UPCOMING (MAJOR) U.S. ECONOMIC EVENTS...
* Wed. Oct. 20 @ 2:00 pm ET - Beige Book Report
* Tues. Oct. 26 @ 10:00 am ET - CB Consumer Confidence
* Fri. Oct. 29 @ 8:30 am ET - Core PCE Price Index m/m Data
* Wed. Nov. 3 @ 2:00 pm ET - FOMC Announcement + FOMC Forecasts and @ 2:30 pm ET - Fed Chair Press Conference
* Fri. Nov. 5 @ 8:30 am ET - Employment Data
* Tues. Nov. 9 @ 8:30 am ET - PPI m/m & Core PPI m/m Data
* Wed. Nov. 10 @ 8:30 am ET - CPI m/m & Core CPI m/m Data
* Fri. Nov. 12 @ 10:00 am ET - Prelim. UoM Consumer Sentiment
* Fri. Nov. 12 @ 10:00 am ET - Prelim. UoM Inflation Expectations
* Tues. Nov. 16 @ 8:30 am ET - Retail Sales & Core Retail Sales Data
* Wed. Nov. 24 @ 2:00 pm ET - FOMC Meeting Minutes
*** CLICK HERE for link to Economic Calendars for all upcoming events.
Friday, August 31, 2012
The following Weekly charts and graphs (for the past week) of the 6 Major Indices and 9 Major Sectors show that these markets have not advanced for a second week as they struggle at major resistance.
The following two charts and graphs depict money flow for the month of August. You can see that the majority of interest/buying occurred in the riskier growth-oriented Technology and Small Cap Indices and Sectors versus a virtual non-interest in the value-oriented defensive Indices and Sectors.
In summary, whether we'll see a rotation of Sector preference in September remains to be seen. I suspect that market action will, generally, be news-driven as we await important decisions by the Fed, ECB, Germany's Constitutional Court ruling on the legality of the ESM, Eurogroup meetings, further economic data, the Dutch election, and any fall-out from the U.S. election campaigning, etc.
Since this tends to produce volatility, I'll continue to monitor it as depicted by the following Daily ratio charts of the SPX:VIX and RUT:RVX. As of Friday's close, both the S&P 500 and Russell 2000 Indices are sitting near the apex of trendline/channel resistance/support. Volatility has been rising the past two weeks and a break of the apex one way or the other is inevitable soon. We may see a build in volumes as price tries to establish a trend away from the apex...something else I'll be monitoring in order to assess the viability/sustainability of such a move. Perhaps we'll see a rotation into the more defensive Sectors and Large Cap Indices in preparation for volatility.
Enjoy the long weekend and best of luck next week!
We all know the naked truth that it's up to you, the politicians, to strengthen the weak/high-risk fiscal and economic environment...the Fed really can't do your job ad infinitum/ad nauseam as it can't fix the economy by monetary policy alone, as re-iterated by Ben Bernanke today in his speech at Jackson Hole:
"As I have discussed today, it is also true that nontraditional policies are relatively more difficult to apply, at least given the present state of our knowledge. Estimates of the effects of nontraditional policies on economic activity and inflation are uncertain, and the use of nontraditional policies involves costs beyond those generally associated with more-standard policies. Consequently, the bar for the use of nontraditional policies is higher than for traditional policies. In addition, in the present context, nontraditional policies share the limitations of monetary policy more generally: Monetary policy cannot achieve by itself what a broader and more balanced set of economic policies might achieve; in particular, it cannot neutralize the fiscal and financial risks that the country faces. It certainly cannot fine-tune economic outcomes."
It's time for politicians to wake up, get out of bed, get dressed, and own up to your responsibilities by acting for the good of those whom you purportedly serve.
Thursday, August 30, 2012
The RUT:RVX ratio pair is approaching channel support, as shown on the Daily chart below. A break and hold below would also signal further weakness ahead for the Russell 2000 Index.
Wednesday, August 29, 2012
Tuesday, August 28, 2012
You can see how it pulled further above the other Major Indices at the beginning of August on the third Daily chart (which shows percentages gained year-to-date for these indices) to form the steeper channel.
The fourth 1-day intraday chart shows a percentage comparison chart of the Major Indices to the Emerging Markets ETF (EEM). You can see that the Russell 2000 Index leads the Nasdaq 100, so far, today, while EEM is the laggard (it's also the laggard for the year, which suggests that traders are generally staying away from riskier foreign markets...a growth-averse vs value-favoured environment).
Whether any further profit-taking turns into a sell-off remains to be seen, but clues lie in the channels. A break and hold below this steeper channel on the Nasdaq 100 Index, along with a break and hold below the "mean" of the channels on the other three Major Indices, may signal the beginning of a sell-off in equities...particularly if the Nasdaq 100 breaks and holds below the upper edge of the larger channel below. Look for confirmation of such a move using the methods outlined in my posts of August 27th and August 24th.
On the other hand, if leadership switches to EEM on an intraday basis, that may be signalling the beginning of a parabolic move upwards in the equity markets before we see a sell-off/correction.
Monday, August 27, 2012
In the event that the 6 Major Indices and 9 Major Sectors drop and hold below their middle Bollinger Band on their Daily timeframe, I'd check to see if the percentage on the above referenced three charts also drops and holds below the 50% level. If all three fall and hold below, it's a likely confirmation of further weakness to come in the equity markets in the short, medium, and longer terms...possibly signalling a correction.
Friday, August 24, 2012
The first three chartgrids show a Monthly, Weekly, and Daily timeframe for the 6 Major Indices.
- In the longer term (Monthly), price is sitting in the "Bull Zone" for all 6 Indices.
- In the medium term (Weekly), price is still in the "Bull Zone" for 5 of the Major Indices, with only the Dow Utilities Index now in the "Bear Zone."
- In the short term (Daily), price closed in the "Bull Zone" for 5 of the Major Indices, with only the Dow Utilities Index remaining in the "Bear Zone." The one to watch for either further developing weakness or a strengthening is the Dow Utilities Index.
The graph below depicts percentage gained/lost for the past week for the Major Indices. Profits were taken in all 6 Indices (with the least taken in the Nasdaq 100 Index), as some of them met with resistance at the upper BB. The Nadsaq 100 Index is worth keeping an eye on to see if it can maintain its bullish lead.
The next three chartgrids show a Monthly, Weekly, and Daily timeframe for the 9 Major Sectors.
- In the longer term (Monthly), price is sitting in the "Bull Zone" for XLY, XLK, XLI, XLE (just), XLP, XLV, XLU, and XLF (just). Price on the XLB is just in the "Bear Zone."
- In the medium term (Weekly), price is still in the "Bull Zone" for all 9 Major Sectors (XLU is just inside this zone).
- In the short term (Daily), price closed in the "Bull Zone" for XLY, XLK, XLI, XLB (just), XLE, XLV, and XLF. Price closed in the "Bear Zone" for XLP (just) and XLU.
The graph below depicts percentage gained/lost for the past week for the Major Sectors. Profits were taken in 7 Sectors, as some of them met with resistance at the upper BB, while XLF remained flat, and XLV gained on the week.
In summary, and in the coming week(s), it will be important to monitor price action on all 6 Major Indices and 9 Major Sectors on all 3 timeframes around the middle BB to try to gauge whether buying pressure continues to surface at this point, or whether more bearish selling begins to appear. Furthermore, we'll see whether buying overcomes the resistance of the upper BB on any retests at this level, firstly, on the Daily timeframe (to gauge the strength of their support levels from where they bounced on Friday). Otherwise, I'd look for a retest of this near-term support, and possibly lower support levels (e.g. the lower BB on the Daily timeframe, or the middle or lower BB on the Weekly and Monthly timeframes).
Before I conclude this post, I'll also take a look at where volatility ended on Friday for the S&P 500 Index and the Russell 2000 Index. The two Daily ratio charts below of SPX:VIX and RUT:RVX show that price pulled back after running into major resistance, but both bounced on Friday at their respective near-term support levels...two to watch to see if volatility reappears in coming days/weeks. (Please refer to my last weekly market update and to my post of August 15th to get a longer-term perspective on these charts.)
Enjoy your weekend and best of luck next week!
Thursday, August 23, 2012
So, this little bit of "frittering" within this range (675.00 to 648.00) is important...one to watch!
Since Consumer Confidence is a "leading indicator of consumer spending, which accounts for a majority of overall economic activity," and they are approaching the 2009 lows, this does not match the buoyant signals that the European markets have been sending/portraying. As they are major importers of Chinese products, this will, no doubt, continue to impact China's slowing economy, as mentioned in my last post.
As I mentioned in my post of August 15th, China's Shanghai Index is struggling to stabilize at three-year lows. Without a sizeable pickup in demand for its products, any temporary stimulus measures that its Central Bank may employ may not have much effect. This is a major player in the global economic slowdown that is currently unfolding, and is one to watch over the coming weeks.
Wednesday, August 22, 2012
One year has passed, and the SPX has gone from a low of 1074.77 on October 4, 2011 to a high of 1426.68 yesterday (Tuesday), as shown on the Daily chart below. A double top has formed at major resistance.
The credit rating has not been upgraded. The Fed also downgraded the economic outlook at their meeting on August 9, 2011, as mentioned in my post of August 9th. The Fed remains committed to holding long term interest rates low for the foreseeable future. Europe's economic condition has weakened. The global economies have slowed. And, finally, the U.S. National Debt continues to rise (unabated) to all-time highs each second. The Fiscal Cliff looms.
Who is convinced that economic and fiscal conditions have improved since then? The only ones, so far, have been the buyers above the yellow arrows. No doubt they will begin to take profits at current levels and re-think their positions after the next FOMC meeting in September. A drop and hold below June's lows of this year would confirm that their sentiment has changed.
Tuesday, August 21, 2012
An indication of weakness would likely be confirmed by a failure of AUD/USD to regain and hold above 1.05, along with further weakness in China's Shanghai Index, as discussed in my posts of August 17th and August 15th.
You can see that this 500 pip level, as depicted by the two white horizontal lines, represents a major level of support and resistance. A break and hold either above or below this "500 pip zone" would set the stage for the next move up or down over the ensuing days/weeks...an important zone to monitor.
P.S. Price target of 1.2541 was hit in 'After Hours' trading on Wednesday, August 22nd...a new 500 pip candle has begun...let's see where EUR/USD goes from here!
Friday, August 17, 2012
- 6 Major Indices
- 9 Major Sectors
- SPX:VIX and RUT:RVX ratio charts
- Major World Indices
- 7 Major Currencies
- Commodities ETF (DBC) and AUD/USD Forex pair
- 30-Year Bonds
- Lumber and the Homebuilders ETF (XHB)
All of them, except the Dow 30 Index and the Dow Utilities Index have now reached their measured closing targets that I mentioned in my post of August 3rd, and the Dow Transports Index has finally made a higher closing swing high.
The Daily chartgrid below of the 9 Major Sectors shows that the only ones that haven't reached their measured closing targets yet are XLP, XLV and XLU (the Defensive Sectors).
The two Daily chartgrids below depict candle action on the Major Indices and Major Sectors. You can see they are all in the vicinity of major resistance at or near their one-year highs.