Every new month is a good opportunity to check out some monthly charts and key reversal levels. It helps to keep a proper long term perspective.
Let’s start with the LT wave chart for May (click for larger image):
The LT wave chart for April did a fairly decent job. The month started strong as expected and was followed by a correction and a rebound in the last week.
For May we have a rather mixed picture. The LT wave peaks in the first days of the month and then a period with up and down swings. This doesn’t mean the month will be flat. I would look for highs and lows based on the blue line. This could be a series of higher highs and lows, or lower highs and lows. Don’t expect perfection. The LT wave gives good indications more than half of the time, but there are also stretches of poor performance, just like with every other system of cycle.
We have also updated our monthly key reversal levels for May 2014. Note: these monthly key reversal are only for long term market orientation. Try to invest mainly in the stronger markets (dark green) and take (partial) profits in markets that go to light green. Speculative buying can be done in the markets that switch from bearish (red) to mildly bearish (pink). A very patient long term investor can do well based on these monthly keys only, but for more optimal entry and exit points the weekly and daily key reversals can be used. We post them here on the blog and through twitter every week/day.
| Monthly | Current | Mode | Key (M) | MoM (M) | Months | % Ch. |
|---|---|---|---|---|---|---|
| Nasdaq | 4,114.56 | 3,491.54 | 8.95 | 53 | 90.29 | |
| S&P 500 | 1,883.95 | 1,592.25 | 8.29 | 27 | 43.54 | |
| Nikkei | 14,304.11 | 12,910.63 | 6.37 | 16 | 34.89 | |
| FTSE 100 | 6,780.00 | 6,249.30 | 2.67 | 17 | 15.57 | |
| DAX | 9,603.23 | 8,092.59 | 7.49 | 26 | 40.56 | |
| Bonds (TLT) | 111.10 | 111.70 | -1.61 | 10 | 3.47 | |
| Gold (spot) | 1,291.36 | 1,434.87 | -3.59 | 12 | -12.53 | |
| $EURUSD | 1.3865 | 1.3200 | 2.67 | 7 | 2.51 | |
| Oil (CL) | 99.74 | 94.30 | 0.82 | 2 | -3.17 |
(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/
Comments:
* Monthly MoM is turning up again for the S&P 500. Bull markets do not give up easily. Most major markets remain well above their monthly key levels, so they are not even close to turning bearish. But a lengthy period of sideways action is still likely for these indexes.
* Bonds are coming very close to their monthly key reversal level. Can they turn bullish? It will take a monthly close above 111.70 for TLT
Monthly key reversal levels for other world markets:
| Monthly | Current | Mode | Key (M) | MoM (M) | Months | % Ch |
|---|---|---|---|---|---|---|
| Australia (AORD) | 5,470.80 | 4,899.12 | 4.50 | 18 | 20.62 | |
| Brazil (BOVESPA) | 51,627.00 | 54,198.10 | -1.98 | 23 | -5.25 | |
| Canada (TSX) | 14,651.90 | 12,943.83 | 5.79 | 15 | 15.00 | |
| China (SSEC) | 2,026.36 | 2,242.97 | -1.35 | 47 | -21.39 | |
| Dow Jones Industrials | 16,580.84 | 14,567.30 | 6.32 | 30 | 38.73 | |
| France (CAC40) | 4,487.39 | 3,845.19 | 5.01 | 16 | 21.19 | |
| Gold stocks (XAU) | 92.26 | 131.06 | -3.85 | 28 | -49.02 | |
| Hong Kong (HSI) | 22,133.97 | 21,422.44 | 0.72 | 18 | 2.60 | |
| India (SENSEX) | 22,417.80 | 19,094.91 | 4.52 | 19 | 19.34 | |
| Indonesia (JCI) | 4,840.15 | 4,188.19 | 0.60 | 58 | 138.80 | |
| Italy (MIB) | 21,783.38 | 17,399.58 | 5.89 | 7 | 24.61 | |
| Malaysia (KLCI) | 1,871.52 | 1,684.89 | 5.02 | 57 | 59.29 | |
| Mexico (IPC) | 40,711.56 | 41,794.88 | -0.93 | 2 | 4.98 | |
| Russell 2000 | 1,126.86 | 986.25 | 8.03 | 27 | 41.39 | |
| Russia (RSX) | 22.71 | 27.52 | -1.17 | 3 | -9.38 | |
| Singapore (STI) | 3,264.71 | 3,042.42 | -0.30 | 0 | 0.00 | |
| South Africa (JOHA) | 48,870.10 | 39,584.26 | 8.48 | 54 | 85.39 | |
| South Korea (KOSPI) | 1,961.79 | 1,901.20 | 0.37 | 7 | -1.79 | |
| Spain (IBEX35) | 10,459.00 | 8,709.06 | 5.56 | 7 | 13.96 | |
| Switzerland (SMI) | 8,476.70 | 7,400.57 | 5.89 | 21 | 32.46 | |
| Turkey (TUR) | 53.21 | 57.35 | -3.81 | 8 | 7.28 | |
| Vietnam (VNM) | 20.08 | 18.22 | 2.82 | 3 | -3.83 | |
| World (MSCI) | 1,687.74 | 1,431.62 | 7.44 | 27 | 36.03 |
(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/
Comments:
* Singapore is turning bullish.
* Monthly MoM is turning up for Brazil, France, Malaysia and Turkey.
* China, Mexico and Russia are the only markets that continue to be fully bearish.
Good luck,
Danny
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Key reversal levels for week of May 19, 2014
Posted by Danny on May 18, 2014
Comments on the key levels for this week :
* No changes in our weekly key reversal levels for major stock indexes.
* On the daily level we have some flip-flopping going on. Nasdaq and S&P 500 have joined the Nikkei by going into bearish mode with downward momentum (MoM). The DAX and FTSE100 remain in bullish mode, but also with downward MoM.
* In other world markets we have a stronger picture with most emerging markets in ongoing bull market.
* Bonds (TLT) continue to rally and have come within a few nickels of our Top1 target at 114.60. The Top2 target is at 115.70, so I expect some serious resistance just above the current levels. I you bought bonds when they turned bullish 16 weeks ago, I would look to take some profits off the table.
* Gold holds just above its weekly key level and has entered rally mode on the daily level, but without much conviction so far. Its next major move also depends on which way the $EURUSD goes (see below). This chart shows why a big move is in the making for gold.
* The Euro has closed below its weekly key level and is now bearish on the weekly level. This is a major change after 41 weeks of bullish status. If the new trend continues we can start eyeing the Bottom targets at 1.3390 and 1.2870, and it would probably push gold prices down as well. If the Euro recovers swiftly and gets back above 1.3844 (weekly close) then the odds reverse.
* Our weekly key reversal levels for the 30 Dow stocks are available here. 24 stocks are bullish this week, unchanged from last week. Above 20 is healthy, see : Keeping an eye on the Dow stocks.
***
Here are the tables.
Key reversal levels for next week:
(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:
(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):
(* = 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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Posted in Market Commentary | Tagged: $EURUSD, FTSE 100 Index, gold, key levels, Nasdaq, Nikkei | Leave a Comment »