2009-04-17 Market Watch: Weekly Analysis

[Last weekly analysis.]  The massive bear market rally has been lasted for six consecutive weeks.  Now SPX has gone back to the previous consolidation region.  If the market can decisively break out above the current resistance, EMA(13) at 925 to 945 will be the next target.

SPX weekly

Overview of World Markets and Sectors

The entire world is going straight up while the emerging market is leading.

World markets relative strengths

The next chart shows the MSCI World/EAFE/Emerging Market, Shanghai Stock Exchange Composite Index, Hang Seng Index, and Nikkei 225 index.  All markets are still very bullish, and up trend has no sign of potential reversal at the moment.

Major indices, commodities, and US dollar are shown in the next chart.  Gold is bearish, US dollar starts to recover, and commodities cannot make a higher high.

Sector overview chart.  Energy sector is lagging behind, other sectors are bullish.

SPX

The wave counting is still the same, and the upside target is about 950.  Over the short term, the rising wedge as well as the negative divergence on RSI should be resolved soon.  My expectation is a moderate pullback to form an ascending channel.

SPX daily SPX hourly target estimation ESM9 2-hr

XLF and SKF

SKF is a falling knife over the intermediate term.  Technically the uptrend of XLF is not completed yet.

XLF daily

Currency Futures and Forex

US dollar index: the trend is confirmed to be up although it hits a resistance now.

USD/SGD: consolidation and the direction unknown.  If the support holds, it should go up again.

USD/CAD: no update.

EUR/USD: no update.  In the short term the downtrend should continue.

Commodities

Crude oil: unable to break out $55 and the consolidation/pullback will last for a while.

Gold: down trend.

2009-04-16 Market Watch

Today the market reached a new high at ES 867.  Afterward it started to drop down immediately with huge volume.  At the time of writing EMA is point up and MACD has given a sell signal.  I expect ES to pullback further and dive below EMA 50.  The intermediate term trend is still up so the game is still buy dip with tight stop.  The massive negative divergence on MACD and RSI will be corrected sooner or later by a decent pullback.  On the daily chart, there is no sell signal at the moment.

ES hourly ESM9 2-hr SPX daily wave counting

XLF revisited the previous high but didn’t break out today.  Further breakout is very likely after a minor pullback.

XLF hourly

2009-04-14 Market Watch

Yesterday I expected that ES went down to ~830, now it almost does.  EMA50 is pointing down, ES may go up to cross above the EMA or go down for a while.  MACD almost gives a buy signal, and RSI is oversold.  Therefore a small green candle is expected tomorrow.  It’s also oversold on the 2-hr chart.  At the current level the futures can go either way.  However the intermediate term trend is up so I prefer to bet on a rebounce first.

ES hourly ESM8 2-hr SPX hourly (negative divergence)

Today RKH and XLF pulled back a bit with decent volume but it closed above the breakout level anyway.  SKF and FAZ have no buyable setup yet.  It’s safer to watch how financial sector goes tomorrow and stay at the long side for the moment.

RKH daily XLF daily

The crude oil and US dollar index have no clear direction at the moment, at least no clear sign to support/against the uptrend.  Therefore I expect a further consolidation instead of large movement tomorrow.

2009-04-13 Market Watch

As expected, ES pulled back on Sunday night, and the market gapped down in the morning and then reached a higher high.  The pattern looks like a rising wedge or an ascending channel.  The MACD and RSI show the same pattern of the negative divergence as previous two peaks.  During the last 15 minutes, the sellers kicked in and the volume spiked.  Hopefully ES can pull back to 830 or lower before the next rally.

ES hourly ESM9 2-hr SPY 5-min

XLF is continuously rising like a rocket.  The runaway gap will not likely be filled at any time soon.  SKF is at all-time low now.  After the breakout on last Thursday, RKH (bank regional holders ETF) is overbought while the trend is still up.

XLF daily XLF hourly RKH daily

The intermediate term trend is still up however the market is getting overbought.  In the near term, a healthy pullback is also needed for further rally to 950+.

1.0.2 SPY 60-m

Put/call ratios are extremely low today, which is bearish in the short term.

2.8.0 CPCE 2.8.1 CPC