Wonder no more as to why global economic conditions are slowing down...this article, courtesy of
Carl Haub of the Population Reference Bureau, offers an excellent explanation [which re-enforces what I've previously said about Baby Boomers (downsizing) here and here]...
"World Population Aging: Clocks Illustrate Growth in Population Under Age 5 and Over Age 65"
I think the U.S. Fed's mandate to tie a 2% inflation target to their timing of a rise in interest rates is outdated and too high and needs to be seriously re-visited, in view of these facts.
Beach Drinks
Sunday, October 11, 2015
Thursday, October 08, 2015
Death Cross Formation on Japan's Nikkei Index
Notwithstanding the bearish moving average Death Cross that has now formed on the Japanese Nikkei Index, all three indicators are hinting of higher prices, as shown on the 5-year Daily chart below.
At the moment, major resistance sits at 19000, while minor support is at 17000, with major support at 16000. I'd watch the RSI, in particular, to see whether it can rise (and stay) above the 50.00 level. If so, we may see price spike to 19000 before consolidating -- then, either, attempt to penetrate above (and reverse) the moving average cross-over and rally to, potentially, new highs, or drop to new lows around the 16000 level. Otherwise, a hold below 50.00 on the RSI may see price plunge as low as 16000 (or lower), first.
At the moment, major resistance sits at 19000, while minor support is at 17000, with major support at 16000. I'd watch the RSI, in particular, to see whether it can rise (and stay) above the 50.00 level. If so, we may see price spike to 19000 before consolidating -- then, either, attempt to penetrate above (and reverse) the moving average cross-over and rally to, potentially, new highs, or drop to new lows around the 16000 level. Otherwise, a hold below 50.00 on the RSI may see price plunge as low as 16000 (or lower), first.
Friday, September 25, 2015
Fed "Double-Talk"
Just to add to confusion regarding what future direction the FOMC may take regarding whether or not to raise interest rates in 2015, we see this tweet last night...
I would just remind readers that Janet Yellen's comments last night are HER comments and are NOT the official Fed Policy Statement that was released at their last meeting on September 17th. In their Release, they stated that...
"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term."
I would just remind readers that Janet Yellen's comments last night are HER comments and are NOT the official Fed Policy Statement that was released at their last meeting on September 17th. In their Release, they stated that...
"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term."
AND...
"To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term."
AND...
"The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."
In my opinion, regardless of what Janet Yellen or any other FOMC member (or media pundit) may say in between their last Fed meeting and the next one, the only one that could be considered the official FOMC policy at the moment, is the one stated in their last meeting.
Monday, September 21, 2015
Thursday, September 17, 2015
What Is The Fed REALLY Saying?
Is the Fed really saying that their present economic monetary policy dictates that they treat current economic conditions like they had to in March of 2009 (re: their decision today to leave Fed Funds Rate unchanged at zero to 1/4 percent)?
If so, then what does that say about the health of U.S. banks? Does that mean they're at the same stress levels as they were in 2009?
If so, then one could rationally conclude that the S&P 500 Index should not be trading 1,323 points higher than it was at the March 2009 lows, as shown on the Monthly chart of the SPX below.
The message I'm seeing on the following Monthly ratio chart of SPX:VIX indicates that the current fear level of market participants equals that experienced back in April of 2011, when the SPX was trading at 1364 before it tumbled to 1074 and, eventually, rallied steadily to reach all-time highs earlier this year.
CONCLUSIONS:
Both, today's message from the Fed and information on the SPX:VIX ratio chart, are telling me that the current valuation of the SPX (at 1990) is far above where it should be. My comments (and subsequent UPDATES) noted in this previous post regarding the SPX:VIX ratio still apply and are worth monitoring over the coming days and weeks.
* Tweeted by BNN's Andrew McCreath September 18th:
If so, then what does that say about the health of U.S. banks? Does that mean they're at the same stress levels as they were in 2009?
If so, then one could rationally conclude that the S&P 500 Index should not be trading 1,323 points higher than it was at the March 2009 lows, as shown on the Monthly chart of the SPX below.
The message I'm seeing on the following Monthly ratio chart of SPX:VIX indicates that the current fear level of market participants equals that experienced back in April of 2011, when the SPX was trading at 1364 before it tumbled to 1074 and, eventually, rallied steadily to reach all-time highs earlier this year.
CONCLUSIONS:
Both, today's message from the Fed and information on the SPX:VIX ratio chart, are telling me that the current valuation of the SPX (at 1990) is far above where it should be. My comments (and subsequent UPDATES) noted in this previous post regarding the SPX:VIX ratio still apply and are worth monitoring over the coming days and weeks.
* Tweeted by BNN's Andrew McCreath September 18th:
Sunday, September 06, 2015
Will Markets Take On More Risk?
The following 1-Year Daily comparison chart has the Dow 30 plotted on as the baseline. You can see that the SPX, NDX & RUT have, for the most part, outperformed the Dow this year.
We'll see if market participants are willing to keep buying into riskier assets in the NDX and RUT (since they're currently outpacing the SPX), or whether money will start flowing back into the larger-cap stocks.
My own feeling is that if (big) money starts fleeing the NDX and RUT (risk), we could, finally, see the SPX and Dow (and other world markets) follow...especially, emerging markets, Japan and China. So, I'd watch for any signs of fresh, large-scale dumping of "risk" on this comparison chart.
With the VIX currently elevated and sitting just above major support (the zone between 20.00 and 25.00), we could, very well, see some large-scale risk-dumping occur (with continued wild, volatile price swings) before markets settle down (when the VIX falls back below 20.00).
We'll see if market participants are willing to keep buying into riskier assets in the NDX and RUT (since they're currently outpacing the SPX), or whether money will start flowing back into the larger-cap stocks.
My own feeling is that if (big) money starts fleeing the NDX and RUT (risk), we could, finally, see the SPX and Dow (and other world markets) follow...especially, emerging markets, Japan and China. So, I'd watch for any signs of fresh, large-scale dumping of "risk" on this comparison chart.
With the VIX currently elevated and sitting just above major support (the zone between 20.00 and 25.00), we could, very well, see some large-scale risk-dumping occur (with continued wild, volatile price swings) before markets settle down (when the VIX falls back below 20.00).
Saturday, September 05, 2015
Will Japan & China Lead Markets Back Up?
How strong is Japanese influence on U.S. markets?
Will the Shanghai Index regain strength on Monday?
Without U.S. markets opening until Tuesday, we may see an attempt by Japan's Nikkei Index and China's Shanghai Index to bounce somewhat. It may not become clear until Tuesday's close as to the potential strength of any sustainable rally in these Indices, along with the S&P 500 Index. Furthermore, there are quite a lot of economic reports being released on Monday for Japan and China, which may influence Tuesday's trading.
I'd keep a close eye on these three Indices, along with the USD:JPY forex pair, which have all traded lock-step (as shown on the following 1-Year Daily comparison chart), as to which direction the next (sustainable) breakout will occur.
Will the Shanghai Index regain strength on Monday?
Without U.S. markets opening until Tuesday, we may see an attempt by Japan's Nikkei Index and China's Shanghai Index to bounce somewhat. It may not become clear until Tuesday's close as to the potential strength of any sustainable rally in these Indices, along with the S&P 500 Index. Furthermore, there are quite a lot of economic reports being released on Monday for Japan and China, which may influence Tuesday's trading.
I'd keep a close eye on these three Indices, along with the USD:JPY forex pair, which have all traded lock-step (as shown on the following 1-Year Daily comparison chart), as to which direction the next (sustainable) breakout will occur.
Monday, August 31, 2015
Higher Prices in Store for Crude Oil?
* See UPDATE below...
The last three-day candle pattern on WTIC Crude Oil could very end up being a "Three White Soldiers" pattern, which is, technically, bullish [Definition (courtesy of StockCharts.com): "Three White Soldiers: A bullish reversal pattern consisting of three consecutive white bodies, each with a higher close. Each should open within the previous body and the close should be near the high of the day."]
If that's the case, we may see Oil continue to the next major resistance level around $54.00-55.00 (confluence of the 200 MA on the Daily chart and the Mid-Bollinger Band & upper Channel on the Weekly chart) before, either consolidating, or reversing; otherwise, a reversal here could send it down to around $45.00 or $42.50, or lower.
* UPDATE September 1, 2015:
Well, just like the action in the game, Pac-Man, WTIC Crude Oil just ate the third "White Soldier" and made inroads on the second one in today's wild 8.24% plunge, after it was rejected at the falling 50 MA.
$45.00 is now resistance and $42.50 is the next support level...a drop below that could send price to new lows for this year.
The last three-day candle pattern on WTIC Crude Oil could very end up being a "Three White Soldiers" pattern, which is, technically, bullish [Definition (courtesy of StockCharts.com): "Three White Soldiers: A bullish reversal pattern consisting of three consecutive white bodies, each with a higher close. Each should open within the previous body and the close should be near the high of the day."]
 |
| "Three White Soldiers" candle pattern |
If that's the case, we may see Oil continue to the next major resistance level around $54.00-55.00 (confluence of the 200 MA on the Daily chart and the Mid-Bollinger Band & upper Channel on the Weekly chart) before, either consolidating, or reversing; otherwise, a reversal here could send it down to around $45.00 or $42.50, or lower.
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| WTIC Crude Oil 9 Months Daily Chart |
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| WTIC Crude Oil 5 Years Daily Chart |
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| Crude Oil Weekly Chart |
* UPDATE September 1, 2015:
Well, just like the action in the game, Pac-Man, WTIC Crude Oil just ate the third "White Soldier" and made inroads on the second one in today's wild 8.24% plunge, after it was rejected at the falling 50 MA.
$45.00 is now resistance and $42.50 is the next support level...a drop below that could send price to new lows for this year.
 |
| WTIC Crude Oil 9 Months Daily Chart |
Thursday, August 27, 2015
What's Still "UP" on the Year?
After the market pullback that we've seen, of late, I thought I'd simply post the following Year-to-Date percentage-gained/lost graphs of a variety of world markets, to illustrate (at a glance) which ones are still "up" on the year (as of their close on Wednesday, August 26th)...presented without individual comment.
They can be monitored to see if they strengthen or weaken over the coming days/weeks, as a possible gauge of general sentiment for the remainder of the markets, particularly, those markets that have lost the most ground this year.
They can be monitored to see if they strengthen or weaken over the coming days/weeks, as a possible gauge of general sentiment for the remainder of the markets, particularly, those markets that have lost the most ground this year.
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| U.S. Major Indices |
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| U.S. 9 Major Sectors |
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| Germany, France + PIIGS Countries |
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| Emerging Markets ETF + BRIC Countries + BRIC ETF |
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| Canada, Japan, UK, Australia + World Market Index |
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| Commodities, Homebuilders ETF, U.S. $ + U.S. Bonds |
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| Currencies |
Wednesday, August 26, 2015
Will GOLD and PLATINUM Make a Comeback?
As I'm writing this post (10:00 pm ET August 26th), PLATINUM is currently rallying (+16.60).
My WAG is, if it can hold above 970.30, we could see a substantial rally on it, and take GOLD along for the ride.
My WAG is, if it can hold above 970.30, we could see a substantial rally on it, and take GOLD along for the ride.
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| PLATINUM/GOLD Daily Comparison Chart |
SPX vs SSEC vs USD:JPY
Notice the correlation among these three instruments...namely, SPX (S&P 500 Index) vs SSEC (Shanghai Index) vs USD:JPY (U.S. $ & Japanese Yen Forex pair).
They've pretty much moved in tandem for several years, now...until very recently, when the SSEC plunged to a much greater extent than the other two, and the U.S. $/Yen Forex pair a bit stronger than the SPX.
I'd keep a close eye on the SSEC for any signs of recovery, and, if there's none soon, we may see another (substantial) leg down on that, with, possibly, SPX and USD:JPY following suit. (You can read further details on the SSEC here at this link.)
They've pretty much moved in tandem for several years, now...until very recently, when the SSEC plunged to a much greater extent than the other two, and the U.S. $/Yen Forex pair a bit stronger than the SPX.
I'd keep a close eye on the SSEC for any signs of recovery, and, if there's none soon, we may see another (substantial) leg down on that, with, possibly, SPX and USD:JPY following suit. (You can read further details on the SSEC here at this link.)
Thursday, August 20, 2015
SPX:VIX Ratio At The Brink
* N.B. See Friday's & Monday's UPDATES below...
Thursday, August 20th:
Note the aggressive selling on the SPX when the SPX:VIX ratio gets up to the 180 level. A drop and hold below the 100 major support level could spell big trouble for the SPX and the other Major U.S. Indices.
With the Momentum indicator in a downtrend on this timeframe, I wouldn't be surprised to see a larger pullback occur in the equity markets. Watch the 2038 level on the SPX, as mentioned in my post of August 14th, for confirmation.
As well, we should see a bearish moving average Death Cross form on the World Market Index, possibly as soon as tomorrow's (Friday's) close...see my post of August 19th for more information on this, as this (along with upcoming action in Chinese markets) could very well weigh heavily on U.S. markets.
* UPDATE Friday, August 21st:
Failure to hold the 60.00 level on the SPX:VIX ratio chart could cause some panic selling in equities, as I mentioned in last year's post of October 15th, 2014. Price closed just above 70.00 today (Friday), as shown on the following Monthly chart. The Momentum indicator is now sitting at the lowest levels seen in the past 20 years...an ominous sign of things to come.
As far as the World Market Index is concerned, price fell further today, but I was a day early in the bearish moving average Death Cross formation -- that will likely happen on Monday -- forecasting another "sell" signal for world equity markets.
* UPDATE Monday, August 24th:
Here's a look at how World Market Indices closed today...the selloff began overnight in Asia and continued into the rest of world equity markets, where, approximately, $5 Trillion in profits were wiped out.
Price closed today well below the 60.00 major support level (mentioned above)...and, as you can see from the data above, the percentage world market selloff was considerable, including that of the U.S. equity markets. Look for more of the same, as long as price on this ratio chart remains anywhere below the 110.00 - 60.00 range...the Momentum indicator continued its plunge to even lower 20-year levels, as well, today, to signal more volatility and weakness ahead for the SPX.
We finally saw a bearish moving average Death Cross form today on the World Market Index, forecasting further weakness and another "sell" signal for world equity markets.
Price has dropped below its first major support level of 1700 and appears to be headed towards the next one at 1600. Whether this continues to plunge without a small bounce in between remains to be seen.
I'd also include the following 1-Year Daily chartgrid of Foreign ETFs. The daily ATRs (average trading ranges) are shown in white along the bottom of each chart. Today's extreme spike in range tells me that we are seeing the beginnings of major volatility and weakness entering these ETFs...confirming what the above charts are forecasting.
Thursday, August 20th:
Note the aggressive selling on the SPX when the SPX:VIX ratio gets up to the 180 level. A drop and hold below the 100 major support level could spell big trouble for the SPX and the other Major U.S. Indices.
With the Momentum indicator in a downtrend on this timeframe, I wouldn't be surprised to see a larger pullback occur in the equity markets. Watch the 2038 level on the SPX, as mentioned in my post of August 14th, for confirmation.
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| SPX:VIX Monthly Ratio Chart |
As well, we should see a bearish moving average Death Cross form on the World Market Index, possibly as soon as tomorrow's (Friday's) close...see my post of August 19th for more information on this, as this (along with upcoming action in Chinese markets) could very well weigh heavily on U.S. markets.
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| World Market Index Daily chart |
* UPDATE Friday, August 21st:
Failure to hold the 60.00 level on the SPX:VIX ratio chart could cause some panic selling in equities, as I mentioned in last year's post of October 15th, 2014. Price closed just above 70.00 today (Friday), as shown on the following Monthly chart. The Momentum indicator is now sitting at the lowest levels seen in the past 20 years...an ominous sign of things to come.
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| SPX:VIX Monthly Ratio Chart |
As far as the World Market Index is concerned, price fell further today, but I was a day early in the bearish moving average Death Cross formation -- that will likely happen on Monday -- forecasting another "sell" signal for world equity markets.
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| World Market Index Daily chart |
* UPDATE Monday, August 24th:
Here's a look at how World Market Indices closed today...the selloff began overnight in Asia and continued into the rest of world equity markets, where, approximately, $5 Trillion in profits were wiped out.
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| World Market Indices |
Price closed today well below the 60.00 major support level (mentioned above)...and, as you can see from the data above, the percentage world market selloff was considerable, including that of the U.S. equity markets. Look for more of the same, as long as price on this ratio chart remains anywhere below the 110.00 - 60.00 range...the Momentum indicator continued its plunge to even lower 20-year levels, as well, today, to signal more volatility and weakness ahead for the SPX.
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| SPX:VIX Monthly Ratio Chart |
We finally saw a bearish moving average Death Cross form today on the World Market Index, forecasting further weakness and another "sell" signal for world equity markets.
Price has dropped below its first major support level of 1700 and appears to be headed towards the next one at 1600. Whether this continues to plunge without a small bounce in between remains to be seen.
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| World Market Index Daily chart |
I'd also include the following 1-Year Daily chartgrid of Foreign ETFs. The daily ATRs (average trading ranges) are shown in white along the bottom of each chart. Today's extreme spike in range tells me that we are seeing the beginnings of major volatility and weakness entering these ETFs...confirming what the above charts are forecasting.
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| Foreign ETFs 1-Year Daily charts |
Wednesday, August 19, 2015
Commodity "Bits & Bites" -- GOLD, COPPER & OIL
Here's my quick take on Gold, Copper, and Oil...
GOLD
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
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| 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
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| 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
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| 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.
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