The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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In my last post on the S&P 500 Index (SPX), I mentioned 2750 as major resistance and 2680 as near-term support.
Since then, price has bounced around in between those levels, as shown on the daily chart below. At the moment, those two levels are confirmed by a variety of intersecting trendlines...most notably the two red horizontal lines (2748 and 2685), which are the nearest to these two levels.
Until we see a clean break and hold either above or below this red consolidation zone, the SPX will continue its sometimes extreme, volatile whipsaw action in a trendless manner.
It's unclear whether momentum favours a breakout to the upside, inasmuch as the last swing high on the momentum indicator was lower than its previous swing high, in a divergence with the last two swing highs made by the price. However, this may have been intentional and meant to be used as a possible "bear trap" in preparation for the resumption of the rally that began in early April.
Perhaps the month of June will produce either a decisive continuation and confirmation of this 2-month uptrend, or a reversal, which may become clearer after this Friday's employment data is released. Keep a close eye on the momentum indicator to support a "red zone" breakout in either direction.
Inasmuch as the July 4th Independence Day holiday is only a month away, I'd make a wild guess that market players will favour a breakout to the upside, possibly producing a new record high by then before taking some profits to enjoy for the summer holidays...so, we'll see.
* UPDATE June 1...
Two different political reactions to today's employment data...
The following year-to-date percentage gained/lost graphs of the U.S. Major Indices and Major Sectors show that market participants have favoured riskier technology, small-cap, and consumer cyclical stocks.
U.S. Major Indices Year-to-Date
U.S. Major Sectors Year-to-Date
As you can see from the following monthly charts of the S&P 500 Index, MSCI World Index, and Emerging Markets ETF (EEM), money has been flowing in and out of them on increased volatility all year since they peaked at or near their all-time highs in January...pretty much as I speculated in my Market Forecast for 2018 post at the end of last year.
As such, we may see this kind of money 'ebb and flow' scenario continue throughout the remainder of the year, with markets either stuck in their current trading ranges while rotating in and out of various sectors, or maybe drift higher in a slow, choppy and volatile manner, until some kind of major catalyst propels the markets decisively one way or the other. Perhaps we'll have a clearer idea once second quarter earnings releases begin in July as to company forecasts for the second half of 2018 and beyond, as well as more well-defined Central Bank and geopolitical policies and agendas.
I last wrote about WTIC Crude Oilhere. My comments posted there remain unchanged...and we now know that President Trump withdrew US participation in the JCPOA deal on May 8 and that new sanctions will be implemented against Iran and, possibly, nations supporting Iran.
BNN Bloomberg TV's market commentator/analyst, Andrew McCreath's market wrap up and interview last Friday regarding Iran and Oil was interesting and worth a look. His 1/2 hour program is split into the following 4 videos (watch them in order).
As Israel prepares for the relocation of the US Embassy from Tel Aviv to Jerusalem on Monday, the Tel Aviv 125 Index (TA125) appears to be poised for a rally.
Price closed on Friday just above major support of 1325 and is trading in between the 50 and 200 moving averages, as shown on the following daily chart.
A break and hold above the 50 MA at 1337, along with a rise in the RSI above 50 and further strength in the MACD and PMO indicators, could see price retest 1400, or higher. The higher swing high on the RSI is hinting of further strength. If such a scenario were to materialize, it's important that the 50 MA remain above the 200 MA, lest we see a bearish Death Cross form, followed by selling.
Tel Aviv 125 Index Daily
This index is trading under the bullish influence of a moving average Golden Cross and price is above both moving averages, as shown on the weekly chart below.
Look for the RSI to move above 50 and for new bullish crossovers to form on the MACD and PMO indicators on any price rally in order to support a retest of 1400, or higher. There is a large gap yet to be filled above 1425ish, so if price makes it that far, we may see that gap close at some point.
Otherwise, a drop and hold below 1325 could see price weaken to retest minor support at 1300, or even major support at 1225.
My last post on Bitcoin made reference to a bearish engulfing candle that had formed on the daily timeframe.
Since then, its price drifted slightly upwards, then plunged and closed below the low of that candle on Friday, as shown on the following daily chart.
The momentum and rate-of-change indicators did not confirm the recent higher price high, but are both in an accelerating diverging downtrend, and are below their zero levels.
This week closed out on a bearish engulfing candle formation on the weekly timeframe, as shown below.
Both the momentum and rate-of-change indicators are below their zero levels and have been drifting lower over the past few weeks.
Daily and weekly price action on Bitcoin reflects systematic, measured selling since it made its record high in mid-December 2017, and it has failed to stabilize since then. There is no indication that is about to change any time soon.
Rather, these charts paint a picture of a highly unstable cryptocurrency which experienced an initial frenzied parabolic rise, followed by high frothy volatility, and which has yet to find its fair value or prove that it has any at all.
TPO stands for Time Price Opportunity. By using a TPO profile chart, you are able to analyze the amount of trading activity, based on time, for each price level that the market traded at for any given time period. The Point of Control (POC) is the price where it spent the most time during that period and in that timeframe.
If you look at the following monthly chart of the VIX with the TPO profile study added to it along the right hand side, you'll see that its POC (on a monthly basis) since 1986 is 20.53.
Whereas, the TPO POC on a daily timeframe from 1986 is 14.66, as shown on the daily chart below.
This tells me that the average "normal" range of the VIX during the past 33 years is between 14.66 and 20.53, regardless of its trading activity on either a monthly or daily timeframe.
I'd also go a bit further and say that any time it traded outside that range for any length of time, it was "unusual" and, therefore, unsustainable...something to consider when you're taking longer position trades in equities.
As of Thursday's close, the VIX was trading in "unusual" territory at 13.23...below the "normal" range, where it has spent most of its time since the November 2016 general election.
The last time it spent the majority of its time below the "normal" range was from 2005 to 2007 leading up to the 2008/09 financial crisis.
Is today's trading environment any different than it has been during the past 33 years where we'll see the VIX held below its "normal" range for a very long time going forward? We'll see...
As economic benefits of last year's Tax Cuts and Jobs Act begin to filter into the US economy, the S&P 500 Index appears to be headed towards a retest of its all-time high of 2872.87 set in January of this year, as shown on the monthly chart below. This record high was accompanied by an all-time momentum (MOM) high, as well...hinting of further strength ahead at some point on this timeframe.
It has broken above what was near-term resistance of 2680 (as I described in my post of May 4).
Watch for a break and hold above its next major resistance level (top of long-term uptrending channel) at 2750. Otherwise, a break and hold below 2680 could see price retest its next support level of 2620, or lower.
However, political headwinds are lurking as Congresswoman Pelosi promises to roll back those tax cuts (like Pac-Man on steroids gobbling up "crumbs") if Democrats retake Congress in the November mid-term election...as well as Congresswoman Waters' non-stop demands for President Trump's impeachment.
Just how much such inflammatory rhetoric will affect the equity markets remains to be seen...perhaps not much until we get into the late Summer/early Fall with both parties further defining their policies and priorities that they wish to implement going into the mid-term and beyond into the 2020 general election...besides obstruction and impeachment.
* UPDATE May 17...
Democrats continue to put the well-being of MS-13 gang members (who have entered the country illegally) ahead of that of American citizens...
And, with comments like the one below, Democrats continue to push their gender card and now conflate it with the health of financial markets.
Exactly what their overall agenda is remains a mystery at this point...and whether or not that will be explained in detail before the mid-term election is anybody's guess.
* UPDATE May 22...
We'll see if Republicans can build on this shift in momentum in their favour over the Democrats through to the mid-term election. How will President Trump contribute to this momentum, not only to November 2018, but through to the general election in 2020, and beyond? We'll see...
It's "interesting" and odd that Democrats, and their media cohorts, don't want full cooperation of the Intel agencies and transparency in order to uncover all the facts pertaining to the 2016 pre- and post-general election campaign activities of both the Democratic and Republican parties, as well as activities of foreign operatives/governments, DOJ, FBI, CIA, State Department, etc.
Only by exposing all the facts, can appropriate remedies be employed in the future to prevent further meddling by any foreign entities or governments in future elections...as well as arming Americans with such information and safeguards.
To summarize what the U.S. political landscape looks like right now...I never thought I'd see the day when Democrats:
put the interests of the terrorist group, Hamas, above Americans
put the interests of North Korea above Americans
put the interests of the violent MS-13 gang above Americans
put the interests of Iran above Americans
put the interests of illegal immigrants ahead of legal immigrants and Americans
are against national security, border protection, and law and order
want to take away Americans' Second Admentment rights
want to tear down capitalism and free and fair trade practices
have done everything in their power to obstruct the passage of laws that enhance the lives of Americans (e.g. they all voted against the 2017 Tax Cuts and Jobs Act)
want to raise taxes and create more red tape regulations
want to crush free-enterprise innovation and creativity, as well as individual freedoms and liberty by adopting soul-destroying socialist policies and laws
think that it's OK to spy on a political campaign in order to subvert the constitutional rights of a fair political election...which resulted in a duly elected President anyway, but whose constitutional rights to govern are in jeopardy inasmuch as the intelligence agency in charge of an investigation into his campaign is, itself, conflicted and seemingly biased and compromised
implement policies and practices to subvert free speech (e.g., Facebook, Google & Twitter execs, as well as college/university campuses censoring Conservative speech)
think it's OK to threaten and physically harrass members of President Trump's administration, including his picks as Supreme Court justices
want to ban 16oz big gulp soft drinks and cows.
They've created a political and nonsensical mess...I wonder what would happen if they regained power in the House and Senate in the mid-term election (besides impeaching President Trump without sufficient grounds and legal cause, as they've repeatedly threatened since he took office)? No doubt, that would create a constitutional crisis and lead to anarchy.
Is that what they really want? We'll see.
In the meantime, they (along with most of the liberal mainstream media, as well as former Obama Intel agency Directors Comey, Clapper and Brennan) seem to be doing President Putin's bidding in sowing chaos and extreme divisiveness in the U.S. with their non-stop and, as yet, unproven accusations of President Trump colluding with Russia during the 2016 election. We know that 90% of the coverage of Mr. Trump by the majority of the media is negative, regardless of the subject matter.
In any event, whatever happened to the presumption of innocence until proven guilty? That seems to have been thrown out the window with respect to this matter. If there was collusion, where's the proof and for how long will this so-called "legitimate investigation" drag on?
* UPDATE June 25...
Maxine Waters is at it again...even liberal-leaning CNN has condemned her latest calls to harass Trump officials in public...imagine what her Democratic party would do to Republican Americans if they retake Congress.
Representative Steve Scalise (R) and some of his collegues were shot and wounded a year ago by a man who hated Republicans. This has become a dangerous escalation of an assault against civil liberties and who knows where this will all end.
There are calls for House Speaker Paul Ryan to sanction Ms. Waters and for her actions to be referred to the Ethics Committee for review. In the meantime, she continues with her unabashed 'total resistance' tactics.
Judge Jeanine Pirro:"A lot of Americans are fed up and I'm one of them."
* UPDATE July 26, 2019...
"Promises made...but not really...
we were just kidding."
Democrats won a majority in the House of Representatives in the 2018 mid-term elections by promising to shore up Obamacare and pass new legislation on healthcare...to fix those things once and for all.
So far, they've done absolutely nothing in that regard. It turns out that it was only a ruse, geared to get votes, so they could fritter away their time and taxpayers' hard-earned money in order to harass and impeach President Trump, about which I've written extensively in this article. In fact, they wasted seven months since the mid-terms and have vowed to carry on wasting the next 17 months in their July 24 press conference that they gave right after former Special Counsel Robert Mueller's disastrous testimony before two House committees.
Year after year, their tired old mantra seems to be a wash-rinse-spin repeat of "Promises made...but not really...we were just kidding."
The takeaway here is beware and don't be fooled by their empty promises in the coming months leading up to the 2020 Presidential election.
Read my subsequent "Political Headwinds" articles at this link...
I watched Prime Minister Netanyahu's recent speech on TV where he described the extent to which Iran's nuclear program had been developed before the 2015 Iran nuclear deal was reached between Iran and six countries -- the US, UK, Russia, France, China and Germany.
From the information he provided, it appears that the parameters around which that deal were structured were false and no longer exist, and, therefore, one could argue that the deal is now illegitimate.
President Trump will have to decide whether or not to recertify the JCPOA by May 12.
By staying in the Iran deal, it sends a message to other countries such as North Korea that they, too, can make deals with the US based on false facts. It sets a precedent and a framework around which future deals could be structured and puts the US and its allies in a more weakened position than they were in before entering into such an agreement, inasmuch as they become tied to the conditions of the agreement.
* UPDATE May 8...
President Trump withdrew US participation in the Iran deal today...new sanctions will be implemented against Iran and, possibly, for nations supporting Iran.
Perhaps we'll have a clearer picture of direction on the S&P 500 Index (SPX) on a break one way or the other after President Trump decides by May 12 whether or not to recertify the JCPOA.
At the moment, it's trading within a tight range between 2620 and 2680, as shown on the daily chart below.
The momentum (MOM) indicator is in downtrend and trading below the zero level. The relative vigor index indicator (RVGI) is also in downtrend and is below zero, but has just formed a bullish crossover to the upside.
Any sustained breakout of the SPX to the upside will need to be confirmed by both indicators breaking and holding above their zero levels. Otherwise, it may be short-lived and followed by a sharp, swift drop.
The Merriam-Webster dictionary defines a Baby Boomer as a member of the generation born between 1946 and 1964. If the average age of Baby Boomers is 65 years, then 1953 would be an important year for them. A lot of stuff happened that year, including the end of the Korean War.
At the age of 65, a person is also considered a senior citizen. With that "badge of honour" comes a whole host of pros and cons. Baby Boomers' young adult lives were much more simple without distraction of home computers, cell phones and social media platforms. This kind of simple life meant that one could live in a more "linear-thinking" kind of mode, where people could more easily define their goals and create strategies and tactics on how they could be achieved at an early age, then work towards those as they aged.
The rapid onset of technology, nano-technology, nuclearization, globalization, pandemics, medical advances and cures, fluctuating climates, and mass human migration that we've seen emerge since the Sixties has brought with it a lot of rising challenges related to the adaption of social, economic, cultural, religious, racial and political differences and discord...as well as an oversaturation of information that's been thrown at us on an ever-accelerating pace.
I'm not sure that the average human brain has kept pace with, and has a full grasp of, all that has occurred during those years and what it will mean for younger generations going forward.
No doubt, Baby Boomers have been and are in the process of retiring and downsizing their homes and possessions. Priorities have changed from work-related and family-raising activities, to ones more focused on health, pensions, friends, and comfort, as well as drawing down their investments for such purposes.
Younger generations are debt-ridden and information-overloaded. They will be saddled with the problems of yesterday, today and tomorrow at an ever-increasing pace and are required to think in a more "lateral" fashion...not an easy task, as they'll need to keep an open mind and a keen eye open. Their disposable income may not be sufficient to plough into the stock markets.
We're now living in that hand-off period between Baby Boomers and these younger people as they begin to step into those roles. What that transition period means for the markets is unknown at the moment...at least I don't have a handle on that aspect (no crystal ball, darn it).
We may see a period of instability or chaos occur on a world-wide basis at some point where indecision becomes the norm for awhile, until new order and direction can evolve...one where markets stall and whipsaw for some time.
WHAT THAT MEANS FOR CURRENT EQUITY MARKETS
In the meantime, the technical indicators on the following monthly chart of the S&P 500 Index (SPX) can be monitored to gauge the strength or weakness of equities.
While the parabolic stop & reverse (SAR), momentum (MOM) and relative vigor index (RVGI) indicators are displayed with their default input values, I've shown the average true range (ATR) input value as 1 month.
In this regard, my observations are:
The SAR has flipped from a buy to a sell signal.
The RVGI has formed a bearish crossover and is accelerating to the downside.
The MOM has broken its recent uptrend from the beginning of 2016 and is accelerating to the downside.
The ATR registered its second-highest reading in history during February of this year...second only to the one made in October 2008 during the financial crisis.
These tell me that markets have reached a level of saturation and indecision...something I've written about in more detail all year in a variety of articles on a variety of markets. And, these technical indicators are additional tools to the ones I've mentioned that can be used to monitor equity strength/weakness/volatility going forward.
Whether this pause reflects, or is the beginning of, what I posited above regarding the generational hand-off is anybody's guess...but it may be...keep an open mind, eyes open and think laterally.
As a Baby Boomer, myself, I intend to do just that, to the best of my abilities.
The price of WTIC Crude Oil (CL) continues to churn in a tight sideways consolidation range as markets and world leaders digest Israel's latest release of information regarding Iran's nuclear program.
As shown on the following daily chart of CL, it's still in uptrend on this timeframe, and this latest consolidation zone (green zone) may be a "bull flag" formation...suggesting higher prices ahead.
If price drops and holds below its near-term support of 66.00, we may see an accelerated level of selling occur. So, keep an eye on the velocity of both the momentum and relative volatility index indicators for confirmation. I've shown an input value of 1 day so you get an idea of day-to-day activity in both directions.
Otherwise, watch for a breakout and hold above 70.00 as it, potentially, could reach its next major resistance level of 80.00, as I recently described here.
We may not get clarification one way or the other until President Trump reaches a decision on May 12 regarding the recertification of the JCPOA.