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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 $$$...

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Events

UPCOMING (MAJOR) U.S. ECONOMIC EVENTS...
* Wed. Nov. 14 @ 8:30 am ET ~ MoM & YoY CPI & Core CPI Data
* Thurs. Nov. 22 ~ U.S. markets closed for Thanksgiving Day Holiday & NYSE closes early @ 1:00 pm on Fri. Nov. 23
* Wed. Nov. 29 @ 2:00 pm ET ~ FOMC Meeting Minutes
* Wed. Dec. 5 @ 2:00 pm ET ~ Beige Book Report
* Fri. Dec. 7 @ 8:30 am ET ~ Employment Data
* Wed. Dec. 19 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts and @ 2:30 pm ET ~ Fed Chair Press Conference
* Tues. & Wed. Dec. 25 & 26 ~ Canadian markets closed for Christmas & Boxing Day Holidays
* Tues. Dec. 25 ~ U.S. markets closed for Christmas Day Holiday & close early @ 1:00 pm on Mon. Dec. 24
* Wed. Jan. 30 @ 2:00 pm ET ~ FOMC Announcement
*** Click here for link to Economic Calendars for all upcoming events

NOTABLE POSTS WITH IMPORTANT UPDATES...

Sunday, November 11, 2018

China's Shanghai Index & Yuan At Potential Inflection Points

My post of October 11 mentioned that China's Shanghai Index broke below a major monthly swing low level of 2638.30 and that it could be headed for its next major support level at 2260, or lower.

Since then, price has fluctuated in both directions and has been attempting to stabilize, but remains just below that former swing low...a potential major inflection point.

Overlayed on all of the following three charts of the USD/CNY forex pair is the Shanghai Index (shown in pink). After price peaked in January of this year, it began an 1,140 point decline, in divergence with a rally in the USD/CNY.

The following monthly chart of the USD/CNY forex pair shows that its price is also now at a potential inflection point...the last swing high set in January 2017, following the November 2016 U.S. Presidential election.

Both the momentum (MOM) and rate-of-change (ROC) indicators (of USD/CNY) have surpassed the January 2017 highs and are at historical highs on this timeframe...hinting at further strength on this timeframe.


On a weekly timeframe, both the MOM and ROC (of USD/CNY) have declined and remain just above the zero level in divergence with this latest price bounce, which began at the end of August...hinting at a potential pullback on this timeframe.


On a daily timeframe, both the MOM and ROC (of USD/CNY) have declined and are just below the zero level in divergence with this latest price bounce, which began at the end of August...hinting at a potential pullback on this timeframe.


In conclusion, both the Shanghai Index and the USD/CNY forex pair are at or near potential inflection points, so it's worth keeping an eye on both to see whether they, either continue to diverge, or whether they both reverse and begin to converge in the near term.

In this regard, monitor the action of the MOM and ROC indicators around their respective zero levels on both the daily and weekly timeframes for clues on direction and strength in the short and medium terms.

As an aside, it would also be interesting to hear whether any chatter arises about whether President Trump declares that China is manipulating its currency any time soon -- which seemed to have been discussed, then dismissed, following the 2016 election -- and whether, and to what extent, such talk affects both the USD/CNY and Shanghai Index.

Friday, November 09, 2018

World Market Headwinds Escalate On A Shift Away From Harmonic Globalism

INTRODUCTION


In my Market Forecast for 2018, I thought that, taking into consideration the uncertainty of the 2018 U.S. midterm elections, coupled with likely interest rate hikes, we'd probably see:
  • volatility rise in 2018 and the SPX and other U.S. Major Indices gain only about half of what they gained in 2017, which would mean an approximate increase of 10% for the SPX
  • that Technology would remain fairly strong, while Small-Caps would likely struggle more than Big-Caps
  • that U.S. markets would continue to outperform other World markets (with the performance of their financials playing an important part)

WHAT HAS HAPPENED, TO DATE, IN 2018


At its all-time high set on September 21 of this year, the SPX had gained 9.62% year-to-date, as shown on the first percentage graph.

Since then, we've seen profits decline to a point whereby only 4.02% of those gains remain as of today's (Friday's) close, as shown on the second year-to-date graph.



You can see from the following daily SPX:VIX ratio chart that volatility increased greatly (doubled) this year, compared with 2017.

Watch for a bearish Death Cross moving average crossover form in the coming days. If that holds, as well as a drop and hold below 150, we'll see further selling occur in the SPX.


The following monthly charts of the S&P 500, Germany's DAX, France's CAC, Italy's FTSE MIB, India's Nifty 50, China's Shanghai, Australia's S&P/ASX, and the Nasdaq Composite Indices show that the Momentum indicator (MOM) has been in decline all year...MOM is below the zero level on all of them, hinting at further weakness ahead on this longer term timeframe, especially if we don't see strong, sustained, convincing buying come in soon.


The following percentage graph shows that, from the March 6, 2009 lows of the SPX (666.79) to Friday's close, the Nasdaq Composite has gained the most, while the Shanghai Index has gained the least.


The following year-to-date graph shows that the Nasdaq Composite is the strongest, while the Shanghai Index is in bear market territory.

Not shown on this graph is the Russell 2000 Index, which has only gained 0.91% YTD and has, in fact, struggled more than Big-Caps since it began to decline after August 31, at which point it had gained 13.37% from the beginning of the year. It's in correction territory.


The following one-month graph shows that buying has occurred in the Nifty Index, while selling has accelerated in the others.


The following monthly chart of the MSCI World Index shows that price pierced below the median of a long-term uptrending Andrew's Pitchfork formation on accelerating downward Momentum (MOM) and is attempting to bounce back to its median.

Failure to recapture and hold above its median, together with continued downward MOM, will indicate further weakness ahead for major world indices.


The following daily chart of the MSCI World Market Index (ex USA), shows how weak other world markets are in comparison with the U.S. markets.

Failure to recapture and hold above 1850 could see this Index retest its 1750 level. If that happens, I think we'll see further selling in the U.S. markets.


The following percentage graph shows that the MSCI World Market Index (ex USA) gained 101.09% from March 6, 2009 to Friday's close.


The following percentage graph shows that the MSCI World Market Index (ex USA) has lost 10.27%, so far this year, and is in correction mode.


CONCLUSIONS


Based on the combative political rhetoric I've seen leading up to and, especially, since the U.S. midterm elections this week, I think that will increase on all sides (Democrats, Republicans, media, and President Trump) until the 2020 elections. In fact, I think that will be like what we've witnessed in 2017/18 on steroids.

I'll go so far as to posit that Democrats have (unwittingly and conveniently) now become the President's scapegoat, so that when the U.S. economy slows in 2019 and shows signs of recession in 2020, he can simply blame Dems for obstruction, gridlock and a waste of taxpayer dollars on endless investigations into his administration. It will cannibalize some (or a considerable amount) of the economic and market gains made since the Presidential election in November 2016 under Trump, and he will accuse Dems of destructive governance and legislative failure as a platform on which to run in 2020.

A failure of U.S. and world markets to recapture convincing sustained buying and to reduce volatility, coupled with escalating domestic and foreign political unrest, as well as President Trump's trade wars and a world-wide shift from an embrace of harmonic globalism to a more divisive world order of nationalism/protectionism will signal, either continued market gridlock/consolidation, or escalating weakness.

Government, corporate, banking, and/or personal debt crises will determine exactly if/when the 9-year bull market bubble blows up, I think.

CLOSING REMARKS


Appearing in the Profile section on my trading blog is the following:


From volatile, whipsaw market action (as evidenced in the above charts and graphs), contentious world-wide political rhetoric and actions, weakening global financials, military buildups, and even increasingly severe weather disturbances, etc., so far this year, I'd say that all three of those behaviours are in retrograde to some degree or other. It's unlikely all of it will abate any time soon.

Buckle up!


Sunday, November 04, 2018

Will The FAANGs Lead U.S. Markets Up or Down?

I last wrote about the FAANGs and FNGU and what I was monitoring going forward in my post of July 30.

Since then, we've seen a great decline in the underlying stocks, as can be seen on the following two daily charts (a 1-year and a 2-month).

Of particular note, is that:
  • many of them, are attempting to stabilize around their 20 MA (blue)
  • the rate-of-change (ROC) indicator on all of these, including the SPX, except TSLA and TWTR are below the zero level
  • the 20 MA is below the 50 MA, including AAPL which just crossed below
  • the 20 MA is poised to cross back above the 50 MA on TSLA and TWTR



The following year-to-date percentages gained/lost graph of the FNGU stocks show that NFLX, TWTR and AMZN are still up the most, while BIDU, FB and BABA have lost the most in this timeframe.


The following one month percentages gained/lost graph of the FNGU stocks show that TSLA and TWTR have gained the most, while NVDA lost the most, and the others suffered considerable losses in this timeframe.


The following one week percentages gained/lost graph of the FNGU stocks show that NVDA, TWTR and TSLA have gained the most, while AAPL lost the most in this timeframe.


The following weekly chart of FNGU is showing a possible triple-bottom reversal in the making.

Both the momentum and rate-of-change indicators are well below their zero levels and, while the MOM is still dropping, the ROC is attempting to stabilize.

Last week's closing price is below that of its open (52.17) when it first began trading back in January.


While the NDX has led the overall percentages gained year-to-date over the other U.S. major indices, it has lost the most on a one-month basis and has gained the least on a one-week basis, as shown on the following three graphs.




CONCLUSIONS

From the above observations, I'd suggest keeping an eye on the following going forward, particularly after the U.S. midterm elections on November 6:
  • AAPL -- further weakness could negatively impact U.S. equities, in general
  • BABA and BIDU -- further weakness could negatively impact China's Shanghai Index (and vice versa)...I last wrote about the SSEC in my post of October 11, and what I'm monitoring is outlined there
  • NVDA -- further weakness could negatively impact U.S. equities, in general...I'll be monitoring any actual progress on trade between the U.S. and China in light of softening rhetoric from both Presidents Trump and Xi in the last couple of days related to trade...however, talk is cheap and meaningless unless and until an actual trade agreement is finally hammered out and the tariffs removed
  • FB -- further weakness could negatively impact U.S. equities, in general...any further data breaches over and above those reported in the media lately could drive this stock to further accelerating losses
  • NFLX -- it appears to be forming a bearish head and shoulders pattern...watch for a break and hold below its neckline around 280-300 to signal much further weakness ahead
  • AMZN -- watching for a possible retest of 1400 if it breaks and holds below 1600
  • GOOGL -- watching for a possible break and hold below 1000 (major one-year support)...next support levels at 950, 850 and 800
  • TSLA and TWTR -- unless the other FNGU stocks reverse their declines, any further advancement on these two will not likely have much of a positive impact on U.S. equities, in general
  • failure of the FNGU stocks to break and hold above, firstly the 20 MA, then the 50 MA, will likely produce further (potentially considerable) losses in U.S. equities, in general
  • if the FNGU fails to break and hold above its IPO open at 52.17, we could see some hefty selling occur in these stocks and U.S. equities, in general

Monday, October 29, 2018

2400 In Store for the SPX?

Further to my post of October 21, the U.S. Homebuilders ETF (XHB) decline continues. Price is now sitting just beneath its long-term 38.2% Fibonacci retracement level of 32.33, which had represented a first major support level (now major resistance). Second major support level (50% Fib retracement) sits at 27.60.

The following weekly comparison chart shows price action of the SPX (green bars), XLF (pink) and XHB (blue) pre and post-2008/09 financial crisis.

You'll note that the XHB entered into a steep decline well ahead of the SPX and XLF in mid-2006...which was a strong indicator of major weakness in that sector and a precursor and barometer of systemic weakness in U.S. equities, in general.

Conversely, it began to accelerate at a faster pace in mid-2012 before it moved lock-step with the other two until they all peaked in January of this year.

All three, subsequently, pulled back, but while the SPX then rallied to new highs, the XLF and, in particular, the XHB did not. In fact the XHB has declined at an alarming rate since early September.


The following year-to-date percentages gained/lost graph illustrates the comparative weakness of the XHB for 2018.

A failure of the XHB to take a leadership role in regaining strength would, no doubt, drag the SPX and XLF down further...assuming that historical movements in markets haven't dramatically changed recently.

In that regard, watch for a break and hold below 2600 on the SPX (a level I had identified as near-term major support in my post of October 10) as a signal that further SPX weakness lies ahead...possibly to its next major support level as low as 2400, which correlates to a long-term uptrending Fibonacci fan line, as shown in my post of August 6.


Keep an eye on the 100 level on the following daily SPX:VIX ratio chart, inasmuch as a break and hold below could see the SPX reach that 2400 level...especially if it breaks and holds below 60 and we see another bearish moving average Death Cross form.


Sunday, October 21, 2018

Systemic Risk Lurking in the U.S. Housing Market?

The U.S. Homebuilders ETF (XHB) is in bear market territory...down 24.68% from its peak on January 24 of this year.

On a year-to-date percentages gained/lost basis, it has drastically underperformed the 9 U.S. Major Sectors, as shown on the graph below.

Year-to-date % Gained/Lost graph of 9 U.S. Major Sectors + Homebuilders

As shown on the first monthly chart, the XHB is nearing a long-term 38.2% Fibonacci retracement level at 32.23, representing a first major support level. Second major support level (50% Fib retracement) sits at 27.60 on this timeframe.

XHB Monthly

The second monthly chart shows that the XHB has dropped beneath a long-term Fibonacci channel on downside accelerating momentum (MOM) and rate-of-change (ROC).

In fact, the MOM and ROC are both at low levels last seen at the height of the 2008/09 financial crisis...which makes me wonder whether the housing market is plagued with another, as yet unrevealed, systemic risk factor of some kindand whether it will spread to the rest of the U.S. equity markets.

Time will tell. Keep an eye on the MOM and ROC indicators, as well as on other critical factors that I described in my recent posts here and here, for potential clues in gauging overall market strength/weakness in the short/medium term.

XHB Monthly

In that regard, the following monthly ratio chart of the SPX:VIX ratio shows that price remains below the 150 Bull/Bear Line-in-the-Sand level on downside accelerating momentum (MOM) -- at a level below the one made during the height of the 2008/09 financial crisis -- indicating an unusually high level of rapidly changing volatility in the SPX...another warning hinting of further equity weakness ahead.

SPX:VIX Ratio Monthly

Saturday, October 13, 2018

U.S. & World Market Volatility Continues

Further to last Wednesday's post, here's where the U.S. Major Indices stood after each close on Thursday and Friday, respectively.

Thursday's Close:


Wednesday's sell-off continued on Thursday, with the nine Major Indices closing at or near a lower near-term support level (or below, as was the case with the NDX and COMPQ), as shown on the following daily charts.


The following percentages gained/lost graph shows the amounts that these indices had lost to date from their highs of this year.

The Russell 2000 and Nasdaq Transportation Indices were now in correction territory, while the Nasdaq CompositeNasdaq 100 and Dow Transports Indices were close to that 10% threshold.


Price on the SPX:VIX ratio had fallen to just above a level that I've long referred to as the Uncommitted Zone (between 100 and 60), as shown on the daily ratio chart below.

A drop and hold below 100 would ensure further weakness ahead in the SPX, while a drop and hold below 60 could produce a catastrophic drop in equities.

Either way, as long as price on this ratio remains below 150, we'll see wild, large intraday swings in both directions on the SPX.

This volatility and weakness will likely not die down until price breaks and holds above 200.


Friday's Close:


The week's sell-off stalled on Friday, as we witnessed wild, large intraday swings in both directions before prices settled, either a bit higher, or slightly unchanged (Russell 2000, Utilities, and Nasdaq Transportation Indices), as shown on the following 2-month daily charts of the nine Major Indices.


The following graph shows the percentages that these indices have gained/lost Year-to-date.


The following graph shows the percentages that these indices lost during this past week.


The following percentages gained/lost graph shows the amounts that these indices have lost to date from their highs of this year (August 29).

The Russell 2000 and Nasdaq Transportation Indices remain in correction territory (10%+), so far, this year.


The following tables show the percentages of Major Markets and Sectors that are trading above a variety of moving averages.

A quick glance at those still above their 200-day MA shows that the S&P Energy, Health Care & Utilities SectorsDow 30, Dow Utilities and Dow Composite Indices remain the strongest, so far, this year. 

A further breakdown in the Dow Indices, in particular, may spell further trouble for U.S. equities, in general.



The following daily ratio chart of the SPX:VIX ratio shows that price bounced a bit on Friday and remains above the 100-60 Uncommitted Zone...but is still below the 150 Bull/Bear Line-in-the-Sand.

A drop and hold below 100 will ensure further weakness ahead in the SPX, while a drop and hold below 60 could produce a catastrophic drop in equities

Either way, as long as price on this ratio remains below 150, we'll see wild, large intraday swings in both directions on the SPX

This volatility and weakness will likely not die down until price breaks and holds above the 200 New Bull Market Level.

Keep an eye on the RSI, MACD and PMO indicators for any signs of a reversal to support any further buying in the SPX...otherwise, look for volatility and weakness to remain elevated.


The World Market Index, which has lost 15% from its high on January 25 this year, is trading under the bearish influence of a moving average Death Cross formation, as shown on the following daily chart.

Price stopped just below a major support level of 1850 and sits squarely in between major resistance at 1950 and lower major support at 1750.

Watch for a possible reversal on the RSIMACD and PMO indicators to support some kind of stabilization in this index...otherwise, look for volatility to remain elevated and for price to, potentially, retest the 1750 level. Such a scenario could very well drag U.S. equities further down, as well (and vice versa)...so, this is an important Index to monitor at this point.


Thursday, October 11, 2018

Shanghai Index Continues Freefall With Breakaway Gap

The first CNBC World Stock Markets Heat Map shows Wednesday's big drop in North/South American, British and European markets.


The second Heat Map shows the subsequent overnight drop in the Asian, etc. markets. At the time of writing this article (around 1:30 am ET October 11), the SSEC is down 4.65%.


The Shanghai Index (SSEC) continued its freefall from its January highs with a breakaway gap below a large trading range and continued to fall in early overnight trading in China, as shown on the daily chart below.


In my post of August 6, I mentioned that the SSEC was in a bear market and that if price broke below its last swing low of 2638.30 on the monthly timeframe, it could be headed for its next major support level at 2260, or lower.

Since then, it has continued to slide and price has just broken below that swing low with this gap down, as shown on the following monthly chart.

Both the momentum and rate-of-change technical indicators are in decline, are well below zero and are making a new low...hinting of further weakness ahead on this timeframe.


In my post of August 15, I mentioned that the China Financials ETF (GXC), on a ratio basis compared with the SSEC, was weaker than the index and that it would be important for the financials sector to attract new buyers, otherwise, we'd see the selling continue, or even, accelerate in Chinese markets.

The following daily ratio chart of the GXC:SSEC ratio shows that (as of Wednesday's close) price has continued to weaken and has broken below near-term support of 0.034...on downside accelerating RSI, MACD and PMO indicators...signalling that we still don't see financial support for the SSEC.

Price on this ratio may well continue to drop to its next major support level of 0.030, or lower, before it, either begins to stabilize, or bounces.


Should price on the SSEC drop another 240 points, or so, that would constitute a measured move comparable with the size of its recent consolidation range (from which the breakaway gap has dropped), bringing price to around 2360...100 points above a potential target of 2260. As such, we may see price overshoot the 2360 level and drop to somewhere in between that and 2260, before it, either begins to stabilize, or bounces.

Keep an eye on the MOM, ROC, RSI, MACD and PMO indicators for potential clues as to future price direction for, both the SSEC and the GXC:SSEC ratio.

Wednesday, October 10, 2018

U.S. Markets...On The Cusp of Chaos

* See UPDATE below...

Further to my observations outlined in my posts of August 6 (where I noted that 2900 represented a major Fibonacci resistance level for the SPX), September 29 (where I mentioned the possibility of equity weakness for the first part of Q4 ahead of the November 6 mid-term elections), and October 7 (where I discussed price on four of the Major Indices being embroiled in a technical chaos formation amid downside accelerating rate-of-change), I'd note that after today's (Wednesday's) dramatic drop in U.S. markets, they are now sitting on or close to near-term major support, as shown on the following daily charts of the nine Major Indices.


Most of them are still hanging onto some of their year-to-date percentage gains, as shown on the first graph below...but have lost a hefty percentage in the past week, as shown on the second graph.



Price on the SPX:VIX ratio has fallen well below both the 200 New Bull Market level and the 150 Bull/Bear Line-in-the-Sand level, as shown on the following daily ratio chart.

All three technical indicators have sunk below their respective neutral levels (50 for the RSI and zero for the MACD and PMO) and are accelerating to the downside, hinting of further weakness ahead for the SPX.


As can be noted on the following monthly chart of the SPX, longer-term major support sits around the 2600 level...a convergence of price support and a long-term median of an uptrending Andrew's Pitchfork formation.

As the SPX made a new all-time high on this timeframe, the momentum and rate-of-change technical indicators did not. In fact, both of these have made a lower swing low and the ROC is now below zero...also hinting of further weakness ahead.

Keep an eye on these latest indicators, together with those identified in my above three posts, for short and longer-term gauges of either, further weakness, or a turnaround any time soon.


* UPDATE October 11...

Wednesday's sell-off continued today, with the nine Major Indices closing at or near a lower near-term support level (or below, as is the case with the NDX and COMPQ), as shown on the following daily charts.


The following percentages gained/lost graph shows the amounts that these indices have lost to date from their highs of this year.

The Russell 2000 and Nasdaq Transportation Indices are now in correction territory, while the Nasdaq Composite, Nasdaq 100 and Dow Transports Indices are close to that 10% threshold.


Price on the SPX:VIX ratio has now fallen to just above a level that I've long referred to as the Uncommitted Zone (between 100 and 60), as shown on the daily ratio chart below.

A drop and hold below 100 will ensure further weakness ahead in the SPX, while a drop and hold below 60 could produce a catastrophic drop in equities. Either way, as long as price on this ratio remains below 150, we'll see wild, large intraday swings in both directions on the SPX. This volatility and weakness will likely not die down until price breaks and holds above 200.