpose of the Fed's QE1, QE2, and Operation Twist programs was to provide liquidity to banks in an attempt to reverse the damage caused by their part in bringing forth the 2007/08 financial crisis. And, from what Ben Bernanke said today in his press conference, it would seem that the Fed is still wanting more liquidity to be carried by the banks...this doesn't signal greater lending policies to be forthcoming from the banks, rather, tighter policies.

This leads me to believe that the financial crisis was far greater than anyone let on and that it is still not resolved. So, what the Fed has been (and is) doing is not to provide money for public consumption, but to financial institutions to try to prevent their collapse pertaining to problems arising from domestic issues, as well as global issues (which have been escalating of late).

So, the politicians (Democrats and Republicans alike) are still on the hook to provide the relief to the average American which they promised in the last election, as well as to deal with their national debt problems.  Let's not forget that America's credit rating was cut in August of 2011 because of the outstanding debt, and it has not been re-instated.

Tuesday, 24 April 2012

Home Prices Rising but New Home Sales and Consumer Confidence Declining

Data released on Tuesday shows that Home Prices rose, but New Home Sales fell, as shown on the graphs below.

This data goes hand-in-hand with a decline in Existing Home Sales and in the NAHB Housing Market Index, as mentioned in my post of April 19th.



Additionally, Consumer Confidence fell, as shown on the graph below. Since it's a "leading indicator of consumer spending, which accounts for a majority of overall economic activity," it's worth tracking to see if this is a harbinger of economic contraction, or even recession.

Monday, 23 April 2012

Top-Down Analysis of SPX

Below are Monthly, Weekly and Daily charts of the SPX. The following is my top-down analysis as of today's close.

Monthly Timeframe: Although price made a higher swing high this year over last year's high, the Stochastics, MACD, and RSI indicators did not...upside momentum is decreasing on the MACD histogram, and the RSI is hooking down. Bollinger Bands are tightening, suggesting a change in trend to the downside. Price is just below the top Bollinger Band, with the next level of support being the middle Bollinger Band at 1279. The 50 sma (red) is in danger of crossing below the 200 sma (pink) and is near the bottom Bollinger Band, forming the next major support level around 1150.


Weekly Timeframe: Although price made a higher swing high this year over last year's high, the Stochastics, MACD, and RSI indicators did not...they have all hooked down, and the Stochastics and MACD have crossed over...and the MACD histogram has now crossed below zero, giving a 'sell' signal. Bollinger Bands are tightening, suggesting a change in trend to the downside. Price is sitting just above a near-term support at the mid-Bollinger Band at 1340, with the 50 sma acting as the next support level at 1280, followed by the lower Bollinger Band at 1235, and then the 200 sma at 1134.


Daily Timeframe: In spite of a series of higher swing highs in March of this year, the Stochastics, MACD, and RSI indicators made lower highs and have continued to trend lower...downside momentum increased again today as shown on the the MACD histogram, and the Stochastics is hooking down again. Price is approaching the lower Bollinger Band, which is widening, suggesting downside continuation. The trendline break of April 10th was confirmed again today after price failed to close above it and the 50 sma. The next major support level is at the 200 sma of 1273.


In summary, it would appear that further selling is in the cards for the SPX on all three timeframes, with their respective support levels noted above. I'd also refer you to my post of April 10th, which describes 1250 as a potential downside Fibonacci confluence support target.

Contraction in Europe

Data released on April 23rd shows contraction in Manufacturing and Services in Europe, Services in France, and Manufacturing in Germany, as shown below.


World markets are down hard as I'm writing this during market hours Monday morning.

Sunday, 22 April 2012

Good Fortune Coming to China?


Data released on April 22nd shows an increase in China's HSBC Flash Manufacturing PMI, as shown on the graph below...as it's still below 50.0, the industry is still in contraction. The Final release is scheduled for April 30th.

The following is an excerpt from the HSBC PMI press release:
"Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said:
'As April flash PMI ticked higher, this suggests that the earlier easing measures have started to work and hence should ease concerns of a sharp growth slowdown. That said, the pace of both output and demand growth remains at a low level in an historical context and the job market is under pressure. This calls for additional easing measures in the coming months. We expect monetary and fiscal easing to speed up in 2Q.'"

As I'm writing this post Sunday evening, China's Shanghai and Hang Seng Indices are down...will see where they close on Monday...perhaps this small uptick will signal good fortune coming to China.


Saturday, 21 April 2012

Homebuilders ETF (XHB)...Volatility Building

I'll be watching these 2 charts (Monthly and Daily) on XHB in relation to New Home Sales data to be released on Tuesday (sales are still near 2009 lows, as shown on the graph below).

Immediate resistance is just above at a confluence of a 61.8% Fibonacci fanline, 50 dma, Monthly Volume Profile POC, Monthly VWAP, and the lower 1/3 level from the 2006 high to the 2009 low...price needs to clear and hold above 21.00 for a potential rally...otherwise, I'd look for more downside movement...looks like lots of volatility building here.



Friday, 20 April 2012

Money Flow for April Week 3

Further to my last weekly market update, here is a summary of where money flow ended for Week 3 of April 2012.

The Weekly charts below of YM, ES, NQ & TF show that the only one that did not close higher than the prior week was the NQ (which is back inside its uptrending channel). The ES backtested its uptrending channel, but closed outside, once again.


As I mentioned in last week's market update, I'm assigning a weekly bullish or bearish rating on YM, ES, NQ & TF until the end of this 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
  • ES = mildly bearish
  • NQ = bullish
  • TF = mildly bearish
I'll re-iterate what I said in my last post about the NQ, namely: The NQ's volume in the Volume Profile from February onwards is very thin, which signals a potential weakness/problem in this e-mini futures index being able to advance much further and hold above its 2011 highs. I wouldn't be surprised to see price drop back to this level at some point and further buying volumes finally enter to support a convincing rally...no doubt this would have a negative impact/drag on the other three indices.


Further to my post of April 19th, the YM, ES, NQ & TF are still within their respective channels and did not make a new high today, as shown on the 4-Hour charts below.

I'll re-iterate what I said in that post, namely: I mentioned in my post of April 17th that I'd be looking for a continuation of Tuesday's advance and a hold above its high on any retest before I would assign a "bullish" rating to all four in the short term. Since that hasn't happened, we'll have to see whether we get more choppy sideways movement, or a resumption of the pullback below the low of the Fibonacci retracement, or whether we see price stair-step upwards to break and hold above Tuesday's high, before a new trend is eventually established on a Daily timeframe. I'd re-iterate that should this third scenario play out, I'd like to see high volumes support such a move, particularly on any breakout and hold above April's high, especially with respect to the NQ (for the reasons I explained on April 17th).


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

Stocks Above 20-Day Average closed higher than last week to just below the 40% level.


Stocks Above 50-Day Average closed higher than last week to just above the 40% level.


Stocks Above 200-Day Average closed higher than last week to just above the 66% level.


I'd conclude that, in the short term stocks are moderately bearish, in the medium term stocks are mildly bearish, and in the longer term stocks are moderately bullish...but, as has been the case for the past four weeks, all are still on negative watch for further potential weakness.

The VIX dropped on the week (by 10.79%), 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 that the SPX bounced and closed just below its 50 sma. Additionally, the RSI, MACD, and Stochastics indicators have turned up. Near-term support is at 65.00...an important level to watch.


As shown on the graph below of the Industry Groups, Biotech was the big gainer, with losses in the Semis, Gold/Silver, Brokers, and Banks.


As shown on the graph below of the Major Sectors, the largest gains were in the Health Care, Consumer Staples, Energy, and Utilities Sectors, with losses in Financials.


As shown on the graph below, the Commodities and Agricultural ETFs (DBC and DBA) were basically flat, and there were losses in the U.S. Financials ETF (XLF) . Gains were made in the Chinese ETF (GXC), European Financials ETF (EUFN), and Emerging Markets ETF (EEM).


As shown on the graph below, gains were made in Copper, Silver, and Oil, while there were losses in Gold.


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





As shown on the graph below of the Major Indices, they all gained, except Transports which were basically flat. Gains were made in the High Dividend-Paying Stocks ETF (DVY), Corporate Bonds (JNK), and EEM.


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


The Daily ratio chart below of the SPX:U.S. $ continues to show the tug-of-war going on between the two as this ratio grapples with the near-term support level of 17.00...one to watch.


No doubt the markets will be awaiting the results of the FOMC meeting on Tuesday & Wednesday next week, and we may see volatility continue until then...particularly as the end of this month approaches, as well.

Enjoy your weekend!