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| Source: ZeroHedge.com |
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| Source: ZeroHedge.com |
Beach Drinks
Thursday, December 14, 2017
Political Gossip Trumps Nuclear War
It would seem that gossip about staff comings and goings at the White House is far more intriguing and attention-grabbing than threats of nuclear war, judging by the number of pageviews that the following two ZeroHedge articles received today...I wonder which one would move the markets more profoundly if what's claimed in either one of those stories actually materialized...
Wednesday, December 13, 2017
Saturday, December 09, 2017
BITCOIN: Volatility on Steroids
* See UPDATES below...
Bitcoin lost nearly 25% of its value in the past 48 hours (a drop of 4400 points)...
...after going hyper-parabolic this year...now awaiting the real fireworks when Bitcoin Futures start trading on Monday.
How can anyone place a serious value on this crypto (definition: hidden or secret) currency?
* UPDATE December 13...
Volatility is evident in wide swings made in just a 24-hour period, as shown on this 5-minute comparison chart of Bitcoin and CBOE Bitcoin Futures.
* UPDATE December 14...
Bitcoin lost nearly 25% of its value in the past 48 hours (a drop of 4400 points)...
 |
| BITCOIN 2-Day Hourly chart |
...after going hyper-parabolic this year...now awaiting the real fireworks when Bitcoin Futures start trading on Monday.
How can anyone place a serious value on this crypto (definition: hidden or secret) currency?
 |
| BITCOIN Monthly chart |
* UPDATE December 13...
 |
| (NB: Comment made at her last Fed Chair Press Conference Dec. 13, 2017) |
Volatility is evident in wide swings made in just a 24-hour period, as shown on this 5-minute comparison chart of Bitcoin and CBOE Bitcoin Futures.
* UPDATE December 14...
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| Bank of Canada Governor Stephen Poloz |
Wednesday, December 06, 2017
Potential Reversal of S&P 500 E-mini Futures Index Ahead
FYI: The appearance of this bearish "evening star" candle formation on the S&P 500 E-mini Futures Index (ES) is warning of potential lower prices ahead, as shown on the Daily chart below...
Saturday, December 02, 2017
Market Forecast for 2018: More Volatility & Political Uncertainty
In my post of November 26, 2016, I was projecting a rally in the SPX to around 2700 by the next U.S. Presidential election in 2020. Markets have certainly been much more robust this year than I anticipated, as this level has almost been hit already. It rallied to an all-time high of 2657.74 on November 30 and closed on December 1 at 2642.22.
At the time of writing this post on December 2, you will see that, of the 9 Major Indices, the S&P 500 Index has gained 18.02% year-to-date, as shown on the first graph below, while the Nasdaq 100 and Nasdaq Composite Indices have gained the most, and the Russell 2000 and Dow Transport Indices the least.
With regard to the 9 Major Sectors, Technology has gained the most year-to-date at 32.84%, with six others at around 20%. Consumer Staples gained 10.77%, while Energy has far underperformed at -5.06%.
All of these Indices and Sectors are currently trading, either above, or well above, their 50-day moving averages, as shown on the following 1-year daily charts.
Without repeating myself with respect to three articles that I posted recently, I'd just direct your attention to the conclusions that I made here regarding the Tech Sector (XLK), Consumer Cyclicals (XLY) and Consumer Staples (XLP) in connection with strengthening/weakening consumer spending into year-end and next year, as well as effects from potential upcoming Fed interest rate hike(s).
Additionally, I'd re-iterate the comments I made here regarding world money flow in the U.S. Financials, versus European and Chinese Financials and their respective major resistance levels.
Finally, please note the comments I made here regarding the (actual past and potential future) effects of political legal machinations and political legislative drama on the SPX and VIX, and their price/technical levels to monitor in the week(s) ahead.
CONCLUSIONS:
I understand that tax cuts contained in the Senate tax bill (that was just passed on December 2) don't begin until 2019. If this time frame is agreed to by the House and ratified by the entire Congress by the end of this year, we may see markets take some hefty profits in early 2018, in protest, as, no doubt, they were expecting them to take effect in 2018, judging by this year's hot market.
If this scenario were to happen and, taking into consideration the uncertainty that next year's mid-term elections will bring, coupled with likely interest rate hikes, I'd project that we'll likely see volatility rise in 2018 and the SPX (and the other 8 Major Indices) gain only about half of what they gained this year. This would mean an approximate increase of 10% for the SPX. I expect Technology to remain fairly strong, and Small-Caps may struggle more than Big-Caps. Nonetheless, I anticipate that the U.S. markets will continue to outperform other World markets (keep an eye on the performance of their Financials, as I noted).
With respect to the S&P 500, Nasdaq 100, and Russell 2000 Indices, I'd watch to see whether the following major support levels can be held on the following Index/Volatility ratios (note their corresponding Monthly ratio charts below)...a breach of those important levels could produce the sell-off that I mentioned above:
- SPX:VIX Ratio -- 200
- NDX:VXN Ratio -- 350
- RUT:RVX Ratio -- 80
Good luck next year!
* UPDATE December 23...
P.S. You can read other 2018 Market Outlook articles (written by fellow contributing writers to Investing.com), as well as mine above, here (Part I) and Part II here.
N.B. See my 2017 Market Wrap-Up post for a final look at how and where the year ended, as well as, further details on what to watch for and where the market may be headed in 2018.
N.B. See my 2017 Market Wrap-Up post for a final look at how and where the year ended, as well as, further details on what to watch for and where the market may be headed in 2018.
RECORD-BREAKING NEWS:
- The S&P 500 Index came within 5 points of hitting 2,700 and the Nasdaq Composite Index hit 7,000 on December 18
- President Trump signed the Tax Cuts and Jobs Act on December 22 (the new lower corporate rate of 21% will take effect January 2018)...following this, many major companies announced pay raises and bonuses for employees, as well as plans to hire more workers and increase infrastructure spending
Markets Roiled by Political Legal & Legislative Drama
U.S. equity markets experienced a volatile intraday trading session on Friday, as news unfolded throughout the day with respect to the ongoing DOJ Special Counsel legal investigation of the Trump administration and its potential involvement with Russian interference in the 2016 election, as well as to discussions and a final vote on tax reform/cuts in the Senate, as shown on the Daily charts below of the SPX and VIX.
With regard to which one most influences the markets -- political legal proceedings versus political legislative accomplishments -- Friday's action is indicative of a tug-of-war environment.
If Friday's close presents any kind of snapshot of which one holds the most sway among market participants, it would seem that, as it stands right now, the scales are slightly tipped in favour of political legal machinations, based on a lower close of the SPX and a higher close of the VIX.
Volatility has been increasing since October 25, as evidenced by the expanding-triangle pattern forming on the VIX. However, with major resistance sitting around the 12.00 level, it will be important that price break and hold above that level as a potential signal that weakness is creeping in on the SPX. If it remains below that price, we could very well see buying return next week, particularly, since the Senate passed its tax bill after midnight, Friday.
However, the SPX is mashed up against major resistance in the form of an external Fibonacci retracement level, as shown on the Monthly chart below. It's also trading above a +2 standard deviation level of a long-term uptrending Regression Channel (formerly major resistance/now major support around 2600). Such a channel breakout has not occurred since it began at its lows of 2009, so any further buying that occurs at/above these levels would be unusual and, potentially, lead to over-exuberant parabolic spikes.
I last wrote about the SPX:VIX ratio in my post of November 21.
Price on this ratio had briefly spiked above 280 (on November 3) to the upper edge of a long-term uptrending (green) channel, before it plummeted below that channel on Friday (to a low of 181.79) and spiked back up to close at 231.16, as shown on the Monthly ratio chart below. This represents a 100-point swing in the past four weeks (and a 65.41-point one-day swing on Friday), confirming that volatility is, indeed, on the rise (as social chaos continues to churn and expand, as well).
I'll re-iterate that it will be important for price on this ratio to reach and hold above the 280 major resistance level, and for the SPX to hold above its 2600 major support level, in support of a convincing argument that favours the sustained entry of the SPX into a new bull-market phase.
Otherwise, if price drops and holds below major support at 200, expect volatility to increase and weakness to set in on the SPX.
In conclusion, we'll see what happens with equities after the House has finished its debate on tax reform/cuts, which is scheduled to begin on Monday, and whether the ongoing political legal drama escalates/expands in the week(s) ahead.
Volatility has been increasing since October 25, as evidenced by the expanding-triangle pattern forming on the VIX. However, with major resistance sitting around the 12.00 level, it will be important that price break and hold above that level as a potential signal that weakness is creeping in on the SPX. If it remains below that price, we could very well see buying return next week, particularly, since the Senate passed its tax bill after midnight, Friday.
However, the SPX is mashed up against major resistance in the form of an external Fibonacci retracement level, as shown on the Monthly chart below. It's also trading above a +2 standard deviation level of a long-term uptrending Regression Channel (formerly major resistance/now major support around 2600). Such a channel breakout has not occurred since it began at its lows of 2009, so any further buying that occurs at/above these levels would be unusual and, potentially, lead to over-exuberant parabolic spikes.
I last wrote about the SPX:VIX ratio in my post of November 21.
Price on this ratio had briefly spiked above 280 (on November 3) to the upper edge of a long-term uptrending (green) channel, before it plummeted below that channel on Friday (to a low of 181.79) and spiked back up to close at 231.16, as shown on the Monthly ratio chart below. This represents a 100-point swing in the past four weeks (and a 65.41-point one-day swing on Friday), confirming that volatility is, indeed, on the rise (as social chaos continues to churn and expand, as well).
I'll re-iterate that it will be important for price on this ratio to reach and hold above the 280 major resistance level, and for the SPX to hold above its 2600 major support level, in support of a convincing argument that favours the sustained entry of the SPX into a new bull-market phase.
Otherwise, if price drops and holds below major support at 200, expect volatility to increase and weakness to set in on the SPX.
In conclusion, we'll see what happens with equities after the House has finished its debate on tax reform/cuts, which is scheduled to begin on Monday, and whether the ongoing political legal drama escalates/expands in the week(s) ahead.
Thursday, November 30, 2017
International Financial ETFs Versus 3 Major World Indices
It appears that several international Financial ETFs have, generally, performed well over the past couple of years and are, either approaching major resistance, or have already reached it, when compared with their respective country's Major Index on a ratio basis.
The first is the XLF:$SPX ratio, as shown on the 5-Year Daily ratio chart below.
The second is the EUFN:$STOX50 ratio, as shown on the 5-Year Daily ratio chart below.
The last is the GXC:$SSEC ratio, as shown on the 5-Year Daily ratio chart below.
The following graph shows the percentages gained by the 3 Major Indices and 3 ETFs during the past 5 years.
The next graph shows the percentages gained by the 3 Major Indices and 3 ETFs year-to-date.
It's evident that, during the 5-year period, the XLF has outperformed its European and Chinese Financial ETFs, on a percentage-gained basis. The $SPX has, not only outperformed the other 2 Major Indices, but also their 2 ETFs.
On a year-to-date percentage basis, China's ETF has far outpaced the other 2 ETFs. The $SPX has outperformed the other 2 Major Indices, but has lagged behind all 3 ETFs, especially China's ETF.
From this comparison, you can see that world money flow, while slowing in the U.S. Financial ETF this year, has accelerated, relatively-speaking, in the European and (especially) Chinese Financial ETFs.
Inasmuch as price levels on all three ratios are at or near major resistance, we'll see which market traders favour going forward into year end and 2018. These charts are worth monitoring to gauge the strength or weakness of these countries' financials. We may see a rotation of funds out of China's financial markets (and, possibly, out of Europe if full transparency is made available as to their banks' true vulnerability regarding accurate stress tests of capital requirements) and into the U.S., for example, as traders anticipate several interest rate hikes by the Fed (one this December and 2 or 3 next year).
The first is the XLF:$SPX ratio, as shown on the 5-Year Daily ratio chart below.
The second is the EUFN:$STOX50 ratio, as shown on the 5-Year Daily ratio chart below.
The last is the GXC:$SSEC ratio, as shown on the 5-Year Daily ratio chart below.
The following graph shows the percentages gained by the 3 Major Indices and 3 ETFs during the past 5 years.
The next graph shows the percentages gained by the 3 Major Indices and 3 ETFs year-to-date.
It's evident that, during the 5-year period, the XLF has outperformed its European and Chinese Financial ETFs, on a percentage-gained basis. The $SPX has, not only outperformed the other 2 Major Indices, but also their 2 ETFs.
On a year-to-date percentage basis, China's ETF has far outpaced the other 2 ETFs. The $SPX has outperformed the other 2 Major Indices, but has lagged behind all 3 ETFs, especially China's ETF.
From this comparison, you can see that world money flow, while slowing in the U.S. Financial ETF this year, has accelerated, relatively-speaking, in the European and (especially) Chinese Financial ETFs.
Inasmuch as price levels on all three ratios are at or near major resistance, we'll see which market traders favour going forward into year end and 2018. These charts are worth monitoring to gauge the strength or weakness of these countries' financials. We may see a rotation of funds out of China's financial markets (and, possibly, out of Europe if full transparency is made available as to their banks' true vulnerability regarding accurate stress tests of capital requirements) and into the U.S., for example, as traders anticipate several interest rate hikes by the Fed (one this December and 2 or 3 next year).
Sunday, November 26, 2017
Bitcoin Moonshot
* See UPDATES below...
Presented without comment (link to prior posts)...
* UPDATE November 27...
Year-to-date percentage gains/losses are shown below for major currencies compared with Bitcoin (+918.37%) (the USD is -9.25%, so far, this year)...
...as it makes its way to 10,000 tonight...
* UPDATE November 28...
Moon landing achieved...10,000 tagged tonight, as shown on the Daily chart below...
So, where does it go from here...it's anybody's guess, but major support lies half-way down between 3000 - 5000, as shown on the Monthly chart below.
* UPDATE November 30...
Two consecutive "high-wave" candles have formed during the past two days, as shown on the Daily chart below. Price is down a bit on tonight's (current) candle (as at 11:05 pm ET).
According to its definition by candlestick guru, Steve Nison, one high-wave candle may signal a change in Bitcoin's upward direction...we'll see whether these two play out in such a scenario. I would have preferred if the second one had closed lower than the first one as a, potential, confirmation of trend reversal. The fact that it closed higher, may prove to be a false alert.
One thing's certain...volatility is increasing on a daily basis. Wednesday's trading range was 2,426.10 points as it spiked to an all-time high of 11,427.20, then plunged to a low of 9001.10 (a 5-hour drop of 21.24%).
Presented without comment (link to prior posts)...
* UPDATE November 27...
Year-to-date percentage gains/losses are shown below for major currencies compared with Bitcoin (+918.37%) (the USD is -9.25%, so far, this year)...
...as it makes its way to 10,000 tonight...
* UPDATE November 28...
Moon landing achieved...10,000 tagged tonight, as shown on the Daily chart below...
So, where does it go from here...it's anybody's guess, but major support lies half-way down between 3000 - 5000, as shown on the Monthly chart below.
* UPDATE November 30...
Two consecutive "high-wave" candles have formed during the past two days, as shown on the Daily chart below. Price is down a bit on tonight's (current) candle (as at 11:05 pm ET).
According to its definition by candlestick guru, Steve Nison, one high-wave candle may signal a change in Bitcoin's upward direction...we'll see whether these two play out in such a scenario. I would have preferred if the second one had closed lower than the first one as a, potential, confirmation of trend reversal. The fact that it closed higher, may prove to be a false alert.
One thing's certain...volatility is increasing on a daily basis. Wednesday's trading range was 2,426.10 points as it spiked to an all-time high of 11,427.20, then plunged to a low of 9001.10 (a 5-hour drop of 21.24%).
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| Source: Steve Nison of Candlecharts.com |
Thursday, November 23, 2017
Wednesday, November 22, 2017
Technology Sector Up 34% in 2017
As can be seen on the Year-to-date percentages-gained/lost graph below, the Technology sector (XLK) leads the other eight major sectors in gains, so far, this year.
It's in a fairly smooth, strong uptrend, and has been relatively devoid of much volatility, overall, compared with the other sectors, as shown on the 1-Year Daily charts below.
The longer-term Monthly chart below shows that XLK is approaching its all-time high price of 65.44. We'll see whether it continues to push higher to tag or exceed that high, as we approach the Christmas shopping/holiday period and the equity market's year-end.
Results of this week's Black Friday spending may provide clues as to continued strength, or not. I'd also keep an eye on the Consumer Cyclicals (XLY) and Consumer Staples (XLP) sectors to gauge such strength/weakness. In particular, watch for XLP to break and hold above major resistance at 55.00, as well as a bullish (20 & 50-day) moving average crossover.
It remains to be seen whether the anticipated raising of interest rates by the Fed on December 13 has any impact on consumer spending this season, but that may be reflected in those three sectors. They may simply push higher, then see profit-taking occur in January as further economic data becomes available.
Have a safe and Happy Thanksgiving!
It's in a fairly smooth, strong uptrend, and has been relatively devoid of much volatility, overall, compared with the other sectors, as shown on the 1-Year Daily charts below.
The longer-term Monthly chart below shows that XLK is approaching its all-time high price of 65.44. We'll see whether it continues to push higher to tag or exceed that high, as we approach the Christmas shopping/holiday period and the equity market's year-end.
Results of this week's Black Friday spending may provide clues as to continued strength, or not. I'd also keep an eye on the Consumer Cyclicals (XLY) and Consumer Staples (XLP) sectors to gauge such strength/weakness. In particular, watch for XLP to break and hold above major resistance at 55.00, as well as a bullish (20 & 50-day) moving average crossover.
It remains to be seen whether the anticipated raising of interest rates by the Fed on December 13 has any impact on consumer spending this season, but that may be reflected in those three sectors. They may simply push higher, then see profit-taking occur in January as further economic data becomes available.
Have a safe and Happy Thanksgiving!
Tuesday, November 21, 2017
SPX Hits 2600 as Social Chaos Churns
I last wrote about the SPX:VIX ratio in my post of October 25. I mentioned that if price dropped and held below the 200 level, expect volatility to increase and weakness to set in on the SPX...and, that if it failed to do so, we could see the SPX reach 2600 before such a scenario may ensue.
Since that date, we've seen the SPX stabilize somewhat, bounce around above 2560, and, finally, reach 2600 today (Tuesday), as shown on the Daily chart below.
After a brief dip below 200, a new "BUY" signal is about to form on the SPX:VIX ratio, as shown on the Daily ratio chart below.
However, it will be important for price on this ratio to reach and hold above the 280 major resistance level, and for the SPX to hold above 2600, in support of a convincing argument that favours the sustained entry of the SPX into a new bull-market phase.
This bird's eye view of the SPX (Monthly chart) shows that it has not faced a major challenge in almost two years.
Price is, however, mashed up against major resistance in the form of a +2 standard deviation of a regression channel. If price does manage to spike through this, the next hurdle is an external Fibonacci retracement level at 2678.
With the VIX down near historical lows (as shown on the Monthly chart below), the current battle unfolding within the Republican party to reform and cut taxes before the end of the year (with zero support from Democrats), and social chaos (sexual assault allegations) exploding across the U.S., we may see volatility increase, correspondingly, in equity markets in the weeks/months ahead...particularly in 2018, with the impending mid-term Congressional elections in November, with possible interest rate hikes by the Fed, and, especially, if tax reform/cuts fail.
Since that date, we've seen the SPX stabilize somewhat, bounce around above 2560, and, finally, reach 2600 today (Tuesday), as shown on the Daily chart below.
After a brief dip below 200, a new "BUY" signal is about to form on the SPX:VIX ratio, as shown on the Daily ratio chart below.
However, it will be important for price on this ratio to reach and hold above the 280 major resistance level, and for the SPX to hold above 2600, in support of a convincing argument that favours the sustained entry of the SPX into a new bull-market phase.
This bird's eye view of the SPX (Monthly chart) shows that it has not faced a major challenge in almost two years.
Price is, however, mashed up against major resistance in the form of a +2 standard deviation of a regression channel. If price does manage to spike through this, the next hurdle is an external Fibonacci retracement level at 2678.
With the VIX down near historical lows (as shown on the Monthly chart below), the current battle unfolding within the Republican party to reform and cut taxes before the end of the year (with zero support from Democrats), and social chaos (sexual assault allegations) exploding across the U.S., we may see volatility increase, correspondingly, in equity markets in the weeks/months ahead...particularly in 2018, with the impending mid-term Congressional elections in November, with possible interest rate hikes by the Fed, and, especially, if tax reform/cuts fail.
Monday, November 20, 2017
Social Whiplash
With all the social whiplash occurring recently regarding allegations of sexual assault against women (and men), I'd just offer this bit of advice...never consider anyone else's body your property, nor is it your right to encroach thereupon.
The U.S. Department of Justice defines "sexual assault" as follows...
If you're in doubt whether anyone is interested in you, ask her/him...never assume anything, as Charlie Rose is now learning (*UPDATE November 21: he has now been fired by CBS, PBS and Bloomberg TV)...
* UPDATE November 21...
It looks like we're headed for social chaos in the weeks/months ahead, as allegations explode across many sectors of society/business/politics (Congressional "shush fund" exposed)...
* UPDATE December 1...
Social upheaval continues as more allegations come forward, investigations are begun, and people are fired from their jobs...
The U.S. Department of Justice defines "sexual assault" as follows...
If you're in doubt whether anyone is interested in you, ask her/him...never assume anything, as Charlie Rose is now learning (*UPDATE November 21: he has now been fired by CBS, PBS and Bloomberg TV)...
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| Source: Washington Post |
* UPDATE November 21...
It looks like we're headed for social chaos in the weeks/months ahead, as allegations explode across many sectors of society/business/politics (Congressional "shush fund" exposed)...
* UPDATE December 1...
Social upheaval continues as more allegations come forward, investigations are begun, and people are fired from their jobs...
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