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

* 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.
* In answer to this often-asked question, please be advised that I do not post articles from other writers on my site.
* 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...


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




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Sunday, July 14, 2019

Market Battle Fatigue: China Versus USA

There have been numerous reports of an economic slowdown (and even contraction in some sectors) in China, one of which describes those in detail at ZeroHedge. While some of China's difficulties may have been exacerbated by a fairly recent trade war with the U.S., it certainly didn't start them...other factors were already in play and bear responsibility for its inception, as explained therein.

There are a couple of gauges I'm monitoring that seem to measure the strength/weakness of both the United States' and China's economies, namely the Canadian Loonie and the Aussie Dollar, respectively.

Canada exports a great deal of commodities to the U.S., while Australia exports many to China. The strength/weakness of those exports is reflected in their respective currencies, and, hence, in the economies of the U.S. and China.

You can see from the long-term monthly forex chart below of CAD/UAD that the Loonie has, essentially, outperformed the Aussie Dollar since February 2012, albeit with several periods of sustained volatility peppering it along the way.

The monthly forex chart of CAD/USD shows that price has, once again, pierced above major resistance around the 0.76 level. Watch for that level to hold to, potentially, signal continued strength in the U.S. markets, versus China's weakness.

The monthly forex chart of AUD/USD shows that price is hovering just above major support at 0.70. If this level is broken with force and held, watch for continued China weakness.

The following daily forex chart of the Loonie versus the Aussie Dollar (CDW:XAD) shows that price briefly broke above major resistance at 1.100 several days ago, hinting of further weakness ahead for China.

Watch for price to possibly retest this level, and if it breaks above and holds, I'd like to see the RSI tick up again and both the MACD and PMO indicators reverse back to the upside in support of further strength in the Canadian Loonie...potentially, signalling further weakness ahead for China.

The following Year-to-date percentages gained/lost graph of the major world currencies illustrates the difference between the Loonie and Aussie Dollar. There's quite a gap between the two in terms of Loonie gains and Aussie Dollar losses, so far, this year.

The following one-week percentages gained/lost graph shows a slight uptick of the Aussie Dollar over the Loonie this past week...one to keep a close eye on over the coming days/weeks, along with the above-mentioned charts and price levels, as potential gauges in determining the strength/weakness of China's economic health.

In addition, the following two monthly charts give a long-term bird's eye view of the S&P 500 Index (SPX) and China's Shanghai Index (SSEC).

China's weakness since mid-2015 is striking, compared with the strength of the U.S. market. I don't think that can be entirely attributed to the current trade war, which is relatively recent, and I think that more weakness may lie ahead.

Finally, I'd just point out that the following SPX:SSEC daily ratio chart shows that the SPX is poised to continue outperforming the SSEC, with minor short-term resistance some distance above at 1.10...another gauge to throw into the mix of, purely technical, analysis of the United States' and China's economic and market health.

Saturday, July 13, 2019

SPX: Trade With Caution

Isn't it amazing what Central Bankers can do for markets. Case in point is this compressed view of the S&P 500 Index (SPX) in "area" format (monthly chart below). It's virtually been on a tear since the bleeding from the financial crisis of 2008/09 was abruptly halted with their intervention and injection of monetary support, and it hasn't had much of a correction since then, relatively speaking.

Purely from a technical point of view, its ascent is beginning to look a bit like the parabolic move that Bitcoin (BTC/USD) began to make in early 2017 and peaked by the end of that year (weekly chart below).

Granted, the SPX is quite a different market instrument than Bitcoin and is much more stable, but I simply thought I'd show a comparison of these two charts, on a purely technical basis, for your information. What you do with that is up to you.

One thing I would point out is that the Momentum indicator (MOM) on the SPX is not corroborating the series of new swing highs that price has made since the beginning of 2018. That's in line with what I reported in my post of June 29, wherein I described what market gauges I'd be monitoring as price, potentially, approaches 3047. My observations and conclusions remain unchanged.

Bottom line...trade with caution in the coming days/weeks.

Tuesday, July 02, 2019

President Trump's Rose-Coloured Glasses Are Back On

It looks like President Trump has chosen to dust off his rose-coloured glasses and put them back on regarding his stance on North Korea and, in particular, its leader, Kim Jong Un.

Take a look at what the President tweeted about his impression of Kim's appearance and health when they met at the Korean DMZ on June 30 and contrast that with what Fox News Anchor, Tucker Carlson, reported in the following video.

Assuming Tucker Carlson's version is accurate wherein he describes Chairman Kim's ill-health (unlike the President, he has nothing to gain by lying about it), I would imagine that Kim depends greatly on his military leaders for support in order to remain in power...for health reasons, safety and security reasons, economic reasons, political reasons, and in order to maximize his priorities of securing North Korea's power as a nuclear powerhouse.

Without that important and immense military support system in place, and as long as they remain loyal to Kim, I believe his future would be very fragile and precarious because of his poor health. For that reason, I cannot foresee an agreement ever being reached between Kim Jong Un and President Trump to completely and verifiably denuclearize, because Trump is not just dealing with Kim, he is also dealing with all of Kim's military leaders/advisers...who are, essentially, propping him up, for the time-being. To create prosperity for the citizens of North Korea would undermine their absolute power over them -- and over Kim -- and would take away their nuclear power and leverage over the rest of the world.

If Kim were of robust health, I'd have a different opinion in this regard...he'd have absolute autonomy to make such a deal with the U.S. However, with so many hard-line military players involved (who are necessary for Kim's survival), the deck is stacked against such a deal ever being struck, with Kim Jong Un at the helm.

So, President Trump is only biding his time with Chairman Kim, using flattery as an interim appeasement tool -- sprinkled with another summit or two and more photo ops, that Kim can use to prop up his image with the North Koreans and the rest of the world -- until such time as he is no longer the U.S. President...and, no doubt, those rose glasses will stay firmly on until then.

In the meantime, I hope the President will not back-track on his maximum pressure campaign against North Korea and will, instead, begin to enforce the rules of that campaign on those countries that are, reportedly, breaking the sanctions that they originally supported at the U.N. (e.g., Russia and China, etc.).

Saturday, June 29, 2019

CAUTION: Alligator Crossing Awaits U.S. Markets In Mid-2019

The Dow 30 (YM), S&P 500 (ES), Nasdaq 100 (NQ) and Russell (RTY) E-mini Futures Indices are in danger of being swallowed into their respective moving average "Alligator" formations (where the moving averages are offset into the future), as shown on the following daily charts.

If price is engulfed within and falls below these formations, we'll see high volatility and wild swings ensue, with a possible correction in equities.

Watch for moving average crossovers to the downside, beginning with the green (5MA, -3) below red (8MA, -5), followed by the red below blue (13MA, -8) to gauge weakness and a potential pullback/correction. At the moment, the only E-mini Index where the green has dropped below the red is the RTY (although the other three are a hair's width away from also crossing), so it is the one to watch the closest in the coming days/weeks as a possible leader in weakness and move away from riskier assets.

As an aside, now that a tentative truce and agreement to halt further escalations in their trade war seems to have been struck between the leaders of the U.S. and China in this weekend's G20 summit in Japan, we may see a tepid rise in equity markets.

However, any sustainable strength may be dampened by a reduced likelihood of any kind of substantial rate cut, if any, by the Federal Reserve at their next meeting on July 31.

Source: ZeroHedge.com

If equities do rally, the S&P 500 Index (SPX) will, again, run into resistance around 3000 (a +3 standard deviation of a long-term uptrending regression channel), as shown on the following monthly chart. Price may overshoot to around 3047, which is a 261.8% External Fibonacci level.

To gauge such strength of any upside move, keep an eye on the SPX:VIX ratio.

The following monthly ratio chart shows that price closed out the first half of 2019 just below the 200 New Bull Market level. Furthermore, you'll see that the monthly price swings on this ratio are at variance with those on the SPX. Whereas the SPX has made a series of higher swing highs since the beginning of 2018, the SPX:VIX ratio has made a series of lower swing highs, which puts into question the sustainability and strength of any further rally in the SPX.

Looking at the following three charts of the SPX:VIX ratio, you'll see that each timeframe tells a different tale.

While the first chart (each candle represents a period of one year) appears very bullish for the first half of 2019, the second one (each candle represents a period of one quarter) shows that volatility increased substantially from Q1 to Q2, and Q2 closed on a great deal of indecision. The third chart (each candle represents a period of one month) highlights the lower monthly swing highs, as mentioned above.

Looking forward to Q3, I'd take a shorter-term look at the daily chart of the SPX:VIX ratio, as shown below, along with a couple of technical indicators.

Firstly, if this ratio crosses and holds above 200 to support any renewed rally in the SPX, we could see this ratio reach as high as 220-230, or so, which is a resistance level represented by the apex of a triangle formed by its 2-year price swings. That level would also converge with a 127.2% external Fibonacci retracement level and channel median shown on the above monthly ratio chart. If that level is hit, then the SPX may have reached a price of 3047, as I described above.

Furthermore, in support of such a scenario, it will be important for the RSI to remain above 50, and for the MACD and PMO indicators to remain bullish on this timeframe.

Otherwise, we may see the SPX falter and be engulfed by its "Alligator" to drop as low as 2600, or lower to 2400, as I described in my post of June 2.

Monday, June 24, 2019

Message For China, North Korea & Iran

You can't read the instructions when you're
stuck inside the jar. 

In other words, if you hide your head in the sand, you'll never make a deal with the US and save face with, and for the benefit of, your citizens...and it's hard to talk with sand in your mouth.

Sunday, June 02, 2019

SPX Triple Top: 2400 Target

My last post was not overly enthusiastic about a continued rally in the SPX, as evidenced by its title.

Now that the month of May is complete, you can see from the monthly chart below that a large triple top has formed on the SPX, which is, in fact, thanks to three bearish candle formations on this timeframe (namely, a dark cloud cover, followed by two bearish engulfing candles) -- albeit it on successively higher swing highs -- after overshooting its upper edge of a long-term ascending regression channel and reaching its +3 standard deviation level.

Its target, if it continues to drop, is the lower edge of this regression channel around the 2400 level, which also happens to converge with its 50-month moving average (red).

All three technical indicators, the RSI, MACD and STOCH, are signalling further weakness ahead.

Price on the following monthly chart of the SPX:VIX ratio closed the month just below the 150 Bull/Bear Line-in-the-Sand level.

Note that there are three bearish engulfing candle formations on this ratio on successively lower swing highs...a bearish divergence from the monthly swing highs on the SPX, as noted above.

The Momentum indicator (MOM) closed below the zero level, hinting at further weakness and rising volatility ahead for the SPX.

While we may see some shorter-term attempts at weak rallies, I think the SPX will eventually reach the 2400 level, or lower...provided that the SPX:VIX ratio remains below 150 and that MOM remains below zero...two gauges to monitor in this regard.

Saturday, May 18, 2019

RIP Grumpy Cat :-(

Tardar Sauce (April 4, 2012 - May 14, 2019), nicknamed Grumpy Cat.

So sad...she'll be missed...1.5 Million Twitter followers and her own Wikipedia page...

Monday, May 13, 2019

China's Shanghai Index: No Longer A Market Leader

Take a look at this monthly comparison chart of the S&P 500 Index (SPX) versus China's Shanghai Index (SSEC).

While the SSEC literally exploded during 2007 compared with the gains made by the SPX, and made an anaemic attempt in 2015, it's, essentially, gone nowhere since mid-2015.

If this is a harbinger of things to come, I'd say that China is in for a rough ride over the next few years...particularly in light of the current trade war with the U.S. And, it's time for them to negotiate in good faith, as Senator Grassley has tweeted.

You can see from my post of May 6 that major support sits at 2500 for the SSECIf it blows through that level, watch out below!

Source: ZeroHedge.com

World markets closed the day massively in the red on Monday...possibly related to this trade escalation and perhaps other world tensions, e.g., Iran, Venezuela, North Korea, etc., as well as slowing world economies. We'll see how overnight trading fares in China tonight.

P.S. Is anybody besides me getting tired of President Trump's incessant "good-cop bad-cop" tweets/messages regarding trade talks with China? All you have to do is look at this 60 min chart of the SPX to figure out where and when after-hours "bad-cop" tweets/messages were let loose by either him or his negotiators, and when "good-cop" tweets/messages were released during market hours. It's getting silly...and predictable.

And, isn't it about time that he finally outlined a comprehensive trade policy that, not only includes China, but other world countries, as well? It's long overdue, in my opinion!

Saturday, May 11, 2019

Sell In May And Go Away...For The Rest Of 2019?

The following graph of the U.S. Major Indices shows the percentages gained from January 1 to the highs that were made, so far, in 2019 (about a week ago).

In my 2019 Market Forecast post of December 17, 2018, I reported that the SPX gained 9.62% for 2018 and thought that, "2019 is likely to bring the same level of volatility and uncertainty, not just in U.S. equity markets, but in other world markets and world politics, as well." That was based on the assumption that central bankers would continue to tighten their monetary policies, with no further fiscal stimulus packages on the horizon in the U.S. at the time. Since then, the Fed has loosened its monetary policies and has indicated that no rate hikes would be implemented in 2019.

I further mentioned that the SPX may, either, retest its all-time high of 2940.91, or resume further declines, putting it at 2400, or lower, to possibly 2250 or 2000 (on the date of my post, the SPX had closed at 2546.2).

After hitting a low of 2346.58 on December 26, the SPX closed out the year at 2506.85 and has since climbed to a new high of 2954.13 on May 1, surpassing its prior high. It has pulled back a bit to close at 2881.40 on Friday.

After further examination, I'd now add 2800 and 2600 to those major support levels, which are evident on the following weekly chart (shown in simple "area" format). At a glance, 2600 stands out as a "right shoulder" target on a potential "inverted head and shoulders" formation, albeit following a large rally from the 2016 Presidential election, rather than after a decline, which would be more typical for this type of technical formation in order for it to trigger and spawn a new rally to, potentially, new highs.

Inasmuch as the SPX has pretty much fulfilled my forecast in its gains for 2019, we may have just seen the top put in for the year, and we may see it pull back to, at least, 2600, or lower. At the risk of repeating myself, I'll, instead, refer to my recent posts here, here, here and here, which describe the market gauges I'm monitoring in this regard.

Monday, May 06, 2019

China's Shanghai Index Rejected At Major Resistance

* See UPDATE below...

I last wrote about China's Shanghai Index (SSEC) on March 25, at which time I identified 3150 as major resistance. Price had closed at 3043.03 that day.

Since then, price briefly broke above 3150 to hit a high of 3288.45 on April 8, and, after retesting that level several times over the next few days, it finally broke and closed below on April 25. In Sunday's overnight trading it closed today (Monday) at 2906.46.

Monday's losses occurred after two tweets Sunday night by President Trump regarding trade and tariffs, as noted below. The third tweet was posted today.

Today was another bad Monday (to put it mildly) for Asian markets, as noted below (screen shot taken at 1:30 pm EDT)...(source Indexq.org)

In my above post, I said the following regarding the SSEC:

"I've shown the input values of the momentum (MOM) and rate-of-change (ROC) indicators as one period. They're both still below the zero level and have, in fact, been declining on recent attempts to move higher during March.
If price breaks and holds above, say, 3150,  I'd like to see both of these indicators also break and hold above zero, while making new highs, as well, to confirm the sustainability of any further meaningful advancement beyond that price.
Otherwise, look for this index to retest its last weekly swing low, or plunge lower, inasmuch as its stability at current levels is questionable."
From the following updated weekly chart of SSEC, both the MOM and ROC indicators (shown with an input value of one period) failed to make a new swing high as price made its new swing high on April 8, and they've been declining ever since, to end back in negative territory...hinting of further weakness ahead.

Major support sits at 2500. Whether it hits that level, or plunges lower, may depend on future unpredictable Trump tweets (which have ranged from extreme optimism on a trade deal, to these latest threats), or on other internal Chinese factors, or other external world events (e.g. tensions/events involving North Korea, Iran, Israel/Palestinians, Venezuela/Russia/Cuba, etc.).

Click here to view video on Twitter

My thoughts outlined in my May 4 post, "I think that U.S. equities and bonds will continue to outperform the rest of the world markets," haven't changed, although we may see some increased volatility and deeper pullbacks over the coming weeks/months than I may have anticipated.

As the S&P 500 Index (SPX) made its new all-time high of 2954.13 on May 1, its corresponding SPX:VIX ratio was not corroborating that strength. As of 2:19 pm EDT today, this ratio had dropped to its 200-day moving average, after it began its decent when it peaked in mid-April. A drop and hold below this moving average (say, 180) could see the SPX plunge much lower (watch for a break and hold below near-term support at 2900) as the SPX:VIX ratio drops to, potentially, 100, or lower.

* UPDATE May 8...

Source: ZeroHedge.com

Saturday, May 04, 2019

General Market Musings

I've not much to say, other than I think that U.S. equities and bonds will continue to outperform the rest of the world markets (especially since the Mueller investigation is now closed, as AG Barr emphatically stated in his testimony before the Senate Judiciary Committee this past week)...that the slow melt-up continues, punctuated, periodically, by episodes of consolidation and minor pullbacks...watch for a strong U.S. dollar to support this. And, I doubt very much if the Fed cuts rates any time soon, as President Trump has suggested...not with the strong economy firing on all cylinders.

Inasmuch as other countries, such as Canada, have numerous trade messes with multiple countries that they're trying to sort out, without much luck, so far, and with their economies slowing, I don't see a growing world-wide slow-down abating anytime soon.

For example, German manufacturing PMI contraction continues to deepen for the fourth straight month, as noted below.

Major resistance for the U.S. dollar sits at 100.00 and major support at 90.00, as shown below.

So, basically, I've nothing significant to add to what I posted on March 26 and April 3, except to suggest keeping an eye on the market gauges mentioned therein.

Friday, April 19, 2019

A Joe Biden Stock Market

Former Vice-President Joe Biden may run for President in the 2020 election. He stated recently that his platform would be the Obama/Biden policies of yesteryear.

Were he to be elected, and if the old Obama policies were resurrected, we could very well see the S&P 500 Index return to pre-Trump levels around the 2200 level, or lower, as shown on the monthly chart below.

In the two years since President Trump took office, the SPX has gained around the same number of points as it did in the last four years of Obama's presidency. Those gains are in jeopardy, as uncertainty will weigh on markets in anticipation of a possible return to a more socialist agenda under Biden, or an even more far-left leaning Democrat.

Think about it...the Democrats' Green New Deal (et al) is only an election away...

Wednesday, April 03, 2019

SPX:VIX Ratio In "New Bull Market" Territory

Take a look at the following charts of the SPX:VIX ratio. Appearing in order,
  • each candle on the first chart represents a period of one year,
  • each candle on the next represents a period of one quarter,
  • each candle on the next represents a period of one month, and
  • each candle on the last represents a period of one day.

For the third day in a row, price closed on Tuesday above what I've called the 200 "New Bull Market" level since it first broke through during the first week in 2017. It still has a way to go before it runs into the 250-280 "Bull Froth Zone," where we've seen traders/investors spike the price first, then take profits in the SPX since then, beginning in May 2017.

Simply put, judging from the extremely bullish bias of the candle formations and the bullish signals of the technical indicators on all four charts and timeframes, I see no reason for this ratio not to retest this 250-280 "Bull Froth Zone" over the coming days/weeks. This means that the SPX will likely retest its prior all-time high of 2940.91, or spike higher at some point...provided that the SPX:VIX ratio holds above the 200 "New Bull Market" level.

In the short term, look for a bullish crossover (a "BUY" signal) to form on the PMO indicator on the daily chart, for the new bullish crossover (a "BUY" signal) to hold on the MACD, for the RSI to hold above 50 (a "BUY" signal), and for the recent bullish moving average Golden Cross formation (a "BUY" signal) to hold should the ratio price continue to rally, to support/confirm any higher prices in the SPX. Otherwise, we may see, either a period of sideways consolidation or a pullback in the SPX (depending on how skittish traders/investors are feeling), until it makes its next move to, potentially, new highs.

As an aside, the bullish comments referenced in my post of March 26 on U.S. 2-5-10-30-Year Bonds, still apply. As the level of market skittishness increases on SPX higher prices, no doubt, we'll see monies continue to flow into Bonds, possibly at an elevated rate...another clue to monitor for evidence of slowing enthusiasm for equities giving way to a growing demand for Bond hedging.