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Friday, May 18, 2012

Money Flow for May Week 3

Further to my last weekly market update, here is a summary of where money flow ended for Week 3 of May 2012.

The Weekly charts below of YM, ES, NQ & TF show that they all closed much lower than the prior week on higher volumes. They have now broken out of their ranges from January. The YM, ES & NQ are sitting above their weekly 50 sma, while the TF has closed below...whether they find short-term support at these levels remains to be seen.

As I mentioned in my market update of April 13th, I'm assigning a weekly bullish or bearish rating on YM, ES, NQ & TF until the end of this year. Please refer to that post for the parameters, and to the Weekly charts below. As of this past week's close, the ratings for next week are as follows:

  • YM = bearish (approaching MAJOR BREAKDOWN)
  • ES = bearish (approaching MAJOR BREAKDOWN)
  • NQ = mildly bearish (approaching moderately bearish)
  • TF = bearish (bordering on MAJOR BREAKDOWN)

What I've been saying for a few weeks now:

           "I'll re-iterate what I said in my last post about the NQ, namely: The NQ's volume in the Volume Profile from February onwards is very thin, which signals a potential weakness/problem in this e-mini futures index being able to advance much further and hold above its 2011 highs. I wouldn't be surprised to see price drop back to this level at some point and further buying volumes finally enter to support a convincing rally...no doubt this would have a negative impact/drag on the other three indices."

In this regard, since the NQ has almost reached the 2011 highs, we'll see if price begins to stabilize (or not) over the next week(s).

The 4-Hour charts below of YM, ES, NQ & TF show their respective intraday ranges from the latter part of March to Friday's close. The YM & TF are just above the (external) 161.8% Fibonacci retracement level, and the ES & NQ are just above the (external) 200% level. My short-term targets, if they broke and held below their Fibonacci ranges, were:
  • YM = 12012
  • ES = 1285.25
  • NQ = 2458
  • TF = 709.40
The NQ & ES have almost reached that target, while the YM & TF have not...we'll see what happens next week as to whether the bearish momentum/sentiment continues...any price below the 100% Fibonacci level carries a SELL rating on this timeframe...and so, they are all still subject to this bearish influence.

The three Daily charts below depict support and resistance levels on the percentage of Stocks Above 20-Day, 50-Day, and 200-Day Averages.

Stocks Above 20-Day Average remained below last week's gap down and closed well below last week at 11.33%.

Stocks Above 50-Day Average closed well below last week at 17.24%.

Stocks Above 200-Day Average closed well below last week at 46.89%.

I'd conclude that, in the short term and the medium term stocks are a SELL under 20%, and in the longer term stocks are mildly bearish beneath 50% to 40%...as has been the case for the past eight weeks, all are still on negative watch for further potential weakness.

The VIX rose on the week (by 14.77%), as shown on the graph below.

Further to the comments in my last weekly market update, the Daily ratio chart below of the SPX:VIX shows that that the SPX broke and closed below the 200 sma. The RSI, MACD, and Stochastics indicators are still trending down...however, the Stochastics is attempting to reverse. Near-term support is at 50.00, followed by 40.00. Near-term resistance is at the 200 sma at 55.95, followed by 65.00.

The Daily chart below of the VIX shows that price broke out of its yellow triangle to the upside. I'll watch to see if near-term support at 23.44 holds as support...with 21.00 as major support. Near-term resistance sits around 27.00...a break and hold above could send the VIX up to the triangle target of 33.22...one to watch for follow-through on intraday and daily price action.

As shown on the graph below of the Industry Groups, they all declined, with the exception of Gold/Silver. Semis, Biotech, Oil Services, Banks, and Brokers led the losses.

As shown on the graph below of the Major Sectors, they all declined, with Materials, and Financials leading the losses. Consumer staples, Healthcare, and Utilities lost the least...markets still favour the defensives, even in declines.

As shown on the graph below, there were gains in the Agricultural ETF (DBA). The biggest losses were in the European Financials ETF (EUFN), followed by the U.S. Financials ETF (XLF), the Chinese Financials ETF (GXC), and the Emerging Markets ETF (EEM). The Commodities ETF (DBC) was basically flat.

As shown on the Daily charts below of EEM and the BRIC countries, they are in downtrend, although the Chinese stock index is trying to stabilize...ones to watch over the next week(s).

The EEM and the BRIC countries are also depicted in the graph below. The Russian Index lost the most this week, followed by Brazil, EEM, China, and India.

As shown on the graph below, gains were made in Gold and Silver, and losses were made in Oil and Copper.

The following four Weekly charts of Gold, Oil, Copper, and Silver show support and resistance levels...ones to watch, particularly Oil and Copper.

As shown on the graph below of the Major Indices, the Dow Transports, Nasdaq 100, Russell 2000, and the S&P 500 were the biggest losers, followed by the Dow 30, and the Dow Utilities. Losses were also made by the Emerging Markets ETF (EEM), the High Dividend-Paying Stocks ETF (DVY), and Corporate Bonds (JNK).

As shown on the currency graph below, money flowed into the U.S. $, and out of the Canadian $, the British Pound, the Aussie $, and the Euro.

The Daily ratio chart below of the SPX:U.S. $ shows that the SPX continued to weaken in comparison to the $ and now sits just below major support at 16.00 and the 200 sma at 16.30...this is worth tracking daily because a failure to regain and hold above what is now major resistance could send the SPX tumbling on accelerating downside momentum. The RSI, MACD, and Stochastics indicators are still trending down, although Stochastics is attempting to cross up.

The next chart of interest is the Weekly chart below of the 30-Year Bonds (ZB). Price closed at a trendline and Fibonacci fan line confluence resistance point on high volumes. Whether accelerating momentum will carry it higher remains to be seen.

In summary, I'll be watching to see whether more volumes enter the markets next week during intraday action, and in which direction they dominate (and whether they can be sustained), in order to judge relevant moves with conviction. As well, I'll be watching for either rising or declining volatility (as depicted by the VIX), and money flow into/out of the U.S. $, Bonds, and the Financials stocks (which are in correction mode and have yet to stabilize, as shown on the chartgrid below).

Enjoy your weekend!