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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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Tuesday, February 24, 2015

The Line-in-Sand Level for SPX:VIX Ratio

150.00 is the Bull/Bear Line-in-Sand level for the SPX:VIX ratio as shown on the Daily chart below.

Price closed today (Tuesday) at 154.53...failure to hold 150.00 could see a serious correction in equities and possible break of the critical 60.00 level, which has been threatened numerous times since mid-October 2014.

Momentum has been choppy and rising tentatively since mid-January of this year, but has yet to make a new all-time high. Price has definitely not made an all-time high on this ratio, and is not confirming the all-time high set on the SPX, as shown on the second Daily chart. As well, momentum on the SPX has also been choppy and rising tentatively since mid-January of this year, but has yet to make a new all-time high. These three observations tell me that, although the SPX remains in uptrend, it is rising in a choppy, tentative and fragile manner at current levels. Furthermore, the SPX will reach a major external Fibonacci level (161.8%) at 2138, where we may see some major profit-taking occur on rising volatility.

SPX:VIX Daily Ratio Chart

SPX Daily Chart

Wednesday, February 11, 2015

Homebuilders Sector at a Critical Level

The following Daily chart of the Homebuilders Sector (XHB) shows, that it reached a new 3-year high today (Wednesday), but not a new closing high. However, the RSI, MACD and Stochastics indicators are not yet confirming a move higher. Note the high volume activity since the beginning of this year...signalling major rotation in and out of this sector, perhaps, in readiness for a big move one way or the other.


When compared with the Financials Sector (XLF), the following Daily ratio chart of XHB:XLF shows that the XHB weakened from the beginning of 2013 until mid-October 2014, while XLF outperformed. At the moment, price has bumped up against major resistance at 1.50 and the RSI, MACD and Stochastics indicators are not confirming another move up yet, even though we now have a bullish Golden Cross of the moving averages. We may see a retest, first, of these averages around the 1.40/38 level before the next major move is established.


When compared with the S&P 500 Index ($SPX), the following Daily ratio chart of XHB:$SPX shows that the XHB weakened from mid-2013 until mid-October 2014, while the $SPX outperformed. At the moment, price has bumped up against major resistance at 0.0175 and the RSI, MACD and Stochastics indicators are not confirming another move up yet, even though we now have a bullish Golden Cross of the moving averages. We may see a retest, first, of these averages around the 0.0165/60 level before the next major move is established.


Since the "continued recovery" in the U.S. is seen to be dependent, in part, on strong homebuilding activity, it may be worth measuring its "strength" against the above sector and index over the near and longer terms...I wouldn't be surprised to see some weakness of the XHB against these in the short term.