World Market Outlook Post-Trump Win

This post will look at where "outliers" are sitting in a variety of world markets, as of the close of the week that saw Donald Trump win the race for U.S. President (those instruments sitting at relatively high or low price levels compared with their respective counterparts and in relation to major support/resistance levels).

They will be shown on the following 1-year Daily charts, Year-to-date gains/losses comparison graphs, and several 5-Year Ratio charts, and will be grouped in the following 10 categories:

• Major U.S. Indices
• 9 Major Sectors + Homebuilders
• Major European Indices
• Emerging Market & BRIC ETFs + BRIC Indices
• Canada, Japan, UK, Australia + World Market Index
• Commodities + US $ + US Bonds
• Major Currencies
• SPX vs World Market Index
• Financial ETFs vs U.S., European & Chinese Major Indices
• Retail ETF vs SPX

R.I.P. Leonard Cohen

R.I.P. Leonard Cohen, Canadian Recording Artist ~~ September 21, 1934 - November 7, 2016

The Bubble No One Talks About

What is it?  The MEDIA BUBBLE!

Seriously, who has time to check out all available sources of news these days? And, where do you start? Who do you trust for fair and accurate information?

Middle-class working folks are too busy trying to earn a living and create a healthy and balanced life for their families to worry about who is saying what and try to figure out who's relaying true facts.

Reality tells me that the only ones who wade through endless scores of tabloid stories are those who work in the media industry.

Like the Baby Boomers who are busy downsizing and simplifying their lives to determine what really matters, it's time the media did the same.

As a boomer myself, I've learned that, with age, comes a realization that focusing on what's truly important to me, in the short term (today) and longer term (the big picture), and trusting my own instincts, helps me ensure that decisions I make are in alignment with my intentions and values and how well I'm actually honouring those values. And, to help me downsize (physically, emotionally, socially and psychologically), it's been very important to accept, appreciate, learn from, and let go of the past, and then move forward with faith in my abilities to handle what's in front of me...that's where my energies are optimally and most valuably utilized.

By the way, this approach can be very helpful in trading the markets, as well...successfully and confidently moving from one completed trade to the next new one.

Admittedly, there are, however, some bubbles that are rather enjoyable...






* UPDATE July 29, 2019...

It looks like the liberal media has not moved on from, or even accepted, the results of the 2016 Presidential election. The two most overused words since then have been "racist" and "impeachment"...referring, of course, to President Trump.

And, it hasn't changed since the recent finalization of the Special Counsel investigation into Russian meddling and purported Trump-Russia collusion, which showed the absence of any crime by Trump or anyone associated with his campaign. In fact, the media has stepped up their attacks on the President and have increased their use of those two words since then, and you'd think he had committed a crime(s).

Aren't Americans getting tired of such inflammatory, patently biased and divisive rhetoric? When will the media (journalists) return to simply reporting facts and actual news, without delivering it with a politically-biased slant or interjecting their own views and demands? They sound more like lobbyists and activists instead of self-proclaimed journalists.

* UPDATE Aug. 22, 2022...

Perhaps liberal media outlets like CNN are finally getting the message...we'll see...

Source: ZeroHedge

Congratulations, President-Elect Donald J. Trump!

Donald Trump is elected 45th President of the United States of America
November 8, 2016

Congratulations, President-elect Donald J. Trump! 

I wish you much success in crafting and enacting win-win solutions for both domestic and foreign issues and affairs, which will enable the unification of ideas and people around the world.

May peace be with you and with everyone.

Gold on Track to 1400

GOLD closed just above 1300 and the 50 MA for a second day in a row, as shown on the following Daily chart. The RSI and MACD downtrends have now been broken to the upside.

The next major resistance level is around 1400. I'd watch to see if the PMO indicator crosses and holds back above zero to see whether such a rally, or continued rally beyond that level, has legs.

In fact, there is thin volume above 1400, as depicted by the pink Volume Profile along the right-hand side of the Weekly chart below, so you could see a price surge above 1400 to, potentially, 1500, which is the next major resistance level. Watch for a Golden Cross of the 50 MA back above the 200 MA on this timeframe to confirm such a surge.

GOLD Daily chart

GOLD Weekly chart

Russell 2000 Dead Cat Bounce?

I'd keep a close eye on the Russell 2000 Index to see whether it continues its recent downward plunge below its (now-broken) support and influences the other three Major Indices to follow suit.

The following Year-to-date comparison chart of percentage gains/losses shows that the RUT has lost the most recently (because of its prior double-top spike to 11%), but that all four Major Indices are roughly even in percentage gains now for the year...we'll see if that was just a dead cat bounce and whether the SPX:VIX ratio does plunge below the 100 level, as I mentioned here.

Day of Reckoning Approaches

As the SPX:VIX ratio approaches the 100 level, once more, it's time for equity market participants to take a stance one way or the other.

A drop and hold below 100 will indicate that bears are taking firm control and threaten to take the market down, while a rebound and break and hold back above 150 will indicate that bulls are committing fresh monies into equities. The Momentum indicator has dropped below zero again on the monthly timeframe, indicating that bears are currently in control of the SPX.

MONTHLY CHART SPX:VIX RATIO

Oops!

With 10 days left before U.S. voters cast their ballots for the next President, we've just learned from a variety of news agencies that FBI Director James Comey has reopened their investigation into Hillary Clinton's handling of sensitive government information due to "the existence of emails that appear to be pertinent to the investigation."

Price on the SPX immediately dropped on this revelation. This is reflected in the drop shown on the SPX:VIX ratio chart below (as of 1:50 pm ET today)...price is now below the 200 MA, and the 3 technical indicators are displaying new "SELL" signals.

We'll see whether this new investigation trumps what I mentioned in my last post and becomes the "October surprise" that has been rumoured to surface in the media for months, or whether it's just a short-term distraction designed to trap market bears.

Either way, volatility will remain elevated as long as price on this ratio stays below the 150 level.

Equity Bear Trap Looming?

Background information on the SPX:VIX ratio can be found here. Equity volatility will elevate as long as this ratio remains below the 150 level (as of 1:45 pm ET today it has fallen below, once again, as shown on the following Monthly chart).

BUT, watch for a potential bear trap, inasmuch as price action and all three technical indicators have morphed into triangular patterns and are nearing their respective apex in readiness for a major breakout, one way or the other, as shown on the Daily chart below.

With the U.S. Presidential election only two weeks away, I doubt whether the aggressively-bullish scenario, that I painted as a possibility in my post of July 1st, is realistic. However, we may see the SPX surge toward that 2280 level, so I'd keep an eye on this ratio to see if price can break and hold back above 150, whether the RSI climbs back and holds above 50, and whether the MACD and PMO re-cross and hold to the upside, as confirmation of such bullish aggression.

VIX Volatility Defies Today's Spike in SPX

As of 12:50 pm EDT today, the SPX:VIX ratio pair is not on board with today's spike in the SPX, as shown on the following Daily ratio chart...instead, watch for weakness ahead on the SPX.

The Highs & Lows of the United Kingdom

We've never seen a wider spread between the FTSE 100 Index (it hit all-time highs today) and the British Pound vs U.S. Dollar forex pair (now at new 30-year lows), as shown on the following Monthly charts...presumably the after-effects of the "Brexit" vote.

The question is, is this the new normal and what will that mean for inflation in the UK if it is?

Deutsche Bank: From Riches to Rags in 9 Years

From an all-time high of 103.14 in May of 2007 to an all-time low of 10.19 (and close at 10.875) today (Thursday), Germany's biggest bank continues its sink into the abyss, as shown on the Monthly chart of Deutsche Bank.

The 3 technical indicators shown on the following Daily chart are no longer supporting a slowdown of its downtrend (as I had reported in my post of February 8th)...rather, they are now suggesting a resumption and acceleration of a stock dump.

This bank stock is now sitting at a tiny fraction of its former value...systemic-risk or value stock? A picture is worth a thousand words...

P.S.
Even more stunning, is the meteoric drop in value (from its June 2007 high of 228.96 to today's close of 5.80) for Germany's second-largest bank, Commerzbank, as shown on the Monthly chart below.

All three technical indicators on its Daily chart below also show evidence of renewed and accelerating selling pressure...reflecting great weakness in Germany's banking sector, despite all of the ECB's various monetary stimulus attempts made, to date, to prop up Europe's financial woes from the onslaught of the 2007/08 financial crisis/recession.

World Market Index Hovers at Make-or-Break Level

All three indicators on this 5-Year Daily chart of the World Market Index are slightly above their respective zero levels, with price hovering above the 50 moving average. They'll all need to hold at or above those levels, otherwise a sharp failure would likely spell big problems for U.S. equities.

Volatility Back Into "Major Conflict Zone"

After today's (Friday's) 53.5 point drop on the SPX, volatility has now fallen back into the "Major Conflict Zone," as depicted on the following 20-Year Monthly ratio chart of SPX:VIX.

As I mentioned here and here, a drop and hold below the 150 Bull/Bear line-in-the-sand level would see a retest of the June 27th lows. You can see from the 60-Day 60-Minute ratio chart below, price closed today at 121.5. There are two remaining gaps below that level yet to be filled, which, when filled, would realize that retest.

Each candle on the following ratio chart depicts One Year. You can see clearly that today's close sits just above the 116.61 open of the 2007 candle.

Each candle on the following ratio chart depicts One-Quarter of One Year. As of today's closing level, upward Momentum is lower now than it was at the open of the Q1 2007 candle...hinting that the buying and bullishness seen on the SPX this year (which pushed Momentum to an all-time parabolic level on the Monthly ratio chart), is, in fact, weak, unsustainable, and without serious merit.

CONCLUSIONS:

Volatility has now risen sharply, after a summer of complacency. Look for wild swings in both directions on these ratio charts as long as price remains below 150. And, if it drops below 80.00, after a retest of the June 27th lows, I'd say that equity markets are in serious trouble and in for a substantial drop.