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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

* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

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* If the dots don't connect, gather more dots until they do...or, just follow the $$$...

Vintage Xmas Shopping

Vintage Xmas Shopping



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Tuesday, December 11, 2012

Yin and Yang - Canadian and U.S. Trade Balance

Data released today (Tuesday) shows that Canada's Trade Balance deficit shrank, while it increased for the U.S., as shown on the graphs below.

U.S. index futures are up in pre-market trading as I write this...we'll see whether they can hang onto their overnight gains and whether this bullish sentiment can continue to produce higher prices during market hours, in spite of this latest trade data, or whether we see a reversal here. Markets have been shrugging off poor economic data these past couple of months...how long can it continue? No doubt, they're expecting a positive outcome of the FOMC meeting that begins today and wraps up tomorrow. We may not see any reversal (if at all) until we know those results...and, possibly, the results of the "Fiscal Cliff" negotiations.

Meanwhile, the Weekly chart of the USD/CAD forex pair shows that the U.S. $ has been trading below parity (solid yellow line) since August of this year, and failed to regain a foothold above in mid-November. It  hasn't spent a lot of time below parity during the past five years...time will tell whether this will shift or not. At the moment, it's trading in deeply bearish territory in the lower half of a triangle formation, below the 60% Fibonacci retracement level, and below falling 20, 50, and 200 smas.

I've noticed that price action on the USD/CAD over the past 5 years resembles that of the VIX, as shown on the Weekly chart below. At the moment, price is sitting on a downtrend line from the August 2011 highs. It would appear that the price level of 20.00 would need to be reclaimed and held in order to confirm any reversal in both the USD/CAD and equities, in general. A sudden, severe drop below this downtrend line may signal that equities have climaxed and such a reversal is imminent.