What's Ahead for the Rest of 2015 for the S&P 500 Index?

As shown on the daily chart of the SPX below, the 50-day MA has, for the most part, held as major support over the past 5 years. Until we see that level breached and held, the bulls will remain, essentially, in control of this market. Although, since the last round of QE stopped at the end of October 2014, this index has spent more time hugging, and circling tightly around, this MA than at any other time during these 5 years...signalling a weakening and, potentially, an end to this bull control.

Without the benefit of any further QE from the Fed, buyers will likely be reluctant to commit new money into this market, which is up 204.57% since the closing-low on March 3, 2009, as shown on the percentage-gained graph below. So, while the SPX continues to consolidate, we'll see the 50 and 200 MAs eventually merge until price, finally, breaks up or down. Once a bearish moving average Death Cross forms, we should see a significant drop in price. Until then, expect more of the same...and, my 2015 outlook for equities may very well come into fruition...at the moment, the SPX is up 3.01% year-to-date, as shown on the last percentage-gained graph...I had forecast an overall price increase of 4% for this year (it reached 3.49% on May 21st...the target high to be surpassed and held if bulls are to remain in control).

So, in a nutshell, I'd keep an eye on the 50 and 200 MAs and their spread (widening or decreasing), and the 4% target-price increase to gauge either weakness or strength for the SPX for the remainder of this year.

Make-or-Break Time for World Market Index

N.B. Important updates can be found on the World Market Index (the latest one is May 22nd) at this link...

FYI...yesterday's chart of the index shows a drop and close just below the 50 moving average...stay tuned for fireworks...

Biotech Nearing its Peak?

As can be seen from the Year-to-Date graph below of the 9 Major Sectors plus the Nasdaq Biotech ETF (IBB), IBB has outperformed all of the 9 Major Sectors, so far, this year on a percentage-gained basis (by a margin of almost 2:1 over the highest Sector performer, that being Healthcare).

Does this, alone, mean that Biotech has reached its peak for the year? To look further into that question, I present the following three Daily charts:

1. Nasdaq 100  Index ($NDX)
2. Nasdaq Biotech ETF (IBB)
3. IBB:$NDX Ratio

First, we'll look at where the $NDX is sitting. Its all-time high is 4816.35. Price closed today (Wednesday, May 20th), at 4505.30 and is almost mid-way between the middle and upper channel (which began mid-November 2012). Over the longer-term, price can run up another 311.05 points before hitting the top of its channel and, at the same time, touching its all-time high by around mid-to-late August of this year (if it rises to and rides along the upper channel from now until then).

Secondly, price action on IBB has been very whippy since it hit its all-time of 374.97 on March 20th and is trading in a range that is sitting above a 200% external Fibonacci Retracement level (which currently forms major support at 341.64). We may see a final thrust of price up to retest its all-time high to form a double top (and sloppy triple top) before it, once again, runs into major resistance at the top of its channel. We could see some major profit-taking occur at that level, with possibly lower-lows made, as well, breaking below the 200% Fib level and the middle of its channel in the process.

The last chart shows the recent underperformance of the IBB compared to the $NDX. Price is sitting in between a 200% external Fibonacce Retracement level and the top of its channel. However, the Momentum indicator is showing recent strength of IBB, so I'd watch price action on this ratio chart to see whether it, either, breaks and holds above major resistance (above the 200% Fib level), or breaks and holds below major support (the top of the channel) for possible clues on near-term strength or weakness.

I think that by following all three charts above, you'll have a more complete picture of near-term and longer-term strength or weakness in Biotechs.

British Pound Running Out of Steam?

If you'd bought the British Pound back in mid-April of this year, you'd have made a pretty penny, as shown on the following Daily chart of $XBP...likely in anticipation of the British election, which was held on May 7th. Price closed at 153.79 on that day.

If price can hold above the 200 Daily Moving Average (156.59), the next resistance level is around the 162.50 price. However, we may see some whipsawing around the current price until the overbought indicators settle down a bit. And, this chart is still under the bearish influences of a Moving Average Death Cross formation, so price may simply be retesting the 200 MA before plunging, once again, possibly to the 50 MA (150.37), or lower...or it may stop at the above-noted close of May 7th before resuming its trek upward.

SPX:VIX Ratio: The Next Hurdle

170 is the next major resistance level to be overcome on the following Daily ratio chart of the SPX:VIX. This appears to be "make or break" time for SPX Bulls. 180 and 192 represent the next and final major hurdles (set in 2014) that will need to be overcome before Bulls can comfortably feel that volatility has been quashed while (if) the SPX resumes any kind of sustainable uptrend.

The following 60-Day 60-Minute chart of the SPX:VIX Ratio shows last Friday's large gap that will, ultimately, need to be filled at some point, since gaps on this timeframe tend to get filled.

As mentioned in my post of March 29th, 2100 is the "froth" level that the ES (S&P 500 E-mini Futures Index) will need to overcome. In the process, it will have to overthrow major resistance, which is formed by a double Fibonacci confluence level. At the time of writing today's post, price has yet to break and hold above Friday's high of 2113.50 and the all-time high of 2119.75 set on April 27th of this year.

Are volatile swings over with now? I wouldn't rule them out just yet until we see the above-mentioned levels comfortably broken and held...and backed up by larger volumes to support new money entering equity markets at these historically-high levels.

Where Does the U.S. Dollar Go From Here?

The USD may stabilize somewhat and swirl around this Fibonacci fanline at or near its current price level, as shown on the following Weekly chart, before, either, resuming its uptrend, or, perhaps falling to its lower Weekly Bollinger Band around 90ish. I'd watch the RSI to see if it remains above 50 to support a theory for higher levels.

Happy 4th Year of Blogging!

Thanks for stopping by and helping me to celebrate!

My Blog is 4 years old today...this is my 1103rd article...it's been fun...now for some cake...

...and maybe some strawberries...

...and maybe some ice cream...

U.S. Markets: The Safest Place to Invest?

The following 5-Year Daily ratio charts of the S&P 500 Index compared to Major World Indices shows that the SPX has underperformed all of them since the beginning of this year, and some for the past 1 1/2 to 2 1/2 years.

Price now sits at or near major support levels on all of these ratios. Unless serious buying begins to pour into the SPX, we may see panic selling ensue in U.S. markets. I'd keep a particularly close eye on the German, Japanese and Chinese indices for signs of any potential rotation of money from those markets and into the SPX, since their ratios are at the most extreme levels against the SPX during this 5-year period. Otherwise, the Fed may, very well, consider re-introducing another round of QE to compete with those countries' Central Banks' QE programs.

Forecasting the S&P 500 E-mini Futures Index...My Dumb Luck?

My post of April 5, 2014 refers.

The following Daily chart of the ES (S&P 500 E-mini Futures Index) shows what happened from that date up to the present. The ensuing swings overshot my projected targets a bit, and it took a bit longer for the "FROTH" level around 2100 to be reached, but price action generally followed the path that I forecast a year ago...price has been consolidating, basically, below that level since December 2014. Additionally, volatility did become the "name of the game" over those weeks and months, as I had anticipated.

As can be seen on the next Daily chart of the ES, 2100 represents a double Fibonacci confluence major resistance level that will have to be solidly overcome and held before bulls can resume any kind of sustainable uptrend. A break and hold below 1992 could see bears take the ES down to 1813, or lower. Until we see a solid break one way or the other, I expect volatile swings to continue in both directions to plague both the bulls and the bears.

Big Caps Fizzle While Nasdaq and Foreign Markets Sizzle

The following Year-to-Date Percentage Gained/Lost graphs are presented without individual comment to, simply, show where money has flowed in a variety of world markets since January of this year (until Friday's close).

This year, the majority of the money has flowed into the Nasdaq, Biotech, Homebuilders, Healthcare, the U.S. Dollar, U.S. Bonds, Silver, Russia, China, Japan, Australia, Germany, France, Portugal, Italy, Ireland, and Spain. The Dow 30, S&P 100, and S&P 500 Indices have remained, basically, flat, while Dow Utilities, Dow Transports, and Nasdaq Transports are down on the year, and Small Caps have made some minor gains.

U.S. MAJOR INDICES

U.S. MAJOR SECTORS + Biotech

U.S. MAJOR SECTORS + Homebuilders

MAJOR EU COUNTRIES

EMERGING MARKETS + BRICs

CANADA, JAPAN, BRITAIN, AUSTRALIA + MAJOR WORLD MARKET INDEX

COMMODITIES

COMMODITIES + LUMBER + HOMEBUILDERS + USD + US BONDS

MAJOR CURRENCIES

The following 1-Year percentage gained/lost chart shows the trend of the S&P 500 Index compared to the U.S. Dollar. They were, generally, in an uptrend until January of this year, whereupon the USD continued its gains, while the SPX consolidated in a large sideways range. From the beginning of March, the spread between them accelerated to the greatest extent seen over this one-year period, and they have been making some large volatile moves since then.

Whether this points to a capitulation and shift of money flow from the USD and into SPX (or whether we see a major correction in the SPX, with money flowing back into the USD) remains to be seen...it may be worth tracking the spread between these two to gauge such a shift in sentiment.

Furthermore, inasmuch as Europe has made such extensive gains, so far this year (compared with U.S. markets), we'll see whether this pace continues, or whether some money is taken off the table soon. You can see on the following 1-Year percentage gained/lost chart that the spread between the German DAX and the Euro has reached an extreme level...in fact, the next chart, which begins in January 1999, shows this anomaly to be highly exaggerated and unprecedented.

The German DAX may, in fact, be well overdue for a major correction...another spread to watch closely over the near term.

Update of the SPX:VIX Ratio

As I mentioned in my post on February 24th, 150.00 is the Bull/Bear Line-in-Sand level for the SPX:VIX ratio, as shown on the updated Daily ratio chart below.

At the moment, price is back above this level, after bouncing in between 160.00ish and 120.00ish since that last post.

The following 2-year Daily chart of the SPX shows a high-volume spike made this past Friday. Generally speaking, each time such a volume spike occurred during this timeframe, it has been followed by, either, an immediate reversal, or one shortly thereafter. If history is to repeat itself, I'd say the SPX is due to reverse to the downside soon.

We may see clues of such an event develop in the SPX:VIX ratio chart above. Bulls will need to hold price above 150.00, plus we'll need to see the price of the Momentum indicator hold above the zero level. A drop and hold below those levels may see the Bears re-take control of the SPX and send it below its last swing low to, potentially, re-test the 200-day moving average, or lower.

Additionally, further clues as to direction may be found in the last update I've written in my post entitled "Major World Index Poised for Breakout or Failure?" at this link.

Major World Market Index Poised for Breakout or Failure?

* NB: See UPDATES below...

The World Market Index will need to recapture the 200-day moving average, as well as the 1900 level, as shown on the following Daily chart. Since it's still under the bearish influences of a moving average Death Cross formation, it's still vulnerable to a retest of the 50-day moving average, or lower, should we see major world markets plunge...a drop and hold below the 50 level on the RSI could point price in that direction.

UPDATE March 15, 2015:

Price has, indeed, declined to retest the 50-day moving average and is now sitting just above a major support level at 1800, as shown on the Daily chart below. A drop and hold below that would have serious implications, not only for foreign markets, but, also, U.S. equity markets. Also, the very recent daily uptrend has now been broken, as price has fallen back into a large sideways trading range. As long as the RSI remains below the 50 level, and the MACD continues to decline, we may very well see this scenario develop. Otherwise, we may see some very volatile swings in both directions over the short term, until a firm breakout from this range in a new direction is confirmed, one way or the other...one to watch closely over the coming days.

UPDATE March 21, 2015:

The following updated chart, as of Friday's close, shows that volatility is still rampant in this index. Price is, once more, poised to break out of this large sideways trading range to the upside. A break and hold above the 1900 level and the 200-day moving average, together with a hold above the 50 level on the RSI should see the bulls re-take control of this index. Otherwise, a fall back into the range will likely result in more volatile and swift swings in favour, ultimately, of the bears, inasmuch as it's still under the bearish influences of a moving average Death Cross formation

UPDATE May 22, 2015:

The following updated chart, as of Thursday's close, shows that price has broken above the 1900 major resistance level, retested it and bounced, after a bullish moving average Golden Cross formed in mid-April.

With all three technical indicators declining in value since the swing high of 1949.91 set on April 27th, we'll need to see price break and hold above that major resistance level, with confirmation of higher highs on the RSI, MACD and Stochastics indicators. Otherwise, we could see a major reversal at what could be considered a right shoulder of a bearish Head and Shoulders formation (with a downward-sloping neckline), that could send world markets tumbling considerably to around the 1600 level, or lower.

P.S. Price closed on May 26th just below the 50 moving average...stay tuned for fireworks...