Our key tables and comments for this week :
* The FTSE100 index has gone into fully bearish mode, the first major market to do so. The DAX is weak as well, but still holding above its weekly key reversal level. Both are testing their Bottom1 targets already. The US markets have been stronger and remain bullish with upward MoM on the weekly level.
* In the daily key levels all major stock indexes are showing downward MoM, which means a pullback is underway. Is it the start of something bigger? That is always possible. Every bear market starts with one down candle and with one down swing. Right now there is no reason for panic, but if the US and Japanese market also drop below their daily key reversal levels, then the outlook for stocks will darken. So I wait and see.
* For the Nasdaq we have a new Top2 target at 4659.
* In other world markets the French CAC 40 has gone into bearish mode. Several other European markets are coming close to do so as well: Italy and Switzerland. New problems brewing in Europe? Hmmm, just old problems resurfacing… Weekly MoM has also turned down for the MSCI World index, marking a possible long term peak.
* Bonds (TLT) have bounced back, but weekly MoM keeps pointing down for the bond market.
* Gold is back to fully bullish. $1415 is the Top1 target if we get another leg upwards. Now it is becoming DO time for gold.
* The Euro is stuck around 1.36. Key levels are bearish for the Euro at the moment, but that doesn’t mean much in a market that has been going sideways for so long. A big move will come, but which way? Plenty of traders are probably looking to go long Euro on a breakout above 1.40, or to go short on drop below 1.34…, and that may or may not work, as fake out moves have become common. In a coiled market like this one I like to take a look at the monthly key levels for direction. Monthly MoM for $EURUSD is going down since May (it had been going up since August 2012) and a monthly close below 1.3264 would confirm the next major move is indeed down.
* Oil has dropped below its weekly key level and is now fully bearish. The Bottom1 target for oil is 94.60
* Our weekly key reversal levels for the 30 Dow stocks are available here. 28 stocks are bullish this week, up from 27 last week. Above 20 is healthy, see : Keeping an eye on the Dow stocks.
* A reader wrote me to tell how boring it is, e.g. my posts keep repeating “healthy bull market” for the Dow Jones week after week.
What to do? It is not as if shorting the Dow Industrials has been profitable in recent months. I can only repeat George Soros on that point: “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
If the key reversal levels are boring it is actually a good sign, it means they are not pointing in a different direction every other week. And that can only mean we are getting good trending moves. E.g. the Nasdaq has been in weekly bullish mode for 79 weeks and counting. It doesn’t get any more boring than that. When we started posting them the weekly key reversal level for the Nasdaq was at 3221, now it stands at 4109, so that is 900 points of Nasdaq profit quietly locked in by our key levels. Meanwhile plenty of other analysts/bloggers have been trying to nail the top since the beginning of last year (if not before). I am sure they have not been bored. But how much have they lost by now (provided they trade their own calls)? 20%, 30%, more? By the time we actually do get a correction it will perhaps give them back half of the money they lost, or back to breakeven if they are lucky (provided they have not given up trading their own calls by then). That’s a big price to pay for being able to say “told you so”.
Some day our key levels will stop saying “healthy bull market”. Maybe next week, next month, next year… It will come.
***
Here are the updated tables.
Key reversal levels for next week:
Weekly |
Current |
Mode |
Key (W) |
MoM (W) |
Weeks |
% Ch. |
Nasdaq |
4,415.49 |
|
4,109.03 |
6.88 |
79 |
42.93 |
S&P 500 |
1,967.57 |
|
1,861.01 |
7.57 |
84 |
38.92 |
Nikkei |
15,164.04 |
|
14,607.06 |
3.08 |
5 |
-0.26 |
FTSE 100 |
6,690.20 |
|
6,834.48 |
1.32 |
0 |
0.00 |
DAX |
9,666.34 |
|
9,409.44 |
4.08 |
15 |
0.46 |
Bonds (TLT) |
113.58 |
|
109.23 |
2.31 |
24 |
6.46 |
Gold (spot) |
1,338.12 |
|
1,279.81 |
0.47 |
3 |
1.76 |
$EURUSD |
1.3607 |
|
1.3729 |
-2.19 |
8 |
-0.60 |
Oil (CL) |
100.83 |
|
104.15 |
2.36 |
0 |
0.00 |
(Legend: Mode: green = bullish, pale green = weak bullish – may have peaked, red = bearish, pink = mildly bearish – may have bottomed | Key: key reversal level | for more details about these key levels, see: https://lunatictrader.wordpress.com/key-reversal-levels/ )
Latest daily key reversal levels:
7/11/2014 |
Current |
W |
Mode |
Key (D) |
MoM (D) |
Days |
% Ch. |
Str. # |
Nasdaq |
4,415.49 |
|
|
4,342.43 |
3.49 |
35 |
6.76 |
2 |
S&P 500 |
1,967.57 |
|
|
1,948.25 |
3.24 |
35 |
4.20 |
2 |
Nikkei |
15,164.04 |
|
|
15,128.86 |
1.04 |
36 |
5.22 |
2 |
FTSE 100 |
6,690.20 |
|
|
6,797.17 |
-2.79 |
3 |
-0.72 |
11 |
DAX |
9,666.34 |
|
|
9,908.46 |
-3.60 |
3 |
-1.25 |
7 |
Bonds (TLT) |
113.58 |
|
|
111.94 |
0.90 |
3 |
0.82 |
5 |
Gold (spot) |
1,338.12 |
|
|
1,299.15 |
3.36 |
21 |
5.12 |
17 |
$EURUSD |
1.3607 |
|
|
1.3643 |
-0.33 |
5 |
0.10 |
15 |
Oil (CL) |
100.83 |
|
|
104.71 |
-5.52 |
5 |
-2.81 |
11 |
(Legend: Mode : green = bullish, pale green = weak bullish – may have peaked, red = bearish, pink = mildly bearish – may have bottomed | Key: key reversal level | W = weekly mode | for more details about these key levels, see: https://lunatictrader.wordpress.com/key-reversal-levels/ )
Our current key target zones (we use a +/-1% zone around these targets):
Key Targets |
Top1 |
Top2 |
Bottom1 |
Bottom2 |
Nasdaq |
4531 |
4659 * |
3975 |
3742 |
S&P 500 |
2001 |
2031 |
1755 |
1641 |
Nikkei |
15976 |
17220 |
13860 |
12940 |
FTSE 100 |
6800 |
7110 |
6642 |
6230 |
DAX |
10240 |
10450 |
9682 |
8715 |
Bonds (TLT) |
114.60 |
115.70 |
108.25 |
102 |
Gold (spot) |
1415 |
1541 |
1160 |
1075 |
$EURUSD |
1.3950 |
1.42 |
1.3403 |
1.2870 |
Crude Oil(CL) |
109.24 |
112.47 |
94.60 |
91.85 |
(* = new or updated target ) (for more details about these key targets, see: https://lunatictrader.wordpress.com/2013/08/20/key-target-levels/ )
Good luck, Danny
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Where does the Euro strength come from?
Posted by Dan on September 14, 2015
Stock market volatility has calmed down a bit and most markets ended the week on a positive note. We have a few more lunar green period days to go and then we will enter a new red period. If the market is going to retest and possibly take out its recent lows, then its best chance to do so is probably in the second half of September.
Let’s have a look at the situation in the S&P 500 (click image to enlarge it):
The S&P is looking for direction after the late August drop. If the market pushes higher then 2050 could be reached fairly quickly. The slower Earl2 indicator (orange line) has turned up from a major low, which is good to see, but that doesn’t rule out another leg lower in the next couple of weeks. The faster Earl (blue line) is going quite high already and may turn down this week. I think the better odds are for a push towards 2040, followed by consolidation for the rest of the month.
A lot of traders will be watching central banking decisions this week. I don’t know whether it will make any difference. I can easily imagine interest rates being nudged higher and see stocks go up rather than down as a result. Would be a typical example of “sell the rumor, buy the news”. Many investors have been selling the ongoing rumor that rates are going to be hiked, so who will be left to sell? It is the uncertainty of an upcoming rate hike that has been hanging over the market for months, and once the step is taken that uncertainty is taken away. We can actually ponder what would be more positive for stocks: keeping rates at zero while telling people that the economy remains too weak… OR raising rates and telling people that the economy is strong enough to do so?
As chart of the week I am choosing the Euro versus Dollar, because it may also contain clues going forward. The Euro has been surprisingly resilient recently (click image to enlarge it):
Since March the Euro has been painting higher highs and higher lows. The 1.15 level has been major resistance for a while and the most recent attempt to break out above it failed. Bullish energy (green in the iceberg chart) is once again rising quickly, so a second attempt appears to be in the making. It is not clear where this Euro strength is coming from. But it is not rare for markets to move first, with the fundamentals that justify the move becoming clear later on. Anyway, a successful break above 1.15 would open the door towards 1.25.
Danny
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Posted in Financial Astrology, Market Commentary | Tagged: Euro, lunar cycle, S&P 500 | 4 Comments »