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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

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Thursday, June 29, 2017

Volatility Heats Up...Summer Selloff Ahead?

The following three ratio charts compare the strength of the NDX, RUT, and SPX with their respective Volatility Index.

The following NDX:VXN ratio chart shows that NDX is sitting in a precarious spot at a rising trendline, but well below what is now major resistance. All 3 technical indicators are still in "SELL" mode, as rising volatility outstrips price performance.


Compare that to where the RUT:RVX ratio is sitting...just above major support, but all three technical indicators are signalling weakness in the RUT, with the potential of rising volatility. We'll see if Small Caps get hit by sellers next.


Similarly, the SPX:VIX ratio is sitting just above major support, but all three technical indicators are signalling weakness in the SPX, also with the potential of rising volatility. We'll see how Large Cap stocks fare over the coming days/weeks.


Although volatility is much higher on the NDX at the moment (no doubt driven by the recent selling in the Tech FAANG stocks), it's still outperforming Small Cap and Large Cap stocks in percentages gained year-to-date, as shown on the comparison chart below. However, if it breaks and holds below the rising trendline mentioned above, we could see quite a selling domino effect occur in all equities.


The last chart grid shows that all five FAANG stocks are immersed in their respective consolidation zones, but have fallen to either their 50-day moving average or price support levels. If these break and hold below support, this could, indeed, confirm overall weakness in equities and begin a summer selloff in earnest.


World Market Index: 150-Point Gain Since March

* See UPDATE below...

When I wrote my article on March 10th, the World Market Index was trading around the 1750 level. Today (Wednesday) it closed just shy of 1900, where it faces the next resistance hurdle, as shown on the following Daily chart.

Inasmuch as the RSI is above the 50 level, I'd watch for a bullish crossover to occur on the MACD and PMO indicators to confirm that any breakout above 1900 has enough support to reach the next resistance target of 1950, or even 2000.

Failure to regain and hold above 1900 could negatively impact U.S. equities.


As can be noted on the Daily chart of the SPX below, price is currently stuck in a tight trading range between 2425 and 2450.

Any break and sustained hold above 2450 should be confirmed by the formation of new bullish crossovers on the MACD and PMO indicators, as well as the RSI holding above 50.


So, which major world indices are lagging in terms of percentages gained year-to-date?

The following graphs are presented without individual comment, as a glance at each will show those laggards, the most notable being Brazil, Russia, China, Canada, and Australia.

I've included a graph of the major commodities, and WTIC Oil and Brent Crude Oil are -16.72% and -16.09% year-to-date, respectively.

As I mentioned in my post of June 22nd, it's worthwhile watching Canada's TSX Index, along with WTIC Oil, to see if their subsequent rallies above 15,250 and 43.50, respectively, are now sustainable.

We'll see whether the indices that have gained the most, so far, this year can hold onto those gains, and whether the five laggards mentioned above are able to gain support to push the World Market Index above 1900 and propel the SPX to new all-time highs.






* UPDATE Thursday, June 29 @ 2:00 pm ET:

The following table of World Market Indices shows that traders favoured Asian markets overnight (Wednesday night) and have plundered European and North American markets today.

We'll see if this selloff continues, and whether it includes Asian markets, by Friday's close...which also marks the close of Q2 of 2017.

Source: http://www.indexq.org/

Thursday, June 22, 2017

Canada's TSX Index Teeters at Major Support/Restistance

After reaching all-time highs earlier this year, Canada's TSX Index has dropped to around the 15,250 level, as shown on the following Monthly chart...an important long-term major support/resistance level.


The latest drop has been halted by a very high volume spike around the 200-day moving average, shown on the Daily chart below.


This index has, historically, been tied to the price of crude oil, as can be seen on the graph below, although it didn't experience the same dramatic drop as oil did in 2014.

So, as I mentioned in my post of  June 21, if oil can regain and hold 43.50, and if the recent high-volume spike on the TSX was an indication of capitulation, we may see a rally ensue in both of these markets. Otherwise, weakness in one may drag the other down, as well...two charts worth watching in the short term.


Wednesday, June 21, 2017

Crude Oil Down 60% Since Mid-June 2014

Crude Oil has fallen a massive 60% since mid-June 2014, as shown on the following graph.


Price today (Wednesday) fell below 43.50, which I identified in my post of June 3rd as a major support level, and closed at 42.53, as shown on the Daily chart below.

Increasing volumes are either signalling continued weakness ahead, or some buying stepping in between this level and 50.00. Since another bearish moving average Death Cross has formed recently, the first scenario may be favoured in the near term.

Unless 43.50 is regained and held, we may very well see a retest of 35.00, or lower. In that case, I'd watch for any extreme volume spikes to signal a potential capitulation and price reversal.


Sunday, June 18, 2017

SPX: 100-Point Rally Ahead?

From the Monthly chart below of the S&P 500 Index (SPX), we could see it rally another 100 points, or so, to around 2525, before it stalls or a meaningful pullback occurs.

That price level would surpass a 200% external Fibonacci level at 2473.34 and intersect with a +1 standard deviation of a long-term regression channel from the 2009 lows.


June's high-wave candle on the following Monthly ratio chart of SPX:VIX shows that volatility has been creeping in, as equity traders become more cautious on the upside.

However, the Momentum indicator is at an all-time high on this timeframe, signalling that bulls remain in charge, in spite of a slight rise in volatility. As such, this ratio chart is worth monitoring, if the SPX continues its rally to new highs. Depending on how June's candle closes, along with the level of the Momentum indicator at that time, we may be able to determine future strength or weakness of the SPX.

Stay tuned...


Thursday, June 15, 2017

"Powerhouse" Profit-Taking

Since I posted my article of May 28 regarding the five FAANG stocks, we've seen some profit-taking in all of them over the past week, most notably in Netflix (NFLX), as illustrated on the 1-Month and 1-Week percentages gained/lost graphs below.



As shown on the following 1-year Daily chartgrid, three of the five are trading around their 50-day moving average, while NFLX and AAPL are now below. All five are hovering around price support.


As I mentioned in my prior article, I'd watch to see whether these stocks break, hold below their respective near-term support levels, and continue to weaken, as such a scenario could precipitate an overall weakening of U.S. equity markets, in general...or whether we see a meaningful bounce anytime soon, accompanied by sustained, decent volumes.


Saturday, June 10, 2017

The Art of "Borrowing"

I've heard it said many times that we come into this world with nothing and we leave with nothing.

I learned a valuable lesson a few years ago in my move cross-country. Since I was in the process of a major downsizing following the loss of my husband several years before that, I was finding it difficult to part with a number of items that we'd accumulated over the years...as well as still grieving his passing and the passing of our two pussycats in the past several years...my "family" of four had been reduced to a family of one (me). However, I had no choice...I had to be rigorous in my approach to the move and establishing my new life.

Then I remembered something I'd learned in the past year...something that can be of benefit to each of us...that was to simply think of items that I had accumulated as items that were only meant to be borrowed and not meant to be kept for life...this same principle can also be applied to everyone we meet (and are a part of) throughout our life (friends, loved ones, spouses, partners, children, family members, pets, etc.).

I think the key to the success of this concept of borrowing is to accept this as fact, detach as much as possible from the many emotions surrounding each treasure (item and person), and maintain a steadfast (and joyful) determination to move forward with our life and life purpose, in spite of the changes in our circumstances. We may also find it useful to think of all the things we're grateful for as we reflect on each of these items and people and to discover what we've learned from our association with them. Finally, and this relates to our items that we're selling or donating, we may think of these as items that others will "borrow," enjoy, and eventually pass on to someone else, as well.

Nothing in our lives lasts forever...good times...bad times...people...pets...things...situations, etc. Change happens, and we need to accept it, so we can grow from each experience....this is one method that can work for you to help you cope with such events.

Such an approach can keep you sane and on track with your life purpose (to move forward in a healthy manner)...I speak from experience...it certainly did for me.


Friday, June 09, 2017

Currency Mugging: British Pound Weakens Again

The British Pound has taken another beating overnight as results of the U.K. general election were released last night.

Theresa May's Conservative government lost the majority held prior to the election, and the U.K. is now left with a hung parliament.


As can be seen on the Monthly chart below of the GBP:USD Forex pair, the pound is -0.0221 as of mid-day today (Friday), and is still trading well below major resistance at 1.4000, after its meteoric plunge from 1.5000 following the Brexit vote on June 23, 2016.

The Pound had risen in anticipation of a larger Conservative majority being elected; however, given the fact that this government has now been weakened ahead of Brexit talks that will be proceeding within the next 10 days with the EU, the future strength of this currency is in limbo.

Any meaningful (and sustainable) strength would, first need to see the 1.3000 level regained, followed by 1.4000. Otherwise, I think that price will continue to bounce between 1.2000 and 1.3000 for the foreseeable future. A drop and hold below 1.2000 could see a catastrophic plunge occur.


Saturday, June 03, 2017

Crude Oil's Sweet Spot

The long-term chart below of Crude Oil shows a potential reverse Head & Shoulders pattern that has formed since the end of 2014, with a high-level tug-of-war occurring above the light green shaded area (just above a 78.6% Fibonacci retracement level and within the upper half of a declining channel) at 43.50 since mid-2016.

At the moment, we see major indecision around the 50.00 level (50 & 200-day moving averages).

A breakout and hold above the reverse H&S pattern neckline around 57.00 would be significant, inasmuch as we see a confluence of major Fibonacci, channel, and price resistance at that level. I'd call that Oil's sweet spot.

Otherwise, a break and hold below 43.50 could see price retest 35.00 (bottom of green shaded area, as well as long-term price support), or lower.