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.
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* 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...please read my full Disclaimer at this link.
Dots
* If the dots don't connect, gather more dots until they do...or, just follow the $$$...
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ECONOMIC EVENTS
UPCOMING (MAJOR) U.S. ECONOMIC EVENTS...
***2026***
* Wed. June 17 @ 2:00 pm ET - FOMC Rate Announcement + Forecasts and @ 2:30 pm ET - Fed Chair Press Conference
*** CLICK HERE for link to Economic Calendars for all upcoming events.
Showing posts with label World Market Outlook. Show all posts
Showing posts with label World Market Outlook. Show all posts
The S&P 500 Index (SPX) has breached, once again, the outermost deviation band of the Regression Channel (+5 standard deviation), which has its beginnings at the March 2009 low, as shown on the following monthly chart. So far, it hasn't been able to sustain a move higher.
It's either going to enter a new hyper-bullish phase to, potentially, spike sharply to parabolic heights, or pull back to somewhere around, either a confluence of the 20 MA with the +2 deviation level around 3100ish, or to a confluence of the 50 MA with the Regression Channel median around 2800ish.
Either way, the move could be swift.
In my post of November 8, I mentioned that buyers were in control of the MSCI World Market Index, based on a monthly timeframe. Its price was 2470.05 (Friday November 6).
The upside target I identified was around 2600. The next day it hit a high of 2546.16 before pulling back to close at 2502.06, as shown on the following daily chart. It's been trying to retest that high for the past three days, without success. The Balance of Power has flipped from buyers to sellers on this short-term timeframe.
This may be a warning of weakening interest and a possible pullback in the SPX, as well as other global indices. Keep an eye on the MSCI World Market Index for clues in the short term.
Since then, it surpassed its resistance level of 2340 and is sitting at 2470.05, as shown on the following monthly chart.
The Balance of Power lies in the hands of buyers on this timeframe, as price is set to break out above its high of 2500.32 to new all-time highs...provided that Momentum (MOM) continues to rise.
Its next major resistance level lies at the top edge of the Andrew's Pitchfork channel around 2600.
For clues on global market direction and strength, keep an eye on the RSI on the following basket of global market indices. As long as it keeps rising over the coming days and weeks, we may see the 2600 target achieved in the medium-to-longer term, or even by the end of 2020.
As well, the tug-of-war situation that I described in my post of October 26 between China's Shanghai Index (SSEC) and the S&P 500 Index (SPX) is worth monitoring, in this respect. The SPX is now sitting just above its former resistance level of 3500, while the SSEC remains around 100 points below its resistance price of 3400. Keep an eye on how this develops for the remainder of the year (and beyond) for additional hints as to the viability of further buying in the MSCI World Market Index.
Contrary to what the media has just announced, Joe Biden has NOT yet been officially declared the President-elect, as he has not yet been certified as the winner of any state. There are still ballots to be counted, numerous recounts to be done, and pending court cases to be litigated and settled before that can happen.
As former President Obama said post-2016 election, "There is only one President at a time."
At the moment, President Trump will remain President until noon on January 20, 2021...and beyond, if re-elected.
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.
* UPDATE December 29...
The SPX managed to hit my Q4 target of 3233 by the end of the year, as I outlined in my post of December 29.
And, so, as I asked in my post of December 24 [one-day $34.4 Bilion U.S. retail sales and $17 Trillion global market gains (21.68%) this year], "What's not to like, Joe?"
If you want to create a liquidity crisis in U.S. equity markets, then go ahead...adopt and enact the ideological measures put forth in that deal/bill. If you want to create an economic crisis, in America, as well as the rest of the world, then go ahead...adopt and enact the ideological measures put forth in that deal/bill. Foreign and domestic investment in the U.S. will disappear.
As it is, U.S. and global markets have been fragile and volatile for over a year, and absurd political games such as this will only suck the liquidity out and increase volatility at an ever-accelerating pace. Offshore U.S. corporate monies will never be repatriated and invested in America. In fact, more funds will be hidden in offshore accounts under this scenario. This deal is a clever counter-measure to President Trump'sTax Cuts and Jobs Act, enacted on December 20, 2017. When companies fail to bring offshore monies to the U.S. by the 2020 election, Democrats will claim that the President's policies haven't worked and that Americans should, instead, embrace their ideology. Any benefits gained from this Act will be shattered. At that time, I was pondering whether the Dow 30 Index would reach 25,000. In fact, it reached a high of 26,951.81 in early October 2018 (just prior to the U.S. midterm elections) before it started to tank, and, interestingly enough, it's hovering just above 25,100, as of Friday's close.
You can see from the following weekly chart of the MSCI World Global Index that price rallied, after touching major support at 1800, and is now sitting at a critical intersection of a long-term uptrending Andrew's Pitchfork median and major price resistance level around 2030.
Inasmuch as many Democrats are on board with this destructive deal (adding to political headwinds as I described in this post) and not many Republicans and the business world have dismissed it yet, no doubt more support for it will continue to grow, especially among Millennials.
Just wait until the big bank executives are hauled before Democrat Maxine Waters' Financial Services Committee (on which Ms. Ocasia-Cortez sits as a member) and watch this political farce continue.
Keep an eye on the MSCI World Global Index, because if that begins to implode, you'll see U.S. markets follow suit.
Perhaps GOLD will become the favoured hedge for traders/investors against such a catastrophic scenario...and we'll see the rally accelerate, as I described recently in this post.
Now it looks like Democrats (including Hillary Clinton and the Clinton Foundation) may be faced with serious investigations involving potential collusion with Russia and threats to national security on a variety of matters in the coming weeks, according to this latest report from The Hill's John Solomon. It's anticipated that the U.S. Inspector General will release a report by late spring/early summer in this regard, along with FISA abuse by the DOJ and FBI leading up to the 2016 election and beyond. As well, Senator Lindsay Graham will be investigating these issues, along with this FISA abuse, via his Senate Judiciary Committee.
And, thanks to active socialist resistance to Amazon's proposal to build a second headquarters in Long Island, Queens from New York politicians such as Ms. Ocasio-Cortez, Amazon are abandoning their project, which would have created 25,000 jobs...their statement is below.
We'll see if Virginia's politicians are any friendlier towards and supportive of capitalism than New York's...
So, Democrats' far-left socialist movement is already underway and is, seemingly, effective at stopping capitalism in its tracks.
Senate Majority Leader, Mitch McConnell is planning to force a vote in the Senate on this "Green New Deal." We'll see if Senate Democrats and their 2020 Presidential candidates will "put their money where their mouth is" to support it...or not.
And, is this constitutional overreach by Democrats?...take a look at this Associated Press article, "House Panel Seeks Documents on 81 People Linked to Trump." How will House Democrats find any time to draft legislation over the next two years that actually benefits Americans when all their attention is focused on these shenanigans?
REALITY CHECK: A good reason to NOT adopt the "Green New Deal"...it would add trillions to the already ballooning $22 Trillion National Debt!
P.S. They're coming for your cows...time to stock up on Big Macs! 😊
Judge Jeanine's Opening Statement Feb. 9, 2019 on Fox News TV's "Justice With Judge Jeanine"
* UPDATE March 26...
This series of tweets from Senate Majority Leader Mitch McConnell mentions that the Senate will vote today to begin debate on the Democrats' Green New Deal...stay tuned...
RESULTS OF THE VOTE...all Republicans voted "against" beginning to debate the Green New Deal...the Democrats did not vote "for" or "against" and, instead, voted "present."
So, it looks like Democrats don't even support a discussion of their own deal in the Senate, despite their on-air declarations of support to the media and to Americans...so, it will not be advanced in the Senate.
Rather, it appears to simply be a 2020 election tool/prop and not a serious proposal that they're willing to defend in Congress.
The following charts depict 2018 market action in the S&P 500 Index (SPX), as well as the MSCI World Index. One word describes 2018 markets...volatile.
Volatility was extreme, as uncertainty gripped, not only U.S. markets, but markets world-wide, as well, as I had posited in my 2018 Market Forecast at the end of 2017. I believe it will continue to apply in 2019, and we'll see a world market slowdown, as I described in my 2019 Market Forecast.
Key levels that I'm watching on the SPX are 2600, 2400, 2250 and 2000, as illustrated in my post of December 27.
Market gauges that I'm monitoring in the weeks/months ahead are outlined in the above-mentioned posts, as the charts below are simply presented without comment (on the SPX) to depict this volatile price action.
Happy New Year and best of luck in 2019!
SPX -- Each candle on the following chart represents a period of one year.
SPX -- Each candle on the following chart represents a period of one quarter.
SPX -- Each candle on the following chart represents a period of one month.
SPX:VIX Ratio -- Each candle on the following ratio chart represents a period of one year.
SPX:VIX Ratio -- Each candle on the following ratio chart represents a period of one quarter.
SPX:VIX Ratio -- Each candle on the following ratio chart represents a period of one month.
MSCI World Index -- Each candle on the following chart represents a period of one week.
N.B.1800 is a critical level, as a break and hold below will drag U.S. equities down, as well. It was briefly pierced during the last week of December and may be retested before, either resuming its plunge, or reversing course.
A tepid reversal will not produce lasting confidence or commitment in world markets, nor sustain a meaningful longer-term rally. In this regard, I've shown the input value as "one" on the three technical indicators (MOM, ROC and ATR) to illustrate and gauge the strength and velocity of either direction.
In last year's market outlook for 2018, I anticipated a rise of around 10% for the SPX. At its all-time high set on September 21, the SPX had risen by 9.62%, before it began to lose its gains for the year, and more.
At the time of today's analysis and post (December 17), you will see from the first percentages gained/lost graph that 7 of the 9 Major U.S. Indices are in negative territory year-to-date.
The second percentages gained/lost graph shows that 8 of the 9 Major Indices are in correction territory from September 21. In fact, the Russell 2000 and the Dow Transports are fast approaching a 20% bear market territory.
The following graph shows the percentages of stocks in the U.S. Major Sectors and Major Indices above their respective moving averages.
The only ones with 50% or more of their stocks above their 200-day moving averages are the S&P 500 Real Estate, S&P 500 Utilities, and Dow Utilities.
The one to note is the S&P 500 Real Estate Sector, which has precisely 50%. If we see further weakness in this sector sending it below that level, I've no doubt that we'll see broad weakness continue across all markets.
Each candle on the following three charts of the SPX represents a period of one month, one quarter, and one year, respectively.
All three charts show clearly the weakness that this index has experienced since September, the uncertainty that has gripped it all year, and the strength of this year's bearishness versus tepid bullishness.
Each candle on the following three ratio charts of the SPX:VIX ratio represents a period of one month, one quarter, and one year, respectively.
Price is currently sitting just above the 100 Uncommitted Zone...a zone, which, if broken and held to the downside, would see a swift selloff occur in the SPX and other U.S. Major Indices.
The extreme volatility and lack of bullish commitment, thus far this year, in the SPX is best illustrated by the yearly ratio chart. Its entire candle range for 2018 has encompassed both candles of 2017 and 2016, as well as good portions of all prior candles to 2010, and has set a new record high for annual ratio range.
CONCLUSIONS AND OUTLOOK FOR 2019
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. $).
Good luck next year!
P.S.To see how markets ended in 2018, check out my post here.
