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Friday, January 06, 2012

Weekly Wrap-up...Jan. 3-6, 2012

My post of December 30, 2011 refers: http://strawberryblondesmarketsummary.blogspot.com/2011/12/2011-market-wrap-up.html

In that post I made reference to a number of markets to wrap up 2011. I'll provide commentary on those markets to wrap up and compare the action this past week.

The Nasdaq 100 Index was the biggest gainer, with the Dow Utilities the biggest loser, compared to the Dow 30, Dow Transports, S&P 500, and Russell 2000 Indices, as shown on the 4-Day graph below (courtesy of www.Stockcharts.com).

The European Financials ETF, EUFN, was, by far, the biggest loser, with the U.S. Financials, XLF, making a slight gain, compared to the Commodities ETF, DBC, the Agricultural Commodities ETF, DBA, the Emerging Markets ETF, EEM, and the Chinese Financials ETF, GXC, as shown on the 4-Day graph below. DBA and EEM are still weak.

Once again, the U.S. $ was the biggest gainer, and the Euro was the biggest loser, followed by the Canadian $, the Aussie $, and the British Pound, as shown on the 4-Day graph below.

Gold made a modest gain, while Oil made a modest loss, and Copper was the biggest loser, as shown on the 4-Day graph below.

Even though the S&P 500 only gained a modest 0.06%, the VIX lost 10.19%, as shown on the 4-Day graph below.

From these graphs, we can see that the U.S. $ gained the most at 2.06%, followed by a gain of 1.47% in the Nasdaq 100. The Dow Utilities made a modest loss, Copper, Agricultural Commodities, Emerging Markets, and the Chinese Financials made further losses, while the Euro and the European Financials made considerable losses. With the 10% drop in volatility, this may set the stage for a possible breakout and rally in Equities. On the surface, it looks like institutions are willing to park their $ in the U.S. equity markets, as well as in the U.S. $, in spite of weakness in Chinese, Japanese and European markets.

I'm still mindful, however, of comments made in my post of January 3rd (stocks above their 20-
Day, 50-Day and 200-Day Moving Averages are still sitting near major resistance levels): http://strawberryblondesmarketsummary.blogspot.com/2012/01/this-weeks-big-questionwill-todays-gap.html

Therefore, I'll look a bit more closely at the YM, ES, NQ & TF for possible clues on near-term support and resistance zones for equities.

Below is a 5-Year Monthly chartgrid, with the Volume Profile noted for this period at the right edge of the charts. The red horizontal line in the profile is the POC. Price on all 4 e-minis is above the Bollinger Band mid-line, is currently above the 50 sma (red), and is currently above the POC.

Below is a 1-Year Daily chartgrid, with the Volume Profile noted for this period at the right edge of the charts, and with the Monthly Volume Profile POC (yellow horizontal lines) also shown for each month. They are all at or near their top Bollinger Band and above the 50 sma. The YM and NQ are just above the Yearly POC, while the ES & TF are considerably below. The YM, ES & NQ are above the 200 sma (pink), while the TF is just below.

They are all trading above December's POC. The YM & NQ are trading below July's POC, and the ES & TF are still trading below June's POC, which is lower than July's. On this timeframe, I'd place support and resistance at these Monthly POC levels, as follows:
  • YM - Resistance = 12498 and Support = 12043
  • ES - Resistance = 1279 and Support = 1245 (July's Resistance = 1326)
  • NQ - Resistance = 2363 and Support = 2280
  • TF - Resistance = 787 and Support = 738 (July's Resistance = 833)

Below is a 4-Day 30-Minute chartgrid, with this past week's Volume Profile at the right edge of the chart...the POC is shown in red within the profile, and is extended as a yellow line to the left. As can be seen, the only e-mini that moved above the POC was the NQ, indicating that risk appetite went into the Technology sector for the week (and slightly into the Financials sector as noted above), while the others simply traded in a range.

I'd look for a breakout and hold either above or below this past week's Volume Profile high/low on all 4 e-minis before trying to determine short-term trend from here...however, because volumes were still lower than normal this past week, I'd look for higher volumes in order to confirm any sustainable breakout/breakdown. I'd also watch to see if the 50 sma can remain above the 200 sma on any pullback within their range in order to assess developing bullish-versus-bearish sentiment. In this regard, near-term resistance and support levels for this intraday timeframe are as follows:
  • YM - Resistance = 12415 and Support = 12219
  • ES - Resistance = 1282.25 and Support = 1259.75
  • NQ - Resistance = 2358.75 and Support = 2302.50
  • TF - Resistance = 759 and Support = 732.60

Of interest, as well, will be the U.S. $, as it attempts to break and hold above price and regression channel confluence resistance at 81.76ish, as shown on the Daily chart below...a break and hold above this level could send it to the next resistance level of 83.40ish...near-term support is 81.00 (prior attempts to hold above this level have failed since November, 2010, so it is an important level for the $ bulls to hold).