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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.
NEW SERVICE: I'm pleased to announce the launch of my new service as a Certified Professional Life Coach...please check out this page for details and updates.

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EVENTS

Earnings Calendar: Courtesy of Yahoo! Finance
Fed's POMO Schedule: at this link

Wednesday, 30 May 2012

SPX Comparison with European Indices

Below are a series of 3-year Daily charts comparing the performance of the main European stock indices with the SPX.

GERMANY: Price has moved fairly lock-in-step with the SPX, although it weakened more in the August 2011 drop and has remained weaker.


FRANCE: Price has moved fairly lock-in-step with the SPX, although it weakened more in the August 2011 drop (and a bit more than the DAX) and has remained weaker.


LONDON FTSE: Price has moved fairly lock-in-step with the SPX, although it weakened more in March of this year and has remained weaker.


SPAIN: These have taken turns leading, but Spain weakened considerably beginning in May of 2011 and the weakness has accelerated.


ITALY: These have taken turns leading, but Italy weakened considerably beginning in May of 2011 and the weakness has accelerated.


PORTUGAL: These have taken turns leading, but Portugal weakened considerably beginning in July of 2011 and the weakness has accelerated.


GREECE: These have taken turns leading, but Greece weakened considerably beginning in December of 2010 and the weakness has accelerated.


In summary, the "periphery countries" (Spain, Italy, Portugal, and Greece) have been more volatile in their trading during the past three years as their swings above and below the SPX have been much wider than their "core country" counterparts (Germany, France, and England). The "periphery countries" are all trading well below their opening price from three years ago, are at three-year lows, and are trading under bearish moving average "Death Cross" influences...Greece has been in a downtrend since November of 2009. I'll be watching over the next days/weeks for signs of a bearish "Death Cross" to form on the "core countries"...one could form in the next few days on the French CAC, followed by one on London's FTSE. All of them have downtrending RSI and MACD indicators, which haven't been broken to the upside.

All of them are weaker than the SPX at the moment, the weakness is accelerating on the "periphery countries," and it has recently begun to accelerate on the French and London indices, and, to a lesser extent, on Germany's index.

I expect further weakness in all of these indices (including the SPX) until I see evidence of a reversal of price and indicator trend, a retest, and a subsequent rally with the backing of powerful financial, monetary, and fiscal cohesiveness...until those materialize, I doubt we'll see much of a sustainable rally.

Tuesday, 29 May 2012

Spain is Still a Problem

Spain is still a problem, as price is trading down on this Spanish ETF during intraday trading on Tuesday morning (in contrast to other Foreign ETFs in my list), as well as on the Spanish Stock Index, as shown on the Daily chart below.

On the index, price has dropped below its recent consolidation...a further drop looks inevitable.


Saturday, 26 May 2012

Happy Birtyday, Dow 30 ~ May 26, 1896

From Investopedia:
"The Dow Jones Industrial Average (play /ˌd ˈnz/), also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow. It was founded on May 26, 1896, and is now owned by Dow Jones Indexes, which is majority owned by the CME Group. The average is named after Dow and one of his business associates, statistician Edward Jones. It is an index that shows how 30 large, publicly owned companies based in the United States have traded during a standard trading session in the stock market.[1] It is the second oldest U.S. market index after the Dow Jones Transportation Average, which was also created by Dow."

Please click this link to read more.

This chart shows Yearly candles...major support sits at 11,500, with major resistance at 13250 on this timeframe.


Friday, 25 May 2012

Money Flow for May Week 4

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

The Weekly charts below of YM, ES, NQ & TF show that they all closed a bit higher than the prior week on lower volumes. Price is hovering just above the lower Bollinger Band and the 50 sma (red). In the case of the NQ, price is still within its rising channel from the 2011 low. The YM and ES are trading just above longer-term trendline support, whereas the TF is just below price resistance.


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 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 = bearish (approaching MAJOR BREAKDOWN)
  • ES = bearish (approaching MAJOR BREAKDOWN)
  • NQ = borderline mildly bullish/mildly bearish
  • TF = bearish (bordering on MAJOR BREAKDOWN)


The 4-Hour charts below of YM, ES, NQ & TF show a Fibonacci retracement from this year's high to recent lows, as well as a downtrending channel. They are all still within the lower one-third of this correction, and the NQ is caught up in its channel. I would assign a SELL rating to anything within this lower one-third level...as such, price action is subject to bearish influences until it breaks and holds above with conviction and higher volumes.


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 24.73%.


Stocks Above 50-Day Average closed higher than the prior week at 23.97%.


Stocks Above 200-Day Average closed higher than the prior week at 50.75%.


I'd conclude that, in the short term and the medium term stocks are bearish under 30% to 20%, and in the longer term stocks are mildly bullish above 50% to 60% (however, they are borderline mildly bearish if they drop below 50% to 40%...as has been the case for the past nine weeks, all are still on negative watch for further potential weakness.

The VIX fell on the week by 1.14%, 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 rallied back above the 200 sma. The RSI, MACD, and Stochastics indicators are still trending down, but have hooked up to reflect this bounce. Near-term support is at the 200 sma at 56.66, followed by 50.00. Near-term resistance is at 65.00, followed by the 50 sma at 76.84.


The Daily chart below of the VIX shows that price has remained above the 20.00 level (which is the apex of a triangle breakout). If this support level holds, a resumption of a rally could send the VIX up to the triangle target of 33.22...one to watch for follow-through on intraday and daily price action.


As shown on the graph below of the Industry Groups, Gold/Silver gained the most, followed by Retail and the Banks. There were losses in Internet, Pharmaceuticals, Brokers, and Semis.


As shown on the graph below of the Major Sectors, the largest gains were made in Consumer Discretionary, followed by Utilities, Financials, Materials, and Consumer Staples. Technology lost the most, followed by Energy. Basically, markets bought (or did some short-covering on) a mixture of defensive and risk sectors.


As shown on the graph below, there were minor gains in the Financials ETF (XLF). The biggest losses were in the Emerging Markets ETF (EEM), followed by the Agricultural ETF (DBA), the Chinese Financials ETF (GXC), the European Financials ETF (EUFN), and the Commodities ETF (DBC).

Please see my post of May 24th which discusses the key to economic stability in China, Europe, and U.S.A. In summary, the key is a unified approach and implementation of monetary and fiscal policies to ensure that financial institutions are stable, that they can support any further economic growth of any substantive quality and quantity, and that they can attract confidence in foreign and domestic investments (in global, federal, and regional areas). There is work to be done in all three (particularly in Europe) to meet such an objective. Until then, the markets are faced with further uncertainty and will be choppy and continue to be affected by Europe's rumours and problems, including those of China and the U.S.A.

I would also draw your attention to the last paragraph of my May 24th post which discusses the bearish Death Cross influence now present in the Commodities ETF (DBC) and in the AUD/USD forex pair. Market action may be quite volatile and choppy for awhile, which may, in turn, cause volatile and choppy price action in the equity markets...ones to keep an eye on over the next days/weeks ahead.


As shown on the graph below, Copper lost the most, followed by Oil, 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 Dow Transports gained the most, followed by the Dow Utilities, the Russell 2000, and the S&P 500. Losses were made in the Nasdaq 100, followed by the Dow 30. There were big losses in the Emerging Markets ETF (EEM), and minor losses in Corporate Bonds (JNK), with gains in the High Dividend-Paying Stocks ETF (DVY)...showing market preference for defensive sectors.


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


The Daily ratio chart below of the SPX:U.S. $ shows that the SPX is trying to stabilize against the decline which began at the beginning of May. Price now sits just above major support at 16.00 and below major resistance at the 200 sma at 16.30...this is worth tracking because a failure to hold this major support level could send the SPX tumbling on a resumption of accelerating downside momentum. The RSI, MACD, and Stochastics indicators are still trending down, although the RSI and Stochastics have hooked up.


The next chart of interest is the Weekly chart below of the 30-Year Bonds (ZB). Once again, price closed just below trendline and Fibonacci fan line confluence resistance on high volumes. Whether accelerating momentum will carry it higher remains to be seen.


In summary, I'll be watching to see whether more volumes enter the markets next week during intraday action, and in which direction they dominate (and whether they can be sustained), in order to judge relevant moves with conviction. As well, I'll be watching for either rising or declining volatility (as depicted by the VIX), and money flow into/out of the U.S. $, Bonds, and the Financial stocks (which are in correction mode and are attempting to stabilize, as shown on the chartgrid below). Any meaningful and sustainable stabilization of the bank stocks will require the solid backing and implementation of unified government monetary and fiscal policies, both domestically, and globally, as I discussed above...otherwise, expect further choppiness and volatility in the markets (particularly the financial markets).


Enjoy your long weekend!

Thursday, 24 May 2012

The Key to Economic Stability in China, Europe, and US.A.

As I see things, China has the ability to fix its own problems through its own unified fiscal and monetary approach.

Europe has major problems and does not have a unified fiscal approach that is being actively implemented by all Eurozone countries. Germany will have to backstop and supply monetary support in some fashion if it truly wants to see all countries remain in the Euro. Otherwise, countries who do not wish to continue under the European Stability Mechanism (ESM) rules will leave the Euro...simple as that.

In the U.S., the key to continued economic growth and a renewed support (and confidence) in its markets (which is currently lacking) will depend on a strengthening of its own fiscal policies and its financial institutions, so that it may weather (and prosper in spite of) any major downdrafts in Europe. Until then, the markets are faced with further uncertainty and will be choppy and continue to be affected by Europe's rumours and problems.

To illustrate this last point, I'll be watching the bank stocks, as shown on the Daily chartgrid below to measure their performance against the Major Indices. At the moment, they're weaker (in spite of QE1, QE2, and Operation Twist), and are caught in the downdraft from March of this year...not a healthy sign for the equity markets to advance with confidence.


A further clue to near-term equity strength vs weakness may lie in these Daily charts of the Commodities ETF (DBC) and the AUD/USD forex pair. I last wrote about these in my post of May 15th. Price declined further on these, as well as in the equity markets. Since then, we now have a bearish Death Cross formation on both charts. Price is trading in the vicinity of prior swing lows, the decline in momentum is slowing, and Stochastics and RSI are beginning to diverge...signs that these markets are trying to stabilize and potentially reverse. However, they are now under the influence of bearish market action and may be quite volatile and choppy for awhile, which may, in turn, cause volatile and choppy price action in the equity markets...ones to keep an eye on over the next days/weeks ahead.

Wednesday, 23 May 2012

Home Price Index Spikes to Four-Year High

Data released on Wednesday shows that the purchase price of homes backed by Fannie Mae and Freddie Mac spiked to a new four-year high, as shown on the graph below.

We'll see whether this spike represents a turning point on increasing house prices (home price bubble forming?)...one to watch over the months ahead.


In contrast, MBA purchase applications fell 3% and and the amount of refinancing fell below the prior week's numbers, as shown below...also ones to keep a eye on over the next weeks.

Tuesday, 22 May 2012

Banks Hedging or Not Hedging is Not the Root Problem

It seems to me that the issue of whether or not banks are hedging their trades (recent example is JPM) would not even be under discussion/investigation (and a complete waste of tax payers' hard-earned money) and would disappear if the banks (as deemed "Too Big to Fail") were all taken off such a list and not continually propped up by tax payers. Regulators would not be having these discussions now if they had never propped up the banks in the first place, and every time the markets have dipped since 2009.

The issue really is that banks will always take risks if they know they will always be bailed out...simple as that...and that's where the buck stops...with the regulators and the banks (not the taxpayers). They should do the right thing and accept responsibility for their decisions so that bank depositors can make safe, sound, and informed decisions...that's their right. Information that every depositor has a right to know is whether that bank engages in proprietary trading. They can then choose to bank with another institution that does not, if that better suits their needs and addresses their concerns.

Richmond Manufacturing Index in Decline

Data released on Tuesday shows that the Richmond Manufacturing Index declined, and, as shown on the graph below, it's pretty evident that manufacturing conditions have been in general decline since April 2010.

Saturday, 19 May 2012

Canada's Business News Network

A reader asked if I would do a post recommending Canadian on-line links to the world's financial markets.

Here's my take (as a Canadian)...

During my trading day I have my TV tuned to BNN (Business News Network). It's Canada's only television service devoted exclusively to business, finance, and the markets. Their commentators are very professional, extremely knowledgeable in all world and financial affairs, and deliver unbiased information.

For those whose TV providers do not transmit this program, you may receive information from their above web link. There, you will find links to their bloggers, as well as to their latest services ~ mobile real-time TV (for smartphones and tablets),  live video stream (an inexpensive subscription to live, high-speed video stream), and Twitter.

You will be continually updated throughout the day (with repeat segments in the evening in case you missed them earlier in the day), not just on Canadian content/issues, but also on world issues (there is a heavy emphasis on their reporting of world issues as they unfold...and without delay, I would add).

Their network and commentators are second to none...trust me! I also find their guests very interesting and knowledgeable (they range from traders, to fund managers, analysts/researchers, current/former politicians, current/former banking officials, current/former world leaders, large/small business CEOs, etc.).

BNN has my full endorsement. You will find the link to their website along the right side of my Blog under Sites I Visit. By the way, I'm not affiliated with BNN in any way.

I hope this was useful in your pursuit of knowledge.

Friday, 18 May 2012

Money Flow for May Week 3

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

The Weekly charts below of YM, ES, NQ & TF show that they all closed much lower than the prior week on higher volumes. They have now broken out of their ranges from January. The YM, ES & NQ are sitting above their weekly 50 sma, while the TF has closed below...whether they find short-term support at these levels remains to be seen.


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 = bearish (approaching MAJOR BREAKDOWN)
  • ES = bearish (approaching MAJOR BREAKDOWN)
  • NQ = mildly bearish (approaching moderately bearish)
  • TF = bearish (bordering on MAJOR BREAKDOWN)

What I've been saying for a few weeks now:

           "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."

In this regard, since the NQ has almost reached the 2011 highs, we'll see if price begins to stabilize (or not) over the next week(s).


The 4-Hour charts below of YM, ES, NQ & TF show their respective intraday ranges from the latter part of March to Friday's close. The YM & TF are just above the (external) 161.8% Fibonacci retracement level, and the ES & NQ are just above the (external) 200% level. My short-term targets, if they broke and held below their Fibonacci ranges, were:
  • YM = 12012
  • ES = 1285.25
  • NQ = 2458
  • TF = 709.40
The NQ & ES have almost reached that target, while the YM & TF have not...we'll see what happens next week as to whether the bearish momentum/sentiment continues...any price below the 100% Fibonacci level carries a SELL rating on this timeframe...and so, they are all still subject to this bearish influence.


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 remained below last week's gap down and closed well below last week at 11.33%.

Stocks Above 50-Day Average closed well below last week at 17.24%.



Stocks Above 200-Day Average closed well below last week at 46.89%.



I'd conclude that, in the short term and the medium term stocks are a SELL under 20%, and in the longer term stocks are mildly bearish beneath 50% to 40%...as has been the case for the past eight weeks, all are still on negative watch for further potential weakness.


The VIX rose on the week (by 14.77%), 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 broke and closed below the 200 sma. The RSI, MACD, and Stochastics indicators are still trending down...however, the Stochastics is attempting to reverse. Near-term support is at 50.00, followed by 40.00. Near-term resistance is at the 200 sma at 55.95, followed by 65.00.


The Daily chart below of the VIX shows that price broke out of its yellow triangle to the upside. I'll watch to see if near-term support at 23.44 holds as support...with 21.00 as major support. Near-term resistance sits around 27.00...a break and hold above could send the VIX up to the triangle target of 33.22...one to watch for follow-through on intraday and daily price action.


As shown on the graph below of the Industry Groups, they all declined, with the exception of Gold/Silver. Semis, Biotech, Oil Services, Banks, and Brokers led the losses.


As shown on the graph below of the Major Sectors, they all declined, with Materials, and Financials leading the losses. Consumer staples, Healthcare, and Utilities lost the least...markets still favour the defensives, even in declines.


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


As shown on the Daily charts below of EEM and the BRIC countries, they are in downtrend, although the Chinese stock index is trying to stabilize...ones to watch over the next week(s).


The EEM and the BRIC countries are also depicted in the graph below. The Russian Index lost the most this week, followed by Brazil, EEM, China, and India.


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


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 Dow Transports, Nasdaq 100, Russell 2000, and the S&P 500 were the biggest losers, followed by the Dow 30, and the Dow Utilities. Losses were also made by the Emerging Markets ETF (EEM), the High Dividend-Paying Stocks ETF (DVY), and Corporate Bonds (JNK).


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


The Daily ratio chart below of the SPX:U.S. $ shows that the SPX continued to weaken in comparison to the $ and now sits just below major support at 16.00 and the 200 sma at 16.30...this is worth tracking daily because a failure to regain and hold above what is now major resistance could send the SPX tumbling on accelerating downside momentum. The RSI, MACD, and Stochastics indicators are still trending down, although Stochastics is attempting to cross up.


The next chart of interest is the Weekly chart below of the 30-Year Bonds (ZB). Price closed at a trendline and Fibonacci fan line confluence resistance point on high volumes. Whether accelerating momentum will carry it higher remains to be seen.


In summary, I'll be watching to see whether more volumes enter the markets next week during intraday action, and in which direction they dominate (and whether they can be sustained), in order to judge relevant moves with conviction. As well, I'll be watching for either rising or declining volatility (as depicted by the VIX), and money flow into/out of the U.S. $, Bonds, and the Financials stocks (which are in correction mode and have yet to stabilize, as shown on the chartgrid below).


Enjoy your weekend!