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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.
* 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 $$$...

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Events

UPCOMING (MAJOR) U.S. ECONOMIC EVENTS...
* Fri. Aug. 7 @ 8:30 am ET ~ Employment Data
* Wed. Aug. 12 @ 8:30 am ET ~ MoM & YoY CPI & Core CPI Data
* Fri. Aug. 14 @ 8:30 am ET ~ Core Retail Sales & Retail Sales
* Wed. Aug. 19 @ 2:00 pm ET ~ FOMC Meeting Minutes
* Wed. Sept. 2 @ 2:00 pm ET ~ Beige Book Report
* Wed. Sept. 16 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts and @ 2:30 pm ET ~ Fed Chair Press Conference

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

Saturday, February 29, 2020

Tesla: February 2020 Insider Buys

I recently wrote about Tesla (TSLA) here and here.

One small tidbit of information caught my eye this weekend, namely the two insider buys that occurred during February (February 14), as noted below.

 Source: openinsider.com

I'm interested because the purchase price (767.00) of these two buys is near the top of Thursday's large gap down, as shown by the pink line on the following daily chart of TSLA.

The gap-fill price would be 776.11 (Wednesday's low) and the 20-day MA sits at 790.00. This zone represents major resistance, while 600.00ish represents major support (just below the 50-day MA).

Watch for a potential spike higher through the 5-day MA, then gap fill and rally to around the 20-day MA at 790.00 in the next week or so...especially if many other U.S. Sectors and Major Indices also spike higher to retest their 5 & 20-day MAs, as per my post here.

Otherwise, we may see more weakness for TSLA in the days/weeks ahead.

I've not heard any talk this weekend as to any major stock buybacks beginning yet for U.S. companies, in general, so keep an eye on those insider buys/sells at the above-noted website for clues. Perhaps we'll hear more about that if the Fed steps in to provide any type of monetary policy easing measures anytime soon.


U.S. Stock Market & Sector Performance Heatmaps

The following graph and heatmap are provided courtesy of Barchart.com.

The following percentage graph shows a 1-year comparison of the S&P 500 Index with the S&P Sectors. You can see which Sectors are outperforming or underperforming the Index.


The following heatmap shows the percentages of stocks within the Sectors and Major U.S. Indices that are currently trading above a variety of moving averages, as of Friday's close.

You can quickly see which are the weakest and strongest of the weak (especially after last week's record market purge) by which ones have the most/least stocks above their 200-day moving average.

With regard to the Major Indices, the Nasdaq 100 is the strongest, while the Dow Transports are the weakest.


The following percentages gained/lost graphs of the S&P 500 Index and the 9 Major Sectors are provided by Stockcharts.com.

The timeframe on each of them is one year, year-to-date, and last week, respectively.

You can see that Technology is outperforming Energy on all three timeframes, while Financials aren't looking too healthy. That is confirmed on the heatmap above...check out the percentages of their stocks above their 200-day moving average.




BOTTOM LINE:

There are no Sectors or Major Indices with stocks that are in the green above their shortest moving average, namely their 5-day moving average, on the heatmap.

Generally speaking, if Friday's bounce continues into this coming week, we may see that flip at some point. If that happens and fails to hold, look for a further equity selloff. Otherwise, we may see them rally to their 20-day moving average before they, either continue convincingly, or reverse around that area of resistance for another leg down to, potentially, new lows.

For further clues as to possible direction on the S&P 500 Index in the coming days/weeks, check out my post which describes the TPO Profile support and resistance levels on the corresponding S&P 500 E-mini Futures Index.

Coronavirus Tracking Map

FYI...you can track the spread of the coronavirus (as cases pop up around the world) on the map at this site.


China's Shanghai Index At Its Tipping Point?

This ZeroHedge article article caught my attention Friday night...


Here are the reports and graphs of the respective China PMI numbers that were released late Friday (courtesy of Investing.com)...catastrophic February data, indeed...




I recently wrote about China's Shanghai Index (SSEChere and here.

The first chart below shows daily price action for the past two years.

It's been having a tough time staying above 3000 and has been recently been bouncing in between that level and 2700 for the past year. It filled its prior large gap down from the beginning of February, but failed, once again, to retake and hold 3000 and has fallen back into this volatile trendless consolidation zone.


The second chart shows a longer monthly view of price action since 2008.

I'll repeat the comments from my post of February 3, as they're still relevant...
"Price has been trapped in a large sideways trading range between 3000 and 2500 since mid-2018...and is now precariously suspended in the middle of this zone.
Essentially, it's had difficulty getting any sustained traction above 3000 since it plunged below in June 2008. When it did manage to break through in December 2014, it was followed by a volatile, parabolic rise and fall back to its current level by the end of 2015. Successive attempts to break out have been increasingly feeble and short-lived.
It's clear, from a charting perspective, that China has been struggling to regain its heady glory days as a stable global economic leader since its bottoming in October 2008, following the global financial crisis.
What's unclear to me, at this time, is when that slump will finally end.
For clues on when this particular rout may be stemmed, I've shown the input value on the ATR (Average True Range) and ROC (Rate-of-change) technical indicators as one period (one month). At the moment, neither of these has spiked to an extreme level, as did occur following the 2008 financial crisis crash and, then, after another drop through to January 2016.
Watch for extreme spikes to form on both of these indicators as a potential sign that a turnaround in market sentiment may, finally, be on the way. 
A drop and hold below 2500 could see price plunge further to 2000, or lower, in short order."
I think that the SSEC has reached a turning point and may, in fact, tip to the downside, especially in view of these horrendous economic numbers and in light of the negative effects of the coronavirus, thus far.

In fact, the uncertainty and headwind effects from the virus may extend for some time and, even, worsen, so I don't see investors flocking to put their money to work in this long-time under-performing index anytime soon.

By the way, if you're interested, you can track the latest coronavirus data at this site.


Friday, February 28, 2020

TPO Profile Price Targets For S&P 500 E-mini Futures Index

Shown on the right-hand side of the daily chart of the S&P 500 E-mini Futures Index (ES) is a TPO Profile. It represents trading activity over a period of time at specified price levels and is shown in vertical histogram format (dark blue). Its outer edges at the top and bottom are defined by the two yellow lines. The longest row of the TPO defines the price level that was hit the most during the specified time period. This level is called the POC (Point of Control) (pink line). The price range surrounding the POC where 70% of the trading activity occurred is called the Value Area (area in between the two turquoise lines).

The time period I've chosen for this post is two years for the purpose of showing, not only the POC and Value levels, but also the lesser price levels that were hit multiple times that can be used as potential target prices in the event of a further decline, or a reversal to the upside next week (broken white lines).

In Friday's action, the ES plunged down through the POC (2888) and, ultimately, spiked higher to close at 2988, just below the upper edge of the Value Area (3004).

So, those two price levels will be important resistance and support levels in the immediate term. Any sustainable activity in either direction must hold above or below those levels.

The next resistance level is around 3110, while the next support level is around 2790.

Inasmuch as this week's purge brought extremely high volumes, we may be seeing some sort of short-term capitulation, to support a further rally in the ES. However, anything is possible, including a retest of the lows of Friday's hammer before traders come to grips with all accompanying risks, and price direction sorts itself out.


So, trade with caution, as volatility is still alive and kicking!

Price has dropped below 80, as shown on the following daily ratio chart of the SPX:VIX ratio.

If we see a rally in the ES next week, this ratio will need to regain and hold above, firstly, 80, then 100, to convince me that any further strength is sustainable.

Otherwise, a further drop towards 60 will also drag the ES down to, potentially, retest the TPO POC (2888) and Friday's low (2853), or lower to, at least, 2790.


From This Week's "Smile File"...Look Before You Drink

Snoopy's got some good advice...


Have a great weekend! 😊

Time To Panic Yet?

For a little perspective, here's a look at a Yearly chart of the SPX...


Time to panic yet? Maybe not quite yet.

But, the only thing I'm certain about is uncertainty is here to stay!


2020 World Economic Cannibalism

Here's a snippet of what I wrote in my post of November 9, 2018 with respect to world market headwinds and 'harmonic globalism'...

"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.
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!"

Here's an excerpt of what I wrote on December 17, 2018 in my 2019 Market Forecast...

"I think 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. I'm getting the impression that major world markets are doubting the ability of their respective political leaders and central banks to continue to stimulate markets to the same degree that they've enjoyed since 2009. In fact, even with all the tax cuts and removals of many regulations that we've seen this year in the U.S., markets are still down extensively. With central bankers tightening their monetary policies, and no further fiscal stimulus packages on the horizon in the U.S., I don't see a convincing bullish bias returning any time soon.

Depending on where both the SPX and SPX:VIX Ratio close at the end of December, I anticipate, either a slower level of equity accumulation, if there is much, to, potentially, propel the SPX to retest its prior all-time high of 2940.91, or to resume further declines, putting the SPX at 2400, or lower, as I've repeatedly mentioned since August and as I last described here. In fact, 2250 would be the next major support below that level, followed by 2000, as is evident on the above three charts of the SPX

Under the latter scenario, I'd expect money to rotate into bonds (which has already been the case over the past several months, as shown on the following monthly charts of 2/5/10/30-year bonds) and/or cash (U.S. $)."

 I came upon this WSJ article tonight...


I don't disagree with the points raised in that piece. In fact, I believe it mirrors the concerns I had in 2018.

After the market rout that we've witnessed over the past few days, it would seem that my dire warnings are beginning to materialize, albeit finally sparked by a world-wide flu virus that may or may not become a pandemic. However, I believe that such a correction was already building for the reasons I mentioned above, but was finally pushed over the edge by what could be described as gasoline being poured on a simmering fire.


It would seem that, in a perfect world, a better world economic balance could be struck:

  • if governments actually implemented fiscal stimulus programs in concert with appropriate monetary stimulus policies, 
  • if world leaders worked towards normalizing world trade imbalances without imposing penalties beforehand (e.g. crippling tariffs),
  • if world leaders were actually supported by their respective legislative bodies when they were first elected instead of being relentlessly persecuted from Day One and finally impeached by the House (then fully exonerated by the Senate) based on faulty evidence, unconstitutional Articles of Impeachment (ruled as such by the Courts), and without due process,
  • if legislative bodies actually worked on a bi-partisan basis to pass laws for the benefit of their citizens, instead of wasting time on matters that are of sole benefit for their own party politics,
  • if world leaders hammered out fair military and peace agreements,
  • if governments, corporations and individuals stopped ramping up unsustainable debts, and
  • if governments stopped imposing overly restrictive laws and removed crippling regulations that prevent domestic and foreign investment and job creation.


I think President Trump began on the right track with his Tax Cuts and Jobs Act when it was passed in Congress on December 20, 2017 and became effective in January 2018, together with his many cuts in regulations over his first term.


In my opinion, that should have been followed up with an infrastructure stimulus package, but was not. Instead, the President began a trade war with a variety of countries, to the detriment of those countries, as well as the U.S. What he didn't count on was the occurrence of a 'black swan event' in the form of a highly-contagious flu virus before he could work out all the kinks in his desired reciprocal trade deals with those countries. This has occurred on top of all the above imbalances that have taken place to date, coupled with the uncertainty of which party's candidate will be U.S. President in November this year.

So, here we are...facing similar U.S. political headwinds that markets faced prior to the November 2018 mid-term election (as I discussed in May of 2018), coupled with everything else.

The SPX did, in fact, retest its prior high of 2940.91 in 2019, as I had forecast in December 2018. It exceeded it to carry on up to a new all-time high of 3393.60 just a few days ago. It plummeted back to close just above 2940.91 on Thursday. It seems to me that, perhaps, that is where current fair value sits.

However, based on the sharp velocity of the equity purge the past few days, it may have further to go before we see price, either stabilize, or reverse. Keep an eye on the various markets I identified in this post for potential clues in this regard.


* UPDATE February 28...

$5 Trillion wipeout (as per this ZeroHedge article)...


In my humble opinion, I don't believe a Fed rate cut is going to solve all the problems I've laid out above (in spite of Goldman's prognostications)...it would just be putting a bandaid on a mountain of open wounds.


Thursday, February 27, 2020

February: One Hell Of An Ugly Month

My earlier February warnings have materialized for the S&P 500 Index, TSLA, FNGU, the Nasdaq Composite Index, & OIL...while some money rotated into GOLD...





Here's where these markets closed today (Thursday)...one more day to go to month end...






So, yes, Investing.com, it has been one hell of an ugly month for Tesla...et al.


BOTTOM LINE:

Keep an eye on the 10-Year Treasury Yields (today's earlier post) to gauge whether money continues to pour into US Bonds and out of equities, or whether that reverses any time soon.

US10YT Drops To A New Record 60-Year Low As US Equity Markets Correct By 10%

I last wrote about US 10-Year Treasury Yields in my post of August 16, 2019, which warned of potential upcoming weakness in the equity market. It was trading at 1.556.

Since then, it rose to a high of 1.952 in December, reversed course sharply in January, and has plunged to an all-time new low of 1.254 as of 2:15 pm ET today (Thursday), as shown on the following Monthly chart, as equity markets reached a 10% correction level this morning.

The big question is, is this capitulation or is it a warning of further equity weakness?

I've shown the Rate-of-Change (ROC) and Average True Range (ATR) indicators in histogram format and with an input value of one period to highlight extreme movements in both directions.

Inasmuch as neither one is at an extreme level yet, we may see a further drop in the US10YT, as well as equities. If it fails to recapture and hold above 1.50 sometime soon, equities are in for more volatility in both directions.


P.S. 

Here's how the US Major Averages closed today...



It will be interesting to see how China trades tonight...

Tuesday, February 25, 2020

Dr. Copper Needs An Antidote

The following weekly chart of COPPER shows that its price has fluctuated wildly around the 2.47 level in an increasingly narrowing triangle formation since the end of the 2008 global financial crisis. At the moment it's acting as major support and happens to coincide with the triangle apex. A drop and hold below this level could see a sharp downdraft in this commodity to around 2.20 (price support combined with the bottom of the triangle and a secondary volume bump), or lower.

Major overhead resistance sits at the confluence of the 50 & 200-month moving averages with the Volume Profile POC around 2.70. A spike and hold above this level could see price rise to around 2.99 (price resistance combined with the top of the triangle and a secondary volume bump), or higher.


Until such time as price breaks through either of these barriers and holds, I'd watch for increasing volatility in the near term.

The technicals are giving mixed signals on the daily chart as to breakout direction.

On a negative note, the RSI is trading below 50, while the MACD and PMO have recently formed a bullish crossover, and a bullish Golden Cross has formed on the moving averages...albeit on a recent weak and tentative price bounce.

These technicals can be monitored for confirmation and sustainability of either directional breakout. They must, either, hold on a rally (and the RSI must break and hold above 50), or reverse on a drop in price on this short-term timeframe.


Finally, COPPER has, historically, mirrored, more or less, China's Shanghai Index (SSEC) over the years, as shown on the following monthly comparison chart.

I last wrote about the SSEC in my post of February 3. Since then, it rallied and sits just above 3000, a level I had identified as major resistance.

If it fails to hold above 3000, I'd watch for a sharp drop to 2500, or lower. If that happens, I'd predict that COPPER would also drop...another potential useful directional gauge.


World-wide pandemic yet?

Monday, February 24, 2020

U.S. Tech Sector Blow-Off Top In Progress

Further to my post of February 10 regarding FNGU (an exchange-traded note that tracks 3x the daily price movements on an index of US-listed technology and consumer discretionary companies) and the Nasdaq Composite Index, the following scenario developed.

  • FNGU did retest its prior all-time high, blew past it, and made a new high at 115.40 last week, as shown on the weekly chart below.
  • The Nasdaq Composite Index did attempt to reach 10,000, but stopped short at its new all-time high of 9838.37 last week, as shown on the weekly chart below.
  • After they both formed a shooting star candle last week, they gapped down considerably today (Monday) to close near their low of the day.
  • You can see, from the last two chartgrids (daily timeframe), that all of the ten tech stocks which comprise FNGU gapped and closed down on Monday, as well.

So, where do they all go from here?

  • The Balance of Power on FNGU and the Nasdaq Composite Index still lies with the buyers on the weekly timeframe, but that is fading quickly. Watch for a drop and hold below zero to indicate that a larger blow-off is developing. Otherwise, if it holds above zero, look for some short-term buying or short-covering or a dead cat bounce before further selling, potentially, resumes.
  • Keep an eye on the ROC (Rate of Change) and ATR (Average True Range) to confirm, either further selling, or a sharp turnaround in buying. I've shown the input value on both of these technical indicators as one period and in histogram format to highlight extreme movements in either direction. Neither one has matched prior all-time extremes yet, so we may see further selling before any serious longer-term buyers step into the Technology sector.
  • You can see from the last two chartgrids where Monday's closing price on each of the ten stocks, as well as FNGU and the Nasdaq Composite Index, sits in relation to their respective 50-day moving average (red). They are either above, below or near it, which is acting as support or resistance. Three of them (FB, BABA and BIDU) are the weakest, after failing to make new swing highs, and their 20-day MA is in the process of crossing below their 50-day MA...hinting at further weakness ahead for these three stocks. The ROC on 8 out of the 12 are below the zero level...hinting at further weakness ahead for the Tech sector. Keep an eye on the ROC on NVDA, TSLA, TWTR and FNGU on the daily timeframe...if they also drop and hold below zero, and if the others hold below, watch for further sharp selling in the Tech sector.
  • Finally, keep an eye on the 4 E-mini Futures Indices and the SPX:VIX ratio mentioned in my last post. If we see further weakness develop in those, we'll likely see continued selling in the above-referenced stocks, ETF and Index.





* UPDATE February 25...

The blow-off continues...



World-wide pandemic yet?