GOLD: Set To Explode Higher

Gold has been under quiet accumulation since last August, as shown on the following daily chart.

The moving averages formed a new bullish Golden Cross several days ago. The RSI and MACD indicators are in uptrend, the RSI is still above 50.00, and the STOCH has just made a bullish crossover.

Price on the following daily ratio chart of GOLD versus its Volatility Index (GOLD:GVZ) has just broken above its near-term major resistance around the 120.00 level.

Both the MACD and PMO indicators have put in a higher swing high, while the RSI has yet to do the same; however, it's still above the 50.00 level.

Should the ratio price remain above 120.00 and continue its rally, I'd like to see the RSI also make a new swing high. If that scenario occurs, there's a very good chance that GOLD could explode much higher in the days/weeks ahead. Near-term minor price resistance is around the 1360 level, followed by 1400 and 1550 major resistance, as shown on the weekly chart below.

Star-Studded FAANGs

I last wrote about the FAANGs and FNGU and what I was monitoring in my post of November 4, 2018.

2018 was the year we saw the FAANGs form bearish shooting stars. Each candle on the following charts of FB, AMZN, AAPL, NFLX and GOOG represents a period of one year (absent on these charts is 2019's candle, as I've left it off to illustrate last year's weakness and volatility compared with prior years in these stocks).

You can see, at a glance, that FB is the weakest of the five, as it has erased almost all of its 2017 gains, as well as its gains last year.

Each candle on the following chart of FNGU represents a period of one quarter. Also absent on this chart is 2019's Q1 candle.

FNGU is an exchange traded note that tracks 3x the daily price movements of an index of US-listed technology and consumer discretionary companies...the index is highly concentrated and equally weighted. It is comprised of the 5 FAANG stocks + 5 tech stocks, namely, BABA, BIDU, NVDA, TSLA and TWTR.

As of the end of last year, it had erased all of its gains since it began trading in January 2018, and more.

Each candle on the following charts of BABA, BIDU, NVDA, TSLA and TWTR represents a period of one year. Also absent on these charts is 2019's candle.

None of these stocks had a good year in 2018, either. In fact, BIDU has lost all of its gains made since 2014 and has taken a bite out of gains made in 2013, and TWTR closed out the year still lower than its IPO price in 2013.

Each candle on the following charts of the FAANGs represents a period of one quarter. Also absent on this chart is 2019's Q1 candle.

We've seen the FAANGs lead the equity markets higher prior to Q4 of 2018 (and Q3 in the case of FB and NFLX), then lead them lower during Q4.

There's been some short covering in all 10 stocks, so far, in 2019 as shown on the following 1-Year daily charts (including FNGU and the SPX).

However, it remains to be seen whether prolonged and serious buying will continue in these stocks so as to propel them to reclaim a leadership role, once again...or whether this is just a short-term dead-cat bounce. I'd keep a close watch on FB, AAPL and GOOG, in particular, as further weakness could have a knock-on effect on some (or all) of these, as well as equities, in general.

We'll also see how much longer TWTR can survive, whether BIDU will ever make a comeback...and, whether FNGU will continue to trade much longer if general weakness persists in its 10 stocks.

China's Shanghai Index: Poised For A Plunge

Bearish Balance of Power may not shift on the Shanghai Index until (and if) 2000 is reached, as shown on the monthly chart below.

Otherwise, watch for a break and hold above 2500, together with a reversal, break and hold of the BOP indicator above the zero level to indicate a transference of power to bulls on this longer term timeframe.

2018 Market Wrap-Up: Extreme Volatility

The following charts depict 2018 market action in the S&P 500 Index (SPX), as well as the MSCI World Index. One word describes 2018 markets...volatile.

Volatility was extreme, as uncertainty gripped, not only U.S. markets, but markets world-wide, as well, as I had posited in my 2018 Market Forecast at the end of 2017. I believe it will continue to apply in 2019, and we'll see a world market slowdown, as I described in my 2019 Market Forecast.

Key levels that I'm watching on the SPX are 2600, 2400, 2250 and 2000, as illustrated in my post of December 27.

Market gauges that I'm monitoring in the weeks/months ahead are outlined in the above-mentioned posts, as the charts below are simply presented without comment (on the SPX) to depict this volatile price action.

Happy New Year and best of luck in 2019!

SPX -- Each candle on the  following chart represents a period of one year.

SPX -- Each candle on the  following chart represents a period of one quarter.

SPX -- Each candle on the  following chart represents a period of one month.

SPX:VIX Ratio -- Each candle on the  following ratio chart represents a period of one year.

SPX:VIX Ratio -- Each candle on the  following ratio chart represents a period of one quarter.

 

SPX:VIX Ratio -- Each candle on the  following ratio chart represents a period of one month.

MSCI World Index -- Each candle on the following chart represents a period of one week.

N.B. 1800 is a critical level, as a break and hold below will drag U.S. equities down, as well. It was briefly pierced during the last week of December and may be retested before, either resuming its plunge, or reversing course.

A tepid reversal will not produce lasting confidence or commitment in world markets, nor sustain a meaningful longer-term rally. In this regard, I've shown the input value as "one" on the three technical indicators (MOM, ROC and ATR) to illustrate and gauge the strength and velocity of either direction.

Happy New Year 2019

Thank you to everyone who visited my Blog in 2018 and to those who sent me thoughtful and encouraging emails...I really appreciated them. 😊

Thank you to the hosts of the following websites who post my articles. ❤ If you haven't had a chance to view their sites, please do so...each one has many unique features, articles and tools to enhance your trading experience!

Investing.com

Slope of Hope.com

TalkMarkets.com

McVerry Report.com

A reminder that my Market Forecast for 2019 can be found here. 👀

May everyone be blessed with good health, wealth, peace and happiness in 2019...Happy New Year!

Post-Christmas Market Plunge Cash-In

It appears that some short-sellers have cashed in the past couple of days and have stalled the plunge in the SPX, as shown on the following weekly chart.

As at 2:00 pm ET today (December 27), price is consolidating intraday just above near-term support of 2400. Major resistance sits at 2600 (just below the weekly Ichimoku Cloud formation), while the next level of support sits at 2250, followed by major support at 2000.

Whether that cash will be deployed in any sustained and meaningful buying any time soon, or whether it's sitting ready for shorting again, remains to be seen. Conditions are very unstable, as depicted on the three technical indicators (each with an input value of "one" and in histogram format to illustrate that volatility and its strength).

Price on the SPX:VIX ratio is still below 80.00, as shown on the following daily ratio chart. As long as it remains below 100, we're going to see continued large, volatile daily gyrations in the SPX. A drop and hold below 60.00 would likely accompany a swift price-drop in the SPX to 2250 or 2000.

 

Merry Christmas 2018

The Queen's 2018 Christmas Message...

SPX Teeters On The Edge Of A Bear Market

The SPX gained 801.35 points from its November 8, 2016 close of 2139.56 (on the eve of the U.S. elections) to its all-time high of 2940.91 on September 21, 2018.

Since September 21, the SPX closed Monday (Christmas Eve) 589.81 points lower at 2351.10...a loss of 73.6% of those Nov/16 to Sept/18 points gained...and is now up by only 9.89% since November 8, 2016, as shown on the following percentage-gained graph.

The SPX is teetering on the edge of a bear market, as it is now -19.78% from its September high this year.

If we get a couple more days like Monday's, the SPX could easily reach its first support level of 2250 before the end of the year, as shown on the following monthly chart, and as I described in my post of December 22. Major support sits lower at 2000.

U.S. equity market gains made since Nov/16 are already being cannibalized by Washington gridlock and erratic Trump administration decisions and policies, as I warned in last month's post of November 9. Whether that is about to abate anytime soon is anyone's guess!

Mr. President, Wall Street's 2018

Mr. President, what Wall Street's vote of "non-confidence" looks like, so far, this year, as White House chaos, instability and political gridlock run rampant in Washington...

SPX: Each candle represents a period of one year

SPX:VIX Ratio: Each candle represents a period of one year

Merry Christmas, Mr. President!

US Real Estate Sector Nosedive

Further to my post of December 17, the percentage of S&P Real Estate stocks above their 200-day moving average has dropped below 50% to 37.5% (as of Friday's close), as shown on the following graphic. At 50% on that date, it was the "last man standing," apart from Utilities.

The monthly action of this percentage relative to its 200 MA is illustrated in chart form, as follows. While the SPX was making a new all-time high in September, the real estate stocks were on their way down.

The actual Real Estate Sector ($SSRE) is depicted on the following monthly chart. Price is approaching near-term support at 190.00. A drop and hold below that could see it drop to major support at 180.00, or lower.

The following monthly chart of the Real Estate ETF (IYR) shows that the first Fibonacci retracement support level sits at 70.50. A drop and hold below that could see it reach its next Fib level at 61.00.

Both the IYR and $SSRE are range-bound with a very large range for December. Further weakness in these would, no doubt, drag the S&P 500 Index (SPX) further down. The SPX gauges that I'm monitoring in the short term are described in my post of December 22. If we see the SPX stabilize or bounce, it will be important to see whether the real estate sector does, as well.

SPX 2400 Target Nearly Tagged...What's Next?

Further to my post of August 6, the SPX continued to rally to top out in September about 100 points shy of an upside target of 3033, but exceeded its first target of 2900, as shown on the following updated monthly chart. The high was 2940.91 and I doubt we'll see that matched before the end of December.

Since then, and as of Friday's close, the SPX has plummeted and it came within eight points of reaching its first major support level of 2400, as I described in my post of December 17.

The input value for each of the three technical indicators is shown as 'one' to illustrate the extreme downside momentum, rate-of-change, and average true range experienced, so far, this month. These either exceed or almost match the levels experienced during the 2008/09 financial crisis.

Whether we see a short-term bounce next week to close out the year is anyone's guess.

However, the RSI, MACD and PMO divergences (shown on the daily chart of the SPX:VIX ratio) compared to the ratio price is hinting that we may either see a bounce in the SPX or some stabilization soon.

If we see the SPX continue to plunge and these divergences wiped out, we may just see the SPX reach its next major support level of 2250, or lower to 2000, as described in my last post. A drop and hold of the ratio below 80 could hold the key to such a scenario being achieved...in short order.

2019 Market Forecast: World Market Slowdown

In last year's market outlook for 2018, I anticipated a rise of around 10% for the SPX. At its all-time high set on September 21, the SPX had risen by 9.62%, before it began to lose its gains for the year, and more.









At the time of today's analysis and post (December 17), you will see from the first percentages gained/lost graph that 7 of the 9 Major U.S. Indices are in negative territory year-to-date.

The second percentages gained/lost graph shows that 8 of the 9 Major Indices are in correction territory from September 21. In fact, the Russell 2000 and the Dow Transports are fast approaching a 20% bear market territory.

The following graph shows the percentages of stocks in the U.S. Major Sectors and Major Indices above their respective moving averages.

The only ones with 50% or more of their stocks above their 200-day moving averages are the S&P 500 Real Estate, S&P 500 Utilities, and Dow Utilities.

The one to note is the S&P 500 Real Estate Sector, which has precisely 50%. If we see further weakness in this sector sending it below that level, I've no doubt that we'll see broad weakness continue across all markets.

Each candle on the following three charts of the SPX represents a period of one month, one quarter, and one year, respectively.

All three charts show clearly the weakness that this index has experienced since September, the uncertainty that has gripped it all year, and the strength of this year's bearishness versus tepid bullishness.

Each candle on the following three ratio charts of the SPX:VIX ratio represents a period of one month, one quarter, and one year, respectively.

Price is currently sitting just above the 100 Uncommitted Zone...a zone, which, if broken and held to the downside, would see a swift selloff occur in the SPX and other U.S. Major Indices.

The extreme volatility and lack of bullish commitment, thus far this year, in the SPX is best illustrated by the yearly ratio chart. Its entire candle range for 2018 has encompassed both candles of 2017 and 2016, as well as good portions of all prior candles to 2010, and has set a new record high for annual ratio range.

CONCLUSIONS AND OUTLOOK FOR 2019

I think that 2019 is likely to bring the same level of volatility and uncertainty, not just in U.S. equity markets, but in other world markets and world politics, as well. I'm getting the impression that major world markets are doubting the ability of their respective political leaders and central banks to continue to stimulate markets to the same degree that they've enjoyed since 2009. In fact, even with all the tax cuts and removals of many regulations that we've seen this year in the U.S., markets are still down extensively. With central bankers tightening their monetary policies, and no further fiscal stimulus packages on the horizon in the U.S., I don't see a convincing bullish bias returning any time soon.

Depending on where both the SPX and SPX:VIX Ratio close at the end of December, I anticipate, either a slower level of equity accumulation, if there is much, to, potentially, propel the SPX to retest its prior all-time high of 2940.91, or to resume further declines, putting the SPX at 2400, or lower, as I've repeatedly mentioned since August and as I last described here. In fact, 2250 would be the next major support below that level, followed by 2000, as is evident on the above three charts of the SPX. 

Under the latter scenario, I'd expect money to rotate into bonds (which has already been the case over the past several months, as shown on the following monthly charts of 2/5/10/30-year bonds) and/or cash (U.S. $).

Good luck next year!

P.S. To see how markets ended in 2018, check out my post here.