Money Flow for July Week 2

Further to my last Weekly Market Update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• YM, ES, NQ, TF, & NKD
• Comparison of SPX, TNX, Oil, Gasoline, DJUSFD, XLF, GE, XHB, Lumber & Copper
• Percentage of Stocks Above 20-50-200-Day Moving Averages
• Comparison of NDX, SPX, VIX & VXN (Is Bubble No. 3 about to burst?)

6 Major Indices

As shown on the Weekly charts and the percentage gained/lost graph below of the Major Indices, the Dow Utilities gained the most, followed by the Nasdaq 100, Russell 2000, S&P 500, Dow Transports, and Dow 30 this past week.

9 Major Sectors

As shown on the Weekly charts and the percentage gained/lost graph of the Major Sectors, the largest gains were made in Utilities, followed by Consumer Staples, Health Care, Materials, Cyclicals, Financials, Industrials, Energy, and Technology.

It was a "risk-on" week, but slightly favouring the Defensive sectors.

YM, ES, NQ, TF & NKD

As I mentioned in my last weekly market update, I was looking for any advance above the middle of an uptrending channel from the November 2012 lows to occur on higher volumes. 

You can see from the Weekly charts below that this week's advance (along with the prior week) occurred on lower volumes. While the YM, ES, NQ & TF are now above the middle of their respective channels, I'd like to see higher volumes take any further move higher. However, if the major moves continue to occur on overnight low volumes, we may not see higher weekly volumes appear. 

Since the NQ & TF are nearing the top of their channels, we may see any further upside momentum slow down soon and profit-taking begin to occur.

Japan's Nikkei is lagging...whether it recovers to its prior highs remains to be seen.

Comparison of SPX, TNX, Oil, Gasoline, DJUSFD, XLF, GE, XHB, Lumber & Copper

I first introduced this grouping in my last weekly market update in order to compare any further rise in Treasury yields with consumer products and services.

As shown on the following Daily charts and the percentage gained/lost graph of this group, you can see that while the 10-Year yields dropped over the past week, gains were made in the rest, with Homebuilders gaining the most, followed by Gasoline, Food Retailers/Wholesalers, Lumber, S&P 500, Financials, Copper, Oil, and GE.

Risk was added as yields dropped...we'll see if that continues, or what happens to these instruments if yields begin to climb again. 

Also worth watching in the days/weeks going forward is the JNK:TNX ratio, as I last discussed on July 10th as a gauge of risk-appetite in the face of rising treasury yields.

Percentage of Stocks Above 20-50-200-Day Moving Averages

The following 5-Year Daily charts of the percentage of stocks above 20-50-200-day moving averages show that, in the short term, stocks above their 20-day MA are at a major resistance level. As such, and co-incidental with my comments above related to the NQ & TF, we may see profit-taking occur soon. 

In the medium term, stocks above their 50-day MA still have a short distance to travel before they are at major resistance.

In the longer term, stocks above their 200-day MA are nearing their major resistance level.

Comparison of SPX, NDX, VIX & VXN

I wrote about the potential for another technology bubble brewing on October 16, 2012. I mentioned that there had been two bubbles followed by swift and deep declines from 2000. Shortly after my post, the NDX pulled back somewhat, but has resumed its climb and now sits at a former resistance level established in 2000 before it continued its meteoric plunge from Bubble No. 1 to the 2002 lows.

The SPX is just above its second bubble's resistance level. 

The spread between the NDX and the SPX continues to widen. We'll see how long Technology continues its climb this time before succumbing to the "Laws of Gravity" (and the "Laws of Bubbles").

Next week, we'll see the release of the Beige Book report on Wednesday and the expiration of monthly options on Friday. As well, Ben Bernanke testifies before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday.  As such, we may see more overnight and intraday larger swings and volatility enter the markets. Furthermore, we may see more volatile swings in the Shanghai Index and the Aussie $, as I wrote about on July 11th, as traders react to a whole slew of economic data to be released on Sunday, Monday, and Tuesday concerning China. Any further weakness in Japan's Nikkei may have a negative impact on the Shanghai Index and the Aussie $, or vice versa. Furthermore, traders may position themselves (in anticipation of any major policy decisions) ahead of the G20 meetings, which take place on Friday and Saturday. It should be an "interesting" week.

Have a great weekend and good luck next week.

Money Flow for July Week 1

Further to my last Weekly Market Update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• YM, ES, NQ, TF & NKD
• Comparison of SPX, TNX, Oil, Gasoline, DJUSFD, XLF, GE, XHB, Lumber, Copper

6 Major Indices

As shown on the Weekly charts and the percentage gained/lost graph below of the Major Indices, the Russell 2000 gained the most, followed by the Dow Transports, Nasdaq 100, S&P 500, and Dow 30, while losses were made in the Dow Utilities this past week.

9 Major Sectors

As shown on the Weekly charts and the percentage gained/lost graph of the Major Sectors, the largest gains were made in Cyclicals, followed by Energy, Technology, Financials, Industrials, Health Care, Materials, and Consumer Staples, while there were losses in Utilities.

YM, ES, NQ, TF & NKD

I most recently discussed the price action from the November 2012 lows on these 5 E-mini Futures Indices in my last weekly market update.

You can see from the updated Weekly charts below that Small-caps (TF) and Technology (NQ) garnered the most support during the week to close just above the middle of their respective uptrending channels. The TF has made a new Daily swing high but will need to make a higher swing low to, potentially, re-establish its former uptrend on the daily timeframe...the one to watch for either continued leadership in a push higher, or for the onset of weakness to, potentially, drag the others lower.

I'd be looking for all of these indices to advance and hold above their mid-channel levels to signal that the bulls have control, once again, and are ready to take these markets higher...BUT I'd like to see any further advance beyond that level done so on higher volumes...otherwise, we may just be witnessing a "dead cat bounce" that has no sustainability. This week's advance occurred on greatly-reduced volumes, likely due to the July 3rd & 4th holiday closures.

As such, we may see this past week's lows tested, and possibly the prior week's lows, before a serious advance resumes.



Comparison of SPX, TNX, Oil, Gasoline, DJUSFD, XLF, GE, XHB, Lumer, Copper

Inasmuch as 2013 Q2 earnings season begins next week with Alcoa reporting on Monday, I thought it might be interesting to monitor the following Indices and Sectors during Q3.

In the "real world" where the "ninety-nine-percenters" are affected the most by inflationary factors, I've assembled the following grouping to see how the SPX reacts to any further rise in the other instruments. It's my opinion that it's unfair and misleading to simply look at one segment of the market and say that a further rise in prices or interest/loan rates would not be onerous on consumers; rather, it's important to look at the impact on the average consumer based on aggregate factors.

You can see from the following 1-Year Daily charts and 1-Year percentage gained/lost graph that 10-Year Treasury yields have gained the most (a whopping 70.01%) during this timeperiod and have set a new 1-year high on Friday, while the Homebuilders Sector is up by 35.57% and is in the midst of a recent downtrend after making a new 1-year high, the Food Retailers & Wholesalers Index is up by 20.08% and is near its 1-year highs, Oil is up by 18.63% and is at a new 1-year high, and Gasoline is up by 5.54% and is retesting recent resistance above the 50 MA. Furthermore, Lumber is now up 8.77% after retesting support near its 1-year lows and Copper is in the red, but is retesting support near its 1-year lows. As well, the Financials Sector has gained 38.29% and is trading near 1-year highs.

I don't know about the rest of you, but my grocery and gasoline bills have been steadily increasing over the past year, and my home and car insurance is more expensive this year than last (I'm definitely not in the 1% category). Further increases in bank loan rates, car loan rates, mortgage rates, home prices, rents, various insurance products, gasoline prices, food, and the cost of cyclical products (as represented by GE, which is up 18.13% and trading near 1-year highs) are bound to place a definite "drag" on consumers...AND I haven't even touched on rising costs associated with health care, education, numerous services, municipal/state/federal taxes, entertainment, travel, etc.

Any further hike in Treasury yields will, no doubt, affect all consumer products and services...at some point, we'll see a slowing in consumer demand...AND I doubt whether any further improvements in job creation in the near term will be sufficient to eliminate and overcome such a cumulative affect in costs, particularly if they continue to be skewed to part-time rather than full-time hiring, as seems to be favoured at the moment. (You can find the latest employment report at this link and 3 summary tables here, here and here...links to other summaries may be found at the bottom of the first link.) That's why I'm monitoring this group for any signs of weakness or excessive frothiness during Q3 and Q4 [in spite of what Q2 earnings reports (and any forward-guidance) may reveal] to gauge the impact on the SPX.

We'll see the release of the minutes of the last FOMC meeting on Wednesday at 2:00pm EDT. No doubt, analysts will be scrutinizing the language related to any future Fed bond purchase "tapering."

Have a great weekend, stay cool, and good luck next week.

Money Flow -- Weekly (June Week 4), Monthly (June), Quarterly (Q2 2013)

Further to my last Weekly Market Update, this week's update will look at charts and percentage gained/lost graphs of the four Major Indices for the past week, month, and quarter (my Q1 2013 market wrap-up can be seen here). 

Money Flow for June Week 3

Further to my last Weekly Market Update, this week's update will simply show percentage gained/lost graphs of World Market action for the week.

You can see that, with the exception of Japan's Nikkei, the U.S. $, and Lumber, they all declined. What I like about this graph format is the fact that we can see, at a glance, where money flow has been directed this past week in various world markets, and to see the "outliers"...that is, which markets gained or lost the most amount compared to the others...ones to watch going forward to see if they continue leading in strength or weakness and what effect they may have on other instruments (e.g., Greece, Japan, Homebuilders, Metals, the BRIC countries, the U.S. $, and Bonds), as well as the TNX:SPX ratio, as outlined in my post of June 17th.

Inasmuch as next week is full of economic data, is the end of the month, is the end of Q2 for 2013, will see nine FOMC members speak at various venues, and will see Fed POMO activity on all five days, I wouldn't be surprised to see intraday and overnight volatility increase as market participants attempt to interpret, what will likely be, conflicting information, data, and viewpoints, not to mention reaction to further domestic and foreign news at it unfolds. As such, we could see choppy, non-directional trading with large, volatile swings dominating...it should be an "interesting" week.

Money Flow for June Week 2

Further to my last Weekly Market Update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• SPX:VIX Ratio

6 Major Indices

As shown on the Weekly charts and the percentage gained/lost graph below of the Major Indices, all of them erased gains from last week's close and ended lower. The largest losses were made in the Nasdaq 100, followed by the Dow 30, S&P 500, Russell 2000, Dow Transports, and Dow Utilities.

As I mentioned in my last weekly update, and is still the case, price remains elevated, overcrowded, and overbought in all of them (see Stochastics indicator) on, not only their Weekly timeframe, but also their Monthly and Monthly Options Expiration timeframes. The one exception (on a Weekly timeframe only) is the Dow Utilities, which, so far, has held the 50 week moving average...it's still overbought on the other two timeframes.

9 Major Sectors

As shown on the Weekly charts and the percentage gained/lost graph of the Major Sectors, six of them erased gains made from the previous week. Financials was the biggest loser, followed by Energy, Industrials, Technology, Cyclicals, and Materials. The "defensive" sectors were flat on the week.

The above comments are also applicable to these Sectors with respect to elevated price and overbought territory on the same three timeframes.

SPX:VIX Ratio

The following 10-Year Weekly ratio chart of the SPX vs. the VIX shows that the SPX (as compared with volatility) has been unable to penetrate above the 2006/07 highs and has been, basically trading in a large, volatile, non-directional trading range between 95.00 and 140.00 since January of this year. Price closed a fraction below support of 95.00 on Friday and the Momentum indicator remains below zero.

Until we see a clear breakout and hold above this year's highs on the SPX, we will likely continue to see this kind of uncommitted volatility in its ratio. A resolution is needed in the current weekly trading range in the SPX, but it may, first, come to the downside before serious investors feel confident about buying into this market at better prices and value than we're seeing now. Downtrending momentum on this ratio does not favour buying stocks at the moment, and it has not yet reached an oversold level. 

This is a short summary this week, as there's not much more that I can say. Markets are likely awaiting the results of the upcoming Fed meeting and Chairman's press conference on Wednesday before making a major move either above or below their current weekly trading range, and we have the monthly and quarterly June Options Expiration occurring at the end of the week. These will, no doubt, add to the wild overnight and intraday volatile swings that we've seen over the past six weeks.

Enjoy your weekend and good luck next week! And, I'd like to wish all Dads a very Happy Father's Day on Sunday! 

Money Flow for June Week 1

Further to my last Weekly Market Update and its Addendum, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• SPX:VIX Ratio
• SPLV vs. SPX vs. CRX
• Various World Markets
• Stocks Above 20/50/200-Day Moving Averages

Addendum to "Money Flow for May Week 5"

Further to, and as an addendum to my latest Weekly Market Update, I've provided the following percentage gained/lost graphs (without commentary) for the purposes of simply seeing, at a glance, where money flow has been directed this past week, as well as for the month of May, in various world markets, and to see the "outliers"...that is, which markets gained or lost an exceptional amount compared to the others for both timeperiods.

You'll see the Weekly graph first, followed by the Monthly graph for the corresponding instruments.

It was mainly a "risk-off" week for world equity markets, Bonds, the U.S. $, and commodities.

Money Flow for May Week 5

Further to my last Weekly Market Update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• SPLV vs. SPX vs. CRX
• SPX:VIX Ratio
• Q2 Targets (channel update)
• Various World Markets -- N.B. Please refer to my next post entitled "Addendum to Money Flow for May Week 5" for details on these markets due to the length of both posts

Money Flow for May Week 4

Further to my last Weekly Market Update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• Various World Markets

Money Flow for May Week 3

Further to my last Weekly Market Update, its subsequent Addendum, and my mid-Week Money Flow update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• Various World Markets

Addendum to "Money Flow for May Week 2"

Further to, and as an addendum to my latest Weekly Market Update, I've provided the following percentage gained/lost graphs (without commentary) for the purposes of simply seeing, at a glance, where money flow has been directed this past week in various world markets (mostly a "risk-on" week, with some variances), and to see the "outliers"...that is, which markets gained or lost an exceptional amount compared to the others (e.g., What's up with Greece?).

Furthermore, you'll see the updated Year-to-date Daily charts below for the 6 Major Indices showing their channels and Fibonacci fan lines, as I mentioned in that weekly market post...clearly, the Nasdaq 100 and Utilities are the leading "outliers" to the upside and downside at the moment in relation to their channels and Fib fan lines.

Money Flow for May Week 2

Further to my last Weekly Market Update and its subsequent Addendum, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• Number of Stocks Above 20/50/200-Day Moving Averages
• Various World Markets
• N.B. Please click this link to see my Addendum post to this one for further Weekly analysis
  

Addendum to "Money Flow for May Week 1"

Further to, and as an addendum to my latest Weekly Market Update, I've provided the following percentage gained/lost graphs (without commentary) for the purposes of simply seeing, at a glance, where money flow has been directed this past week in various world markets...certainly another "risk-on" week. We'll see if that momentum and sentiment continue over the next week(s).

Furthermore, you'll see the updated Year-to-date charts below for the 6 Major Indices showing their channels and Fibonacci fan lines, as I mentioned in that weekly market post.

Money Flow for May Week 1

Further to my last Weekly Market Update and its subsequent Addendum, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• SPX:VIX Ratio
• Hypothetical Portfolio
• Copper
• Lumber
• Homebuilders ETF
• Emerging Markets ETF
• 30-Year Bonds
• Various World Markets (*N.B. These will be covered in a separate Addendum post because of space concerns in this post...please check my Blog at this link to see that one)

Addendum to "Money Flow for April Week 4"

Further to, and as an addendum to, yesterday's Weekly Market Update, I've provided the following percentage gained/lost graphs (without commentary) for the purposes of simply seeing, at a glance, where money flow has been directed this past week in various world markets...certainly a "risk-on" week. We'll see if that momentum and sentiment continue over the next week(s).

Money Flow for April Week 4

Further to my last Weekly Market Update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• Channel/Fibonacci Projections to the End of Q2 of 2013 for 6 Major Indices

Money Flow for April Week 3

Volatility, profit-taking, mayhem, and tragedy...this is how I'd summarize the events that took place in world markets, as well as on American soil, this past week. My deepest sympathies go out to those law enforcement, fire fighting, and civilian victims who died or were injured in connection with the Boston marathon bombings and the Texas fertilizer plant explosions, and to all their friends and families. My thoughts and prayers are with you...may we all find answers to these terrible tragedies, and, may all those who are responsible, be brought to justice.

Further to my last Weekly Market Update, this week's update will look at:

1. Nine 1-Year Daily thumbnail chartgrids of a variety of markets around the world
2. Nine 1-Week percentage gained/lost graphs of these markets (you can see which markets gained/lost this week, and by how much)
3. Three Monthly charts of Lumber, Copper, and the Homebuilders ETF (XHB)

As you can see, this is a different format than I usually produce for these weekly summaries. With respect to items 1 and 2 above, I'll simply post each chartgrid, followed by its corresponding graph, without commentary. With regard to item 3, I'll provide some comments just before the three charts on those instruments.

What I will say, is that on the Item #1 charts, I would use the 50 ma (red) as a rough guide to act as the general daily trend and support indicator. When price is below that moving average, it is subject to 'bearish' influences, particularly in those instances where the 20 ma (blue) has crossed below the 50 ma. In that case, I'd look for areas of support below the 50 ma that would be formed by trendlines, prior consolidations, and a series of previous swing highs/lows, etc. From that, you can see how much further downside is available compared to potential retracement to the 1-year highs. Of course, on those charts where price is at a 1-year low, you'd have to bring up additional longer-term charts to see where you'd find potential support levels...this is not something I've done in this exercise. 

My purpose today is simply to show you, at a quick glance, where world markets are, whether they are in 'bull'  (above the 50 ma) or 'bear' (below the 50 ma) territory, if any are still making new 1-year highs, and how far others have pulled back from their highs. This shows which areas are stronger and may continue to show leadership going forward, and, if they do, we may see those areas which have weakened considerably begin to rally. Otherwise, a continued drop in the weaker issues may, finally, weigh negatively on all markets to produce a larger, more general, pullback, or even a correction.

In general, it appears that the U.S. $ and 30-Year Bonds are still considered to be the 'safe-haven' plays.

The next three Monthly charts show resistance and support levels on Lumber, Copper, and the Homebuilders ETF (XHB). Lumber and XHB have pulled back somewhat after hitting major resistance levels. Copper has been much weaker and is approaching one major support level at 3.00. If Copper falls and holds below 3.00, it may have a negative impact on Lumber and XHB. And, vice versa, if Lumber and XHB continue to drop, we may see Copper decline below that level down to its next major support level at 2.50.

As an aside, I'd have to say that a good part of the increase that we've seen in new home prices since the 2009 lows is likely due to the increase in the price of Lumber (which has been approaching historical 25-year highs) (and Copper, to some extent, which hit an all-time high in 2011). We'll see if new home prices (and sales) continue to rise if we see a meaningful decline in these three issues, as well as in the Financials Sector.

These three instruments (including Financials) are worth watching going forward, along with Commodities, as I've written about recently here, here, here, and here, since further weakness in these may markedly negatively influence equities. As well, further weakness in European instruments, particularly their banks, along with the BRIC countries/ETF and Emerging Markets ETF, may negatively impact U.S. equity markets.

Enjoy your weekend and good luck next week!

Money Flow for April Week 2

Further to my last Weekly Market Update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• Commodities, Homebuilders, USD, & USB vs. Major Indices vs. Major Sectors

6 Major Indices

As shown on the Weekly charts and the percentage gained/lost graph below of the Major Indices, the largest gains this past week were made in the Nasdaq 100, followed by the S&P 500, Russell 2000, Dow 30, Dow Transports, and Dow Utilities. All are still running in overbought territory on the weekly Stochastics indicator. The S&P 500 finally reached an all-time high and closing high (along with the Dow 30).

9 Major Sectors

As shown on the Weekly charts and the percentage gained/lost graph below of the Major Sectors, the largest gains made this week were in Cyclicals, followed by Health Care, Consumer Staples, Financials, Technology, Industrials, Utilities, Materials, and Energy, as buyers added more 'risk.' All are still running in overbought territory on the weekly Stochastics indicator. 

Commodities, Homebuilders, USD, & USB vs. Major Indices vs. Major Sectors

This week I'm looking at a comparison of percentage gained/lost of a variety of commodities, the Homebuilders Sector, the US $, 30-Year Bonds vs. the Major Indices vs. the Major Sectors.

The first 3 graphs show the timeperiod from the March 6, 2009 lows made by the SPX to today's (Friday's) close.

The second 3 graphs show the Year-to-date timeperiod.

The last graph shows the gains/losses made this past week on only the commodities through to USB, since you can find the 1-week graphs of the Major Indices and Major Sectors above.

In analyzing the above graphs showing their 3 different timeperiods, I would note the following observations:

• The Dow Transports have been playing leap-frog in terms of leadership with the Nasdaq 100 and Russell 2000 during those three timeperiods. 
• Cyclicals and Financials have been strong performers in all three timeperiods; however, the 'defensive' Sectors (Consumer Staples, Health Care & Utilities) have outperformed the other Sectors for 2013.  
• The Homebuilders Sector has been outperforming the commodities during all three timeperiods.  
• Copper was holding up until 2013, but is now trading in negative territory for the Year-to-date timeperiod, as are Lumber, Gold, Silver, Oil, DBC & DBA. 
• Gold, Silver and Oil were particularly hard-hit this week, while Lumber lost 1.34%. 
• The US $ is down 7% from the March 2009 SPX lows, while 30-Year Bonds are up 14%. The US $ is, however, up 3% for 2013, while Bonds are flat for the year...so, a bit of rotation going on this year in these two instruments, while  money was favouring the Large-Cap Indices and Transports, as well as the 'defensive' Sectors.
• However, buying got a bit more aggressive this week in the Technology and Small-Cap Indices, as well as the 'riskier' Sectors. 

Summary

From the above observations, I'd keep an eye on:

• Small-Caps vs. Large-Caps -- relative strength vs. weakness -- as I've mentioned recently in this post, I'd find it difficult to support any kind of sustained buying in equities without a strengthening in Technology and Small-Caps, particularly with the SPX in the vicinity of a 13-year triple-top formation, and with the NDX facing a triple-top, as I described in this post.
• 'Defensive' Sectors vs. 'Riskier' Sectors -- will the recent buying pick up in the 'Riskier' Sectors?
• Transports Index -- will the strength continue?
• Homebuilders Sector -- will it continue rising if Copper and Lumber continue falling?
• If the Homebuilders Sector falls, will the Financials also drop or vice versa?
• Gold, Silver and Oil -- will their recent weakness continue -- if so, will they finally have a negative impact on the Major Indices -- see the "Comparison of SPX, CRX, USD & USB" section in my last Weekly Market Update post -- I made the case for a negative impact on equities if Gold and the CRX continued to drop.
• US $ and 30-Year Bonds -- will bulls abandon these or continue to accumulate them as a potential hedge against an equity downturn?
• The SPX, NDX & RUT vs. their Volatility Indices -- see my post of April 9th -- will they regain control and dominance over volatility as their ratio pairs trade at their respective resistance levels?

Next week (Wednesday at 2:00 pm EST), we'll see the release of the Beige Book information with details on the latest economic conditions, which may offer some clues in answer to my questions. Friday is monthly Options Expiration, so we we may see an increase in volatility during the week as traders rotate out of and into various instruments. And, of course, we're in the midst of earnings season for Q1 of 2013, so we may see added volatility in that regard.

Enjoy your weekend and good luck next week!