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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

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Wednesday, September 26, 2012

Major Indices - Monthly/Weekly/Daily Cycles

The Monthly, Weekly, and Daily Stochastics cycles are shown on the charts below of the 6 Major Indices. Also shown on each chart are Bollinger Bands, and the 50 (red) and 200 (pink) smas.

On a Monthly timeframe, the Stochastics:
  • are in overbought territory on the Dow 30, S&P 500, Nasdaq 100, and Russell 2000
  • have hooked down on the Dow Transports and are approaching 50
  • have recently hooked down on the Dow Utilities

On a Weekly timeframe, the Stochastics:
  • are in overbought territory on the Dow 30, S&P 500, Nasdaq 100, and Russell 2000
  • are below 50 on the Dow Transports
  • are in oversold territory on the Dow Utilities

On a Daily timeframe, the Stochastics:
  • are below 50 on the Dow 30, S&P 500, and Nasdaq 100
  • are in oversold territory on the Russell 2000
  • are in oversold territory on the Dow Transports
  • are approaching overbought territory on the Dow Utilities

In summary, the Dow Transports is the only one that is close to its 50 Stochastics on the Monthly timeframe. The only one that is oversold on a Weekly basis is the Dow Utilities, but it is nearing overbought on the Daily. The only ones that are oversold on a Daily basis are the Russell 2000 and the Dow Transports. These three are the ones to keep a close eye on to see if buyers support these first any time soon. If not, we may say the Dow 30, S&P 500, Nasdaq 100, and Russell 2000 drop to their 50 sma on the Daily timeframe before buyers return, generally, to these markets at an oversold Stochastics level. If a subsequent rally is weak, we may see price drop to the 50 sma or the lower Bollinger Band on their Weekly timeframe to co-incide with an oversold signal on the Stochastics.

***I would note that the S&P 500 is extremely close to forming a bearish moving average "Death Cross" on the Monthly timeframe...one to watch, as it could signal a return of high volatility if it forms.

Two volatility charts I'm watching are the following Daily ratio charts of the SPX:VIX and RUT:RVX. I'm watching these in conjunction with the above Stochastics cycles as they pertain to the S&P 500 and the Russell 2000 Indices.

Price closed today (Wednesday) on SPX:VIX just below the lower channel, once more, signalling an increase in volatility, with the hint of more to come...also the Momentum indicator closed below the zero level.

On RUT:RVX, price closed just above the lower channel on increased volatility. As I mentioned in yesterday's post, I'm watching to see if price drops below this channel and, subsequently, 37.00, as a signal of further weakness to come...the Momentum indicator closed below the zero level to signal that volatility may rise further.