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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.

Dots

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Events

UPCOMING (MAJOR) ECONOMIC EVENTS...
* Wed. Nov. 22 @ 2:00 pm ET ~ FOMC Meeting Minutes
* Thurs. Nov. 23 ~ U.S. Markets closed for Thanksgiving holiday
* Fri. Nov. 24 @ 1:00 pm ET ~ U.S. Markets close early
* Wed. Nov. 29 @ 2:00 pm ET ~ Beige Book Report
* Fri. Dec. 8 @ 8:30 am ET ~ Employment Data
* Tues. Dec. 12 ~ 2-day FOMC Meeting Begins
* Wed. Dec. 13 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts + @ 2:30 pm ET ~ Fed Chair Press Conference
* Mon. Dec. 25 ~ U.S. Markets closed for Christmas holiday
*** Click here for link to Economic Calendars for all upcoming events

Saturday, December 31, 2016

2016 Market Wrap-Up: S&P 500 Index, SPX:VIX Ratio & USD

This post will outline how the S&P 500 Index and the SPX:VIX Ratio performed throughout 2016 and how they ended the year. It will also take a look at where the US Dollar Futures Index finished up.

S&P 500 Index


The following four charts of the S&P 500 Index will depict how 2016 ended, on a yearly, quarterly, monthly, and weekly basis.

Each candle on Chart #1 represents a period of one year.

After breaking out to all-time highs and above major resistance, the 2016 candle closed near its high, after re-testing last year's low and the close and open of the 2013 and 2014 candles, respectively. It would appear that, after shaking out short-sellers, the bulls are firmly in control of upward momentum. We'll see if the Momentum indicator makes a new high on the 2017 candle...a distinct possibility, if price can remain above major support at 2100. If price drops to that level, we'll see a rise in volatility, and, if price drops and holds below that level, volatility will rise drastically.

Chart #1 SPX Yearly

Each candle on Chart #2 represents a period of one quarter.

The Q4 candle closed in its upper 1/4, after re-testing the lows of Q3, as well as, what was major resistance, now major support. I'd like to see the Momentum indicator begin to reverse its current downward drift, if price moves higher...otherwise, we could see weakness and an increase in volatility in the first quarter of 2017.

Chart #2 SPX Quarterly

Each candle on Chart #3 represents a period of one month.

The December candle closed in its upper 1/3, after re-testing November's close and highs. The Momentum indicator broke its downtrend (which began in 2014), but has failed to make a new swing high. This signals that we'll likely see an increase in volatility in the medium term, until a new swing high is made on MOM.

Chart #3 SPX Monthly

Each candle on Chart #4 represents a period of one week.

The last week closed on a bearish engulfing candle, after re-testing the top Bollinger Band and prior all-time highs, once again. The Momentum indicator has broken slightly above its 2016 downtrend, but has yet to make a new swing high. This signals that we'll likely see an increase in volatility in the short term and lower prices down to and on either side of 2200, until serious buying resumes and a new swing high is made on MOM.

Chart #4 SPX Weekly

SPX:VIX Ratio


The following four charts of the SPX:VIX Ratio will depict how 2016 ended, on a yearly, quarterly, monthly, and weekly basis.

Each candle on Chart #5 represents a period of one year.

Price on this ratio closed near its all-time high and above major resistance at 150 on a massive bullish engulfing candle, after a hefty retreat down into the "Fragile Zone" this year. Volatility was enormous in 2016 and the Momentum indicator drifted slightly upwards, but has yet to make a new swing high. We'll see if the Momentum indicator makes a new high on the 2017 candle...a distinct possibility, if price can remain above major support at 150. If price drops to that level, we'll see a rise in volatility, and, if price drops and holds below 140, volatility will rise drastically.

Chart #5 SPX:VIX Yearly

Each candle on Chart #6 represents a period of one quarter.

The Q4 candle closed in its top 1/3 on a massive high wave candle. Although price was plagued by uncertainty, it finished relatively strong on this timeframe. Although the Momentum indicator drifted higher in 2016 from its lows in mid-2015, it has yet to make a higher swing high and dipped by the end of the year.

Chart #6 SPX:VIX Quarterly

Each candle on Chart #7 represents a period of one month.

The December candle closed near its low after briefly breaking out to new highs and is high-basing in the upper 1/3 of this year's candles. While the Momentum indicator broke out to a new swing high several months ago, it has yet to confirm December's brief (and failed) breakout.

Chart #7 SPX:VIX Monthly

Each candle on Chart #8 represents a period of one week.

The last week closed near the bottom of its large bearish candle, after briefly breaking out (and back into a long-term uptrending channel from the 2011 lows) the week before. Bollinger bands are tightening and the Momentum indicator has been making a series of lower highs this year on this timeframe...suggesting that serious longer-term, committed new buying has yet to make its way into the S&P 500 Index. Until it does, I think we'll see a rise in volatility, particularly if this ratio drops and holds below 150, and, especially, 140. Bulls will need to come out in full force to see it rally back into the rising channel above the 200 level...and be confirmed by a new MOM swing high on this short-term timeframe.

Chart #8 SPX:VIX Weekly

US Dollar Futures Index


Each candle on Chart #9 represents a period of one month.

The December candle closed in its upper 1/3 on a high wave candle...although, it's, technically, a bullish candle and closed higher than the prior month, it still represents indecision on this timeframe, after breaking out to new highs this year. It's caught in between a 161.8% external Fibonacci retracement level at 100.54 (major support) and a 161.8% Fibonacci extension level at 103.47 (minor resistance). The next Fibonacci resistance level is 107.08 (a 200.0% external Fibonacci retracement level). Bollinger bands are still widening on this timeframe, and, if price can hold above 100.00, then it could very well rally to 107.00. However, it may be influenced by what happens in the S&P 500 Index and the SPX:VIX ratio, so it's worth monitoring how those behave in the short and longer terms, as outlined above.

Chart #9 US Dollar Monthly

CONCLUSIONS


2016 was a year of major volatility. In my Market Forecast for 2016, I had anticipated an increase of around 5-6% in equities, in general, as well as a rise in volatility. In fact, the S&P 500 Index had increased by 11.14% by mid-December, but closed at 9.54% by the end of the year.

2017 will, no doubt, hold a lot of uncertainty in relation to what happens with a new U.S. political administration and future economic and fiscal policies that may be enacted, what domestic and foreign events and policies develop, and what the Fed decides regarding interest rates. However, if we see general cooperation being maintained among government officials, we could see much less volatility next year (especially since the 2016 U.S. Presidential election is behind us)...and it may be a slower, steadier climb to higher prices in equity markets than we saw in 2016, along with a rising U.S. dollar. The timeframes on the above-referenced instruments are one of many methods that can be used to evaluate the effects from such future influences.

A LOOK INTO THE FUTURE


In closing, I'd mention that my Market Forecast for 2017 can be found at this link...and that my longer-term SPX Outlook to 2020 U.S. Presidential Election can be found at this link.

Of course, I realize that a forecast is, simply, one possibility. However, it can be a useful tool for any serious trader/investor to implement in order to track, assess and learn from one's future successes and failures on a short, medium and long-term basis. And, it can be modified/updated during its duration, depending on world and domestic influences at the time.


I wish you good fortune with all your endeavours in 2017!

Happy New Year 2017!

Saturday, December 24, 2016

Saturday, December 10, 2016

Four-Year Dearth in Retail Sales

The Retail Sales m/m report for November (includes auto sales) is being released on December 14 at 8:30 am...the consensus is 0.3%.

For around 10 years, from 2002 to 2013, average monthly sales were 1.0%. For the past 4 years, average sales have been less than 0.5%.

We'll see if this lackluster trend continues into 2017...or, whether Americans will be induced to open their wallets again by the recent stock market "Trump bump" and as the Trump economic and tax agendas become clearer and take shape.

Let's see if December's report is any rosier when it's released next month (January 13th @ 8:30 am).


* UPDATE December 14th:

Actual Retail Sales m/m print for November was 0.1%...lower than forecast...watch this space...


AAPL Poised For New Highs

If AAPL can break and hold above 120, we could see it soar to new highs. Watch for a bullish crossover of the MACD and PMO indicators and for the RSI to remain above the 50.00 level, as shown on the following Weekly chart.

Weekly AAPL

It's important that price hold above 110, as shown on the second Weekly chart below, as it represents a confluence of price and a 61.8% Fibonacci fanline major support level.

Weekly AAPL

Perhaps if AAPL executives can be persuaded to repatriate its considerable overseas cash to the U.S., in exchange for forgiveness of paying taxes on such a transaction by some kind of Congressional intervention (which includes, say, AAPL committing to invest in public infrastructure programs), you could see its stock break out to new highs next year. Maybe President-elect Trump's team can work some kind of magic in this regard.

Friday, December 09, 2016

Tech May Hold Key to Continued Santa Rally

From the close of November 8th to the close of December 9th (today), the Dow 30 Index has gained 1,424.11 points...a gain of 7.77% since the U.S. Presidential election.

Daily Dow 30 Index

Percentages Gained Since U.S. Presidential Election

In the meantime, while the Nasdaq Composite Index has finally broken out and closed at all-time highs, the Nasdaq 100 Index is still stuck in a 1 1/2 year trading range. We'll see if it plays catch-up to break out, and round out, a potential continued Santa rally into the end of this year...and, possibly, signal overall market strength for 2017, as I wrote about in my Market Forecast for 2017 post.

Weekly Nasdaq Composite Index

Weekly Nasdaq 100 Index


Sunday, December 04, 2016

EUR/USD Nearing Critical Support Level

As the EUR/USD Forex pair continues its rather steep decent during the past couple of months, it is approaching a critical major support level around 1.04, as shown on the Weekly chart below.

Not only will a drop to that level form a potential triple bottom pattern, it will also hit a triple confluence of long-term price, trendline and regression channel "mean" major support.

A drop and hold below 1.04 could see a catastrophic price plunge to levels (0.8827) not seen since October 2000. We may, however, see price overshoot and drop below 1.04 briefly, before a potential bounce occurs.


In this regard, it may also be worthwhile keeping an eye on the European Financials ETF (EUFN). As shown on the Daily chart below, price has recently managed to pop back above a major resistance level at 18.00 on a high volume spike.

If price can remain above 18.00, if the RSI can remain above 50, and if we get bullish crossovers on the MACD  and PMO indicators, it may have a positive influence on the Euro.

But, major weakness in the Financials sector could bring about a catastrophic drop in the Euro. In that scenario, we'll see whether the ECB has any bullets left in its monetary armory to prevent such an event.


Thursday, December 01, 2016

Market Forecast for 2017: SPX at 2400 by End of Year

On November 26th, I posted an article which outlined a hypothetical scenario of the S&P 500 Index reaching 2700 by the next U.S. Presidential election in November 2020.

I realize that this is only one of many possibilities that lie ahead for the SPX. However, given the aggressive economic, tax and fiscal agenda that President-elect Trump is currently promoting, it could, very well, materialize without too much resistance.




In keeping with the trajectory and velocity associated with that premise, I anticipate that the SPX could reach 2400 by the end of 2017, as shown on the Monthly chart below.

Monthly SPX

In last year's market outlook for 2016, I anticipated a rise of around 5-6% in equities, in general, in a run-up to this past November's Presidential election.

As of today's date of December 1st, you will see that the S&P 500 Index has gained 7.2% Year-to-date, as shown on the first graph below, while the Dow & Nasdaq Transport Indices and Russell 2000 Index have gained the most. The Nasdaq 100 Index has been the weakest.

The second graph shows the steep rise of the Dow & Nasdaq Transport Indices and Russell 2000 Index from the day after the election.



The third Year-to-date graph shows the percentages gained/lost for the 9 Major Sectors

Energy, Industrials, Financials and Materials have gained the most, while Consumer Staples has gained the least, and Healthcare has lost 4.16%, so far, this year. 

The last graph shows the steep rise of the Energy, Industrials, Financials and Materials sectors, and the decline of the Healthcare and  Consumer Staples sectors, since the election.



CONCLUSIONS

Assuming that volatility will be kept low (which can be monitored in a manner as described in my post of November 26th), I'd project that equity markets, in general, will gain around 11% in 2017. That would place the S&P 500 Index at just above the 2400 level by the end of the year.

In that regard, I think it will be important that Financials, Large-Caps and Small-Caps stay strong and that market participants continue to favour the riskier sectors over their more defensive counterparts. As well, I'd like to see Technology firm up and gain strength to support such a bullish outlook.

~~~~~~~~~~~~~~

P.S.
By the way, for those who have pooh-poohed the validity or value of my forecasts, I would, respectfully, mention that forecasting is a useful tool for any serious trader/investor to implement in order to track, assess and learn from one's future successes and failures on a short, medium, and long-term basis.

And, they can read my prior years' forecasts at this link and determine their merit for themselves.

~~~~~~~~~~~~~~

P.S. -- SHOUT OUT TO INVESTING.COM...

As a contributing writer to Investing.com, I'd like to thank them for inviting me, once again, to participate and share my views and for publishing my article at this link on their site on December 28th, along with some of their esteemed contributors. It's a privilege to have contributed to their annual forecasting special during the past few years.



* UPDATE February 21, 2017: Since the beginning of this year, the SPX has already gained 5.65%, as shown on the following Percentages gained/lost graph of the U.S. Major Indices...a little over half-way to its projected 2017 percentage increase.

U.S. Major Indices -- Year-to-Date percentages gained

Wednesday, November 30, 2016

Beige Book Report: Current Conditions Do Not Support Dec/16 Rate Hike

This summary of today's release of the FOMC Beige Book Report (courtesy of Nasdaq.com) is hinting that current soft economic conditions may not be supportive of an FOMC rate hike in December.

We'll see what current (and any anticipatory) factors may have been considered that would warrant a rate hike, if one is, in fact, implemented...hopefully, they will be clearly spelled out in Ms. Yellen's 2:30 pm press conference that will follow the Fed's rate announcement on December 14th.


Saturday, November 26, 2016

SPX Outlook to 2020 U.S. Presidential Election

I've written about the SPX:VIX ratio many times in the past. I've mentioned, as recently as November 13th, that it will be necessary for the bulls to hold price on this ratio above the 150 level in order for SPX equities to continue their rally with little volatility to impede this rise.

This post will take a look at one possible scenario that could see the SPX reaching a price of 2700, or so, by 2019, in anticipation of the next U.S. Presidential election in 2020.

As shown on the Monthly chart of the SPX below, price has rallied this month from the "median" of a long-term regression channel (which begins at the lows of 2009), and has broken out to all-time highs (above an almost two-year consolidation/congestion level) since Donald Trump was elected as President on December 8th.

It looks poised to continue this advance in a manner similar to that which occurred after Barack Obama was re-elected as President in November of 2012. If it did continue on that trajectory and at that velocity, we could see price reach the "+2 standard deviation level" on this channel at 2700 by November-December 2018. After such an advance, price could very pull back to around the "-1 standard deviation level" to around 2370, then bounce back to 2700 by the next election in November 2020.

Of course, that hypothetical scenario would depend on a lot of factors -- especially whether President-elect Trump's ambitious economic/tax/fiscal agenda can be supported by Congress and implemented, together with whatever future monetary policy measures may be enacted of the Fed -- to merit such an exuberant advance in equities.

Monthly SPX

As can be noted on the following Daily, Weekly, and Yearly (each candle represents a period of one year) ratio charts of SPX:VIX, it will be critical that bulls hold price above the 150 level, which is defined as a major support level, not only by price action, but also by the daily and weekly 50 and 200 moving averages.

The RSI, MACD and PMO indicators are hinting of further short-term strength in the SPX on the Daily timeframe, and crossovers are either imminent or have just occurred on the MACD and PMO on the Weekly timeframe, with an RSI holding above 50, also hinting of medium-term strength.

Price action on the Yearly timeframe is, currently, extremely bullish for the SPX (a massive bullish engulfing candle is forming), and, depending on its close at the end of this year, it may forecast whether the hypothetical longer-term scenario that I've described above is realistic and has begun.

Daily SPX:VIX Ratio

Weekly SPX:VIX Ratio

Yearly SPX:VIX Ratio

CONCLUSIONS

We'll see whether a Santa rally is currently in play...or whether a lump of coal surprises the markets this year. These charts are worth monitoring as part of your crystal ball-gazing activities -- in the short, medium and longer terms -- leading up to the next Presidential election.


Thursday, November 24, 2016

The Plight of the World Market Index

As can be seen on the following Daily chart of the World Market Index, price has fallen below both the 50 and 200 MAs and is, once again, nearing a critical major support level of 1600.

Even though price is trading under the bullish influences of a moving average Golden Cross, all three technical indicators are hinting of further weakness to come.

Watch for a bullish cross-over of the MACD and PMO indicators, as well as a price reversal and bounce, break and hold, firstly, above 1700, then above 1750, as a potential signal of clear support of higher prices for world equities, in the longer term, including that of the SPX.

Conversely, a break and hold below 1600 could very well forecast a large downdraft for all world equities in the near term.


Wednesday, November 23, 2016

China's Shanghai Index: Its Role in World Markets in 2016

I last wrote about China's Shanghai Index (as part of a comprehensive review of major world markets) on January 29th. Since then, and, until June, the road to recovery from its lows of the year has been volatile and rocky. The last half of this year has seen a fairly steady, if choppy, advance to its current level just below its next resistance level of 3250, as shown on the following Daily chart.

In that post, I had mentioned that a rally to (and hold above) 3000 could thwart a major downdraft, as was being threatened by an imminent break of a neckline of a massive Head & Shoulders formation.

A break and hold above 3250 could see price continue to rally to its next resistance level around 3400-3500. This index is trading under the bullish influences of a moving average Golden Cross, so a break and hold above 3250 is critical to continued success of further advance; otherwise, a drop and hold below that level could very well see a major bear attack ensue, sending price to new lows of around 2500, or more.


In my above-mentioned post, I also made the following conclusion (relative to world markets):
     "In particular, watch Japan, China, Brazil, the Russell 2000 and the Nasdaq 100 Indices for committed leadership..." related to any real success or failure of the S&P 500 Index and equities, in general.

As noted on the following 1-year Daily charts of these indices, they've all risen above major consolidation/congestion levels this year, with the exception of the Nasdaq 100...the one to watch, along with the Shanghai Index, to see whether their movements (either strength or weakness) influence, or have an impact on, the other indices in the days and weeks ahead.


Sunday, November 13, 2016

The Rocky Road of the SPX:VIX Ratio

Well, since my last post on the SPX:VIX ratio, we find that, after true-to-form recent volatility in between 150 and below 100 to just above 90, it has, once again, spiked upward, broken and closed above 150, as shown on the following Monthly ratio chart.

The Momentum indicator has rallied and is, again, back above the zero level, which now favours the bulls on this longer term timeframe.


As I've said many times over the past several years, a hold above 150 clearly favours equity bulls. Watch for an SPX breakout to new all-time highs in the near term (last new high is 2193.81).

For confirmation of such a move, keep an eye on whether the MACD and PMO indicators (which have both just crossed over to the upside), as well as the RSI indicator, break their respective downtrends, as shown on the following SPX:VIX Daily ratio chart.

No doubt, markets are likely buoyed by more unity in all three U.S. Washington political houses subsequent to the Trump/Republican win last week. While traders will pay attention to the future policies, implementation, and effects of those policies, this ratio should provide a good gauge of market sentiment and momentum conviction, as well as the strength and velocity of volatility.


Saturday, November 12, 2016

World Market Outlook Post-Trump Win

This post will look at where "outliers" are sitting in a variety of world markets, as of the close of the week that saw Donald Trump win the race for U.S. President (those instruments sitting at relatively high or low price levels compared with their respective counterparts and in relation to major support/resistance levels).

They will be shown on the following 1-year Daily chartsYear-to-date gains/losses comparison graphs, and several 5-Year Ratio charts, and will be grouped in the following 10 categories:
  • Major U.S. Indices
  • 9 Major Sectors + Homebuilders
  • Major European Indices
  • Emerging Market & BRIC ETFs + BRIC Indices
  • Canada, Japan, UK, Australia + World Market Index
  • Commodities + US $ + US Bonds
  • Major Currencies
  • SPX vs World Market Index
  • Financial ETFs vs U.S., European & Chinese Major Indices
  • Retail ETF vs SPX

Friday, November 11, 2016

R.I.P. Leonard Cohen

R.I.P. Leonard Cohen, Canadian Recording Artist ~~ September 21, 1934 - November 7, 2016


The Bubble No One Talks About

What is it?  The MEDIA BUBBLE!

Seriously, who has time to check out all available sources of news these days? And, where do you start? Who do you trust for fair and accurate information?

Middle-class working folks are too busy trying to earn a living and create a healthy and balanced life for their families to worry about who is saying what and try to figure out who's relaying true facts.

Reality tells me that the only ones who wade through endless scores of tabloid stories are those who work in the media industry.

Like the Baby Boomers who are busy downsizing and simplifying their lives to determine what really matters, it's time the media did the same.

As a boomer myself, I've learned that, with age, comes a realization that focusing on what's truly important to me, in the short term (today) and longer term (the big picture), and trusting my own instincts, helps me ensure that decisions I make are in alignment with my intentions and values and how well I'm actually honouring those values. And, to help me downsize (physically, emotionally, socially and psychologically), it's been very important to accept, appreciate, learn from, and let go of the past, and then move forward with faith in my abilities to handle what's in front of me...that's where my energies are optimally and most valuably utilized.

By the way, this approach can be very helpful in trading the markets, as well...successfully and confidently moving from one completed trade to the next new one.

Admittedly, there are, however, some bubbles that are rather enjoyable...