The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex
N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.
DISCLAIMER:All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...please read my full Disclaimer at this link.
Dots
* If the dots don't connect, gather more dots until they do...or, just follow the $$$...
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ECONOMIC EVENTS
UPCOMING (MAJOR) U.S. ECONOMIC EVENTS...
***2026***
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*** CLICK HERE for link to Economic Calendars for all upcoming events.
From the information shown on the following two historical charts, it appears that Canada's consumers have done the heavy lifting over the past 10 years since the 2008/09 financial crisis, as foreign investment slowed and has since been quite volatile. It's likely to continue to slow due to the global economic slowdown currently underway and unresolved global trade wars.
Although the USMCA trilateral trade deal was signed by the leaders of the U.S., Mexico and Canada on November 30, 2018, ithas still not been approved by the U.S. Congress. If it's not done before the Canadian Federal election on October 21, and if there's a change in government, will the new Prime Minister scrap the agreement and leave Congress holding the bag?
With Canadian household debt to disposable income near all-time highs, how much longer can Canadians afford to take on more debt? If this slows, will this change the dynamic of the USMCA and cause the Canadian government to re-think any of its negotiated terms?
It would seem that time is of the essence for Congress to approve the agreement before it's, potentially, too late.
Canada Households Credit Market Debt to Disposable Income
Canada's TSX Index closed at an all-time high of 16,682.42 on Friday, after making an all-time intraday high of 16,756.11, and after launching off the median of a very long-term uptrending channel at the beginning of November, as shown on the following monthly chart.
It still has a couple of hundred points to go before it runs into its next major resistance level in the form of an external Fibonacci retracement level of 1.236% at 16,972.52.
To monitor such a possible move higher, I've shown the MOM and RSI technical indicators with their normal input values to gauge when they hit prior overbought levels. On the other hand, I've shown the ROC and ATR indicators in histogram format and with an input value of one period, which may spike exceptionally high to signal exhaustion and a potential trend change when/if MOM and RSI reach overbought conditions.
Whether all those line up to co-incide with price tagging the 1.236 external Fib level is anyone's guess...but ones that can be followed on this longer-term timeframe if price continues its breakout rally...especially ahead of Canada's October election...and as Canadians, perhaps, reflect on their debt burdens.
As Friday's trading action is coming to a close in a couple of hours before the Labour Day weekend, an interesting observation to note is this daily chart of the SPX.
Since the beginning of August, gaps on the open in both directions have pretty much occurred on a daily basis (blue box). When the same thing happened in the last quarter of 2018 (blue box), we saw a rapid plunge in the space of a few days.
Both pink boxes shows that a similar setup may be forming. The question is, will it retest the December 2018 lows anytime soon?
If I had 2 crystal balls, I'd give you a second opinion...😊
This is a very simplistic look at world markets and current world trade wars...sometimes the K.I.S.S. principle can be useful.
Take a look at the thumbnail charts (monthly timeframe) of the following major world indices:
SPX - USA
FTSE 100 - UK
DAX - Germany
CAC - France
FTSE MIB - Italy
IBEX - Spain
SSEC - China
NIKK - Japan
It's pretty easy to see, at a glance, whose equity markets have led and whose have lagged, over the past couple of decades (since around 2000).
Which one do you think could best weather prolonged trade wars, especially if they escalate, as well as a possible substantial loss of market capital from their current levels? Which market has most benefited from its central bank's monetary and political fiscal stimulus policies since the 2008/09 financial crisis?
The answer to those simple questions will tell you who most needs a trade deal in the near term...and I don't think it's the USA. My two cents' worth, from a chartist's perspective, says it's in the strongest position in this regard.
As I mentioned in my post of August 5, volatility ramped up on July 26 and it continues to churn in US markets, as evidenced on the following daily chart of the SPX, as well as the monthly chart of the SPX:VIX ratio.
Near-term resistance and support levels are 2950 and 2800, respectively, on the SPX.
Major resistance and support levels on the SPX:VIX ratio are 200 and 100, respectively.
Until we see a clear breakout and hold above or below these levels, both price and volatility will continue to churn in a large sideways trendless direction.
Furthermore, as President Trump continues to pump out unpredictable tweets like the ones below that he let fly on Friday, volatility will remain elevated in both directions.
And, this about sums up things with respect to US trade negotiations with China...
The following daily chart of the MSCI World (ex USA)Index shows that price has dropped, once again, to just above the 1800 level (as of last Friday's close).
The MACD histogram and RSI indicators are hinting that price is attempting to stabilize on this short-term timeframe and may reverse its decline that began in early July.
The following monthly chart of the MSCI World, Global (incl USA) Indexes shows that price is stuck at a triple-top formation, after failing to break out and hold above an all-time high set in January 2018.
The RSI, MOM and ROC indicators have yet to make a new swing high above those also set in January 2018.
In summary, keep an eye on:
both of these indices and short and longer term timeframes, along with their indicators, as well as
US 10-Year Treasury yields and ROC and ATR indicators, as outlined in my post of August 16
for clues that world markets may, finally, be paying attention to negative effects of negative bond yields and then weakening further as a result.
In this regard, this Zero Hedge article outlines why negative rates do not bode well for world economies, markets and more...
The High Yield Corporate BondsETF (HYG) is at an interesting juncture.
There are, potentially, two uptrend lines that one could apply to form a large long-term triangle pattern on the following monthly chart. In turn, two possible triangles and two apexes emerge.
Price has been bouncing in between both apexes (and upper edge of this triangle) since February of this year. Attempts to fully break out and move higher have failed repeatedly since then.
In the short term, I'm more interested in the upper apex (blue) because the price, once again, sits outside and below the smaller triangle, while it's still inside the larger one.
I've added the rate-of-change (ROC) indicator in two formats. The input value of the first one is the default nine-period length, while I've changed the input value on the second one to a short one-period length.
If price breaks and holds above this upper apex, I'd monitor the second ROC indicator in the near term to see whether there is a sustained acceleration (above its zero level) to confirm support for continued buying. At the moment, it is accelerating to the downside below the zero level.
Otherwise, if it holds below this upper apex, price may decline to the lower apex, or lower, especially if the second ROC continues to accelerate on the downside.
Once again, US 10-Year Treasury yields are approaching 60-year historical lows set in mid-2012 and mid-2016, as shown on the following monthly chart.
Shown on the next shorter-term monthly chart are the Rate-of-Change (ROC) and Average True Range (ATR) indicators (in histogram format and with an input value of one period).
Should this rate continue to fall, and, in particular, if it breaks and holds below the previous lows, I'd say that US equity markets would weaken considerably. In that regard, watch for accelerating larger spikes on both histograms for confirmation of further yield drops. Otherwise, watch for large sustained spikes to confirm a serious turnaround to the upside...with US equities strengthening.
* UPDATED August 18...
This Zero Hedge article outlines why negative rates do not bode well for world economies, markets and more...
In this regard, the following daily chart of the MSCI World (ex USA)Index shows that price has dropped, once again, to just above the 1800 level.
The MACD histogram and RSI indicators are hinting that price is attempting to stabilize on this short-term timeframe and may reverse its decline that began in early July.
The following monthly chart of the MSCI World, Global (incl USA) Indexes shows that price is stuck at a triple-top formation, after failing to break out and hold above an all-time high set in January 2018.
The RSI, MOM and ROC indicators have yet to make a new swing high above those also set in January 2018.
In summary, keep an eye on both of these indices and short and longer term timeframes, along with their indicators, as well as US 10-Year Treasury yields and ROC and ATR indicators, for clues that world markets may, finally, be paying attention to negative effects of negative bond yields.
The following monthly chart of Copper shows that price is hovering above the apex of a very large long-term triangle.
Since early 2018, it hasn't been able to break out above the upper edge of this triangle, confirming the weakness that we've been seeing in global markets, to date. My last article summarizes this weakness in a nutshell.
I've shown the Rate-of-Change (ROC) and Average True Range (ATR) indicators in histogram format with an input value of one period. I'd watch for a series of larger spikes on each to signal, either serious and sustained buying, or a plunge to further lows (as another gauge to track global market strength/weakness). Otherwise, continued smaller spikes would accompany more range-bound, tepid trading in Copper, as well as global markets, in general.
The following 1-year daily charts of major world markets show that some of them have broken below their mid-year lows, while others are close to a retest.
In the following two videos of BNN Bloomberg's August 9 interview with David Prince, it's clear that market weakness is not President Trump's fault, in spite of what many media pundits would have you believe.
As David outlines, there are many factors at play, contributing to economic slowdown, that are affecting markets worldwide.
"New records are being made, specifically with the value of negative-yielding debt (that you basically pay to own) now screeching to $15 Trillion worldwide."
Just glancing at the charts above, I'd say that if the remaining markets break and hold below their mid-year lows, we'll likely see an escalation of, not only worldwide market weakness, but also economic weakness...potentially leading to a recession in the not-too-distant future.
N.B. If you can't see or play these videos, you can find them here and here, respectively.
My post of July 14 discussed the trade war between China and the US and the effects it was having on China, in particular. Since that date, I added several important updates on that post, which are definitely worth reading...the latest one was earlier today (Monday).
The following World Stock Markets heat map shows the major losses incurred by world markets at their respective closes today...not a pretty picture.
Volatility has ramped up significantly since July 26 and price closed on the following SPX:VIX monthly ratio chart well below the 150 Bull/Bear Line-in-the-Sand level at 115.69.
Price action on this ratio peaked in January 2018 and it has made a series of lower highs, which are clearly evident on the next three charts (depicting monthly, quarterly and yearly timeframes, respectively)...indicating that the successive rallies in the SPX were getting weaker.
A drop and hold below 100 on this ratio could produce an acceleration of the selloff, sending the SPX down to, at least 2600, or even 2400, as I described in one of my updates in the above-mentioned post.
A drop to 2600 would land price on the median of this long-term uptrending regression channel (after nearly tagging a target price of 3047 identified in my post of June 29), as shown on the following SPX monthly chart.
And, as I warned in my aforementioned post of June 29, the alligator formations on the YM, ES, NQ and RTYE-mini Futures Indices have now crossed, hinting of further weakness ahead.
Of note, is price relative to the 200-day MA (yellow). If we see an acceleration of selling to take the ES and NQ below it, I'd say that the SPX has a good chance of hitting 2600, or lower...watch for price to drop and hold below 100 on the SPX:VIX ratio for confirmation. Inasmuch as the YM and RTY are already below their 200 MA, we'll see if they can catch a sustainable bounce anytime soon to lead the other two back into recovery mode. Otherwise, look for the YM and RTY to lead the others in a continued selloff.
There have been numerous reports of an economic slowdown (and even contraction in some sectors) in China, one of which describes those in detail at ZeroHedge. While some of China's difficulties may have been exacerbated by a fairly recent trade war with the U.S., it certainly didn't start them...other factors were already in play and bear responsibility for its inception, as explained therein.
There are a couple of gauges I'm monitoring that seem to measure the strength/weakness of both the United States' and China's economies, namely the Canadian Loonie and the Aussie Dollar, respectively.
Canada exports a great deal of commodities to the U.S., while Australia exports many to China. The strength/weakness of those exports is reflected in their respective currencies, and, hence, in the economies of the U.S. and China.
You can see from the long-term monthly forex chart below of CAD/UAD that the Loonie has, essentially, outperformed the Aussie Dollar since February 2012, albeit with several periods of sustained volatility peppering it along the way.
The monthly forex chart of CAD/USD shows that price has, once again, pierced above major resistance around the 0.76 level. Watch for that level to hold to, potentially, signal continued strength in the U.S. markets, versus China's weakness.
The monthly forex chart of AUD/USD shows that price is hovering just above major support at 0.70. If this level is broken with force and held, watch for continued China weakness.
The following daily forex chart of the Loonie versus the Aussie Dollar (CDW:XAD) shows that price briefly broke above major resistance at 1.100 several days ago, hinting of further weakness ahead for China.
Watch for price to possibly retest this level, and if it breaks above and holds, I'd like to see the RSI tick up again and both the MACD and PMO indicators reverse back to the upside in support of further strength in the Canadian Loonie...potentially, signalling further weakness ahead for China.
The following Year-to-date percentages gained/lost graph of the major world currencies illustrates the difference between the Loonie and Aussie Dollar. There's quite a gap between the two in terms of Loonie gains and Aussie Dollar losses, so far, this year.
The following one-week percentages gained/lost graph shows a slight uptick of the Aussie Dollar over the Loonie this past week...one to keep a close eye on over the coming days/weeks, along with the above-mentioned charts and price levels, as potential gauges in determining the strength/weakness of China's economic health.
In addition, the following two monthly charts give a long-term bird's eye view of the S&P 500 Index (SPX) and China's Shanghai Index (SSEC).
China's weakness since mid-2015 is striking, compared with the strength of the U.S. market. I don't think that can be entirely attributed to the current trade war, which is relatively recent, and I think that more weakness may lie ahead.
Finally, I'd just point out that the following SPX:SSEC daily ratio chart shows that the SPX is poised to continue outperforming the SSEC, with minor short-term resistance some distance above at 1.10...another gauge to throw into the mix of, purely technical, analysis of the United States' and China's economic and market health.
* UPDATE July 26... WSJ article:"China is not, as some believe, a “trivial state” that seeks nothing more than to preserve its regime and defend its territory."
President Trump sent out a series of tweets this morning regarding the addition of a further 10% tariff on the remaining $300 Billion on Chinese goods...
In response, China opened down in overnight trading...
Here's a screenshot of the World Stock Market Heat Map taken at 10:50 PM ET...
A drop and hold below, firstly, 2850, then 2800 on the Shanghai Index (SSEC) could send this index plummeting to major support at 2500, or lower, as shown on the following weekly chart.
The S&P 500 Index (SPX) closed down today just above near-term support of 2950, as shown on the following weekly chart. A drop and hold below that level could send it down to 2600, 2400, or even lower, as I've described in recent posts.
* UPDATE August 5...
Historian, Niall Ferguson, discusses the present dangers posed by Russia and China with Fox News TV host, Mark Levin, on August 4 in the following informative and important video...
The following screenshot of CNBC's world markets heat map, taken at 2:30 pm ET, shows US markets down more than 3% today following the overnight 1.62% drop of the Shanghai Index. No doubt, we'll see further weakness in China's markets tonight, as the trade war between the two countries has escalated considerably over the past several days.
How US major indices closed today...
The article referenced in the following Zero Hedge tweet is critical to note...
"Following the plunge in the yuan overnight, the U.S. Treasury Department on Monday designated China as currency manipulator, a historic move that no White House had exercised since the Clinton administration."
