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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

* 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.
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* 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...please read my full Disclaimer at this link.


* If the dots don't connect, gather more dots until they do...or, just follow the $$$...

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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.