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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.


...If the dots don't connect, gather more dots until they do...




* Wed. March 21 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts + @ 2:30 pm ET ~ Fed Chair Press Conference
* Fri. March 30 ~ U.S. markets closed for Good Friday Holiday
* Fri. April 6 @ 8:30 am ET ~ Employment Data
* Wed. April 11 @ 8:30 am ET ~ MoM & YoY CPI & Core CPI Data
* Wed. April 11 @ 2:00 pm ET ~ FOMC Meeting Minutes
* Wed. April 18 @ 2:00 pm ET ~ Beige Book Report
* Wed. May 2 @ 2:00 pm ET ~ FOMC Announcement
*** Click here for link to Economic Calendars for all upcoming events

Thursday, March 22, 2018

Close of 2018 Q1 Draws Near on Accelerating Volatility

Each candle on the following charts of the Dow 30, S&P 500, Nasdaq Composite, and Russell 2000 Indices represents a period of one quarter of one year.

This year's Q1 candle is a high-wave spinning top, representing indecision. It will close next Friday.

After today's broad-based equity drop, the SPX:VIX ratio has extended its decline, closing well below the 150 Bull/Bear line-in-the-sand level, and is mired in the "major conflict zone," as shown on the monthly ratio chart below. Momentum is accelerating to the downside and is well below its zero level.

The following monthly chart of the CBOE VIX Volatility Index (VVIX) shows that momentum of VIX volatility closed on an all-time high last month, forecasting rising volatility of equity volatility and risk. Where it closes next Friday may provide a hint as to acceleration or deceleration of further equity decline in the month(s) ahead.

In this regard, the next chart of the VVIX shows that momentum is accelerating on a daily timeframe, is well above the zero level, and is making a series of higher swing highs and lows. Watch for that to continue next month in order to confirm the sustainability of any further increase in VIX volatility.

Finally, the following monthly charts of the Dow 30, S&P 500 & Nasdaq 100 E-mini Futures Indices plus the Russell 2000 Index show that price is hovering above a moving average "Alligator" formation. If price falls inside this formation, we'll see high volatility and wild swings remain, with, possibly a further correction in equities, until it breaks out and holds above this beast. Unless we see a very sharp snap-back soon in these indices (in the next week or two), I'd say that higher volatility will continue for awhile.

The Fate of Facebook's Momentum About-Face

The following monthly chart of FB shows that price has plunged to near-term support defined by its longer-term uptrend channel median and 23.6% Fibonacci retracement level (166.22).

The reversal from its all-time high made last month has been accompanied by accelerating (to the downside) Momentum (peaked in October 2017) and Rate-of-change (peaked in September 2017) technical indicators which, in fact, reversed well ahead of price.

Neither of these two indicators have broken below their respective zero levels since the early months following FB's IPO. A drop to, and hold below, zero on this monthly timeframe on these indicators could spell serious trouble for FB in the longer term. In this regard, watch for any drop in price to, and hold below, its next support level around 148.00 (channel bottom plus 40% Fib retracement level).

Sunday, March 11, 2018

Saturday, March 10, 2018

9-Year U.S. Bull Market Run: Will We See a 10th?

Each candle on the following five charts of the Major U.S. Indices represents a period of one year.

You can see at a glance that we're still ensconced in a bull market that began in 2009 when the Fed first began their QE monetary policy. 

In fact, both Tech indices closed at new all-time highs on Friday and haven't experienced much of a pullback, so far, this year, compared with the other three relative to last year's candle (thanks, in large part, to the FAANGs, as shown on the daily chartgrid below)...indicating that the bulls are still in charge of equities, overall.

However, they have been battling increased volatility, as depicted on the following three monthly equity/volatility ratio charts (SPX:VIX, NDX:VXN and RUT:RVX).

In my post of February 26, I had re-iterated the importance of, what once were and had been breached, major support levels for these ratios, namely:

  • SPX:VIX Ratio -- 200
  • NDX:VXN Ratio -- 350
  • RUT:RVX Ratio -- 80

The one ratio that is still below that level is the SPX:VIX ratio, but it's poised to break above. Keep an eye on the Momentum indicator for a break and hold above the zero level on this timeframe as confirmation of a resumption of bullish bias in the SPX, if it crosses above 200.

While Momentum on the RUT:RVX ratio is above zero, it's not on the NDX:VXN ratio. It will need to cross and hold above to confirm sustainability of buying in the NDX.

On a daily timeframe, you'll note that all three ratios are still trading under the bearish influence of a moving average Death Cross formation.

The SPX:VIX ratio is retesting the 50-day moving average and remains the weaker of the three ratios, while the NDX:VXN and RUT:RVX ratios closed just above their 200-day moving average on Friday. The RSI, MACD and PMO technical indicators are in positive territory on all three ratios, so look for that to continue to confirm a bullish bias in the SPX, NDX and RUT, in the short term. Ultimately, the Death Cross will need to reverse to a Golden Cross as a bullish confirmation, in the longer term.

In conclusion, keep an eye on price action of the monthly and daily ratios (relative to their respective major support levels, moving average formations, and technical indicators), to gauge the strength and direction of the SPX, NDXRUT, and equities, in general. If we see those gauges turn and/or remain positive, we'll likely see a 10th year produced in this 9-year bull market run. As well, additional influencers of equity volatility can be found in the "Volatility Gauges" that I described in my post of February 10.

Friday, March 09, 2018

6,000 Is In BITCOIN's Crosshairs

I've a feeling that the hammer low of 6,000 will be retested on BITCOIN, as shown on the weekly chart below. From price action on this timeframe, it appears that measured selling has been occurring ever since it nearly reached 20,000.

Also, 6,000 is the approximate median level of a downtrending channel on the daily timeframe. Price has fallen back into this channel after a failed breakout.

What is does after such a retest should be "interesting."

Thursday, March 08, 2018

More Volatility Ahead for Italy's FTSE MIB Index

Italy's FTSE MIB Index still remains more than 60% below its record high reached pre-2007 financial crisis, as shown on the monthly chart below.

It's facing major overhead resistance with the convergence of a triple top price formation, 40% Fibonacci retracement level, and the lower edge of its original uptrending channel around 24,568, which is still a long way above its current price, but which may act as a depressant and contribute to volatile swings until it eventually retests that level and either breaks and holds above, or is rejected.

Also, 24,568 is approximately the median (major resistance) of an Andrew's Pitchfork formation on the monthly timeframe, as shown on the chart below.

Near-term minor resistance and support sit at 22850 and 21500, respectively, as shown on the daily chart below.

With no clear majority victory for any political party in Italy's recent general election, I'd say that volatile swings that began in March of last year will continue in this index until price breaks and holds above or below this 1,350-point consolidation zone, in the short term.

Friday, March 02, 2018

Canada's TSX: Isolated

The monthly chart below of Canada's TSX Composite Index (TSX) shows that price has become isolated outside of several long-term intersecting trendlines and is caught up within an expanding triangle formation that began forming in December 2016 (right after the U.S. Presidential election).

Expanding triangle formations typically represent trendless, volatile periods of consolidation and this type of range trading will continue until price either breaks and holds above or below this triangle. I've no reason to doubt that this will be the case here...particularly, in view of the following.

Canadian Prime Minister Trudeau's recently-released 2018 budget is, in my opinion, a weak political budget, not a strong economic budget. There does not appear to be any kind of "backstop" fiscal measure/proposal to prevent or minimize economic headwinds/shocks that may arise from global or domestic pressures/issues, as well as current influences such as a wildly fluctuating Canadian dollar, wildly fluctuating commodity prices, rising global and domestic inflation, tightening Central Bank monetary policies, rising interest rates, high personal debt, anaemic wage growth, a weakening Canadian GDP (2017 Q4 GDP was 1.7%, below 2% estimates, and 2018 Q1 is not anticipated to be strong), etc.

Further headwinds are the current NAFTA negotiations that have been underway with the U.S. for some time now. After seven trade meetings, it's still unresolved and is in danger of being scrapped by President Trump. As well, Canada will be slapped with additional 25% steel and 10% aluminum tariffs, as has been proposed by him this week.

To enact such a weak budget during such volatile and chaotic times and think you can rely solely on monetary policy to protect in times of further stress, is willfully irresponsible and naive, especially when you're attempting to negotiate with your largest trading partner who is bent on implementing a protectionist (and very unpredictable) agenda to the detriment of other countries, including your own. You will, no doubt, be seen as a weak leader who is reactionary, as opposed to one who is perceived to be strong, proactive and prepared.

This budget panders to the political interests of a variety of special interest groups in preparation for the Canadian federal election (October 21, 2019) and recklessly ignores the above economic pressures/stresses...not a good signal for Canadians, such as myself, to consider at the voting booth. As such, we may see the TSX continue to trade within this expanding triangle formation until the election.


Harley-Davidson Inc. (HOG) may become a casualty of President Trump's "trade war" policies. In particular, his latest threat to impose a 25% tariff on steel imports and 10% on aluminum has produced a retaliatory threat against the U.S. by Europe on companies such as HOG.

No doubt, this new policy, if pursued by the U.S., would be argued before the WTO and have greater implications on other countries and goods/services. My post of November 12, 2016 made mention of the need for the new Trump administration and Congress to consider a number of factors so as not to, potentially, cause economic imbalances and a catastrophic domino effect on the rest of the world. This is a complicated issue and will bring forth many positions/arguments/considerations and may cause further instability in world equity, currency, financial, bond, and commodity markets until a resolution is reached.

Source: ZeroHedge

In the meantime, HOG has broken below the intersection of the lower edge of a long-term uptrending channel and the middle of a shorter-term downtrending channel, as shown on the following monthly chart. This apex sits around the 44.40 level.

Major Fibonacci retracement support sits at 41.93 (50%), while major resistance is 49.94 (60%). Until price breaks above or below this range, we'll likely continue to see trendless, chaotic trading as this already-fragile U.S. company is tied up and used as a pawn in international trade disputes.