Homebuilders ETF Looks Shaky

The following monthly chart of the Homebuilders ETF (XHB) reveals the explosive activity that occured from mid-2020 to January 2022 -- nearly doubling in value -- before plunging, along with the Major Averages and equities, then bouncing somewhat.

However, anything above 40.00, especially above 50.00, is subject to further weakness and a rapid downdraft -- to, potentially, the long-term major support level of 30.00, or lower -- as the U.S. and world economies slow into recession over the coming weeks and months.

If XHB plummets, I expect that the SPX will follow...so, this ETF is worth monitoring closely.

The following article describes the recent weakness in this market.

Source: ZeroHedge

2400 In Store for the SPX?

Further to my post of October 21, the U.S. Homebuilders ETF (XHB) decline continues. Price is now sitting just beneath its long-term 38.2% Fibonacci retracement level of 32.33, which had represented a first major support level (now major resistance). Second major support level (50% Fib retracement) sits at 27.60.

The following weekly comparison chart shows price action of the SPX (green bars), XLF (pink) and XHB (blue) pre and post-2008/09 financial crisis.

You'll note that the XHB entered into a steep decline well ahead of the SPX and XLF in mid-2006...which was a strong indicator of major weakness in that sector and a precursor and barometer of systemic weakness in U.S. equities, in general.

Conversely, it began to accelerate at a faster pace in mid-2012 before it moved lock-step with the other two until they all peaked in January of this year.

All three, subsequently, pulled back, but while the SPX then rallied to new highs, the XLF and, in particular, the XHB did not. In fact the XHB has declined at an alarming rate since early September.

The following year-to-date percentages gained/lost graph illustrates the comparative weakness of the XHB for 2018.

A failure of the XHB to take a leadership role in regaining strength would, no doubt, drag the SPX and XLF down further...assuming that historical movements in markets haven't dramatically changed recently.

In that regard, watch for a break and hold below 2600 on the SPX (a level I had identified as near-term major support in my post of October 10) as a signal that further SPX weakness lies ahead...possibly to its next major support level as low as 2400, which correlates to a long-term uptrending Fibonacci fan line, as shown in my post of August 6.

Keep an eye on the 100 level on the following daily SPX:VIX ratio chart, inasmuch as a break and hold below could see the SPX reach that 2400 level...especially if it breaks and holds below 60 and we see another bearish moving average Death Cross form.

Systemic Risk Lurking in the U.S. Housing Market?

The U.S. Homebuilders ETF (XHB) is in bear market territory...down 24.68% from its peak on January 24 of this year.

On a year-to-date percentages gained/lost basis, it has drastically underperformed the 9 U.S. Major Sectors, as shown on the graph below.

Year-to-date % Gained/Lost graph of 9 U.S. Major Sectors + Homebuilders

As shown on the first monthly chart, the XHB is nearing a long-term 38.2% Fibonacci retracement level at 32.23, representing a first major support level. Second major support level (50% Fib retracement) sits at 27.60 on this timeframe.

XHB Monthly

The second monthly chart shows that the XHB has dropped beneath a long-term Fibonacci channel on downside accelerating momentum (MOM) and rate-of-change (ROC).

In fact, the MOM and ROC are both at low levels last seen at the height of the 2008/09 financial crisis...which makes me wonder whether the housing market is plagued with another, as yet unrevealed, systemic risk factor of some kind, and whether it will spread to the rest of the U.S. equity markets.

Time will tell. Keep an eye on the MOM and ROC indicators, as well as on other critical factors that I described in my recent posts here and here, for potential clues in gauging overall market strength/weakness in the short/medium term.

XHB Monthly

In that regard, the following monthly ratio chart of the SPX:VIX ratio shows that price remains below the 150 Bull/Bear Line-in-the-Sand level on downside accelerating momentum (MOM) -- at a level below the one made during the height of the 2008/09 financial crisis -- indicating an unusually high level of rapidly changing volatility in the SPX...another warning hinting of further equity weakness ahead.

SPX:VIX Ratio Monthly

Homebuilders ETF Poised to Make a New All-Time High

The Homebuilders ETF (XHB) is poised to make a new all-time high as it faces its peak set just before the 2007/08 financial crisis struck, as shown on the monthly chart below.

There are two interesting things I notice on this chart. The volume moving average has been steadily declining since September of 2013 as the momentum indicator is nearing its record peak set in May of 2013...hinting of potential profit-taking at current overheated levels.

So, whether, or not, we are about to see a rollover anytime soon should be revealed in coming days/weeks. Keep an eye on volumes and momentum, for possible clues. Furthermore, as the Fed considers 3 to 4 interest rate hikes this year, no doubt mortgage rates would rise, as well, negatively impacting this sector.

The S&P 500 Index (SPX) is shown in the background as the blue area. If the XHB rolls over, it may also bring the SPX with it, but, as I described in yesterday's post, keep an eye on HYG, as well.

Lumber vs. Homebuilders: The Great Disconnect

Lumber and the Homebuilders ETF (XHB) traded, essentially, in the same directions from mid-2010 until October 2014 -- when Lumber suddenly took a nosedive down to major support at 240, while XHB broke out and rallied -- as shown on the following 5-Year Daily comparison chart.

At the moment, it looks as though that support level will be retested, once more. A drop and hold below 240 could very well be the catalyst that breaks XHB's slightly-sloping (tight) uptrend. And, a drop and hold below 220 could see a very quick, sizable plunge in XHB...possibly slicing through 34.00 down to retest major support around 28.00, or lower.

Lumber and Homebuilders ETF...two charts to monitor to see if the current spread between them continues to widen or shift.

* UPDATE -- Click this link to view an interesting read, dated September 17th, from Tom McClellan regarding New Home Sales vs Lumber...another correlation to monitor in the coming weeks and months.

Fed Stimulus "Canaries" About to Croak?

I last wrote about the Fed Monetary Stimulus "Canaries" in my post of December 16, 2014. As a reminder, I chose six of them (ETFs) in order to determine their relative strength/weakness against their respective Stock Market Index, since they may have held clues for further accumulation in riskier assets due to respective Central Bank stimulus programs.

So that we can compare their current relative strength/weakness, I've provided the following 5-Year Daily ratio charts for each "Canary."

OBSERVATIONS

XLF:SPX -- U.S. Financials ETF (XLF) has, basically, traded lock-step with the SPX. A recent breakout has failed and brought price back below major resistance. We'll need to see price retake the 0.0121 level, first, then 0.0122, if XLF is going to resume an outperformance of the SPX...however, the RSI failed to make a higher swing high relative to the higher swing price high, so I'm doubtful that we'll see the XLF move higher before it, potentially, retests the 200 MA.

EUFN:STOX50 -- European Financials ETF (EUFN) was underperforming the European Index (STOX50) until mid-March of this year, but has rallied and has consolidated in between the 50 and 200 MAs. Price action is still under the bearish influences of a moving average Death Cross formation, so it is subject to reversal if it fails to break out and hold above major resistance at 0.0073 and a bullish moving average Golden Cross forms.

GXC:SSEC -- Chinese Financials ETF (GXC) has drastically underperformed the Shanghai Index (SSEC) since July of 2014. The shockwave that I warned against in my above-noted post did occur in this ETF, but had the opposite effect on the Index, once the major support level of 0.025 was broken...however, once the last support level of 0.022 was broken, we started to see the Index weaken and, ultimately, implode. A strong Index is only as good as its financials to support it, in the long run, so we'd need to see price reclaim (and hold above) 0.025 and higher; otherwise, I'd look for considerable weakness ahead in the Index, as I warned here.

XHB:SPX -- Homebuilders ETF has, essentially, traded sideways (along with the SPX) since January of this year. We'll need to see a solid breakout and hold above 0.0180 to convince bulls that this ETF was going to outperform for the remainder of this year...we may see a brief pop until such time as the Fed raises interest rates.

RTH:SPX -- Retail ETF has outperformed the SPX since mid-June of this year, after retreating from its highs in March. So far, price has retested and failed to break out and hold above those highs, which it will need to do in order to regain its leadership...otherwise, it's in danger of falling back to its 200 MA, or lower (to erase all of its gains for 2015).

EEM:SPX -- Emerging Markets ETF has continued to underperform the SPX and has, in fact, broken below this year's major support level. Once again, we see price under the bearish influences of a moving average Death Cross formation...price would need to reclaim (and hold above) 0.022 and a bullish moving average Golden Cross form; otherwise, we could very well see an acceleration of downside pressure occur on EEM.

SUMMARY

• Chinese and European Financials are very weak and do not support their respective Indices
• U.S. Financial ETF is at a crossroads and looks like it's in for some weakness
• Homebuilders ETF is up against considerable resistance and could be in for some weakness
• Retail ETF is pushing on a string at these all-time highs and overbought levels
• Emerging Markets ETF is falling off a cliff

CONCLUSIONS

It would appear that these six "Canaries" are about to fall (further, in some cases) off their perch...charts worth monitoring to see where the cracks begin or widen to suggest that the effectiveness of these Central Banks' policies has run its course.

Homebuilders Sector at a Critical Level

The following Daily chart of the Homebuilders Sector (XHB) shows, that it reached a new 3-year high today (Wednesday), but not a new closing high. However, the RSI, MACD and Stochastics indicators are not yet confirming a move higher. Note the high volume activity since the beginning of this year...signalling major rotation in and out of this sector, perhaps, in readiness for a big move one way or the other.

When compared with the Financials Sector (XLF), the following Daily ratio chart of XHB:XLF shows that the XHB weakened from the beginning of 2013 until mid-October 2014, while XLF outperformed. At the moment, price has bumped up against major resistance at 1.50 and the RSI, MACD and Stochastics indicators are not confirming another move up yet, even though we now have a bullish Golden Cross of the moving averages. We may see a retest, first, of these averages around the 1.40/38 level before the next major move is established.

When compared with the S&P 500 Index ($SPX), the following Daily ratio chart of XHB:$SPX shows that the XHB weakened from mid-2013 until mid-October 2014, while the $SPX outperformed. At the moment, price has bumped up against major resistance at 0.0175 and the RSI, MACD and Stochastics indicators are not confirming another move up yet, even though we now have a bullish Golden Cross of the moving averages. We may see a retest, first, of these averages around the 0.0165/60 level before the next major move is established.

Since the "continued recovery" in the U.S. is seen to be dependent, in part, on strong homebuilding activity, it may be worth measuring its "strength" against the above sector and index over the near and longer terms...I wouldn't be surprised to see some weakness of the XHB against these in the short term.

Update on Fed Monetary Stimulus "Canaries"

I last wrote about the Fed Monetary Stimulus Program "Canaries" in my post of February 6, 2013. As a reminder, I chose six of of them (ETFs) in order to determine their relative strength/weakness against their respective Stock Market Index, since they may have held clues for further accumulation of riskier assets due to respective Central Bank stimulus programs.

So that we can compare their current relative strength/weakness, I've provided the following 3-Year Daily ratio charts for each "Canary."

XLF:SPX ~ U.S. Financials ETF has, basically, traded lock-step with the SPX since my last post. A recent breakout has brought price back to re-test this breakout level. We'll need to see 0.0120 held if XLF is going to resume an outperformance of the SPX.

EUFN:STOX50 ~ European Financials ETF has, after outperforming the European Index until March of this year, dramatically underperformed and has fallen back to the same levels that were made at the time of my last post. We'll need to see price reclaim and hold above the falling 200 moving average, currently at 0.0081. Price action is under the bearish influences of a moving average Death Cross formation, so we may see an increase in volatility on any re-test of the 200 moving average and either a decisive trend reversal or trend continuation established.

GXC:SSEC ~ Chinese Financials ETF has experienced a roller-coaster ride against the Shanghai Index and has drastically underperformed since the highs in July of this year. Price is approaching a 3-year support level...a drop and hold below 0.025 could send a shockwave through China's banking sector.

XHB:SPX ~ Homebuilders ETF has underperformed the SPX since May of 2013, but has bounced since its lows in October of this year to re-test the 200 moving average. Price is still under the bearish influence of a moving average Death Cross formation...any sustainable reversal of this formation will need to be confirmed by a Golden Cross formation...a break and hold above 0.0170 will be necessary in this regard.

RTH:SPX ~ Retail ETF has outperformed the SPX since August of this year. A drop and hold below near-term support of 0.0340 could see a reversal of this trend, or a re-test of the 50 moving average.

EEM:SPX ~ Emerging Markets ETF has drastically underperformed the SPX, essentially since January of 2013. EEM may be monitored more closely against the USD, as more fully explained in my last post at this link, in addition to monitoring the ratio below. Once again, we see another bearish moving average Death Cross formation on this chart...price would need to reclaim and hold above the major resistance level of 0.023 in order to, potentially, claim a sustainable outperformance of the SPX.

CONCLUSIONS

China's Financial ETF and the Emerging Markets ETF are drastic underperformers, while the Retail ETF has been a major outperformer, as compared with their respective Indices. U.S. Homebuilders, and European Financials have been slack, and U.S. Financials will need to hold above major support to demonstrate sustainable strength. In fact, China's Banking Sector could be sent plunging if its current price level is not held, as I mentioned above.

SPX vs Major Sectors: Stock Market Weakness Ahead?

The following 11 1-Year Daily charts show the 9 Major Sectors, plus Housing and Biotech.

You can see that Technology (XLK), Industrials (XLI), Materials (XLB), Energy (XLE), and Consumer Staples (XLP) have been the strongest performers, of late. The laggards have been Housing (XHB) and Biotech (IBB)

The next 11 1-Year Daily ratio charts show the relative strength/weakness of each of these sectors compared with the SPX.

What I notice immediately on these is the relative weakness of Cyclicals (XLY), Financials (XLF), and Housing (XHB), followed by Biotech (IBB). Unless we see a firming up and buying begin in these 4 sectors, we may see a general weakness creep into the stock market, in general...ones worth watching going forward.

The accumulation we've seen in 2-5-10-30-year bonds of late, and particularly today (Wednesday), may be an attempt by the institutions/market makers to lower interest rates as a precursor to, potentially, stimulate buying in these sectors...so, bonds/rates are also worth tracking over the next weeks/months, relative to these and all sectors...see Sectors vs 30-year bond ratio charts at this link and on the last set of 1-Year Daily ratio charts below.

Gold Poised to Rally Hard?

Is it my imagination, or is Gold poised to rally hard?

Gold, Silver, Copper and DBC (Commodities ETF) are at/near major support levels, as shown on the charts at this link: http://stockcharts.com/freecharts/candleglance.html?DBC,DBA,$GOLD,$WTIC,$COPPER,$SILVER,$LUMBER,XHB,$USD,$USB|D

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.

"Mortgage Rates are Suddenly Soaring"

Data released today (Wednesday) shows that "mortgage rates are suddenly soaring and are pulling down mortgage activity."

This kind of loan rate rise was something to which I alluded in my post of May 7th. Perhaps this is why we saw a rise in Mortgage Delinquencies on May 9th.

We'll see if rates stay elevated if "tapering in stimulus" is NOT mentioned as an imminent proposal in Ben Bernanke's speech/testimony today.

***UPDATE: No mention in Bernanke's speech about imminent tapering (it will be dependent upon economic data that the FOMC reviews at each meeting, according to him). So, the big question now becomes, "Will Banks lower mortgage rates?" Don't hold your breath. And, my last question is, "Will TV commentators stop talking and guesstimating about such a scenario anytime soon?" Don't hold your breath.

We'll see if the Homebuilders ETF (XHB) continues to soar or begins to pull back. A drop and hold below immediate support at the 61.8% Fibonacci retracement level of 31.81 and, subsequently 30.00, could trigger a decline to the lower Bollinger Band, or lower, as shown on the following Weekly chart...one to watch.

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!