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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

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.
* 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...

Dots

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

Fall

Fall

Events

UPCOMING (MAJOR) U.S. ECONOMIC EVENTS...
* Wed. Oct. 16 @ 8:30 am ET ~ Core Retail Sales & Retail Sales
* Wed. Oct. 16 @ 2:00 pm ET ~ Beige Book Report
* Wed. Oct. 30 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts and @ 2:30 pm ET ~ Fed Chair Press Conference
* Fri. Nov. 1 @ 8:30 am ET ~ Employment Data
* Wed. Nov. 13 @ 8:30 am ET ~ MoM & YoY CPI & Core CPI Data
* Wed. Nov. 20 @ 2:00 pm ET ~ FOMC Meeting Minutes

*** Click here for link to Economic Calendars for all upcoming events

Sunday, September 29, 2019

Political Editorial: Trump Impeachment and US 2020 Election

The following is presented without prejudice.

When I step back from and disregard the daily hyperbolic political reports/accusations and quest by US Democrats and the majority of media pundits to investigate and impeach President Trump (which has been going on since before he was sworn in on January 20, 2017), I think that any negative fallout against him from that attempt will be mitigated and cannibalized by at least five major factors:
  1. at the moment, approximately 60% of Americans are against impeachment,
  2. there may be grave repercussions for Democrats when the long-awaited and soon-to-be-released DOJ IG's report on FISA abuse under the Obama administration leading up to and post-2016 presidential election is made public,
  3. there may be even more damaging repercussions for Democrats once the DOJ's review and report on the origins of the Trump-Russia collusion investigation under the Obama administration is eventually made public,
  4. the reputation of Democrats' current front-runner 2020 presidential candidate, former Obama Vice President Joe Biden, will, no doubt, be negatively impacted as they proceed with an impeachment process over the Ukraine issue, and
  5. the lurch to the extreme far-left by Democrats and the 2020 Democrat candidates as they embrace and attempt to enforce their Green New Deal doctrine (GND) and socialist agendas will blow up the US National Debt and personal debt of every American to an unsustainable and unattainable level. In short, the US would be bankrupt! This Fox News TV headline caught my attention on Friday...it looks like their GND and socialist policies may not be so attractive for donors.

As of 7:00 pm ET today (September 29), the US National Debt stands at $22,634,538,392,628...by the time you read this, it will be higher. Debt per citizen stands at $68,641 and debt per taxpayer is $183,625.

Who can afford to suddenly pay off that amount, let alone anything outrageously higher, as Democrats are promising to implement with their election agendas?


At the moment, and as I understand things, the only thing that Democrat House Speaker Nancy Pelosi has announced is that a so-called "formal impeachment inquiry" is underway by a variety of Democrat House Chairmen/women and their committees. Exactly who is investigating what and why is unclear. Articles of Impeachment have not yet been drafted and Ms. Pelosi has not called for a formal vote of the entire House to begin impeachment hearings based on those articles.

So, unless and until that is done, these investigations are entirely one-sided, inasmuch as Republican committee members are hamstrung and unable to subpoena their own witnesses in order to conduct thorough, transparent, bona fide, bi-partisan, and fair impeachment hearings. 

The longer she drags out her "inquiry" process without calling for a full House vote will highlight Democrat mal-intent and subvert due process of Presidential rights in their rush to overturn the results of the 2016 election...and convey the message to the 63 million supporters who voted for Trump (Hillary's "basket of deplorables") that their vote was not legitimate and didn't matter.

Instead, it looks like a politically-motivated smear campaign is being waged against the President to:
  • try and damage his chances of being re-elected in 2020, rather than formally impeach him under Constitutional law,
  • pivot/divert attention away from Factors #2, #3 and 4, and
  • try and muddy the details and implications of implementing their socialist election policies/agenda

Furthermore, the promises made by Democrats (who ran and won in previously-held Republican districts in the 2018 midterm election) to work across the aisle with Republicans and the President on a variety of issues has now been exposed as empty and false political rhetoric.

At the end of the day, people (voters) care about jobs, housing, health, family, national and personal security, the rule of law, liberty, freedom and their rights...not day-to-day over-blown and under-delivered political crises.

At the moment, I don't see any better (and affordable) alternatives being seriously presented to the American people on any of those issues by Democrats than are currently being provided by the Trump administration and Republicans.

In the meantime, the chances that any beneficial legislation (for all Americans) can be passed on a bi-partisan basis in the House and Senate until after November 3, 2020 are nil.

BOTTOM LINE: 
How does this affect the US equity markets?

In the long run and based upon the above-noted five mitigating factors, I don't see that any further political impeachment rhetoric will have much of an overall impact on equity markets (barring the revelation of any, as yet unknown, major negative catalyst).

Instead, I've identified several gauges to monitor going forward to the end of 2019 in my last article. If anything, there may be a 60/40 chance that the SPX will, ultimately, move higher from last Friday's close...albeit on choppy, whipsaw trading.


N.B. For a further in-depth look at the origins of the Trump-Russia collusion investigation, this video interview -- conducted on September 22 by Fox News TV host Mark Levin of author and former law enforcement officer and Secret Service agent Dan Bongino -- is illuminating and worth watching.

Click here to watch the video

This WSJ article by Michael B. Mukasey, former U.S. Attorney General (2007-09) and district judge (1988-2006), describes the impeachment process and contains some, potentially, exculpatory news (to the benefit of Trump) that Democrats may not welcome in their quest to impeach President Trump.

Source: WSJ.com

In any event, it looks like any President of the Unites States has a duty to investigate any information related to corruption/criminal activities, as outlined in this cover letter from former President Bill Clinton regarding a 1999 Treaty between the US and Ukraine (signed at Kiev in 1998 and ratified by the US Senate in 2000)...and, so it appears that President Trump was carrying out his duty during the course of his phone call with the Ukrainian President.


In a May 30, 2018 update on my post of May 9, 2018, I wrote the following summary of what the US political landscape looked like then...in the days leading up to the 2018 mid-term election...


I've framed the above paragraph in red to illustrate that, even then, Democrats were transparent in their real agenda to overturn the results of the 2016 presidential election by impeaching the President using whatever means they deem to be appropriate.

It looks like they're now proceeding full steam ahead, while bypassing normal rules governing the impeachment process, according to this disturbing Wall Street Journal article...

Source: WSJ.com

And, so, I'll re-post what I said in a subsequent July 26, 2019 update on my article...


Furthermore, with Joe Biden now demanding in a letter to various media outlets that they stop booking interviews of President Trump's attorney Rudy Giuliani, as well as another 2020 Democrat presidential candidate Kamala Harris calling for Trump's Twitter account to be suspended from their social media platform, it's clear where the Democrat policies are headed...namely, towards the silencing of free speech and dictating what information is appropriate by whom and for whom.

I wonder how foreign investors would view such a move and whether they'd be so eager to continue to invest in American companies and US Treasuries. What effect would that have on the economy?

Democrats' real reason for their urgency and haste
 to impeach the President for any reason 
and by any means necessary 
before the 2020 election?

Perhaps Democrats' real reason for their urgency and haste to impeach the President for any reason and by any means necessary before the 2020 election relates to the potential impact on the Supreme Court Justices if he were to be re-elected for another four years...if what's mentioned in this article ever transpired, its effects would be in play for many years/decades after Trump's presidency is over.

Click here to read my more detailed thoughts on this topic.

Source: Reuters.com

More drama emerged on October 2...this time about Democrat House Intelligence Chairman Adam Schiff and the mishandling and misreporting of the so-called "whistleblower's" complaint...


So, as Democrats carry on with this quasi-impeachment circus while searching for a crime (and block Republicans from participating in the investigatory process), Congress remains in gridlock and no work gets done on behalf of their voters. What fallout will occur to their livelihood and the economy? If today's stock market plunge is any indication, then the US is in for a very rough ride until November 2020!

Give yourself a round of applause, Nancy. Because I doubt if American voters will.


World Market Money Flow: Outlook for 2019 Q4

My goal in writing this article was to keep it as simple as possible -- not an easy task for me as I'd love to delve deep into the minutiae of analyzing a whole slew of my charts, data, and information I've assembled over months and, even years -- but, for your sake and the sake of reaching a coherent conclusion and forecast for the fourth quarter of 2019, I've had to, considerably, whittle down my presentation. So, while looking through my superpower lenses, here goes...

When I wrote my post of August 6, 2018, the SPX was trading at 2840.35. I had projected either a push higher towards 2900, or even 3033, or a pullback to its first Fibonacci Speed Resistance Fanline support around the 2400 level. Also contained in that post, were a couple of technical gauges to monitor strength/weakness and trend.

Since then, the SPX:
  • continued a tepid, choppy rally, to exceed its first target (2900) and hit a high of 2940.91 on September 21
  • eventually reversed course to exceed its second target (2400) and hit a low of 2346.58 on December 26
  • abruptly reversed course and rallied towards its third target (3033) to hit a new all-time high of 3027.98 on July 26, 2019...just 5.02 points shy...for a gain of 20.7% from January 1 (28.7% from December 26)

Overlayed on the following monthly chart of the SPX is the same Fib SR Fanline drawing.

The current price on the SPX reflects last Friday's close...just one day short of the last trading day of September and Q3 of 2019.

At the moment, near-term resistance lies at 3033 (target 3). Near-term first support sits at 2800 (price and trendline support), with second support at 2550 (price and fanline support).

Longer-term resistance is at 3233 (fanline resistance) (and, potentially achievable by year-end, or sooner), while longer-term support rests at 2400 (major price support). Exactly what catalyst would drive price to either extreme is yet to be revealed.

Instead, we may see price continue to whipsaw erratically between 3033 (or maybe a bit higher) and 2800 or 2550 for Q4.

To try and keep things simple in terms of possibly gauging strength/weakness and direction, I'd suggest monitoring three basic technical indicators on this longer-term timeframe...namely, the RSI, MACD and STOCH.

In this regard, both the MACD and STOCH have recently formed bullish crossovers and the RSI is trading above the 50 level. If those hold and continue to rise, they will support higher prices. 

However, a reversal of those indicators may signal that traders were satisfied with their gain of 20.7% (from January 1 to July 26) -- that target 3 had, essentially, been achieved -- and will be taking some profits as they, possibly, seek profits (or safety) in other markets until year end.


If we see either scenario begin to emerge whereby new SPX highs are made or old lows retested, one tool that may be used to gauge directional sustainability to year end is the velocity and degree to which money flows into or out of the SPX versus: 
  • the World Index excluding USA
  • the US dollar
  • 30-Year US Bonds
  • Gold Futures
...shown on the 1-year daily charts below.


For example, the following graphs show percentages gained/lost over four timelines, namely, year-to-date, Q3, the month of September, and the past week, respectively.

Investors have:
  • hedged risk in the SPX with Gold & Bonds on a year-to-date basis
  • more heavily favoured Gold, Bonds, & US$ during Q3
  • taken a tepid interest in other world markets during September
  • renewed their interest in Bonds & US$ during the past week, while taking some profits in Gold, SPX & other world markets

If we see continued interest in Gold, Bonds, & US$ going forward on an accelerated percentage-gained basis, I'd predict that selling will continue and accelerate in the SPX and other world markets. However, we may need to see some sort of catalyst occur to move them substantially, and to potentially an extreme level, in either direction.

In the short term, that can be monitored on a week-by-week basis (fourth graph), until each of the next three months of Q4 are complete.





Tuesday, September 17, 2019

An Intraday Look At WTI Crude Oil Futures

Further to my post of September 14 regarding the attack on Saudi Arabia's oil refineries and possible effects on the price of WTI Crude Oil (CL) and Brent Crude Oil (LCO), I'd present this analysis of CL on a short-term intraday basis.

As you can see on the following 60 min chart of CL, price gapped up when it opened on Sunday and has been trading in a large volatile trading range since then. I had identified 60.00 as a major resistance level, and price has been, largely, trading above it since then, with a few dips below. It closed below that level on Tuesday.

The Balance of Power has shifted from buyers to sellers since the gap and is now at an extreme low level, from which, price has, typically, launched higher after previous drops during the past several months.


Shown on the next 60 min chart of CL are today's (Tuesday) and tomorrow's price Pivot Points and their respective intraday support and resistance levels.

Here are Wednesday's price levels:
  • R3 = 68.21
  • R2 = 64.08
  • R1 = 61.45
  • PP = 59.95
  • S1 = 57.32
  • S2 = 55.82
  • S3 = 51.69
Note that PP lines up with 60.00 major resistance, which traders will need to retake and hold if others are going to be convinced that sentiment has shifted back to the buyers.

I've also shown the monthly VWAP (volume weighted average price) on this chart (broken gold line). At the moment, it's in line with S1 and the 200 period MA (pink), so CL may briefly dip lower to that level before it, potentially, retests its upside breakout highs and beyond.

Also, the RSI indicator is presently oversold on this timeframe, hinting that a turnaround may be imminent.


The following daily WTIC:OVX ratio chart shows that price dropped on Tuesday to near-term support around 1.25. As well, a bearish moving average Death Cross has just reformed on this timeframe, suggesting a lower oil price may be imminent.

However, this may prove to be a "bear trap" for traders who position themselves on the short side of CL, in the near term.

To assist in gauging whether this is a trap, and potential price reversal points, keep an eye on:
  • the RSI on the daily timeframe for a flip back up towards 50.00
  • a reversal upwards and eventual bullish crossovers of the MACD and PMO indicators on the daily timeframe
  • a reversal of the bearish moving average Death Cross to a bullish Golden Cross on the daily timeframe
  • a reversal in the Balance of Power from sellers to buyers on the 60 min timeframe
  • price action around the Pivot Point levels, and, in particular, S1 and PP, together with VWAP and 200 MA, on the 60 min timeframe
  • the RSI on the 60 min timeframe for a flip back up towards 50.00


As an aside, Bloomberg is reporting the following...

Source: Bloomberg.com

In closing, I'd mention that it's not just about oil supply.

Now, it's, also, about the perception of increased vulnerability to more attacks, not only on oil facilities, but, also, other national and international security infrastructure, that will affect global markets and economies over the coming weeks and months, as well as any military escalations, as a result...and how longer-term players position themselves, as a result. Whether or not GOLD factors into their portfolios remains to be seen, about which, I've written in my post of September 17.

One thing is certain...heightened market volatility in both directions is here to stay for awhile.

India's Nifty 50 Index Under Bearish Death Cross

The news in this article from Bloomberg does not bode well for India's market.


The profit-taking mentioned in the article is depicted on the following monthly chart of the Nifty 50 Index (NSEI).

Price is sitting just below near-term support of 11000 and has fallen outside of an uptrending channel from the February 2016 lows.

The Momentum indicator (MOM) began diverging and making lower swing highs after October 2017, while the index was making higher swing highs...hinting at impending weakness. At the moment, MOM is sitting just above the zero level. A drop and hold below that would see price weaken further, perhaps down to its next major support level of 10000.


On a shorter timeframe,
  • a bearish moving average Death Cross has just formed on the daily chart of NSEI
  • price is trading below both the 50 and 200 MAs, and
  • Balance of Power is in the hands of the sellers and accelerating,
all of which are hinting of further near-term weakness, unless and until those conditions change.


1600 GOLD?

How about that...since I wrote my post of January 23, GOLD Futures (GC) finally hit just above its target price of 1550 on August 26...and it carried on to make a 2019 high of 1566.20 on September 4, for a gain of 21.58% from that date.


The moving average Golden Cross, that had just formed a couple of days prior to that, held, price retested the 200 MA (which is normal after these form), and the formation is still in play, as shown on the following daily chart of GC.


The following two monthly charts show that major resistance lies at 1600, while near-term support sits at 1450.

Although price looks overextended according to the RSI, MACD and STOCHS indicators, and it has run up against the top of its long-term rising channel, we may see momentum drive price higher, depending on what happens with the fallout from the Saudi Arabia oil refinery attack this past weekend, about which I've written here.

In the short term, keep an eye on the daily RSI, MACD and STOCHS for clues on price direction and strength. They're mixed at the moment, but, if the RSI breaks and holds back above 50.00 and if we see upside crossovers of the MACD and STOCHS that hold, then we should see higher prices.  At the moment, GC is sitting just above the 50 MA, which is providing near-term minor support.

1600 happens to be the Upper Value level of the Volume Profile shown along the right-hand side of the last chart. An escalation of Middle East military action could easily propel GOLD to that level, or much higher.



Monday, September 16, 2019

US Bond Bubble Or Equity Bubble?

Based on purely technical reasons, which I'll explain below, I'd hazard a guess that US bonds are not in a bubble. If anything, equities look more like their bubble is about to burst.

The price on the following monthly charts of US 2-yr, 5-yr, 10-yr, and 30-yr bonds is currently trading around their respective regression channel medians, after a lengthy move up over the past year off very oversold lows (around the channel -2 deviation level).

So, they're now priced around an average level, compared with historical data from 2008 (for 2 and 5-yr bonds), 2003 (for 10-yr bonds), and 2000 (for 30-yr bonds).


In contrast, the SPX is, once again, trading around the +3 deviation of a long-term uptrending regression channel taken from the 2009 lows, and is hovering just below the 3000 level, as shown on the following monthly chart.

Near-term major resistance sits at 3047.34, which is a 261.8% external Fibonacci Retracement level.


While bonds launched their latest climb from extreme channel lows, the SPX launched its climb over the past year off its channel median.

From that simple analysis, I'd say that we may see more weakness in the weeks ahead for the SPX than we'll see in bonds, although we may see volatility increase in all of them for some time due to the recent developments in Saudi Arabia and the price of oil over the weekend, about which I've written and added numerous updates as news emerges at this link.

As I mentioned in one of the updates in that post, keep an eye on the SPX:VIX ratio to gauge the level of volatility and direction of the SPX. Price on that ratio needs to hold above 200 to remain bullish...otherwise, a drop and hold below that level could send the SPX down to levels mentioned in my post of August 30. On the bottom section of the above SPX chart, the SPX:VIX ratio is shown in histogram format. It closed on Monday at 204.36.

As well the SPX will need to retake 3000 solidly if it's going to breakout and move higher into ever more extreme overbought territory (according to what the regression channel technicals are telling me).

Saturday, September 14, 2019

Light Crude Oil Breakout Imminent

* See UPDATES below...

Senator Lindsey Graham unleashed a series of tweets Saturday morning after learning of drone attacks on Saudi oil refineries.

I've yet to hear whether the Saudis will blame/have blamed Iran for the attacks and whether war will eventually be declared against them. It's been reported that, "Houthi rebels - who are backed by Iran in a yearslong Saudi-led war against them in Yemen - have reportedly claimed responsibility for the attacks and have vowed that further attacks could be expected in the future."

Source: foxnews.com

No doubt, this will affect oil prices when futures trading begins later on Sunday.

WTI Light Crude Oil futures closed on Friday at 54.84. As shown on the following monthly chart of CL, it's sitting just below the apex (at 56.00) of a large triangle and is about to breakout of this formation soon.

Saturday's news from Saudi Arabia may be the catalyst that catapults CL out of this triangle and to new highs for 2019 and beyond.

I've shown the ROC and ATR technical indicators in histogram format with an input value of one period. Keep an eye on the ROC to spike back above the zero level and climb higher to confirm higher prices. As well, watch for an expansion of the ATR on such a move, and, ultimately, for an exceptionally high exhaustion spike to signal either a pause in price or a trend reversal.


From the Volume Profile shown on the right-hand side of the following monthly chart of CL, major support sits at 50.00, which happens to be the Volume Profile's POC (point of control) on this timeframe.

Near-term resistance sits at 60.00. A breakout and hold above that could send price as high as 80.00, or even higher to 100.00, as others are now speculating.


On the bottom section of the following monthly chart of CL, the ratio of Oil to its Volatility Index is shown in histogram format.

Watch for it to break and hold above 2.00, and, subsequently, 3.00 on this ratio, as well as an upside crossover of the 5 and 8 MAs, to confirm the sustainability of such a price surge.


As a side note, whether a sharp rise in Oil also drags Canada's TSX Index higher, remains to be seen. Coincidentally, I wrote about such a scenario in my post late Friday night, based on different circumstances/influences.

Here's an excerpt from that article (entitled "Canada's TSX, Election and Trade Fever").


* UPDATES...

In the several hours that have passed since I posted the subject article, Secretary Pompeo has tweeted the following (he blames Iran, not Yemen, directly for the attack...reports speculate that the nature of the attack was too sophisticated to have been carried out by the Houthi rebels)...


This tweet from Reuters followed (but, exactly what "necessary measures to safeguard national assets, international energy security and ensure stability of world economy" would be taken by a Saudi-led, western-backed, Sunni Muslim military alliance, remains to be seen)...

Source: Reuters.com

And, now, these tweets ("expect chaos") surface from Zero Hedge on Sunday with a report from Goldman Sachs on oil...


Source: ZeroHedge.com

And, later Sunday afternoon, these clarifications are beginning to emerge...and it looks like uncertainty and volatility in the oil markets will remain elevated for, possibly, months...

 Source: ZeroHedge.com

Source: Reuters.com

Source: ZeroHedge.com

Click here for Bloomberg Tweet thread

The following screenshots (taken around 8:50 pm EDT on Sunday) of the daily charts of WTI Light Crude Oil (CL) and Brent Crude Oil (LCO) show that price gapped up significantly when these futures opened this afternoon...while S&P Futures gapped down and Gold Futures gapped up.

They're both hovering above prior-resistance-now-support of 60.00 for CL and 67.00 for LCO. The third chart is a monthly timeframe, which depicts LCO's new support level, as well as its next major resistance levels at 80.00 and 100.00.

We'll see whether those new support levels hold over the coming days.




Here we go...President Trump says U.S. is "locked and loaded"...


Source: ZeroHedge.com

The following is an informative interview on September 16 with General Jack Keane...(in my opinion, he should be appointed President Trump's next National Security Advisor...I've seen him interviewed many times on Fox News TV over the past couple of years, and he's a very smart, sharp as a tack, level-headed, highly-skilled and well-versed strategic military/intelligence tactician)...

Click here to listen to the interview

======================
In my opinion, the added risk of Middle East major military instability has, now, increased greatly...and could hang on for months...contributing to elevated oil volatility for some time.

And, what could be of more consequence, is the perception, now, that similar attacks like this CAN be done...again and again...especially if there are no consequences to this attack.
======================

So, what does this mean for the SPX?

To gauge the level of volatility and direction that the SPX may experience from Monday's open onward, keep an eye on the SPX:VIX ratio...daily chart below.

Price needs to hold above 200, then watch for a climb to, potentially, retest 250, or higher, to confirm higher prices for the SPX from Friday's close...and see how overbought the RSI, MACD and PMO are by then.

Otherwise, a drop and hold below 200, would see the SPX decline...perhaps to levels mentioned in my post of August 30.


As an aside, whether any of this affects the Fed in their decision-making on whether or not to cut interest rates at their upcoming meeting this Wednesday, and whether the SPX reacts, in kind, remains to be seen.

* UPDATE Sept. 18...Fed cut rates by 1/4%.



* UPDATE September 18...

"An Act of war"...

Source: ZeroHedge.com 

Attacks "unquestionably sponsored" by Iran...

Source: ZeroHedge.com 

"We have a major crisis on our hands"...

Click here to view video