Chart showing the US stock market lagging the Japanese market by 11 years.
Tuesday, August 16, 2011
Food for thought: US stocks are lagging Japanese stocks by 11 years?
Chart showing the US stock market lagging the Japanese market by 11 years.
Monday, August 15, 2011
Dead Cat Bounce - Market Analysis for 15th August 2011 by Singaporeseeds
Daily chart for Dow
Daily chart for S&P
Daily chart for NASDAQ
After a 2 day consolidation, last Wednesday marked the start of the dead cat bounce for the markets. As our title suggests, we do not think this is the start of another rally. Instead I have a down target at 1,015 on the S&P.
However like most if not all major downtrends, there has to be a huge dead cat bounce before the next leg down. First bounce target at 1,215, second target at 1,260 on the S&P. I do not think the S&P will bounce any higher than that.
Daily chart for the Dollar
The dollar is still keeping below the wedge trendline as indicated by the red line. Final target for this wedge movement will be at 72 for /DX.
Daily chart for Gold
Gold spiked right past it’s Fibo retracement XOP level at 1,725 in one huge candle last Monday and has kept above this level. Now if gold does not break below this level and bounces off, I have a final target at 2,000.
Daily chart for Silver
Silver is also showing signs of strength as it had been bouncing off the lower channel for the past week. I believe silver is at the beginning of the next rally leg which should bring it above its previous high at 49.82.
Daily chart for Crude Oil
The bullish divergence pattern on Crude Oil had failed and with it, triggered a bearish signal. However I think crude oil is following the markets for now and should bounce over the next few days. There are a range of resistances at 90-92 so I believe crude oil should start turning down from there.
Daily chart for Natural Gas
Natural gas had gone back to its usual movement for the past 2 years….sideways… Currently there are no upward or downward signals so I think it should be following this path for the foreseeable future.
Daily chart for S&P
Daily chart for NASDAQ
After a 2 day consolidation, last Wednesday marked the start of the dead cat bounce for the markets. As our title suggests, we do not think this is the start of another rally. Instead I have a down target at 1,015 on the S&P.
However like most if not all major downtrends, there has to be a huge dead cat bounce before the next leg down. First bounce target at 1,215, second target at 1,260 on the S&P. I do not think the S&P will bounce any higher than that.
Daily chart for the Dollar
The dollar is still keeping below the wedge trendline as indicated by the red line. Final target for this wedge movement will be at 72 for /DX.
Daily chart for Gold
Gold spiked right past it’s Fibo retracement XOP level at 1,725 in one huge candle last Monday and has kept above this level. Now if gold does not break below this level and bounces off, I have a final target at 2,000.
Daily chart for Silver
Silver is also showing signs of strength as it had been bouncing off the lower channel for the past week. I believe silver is at the beginning of the next rally leg which should bring it above its previous high at 49.82.
Daily chart for Crude Oil
The bullish divergence pattern on Crude Oil had failed and with it, triggered a bearish signal. However I think crude oil is following the markets for now and should bounce over the next few days. There are a range of resistances at 90-92 so I believe crude oil should start turning down from there.
Daily chart for Natural Gas
Natural gas had gone back to its usual movement for the past 2 years….sideways… Currently there are no upward or downward signals so I think it should be following this path for the foreseeable future.
Thursday, August 11, 2011
To Bounce or not to Bounce is the question... Market snapshot analysis 11 August 2011
Here is a quick take on the market scenario as at current status...
ES mini (S&P500 futures)
The daily ES chart shows a completed Head & Shoulders pattern that not only achieved its target in 3 trading sessions, but extended losses and retraced sharply after FOMC statement about leaving interest rates near zero for an extended term until 2013. The next day, due to European debt concerns, particularly the downgrade of France, the anticipated bounce was cancelled and the ES thrugged further down. It is clear that volatility remains with swings in excess of 30 points seen on the ES and its index.
IF there is going to be a bounce, 1180 and 1212 are levels to watch... and perhaps more importantly, the neckline may be the final resistance, whcih co-incidentally has the 200MA lurking about the neckline. Given the MACD, this recent move appears to be the first of many and is not a flash crash (similar to 6th May 2010).
Today, at time of writing, 0500hrs ET, the ES appears to have rebounded and claimed 15 points. Europe is up 2% and Marketwatch.com headlines reads "A Rebound gets underway". This was due to a reaction from the French Prime Minister who cut short his holiday just to return to make a statement that France will do take certain measures... only to stave off a downgrade at this point. This sounds really odd, as it is a reaction... also, the French and German banks were so affected by GreeK exposure that the last reporting season saw many reporting losses due to Greek exposure. There will be more to come.
Looking at the ES 30 minute chart show an interesteing intersection of resistance and supports.
There is a mid channel resistance and a uptrendline resistance at the current point. The ES had bounced off the larger downtrending channel support after reentry from a breakdown. That bounce off was also significant as it was a cross point for two channels of different angles. A breakout above 1150 would put a bullish bounce in force and should follow through to close above 1170 on Thursday.
At this point, a breakdown would mean that the bounce is not ready.
IMHO, I am at this point expecting a breakdown later tonight...
Another reason why so...
STI
Below is the STI index chart as of this morning. There have been many gaps in the STI which actually appears very much weaker. A possible reason may be that funds are exiting Asia for US Treasuries and Gold. But that is another story for another day. The STI daily chart needs to close above 2800 at least for a chance. Today, the STI gapped down past two support levels (as indicated) and traded lower until the afternoon session. The STI closed at 2793, and looks unable to rally above 2800 resistance with commitment. This leaves it in the area between 2800 resistance and 2700 support. Although the stochastics are oversold, it is not indicating a turn - just yet.
That's all from me for now... more next week!
Have a good end to the week and take care!
The MadScientist - 11 August 2011
Note: Any material posted here is of my sole opinion, and my opinion may differ from others. It is definitely NOT a solicitation to do anything else as a consequence of reading this material. The material presented here is intended for educational purposes only.
ES mini (S&P500 futures)
The daily ES chart shows a completed Head & Shoulders pattern that not only achieved its target in 3 trading sessions, but extended losses and retraced sharply after FOMC statement about leaving interest rates near zero for an extended term until 2013. The next day, due to European debt concerns, particularly the downgrade of France, the anticipated bounce was cancelled and the ES thrugged further down. It is clear that volatility remains with swings in excess of 30 points seen on the ES and its index.
IF there is going to be a bounce, 1180 and 1212 are levels to watch... and perhaps more importantly, the neckline may be the final resistance, whcih co-incidentally has the 200MA lurking about the neckline. Given the MACD, this recent move appears to be the first of many and is not a flash crash (similar to 6th May 2010).
Today, at time of writing, 0500hrs ET, the ES appears to have rebounded and claimed 15 points. Europe is up 2% and Marketwatch.com headlines reads "A Rebound gets underway". This was due to a reaction from the French Prime Minister who cut short his holiday just to return to make a statement that France will do take certain measures... only to stave off a downgrade at this point. This sounds really odd, as it is a reaction... also, the French and German banks were so affected by GreeK exposure that the last reporting season saw many reporting losses due to Greek exposure. There will be more to come.
Looking at the ES 30 minute chart show an interesteing intersection of resistance and supports.
There is a mid channel resistance and a uptrendline resistance at the current point. The ES had bounced off the larger downtrending channel support after reentry from a breakdown. That bounce off was also significant as it was a cross point for two channels of different angles. A breakout above 1150 would put a bullish bounce in force and should follow through to close above 1170 on Thursday.
At this point, a breakdown would mean that the bounce is not ready.
IMHO, I am at this point expecting a breakdown later tonight...
Another reason why so...
STI
Below is the STI index chart as of this morning. There have been many gaps in the STI which actually appears very much weaker. A possible reason may be that funds are exiting Asia for US Treasuries and Gold. But that is another story for another day. The STI daily chart needs to close above 2800 at least for a chance. Today, the STI gapped down past two support levels (as indicated) and traded lower until the afternoon session. The STI closed at 2793, and looks unable to rally above 2800 resistance with commitment. This leaves it in the area between 2800 resistance and 2700 support. Although the stochastics are oversold, it is not indicating a turn - just yet.
That's all from me for now... more next week!
Have a good end to the week and take care!
The MadScientist - 11 August 2011
Note: Any material posted here is of my sole opinion, and my opinion may differ from others. It is definitely NOT a solicitation to do anything else as a consequence of reading this material. The material presented here is intended for educational purposes only.
Monday, August 8, 2011
Post Crash, Downgraded US - Market Analysis for 8th August 2011 by Singaporeseeds
Daily chart for Dow
Daily chart for S&P
Daily chart for NASDAQ
What a week! The market crashed 800+ points over the week, broke its channel support and the 200 day moving average. S&P downgraded US treasuries down a notch to AA the last weekend. This caused futures to gap down over the weekend. Gold soared and crude oil dived.
On the Demark candle counting system, today is the last day of the trend. So if this holds, we should see some consolidation today. I’m expecting a bounce over the next 1-2 weeks. This should not mark the end of this downtrend. We should be in bear territory for the next few months. However do not be surprised to see the S&P hit 1,000 before this is over.
Daily chart for the Dollar
The dollar usually rallies whenever the market crashes just like gold as it is deemed a safe haven in bad times. This was last seen in the 2008 Subprime crisis. However the movement in the dollar over the past few weeks had been nothing but sideways. I believe this shows that the dollar is slowly losing its importance in the world as a safe asset. However I think the dollar would be moving sideways over the next few weeks.
Daily chart for Gold
Gold spiked up and gapped over the weekend to new highs. It is very close to my fibo retracement XOP target at 1,726. I’m still expecting gold to hit this target. However with gold rallying so much over such a short period of time, we think we should see some retracement after it had hit this target.
Daily chart for Silver
Silver usually lags gold so we should see silver rallying over the next few weeks though not on the same scale as gold. I have a fibo retracement target at 47 by end October 2011.
Daily chart for Crude Oil
With the crash in the stock market, the economy is expected to go down with it, along with crude oil consumption. Hence the fundamental weakness and drop in crude oil prices. Next support at 81.10.
Daily chart for Natural Gas
Together with crude oil, natural gas consumption is also expected to drop with expected weakness in the economy. We should see both crude oil and natural gas finding support over the next few sessions. Next support at 3.75.
Daily chart for S&P
Daily chart for NASDAQ
What a week! The market crashed 800+ points over the week, broke its channel support and the 200 day moving average. S&P downgraded US treasuries down a notch to AA the last weekend. This caused futures to gap down over the weekend. Gold soared and crude oil dived.
On the Demark candle counting system, today is the last day of the trend. So if this holds, we should see some consolidation today. I’m expecting a bounce over the next 1-2 weeks. This should not mark the end of this downtrend. We should be in bear territory for the next few months. However do not be surprised to see the S&P hit 1,000 before this is over.
Daily chart for the Dollar
The dollar usually rallies whenever the market crashes just like gold as it is deemed a safe haven in bad times. This was last seen in the 2008 Subprime crisis. However the movement in the dollar over the past few weeks had been nothing but sideways. I believe this shows that the dollar is slowly losing its importance in the world as a safe asset. However I think the dollar would be moving sideways over the next few weeks.
Daily chart for Gold
Gold spiked up and gapped over the weekend to new highs. It is very close to my fibo retracement XOP target at 1,726. I’m still expecting gold to hit this target. However with gold rallying so much over such a short period of time, we think we should see some retracement after it had hit this target.
Daily chart for Silver
Silver usually lags gold so we should see silver rallying over the next few weeks though not on the same scale as gold. I have a fibo retracement target at 47 by end October 2011.
Daily chart for Crude Oil
With the crash in the stock market, the economy is expected to go down with it, along with crude oil consumption. Hence the fundamental weakness and drop in crude oil prices. Next support at 81.10.
Daily chart for Natural Gas
Together with crude oil, natural gas consumption is also expected to drop with expected weakness in the economy. We should see both crude oil and natural gas finding support over the next few sessions. Next support at 3.75.
Sunday, August 7, 2011
SPY (S&P500 ETF)
Weekly
Immediate support lies around 115-117. The Head and Shoulders pattern achieved its target within this support level.
In the next 7 weeks, watch 107.55 on the SPY. Closing below this level would confirm the bear cycle.
The weekly MACD has been patiently forming a bearish divergence (white arrow in MACD panel), and it is only now that this divergence is starting to equilibrate.
When the SPY breaks the immediate support, which is also the weekly 200MA, and a long term extended trendline, it is likely to break the TDST support (red dotted level @ 109. By this time, the MACD would be in bearish territory and a cyclical bear would be firmly established.
SPY
Daily
The daily chart shows a very clear Head & Shoulders pattern (outlined by the white arcs). A break of the neckline at 126 occurred on 2 August 2011, and it was quickly tested the following day. This test failed, and together with the MACD running into bear territory, resulted in a breakdown.
The H&S target was 117, which was subsequently hit on an intraday basis 3 days after the neckline was broken.
Clearly, the SPY is well below the 200DMA (dark blue line), which is a long established support for chart technicians, and plasters a bearish outlook. The last time this happened was in 2008 and it resulted in a hefty breakdown of the equity markets before a recovery was in place. Today, it appears that the depth of the tank is nearing a possible end, and it is likely that a test of the 200DMA would be along shortly. Again, this test is expected to fail.
Notice at the bottom, a customized indicator called the TTR. Note that when the TTR spikes above 0.86, after being less than 0.85, it represents a significant turning point.
The SPY has clearly topped out and the bull turned over. What entails shortly could be a dead cat bounce and more downside risk for the rest of 2011.
VXX (VIX ETF)
The daily chart of the VIX ETF, VXX, has a very clear bullish divergence. In May 2011, this bullish divergence did not equilibrate and instead continued its build-up. The recent breakout of volatility as indicated by the VXX suggests that volatility is likely to be increasing in the weeks to come.
This sudden increase of volatility has met with one of two resistance. The first resistance is the 200DMA of the VXX. It is not clear at this point if the test has failed or there is more of a volatility spike.
The other resistance is the TDST resistance which lies on 34 of the VXX. The current Setup is short of breaking that level.
Given the circumstances, a breakout of the VXX would mean a consequent volatility increase, which is bearish for equity markets. This bullish divergence has yet to run its course and this supports more volatility in the coming weeks.
However, it is possible for a decrease in volatility and the VXX to find its way back to 25 before another spike in the VXX.
TLT (20Yr Treasury Bond Fund)
The daily TLT chart went parabolic with heavy volume this past week. This is happening as money is moving into US Treasuries and out of the equity markets as a very fast pace.
Clearly, the extreme short term movement is past mania and a reversal looks to be due soon. This reversal may be seen as soon as Monday 8 August 2011, as the USA was downgraded by S&P to AA- from AAA. While the weekend saw media and experts argue both camps, the TLT chart suggests a return to mean. A close below 101.54 would signal a possible drop to less than 98.
At this point, the demand in Treasuries may mean that a recession is expected and therefore funds are flowing into “safe haven” US Treasuries. An outflow of money from Treasuries would spur the equity markets into a rally.
Having said that, the US Treasury is likely to remain in demand given the developments in Europe, and possible surprises from China.
From the charts above, which are not the usual charts I use for analysis, there appears to be a short term reversal which is likely to be a relief rally, or a technical rebound, before a larger second leg movement follows. Given the current scenario and status, if there are no major changes (eg. QE3), the equity markets would be in bearish territory and continue to be hot with negative news from Europe, and perhaps even China, in the coming weeks to the end of the year.
Just a brief, yet significant mention that the usual charts all signal weakness in the coming weeks. Something I have not seen for a long time.
Fair warning had been given in the charts, and if anyone out there is still applying a dollar-cost-averaging or buy-and-hold strategy, it might be high time to for a review.
For now, let’s see what happens over the next few weeks…
The MadScientist 7 August 2011
Note: Any material posted here is of my sole opinion, and my opinion may differ from others. It is definitely NOT a solicitation to do anything else as a consequence of reading this material. The material presented here is intended for educational purposes only.
Weekly
In the next 7 weeks, watch 107.55 on the SPY. Closing below this level would confirm the bear cycle.
The weekly MACD has been patiently forming a bearish divergence (white arrow in MACD panel), and it is only now that this divergence is starting to equilibrate.
When the SPY breaks the immediate support, which is also the weekly 200MA, and a long term extended trendline, it is likely to break the TDST support (red dotted level @ 109. By this time, the MACD would be in bearish territory and a cyclical bear would be firmly established.
SPY
Daily
The H&S target was 117, which was subsequently hit on an intraday basis 3 days after the neckline was broken.
Clearly, the SPY is well below the 200DMA (dark blue line), which is a long established support for chart technicians, and plasters a bearish outlook. The last time this happened was in 2008 and it resulted in a hefty breakdown of the equity markets before a recovery was in place. Today, it appears that the depth of the tank is nearing a possible end, and it is likely that a test of the 200DMA would be along shortly. Again, this test is expected to fail.
Notice at the bottom, a customized indicator called the TTR. Note that when the TTR spikes above 0.86, after being less than 0.85, it represents a significant turning point.
The SPY has clearly topped out and the bull turned over. What entails shortly could be a dead cat bounce and more downside risk for the rest of 2011.
VXX (VIX ETF)
This sudden increase of volatility has met with one of two resistance. The first resistance is the 200DMA of the VXX. It is not clear at this point if the test has failed or there is more of a volatility spike.
The other resistance is the TDST resistance which lies on 34 of the VXX. The current Setup is short of breaking that level.
Given the circumstances, a breakout of the VXX would mean a consequent volatility increase, which is bearish for equity markets. This bullish divergence has yet to run its course and this supports more volatility in the coming weeks.
However, it is possible for a decrease in volatility and the VXX to find its way back to 25 before another spike in the VXX.
TLT (20Yr Treasury Bond Fund)
Clearly, the extreme short term movement is past mania and a reversal looks to be due soon. This reversal may be seen as soon as Monday 8 August 2011, as the USA was downgraded by S&P to AA- from AAA. While the weekend saw media and experts argue both camps, the TLT chart suggests a return to mean. A close below 101.54 would signal a possible drop to less than 98.
At this point, the demand in Treasuries may mean that a recession is expected and therefore funds are flowing into “safe haven” US Treasuries. An outflow of money from Treasuries would spur the equity markets into a rally.
Having said that, the US Treasury is likely to remain in demand given the developments in Europe, and possible surprises from China.
From the charts above, which are not the usual charts I use for analysis, there appears to be a short term reversal which is likely to be a relief rally, or a technical rebound, before a larger second leg movement follows. Given the current scenario and status, if there are no major changes (eg. QE3), the equity markets would be in bearish territory and continue to be hot with negative news from Europe, and perhaps even China, in the coming weeks to the end of the year.
Just a brief, yet significant mention that the usual charts all signal weakness in the coming weeks. Something I have not seen for a long time.
Fair warning had been given in the charts, and if anyone out there is still applying a dollar-cost-averaging or buy-and-hold strategy, it might be high time to for a review.
For now, let’s see what happens over the next few weeks…
The MadScientist 7 August 2011
Note: Any material posted here is of my sole opinion, and my opinion may differ from others. It is definitely NOT a solicitation to do anything else as a consequence of reading this material. The material presented here is intended for educational purposes only.
Thursday, August 4, 2011
Single worst day loss since 2008 - a chart technician's dream come true
Good morning!
You just woke up to a MAJOR day in global markets. The S&P500 puked its guts out and Asian markets are going to BLEED! The Head & Shoulders pattern broke down 2 days ago, tested and failed the neckline and then hit its downside target within 2 days with a 60 point drop in the S&P500! Amazing volatility!
What was highly possible became real in just the last TWO days!!!
The MadScientist
You just woke up to a MAJOR day in global markets. The S&P500 puked its guts out and Asian markets are going to BLEED! The Head & Shoulders pattern broke down 2 days ago, tested and failed the neckline and then hit its downside target within 2 days with a 60 point drop in the S&P500! Amazing volatility!
What was highly possible became real in just the last TWO days!!!
The MadScientist
Tuesday, August 2, 2011
Debt Deadline Today! - Market Analysis for 2nd August 2011 by Singaporeseeds
Daily chart for Dow
Daily chart for S&P
Daily chart for NASDAQ
The market made a 6 day consecutive down move over the past 2 weeks. This has brought the S&P futures down to its channel bottom and broke the 200 day moving average. Dow and Nasdaq are currently still above its 200 day moving average. With the US debt issue still unresolved, I believe we would be seeing more weakness in the market.
The markets had been moving sideways for the whole year now with a huge bearish divergence. As we move into August which is a seasonally weak time of the year and with the US debt issue still unresolved, we might be seeing more down moves over the next few weeks going into October. I’m expecting the S&P to break channel support and move down to around 1,200 by the end of the year.
Daily chart for the Dollar
The dollar had broke the wedge and is now testing resistance at the bottom of the wedge (red line) and also the 50 day moving average. I’m expecting this to fail and the dollar to continue to drop to around 68 on /DX.
Daily chart for Gold
Daily chart for Silver
The uncertainty over the US debt issue is pushing gold and silver up. Gold may continue to rally against a bearish divergence on MACD up to fibo retracement XOP at 1,726. Silver might have just started rallying following gold’s lead.
Daily chart for Crude Oil
Crude oil broke below its 50 day moving average. This shows that the current RSI and MACD bullish divergence in crude may not last. However there’s still the 200 day moving average. As long as crude can remain above this level it may continue to move higher.
Daily chart for Natural Gas
Natural gas is still moving in an slightly uptrending channel. We should see a bounce off the lower channel over the next few days.
Daily chart for S&P
Daily chart for NASDAQ
The market made a 6 day consecutive down move over the past 2 weeks. This has brought the S&P futures down to its channel bottom and broke the 200 day moving average. Dow and Nasdaq are currently still above its 200 day moving average. With the US debt issue still unresolved, I believe we would be seeing more weakness in the market.
The markets had been moving sideways for the whole year now with a huge bearish divergence. As we move into August which is a seasonally weak time of the year and with the US debt issue still unresolved, we might be seeing more down moves over the next few weeks going into October. I’m expecting the S&P to break channel support and move down to around 1,200 by the end of the year.
Daily chart for the Dollar
The dollar had broke the wedge and is now testing resistance at the bottom of the wedge (red line) and also the 50 day moving average. I’m expecting this to fail and the dollar to continue to drop to around 68 on /DX.
Daily chart for Gold
Daily chart for Silver
The uncertainty over the US debt issue is pushing gold and silver up. Gold may continue to rally against a bearish divergence on MACD up to fibo retracement XOP at 1,726. Silver might have just started rallying following gold’s lead.
Daily chart for Crude Oil
Crude oil broke below its 50 day moving average. This shows that the current RSI and MACD bullish divergence in crude may not last. However there’s still the 200 day moving average. As long as crude can remain above this level it may continue to move higher.
Daily chart for Natural Gas
Natural gas is still moving in an slightly uptrending channel. We should see a bounce off the lower channel over the next few days.
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