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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...
please read my full Disclaimer at this link.

Skater

Skater

Events

UPCOMING (MAJOR) ECONOMIC EVENTS...
* Mon. Feb. 20 ~ U.S. Markets closed for Presidents' Day Holiday
* Wed. Feb. 22 @ 2:00 pm ET ~ FOMC Meeting Minutes
* Wed. Mar. 1 @ 2:00 pm ET ~ Beige Book Report
* Fri. Mar. 10 @ 8:30 am ET ~ Employment Data
* Tues. Mar. 14 ~ 2-day FOMC Meeting Begins
* Wed. Mar. 15 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts + @ 2:30 pm ET ~ Fed Chair Press Conference
* Wed. Mar. 15 @ 8:30 am ET ~ Retail Sales
*** Click here for link to Economic Calendars for all upcoming events

Friday, March 29, 2013

Money Flow for March Week 4

Further to my last Weekly Market Update, this week's update will look at:

  • 6 Major Indices
  • 9 Major Sectors
  • 30-Year Bonds
  • U.S. $
  • Emerging Markets ETF (EEM) and BRIC Indices & ETF (BKF)
  • Germany, France, and the PIIGS Indices

6 Major Indices


As shown on the Weekly charts and the percentage gained/lost graph below of the Major Indices, the largest gains this past week were in the Dow Utilities, followed by Dow Transports, Nasdaq 100, S&P 500, Dow 30, and Russell 2000.

The Indices remain (technically) in overbought territory on their Weekly and Monthly timeframes, which may be viewed as overvalued to some and bullish to others. 



9 Major Sectors


As shown on the Weekly charts and the percentage gained/lost graph below of the Major Sectors, the largest gains were made in Health Care, followed by Utilities, Consumer Staples, Cyclicals, Energy, Industrials, Technology, Financials, and Materials. There was a bigger appetite for the 'Defensive' Sectors as the S&P 500 approached and finally closed above its all-time closing high.

The Sectors also remain (technically) in overbought territory on their Weekly and Monthly timeframes, which may be viewed as overvalued to some and bullish to others.



30-Year Bonds


The 5-Year Weekly chart below of 30-Year Bonds shows that price continued its bounce from the prior two weeks and is sitting just below major resistance. A break and hold above resistance may coincide with profit-taking in the Major Indices/Sectors...something I'll be watching for in the coming week(s). I'd need to see major support below broken and held on increasing volumes before I'd suggest that perhaps big money is finally flowing out of Bonds to be deployed into equities, and/or commodities, currencies, other instruments. However, there may be some drifting out within this current range (in between support and resistance) that is not so apparent because of Fed intervention.


U.S. $


As shown on the 5-Year Weekly chart below of the U.S. $, price closed (once again) above an important convergence of two 60% Golden Fibonacci ratio levels. A break and hold above its recent highs may also coincide with some profit-taking in the equity markets, or serve as a hedge on any further equity rally.


Emerging Markets ETF (EEM) & BRIC Indices & ETF (BKF)


As shown on the 5-Year Weekly chart below of EEM, price is retesting major resistance. A break and hold above may positively influence the 'riskier' Sectors, while a break and hold below major support [the confluence zone of the 50% Fibonacci level, 50 and 200 smas (note the bearish 'Death Cross' formation on this timeframe as price is still subject to its bearish influences), Volume Profile POC, and lower Bollinger Band] could produce a drag on any further equity rally...an important ETF to watch going forward.


You can see on the Daily thumbnail charts below of the BRIC countries and ETFs, that those Indices/ETFs are attempting to rally from or near to a support level of one form or another.


The following graph shows gains/losses made year-to-date for these countries and ETFs. You can see that Brazil has been battered the most, followed by Russia, and India, while China is basically flat on the year...ones to watch as further weakness in these countries may finally negatively affect U.S. equities.


Germany, France, and the PIIGS Indices


The Daily thumbnail charts below show that Portugal, Italy, Greece, and Spain have broken their uptrend lines, while Germany, France, and Ireland are in the process of testing theirs. Greece looks particularly vulnerable at the moment, as does Italy.


The following graph shows gains/losses made year-to-date for these countries. Italy, Greece, and Spain have suffered the most losses, so far this year, while Ireland has gained the most, followed by France, Portugal, and Germany. Unless the other countries, particularly the southern European countries pick up the pace, I doubt whether Ireland can carry Europe on its own for the rest of the year...also ones to watch, as continuing weakness may produce a drag on U.S. equities.


Summary


In summary, as I pointed out here, the Dow 30 and Russell 2000 have made a new all-time high and closing high, while the S&P 500 made an all-time closing high on Friday (however, its all-time intraday high of 1576.09 remains unbroken and is still serving as major resistance at a formidable triple-top formation and represents an opportunity for some cannibalization, as I wrote about here. The Nasdaq 100 has lagged the other three Major Indices, so far this year, and is hampered by major resistance. However, all four remain in a strong uptrending channel on the 4-Hour timeframe, as I mentioned here and will likely need to be broken convincingly before the trend changes. We'll see whether the longer-term resistance scenario holds for the SPX to turn it back, or whether the shorter-term uptrend continues to push it up and over major resistance.

The U.S. $ has strengthened, while the Euro has slumped, as I wrote about here. Foreign (and U.S.) markets have been trading erratically, as I wrote about hereherehere, and here. As I've mentioned above, they will need to strengthen considerably (otherwise I'd be looking for the 'Canaries' to drop, with the others following suit) if a convincing case is to be made that all is well in the U.S. and that now is the right time to be buying stocks, particularly at their current (technically) Weekly and Monthly overbought levels. Brent Crude Oil and WTIC have begun to rally (no doubt in taking advantage of the recent banking and fiscal upheaval in Europe), and I'm watching Brent to see if the spread begins to widen again in favour of Brent, as I wrote about here and here.

Next Friday we have a few data releases, including Non-Farm Employment Change, Trade Balance, Unemployment Rate, and Average Hourly Earnings. Inasmuch as the first three are hinting at some slight economic improvements, wages have yet to make a comeback to the pre-2009 financial crisis levels, as shown on the following graphs. Without seeing much improvement in wages this year, the average consumer may not be so inclined to keep piling on debt as product prices continue upward (which they will do as companies look for ways to keep improving profits, while lowering costs). In that regard, we may see a slow and choppy growth for 2013 on the earnings and economic front...whether the stock market accurately reflects that is another matter, particularly with the Fed pouring gasoline on the fire.


Happy Easter and good luck next week!


Thursday, March 28, 2013

Q1 2013 Market Wrap-Up

Each candle on the following charts of the 4 Major Indices represents One Quarter. The last candle represents Q1 of 2013 and closed today (March 28th, since the markets are closed tomorrow for Good Friday of the Easter long weekend).

You can see at a glance that the Nasdaq 100 has lagged the other three all year, so far, and is hampered by major resistance. The Dow 30 and Russell 2000 have made a new all-time high and closing high, while the S&P 500 made an all-time closing high today (however, its all-time intraday high of 1576.09 remains unbroken and is still serving as major resistance at a formidable triple-top formation and represents an opportunity for some cannibalization to occur, as I wrote about here.).


The following percentage gained/lost graph shows that, from the beginning of January to today, the Russell 2000 is the leader, followed by the Dow 30, S&P 500, and Nasdaq 100.


The following percentage gained/lost graph of the 9 Major Sectors shows that, for 2013, the market participants have positioned themselves more defensively, as the largest gains have been made in Health Care, Consumer Staples, and Utilities.


Going forward into Q2, Technology will need to pick up the pace and make a convincing argument to attract serious money into all sectors of the equity markets to keep up the bullish sentiment. Otherwise, these markets could be in for a pullback, particularly in view of the financial woes that have surfaced again in Europe. We'll see whether buying gets more aggressive in the other, riskier sectors, now that the psychological closing high has been broken on the SPX; however, the SPX will still need to close and hold above its all-time high...ones to watch (particularly the Financial Sector), as well.

No Government for Italy...So, What's Next?

This news was just announced...and the SPX and EUR/USD rally...go figure...


Oh, look...another 'surprise'...


Wednesday, March 27, 2013

Why It's a Good Idea to Regress to the Era of the Slide Rule ;-)


U.S. $ Strength Continues as the Euro Slumps

The U.S. $ is still strong, as shown on the Daily chart below...will see if it carries on over resistance. Any hint of weakness may be the catalyst that propels the markets higher...but I'm thinking that with the banking mess in Europe at the moment, that may be a long shot.

Angela Merkel needs to pull a rabbit out of the hat...Euro-bonds perhaps?...or even just another rumour about them? A rumour wouldn't surprise me!


In the meantime, the EUR/USD continues to slump, as shown on the Weekly chart below. Major support lies in the vicinity of the 50% Fibonacci retracement level at 1.2125.


'Bi-Polar' Markets

Awaiting a convincing breakout/breakdown (and hold) while volatility and volumes build on YM, ES, NQ & TF...


For now, they remain in this strong uptrending channel...


I Dub Thee 'Turn-Around-Wednesday'


Source: http://www.indexq.org/

UPDATE: 1:15 pm EST: Which market has been hurt the most over the past couple of days by the Cyprus banking crisis? Hint, see data below, as well as yesterday's post.


UPDATE: 7:15 pm EST: This Daily ratio chart of the Russian Index vs. the Greek Index shows Russia's relative strength over Greece for the past two days. A break and hold above 30.00 could launch it higher above the trading range that it's been in since last November on further weakening of Greece, while a break and hold below 25.00 could signal much more trouble ahead for Russia.


In the meantime, Brent Crude Oil and WTIC have both popped during the past several days, as shown on the Daily chart below. We'll see if Brent now holds above its 200 sma (109.44), as all three indicators are pointing to a further rally...its next target would be the 50 sma at 112.70, while major support lies at 1.05. WTIC is approaching major resistance, but it may break above and follow suit if Brent continues to rally...100.00 would be the next upside target, while major support sits well below at 90.00.


The following Daily ratio chart of Brent:WTIC shows a very slight stabilization (at a major support level) in the spread between the two over the past couple of days...one to watch to see if that continues, or if it begins to widen in favour of Brent, once more.


Monday, March 25, 2013

Spot the 'Canaries in the Coal Mine' in Today's Action


Source: http://www.indexq.org/

Watch for a break and hold below 1.2843 on EUR/USD...


...as the Daily uptrend has already been broken.


Meanwhile, here's a look at today's performance of the EURO STOXX Banks Index, as well as the Top Gainers/Losers in that index.


Sunday, March 24, 2013

War of the Worlds...VIX Pop or Drop?

This Daily ratio chart of the Russian Index vs. the European STOXX 50 Index shows that Russia has been much weaker and is sitting on major support. A break and hold below that level could indicate more disruption ahead for both of those nations.


Price has closed just below major support on the following Daily chart of the Russian Index vs. the SPX. I'll be watching for a continuation of weakness in Russia below what is now a major resistance level, particularly if we see another bearish "Death Cross" develop.


In the meantime, the following Daily ratio chart of the Russian Index vs. China's Shanghai Index shows that price has now dropped below major support as Russia continues to underperform China. A hold below that level, as well as the formation of a bearish "Death Cross," would signal further weakness is in store for Russia.


China's Shanghai Index has been outperforming the SPX recently, however, as both the 50 and 200 smas have converged at a major support level just below Friday's close, as shown on the following Daily ratio chart. A drop and hold below that level could signal much further weakness ahead for the SPX, particularly on the formation of a confirming bearish "Death Cross."



On the metals side of things, I'm watching to see if price drops below major support and for a bearish "Death Cross" to form on the following Weekly chart of  Dr. Copper.


In the meantime, we'll see if price bounces at this major support level to reverse a recent bearish "Death Cross" on the Weekly timeframe of the following chart of Platinum. There have been increased interest and volumes in 2013 and at this level.


Further weakening of these two metals below their major support levels may finally have a negative influence on equities...ones worth watching.

The Commodities ETF (DBC) has fallen below major support on increased volumes, while the AUD/USD forex pair has rallied to a major resistance level, as shown on the Weekly charts below.


No doubt, North/South American traders will be watching for overnight reaction to the developing situation in Cyprus in the Asian, Russian, and European markets, as well as the currency and commodity markets (also see my last post on Brent and WTIC). We'll see if the VIX pops or drops (as it sits just below major resistance) when the SPX begins trading on Monday.


Saturday, March 23, 2013

Brent:WTIC Ratio Hinting of Further Weakness in Europe

Friday's drop below major support on the following Brent:WTIC Daily ratio chart may be signalling further woes to come out of Europe.

Keep an eye on the RSI, MACD, and Stochastics indicators, which are diverging at the moment, but which have yet to hook up on confirming price pattern.


The next Daily chart shows that Brent is approaching major support at 105.00. A drop and hold below this level may confirm such Euro-weakness.


Friday, March 22, 2013

Money Flow for March Week 3

Further to my last Weekly Market Update, this week's update will look at:

  • 6 Major Indices
  • 9 Major Sectors
  • 30-Year Bonds
  • U.S. $

6 Major Indices


As shown on the Weekly charts and the percentage gained/lost graph below of the Major Indices, there were minor gains in the Dow Utilities, while the Dow Transports lost the most, followed by the Russell 2000 and the S&P 500. The Dow 30 and Nasdaq 100 were flat on the week.

The Indices remain in overbought territory on their Weekly and Monthly timeframes, which may either be viewed as overvalued to some and bullish to others. Next week is a short week, as the markets wind down for month-end, end of Q1 for 2013, and the Easter holiday. 

Whether or not the SPX rallies to meet its all-time high of 1576.09 any time this week and whether the Russell 2000 E-mini Futures Index (TF) makes it to 970 by April Fool's Day remains to be seen.

However, inasmuch as Technology is lagging the other Indices this year, I'd keep a close watch on the Nasdaq 100 for signs of improvement or further weakness, since it may influence the other Indices.



9 Major Sectors


As shown on the Weekly charts and the percentage gained/lost graph below of the Major Sectors, the largest gains made this past week were in Consumer Staples, followed by Health Care. The largest losses were in Materials, followed by Financials, Energy, and Industrials. The others were flat.

We can see that there was a flight-to-safety trade into the "defensive sectors," while profit-taking continued in the higher-risk sectors. All sectors are in overbought territory on the Weekly timeframe (as they are on their Monthly timeframe, with the exception of Technology, which is headed in that direction). 



30-Year Bonds


The 5-Year Weekly chart below of 30-Year Bonds shows that price continued its bounce from the prior week, broke back into the middle of what was a recent bear flag (but is no longer), and is sitting in between major support and resistance. There was an increase in volumes this past week as market indecision reigned supreme over Europe's machinations regarding the Cyprus banking crisis/bailout issue, and markets used this as a hedge against risk. I'll need to see major support broken and held on increasing volumes before I'd suggest that perhaps big money is finally flowing out of Bonds to be deployed into equities, and/or commodities, and/or currencies, and/or other instruments. A break and hold above major resistance may coincide with further profit-taking in the Major Indices/Sectors.


U.S. $


As shown on the 5-Year Weekly chart below of the U.S. $, price continued to bounce around in between Fibonacci resistance and support levels, which happen to represent an important convergence of two 60% Golden Fibonacci ratio levels. A break and hold above its recent highs would be surprising, but is still probable. It may take a pretty hefty catalyst of perhaps a negative global event or domestic financial event to propel the dollar higher, or traders may view this as a safe-haven play in the event the equity markets explode higher in the week(s) ahead.


Summary


In a nutshell, indecisive and risk-averse spring to mind in summarizing this past week's market actions. Going forward, we'll see if participants consider markets (including the 'riskier' sectors) to be bullish and ripe for a further rally at current levels, or overvalued with further profit-taking occurring. Any further rise before a meaningful pullback may become parabolic...however, even parabolic rallies eventually run out of steam and usually end up back where they started...something to think about when considering a further rally as being sustainable from current overbought Weekly and Monthly levels.

Enjoy your weekend and best of luck next week...it's a short one due to the market closure on Good Friday.

Cause and Effect -- 'Euro-grip' = Shake, Rattle and Roll

The following 60 min (market hours only) charts of the YM, ES, NQ & TF illustrate the reactions to this week's unsettled (so far) banking crisis/bailout battle between the EU and Cyprus

There is lots of indecision in these markets as they react to the ongoing saga in Europe's fragmented banking, political, and economic systems (on which the Troika is attempting to get a firm grip by implementing 'unusual' and what will become precedent-setting methods, as the irrefutable Law of Attraction dictates).


Link to chart: http://screencast.com/t/26T0k9ybEBf