A closer look at the YM, ES, NQ & TF

In yesterday's post, I referred to a 3 days/candle timeframe on the YM, ES, NQ & TF. Here's how Day 3 of the current candle closed today...all on a bull harami hammer. They re-tested and broke below the August low, except for the NQ, which is still displaying relative strength to the other e-minis.

For a closer look at each one, I've posted 4-hourly charts below with commentary.

For the YM...price ended today just below a confluence level (at 11000ish) of the "mean" of a longer and a shorter downtrending regression channel, and the 50 sma (red). This counter-trend push back up into the large trading range for the past two days has been on high volumes, but today's last green candle (1:00 p.m.) had weaker volumes. Price is, once again, back in the vicinity of the August 8th range (after the S&P downgrade of the U.S. credit rating) as traders seem reluctant to make a decisive move away from this area, and it has, generally, formed the "mean" around which price is swirling. At the moment, it is in the lower one-third of the entire move down from the May highs to yesterday's lows and is, therefore, still, technically, ripe for further weakness at these levels. We'll see where price moves over the next days/weeks.

For the ES...price ended today just below a confluence level (at 1140ish) of the "mean" of a longer downtrending regression channel and the 50 sma (red)...the "mean of a shorter downtrending regression channel is just above at 1150ish. This counter-trend push back up into the large trading range for the past two days has been on high volumes, but today's last green candle (1:00 p.m.) had weaker volumes. Price is, once again, back in the vicinity of the August 8th range as traders seem reluctant to make a decisive move away from this area, and it has, generally, formed the "mean" around which price is swirling. At the moment, it is in the lower one-third of the entire move down from the May highs to yesterday's lows and is, therefore, still, technically, ripe for further weakness at these levels. We'll see where price moves over the next days/weeks.

For the NQ...price ended today just below a confluence level (at 2170ish) of the "mean" of a longer downtrending regression channel, the -1 deviation level of a shorter uptrending regression channel, the 50 sma (red), and the 200 sma (pink). This counter-trend push back up to remain within the large trading range for the past two days has been on high volumes, but today's last green candle (1:00 p.m.) had weaker volumes. Price is, once again, back in the vicinity of the August 8th range as traders seem reluctant to make a decisive move away from this area, and it has, generally, formed the "mean" around which price is swirling. At the moment, it is in the lower portion of the middle one-third of the entire move down from the July highs to yesterday's lows and is, still displaying relative strength to the other 3 e-minis. It is, however, still, technically, ripe for further weakness while it remains below the current confluence level. We'll see where price moves over the next days/weeks.

For the TF...price ended today just below a confluence level (at 660ish) of the "mean" of a longer and a shorter downtrending regression channel, and the 50 sma (red). This counter-trend push back up into the large trading range for the past two days has been on high volumes, but today's last green candle (1:00 p.m.) had weaker volumes. Price is, once again, back in the vicinity of the August 8th range as traders seem reluctant to make a decisive move away from this area, and it has, generally, formed the "mean" around which price is swirling. At the moment, it is in the lower one-third of the entire move down from the May highs to yesterday's lows and is, therefore, still, technically, ripe for further weakness at these levels. We'll see where price moves over the next days/weeks.

In closing, I would also note that the 50 sma is either still below (as in the case of the YM) or has again crossed below the 200 sma (as in the case of the other 3 e-minis) in a "Death Cross" formation...which is a bearish continuation pattern. Whether or not the action of the past two days has begun a reversal of or another bounce within this downtrend remains to be seen...at the moment, they're all at a confluence level of resistance and still ripe for further weakness. I'll continue to watch these charts for further clues on strength versus weakness in the days/weeks ahead.

Do you base your spending habits on GDP forecasts?

I saw that headline question pre-market today on Canada's BNN TV...unfortunately, I didn't get to watch the answers that the "man/woman in the street" gave.

Really, is there any doubt? Doesn't it go something like this?...a balanced budget = personal income divided by personal outgoings with, hopefully, something left over to put into savings for retirement and future inflation. And, since I don't have the luxury of my own personal money printing press, I can't fabricate what I haven't legitimately earned to cover expenses. So, NO is my answer, if I were polled.

With bank interest rates pretty much non-existent these days, and the fact that personal debt-to-income ratio has skyrocketed to extremely excessive amounts for many Americans over the past few years, I don't see how the country's economy can legitimately grow (from domestic demand) without the printing of additional money. What people are faced with, in reality, is trying to pay off debts and survive at the same time. The same comments apply to the world economies...a slowdown in growth = a slowdown in demand for U.S. products/services (as well as for domestic products/services).

YM, ES, NQ & TF..."3-Black-Crows" Pattern on a 3-Day Timeframe...

Charts which I'll be watching over the next few days and weeks are on a 3-days/candle timeframe. I've selected them on the basis of their immediate support levels which are being re-tested, as well as a couple of other tasty tid-bits which caught my attention. Furthermore, it will be interesting to see how they weather further rumours that will, no doubt, surface over the next few weeks/months regarding Europe and other world markets.

Of note, is the chartgrid below of the YM, ES, NQ & TF. As can be seen, each one has formed a "3-Black-Crows" pattern from July 22nd (in the case of the YM, ES & TF)...the NQ's pattern began on July 27th. This pattern has been tested in both directions repeatedly...we'll see how the current candle closes tomorrow, and whether or not it signals a downward continuation yet.

The next chart is the XLF, the financial ETF...what's interesting about this particular chart is a "Double Death Cross" that has now been formed by the crossing of the 50 sma (red) below the 100 sma (yellow) and the 200 sma (pink). A downside H&S target of 10.2 was within reach today before the end-of-day rally. We'll see where this candle closes tomorrow, and what becomes of the moving average cross-overs in the coming days/weeks. As I've mentioned in previous posts, a strong equities rally cannot realistically (and believably) occur without the support of a strong financial sector.

The next chart is a one-year Daily comparison chart of the S&P 500 with the XLF. Price started to separate and become much weaker on the XLF in April of this year. The spread has become much wider since July...this chart confirms my last sentence above.

The next chart is the EEM, the emerging markets ETF. Price is currently sitting on a confluence of a -1 deviation level of a longer-term uptrending regression channel which started in October 2007, a shorter-term downtrending regression channel which began in April of this year, and a price support level of 35.00. Today, price nearly reached the next support level of 33.00. Volumes are building on this ETF and we'll see where the candle closes tomorrow.

Since I keep hearing various fund managers on TV recommend that investors look to emerging markets in which to place their money, it will be interesting to see how it performs against the S&P 500 over the next six months. In fact, it has not weathered the downturn from April nearly as well as the S&P 500 as shown on the 6-month Daily comparison chart below...and that spread is widening. This does not look like a safe, stable instrument in which I would responsibly invest...if I were an investor.

The next chart is the DBC, the commodities ETF. Price is currently sitting on a the 200 sma and is in between a resistance level of 28.00 and a support level of 24.00. Price was unable to rise above a downtrending line that began in July 2008 this year, and has fallen along with the equities markets.

The last chart is a six-month Daily comparison chart of the S&P 500 with DBC...as can be seen, each one has taken turns as to leader and laggard since April of this year, and they are nearly "at par" at the moment. We'll see whether they continue to move "in tandem" over the next few days/weeks, or which one outperforms the other...definitely one to watch in combination with the others above.

The "Spin Doctor's" office is OPEN...

Will we see a "3-Black-Crows" formation tomorrow on the YM, ES, NQ & TF?

Further to my last post, I notice that the potential exists on the YM, ES, NQ & TF for a "3-Black-Crows" formation to be made by tomorrow's close as shown on the Daily chart below.

That would involve, of course, a break below the August lows on the YM, ES & NQ...(TF broke below today). We'll see if the downward momentum produces such a result on all 4 e-minis.

A close below the August lows would be very bearish, and in keeping with the "spirit" of such a formation.

YM, ES, NQ & TF "Makin' Hay"

Below is a 1-hour (market hours only) chartgrid of the YM, ES, NQ & TF. On each chart is the drawing, "Andrews' Pitchfork." As can be seen, price closed below the lower fork on the ES & TF today, and they closed below the August lows on this timeframe.

Since I don't see any major volume spikes yet, indicative of capitulation, I will assume that the overall downward momentum will continue on all 4 e-minis until proven otherwise (e.g. a reversal of the 50/200 SMAs "Death Cross" on higher sustained upside volumes).

See my previous detailed post on September 28th pertaining to this chartgrid: http://strawberryblondesmarketsummary.blogspot.com/2011/09/island-paradise-is-gone.html

My post last Friday has longer-term downside targets for their corresponding Major Indices: http://strawberryblondesmarketsummary.blogspot.com/2011/09/who-won-pinball-game-in-3rd-quarter-of.html

Bigger Picture Outlook for the US $...

The US $ ended at the +2 deviation level of a downtrending regression channel (which began in June 2010) after breaking out today above the +2 deviation level of a a shorter rising regression channel (which began in May of this year), as shown on the Daily chart below. It's currently sitting just above the 80.00 level...which happened to be a potential target that I mentioned in passing in my post on June 23rd of this year:  http://strawberryblondesmarketsummary.blogspot.com/2011/06/xmas-666.html

I'll be following this chart over the ensuing days/weeks to see whether a Golden Cross ultimately occurs on this timeframe (cross of the 50 sma above the 200 sma), and whether 80.00 holds as support, to confirm a further bullish bias on this currency.

In addition, I see the next level of resistance at around 83.00 as shown on the Monthly chart below...this is a fairly major price level, which happens to be combined with a confluence of the +1 deviation levels of both the longer and shorter downtrending regression channels on this timeframe. Above that, I see the next major resistance level at 93.00.

Canada's TSX now in technical bear market territory...

Canada's Toronto Stock Exchange Index, TSX, is currently down 20.84% from its April closing high and is now in technical bear market territory (this was written before today's close at 2:29 p.m. EDT).

P.S. The TSX closed today at at a low for 2011. As shown on the Weekly chart below, it is approaching a major support level at 11000. The  next support level below that is at 9500.

Keeping a close watch on Oil...

I'm keeping a close watch on Oil...it is sitting beneath a confluence level of 82.50ish and is presently at near-term support on this Monthly chart...the next major confluence support level is at 70.00ish.

$2.00 in store for BAC?

Major support on BAC is sitting around 2.00 on this Quarterly timeframe:

Thank goodness for my "blogging studio"...

Enjoy what's left of your weekend!

2 books about trading stock markets that are "keepers"...

http://www.amazon.com/Slope-Hope-Bathroom-Reader/dp/1463533896

I laughed...I cried...I identified...in his latest book, "The Slope of Hope Bathroom Reader," Tim Knight's personal experiences and views as a stock market trader demonstrate his courage, discipline, resilience, enthusiasm, and dedication to honesty with which he approaches his profession.

This is one of two books I'll re-read until I no longer walk this earth...the other is "Reminiscences of a Stock Operator" by Edwin Lefevre which portrays the experiences and thoughts of another trader, Jesse Livermore...both "keepers."

Thanks, Tim, for sharing!

P.S. Tim's blog site, "Slope of Hope," is a place where I enjoy exchanging ideas with other traders...a place where newcomers are welcome into the Slope community:
http://slopeofhope.com/

How the EUR/USD ended the 3rd Quarter of 2011

Each candle on the chart below of the EUR/USD represents a one-month Option Expiry period...this candle will close on October 21. Price on the current candle sits on the apex of a rough diamond formation in between the 50 sma (red) and the 200 sma (pink). A continuation of the bearish momentum could send it down to, firstly, 1.3ish, and, subsequently, to a more major support of 1.2ish (200 sma)...these levels are depicted more clearly on the next 2 charts.

Each candle on the next chart represents one yearly Quarter. The current Quarter closed decisively as a bearish engulfing candle and is the third bearish candle since the 3rd Quarter in 2008 (on the last 3 attempted rallies since the beginning of 2007)...this tells me there is no solid case on which to base a bullish argument for this currency pair and hasn't been since the 3rd Quarter of 1990 as price is back to that level, once again.

Each candle on the last chart represents one year. Price on the current candle is retesting last year's close and is currently in a descending triangle formation. Last year's long bottom tail has not been retested and lies in the vicinity of the 1.2 major support level. Should that level be breached on extreme weakness, I see the  next major support levels below that at 1.15 and 1.05.

***From my weekend analysis of Quarterly and Yearly charts of various instruments, it would appear that the markets are in for a rough ride for the next several years. I'll be keeping an eye on the VIX for additional clues in the months ahead...something I wrote about on September 12th of this year: http://strawberryblondesmarketsummary.blogspot.com/2011/09/money-is-always-interesting-subject.html

Emerging Markets...Weekly, Quarterly & Yearly charts...

The following charts of EEM show where price has ended for the week, as well as for the 3rd quarter of 2011.

The first chart below is a Weekly...on it are an uptrending regression channel, Fibonacci fan lines, and a variety of price support levels. Price ended on Friday at the -1 deviation level of the channel and one of the support levels. A further weakening of this sector (in line with a weakening in global economies) could send it down to a major confluence level of 26.50ish.

Each candle on the next chart depicts one yearly quarter. The 3rd quarter for 2011 was decidedly bearish on higher volume than the 2rd bearish quarter (and all prior quarters until the 2nd quarter in 2010). Price has ended back at the levels seen in the 3rd quarter of 2008. Any quarterly advances have been on lower volumes than on the declines.

Each candle on the last chart depicts one year. The current candle is a bearish engulfing and has nearly reached last year's lows. A close of 26.50 for this year would be slightly above the 23.96 close for 2008...the bottom tails of the 2008 and 2009 candles may, however, be retested at some point before the EEM finds sufficient support from which to convincingly rebound. We'll see how this candle closes by the end of the year, and what it signals for next year.