Commodity "Bits & Bites" -- GOLD, COPPER & OIL

Here's my quick take on Gold, Copper, and Oil...

GOLD

• a drop and hold below 1072.30 on GOLD could, finally, see price retest the 1000 level, or lower, since there is an absence of volume support down to this level, according to the Volume Profile shown along the far right side of the chart
• 1150 = major resistance

GOLD Weekly

COPPER

• a drop and hold below the current price on COPPER (2.274 and now sitting at the downtrend channel "mean") could send price plunging
• 2.385 = major resistance

COPPER Weekly

OIL

• OIL is now sitting at 2004 prices
• it could drop as low as 33.20 (major support), or lower...no end in sight, since there is little volume support down to this level, according to the Volume Profile shown along the far right side of the chart

OIL Weekly

The Highs and Lows of the SPX

You can see from the Daily chart of the SPX below that the recent long-tailed hammer off the 200 MA failed to confirm the beginning of a new bull market trend.

The roller-coaster sideways movement of the SPX for 2015 will likely persist until, at least, the September Fed meeting, when markets are anticipating the first rate hike. Until then, we may continue to see failure of (sustainable) breakouts in either direction.

If we see a bearish moving average Death Cross form on the World Market Index (as appears imminent soon on the Daily chart below), this would confirm a weakening global economy and would likely drag the U.S. markets down, as well -- possibly, before the September Fed meeting. This is one chart to keep an eye on, as well as China's Shanghai's Index.

SPX: Bull/Bear Line-in-the-Sand Level

Just glancing at this 5-Year Daily chart of the SPX, I'd have to say that 2038 (300 MA) represents major support  as the Bull/Bear line-in-the-sand level...plain and simple.

US $ vs Cdn $: Commodity Price Turnaround Coming?

We may see a turnaround sometime soon on this USD:CDW forex pair.

A break and hold below 50 on the RSI could signal a retest of the 1.250 price level, or lower at the 50 MA at 1.223. The bearish crossovers on the MACD and Stochastics are forecasting lower prices for this forex pair.

If we see a pop in Oil and Gold, we should see the Canadian $ regain some of its losses against the U.S. $. Since somebody bought today's (Tuesday's) intraday dip (big-time) on Canada's TSX to the tune of 150 points from its low of the day, this could be hinting of higher commodity prices. Watch it for clues in the short term; otherwise, today's action may have just been an opportunity to short the Canadian equity and currency markets (and some commodities) at short-lived higher prices.

SPX: No "Free" Market Here

SPX: 2015 has been the most "muted" market (and probably most hated for momentum players) in the past 5 years -- RSI has not hit either 70 or 30 this year -- someone's got this market "muzzled," so no "free" market here.

UPDATE August 12:

Market still locked up tight...thanks to world Central Banks' currency wars...

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.

30-Year U.S. Bonds at Crossroads

The following 1-Year Daily chart of 30-Year U.S. Bonds ($USB) shows that a bearish moving average Death Cross has recently formed -- warning that lower prices may be in store. However, the rising RSI indicates building strength from May through July.

Near-term major resistance lies at 155.00, while longer-term major support sits at 150.00, as shown on the following 5-Year Daily chart. We may see price break through both sides of this 150.00-155.00 consolidation zone before market participants make a final decision "for" or "against" this bond...watch to see which side of 50.00 that the RSI, either, aligns with, or diverges from, that final choice to confirm sustainability of that direction.

The key to direction may lie in how well the U.S. $ performs in the near-term. The following 5-Year Daily chart of $USD compares price action to $USB. Price has, basically, moved in tandem on both of these instruments since mid-2013. The RSI is still in an uptrend from May and above the 50.00 level on $USD, and major price resistance lies at 98.00.

However, the following 5-Year Daily ratio chart of $USD:$USB shows that, recent attempts by $USD to break and hold above the 98.00 price level have been futile, while buying has strengthened each time in $USB. I'd watch the 0.630 major support level on this chart to see if the U.S. $ can regain a bullish bias...a breakout and hold above 0.660, together with a move on the RSI back above the 50.00 level would reinforce that scenario.

China's Shanghai Index: The Falling Knife

* See UPDATES below...

Further to my post of June 8th, here's what has happened, since then, on China's Shanghai Index.

After making a slightly higher high of 5178.19 on June 11th, it has since plunged to a low today (July 8th) of 3421.53 to close at 3507.19...slightly above its 200 Day Moving Average -- making a loss of 1671 points from high to close, thus far.

The first level of major supports sits around 3000...the next around 2500...a solid break and hold below 2000 could cause major panic in markets around the world.

So far, attempts by the Chinese Central Bank to intervene and stop this falling knife have failed...we'll see if this market can find any stability at any of the above-noted levels. There are no "buy" signals at this time on the RSI, MACD, and Stochastics indicators -- rather, they are still bearish, although quite oversold; however, the extreme bearish force of the MACD, in particular, should be respected, as we could, very well, see much more selling in the short term.

* UPDATE July 27, 2015:

* UPDATE August 25, 2015:

Major support now sits in between 2750 and 2500, as price has closed below 3000 today -- now major resistance.

* UPDATE September 7, 2015:

China's Shanghai Index is about to experience a bearish moving average Death Cross...likely by tomorrow's or Wednesday's close. The RSI and PMO indicators are indicating further weakness to come.

At the moment, price (after bouncing back from its price noted in my above UPDATE) is trading at just above the major support level of 3000...a drop and hold below could, very well, see price falling back to somewhere in between 2750 and 2500, or 2000, or even lower. If price holds above 3000, we may see price rally to retest the Death Cross around 3700, before we see further weakness and lower swing lows...however, failure to close the gap below 3500 would likely spell major trouble for this index and see price plunge rather quickly to new lows for 2015.

* UPDATE September 8, 2015:

Bearish moving average Death Cross formed today...yesterday's comments (noted above) apply...

SPX Candle Review of the First Half of 2015

Q2 of 2015 closed today (Tuesday, June 30th). The following describes candle action, to date, in four timeframes -- namely, Yearly, Quarterly, Monthly, and Weekly timeframes.

Each candle shown on the following chart of the SPX represents One Year.

The first half of this year is depicted by a "doji," as of the close on June 30th -- spelling "indecision" by this equity market. So far, the close is a mere 4.21 points higher than its open on January 2nd...not much of a gain in six months...no surprise, since price has been held back by the 161.8% External Fibonacci Retracement level (taken from the last major swing high in 2007 to the 2009 low), which is a typical major Fibonacci profit-taking level.

Each candle on this next chart of the SPX represents One Quarter of One Year.

Q1 of this year is depicted by a "spinning top" -- spelling "indecision" by this equity market. Q2 of this year is depicted by a "shooting star" with a slightly lower close than Q1 -- spelling a rejection of higher prices and a "bearish tilt" to this market.

FURTHER OBSERVATIONS...

Momentum has declined since 2014 on both charts -- confirming the lack of bullish confidence and commitment in this index. Candle action on both charts shows that major profit-taking has occurred in a considerable number of stocks in this index, so far, this year. In order to confirm that bears have taken firm control of this index going into Q4 of this year, we'll need to see a lower close on the Q3 candle (which begins tomorrow) on September 30th.

DRILLING DOWN...

However, looking at two shorter time frames:

• because of June's "bearish engulfing" candle, we'll need to see a lower close for the upcoming July candle on the following Monthly chart to signal further medium-term bear strength going into August, and
• because of last week's "bear harami" candle and a lower price below that close, so far, this week, we'll need to see a lower close by the end of this week on the following Weekly chart to confirm further short-term bear strength going into next week.

So, I'd watch for lower lows on this week's candle with a lower close on Friday, and, then, a lower low on July's candle with a lower close on July 31st -- also, a drop and hold of the Momentum indicator below the zero level on both charts (it has already dropped below zero on the Weekly timeframe) -- to warn of bearish control of this index going into August.

Bull/Bear Struggle for Control of EUR/USD

The following Monthly chart of EUR/USD Forex pair shows that price has been bouncing (generally) between 1.15 (dotted yellow horizontal line) and 1.08 (solid yellow horizontal line) since February of this year.

At the moment, 1.15 is defined by a confluence of a Fibonacci fanline and a falling trendline...1.08 sits around the lower one-third level of the large price range between the 2000 lows and the 2008 highs.

Bulls will need to reclaim, firstly, the 1.15 level, then 1.19 and 1.21...Bears will need to drop price below 1.08 to, potentially, 1.02 or lower. However, price support is much lighter at 1.02, as shown on the TPO Profile along the right edge of the chart, so price could slice right through that level before finding stability at a much lower level -- the lower "value" level (blue horizontal line) of the TPO Profile shows that near-term price support sits at 1.10...an important Line-in-the-Sand level for Bulls to hold and Bears to break.

Re-test of 98 in Store for U.S. Dollar?

The U.S. Dollar is back above the major support level of 95 after a brief break below, as shown on the Daily chart (cash index) below. As I mentioned here and here recently, I believe a large move is coming, one way or the other, in currencies. The RSI indicator is back above the 50 level, hinting that bulls are back in charge of $USD.

A re-test of 98 is not out of the realm of possibilities next and will be the first major resistance level that will need to be overcome to convince traders to pile in on this trade...assuming price breaks back (and holds) above the declining 50 MA around 96 immediately above today's (Tuesday's) close...coincidentally, there is a confluence of major resistance at the 96 level -- formed by a Fibonacci fanline and mid-Bollinger Band intersect -- as shown on the next Weekly chart of the U.S. $ Futures Index. Watch for the RSI to stay above the 50 level  (on the cash index) to confirm such a rally...as well, we'll need to see a higher high on the RSI at the 98  price level as a sign of bull conviction for any sustainable move higher.

Fibonacci Resistance Levels on S&P 500 E-mini Futures Index

Depicted on the Weekly chart below of the S&P 500 E-mini Futures Index (ES), are two External Fibonacci Retracements, a Fibonacci Extension, and a channel.

There are two upcoming levels of confluence representing major resistance:

• the first is between 2139 and 2155 (which could be hit any day now)
• the second is between 2213 and 2216 (which could be hit around July 20th if this extreme bull run continues in an aggressive, sustained momentum)

I'd watch for any aggressive drop below 2070 to signal a possible re-test of the bottom of the channel around the 1980 level, or even lower (I'd watch for general signs of weakness in the Dow Jones Composite Index -- as noted in my post of June 20th -- as confirmation)...otherwise, if price holds above 2070, we could very well see the second target resistance level hit by July 20th.

Watch Out for the "Big Freeze" (Bull Squeeze)

From the Monthly chart of the Dow Jones Composite Index, I'm seeing a "dinosaur" formation from 1999 to the present (first the tail, then legs, neck, and finally the head and nose -- where price is now). We all know that dinosaurs became extinct...my gut tells me that this present dinosaur bull run is not sustainable -- and likely due for a very big fall -- possibly in a 2-tier drop (big drop, small bounce, and big drop).

There are three reasons why major support lies between 4733 and 4900 on this index, which, technically, could be hit by December 2015...there is a tri-Fibonacci confluence at that spot (denoted by the red rectangle).

Watch out for the "big freeze" (bull squeeze) by Christmas.