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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...
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Thursday, July 03, 2014

"RISK-ON" Theme to Begin Fourth of July Fireworks

Since the lows of 2009, markets have been trending upwards, generally, with a couple of pullbacks in 2010 and 2011.

From the Weekly comparison chart below of the Dow, S&P 500, Nasdaq 100, and Russell 2000 Indices, you can see how much markets have gained, percentage-wise, since those lows. The Nasdaq is in the lead, followed by the Russell, S&P, and the Dow, thanks to the Fed's monetary policy pertaining to financial price stability, inflation, and unemployment concerns.

Since Janet Yellen indicated in her speech to the IMF on July 2nd that their monetary policy does not need to deviate from those concerns, I'd expect this bull market to, basically, continue until that changes. There may be periods of volatility over the next year or two that may be influenced by world incidents, or even by month-to-month economic data, especially concerning inflation or corporate earnings, but until we see any political uncertainty arise in the markets closer to the U.S. Presidential election in 2016, we may see a steady climb continue.


The next Weekly chart is the ratio of the SPX:VIX. This week's trading closed above near-term resistance of 180.00 and Momentum made another higher (all-time) swing high. Price may fluctuate between 180.00 and 150.00 before a further climb is made, if the 180.00 level (now near-term support) is breached.


The following Daily chart of the S&P 500 E-mini Futures Index (ES) shows a steady climb upwards in its channel from the 2013 breakout towards a confluence of the channel median with a Fibonacci Fanline and a Fibonacci extension level around the 1990 or 2000 level, as I mentioned in my post of June 8th (I was a little early in my projected date of the end of June for this target).

One thing I'm noticing on this chart is the drop-off in volumes...one to watch over the coming days/weeks to see if this trend continues, whether it has any effect on this upward climb, or whether we see more volumes pour into the Nasdaq and Russell Indices to confirm a full "Risk-On" scenario. This latter scenario would become evident over time on the comparison chart above...another one to watch.


Happy Fourth of July to my U.S. friends! Have a fun and safe long weekend.