How the EEM and NKD closed out the week...

My post on Thursday provided information on the EEM and the NKD...the following is simply a follow-up to that post.

Each candle on the chart below of the EEM (Emerging Markets Index) represents 3 days...the current candle closed on Friday. It has broken and closed below the neckline of the former H&S pattern (41.66) and engulfs the prior two candles after a backtest of the -2 deviation level of the uptrending regression channel that it broke through on the "gap breakaway" candle that began on August 4. This candle pattern is indicative of a continuation to the downside.

Below is a Daily chart of the NKD (Nikkei 225 Futures Index). Friday's candle closed below the downtrend line from the "pink diamond" pattern that I described in Thursday's two posts. Should the NKD continue down, the next support level is around 8200.

The last chart below is a 3-day chart of the NKD...it shows more clearly the potential for a continuation to the downside.

The downward momentum is still accelerating on both the EEM and the NKD...will see how next week plays out.

How this OPEX period closed for the YM, ES, NQ & TF

Below is a chartgrid of the YM, ES, NQ and TF. Each candle represents a one-month OPEX period. The current candle closed today.

Overlayed on each chart are:

•  a regression channel which begins at the high close around mid-2007
• a Fibonacci retracement taken from the 2007 high to the 2009 low in the case of the YM and ES, and taken from the 2009 low to this year's high in the case of the NQ and TF
• a sideways channel broken into thirds within the Fib retracement high/low boundaries

In terms of relative weakness of closing price as measured against the above studies within the realms of the one-month OPEX timeframe:

• the ES led as it closed just below its 50% retracement level and just above its downtrending "mean"
• the YM is next in line on the weakness scale as it closed just above its 50% retracement level and its downtrending channel "mean"
• the TF is third as it closed just below its 38.2% retracement level and its uptrending channel "mean"
• the NQ closed the strongest above its 38.2% retracement level and just below its uptrending channel "mean"
• the YM, ES and TF are currently within their middle one-third of their sideways channel, while the NQ is still in the upper one-third, albeit near the lower portion
• all four are still above the 2010 lows (which lie near a Fib retracement level...the TF is closest to its 2010 low of 584.30)

Below are Daily charts of the YM, ES, NQ and TF.

Overlayed on each chart are:

• a downtrending regression channel which begins at the high close of this year
• a Fibonacci retracement taken from the highs of this year
• a sideways channel broken into thirds within the Fib retracement high/low boundaries

However, I'll provide comments on relative weakness of current price as measured against the studies within the realms of a 4-hourly timeframe, as shown on the charts below, since they provide a further breakdown of what's going on in the Daily charts:

Overlayed on each chart are:

• a downtrending regression channel which begins at the high close of this year
• an uptrending regression channel which begins at the low close of this year
• a Fibonacci retracement taken from the highs of this year
• a sideways channel broken into thirds within the Fib retracement high/low boundaries

With respect to relative weakness, all four are roughly equal in terms of where they are in relationship to their shorter channel, their Fibonnaci retracement level, and their sideways channel. However, because the NQ made a higher close much later in the year, its downtrending regression channel is much steeper than on the other three e-minis, and price closed just below its "mean," whereas, price closed in between the -1 and -2 deviation levels on the other three e-minis. I would, therefore, say that the NQ is showing relative strength in this timeframe because of this...however, a break and (and hold) below the -2 deviation of the shorter uptrending regression channel and the lows of this year, would be bearish for all four e-minis and could begin a second leg down within the longer downtrending regression channel.

I would add that there is quite a lot of support below current closing price as depicted on the first chartgrid above. It may be that price retraces somewhat before making another move to the downside...however, the large price moves of late have been news driven, particularly with respect to Europe, so any moves could continue to be quite volatile and defy traditional technical analysis. I'll be watching the various VIXs closely for further clues in increasing vs. decreasing volatility, as well as upward vs downward price momentum and velocity of momentum, and volumes on the four e-minis (and their regard for or disregard of technical analysis) in the days and weeks to come.

Downtrend Gap Continuations?

Today's gap down on quite a few ETFs could become a "Gap Continuation" from their recent declines which began in July...if so, the following ETFs that gapped down today, could fall the same amount on this second leg down that they fell on their first leg down. It remains to be seen as to whether this will play out or not...but this is something I'll keep an eye on over the next few days.

Further to my post yesterday, here is how Day 2 of this 3-Day chart of EEM ended today...it broke below the former neckline of the former H&S pattern (41.66)...will see how it closes out tomorrow and whether it continues to form more weakness under this price level.

Further to this morning's post on the NKD, here is how it closed on the Daily chart today...it's sitting on the downtrend line from the "pink diamond" pattern that I mentioned in my post...another index I'll be watching over the next few days to see whether weakness continues to build, particularly if price falls below this trendline again.

Furthermore, I'll be watching the price action on the 4-hour charts below of the YM, ES, NQ & TF...in terms of relative weakness, the NQ is leading, followed by the TF, ES, and YM. An escalating move below the -2 deviation levels on both the shorter and the longer regression channels could confirm my gap continuation theory/scenario on the ETFs above.

Finally, I'll continue to watch these instruments on the Daily chartgrid below and will look for continued market cohesiveness in terms of weakness in equities (in particular, financials), commodities, Oil, EUR/USD, TNX & TYX vs. strength in Gold, the US$ and the VIXs (as referred to in my post on August 15).

Japan's Nikkei 225 Futures Index showing relative weakness...

Japan's 225 Futures Index is showing relative weakness today to the YM, ES, NQ & TF...see Daily chart below: 

It has had difficulties holding above the 10,000 level which it broke immediately after the earthquake in March of this year. An odd formation occurred afterwards...a "diamond" pattern (pink) emerged on subsequent price action, but not in the traditional sense in that price formed on the outside of the diamond rather than on the inside...nonetheless, price briefly popped above the diamond's apex, then has been falling with the YM, ES, NQ & TF since July 22. Today, price is retesting last Tuesday's lows, as well as the declining pink trendline which forms part of this pink diamond. It will be interesting to see where it closes today and what happens tomorrow.

EEM tumbled after wavering...

My post on the Emerging Markets index, EEM, on June 24 refers:  http://strawberryblondesmarketsummary.blogspot.com/2011/06/emerging-markets-index-is-wavering.html

Since that date, the index broke below a "diamond" pattern that had formed and tumbled back below a former neckline of a H&S pattern that had broken to the downside in August 2008 (at 41.66ish), as shown on the updated chart below. Each candle represents 3 days and the current candle began today. At the moment, price has popped back up above 41.66 and is currently trading at the -2 deviation level of the shorter regression channel that began in May of 2010 and below the "mean" of the longer regression channel that began in October of 2007.

This is another index that I'll be watching, along with the others mentioned in this week's and last week's posts, in order to gauge overall market weakness vs. strength. At the moment, it is more weak than strong...but will become even weaker when it breaks and holds below 41.66 again.

You're only as strong as your weakest link...

Would you support this restaurant if this happened to you? What would the manager do if all patrons felt that way and stopped coming? Could the manager run the restaurant on his own if all his waiters were like this? Perhaps the waiter's complacent attitude is a reflection of the manager's.

I pose similar questions about the sustainability of the Eurozone...there are weak links and there is a lot of complacency...Greece and a few others come to mind. Could Germany carry the ball? Two world wars were fought because Germany had ideas about taking over and running Europe...perhaps they end up dominating economically this time...but what's to be gained by that? A lot of debt forced on the Germans with no growth to sustain it in the long run...in fact, a drag on its reserves and civil war would result. Unless there is a concerted effort by all countries in the Eurozone to pull together and support each other in their efforts to deal with debt issues and actively develop and pursue new areas of sustainable growth, it will fail.

A similar fate will fall onto the rest of the world's countries unless they start working together to deal with debt issues and actively develop and pursue new areas of meaningful and sustainable growth...not simply produce "the latest and greatest cell phone." But first, each country must start looking after their own "weak links"...high unemployment, for one...starvation in some countries...and genocide in others.

Just like the human body...it cannot function and prosper properly if it has a weak heart or severe problems with its skeletal framework...it must be fixed and nourished.

More thoughts on where to begin to fix this problem are in my previous post:  http://strawberryblondesmarketsummary.blogspot.com/2011/07/holy-grail-and-maslows-hierarchy-of.html

"They're" hoping a crisis will never occur...

Who?...world leaders...

But, it looks like traders are getting nervous in spite of that "hope." Each candle on the 4 charts below of the Dow 30, S&P 500, Nasdaq Comp, and Russell 2000 represents one year...the action on the current candle, so far, clearly represents the indecision that has been present in these indices all year...at the moment, the indecision is leaning more bearish. The Russell 2000 has had the deepest pullback from the 2009 low to this year's high, with the S&P 500 second, the Dow third, and the Nasdaq last.

To help me navigate through the wild and volatile intraday swings, I'll continue to watch the instruments that I mentioned in yesterday's post and look for market cohesiveness before entering a trade in either direction.

If Lucy ran the country...

...things'd be different...

And, a message for Warren...

...looks like I'll be keeping him in business for awhile:  http://strawberryblondesmarketsummary.blogspot.com/2011/07/stuff-im-buying.html



Today it was Financials, Commodities & Energy

With today's push upwards on the Toronto Stock Exchange index (TSX), along with commodities, energy, and financials, I'll be watching the following charts tomorrow...

The TSX Daily has almost reached a near-term resistance level of 12750...will see whether the above sectors continue their push up and how the TSX performs relative to them, or whether they stall or reverse at or near this level.

The Daily charts below of the YM, ES and TF show that prices advanced to a level above the -1 deviation level of their downtrending regression channels, while the NQ has almost reached the +1 deviation level. Furthermore, the YM and ES ended just above the 38.2% Fib retracement level, while the NQ ended on its 50% retracement level, and the TF ended just below its 38.2% retracement level. I'll see whether the NQ continues its climb through its immediate confluence of resistance, or whether it stalls or reverses at or near this level.

Finally, I'll continue to watch the action on the following Daily charts of Gold, the US$, EUR/USD, Oil, TNX, TYX, XLF, GS, CRX, VIX, RVX and VXN...to see whether the 3 VIXs, Gold and the US$ push upwards with EUR/USD, TNX, TYX, XLF, GS and CRX pushing downwards if the TSX and the NQ (and the YM, ES and TF) pull back. It may take several attempts before we see any meaningful reversal at the current levels, and it may be that prices attempt one final push up before falling back and continuing their decline that started in July.

Overhead resistance on YM, ES, NQ & TF

Overlayed on the Daily charts below of the YM, ES, NQ & TF are a downtrending regression channel which begins from the high close to the low close of this year, a Fibonacci retracement level from this year's high to low, and a sideways trending channel divided into thirds from this year's high to low.

At the moment, near-term support on the YM, ES & NQ lies on their lower one-third channel level, while it lies on the -2 deviation level of the regression channel on the TF.

Near-term resistance on the YM & ES lies around a confluence of their 38.2% fib retracement level and the -1 deviation level of the regression channel, while it lies around a confluence of a 50% fib retracement level and the +1 deviation level of the regression channel on the NQ. Near-term resistance on the TF lies, firstly, at the lower one-third channel level, then above at a confluence of a 38.2% fib retracement level and the -1 deviation level of the regression channel.

We'll see whether the prices hold above their near-term support levels on the YM, ES & NQ and continue a climb upwards, or whether they fall back into last week's volatile trading range. I consider the TF to still be within this range until it clears above the lower one-third channel level. During this equity options expiry week, I'll continue to watch the ETF, foreign ETF, forex, commodity and equity markets in my lists (with particular attention to the Financials) to measure their strength vs. weakness and their cohesiveness (or lack thereof), as well as the volatility indices and market internals. No doubt, this will be an interesting week.

P.S. For a look at longer-term support and resistance levels, I'll be examining the Weekly and Monthly charts of the YM, ES, NQ & TF with the same three overlays (which are based on their respective timeframes) during the course of this week as shown on the following 2 chartgrids (a quick glance at each shows where price is currently trading relative to these parameters):

Where there's a will...

...there's a way...

YM, ES, NQ & TF...today's climb so far...

The YM, ES, NQ & TF are trying to climb back up...today's action, so far, has been whippy and slow. The ETF, foreign ETF, forex, commodity and equity markets in my lists are bifurcated, with a very slight edge to the bulls on equities. Gold & cotton have been the biggest movers, percentage-wise, in commodities.

That's it for me today...am off to do other things...enjoy the weekend...my weekend post will likely be late since my TOS charting platform will be unavailable until Sunday noon.

Building "Ledges" For A Trek Back Up?

Navigating a counter-trend move on the TF can be tricky at the best of times....navigating a counter-trend move of a rather steep drop can be even more tricky, especially with volatility running at extremely high levels and moment-to-moment total bid & ask sizes at about 1/3 of their normal size (on the TF). As one who only daytrades the TF, I've found that it helps to have a "big picture" view of what's happening, not just on the TF, but also on the YM, ES & NQ, as well as a number of other instruments...and, then, to drill down to lower timeframes to see what's going on at certain levels of that big picture.

The following 4 chartgrids depict the YM, ES, NQ & TF on a variety of timeframes.

YM, ES, NQ & TF Cliffhanger...

In last night's post below I made reference to a number of  charts I'd be studying over the next while. Here is my updated view on things after today's close.