[Last weekly analysis]. We have seen another week of free falling and the selling power has not been weakened yet.
Overview of World Markets and Sectors
Probably because of strong crude oil and commodities, the emerging market as well as other parts of the world are not dropping as fast as US market. The emerging market so far has not made a new low yet.
The next chart shows the MSCI World/EAFE/Emerging Market, Shanghai Stock Exchange Composite Index, Hang Seng Index, and Nikkei 225 index. On the daily chart, only mainland China market looks better.
Major indices, commodities, and US dollar are shown in the next chart. UD dollar looks strong, while the crude oil and commodities probably have an intermediate-term bottom in place.
Sector overview chart. Only thing noticeable is that technology sector is in a better shape, and sell off in several sectors has slowed down a bit.
SPX
The wave 3 of (5) is still unfolding and it will probably reach 650 or lower before consolidating for a while.
The target on the P&F chart has been hit in the last week, however the next target is unknown since there is no reference below. It's very difficult to do further analysis.
XLF and SKF
SKF should have topped out and drop down in the next week.
Currency Futures and Forex
US dollar looks topped out and has reversed back down. If this is true, the market could bounce back up in the short term. Euro FX futures is consolidating.
Commodities
Crude oil: higher high and higher low, right at the resistance. Bullish.
Gold: bounce back from the lower edge of the channel. Bullish.
Tracking errors of leveraged ETF's
First, suppose we buy both SPY and SDS at the ratio of 1:1.087, considered the daily performance based on the dollar value of SDS relative to SPY, the daily market movement should be roughly canceled in this portfolio. Here you can see that SDS has largely driven by volatility/sentiment after Sep 18th.
If we set the benchmark on Jan 6th when the demand to short ETF was at the low point, we can see that the value of SDS has been continuously stretching by the fear. Unfortunately there is no sharp peak which can pinpoint a market bottom.
Measurement on SKF with benchmark on Jan 6th, and last Mar 7th. The conclusion is although the market is approaching or very close to a short-term bottom, however we have yet to see a sharp peak on SDS/SKF to confirm the intermediate term bottom is in place.
