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Wednesday, August 10, 2011

YM, ES, NQ & TF Cliffhanger...

In last night's post below I made reference to a number of  charts I'd be studying over the next while. Here is my updated view on things after today's close.

Overlayed on the 4-hour charts below of the YM, ES, NQ & TF are 2 regression channels...the longer downtrending one begins at the May 2011 high and the shorter uptrending one begins at this past Monday's low. Price is currently trading as follows:
YM = below the -2 deviation level of the longer channel and just below the -1 deviation level of the shorter channel
ES = below the -2 deviation level of the longer channel and just below the -1 deviation level of the shorter channel
NQ = below the -2 deviation level of the longer channel and just below the -1 deviation level of the shorter channel
TF = below the -2 deviation level of the longer channel and just below the -1 deviation level of the shorter channel
Price has attempted to climb back above the -2 deviation of the longer channel, but was turned back...this presents a near-term resistance level. Price is attempting to build out a meaningful uptrending channel, but is, so far, displaying weakness in so doing. In addition, I would note that the angle of the shorter channel's uptrend is not as pronounced on the YM as on the other e-minis' channel...this suggests that the attempt to rally has been the weakest, so far, in the YM. Also, today's volumes on the decline are larger than on yesterday's rally. This suggests to me that the larger downtrend has not yet bottomed, with the velocity of the decline potentially accelerating.

The chartgrid below contains Weekly charts of Gold, US$, EUR/USD, Oil, XLF, GS, CRX & VIX. Gold has shown the most growth since the beginning of 2010, and, initially, so did the US$, Oil, the Financials, and Commodities, while the EUR/USD and the VIX traded inversely. The first to start showing signs of weakness this year were the Financials, followed by Commodities, then Oil. The US$ started its decline in June 2010, while the EUR/USD started its climb then. At the moment, Financials are beginning to fall off a cliff. The US$ is attempting to hold above 74.00. The EUR/USD is attempting to hold above 1.4000. Oil is attempting to hold above 75.00. Commodities are currently attempting to hold at their current level. The VIX is attempting to hold at highs not seen since July 2010.

Overlayed on the Weekly charts below of GS, C, XLF & JPM is an uptrending regression channel which begins at the bottom of their respective large declines in 2008. Price has, so far, been unable to hold at the -2 deviation level of this channel on C & XLF...GS & JPM are sitting on this level. All 4 have broken below their 2010 support levels this week...re-affirming my observation above.

Unless we see a stabilization and bounce in Financials, I don't see the equities markets advancing. These are some of the things I'll be watching over the next few days and weeks ahead.