I, Thinker: 3/15/09

Saturday, March 21, 2009

2009-03-20 Market Watch: weekly analysis

[Last weekly analysis]. This week the market tried to go back above 800 but finally dropped down. However, the market still gained 1.58%.

Overview of World Markets and Sectors

Over the intermediate term, the world markets are neutral to bullish while the emerging market leads all others.

world markets relative strength

The next chart shows the MSCI World/EAFE/Emerging Market, Shanghai Stock Exchange Composite Index, Hang Seng Index, and Nikkei 225 index. The pattern on the daily chart does not look good, we have to watch the follow-through on Monday to see if the trend really turns down.

Major indices, commodities, and US dollar are shown in the next chart. With the declining of dollar, commodities and crude oil continue to be bullish.

Sector overview chart. Based on the moving averages, financials and industrials are still two most bearish sectors.

SPX

Looking at the internal structure, I tend to think that the wave 4 of (5) is incomplete and wave 5 of (5) is still far away. Since the last week high didn’t overlap with wave 1, the bearish counting is still valid.

On the hourly chart, the first target at 750 seems nothing but a decent correction in the up trend. However 50% correction to 735 looks more reasonable. SPX 60-min system has given the confirmed sell signal. EMA50 on the ES hourly chart starts to fall, and the steep ascending channel doesn’t hold the trend any longer.

SPX hourly SPX 60-min system

ES hourly

XLF and SKF

XLF has declined 38.2% from the top, and over the very short term it’s oversold so a small rebound is likely. However because of the strong volume during the pullback, further down is expected. SKF has resumed its uptrend.

XLF hourly SKF daily SKF hourly

Currency Futures and Forex

US dollar index: no sign of recovering, and this might be a good sign to the financials.

$USD daily DX hourly

USD/SGD: wait for more declining after the consolidation

USD/CAD: up trend is broken, and it will fall down more.

EUR/USD: overbought, wait for 1.3-1.31 pullback and resume the uptrend.

Commodities

Crude oil: very bullish, buy on dip. Friday’s futures contracts rollover looks very much better than ever before.

daily weekly

Gold: bounced back off from the support, up trend still valid.

Charts from Cobra

SPY short term trend.

intermediate term trend also points down.

Thursday, March 19, 2009

2009-03-19 Market Watch

SPX daily: today the market declined a little bit. Fortunately wave 1 is still intact since SPX didn’t really make a significant new high. Zooming in the chart, we can see that the market actually consolidated and the technical indicators were corrected.

SPX daily closeup

On the hourly chart, the overbought market seems tired. Negative divergence appears on both MACD and RSI. However it’s still wandering above the support level at 780. I’m not going to say the upside room is depleted however a significant pullback to 750 is imminent regardless the wave counting or intermediate trend.

Before the settlement of March e-mini futures, ES finally jumped out of the sharp ascending channel, and this may give a little relief to the bears suffered from nightmare during the past several days. It seems no doubt that the market may open lower and bounce back up after the big money starts to focus on the market instead of manipulating the futures contract settlement price.

XLF gave a sell signal again, which agrees with SKF.

XLF hourly SKF daily SKF hourly

SPX 60-min mechanical system (courtesy of BPT) almost give the sell signal, however moving averages and slow STO have not confirmed it yet.

The most important event during the past two days is the breakdown of US dollar. A bounce back is possible which will hurt the stock market for sure, but the down trend may last for some time.

$USD daily DX hourly