Valentine Review

Here are a few thoughts and charts of several markets that may be worth monitoring over the coming days and weeks to gauge potential market strength, sentiment and direction...

The first charts are Daily charts of the YM, ES, NQ, TF, & NKD.

You can see that 3400 is an important level for the NQ to hold on any future decline that may lie ahead. As well, the TF will have to break through and hold above some resistance at 1150 to re-enter its major rising channel. The ES is nearing an all-time high, while the YM has a bit further to go yet in that regard. Volumes have been much higher lately.

The NKD will have to hold above 14000, lest it be the subject of a further major correction (as confirmed on the next Weekly chart of the NKD, and as I mentioned in my post of January 2, 2014)...one that may bear a close watch to see if such a scenario also drags the US futures indices down, as well, along with the next Weekly chart of the USD/JPY forex pair...a drop and hold below 101.00 on this pair would suggest further weakness ahead).

Each candle on the following chart of the EEM (Emerging Markets EFT) represents 3 days. The current candle began last Thursday and will close this Tuesday. It has approached a major confluence of resistance at a double mid-point of two regression channels around the 40.00 level. There have recently been extremely high volumes, signalling a potential large move in the making, one way or the other. A rally and hold above the 42.00 level could signal further strength ahead, while a failure to gain a solid foothold above 40.00 could signal great weakness ahead.

The following Weekly chart of the EUFN (European Financials ETF) shows that this ETF has been climbing along a rising 50% Fibonacci fanline since April of 2013 and is approaching a recent all-time high. A failure to continue rising at this steep pace around this fanline could signal that the steam has run out of this move and that buyers are taking profits. High volumes over the past several weeks suggests that a large move may be imminent, one way or the other.

I've written several posts recently concerning ratio charts of the SPX:VIX. The following updated Daily ratio chart of the SPX:VIX shows a "crack-and-snap" market action below and back above major support around the 100.00 level. A failure of this ratio to hold above the immediate shorter-term 130.00 support level could signal a retest of 85.00, and a failure to hold this next major support level could signal a much larger correction ahead for the SPX and a re-ignition of the momentum of fear to accelerate to or surpass all-time highs, which was nearly the case a week and a half ago.

The following Weekly chart of Oil shows that price is hovering around a major resistance/support level of 100.00. It has quite a distance to rally to around the 115.00 level before it even re-enters the major rising channel that began in 2009. Watch for any further rallies on higher volumes to, potentially, push price up to such a level.

The next Daily ratio chart of WTIC:SPX shows that a rally and hold above 0.0550, with a subsequent rise to test the 200 MA at 0.0581, may confirm the beginnings of such a rally in Oil, a decline in the SPX, and possibly a rise to 0.0700 or higher on this ratio chart.

All-in-all, we may see quite a volatile year ahead for the major indices with some wild swings in both directions. The SPX:VIX ratio chart should be a good general indicator as to whether fear is overtaking or overshadowing any buying in the SPX...a drop in the Momentum indicator on my chart will indicate that fear is outpacing the buying. At the moment, the following 60-day 60-minute ratio chart of the SPX:VIX shows that fear has been outpacing the recent buying since February 7th.

Best of luck for the coming short week (Note: US and Canadian markets are closed due to their respective holidays on Monday).

5-10-30-Yr Treasuries

No charts to show (not on my main computer tonight), but if the 5-Yr, 10-Yr and 30-Yr Treasuries can rally and hold above their respective Daily 200 MA, then I think we could see some serious buying enter the bond markets, and, ultimately, see a bullish 50 MA crossover of the 200 MA...just my 2 cents' worth...

Accelerating Fear and 10-Year Yields

Further to my post of January 27th, the Momentum indicator on the following 3 Daily ratio charts shows that fear has continued to accelerate in comparison with the SPX, RUT and NDX Indices, even though price hasn't yet broken and held below their major support levels.

A failure of these markets to hold and snap back at the current level would see a continued rise in momentum and could send them into a much deeper correction territory.

A failure of the following Daily ratio chart of TNX:SPX to rise and hold above what appears to be a fairly critical 0.015 major support level (and possible Head & Shoulders neckline), could send 10-Year Treasury Notes much higher in an investor "flight-to-safety" scenario, if the above 3 Major Indices fail to rally. If the Momentum indicator rises and holds above the zero level on this ratio chart, we may see some stability enter these indices...whereas, a break and hold below its last pivot low could spell trouble for these markets.

These are 4 charts worth monitoring over the coming days/weeks as one gauge of where (and how fast) investor money is flowing.

Happy Chinese New Year 2014!

To my Chinese readers, I wish you a very Happy New Year of the Horse, good health, and much prosperity for 2014!

Emerging Markets About to Implode?

Each candle on this chart of EEM represents 3 days...the current candle closed today. You can see the very high volumes that have occurred over these 3 days.

My 2 cents' worth tells me that a break and hold below 37.50 could send EEM into a new short-term downtrend, in alignment with its longer-term downtrend, and a break and hold below 33.00 may see an accelerated rate of selling...perhaps even panic.

Triple Fear

The following 3 Weekly ratio charts show that the SPX, RUT and NDX have weakened in comparison with their respective Fear indices. Price has now reached a major confluence level on all 3 at the bottom of a rising channel (from the 2011 lows) and a 38.2% Fibonacci level (taken from the 2009 lows).

A failure of the SPX, RUT & NDX to hold and rally once more at these near-term major support levels could send them into a much larger correction...ones to watch over the coming days/weeks to see if the ratio of fear begins to accelerate.

China's Shanghai Index and AUD/CAD

I last wrote about China's Shanghai Index on July 11, 2013. In that post, I mentioned the importance of price holding above 2000 and reaching and holding above 2200 and 2300, respectively.

As can be seen on the 3-Year Weekly chart below, price almost reached the 2300 level, but failed to hold and breached the 2000 level last week. We may see price fluctuate in between 2000 and 2300 until a solid break and hold is made one way or the other for awhile. Furthermore, we'll need to see the RSI break and hold above 50 and the MACD cross over and hold above the zero level to support a break to the upside. Until that occurs, this index is, basically, trendless and traders/investors are non-committal.

Additionally, as I mentioned in that post, one gauge of China's strength going forward lies in the AUD/CAD forex pair.

As can be shown on the following 3-Year Daily chart, price did breach the 93.00 level, but bounced and is now caught up in between the 50 and 200 smas. Should we see a clear break and hold above the 200 sma and the 0.9900 level (but a more-convincing 1.00 level), and if the RSI can regain and hold above the 50 level, we may see the Shanghai Index follow suit...one to watch if you're trading the Shanghai Index.

2013 World Market Wrap-Up

Happy New Year 2014!

My Market Wrap-Up for 2012 can be found here.

Although I stopped trading in July of 2013, I was curious to see how the year ended and thought I'd share the results of my review.

The following graphs and charts show the gains and losses made in a number of world markets for 2013. They will be shown without individual comment, as you can see at a glance where the outliers are (which ones made the most losses or gains) and where support and resistance are.

Happy New Year 2014!

To those who still visit my site, I wish you all a very prosperous and Happy New Year...stay safe...be healthy...be happy.   :-)

This is my Last Post

This will be my last post...I've stopped trading (after 10 years at this game) and blogging (for a number of personal reasons).

However, I'll leave my Blog up (at least for awhile) since it contains a lot of useful reference material.

I'd like to thank all who've visited my Blog over the past couple of years and those who've kindly e-mailed me. And, I wish to give a hearty 'thank-you' to all websites that are either linked to my Blog or have published my articles...the creators of these sites have been most generous and I'm very grateful for the exposure. :-)

Take care and best of luck to all.

Cheers,
SB

Relative Strength of 10 Major World Indices

The following Daily charts show price action for 1 year on the SPX and other select major world indices. I've chosen these simply to illustrate comparative market strength of these regions.

If you look at price action from the beginning of 2013, you can see that Japan's Nikkei has gained the most, followed by the SPX, London's FTSE, Germany's DAX, France's CAC, and Australia's AORD. The laggards have been the BRIC countries, although India is slightly in the green for the year. This is more easily seen on the following Year-to-date percentage gained/lost graph.

This news has just been released regarding the ECB's EFSF (I've written about the EFSF and the OMT here relative to the OMT's legitimacy):

Any substantial weakening of the EU countries (particularly below the 50 MA) in response to this news could have a negative affect on the SPX, as well as the already-depressed BRIC countries...ones to watch over the days/weeks to come.

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.

China's Shanghai Index and AUD/CAD

I last wrote about the importance of China's Shanghai Index regaining control and remaining above the 2000 level on June 24th.

Since then, price has rallied and has closed above 2000 in Thursday's action, as shown on the Daily chart below. The next hurdle will be to rally and hold above the 50 and 200 MAs at 2200, followed by a downtrend line at 2300.

One gauge of China's strength going forward may be exemplified by the AUD/CAD forex pair.

You can see from the following Weekly chart that, as of Thursday evening, price has, once again, broken below the lower edge of the downtrending channel and is threatening to fall to the next support level of 0.9300, or lower.

Further weakness in AUD/CAD may drag the Shanghai Index back below the critical 2000 level (or vice versa)...worthwhile watching if you trade the Shanghai market.

JNK:TNX Ratio -- Will Traders Buy JNK in Spite of Rising Interest Rates?

JNK:TNX Daily ratio -- price flirting with major triple bottom support...some positive divergence on all 3 indicators...hinting that JNK will attract buyers in spite of rising interest rates: 3-Year Daily chart of JNK:TNX

JNK attempts to stabilize at 200 Day MA...will see if traders buy into corporate bonds once more...frothy volumes kept price from plunging after initial drop below 200 MA...all 3 indicators pointing to a higher price...if so, equities should continue to rise, in general, but will see how JNK performs against TNX in the coming days/weeks: 3-Year Daily chart of JNK

TNX approaching major resistance level on slightly negative divergence on indicators...hinting at pause or slow-down in rate rise: 3-Year Daily chart of TNX