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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...
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Friday, June 11, 2021

U.S. SPX Index vs. Brent Crude Oil/Russian RTSI Index/German DAX Index

What do all of these have in common?

First of all, take a look at the monthly comparison chart below of Brent Crude Oil, Russia's RTSI Index, and Germany's DAX Index.

From around April 2015, these three have traded virtually lockstep, with varying degrees of strength on their upward push from around April 2020.

While the DAX has rallied to new all-time highs, the RTSI is trading around major (long-term) resistance, and Brent is approaching major (long-term) resistance around 80.00.

The Balance of Power (BOP) (pertaining to Brent) is nearing its all-time historical high, as the buyers are currently in control.

We may see a final spike upwards in Brent towards 80.00, dragging the RTSI and DAX Indices along with it, before they all, either take a pause and consolidate, or pull back.

However, look for a possible deviation during such a spike by either or both the RTSI and DAX, potentially signalling that buying is weakening in Brent

Keep an eye on the Brent BOP to confirm either scenario.

Price on the following monthly chart of the S&P 500 Index (SPX) is nearing its +10 standard deviation on its long-term uptrending regression channel, at approximately 4300. Minor support sits around 4200.

The SPX:VIX Ratio is shown in histogram format in the bottom portion of the chart. Price on this ratio is just below its all-time historical high...representing major resistance. 

As you can see, it's had great difficulty breaking and remaining above the 250 level. It's first level of support is 200...followed by 150 and 100, respectively. 

A drop and hold below 200 could see the SPX drop to around 4200. A drop and hold of the ratio 5 MA below 200 could send the SPX sharply below 4200...in short order. 

Keep an eye on this ratio and 5 MA for clues as to direction and strength of the SPX.


So, keep an eye on possible spikes in Brent towards the 80.00 level and the SPX towards 4300 before we see any kind of pause and consolidation of all of the above markets, or a sharp, swift pullback.

No doubt, these markets will react following the outcome of President Biden's meeting on June 16 with President Putin in Geneva, Switzerland, so we could very see a run-up until then.

Therefore, I'd say that, in the near term, the common denominator is Geneva's meeting, the outcome of which may be the catalyst for a sharp, swift change in direction for the SPX, RTSI, DAX and Brent.

We'll see what happens.