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, May 31, 2013
You'll see the Weekly graph first, followed by the Monthly graph for the corresponding instruments.
It was mainly a "risk-off" week for world equity markets, Bonds, the U.S. $, and commodities.
- 6 Major Indices
- 9 Major Sectors
- SPLV vs. SPX vs. CRX
- SPX:VIX Ratio
- Q2 Targets (channel update)
- Various World Markets -- N.B. Please refer to my next post entitled "Addendum to Money Flow for May Week 5" for details on these markets due to the length of both posts
Thursday, May 30, 2013
However, that correlation diverged in mid-May and the SPLV has now made a lower closing swing low on this timeframe. Furthermore, the Momentum indicator has dropped below the zero level signalling potential further weakness ahead.
We'll see if the SPX follows and pulls back on any further SPLV weakness.
Tuesday, May 28, 2013
Friday, May 24, 2013
Since then, price rallied a staggering 4850 points to a high of 16020 (reached earlier this week) and promptly dropped 2020 points as of 12:45 pm EST today (Friday), as shown on the Weekly chart below. You can see that this week's candle is in the midst of forming an enormous outside bar, encompassing the past two weeks. This candle's low of 14000 has hit a confluence zone of several external Fibonacci retracement levels.
A failure to hold 14000 could send price down to the next confluence level at 12600 or lower.
Perhaps this meteoric rise in the NKD is what influenced a similar rise in the SPX, which would possibly answer my query posed in my post of May 23rd.
Thursday, May 23, 2013
In it, I mentioned the correlation between the two and the instances where, mainly, the CRX would lead an ultimate drop in equities, by putting in negative price divergence before the SPX.
The following chart shows that, since the time of my post, the CRX has put in another lower swing low and has not yet made a higher swing high in its present (large) negative divergence that begins from February of this year, while the SPX has continued its meteoric climb.
If commodities continue their weakness and equities do not follow suit, I will wonder what has changed since February to cause this disconnect between the two.
Wednesday, May 22, 2013
A drop and hold below 122.50 could signal further downside to come in the SPX.
This kind of loan rate rise was something to which I alluded in my post of May 7th. Perhaps this is why we saw a rise in Mortgage Delinquencies on May 9th.
We'll see if rates stay elevated if "tapering in stimulus" is NOT mentioned as an imminent proposal in Ben Bernanke's speech/testimony today.
***UPDATE: No mention in Bernanke's speech about imminent tapering (it will be dependent upon economic data that the FOMC reviews at each meeting, according to him). So, the big question now becomes, "Will Banks lower mortgage rates?" Don't hold your breath. And, my last question is, "Will TV commentators stop talking and guesstimating about such a scenario anytime soon?" Don't hold your breath.
We'll see if the Homebuilders ETF (XHB) continues to soar or begins to pull back. A drop and hold below immediate support at the 61.8% Fibonacci retracement level of 31.81 and, subsequently 30.00, could trigger a decline to the lower Bollinger Band, or lower, as shown on the following Weekly chart...one to watch.
Tuesday, May 21, 2013
I'd just take a minute to remind traders that Baby Boomers, who were heavily into acquiring all kinds of assets/products/services/loans for themselves and their growing children/teenagers in the 90s, are now facing retirement and are no longer "spending like there's no tomorrow" on the same kind of stuff. To illustrate this point, I'd direct you to my post of July 17, 2011.
We also know now that it's been difficult for young people to get jobs, in spite of (what appears to be) a lowering of the unemployment rate since 2011.
Just once, I'd like to see a solid, quantifiable presentation of what it is (and how much) that consumers are now buying, and who those consumers are, that would support such "It's different this time" theme.
The only reason that it's different this time is the one I've presented above. And it does not support the theory that markets should keep going up because the "Fed has your back." If that's the case, and based on my earlier post today (Tuesday), then markets would be operating on a casino-like mentality, not on sound economic, fundamental, and technical reasons. And, how long can that last?
The following is an update to report that the minimum target objectives have already been reached in 5 out of the 6 indices (Utilities, which had been on a parabolic rise, pulled back before reaching its minimum target), the maximum target was exceeded in the Nasdaq 100 and the Russell 2000, and the maximum target was nearly reached (within 12 points) on the S&P 500. ***UPDATE May 22nd: Maximum target for the SPX was hit Wednesday morning.
This would suggest that these indices have risen at a much faster rate than economic conditions would warrant (my assumptions were based on Q2 GDP mirroring Q1 GDP, thereby causing the indices to perform on a similar trajectory as they did in Q1...however, weakening economic data that we've seen, of late, may end up showing a weaker GDP for Q2). As such, a correction (or even a pullback/profit-taking), as I mentioned last week here and here, may be imminent.
The following Year-to-date Daily charts of the Major Indices show market action relative to their respective channels (which were the basis of my projected targets).
The following percentage gained/lost graph of the Major Indices shows how much these indices have gained, so far, for 2013 (as of Monday's close). Not a bad performance. No doubt, some will be taking profits at these over-extended levels.
Friday, May 17, 2013
- 6 Major Indices
- 9 Major Sectors
- Various World Markets
I don't think that Canada has to worry about the BOC raising interest rates any time soon. The USD/CAD forex pair is well above parity, as shown on the Weekly chart below. With Bollinger Bands widening, we may well see prices push above near-term resistance.
Furthermore, Gold is down again today and is approaching the last wing low, as shown on the Weekly chart below. We may well see momentum generate a push much lower (through very thin volumes, as highlighted in the Volume Profile along the right side of the chart) down to around 1150, as I've written about in previous posts.
Thursday, May 16, 2013
Wednesday, May 15, 2013
My only comment is that, so far, it's a "risk-on" week for equities, the U.S. $, most of the major EU countries, and some of the social media stocks, and it's a "risk-off" week for commodities, emerging markets, most BRIC countries, and 30-Year Bonds.
We'll see how they finish up the week.
Tuesday, May 14, 2013
You can see from the next Daily chart of the AAPL:NDX ratio how AAPL is underperforming the NDX. The Momentum indicator is approaching the zero level, once more -- a drop and hold below zero will signal accelerating downside ratio momentum (and weakness) in AAPL against the NDX.
It would seem that the "cannibalization" of AAPL did, indeed, occur, as I first mentioned in my post of October 23, 2012, and subsequent posts.
Monday, May 13, 2013
I'll need to see China's Shanghai Index advance and hold above the Daily 50 MA to, potentially, support any attempted rally in the AUD/USD forex pair.
A drop and hold below 1.00 on the AUD/CAD forex pair could signal harder times ahead for China, particularly if the above scenarios do not materialize, and as it faces increasing competition from other Asian exporters (Japan, especially, with its devalued Yen) .
That may, then, produce a drag on any further advancement in North American markets. As well, further weakness in Commodities may also produce the same effect, as I've mentioned in recent posts. You can see from the first chart above, that DBC (the Commodities ETF) is attempting to stabilize after experiencing considerable weakness this year, and, basically, since 2011...I'll be watching for any break and hold below its last Weekly swing low.
Saturday, May 11, 2013
Furthermore, you'll see the updated Year-to-date Daily charts below for the 6 Major Indices showing their channels and Fibonacci fan lines, as I mentioned in that weekly market post...clearly, the Nasdaq 100 and Utilities are the leading "outliers" to the upside and downside at the moment in relation to their channels and Fib fan lines.
Friday, May 10, 2013
- 6 Major Indices
- 9 Major Sectors
- Number of Stocks Above 20/50/200-Day Moving Averages
- Various World Markets
- N.B. Please click this link to see my Addendum post to this one for further Weekly analysis
Tuesday, May 07, 2013
Tuesday's Decline in Consumer Habits and Optimism -- (Would the Fed ever back-stop consumer loan defaults?)
Further data today also showed a drop in Consumer Economic Optimism and in Consumer Credit, as shown on the graphs below.
It's interesting to note that consumers have been borrowing at a higher value level in 2012 and 2013 than they were in the years leading up to the financial crisis. Any increase in loan rates from the banks could lead to defaults and pose a problem for those institutions. If the amount of loans continues to decrease, we may see banks raise rates to compensate for any losses that may be incurred in revenues...that could then spawn such defaults.
Not that the markets are paying attention to weak economic data anyway...but am mentioning this nonetheless.
***UPDATE May 9, 2013: Data released today shows a rise in Mortgage Delinquencies, as shown on the graph below...evidence that banks are already struggling with consumer defaults...if the above scenario were to play out, the banks would have added stress.
The Fed certainly has its hands full with its current Mortgage-Backed Securities Purchase Program. No doubt, if the Fed weren't backing the banks on this matter, we wouldn't see house prices rising. The question then becomes, would the Fed begin to back consumer loan defaults if that became a problem? Where does it all end?
Furthermore, data released today shows that Wholesale Inventories rose, as shown on the graph below...confirming the above consumer data.
Sunday, May 05, 2013
The question is, will the spread between Brent and WTIC begin to widen again, in favour of Brent, any time soon?
As shown on the last (ratio) chart, after breaking through near-term support, price is attempting to move up on positively-diverging indicators, to suggest that the spread may, in fact, widen. I'll be watching to see if the MACD histogram moves above zero, along with a positive signal-line cross-over.
Friday, May 03, 2013
Furthermore, you'll see the updated Year-to-date charts below for the 6 Major Indices showing their channels and Fibonacci fan lines, as I mentioned in that weekly market post.
- 6 Major Indices
- 9 Major Sectors
- SPX:VIX Ratio
- Hypothetical Portfolio
- Homebuilders ETF
- Emerging Markets ETF
- 30-Year Bonds
- Various World Markets (*N.B. These will be covered in a separate Addendum post because of space concerns in this post...please check my Blog at this link to see that one)
Thursday, May 02, 2013
Market participants favoured the Technology sector, followed by Emerging Markets, Cyclicals, Large-caps, Commodities, Small-caps, and Financials. Homebuilders has been flat and some profits have been taken in the Health Care Sector. Some money was then allocated into 30-Year Bonds.
While there was a blip in volatility on Wednesday, the VIX dropped back below 14.00 on Thursday.
We can see that markets have been willing to add a fair bit of "risk." While volatility remains low, I'd suggest that we'll see the markets continue to buy into the "growth" sectors, along with "value" until this sentiment changes.
This weekend's market update will look at a broader flow of money for the entire week, so be sure to check back for that post.
The following Year-to-date graph shows that, up until now, markets have favoured a fairly "value-oriented" approach (sprinkled with some "growth" segments)...Commodities and Emerging Markets are in negative territory. We'll see if the buying (as has begun this week) picks up in those areas any time soon. If so, we may also see more money flowing into Bonds as a safety net...in that case, we may see a slow, choppy advance in the general markets as participants rotate into and out of various segments in order to fund further purchases. Otherwise, if we see large-scale draw-downs in Bonds, we may see a much more rapid advance in Commodities and Equities.
Wednesday, May 01, 2013
We'll see if that holds, worsens, or reverses after the release of the Fed meeting rate announcement and press statement today at 2:00 pm EST.
There's been a slight uptick in volatility today, as shown on the Daily chart of the VIX below. 14.00 seems to be a popular resistance/support level recently, so we'll see if it holds above (where it's sitting at the moment).
Just for fun, I thought I'd look at a few instruments to see their comparative growth during a one-year period as a broad measure of where "value" vs. "growth" sentiment currently is in a so-called "balanced portfolio." There are 10 in total, since that's the number I'm limited to showing on one graph.
Then, if one were so inclined, one could track the performance of this group for the rest of 2013 year to get an idea of general market trend, risk appetite, and the momentum of both.
The selections are based on the "low-growth macro-economic environment" and on the assumptions (made in my post of April 25th) that the "BUZZ WORDS" will be with us and will continue to define World Central Bank and global market activity for the rest of the year.
I, therefore, dub this a "hypothetical canary portfolio."
As shown on the 1-year percentage gained/lost graph below, I've selected three of the Major Indices, the Commodities Index, the Financial, Health Care, and Cyclical Sectors, the Home Builder and Emerging Markets ETFs, and 30-Year Bonds. I thought such a basket could represent a good cross-section of "value vs. growth segments" and be worth monitoring. No doubt there are many other portfolio combinations, but this is the mix that I've chosen.
You can see that the Homebuilders ETF has gained the most, followed by Health Care, Financials, Cyclicals, Small-Caps, and Large-Caps. During the past year, Technology, Emerging Markets, 30-Year Bonds, and Commodities have lagged. We'll see whether traders step in any time soon to add these laggards (except Bonds) into their portfolios, thereby increasing "risk" in this projected "low-growth macro-economic environment." Whether they rotate out of the "leading value instruments" and/or Bonds in order to fund such acquisitions remains to be seen.
This portfolio is shown next in chart form, from which you get an idea of their respective trend and momentum, along with support/resistance levels.
What I notice first is that the leader, Homebuilders, has run into resistance and has yet to make a higher swing (closing) high, while the laggard, the Commodity Index, has fallen to a level of support and bounced, but has yet to make a higher swing (closing) high and is still in negative territory for the year. I would suggest that if both of these make a higher swing (closing) high in the short term, and are able to stay above these levels, we may see the others continue upwards for a period of time in a "risk-on growth-oriented" play. This would then tie in with the scenario that I've outlined recently in these three posts here, here, here. However, I would suggest that if Homebuilders and Commodities weaken and fall (and hold) below their last swing (closing) low, we may see some weakness enter in the rest of these markets, and see "risk and value" come off, and money flow into Bonds.
Time will tell which scenario we see first.