Santa Claus Is Coming To Town! - Market Analysis for 27th December 2011 by Singaporeseeds

Daily chart for S&P


Daily chart for Dow


Daily chart for NASDAQ


Market analysis from last week:
“We dipped after a huge rally that changed all my indicators from bearish to bullish. On Friday, the market closed around important support levels for all 3 indexes. This is 1215 for S&P.
Today, we shall see whether these support levels hold. If it holds, the chances that we will see a Santa Claus Rally would be much higher.
Currently, I believe that the market will hold these support levels and move up to 1350 by year end or early Jan 2012.”

Market analysis for this week:
The past week had been one of the most bullish for the past few months. This is just the start of the huge bullish divergence pattern that appeared on the charts a few weeks ago. This should bring the S&P up to around 1,350 over the next 2-4 weeks. This will be around 12,750 for the Dow.

Daily chart for the Dollar


Market analysis from last week:
“The dollar (UUP) made yet another bearish divergence in the market on daily charts. However on weekly charts, it seems that the dollar has more to go. At least around 2 more weeks of bullish movement before it finally give way. As the market movement is inversely correlated with the stock market, this might mean that we will have 2 more weeks of bearish market. This will directly cut into the Santa Claus rally. We shall see how it goes.”

Market analysis for this week:
Longer term weekly chart is showing that the dollar will continue to go up, but on daily, it shows down. We might see some weakness in the dollar over the next 2 weeks. First target at 22, second at 21.70.

Daily chart for Gold


Quote from my last market analysis:
“Gold broke out of the triangle last Monday and completed the breakout move by the end of the week. Price closed just below it’s 200 day moving average on Friday.
Today, we should see gold consolidate after a big move. Especially with a strong and rising dollar, we should see further lower prices over the next 1-2 weeks. Next support at around 1500 on gold futures.”

Market analysis for this week:
Gold is still consolidating after the huge movement. It may trend down to 145 on GLD over the next few weeks. It should move in a range between 145 and 158.50 for the next 1-2 months.

Daily chart for Crude Oil


Market analysis from last week:
“The uptrend did indeed end last Tuesday with a gap down and drop over the rest of the week.
Now with crude at it’s 50 day moving average, we should see either a consolidation or bounce before dropping further over the next few weeks. Next support at 35 and then 33.50 on USO.”

Market analysis for this week:
Crude oil is more bullish than ever, having bounced off it’s 50 and then 200 day moving average in the past week. I believe we should see a dip next week with support at around 37.50 on USO before breaking resistance at 39.50.
Final target will be around 45.20 in 3 month’s time. This will be around 113 on crude oil futures. Expect gasoline prices to increase.

Preparing for the Santa Claus Rally? - Market Analysis for 19th December 2011 by Singaporeseeds

Daily chart for S&P


Daily chart for Dow


Daily chart for NASDAQ


Market analysis from last week:
“Well, the markets closed as a doji this week. On Dow, it bounced off its 200 day moving average and on NASDAQ, the 50 day moving average. The market seems to be anticipating some kind of good news from the European Crisis as it shrugged off the bad news reports coming from the ECB discussion and slowly edged upwards this week.
It seems that we should be getting good news from Europe. We shall see about this soon.
Last week, market technical changed overnight from very bearish to bullish with the release of a single news report. We will be getting more of this over the next few months. This shows how news driven this market had become.
I have a target at 1,350 on S&P that should be hit before the end of the month. If the news from Europe is indeed good, we can reach this target overnight. In the meantime, we might just move more or less sideways.”

Market analysis for this week:
We dipped after a huge rally that changed all my indicators from bearish to bullish. On Friday, the market closed around important support levels for all 3 indexes. This is 1215 for S&P.
Today, we shall see whether these support levels hold. If it holds, the chances that we will see a Santa Claus Rally would be much higher.
Currently, I believe that the market will hold these support levels and move up to 1350 by year end or early Jan 2012.

Daily chart for the Dollar


Market analysis from last week:
“On weekly charts, the dollar closed as a doji. Everyone seems to be waiting for a news report from Europe to start a new trend. My market analysis is still the same. I’m expecting a double dip for the dollar to 21 on UUP.”

Market analysis for this week:
The dollar (UUP) made yet another bearish divergence in the market on daily charts. However on weekly charts, it seems that the dollar has more to go. At least around 2 more weeks of bullish movement before it finally give way. As the market movement is inversely correlated with the stock market, this might mean that we will have 2 more weeks of bearish market. This will directly cut into the Santa Claus rally. We shall see how it goes.

Daily chart for Gold


Quote from my last market analysis:
“Gold is still in the triangle. Without any significant movement in the markets and in the dollar, gold should not be moving much. We should be seeing a breakout (up or down) for gold, dollar and the markets all at the same time.”

Market analysis for this week:
Gold broke out of the triangle last Monday and completed the breakout move by the end of the week. Price closed just below it’s 200 day moving average on Friday.
Today, we should see gold consolidate after a big move. Especially with a strong and rising dollar, we should see further lower prices over the next 1-2 weeks. Next support at around 1500 on gold futures.

Daily chart for Crude Oil


Market analysis from last week:
“Crude (USO) formed a support at 37.77 and bounced. This is also the 200 day moving average and meeting point for 2 trendlines.
On candlesticks, it seems to have formed a piercing pattern. Monday has to close as a bullish candle for this pattern to be reliable. The uptrend from early October 2011 should be ending this week.

Market analysis for this week:
The uptrend did indeed end last Tuesday with a gap down and drop over the rest of the week.
Now with crude at it’s 50 day moving average, we should see either a consolidation or bounce before dropping further over the next few weeks. Next support at 35 and then 33.50 on USO.

Just about there... Market Analysis 16 Dec 2011

While the rest of my buddies are in a Christmas gathering, I am here rushing out an update to my mid-week analysis before the CPI data comes online... and before I rush down to join that Christmas Gathering for the finale.

Basically, the daily chart is looking at a potential (possible but weak case) bounce day. The past three days indicate increasing volatility breakdown. and I am expecting a burst downside by next week Wednesday.  Otherwise, all bets are off.

30min chart (right) is showing a second test of the 200MA. MACD indicators are not encouraging for a bull case, but it would also depend on CPI data in 30 mins time. This level is also resistance level as well as a Fibo retracement level. Am expecting downside.... otherwise, a relook is in order.

Quick nips...
On the Gold charts, a bounce is due.
On USD futures, a retracement is due.
Today is options expiry day!

Have a great weekend ahead!


The MadScientist
16 December 2011

Note: ALL material posted here is from my personal opinion, and my opinion may differ or change without notice. These do NOT constitute as solicitation, investment nor financial advice. By reading the materials presented here, Readers acknowledge the awareness that the materials are intended for educational purposes only. For investment(s) advice, related decisions and/or actions pertaining to investments, always consult your own qualified financial advisors, brokers, etc.

Charts are from TD Ameritrade Thinkorswim platform

It's elementary! - WMA 14 December 2011

Ah! Its been two weeks, and it is time for analyses again!
My last post was about a sucker rally on 28th November, a post I did through my iPad.
Since then, I had been really bogged down with work and other things in life that the little time I had reading news and watching through my mobile devices all did not seem to make much sense. Hence, I abstained... from taking any positions.

A quick review... since my last post, major events include the central banks easing the swap rates, and the Euro Summit. The former fired off a very strong rally but it fizzled as people started to realize that it was a bleed to let off some pressure. This means that there is more time added, hence kicking the can further down the road. While that happened, the bond yields of the European sovereigns actually receded enough to ease tensions, giving the central bank measures some punch for its efforts.
Then there was optimism fuel from the Euro Summit anticipation, as well some seemingly decent economic data out of the US.
Despite the above, the market rallies were short and stunted. A look at the charts reveal the behaviour and psychology of the current market.

Below is a snapshot of what I saw today... click on image to get a larger view.

The ES weekly chart (left panel) appears to be forming a HUGE bear flag, which suggest a deeper downside going forward into 2012. While this is may include some upside as the turn of the year, for now, looks like Santa may have crashed en route to the rally party IMHO...

The daily chart (middle panel) has some very omnious technical aspects. Notice the while downtrending line from August 2011? That trendline has been tested and failed five times. For technical chartists, this is significant as the more times the trendline is tested and failed, the stronger that trendline becomes. Furthermore, see the dark green 200MA line, which has been tested and failed three times in the past two months. Although there has not (YET!) been a Sell signal, there may be one coming along soon if Santa does not rally the market. The dismal outcome of the Euro Summit and developments over the past months in Europe is certainly showing a trend... that hopeful promises will be made, and will yet to be delivered, if at all. These promises will result in powerful bear rallies. In any case, the red arrows outline my baseline expectations in the near term, where the S&P futures should break 1220 and then test 1200. A breakdown of 1200 this time would be really bad. Before this happens, I am expecting a Sell signal in the coming week, barring no new jolting developments from European leaders (which I suspect is unlikely). I am actually looking for the end of the review period of the rating agencies to help in downgrading the sovereigns (and tank the markets).

In the 30 min charts (right panel), it is clear that there is a current downtrend... this would be the first to change if there is a reversal rally, so it is worth keeping an eye on it.

In other charts, not shown here today...

/DX, the USD futures is looking bullish.
/GC, the Gold futures is ranging in a large area and is looking bearish. So is silver. Same for copper.
/CL, the Crude futures, strangely appear bullish to me, and this does not fit into the overall scheme of things. I do wonder as I keep an eye out on crude.

Meanwhile... as US economic and employment data, together with Leading Economic Indicators (LEIs), are looking good for a mild US economic recovery. That is without a doubt. However, a European breakdown is more than enough to overwhelm all that good news and improvement. For now, it appears to be a bear market, and the bull really needs to work real hard in the weeks to come.

Be safe, be wise.


The MadScientist
14 December 2011

Note: ALL material posted here is from my personal opinion, and my opinion may differ or change without notice. These do NOT constitute as solicitation, investment nor financial advice. By reading the materials presented here, Readers acknowledge the awareness that the materials are intended for educational purposes only. For investment(s) advice, related decisions and/or actions pertaining to investments, always consult your own qualified financial advisors, brokers, etc.

Charts are from TD Ameritrade Thinkorswim platform

Waiting for Good News from Europe - Market Analysis for 12th December 2011 by Singaporeseeds

Daily chart for S&P


Daily chart for Dow


Daily chart for NASDAQ


Market analysis from last week:
“What a difference a week makes!
http://www.bloomberg.com/news/2011-11-30/treasuries-set-for-monthly-gain-as-eu-struggles-to-stem-contagion-concern.html
On Wednesday, the US Federal Reserve and five other central banks cut the cost of emergency dollar funding for European banks in response to the continent’s sovereign-debt crisis.
This sparked a huge rally on Wednesday that smashed through all resistances on my charts. Non-farm payrolls on Friday was also expected to be good (which also turned out good) and this added to the euphoria.
On the S&P, we are just below the 200 day moving average and the down channel that we had been in since June 2011. If we break above the 200 day MA, it would be the start of another rally that might bring us back up to the all-time high around 1,550.
The direction of the market this week will determine the direction of the market over the next few months.”

Market analysis for this week:
Well, the markets closed as a doji this week. On Dow, it bounced off its 200 day moving average and on NASDAQ, the 50 day moving average. The market seems to be anticipating some kind of good news from the European Crisis as it shrugged off the bad news reports coming from the ECB discussion and slowly edged upwards this week.
It seems that we should be getting good news from Europe. We shall see about this soon.
Last week, market technical changed overnight from very bearish to bullish with the release of a single news report. We will be getting more of this over the next few months. This shows how news driven this market had become.
I have a target at 1,350 on S&P that should be hit before the end of the month. If the news from Europe is indeed good, we can reach this target overnight. In the meantime, we might just move more or less sideways.

Daily chart for the Dollar


Market analysis from last week:
“Instead of breaking through the 22.50 resistance, the dollar made a bearish divergence on both MACD and RSI. Fundamentally, the Fed boosting liquidity for Europe and the expectation of a 3rd round of stimulus in US is not giving much boost to the value of the US dollar.
http://www.bloomberg.com/news/2011-11-30/oil-rises-in-new-york-as-central-banks-led-by-fed-cut-dollar-funding-costs.html
I’m expecting the start of a new downtrend down to 21 over the next few days.”

Market analysis for this week:
On weekly charts, the dollar closed as a doji. Everyone seems to be waiting for a news report from Europe to start a new trend. My market analysis is still the same. I’m expecting a double dip for the dollar to 21 on UUP.

Daily chart for Gold


Quote from my last market analysis:
“Gold is still within the triangle. However I’m expecting a movement (can be either up or down) this coming week. With the dollar expected to drop over the next few weeks, and the Fed boosting liquidity, Gold is set to make a new high soon.”

Market analysis for this week:
Gold is still in the triangle. Without any significant movement in the markets and in the dollar, gold should not be moving much. We should be seeing a breakout (up or down) for gold, dollar and the markets all at the same time.

Daily chart for Crude Oil


Market analysis from last week:
“Crude oil formed an inverse head and shoulders pattern on daily charts. This should bring USO up to 42.50 over the next few weeks. With the US dollar expected to fall, this should not come as a surprise.”

Market analysis for this week:
Crude (USO) formed a support at 37.77 and bounced. This is also the 200 day moving average and meeting point for 2 trendlines.
On candlesticks, it seems to have formed a piercing pattern. Monday has to close as a bullish candle for this pattern to be reliable. The uptrend from early October 2011 should be ending this week.

Decision Week! - Market Analysis for 5th December 2011 by Singaporeseeds

Daily chart for S&P


Daily chart for Dow


Daily chart for NASDAQ


Market analysis for this week:
What a difference a week makes!

http://www.bloomberg.com/news/2011-11-30/treasuries-set-for-monthly-gain-as-eu-struggles-to-stem-contagion-concern.html

On Wednesday, the US Federal Reserve and five other central banks cut the cost of emergency dollar funding for European banks in response to the continent’s sovereign-debt crisis.
This sparked a huge rally on Wednesday that smashed through all resistances on my charts. Non-farm payrolls on Friday was also expected to be good (which also turned out good) and this added to the euphoria.
On the S&P, we are just below the 200 day moving average and the down channel that we had been in since June 2011. If we break above the 200 day MA, it would be the start of another rally that might bring us back up to the all time high around 1,550.
The direction of the market this week will determine the direction of the market over the next few months.

Daily chart for the Dollar


Market analysis for this week:
Instead of breaking through the 22.50 resistance, the dollar made a bearish divergence on both MACD and RSI. Fundamentally, the Fed boosting liquidity for Europe and the expectation of a 3rd round of stimulus in US is not giving much boost to the value of the US dollar.
http://www.bloomberg.com/news/2011-11-30/oil-rises-in-new-york-as-central-banks-led-by-fed-cut-dollar-funding-costs.html
I’m expecting the start of a new downtrend down to 21 over the next few days.

Daily chart for Gold


Quote from my last market analysis:
“Gold had been forming a triangle pattern since August 2011. A triangle pattern is formed when volatility and price movement had been decreasing gradually. This pattern usually results in a surge of activity together with a large movement in price. This can be either up or down. With the problems occurring around the world, I would expect a surge up in price soon.”

Market analysis for this week:
Gold is still within the triangle. However I’m expecting a movement (can be either up or down) this coming week. With the dollar expected to drop over the next few weeks, and the Fed boosting liquidity, Gold is set to make a new high soon.

Daily chart for Crude Oil


Market analysis for this week:
Crude oil formed an inverse head and shoulders pattern on daily charts. This should bring USO up to 42.50 over the next few weeks. With the US dollar expected to fall, this should not come as a surprise.

What a rally! A sucker rally? - 28 Nov 2011

The US market just opened 30 mins ago, and I just settled down enough to look at the charts... with a stunning 40 points upshot on the ES (S&P500 futures).

This is an awesome headline rally that followed a huge gap up, that might be a good runner for the next week or so, but the intraday bearish divergence is just so obvious. The ES is now up 40 points, 3.5%, and the charts below are snapshots from my iPad.

Notice that the USD futures, DX also has a bullish divergence... and another interesting point is that Crude (CL) futures had a similar bearish divergence and the rally was not sustained even as the ES continued to rally more.

While the news at the opening of the week is really awesome, I am left to wonder if this is a sucker rally of sorts... I'd be watching that ascending wedge as well as for a reversal swing point.


The MadScientist
28 November 2011

Note: ALL material posted here is from my personal opinion, and my opinion may differ or change without notice. These do NOT constitute as solicitation, investment nor financial advice. By reading the materials presented here, Readers acknowledge the awareness that the materials are intended for educational purposes only. For investment(s) advice, related decisions and/or actions pertaining to investments, always consult your own qualified financial advisors, brokers, etc.

Charts are from TD Ameritrade Thinkorswim platform

Beginning of Roller Coaster Ride (2012) - Market Analysis for 28th November 2011 by Singaporeseeds

Daily chart for S&P


Daily chart for Dow


Daily chart for NASDAQ


Last week's market analysis:
“The S&P closed at its 50 day moving average last Friday and all 3 indexes were forming classic daily patterns of market topping throughout the week as we slowly trend downwards. My trading system also highlighted a bearish signal on Thursday. As we move into the December and the famous Christmas rally, I was cautious of being too bearish in a seasonally bullish period of the year.
Then during the weekend, this news came up.
http://www.bloomberg.com/news/2011-11-21/u-s-debt-supercommittee-is-said-to-be-poised-to-announce-failure-of-talks.html

With the situation in Europe going from bad to worse, and reports of repercussions of bad debts moving across the Atlantic into US, this will definitely move the indexes below their 50 day moving averages. (Only the Dow is still above now) On weekly charts it looks even worse. All 3 indexes are showing classic signs of failure and should hit their early October 2011 lows by the end of the year.”

Market Analysis for this week:
All indexes are below their 50 day moving average now. Short term and long term charts are pointing to a downtrend for the next 2 months. We should be back around the early October lows real soon.
Fundamentally, there is nothing bullish right now. Europe, USA and China are showing weakness, with huge debt problems surfacing in every country in the European Union. The US had been reducing its debt liabilities for the past few years by printing its way out of it but with inflation increasing and spiralling out of control, this will not be an option soon. 2012 is turning out to be a very bad year indeed.
We may see a bounce next week to around 1200 on S&P. However it will be downhill after that. I believe the market will break below the October lows and make a new low by the end of the year.
The roller coaster ride for 2012 had just began.

Daily chart for the Dollar


Last week's market analysis:
“The dollar has bounced back up above its 50 and 200 day moving average, indicating bullishness. This should be the case for the rest of the year.

We should move back up to the early October 2011 highs over the next few weeks”

Market analysis for this week:
The dollar is almost back at its October highs. We should break this high easily. Final target at 23.40 on UUP.

Daily chart for Gold


Quote from my last market analysis:
“Gold had been bouncing off its 50 day moving average throughout last week as a rising dollar puts bearish pressure on the price of gold. With such bad news coming out of both Europe and US, I believe we should see gold at an all-time high in the next few months.”

Market analysis for this week:
Gold had been forming a triangle pattern since August 2011. A triangle pattern is formed when volatility and price movement had been decreasing gradually. This pattern usually results in a surge of activity together with a large movement in price. This can be either up or down. With the problems occurring around the world, I would expect a surge up in price soon.

Daily chart for Crude Oil


Last week's market analysis:
“Crude dipped as expected and found support at its 200 day moving average. This is especially so after a steep uptrend and is healthy if we are to have a sustained rally in crude. Supports for this dip should come in at 37.60 and then 35.20.”

Market analysis for this week:
Crude is still forming a support around its 200 day moving average. I would expect crude to move sideways for the next few trading sessions.

Thanksgiving's Roast - 24 Nov 2011

Happy Thanksgiving to all!

Today, the US markets will be closed and on Friday, it opens for the last day of the week, albeit with expected low volumes. Over the weekend, there would be results of Black Friday known and Monday may react to the this piece of news. Black Friday is traditionally the start of the shopping sales season and it is taken as an indication of consumer spending strength, as most retail stores get back into the black (accounting term) from this Friday onwards, if it so happens. Therefore, it might become a significant event either way... up or down.

Meanwhile, here is some good weekend reading:
A very good piece to read about knowing the background of this European Debt Crisis (EDC).
and
I personally like John Mauldin's piece titled Print or Perish, as it outlines why the EDC is one huge gorilla in the room, and how it really can be sorted out, albeit selfishly for the rest of the world, as well as how it is a lose-lose situation for Europe.
Note that the title was tagged from the academic phrase of "Publish or Perish".
Having read these two articles, you should have a think about the year ahead... the picture would be pretty clear.

Now, I already had been bearish longer term since end July, preferring to be "risk off", and previously tracked the current technicals compared to that of early 2008. At some point in the last two weeks, I noted that the market had deviated from that track a little after the second dip. The bounce was magnificent, to say the least, and the ES hit the daily 200MA in half the time it did in early 2008! For a while it looked as if the similarities were broken, and a couple of days later after testing the 200MA twice, it failed. This was the "last station before the train falls over the cliff" as outlined in a my blogpost two days ago.

And in the past two days market action, it is raising some alarm bells...
The US markets have a tendency to rally pre-holiday season. Last two days had weak bull activity and the bears clobbered the bulls really swiftly. This looks as if there is offloading at every opportunity, particularly a fear of holding anything over the holiday season.
The thing is, when observing the intraday charts in comparison, it is a little un-nerving.

Here's why...

Below is a SPX chart compared with TLT (Treausries ETF) and VXO (The old VIX that comprises of large caps only - my preference as I observed it to react faster than the widely used VIX).
From the 15 min intraday chart, in the past two trading sessions, there have been two occasions where TLT makes a higher high BEFORE the S&P500 (/ES, SPX, SPY) starts tanking. For TLT, making higher highs at this level is significant as it is pushing towards historical highs. And the correlation to its indication of a the equity market tanking shortly after is almost 100% since July 2011.
The VXO, however, has stopped being such a similar indicator as it was in August and September 2011. This is telling of money movements into Treasury bonds (likely by big players), without triggering a mass sell-off as indicated by the fear indexes (VIX/VXO).

On the daily SPX charts, there clearly were ice-hole failures on the 200MA, and a critical level is identified at 1130.
Despite the rather significant October rally, the TLT retraced and continued to uptrend, potentially to be rejected or breakout into historical higher highs. By the time the SPX is at 1130, the TLT should be at historical highs, given the current trend momentum.
Similarly, the VXO is no where near the August-Setpember highs, but looks set to breakout of the smaller October range highs.
By mid-next week, it would be obvious.

Below are the /ES charts, weekly (left) and daily (right).
If this week closes at the current levels, the MACD indicates are bearish crossover in bear territory, which may mean a farewell to the Santa rally next month. Remember 1130 on the daily chart? It is coincidentally the weely 200MA support. That's how critical that level would be in the weeks to come.
On the daily ES chart, as described previously, a technical breakdown that included 200MA failures, channel breakdown, and Sell signals all occured last week. The last two trading sessions saw a MACD bearish crossover into bear territory, but price is still not reflecting an extreme breakdown - yet.
The TTR model, which compares the ratio of the TLT/TIP ratio is warning of another downleg.

Yesterday, European news that caught my eye included Dexia's bailout that itself was in trouble, and particularly significant, the German bond auction technically failed. With stuff like that happening over the Thanksgiving seasonal holidays, it is little wonder that the US Treasuries will be attracting more funds. Furthermore, Fitch and Moody are reviewing European ratings, particularly that of France, and so is S&P of the US.

Thee various "signs" are omnious... there will be more to come... watch the train fall off the cliff, and if you didn't get out at the last station, be ready to jump out of the train or go down with it!

The MadScientist
24 November 2011

Note: ALL material posted here is from my personal opinion, and my opinion may differ or change without notice. These do NOT constitute as solicitation, investment nor financial advice. By reading the materials presented here, Readers acknowledge the awareness that the materials are intended for educational purposes only. For investment(s) advice, related decisions and/or actions pertaining to investments, always consult your own qualified financial advisors, brokers, etc.

The train has left the last station - WMA 22 Nov 2011

It's been a while since I analyzed the markets proper... partly due to myself being occupied with many different things as well as the volatility in either direction, and the large range consolidation. However, at the end of last week, a new trend started to emarge...

Let's look at the ES (S&P500 futures) first...

The weekly chart shows that last week was a potential end to the short rally, with indicators stopping short on being bullish (pun not intended). There seems to be a significant downside risk from the weekly chart.
The daily ES chart (right) clearly shows a breakdown out of the uptrendling support. Some see a triangle formation that has broken down as well. Indicators are suggesting that a downtrend started late last week, where a Sell signal was generated. There is now a clear failure of the moving averages. With a short trading week, it appears as if there is more downside over the next 4-5 trading days, likely to come close to 1130 as a short term target. Today, 22 Nov 2011, looks set to have an early morning bounce.

With the global economics and politics moving forward, the downside risks appear to be significantly high for the rest of this week.

At this point of time, when there is a lot of uncertainty and a potential breakdown of the European sovereign debt, a lot of money is moving places, mostly out of equity markets and into safe havens. One such haven is the US Treasuries, and this is concomitant of a rise in the USD dollar index as the markets capitulate. Looking at the ETF for US Treasuries, ticker: TLT, we are able to observe that there are signs which indicate a high probability of equity market sell-offs.

Similarly, the VIX index show indications of market sell-off before it happens. Here, we use the CBOE VIX ETF, ticker: VXX.

Shown below is the intraday chart of the SPY (the S&P500 SPDRS ETF), correlated with TLT and VXX daily closing prices in line charts below. What is obvious in the time marking is that there is a break of a higher high on TLT and on VXX BEFORE the SPY started selling off. This is much clearer in candle comparison charts where the breakout of higher highs are registered, as opposed to the closing prices.

Below is the daily chart of TLT, and it is clear that the MACD is indicating a start of a rally, which is concomitant with a higher high breakout. Compare the current scenario with that of early August 2011. The situations look very similar.

Likewise, the VXX daily chart corroborate a similar indication as well.

All the above are suggesting that a significant market sell off is coming and that the last few days' activity is just the beginning. Notice too from the first chart that the was a failure of the 200MA on the ES. This is a major no-no tyope of ice-hole failure and one should be looking out for signs of major deterioration of the markets from the global economic perspective of politics.

The train has left the last station... next stop may be the bottom of the cliff.

Hang on to your pants!

The MadScientist
22 November 2011

Note: ALL material posted here is from my personal opinion, and my opinion may differ or change without notice. These do NOT constitute as solicitation, investment nor financial advice. By reading the materials presented here, Readers acknowledge the awareness that the materials are intended for educational purposes only. For investment(s) advice, related decisions and/or actions pertaining to investments, always consult your own qualified financial advisors, brokers, etc.

And Down We Go! - Market Analysis for 21st November 2011 by Singaporeseeds

Daily chart for S&P


Daily chart for Dow


Daily chart for NASDAQ


Last week's market analysis:
“Anyway last week ended as a doji on S&P. We should see some market gyrations over the next few days as we hit a range of important resistance levels. On daily and weekly RSI, we are seeing a widening bearish divergence. I believe we are at a market top right now and the market is just churning, stronger hands giving way to weaker hands. Once the pros have moved out of the market, the market should give way real soon. I think we would end the year much further down then the levels we are at today. Most probably we should end the year at the early October 2011 lows.”

Market Analysis for this week:
The S&P closed at its 50 day moving average last Friday and all 3 indexes were forming classic daily patterns of market topping throughout the week as we slowly trend downwards. My trading system also highlighted a bearish signal on Thursday. As we move into the December and the famous Christmas rally, I was cautious of being too bearish in a seasonally bullish period of the year.
Then during the weekend, this news came up.
http://www.bloomberg.com/news/2011-11-21/u-s-debt-supercommittee-is-said-to-be-poised-to-announce-failure-of-talks.html

With the situation in Europe going from bad to worse, and reports of repercussions of bad debts moving across the Atlantic into US, this will definitely move the indexes below their 50 day moving averages. (Only the Dow is still above now) On weekly charts it looks even worse. All 3 indexes are showing classic signs of failure and should hit their early October 2011 lows by the end of the year.

Daily chart for the Dollar


Last week's market analysis:
“The dollar has bounced back up above its 50 and 200 day moving average, indicating bullishness. This should be the case for the rest of the year.

We should move back up to the early October 2011 highs over the next few weeks”

Market analysis for this week:
Analysis for the dollar is still the same.

Daily chart for Gold


Quote from my last market analysis:
“Gold has been showing strength over the past few weeks, breaking the 50 day moving average. I am seeing a bullish signal today. If this follows through, we should see gold break its high at 1923.70 soon. With the mess in Europe getting out of hand and rating agencies making mistakes, this should not be too difficult.”

Market analysis for this week:
Gold had been bouncing off its 50 day moving average throughout last week as a rising dollar puts bearish pressure on the price of gold. With such bad news coming out of both Europe and US, I believe we should see gold at an all-time high in the next few months.

Daily chart for Crude Oil


Last week's market analysis:
“Crude oil had one of the best bullish runs over the past 2 months. However we are reaching the end of this rally soon. My target is at 103 on /CL. Crude oil is very close to being overbought and this straight up rally movement is not sustainable. We could have a repeat of the late April to early May 2011 type of drop. I would expect crude oil to do move back down later this week or next week.”

Market analysis for this week:
Crude dipped as expected and found support at its 200 day moving average. This is especially so after a steep uptrend and is healthy if we are to have a sustained rally in crude. Supports for this dip should come in at 37.60 and then 35.20.

Formation of a Market Top - Market Analysis by Singaporeseeds for November 14th 2011

Daily chart for Dow


Daily chart for S&P


Daily chart for NASDAQ


Was very busy with the move from Winchester to London last week and coupled with this being the busiest time of the year, I didn’t have time to do my market analysis last week. Will still not be able to have proper internet access until Friday, when the people from British Telecom will come down to fix up the internet access. Things just move at a very slow pace here.

Anyway last week ended as a doji on S&P. We should see some market gyrations over the next few days as we hit a range of important resistance levels. On daily and weekly RSI, we are seeing a widening bearish divergence. I believe we are at a market top right now and the market is just churning, stronger hands giving way to weaker hands. Once the pros have moved out of the market, the market should give way real soon. I think we would end the year much further down then the levels we are at today. Most probably we should end the year at the early October 2011 lows.

Daily chart for the dollar


The dollar has bounced back up above its 50 and 200 day moving average, indicating bullishness. This should be the case for the rest of the year.

We should move back up to the early October 2011 highs over the next few weeks.

Daily chart for Gold


Gold has been showing strength over the past few weeks, breaking the 50 day moving average. I am seeing a bullish signal today. If this follows through, we should see gold break its high at 1923.70 soon. With the mess in Europe getting out of hand and rating agencies making mistakes, this should not be too difficult.

Daily chart for Silver


After the huge drop in mid September 2011, silver is now sitting right above an important support level of 33.60. We should see silver move up over the next few sessions together with gold.

Daily chart for Crude Oil


Crude oil had one of the best bullish runs over the past 2 months. However we are reaching the end of this rally soon. My target is at 103 on /CL. Crude oil is very close to being overbought and this straight up rally movement is not sustainable. We could have a repeat of the late April to early May 2011 type of drop. I would expect crude oil to do move back down later this week or next week.