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Welcome and thank you for visiting!

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

N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
* My posts are also re-published by several other websites and I have no control as to when their editors do so, or for the accuracy in their editing and reproduction of my content.
* In answer to this often-asked question, please be advised that I do not post articles from other writers on my site.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

Dots

...If the dots don't connect, gather more dots until they do...or, just follow the $$$...

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Beach

Events

UPCOMING (MAJOR) U.S. ECONOMIC VENTS...
* Wed. July 31 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts and @ 2:30 pm ET ~ Fed Chair Press Conference
* Fri. Aug. 2 @ 8:30 am ET ~ Employment Data
* Tues. Aug. 13 @ 8:30 am ET ~ MoM & YoY CPI & Core CPI Data
* Thurs. Aug. 15 @ 8:30 am ET ~ Core Retail Sales & Retail Sales
* Wed. Aug. 21 @ 2:00 pm ET ~ FOMC Meeting Minutes
* Wed. Sept. 4 @ 2:00 pm ET ~ Beige Book Report
*** Click here for link to Economic Calendars for all upcoming events

NOTABLE POSTS WITH IMPORTANT UPDATES...

Sunday, July 14, 2019

Market Battle Fatigue: China Versus USA

* See UPDATE below...

There have been numerous reports of an economic slowdown (and even contraction in some sectors) in China, one of which describes those in detail at ZeroHedge. While some of China's difficulties may have been exacerbated by a fairly recent trade war with the U.S., it certainly didn't start them...other factors were already in play and bear responsibility for its inception, as explained therein.


There are a couple of gauges I'm monitoring that seem to measure the strength/weakness of both the United States' and China's economies, namely the Canadian Loonie and the Aussie Dollar, respectively.

Canada exports a great deal of commodities to the U.S., while Australia exports many to China. The strength/weakness of those exports is reflected in their respective currencies, and, hence, in the economies of the U.S. and China.

You can see from the long-term monthly forex chart below of CAD/UAD that the Loonie has, essentially, outperformed the Aussie Dollar since February 2012, albeit with several periods of sustained volatility peppering it along the way.


The monthly forex chart of CAD/USD shows that price has, once again, pierced above major resistance around the 0.76 level. Watch for that level to hold to, potentially, signal continued strength in the U.S. markets, versus China's weakness.


The monthly forex chart of AUD/USD shows that price is hovering just above major support at 0.70. If this level is broken with force and held, watch for continued China weakness.


The following daily forex chart of the Loonie versus the Aussie Dollar (CDW:XAD) shows that price briefly broke above major resistance at 1.100 several days ago, hinting of further weakness ahead for China.

Watch for price to possibly retest this level, and if it breaks above and holds, I'd like to see the RSI tick up again and both the MACD and PMO indicators reverse back to the upside in support of further strength in the Canadian Loonie...potentially, signalling further weakness ahead for China.


The following Year-to-date percentages gained/lost graph of the major world currencies illustrates the difference between the Loonie and Aussie Dollar. There's quite a gap between the two in terms of Loonie gains and Aussie Dollar losses, so far, this year.


The following one-week percentages gained/lost graph shows a slight uptick of the Aussie Dollar over the Loonie this past week...one to keep a close eye on over the coming days/weeks, along with the above-mentioned charts and price levels, as potential gauges in determining the strength/weakness of China's economic health.


In addition, the following two monthly charts give a long-term bird's eye view of the S&P 500 Index (SPX) and China's Shanghai Index (SSEC).

China's weakness since mid-2015 is striking, compared with the strength of the U.S. market. I don't think that can be entirely attributed to the current trade war, which is relatively recent, and I think that more weakness may lie ahead.



Finally, I'd just point out that the following SPX:SSEC daily ratio chart shows that the SPX is poised to continue outperforming the SSEC, with minor short-term resistance some distance above at 1.10...another gauge to throw into the mix of, purely technical, analysis of the United States' and China's economic and market health.


* UPDATE July 20...

Source: ZeroHedge.com

Source: Bloomberg.com

Saturday, July 13, 2019

SPX: Trade With Caution

Isn't it amazing what Central Bankers can do for markets. Case in point is this compressed view of the S&P 500 Index (SPX) in "area" format (monthly chart below). It's virtually been on a tear since the bleeding from the financial crisis of 2008/09 was abruptly halted with their intervention and injection of monetary support, and it hasn't had much of a correction since then, relatively speaking.

Purely from a technical point of view, its ascent is beginning to look a bit like the parabolic move that Bitcoin (BTC/USD) began to make in early 2017 and peaked by the end of that year (weekly chart below).

Granted, the SPX is quite a different market instrument than Bitcoin and is much more stable, but I simply thought I'd show a comparison of these two charts, on a purely technical basis, for your information. What you do with that is up to you.

One thing I would point out is that the Momentum indicator (MOM) on the SPX is not corroborating the series of new swing highs that price has made since the beginning of 2018. That's in line with what I reported in my post of June 29, wherein I described what market gauges I'd be monitoring as price, potentially, approaches 3047. My observations and conclusions remain unchanged.

Bottom line...trade with caution in the coming days/weeks.



Tuesday, July 02, 2019

President Trump's Rose-Coloured Glasses Are Back On

It looks like President Trump has chosen to dust off his rose-coloured glasses and put them back on regarding his stance on North Korea and, in particular, its leader, Kim Jong Un.

Take a look at what the President tweeted about his impression of Kim's appearance and health when they met at the Korean DMZ on June 30 and contrast that with what Fox News Anchor, Tucker Carlson, reported in the following video.





Assuming Tucker Carlson's version is accurate wherein he describes Chairman Kim's ill-health (unlike the President, he has nothing to gain by lying about it), I would imagine that Kim depends greatly on his military leaders for support in order to remain in power...for health reasons, safety and security reasons, economic reasons, political reasons, and in order to maximize his priorities of securing North Korea's power as a nuclear powerhouse.

Without that important and immense military support system in place, and as long as they remain loyal to Kim, I believe his future would be very fragile and precarious because of his poor health. For that reason, I cannot foresee an agreement ever being reached between Kim Jong Un and President Trump to completely and verifiably denuclearize, because Trump is not just dealing with Kim, he is also dealing with all of Kim's military leaders/advisers...who are, essentially, propping him up, for the time-being. To create prosperity for the citizens of North Korea would undermine their absolute power over them -- and over Kim -- and would take away their nuclear power and leverage over the rest of the world.

If Kim were of robust health, I'd have a different opinion in this regard...he'd have absolute autonomy to make such a deal with the U.S. However, with so many hard-line military players involved (who are necessary for Kim's survival), the deck is stacked against such a deal ever being struck, with Kim Jong Un at the helm.

So, President Trump is only biding his time with Chairman Kim, using flattery as an interim appeasement tool -- sprinkled with another summit or two and more photo ops, that Kim can use to prop up his image with the North Koreans and the rest of the world -- until such time as he is no longer the U.S. President...and, no doubt, those rose glasses will stay firmly on until then.

In the meantime, I hope the President will not back-track on his maximum pressure campaign against North Korea and will, instead, begin to enforce the rules of that campaign on those countries that are, reportedly, breaking the sanctions that they originally supported at the U.N. (e.g., Russia and China, etc.).

Saturday, June 29, 2019

CAUTION: Alligator Crossing Awaits U.S. Markets In Mid-2019

The Dow 30 (YM), S&P 500 (ES), Nasdaq 100 (NQ) and Russell (RTY) E-mini Futures Indices are in danger of being swallowed into their respective moving average "Alligator" formations (where the moving averages are offset into the future), as shown on the following daily charts.

If price is engulfed within and falls below these formations, we'll see high volatility and wild swings ensue, with a possible correction in equities.

Watch for moving average crossovers to the downside, beginning with the green (5MA, -3) below red (8MA, -5), followed by the red below blue (13MA, -8) to gauge weakness and a potential pullback/correction. At the moment, the only E-mini Index where the green has dropped below the red is the RTY (although the other three are a hair's width away from also crossing), so it is the one to watch the closest in the coming days/weeks as a possible leader in weakness and move away from riskier assets.





As an aside, now that a tentative truce and agreement to halt further escalations in their trade war seems to have been struck between the leaders of the U.S. and China in this weekend's G20 summit in Japan, we may see a tepid rise in equity markets.

However, any sustainable strength may be dampened by a reduced likelihood of any kind of substantial rate cut, if any, by the Federal Reserve at their next meeting on July 31.

Source: ZeroHedge.com

If equities do rally, the S&P 500 Index (SPX) will, again, run into resistance around 3000 (a +3 standard deviation of a long-term uptrending regression channel), as shown on the following monthly chart. Price may overshoot to around 3047, which is a 261.8% External Fibonacci level.


To gauge such strength of any upside move, keep an eye on the SPX:VIX ratio.

The following monthly ratio chart shows that price closed out the first half of 2019 just below the 200 New Bull Market level. Furthermore, you'll see that the monthly price swings on this ratio are at variance with those on the SPX. Whereas the SPX has made a series of higher swing highs since the beginning of 2018, the SPX:VIX ratio has made a series of lower swing highs, which puts into question the sustainability and strength of any further rally in the SPX.


Looking at the following three charts of the SPX:VIX ratio, you'll see that each timeframe tells a different tale.

While the first chart (each candle represents a period of one year) appears very bullish for the first half of 2019, the second one (each candle represents a period of one quarter) shows that volatility increased substantially from Q1 to Q2, and Q2 closed on a great deal of indecision. The third chart (each candle represents a period of one month) highlights the lower monthly swing highs, as mentioned above.




Looking forward to Q3, I'd take a shorter-term look at the daily chart of the SPX:VIX ratio, as shown below, along with a couple of technical indicators.

Firstly, if this ratio crosses and holds above 200 to support any renewed rally in the SPX, we could see this ratio reach as high as 220-230, or so, which is a resistance level represented by the apex of a triangle formed by its 2-year price swings. That level would also converge with a 127.2% external Fibonacci retracement level and channel median shown on the above monthly ratio chart. If that level is hit, then the SPX may have reached a price of 3047, as I described above.

Furthermore, in support of such a scenario, it will be important for the RSI to remain above 50, and for the MACD and PMO indicators to remain bullish on this timeframe.

Otherwise, we may see the SPX falter and be engulfed by its "Alligator" to drop as low as 2600, or lower to 2400, as I described in my post of June 2.


Monday, June 24, 2019

Message For China, North Korea & Iran

You can't read the instructions when you're
stuck inside the jar. 

In other words, if you hide your head in the sand, you'll never make a deal with the US and save face with, and for the benefit of, your citizens...and it's hard to talk with sand in your mouth.


Sunday, June 02, 2019

SPX Triple Top: 2400 Target

My last post was not overly enthusiastic about a continued rally in the SPX, as evidenced by its title.

Now that the month of May is complete, you can see from the monthly chart below that a large triple top has formed on the SPX, which is, in fact, thanks to three bearish candle formations on this timeframe (namely, a dark cloud cover, followed by two bearish engulfing candles) -- albeit it on successively higher swing highs -- after overshooting its upper edge of a long-term ascending regression channel and reaching its +3 standard deviation level.

Its target, if it continues to drop, is the lower edge of this regression channel around the 2400 level, which also happens to converge with its 50-month moving average (red).

All three technical indicators, the RSI, MACD and STOCH, are signalling further weakness ahead.


Price on the following monthly chart of the SPX:VIX ratio closed the month just below the 150 Bull/Bear Line-in-the-Sand level.

Note that there are three bearish engulfing candle formations on this ratio on successively lower swing highs...a bearish divergence from the monthly swing highs on the SPX, as noted above.

The Momentum indicator (MOM) closed below the zero level, hinting at further weakness and rising volatility ahead for the SPX.


While we may see some shorter-term attempts at weak rallies, I think the SPX will eventually reach the 2400 level, or lower...provided that the SPX:VIX ratio remains below 150 and that MOM remains below zero...two gauges to monitor in this regard.

Saturday, May 18, 2019

RIP Grumpy Cat :-(

Tardar Sauce (April 4, 2012 - May 14, 2019), nicknamed Grumpy Cat.

So sad...she'll be missed...1.5 Million Twitter followers and her own Wikipedia page...


Monday, May 13, 2019

China's Shanghai Index: No Longer A Market Leader

Take a look at this monthly comparison chart of the S&P 500 Index (SPX) versus China's Shanghai Index (SSEC).

While the SSEC literally exploded during 2007 compared with the gains made by the SPX, and made an anaemic attempt in 2015, it's, essentially, gone nowhere since mid-2015.


If this is a harbinger of things to come, I'd say that China is in for a rough ride over the next few years...particularly in light of the current trade war with the U.S. And, it's time for them to negotiate in good faith, as Senator Grassley has tweeted.

You can see from my post of May 6 that major support sits at 2500 for the SSECIf it blows through that level, watch out below!


Source: ZeroHedge.com

World markets closed the day massively in the red on Monday...possibly related to this trade escalation and perhaps other world tensions, e.g., Iran, Venezuela, North Korea, etc., as well as slowing world economies. We'll see how overnight trading fares in China tonight.


P.S. Is anybody besides me getting tired of President Trump's incessant "good-cop bad-cop" tweets/messages regarding trade talks with China? All you have to do is look at this 60 min chart of the SPX to figure out where and when after-hours "bad-cop" tweets/messages were let loose by either him or his negotiators, and when "good-cop" tweets/messages were released during market hours. It's getting silly...and predictable.

And, isn't it about time that he finally outlined a comprehensive trade policy that, not only includes China, but other world countries, as well? It's long overdue, in my opinion!