WELCOME

Welcome and thank you for visiting!

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

N.B.
* 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.
* My posts are also re-published by several other websites and I have no control as to when their editors do so, or for the accuracy in their editing and reproduction of my content.
* 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.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

Dots

...If the dots don't connect, gather more dots until they do...

Paris

Paris

Events

UPCOMING (MAJOR) U.S. ECONOMIC EVENTS...
* Wed. May 2 @ 2:00 pm ET ~ FOMC Announcement
* Fri. May 4 @ 8:30 am ET ~ Employment Data
* Thurs. May 10 @ 8:30 am ET ~ MoM & YoY CPI & Core CPI Data
* Wed. May 23 @ 2:00 pm ET ~ FOMC Meeting Minutes
* Mon. May 28 ~ U.S. markets closed for Memorial Day Holiday
* Wed. May 30 @ 2:00 pm ET ~ Beige Book Report
* Wed. June 13 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts + @ 2:30 pm ET ~ Fed Chair Press Conference
*** Click here for link to Economic Calendars for all upcoming events

IMPORTANT BLOG POST UPDATES...

Sunday, June 08, 2014

Overshooting the Limit

Further to my post of May 22nd, the SPX:VIX ratio has now overshot its limit. As shown on the Weekly ratio chart below, price has now punched above major channel, trendline, Fibonacci, and price resistance and sits at another all-time high. As well, Momentum has advanced to an extreme all-time high level...exceeding even the exuberant levels reached in 2006/07 before the financial crisis.


The Daily chart below of the ES (S&P 500 E-mini futures index) shows a steady price climb within a rising channel from the breakout in 2013. If price continued to rise at the same pace, remained within this channel, and remained above the 50% Fibonacci fanline (green dotted line), theoretically, price could reach 1990ish by the end of June (or sooner), 2100ish by mid-August, and 2240ish by this Christmas...these are all confluence resistance levels (a combination of Fibonacci fanlines, Fibonacci extension, and channel).

However, such a climb within those time periods could, inevitably, create a massive price bubble-like environment, judging by the current extreme Momentum level shown on the ratio chart above...we may see lots of manipulation of price in between those dates to allow prices to drop at various points in order to relieve such high levels of froth...so, we may see elevated levels of short-term volatility surface within mini -bubbles now and then, and, perhaps, even more frequently for the remainder of this year.

With the Fed holding interest rates low, it's likely the institutions will continue to take advantage of this facility and push prices higher...however, any unexpected spike in inflation may cause them to reconsider their position...so, nothing is ever certain...with the possible exception of volatility and froth.


Best of luck for this week!