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...or, just follow the $$$...

Weekend

Weekend

Events

UPCOMING (MAJOR) U.S. ECONOMIC EVENTS...
* Wed. July 18 @ 2:00 pm ET ~ Beige Book Report
* Wed. Aug. 1 @ 2:00 pm ET ~ FOMC Announcement
* Fri. Aug. 3 @ 8:30 am ET ~ Employment Data
* Fri. Aug. 10 @ 8:30 am ET ~ MoM & YoY CPI & Core CPI Data
* Wed. Aug. 22 @ 2:00 pm ET ~ FOMC Meeting Minutes
* Mon. Sept. 3 ~ U.S. markets closed for Labour Day Holiday
* Wed. Sept. 26 @ 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...
* Trade Wars have escalated and now include diplomatic wars PLUS President Trump is cannibalizing prior U.S. market gains with his tariff tantrums against its world trading partners, while destabilizing a delicate world market balance

Saturday, December 02, 2017

Markets Roiled by Political Legal & Legislative Drama

U.S. equity markets experienced a volatile intraday trading session on Friday, as news unfolded throughout the day with respect to the ongoing DOJ Special Counsel legal investigation of the Trump administration and its potential involvement with Russian interference in the 2016 election, as well as to discussions and a final vote on tax reform/cuts in the Senate, as shown on the Daily charts below of the SPX and VIX.



With regard to which one most influences the markets -- political legal proceedings versus political legislative accomplishments -- Friday's action is indicative of a tug-of-war environment.

If Friday's close presents any kind of snapshot of which one holds the most sway among market participants, it would seem that, as it stands right now, the scales are slightly tipped in favour of political legal machinations, based on a lower close of the SPX and a higher close of the VIX.

Volatility has been increasing since October 25, as evidenced by the expanding-triangle pattern forming on the VIX. However, with major resistance sitting around the 12.00 level, it will be important that price break and hold above that level as a potential signal that weakness is creeping in on the SPX. If it remains below that price, we could very well see buying return next week, particularly, since the Senate passed its tax bill after midnight, Friday.

However, the SPX is mashed up against major resistance in the form of an external Fibonacci retracement level, as shown on the Monthly chart below. It's also trading above a +2 standard deviation level of a long-term uptrending Regression Channel (formerly major resistance/now major support around 2600). Such a channel breakout has not occurred since it began at its lows of 2009, so any further buying that occurs at/above these levels would be unusual and, potentially, lead to over-exuberant parabolic spikes.


I last wrote about the SPX:VIX ratio in my post of November 21.

Price on this ratio had briefly spiked above 280 (on November 3) to the upper edge of a long-term uptrending (green) channel, before it plummeted below that channel on Friday (to a low of 181.79) and spiked back up to close at 231.16, as shown on the Monthly ratio chart below. This represents a 100-point swing in the past four weeks (and a 65.41-point one-day swing on Friday), confirming that volatility is, indeed, on the rise (as social chaos continues to churn and expand, as well).

I'll re-iterate that it will be important for price on this ratio to reach and hold above the 280 major resistance level, and for the SPX to hold above its 2600 major support level, in support of a convincing argument that favours the sustained entry of the SPX into a new bull-market phase.

Otherwise, if price drops and holds below major support at 200, expect volatility to increase and weakness to set in on the SPX.


In conclusion, we'll see what happens with equities after the House has finished its debate on tax reform/cuts, which is scheduled to begin on Monday, and whether the ongoing political legal drama escalates/expands in the week(s) ahead.