Beginning of the Double Dip Recession - Market Analysis for 30th June 2010 by Singaporeseeds

I’ve stated on Facebook that this downturn will be ugly. The following charts will show you how I came to this conclusion.

Monthly chart of the S&P 500 during the Great Depression


Cannot really see the 200 month moving average but the S&P was definitely below its 200 month moving average from the years 1938 to 1945.

Monthly chart of the S&P 500 during the Stagflation Seventies


Monthly chart of the S&P 500 during the 2008 Financial Crisis and now


As you can see, there were only 3 times when the S&P 500 went below the 200 month moving average and the consequences were really ugly. Depression, mass unemployment and etc. We are now just below it again. If we do not bounce real soon (as in 1-2 day’s time) we will be back in recession mode within 6-10 month’s time. And this time, it will be uglier than the 2008 recession because another recession so soon means that all the stimulus money did not do any good at all. There will definitely be much more fear this time round.

On the brighter side, this is the time where the old makes way for the new. The stronger and more adaptable will survive and the weaker ones will fade away.

Daily chart of the Dow


Daily chart of the S&P


Daily chart for NASDAQ


Only Dow remains above the low of the year. From the looks of it, it seems that we are going to break the low either today or tomorrow. This will also mean that the monthly 200 moving average would be broken.

I'm expecting the S&P 500 to go down to around 950 by Oct 2010.


Daily chart of the VIX


Prophet charts for VIX went totally bonkers. So I’m going to use my TOS charts for this. VIX made a large spike up yesterday as expected. We should see more of such large spikes over the next few weeks.

Daily chart for Gold


When there’s fear, gold and VIX spikes. However we are not yet seeing much movement in gold yet. Maybe it’s because it had ran up quite a bit recently. I’ve never had much good experience trading gold so we shall see about this one.

WMA 27 June 2010 - Bullish currents under the range

TIP - The weekly TIP chart is showing growing strength in the bullish rally. Having said that, there appears to be a bearish divergence forming on this weekly chart as well, at least hinted by the MACD histograms and volume. For now, the bullish run should last another 2 months, taking the calendar into August at least. The daily chart looks bullish as well, supporting the weekly rally.

JNK – The weekly JNK charts is indicating a bullish rally that should continue despite hitting a resistance last week. The daily chart had recently made a series of higher lows, and then rallied and retraced (over the last week). It appears to be making an attempt to reverse after bouncing off the 62% retracement level.

DBB / /HG
Copper had a beautifully bullish week, after almost 2 dismal months. For now, the weekly bearish divergence appears to have been done and copper prices are recovering with gusto. The daily charts show of a higher low, with supporting indicators making higher highs, showing strength in the rally

According to the above leading indicators, we are in for another bullish rally in the market as all indicators are bullish and show strength in the not so nascent rally.

/DX
The weekly USD futures chart show a parabolic climb that is returning to reality, and along with much gusto. The daily chart is resuming the downtrend and its acceleration should be continuing.

SPX / S&P500
The weekly chart posted a bearish engulfing in a retracement rally and for now, the S&P500 looks bearish for another downleg. The daily charts indicate a bearish week ahead and it remains to be seen if the bullish divergence is to continue developing, which needs to bring the SPX below 1060, testing 1040 or beyond briefly.

/GC / Gold – The weekly chart are still indicating a bullish rally for Gold. The daily chart show a bullish breakout of the range resistance which should clock another historical high in Gold price this coming week, albeit bearish divergence formations in the daily indicators.

/CL / Crude – The Crude oil weekly chart show that the long term bearish divergence may have equilibrated, and the crude rally is continuing. The Daily chart has consistently shown higher lows and higher highs, and this rally should break 86 in the next month.

VIX / VXX – The weekly VIX chart is just about to get bearish, although it closed with a bullish engulfing, and the indicators are bearish. This is a little paradoxical. The daily chart closed the week with a bearish harami but the indicators were not very bearish.


From the market scans, it looks like the equities market should be turning bullish sometime this week, which the leading indicators are showing. While the USD would be downtrending, and the VIX should follow suit as well. These are admittedly not the very obvious but underlying indications are prevalent. Gold should clock a new historical high this week and Crude looks for continued strength in the rally.

The MadScientist – 27 June 2010

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.

Taking a break in the downtrend – Market Analysis for 28th June 2010 by Singaporeseeds

Daily charts for Dow


Daily charts for S&P


Daily charts for NASDAQ


We’ve got the failure of the 50 day moving average and the break of the lower MOBO bands over the past week. This is the classic case of the start of the downtrend. In addition, we have also failed the break above the 200 day moving average. Should we fail to break above soon, we might be experiencing a double dip recession in 6-10 months time.

Historically, we should be seeing a little bounce in the market especially after the indexes had broken all supports within such a short period of time. I’m inclined to believe that the doji on Friday was the bounce and that we will be on our way down again on Monday. Otherwise we might have a bullish Monday or Tuesday (which will be the 2nd wave) followed by the 3rd down wave that should bring us down to the lows of the year.


Daily chart for VIX


It is interesting to see VIX moving with the moving averages. The VIX made a low on the 21st of June at its 200 day moving average support and broke the 50 day moving average. Now it is resting on the 50 day moving average. This VIX price movement up to 30 is reflected in the 4 down days last week. It looks like VIX is poised to rally and this could mean a bigger drop in the indexes over the next few weeks.

Daily chart for Gold


Gold had been extremely resilient and had bounced off one support after another. I will be looking at entering gold at the next price dip. (if it ever dips…) Profit target at 1,425.

Strong Bearish Momentum Buildup – Market Analysis for 25th June 2010 by Singaporeseeds

Daily charts for Dow


Daily charts for S&P


Daily charts for NASDAQ


The indexes made a ice hole failure at their 50 day moving average on Monday and failed miserably over the week. Now only NASDAQ futures chart is still above its 200 day moving average. All indexes had broken its lower MOBO bands indicating momentum in this down move.

I am expecting all 3 indexes to test its low of the year by end of next week. Whether it will break this low and form a double dip recession as highlighted by the media will depend on its movement over the next few days. However the probability of this happening is now very high.

The Market is Indecisive– Market Analysis for 17/06/2010 by Singaporeseeds

Daily chart for Dow


Daily chart for S&P


Daily chart for NASDAQ


Nothing better than a doji to add to the confusion. And this doji happened after the day the Dow and S&P had broken above their 200 day moving average on its 3rd attempt. Since dojis generally mean indecision, I supposed the market sentiment is undecided whether it should break above the 200 day moving average or not.

Today, we should see the Dow and S&P fight to keep above the 200 day moving average. On futures charts, the Dow and S&P have not broken above the 200 day MA yet. We would need to see all 3 indexes plus their futures prices break above the 200 day MA for this to work. Otherwise this may just be a fake breakout, which may come with very bearish consequences in the next few days.

Attack of the 200 day Moving Average – Market Analysis for 16/06/2010 by Singaporeseeds

Daily chart for Dow


Daily chart for S&P 500


Daily chart for NASDAQ


Dow and S&P 500 broke the 200 day moving average yesterday. Today we shall see whether there is enough momentum to hold onto the gains. For any chance of the continuation of the March 2009 rally, we will need to also break above the 50 day moving average. Now there are 2 different setups with 2 different results occurring.

Setup 1:
As seen on my daily charts above, I have a nice fibo down for all 3 indexes. For this fibo to work, all 3 indexes should not rally pass their 50% retracement levels. This would mean that this rally is a dead cat bounce and should not last more than a week.

Setup 2:
Double bottom for daily chart of S&P


This double bottom pattern had occurred in all 3 indexes and Dow and S&P had broken above the resistance level at 1105 yesterday. If S&P and Dow fails to break below the line soon, we might see S&P rally to 1170. This would be 10,730 for Dow and 2,425 for NASDAQ.

End of Bullish trend? – Market Analysis for 15/06/2010 by Singaporeseeds

Daily charts for Dow


Daily charts for S&P


The Dow and S&P 500 did a shooting star candlestick pattern right below their 200 day moving average yesterday. This doesn’t look very bullish to me. However a shooting star candlestick pattern would require a bearish candle today as confirmation of the start of a bearish trend. We shall see what tonight holds.

As for me, I’ll be expecting a bearish day. This is due to the continued failure of the indexes to break above its 200 day moving average. As long as the indexes fail to break above its 200 day moving average, I will be favoring a downward market.

End of Bearish Momentum and the Beginning of the Dead Cat Bounce - Market Analysis for 14/06/2010 by Singaporeseeds

Daily chart of Dow


Daily chart of S&P


Daily chart of NASDAQ


All 3 indexes broke strongly through my lower MOBO bands last Thursday and continued through Friday. Dow and S&P closed at its 20 day moving average and upper MOBO bands while NASDAQ closed slightly above its 20 and 200 day moving average. All 3 indexes have formed a double bottom over the past few weeks on daily charts.

I believe the market is on a dead cat bounce since last Thursday and I believe this should last for the next 2 weeks. The first target will be the 50 day moving average for all 3 indexes.


Daily chart for the Dollar (UUP)


The dollar has been on a huge rally since the beginning of the European crisis. And I believe that this European crisis should get worse before it gets any better. Traditionally the dollar is the safety haven of choice whenever there’s fear of a coming crisis. This coming crisis should push the dollar back up to the September 2009 highs of around 26.50 on UUP. As long as the dollar fails to drop below my support at 25.06, the fear of a coming crisis is still strong.


Daily chart for Gold (GLD)


I believe gold is on a strong uptrend and calls for USD 3,000 gold should not be unrealistic in the next few months. Gold is the other safety haven of choice during financial crisis but in this case, I believe the uptrend in gold is due to the huge bullish cycle in commodities that should last for the next decade. I will be looking at pullbacks as opportunities to buy some gold.


Daily chart for Crude Oil (USO)


As you can see on the wedge that I’ve drawn since Feb 2010, the drop in crude oil is over. Crude should be more or less directionless for the next few weeks. However I believe crude should be on a slow uptrend back towards its 50 day moving average for the next few weeks.

Continued Bearish Momentum - Market Analysis for 10/06/2010 by Singaporeseeds

Daily Chart for the Dow


Daily chart for S&P 500


Daily chart for NASDAQ


Since my last market analysis on Monday, all 3 indexes had failed repeatedly over the last 3 trading days to break above the lower MOBO bands. Dow had also failed to recapture the psychologically important 10,000 level last night. This indicates weakness in the stock market and that the bearish momentum is still strong. It looks like we are poised to break below the year’s low and make a new low for the year. This should happen either today or tomorrow.

Double Failure for the Indexes - Market Analysis for 07/06/2010 by Singaporeseeds

Daily charts for Dow


Daily charts for S&P


Daily charts for NASDAQ


On Friday, Dow and S&P did another ice hole failure for the 200 day moving average and broke the lower MOBO bands. Only NASDAQ is still above its lower MOBO bands. However NASDAQ is below the 200 day moving average. This shows momentum for a continued downtrend. In addition, Dow broke the psychologically important 10,000 level. If we do not rally above this level over the next few days, this will put a serious damper on bullish sentiment.

On Monday, I believe the markets should rally intraday to test resistance at the lower MOBO bands. This would be coincidentally at 10,000 for Dow, 1,070 for S&P. Should the indexes fail to rally and stay above these levels, we should be seeing the market drop to around 9,500 for Dow, 1,000 for S&P and 2,000 for NASDAQ.

Failure at the 200 Day Moving Average – Market Analysis for 02/06/2010 by Singaporeseeds

Daily charts for Dow


Daily charts for S&P 500


Daily charts for NASDAQ


Dow and S&P failed to break above the 200 day moving average over the weekend and has formed a bearish candlestick pattern (last 3 daily candles) together with NASDAQ on daily charts. Both Dow and S&P are at MOBO lower band support at market close last night. Should it continue to trend down and close down today, we might be in for a few more days of tanking down to 1,000 on S&P 500.