Spurious

Here is something that I was noodling around with in my last post: Spiel

This is very interesting. We could be setting up for an A impulse down from Apr-May, B triangle from June-Sept, and then a C impulse down for Sept-Oct for the 'Fall Classic' (per Bob Hoye). So it wouldn't be P3, but a large correction for the intermediate term just the same.


Adding SSEC (Shanghai) charts based on conversation with gideon

Spiel

I am going to go through a rambling stream-of-consciousness chart dump. I will add charts as I update.

1) FTSE

As Blankfiend rightly observes, the FTSE made a higher high today above it Aug high, and also closed above the Aug high close. This is decidedly not bearish. So if the FTSE is headed down (eventually), the count needs to look something like this .... and it is ridiculous. We will see.


So the question is: Is a bearish September in our future? The FTSE sure doesn't think so.

1a) FTSE alternate count

There is a lot to hate about this count. But it is viable in the fact that it doesn't break any rules.

I don't really buy it, but we will see.


2) SPX - LD issues

Here is why I don't buy either Leading Diagonal count option for the SPX. Just because I don't buy it means precisely squat. It might turn out to be a LD just so the market can kick my face in.

... But no sir, I don't buy it.


2a) SPX - My preferred impulsive count


3) Index Examination

This is very interesting. We could be setting up for an A impulse down from Apr-May, B triangle from June-Sept, and then a C impulse down for Sept-Oct for the 'Fall Classic' (per Bob Hoye). So it wouldn't be P3, but a large correction for the intermediate term just the same.

Uncle Bob

I had discussed the FTSE in a few posts over the last few months: A Trip Around the Globe IV: A Look at a Few International Indices and Bob's Your Uncle

And per yesterday's post, I was showing a lot of topping Formations on the US indices. Well Uncle Bob is not looking so hot either. Here was my last chart of the FTSE (Apr 30):



And here is how it looks today:



.... ouch.

TSX Charts for Kaz

A Trip Around the Globe IV: A Look at a Few International Indices

I see London I see France .... :)

Here are a Few Charts, Globetrotter Style!

Original - A Trip Around the Globe: A Look at a Few International Indices - Dec 10, 2009
Second Trip - A Trip Around the Globe II: A Look at a Few International Indices - Jan 18, 2010
Third Trip - A Trip Around the Globe III: A Look at a Few International Indices - Jan 31, 2010

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First things first

Per usual binve modus operandi, I made some horrendously bad calls in my last trip. Namely, I thought that the January top marked a significant top, which the market resoundingly threw back in my face.

However, when I look at the international markets now, 3 months later, something very interesting is occurring. Namely, the last year was market by virtually every index on the planet (not exactly, but a lot of the major ones) moved basically in lock-step. But over the last 3 months we have been seeing more and more divergences develop.

The SSEC (china) and the HSI (asia + international financials) are putting on a dismal performance. Whereas indices like the NDX are still going very strong. Divergences are very interesting and might be giving us a clue as to what is happening next.

First stop Europe. The DAX, arguably the leader of the European Stock Markets, shrugged off the negative developments in January and made some clear new highs. It is also challenging its 62% retrace right now (just like the Dow and SPX). It is still not forecasting major weakness and looks to be holding its own (and with the worries about Greece, Spain and Portugal in the Euro-zone, the stronger European economies will act like safe havens relatively speaking).



The FTSE (Great Britain) on the other hand, does not. This was one of the few good calls I made recently: Bob's Your Uncle



Next stop, India! The Sensex did not break down as much as I thought it would (it did test the 200 day MA like I expected, but I held firm, which I didn't expect). But now it is just retesting the highs in a sort of sideways action. It also did not use the support line off the bottom to make a new run up. That could be very telling.



Next stop, the Far East! I have spent a lot of time writing about Asian Markets, please look through my posts for more observations: Asia

First look is at the HSI. Still not looking so hot my friends. It was the weakest link in my last post and it still looks anemic. It is a heavy mix of Asian/Chinese stocks and International financials. Financials have been faring slightly better recently (US domestic financials were on a tear the last 2 months). The HSI has two crotches and it is getting kicked in one of this time (it's cup is half on?).



Next is South Korea. It is coming up on major resistance. It tried once and was tossed back hard. But like the Energizer Bunny, it kept going. Right now it is at a crossroads. It is in the stance of making a triple top. But if it does breakout, it has a *huge* resistance zone above which should prove difficult to break through.




China / via the Shanghai exchange. Read the notes, they tell the story. The only thing I will add here is: yikes. It keeps breaking support and the momentum is starting to change to downward again.



Next Tokyo. I have written Several posts on the NIKKEI. We did get a small drop from where I called it, but nothing like what I was expecting. However this move back up the last 3 months is very tired, not at all sharply up. It could be a large ending diagonal in the making. This is one I am watching closely.



It also is worthwhile to keep in perspective that the NIKKEI is still in the midst of a several decade bear market





Next stop, South America! The Brazilian BVSP is putting on an *impressive* run!! However, the weekly indicators are looking tired. It did put in a new nominal high during the last 3 months but not an all time high. And the weekly chart is still saying that there will likely be a pullback (of some significance) before the next major bull move.



Back to the USA.. First is the NDX (Nasdaq 100)... holy schnikeys. This sucker just keeps going. It did break the 78.6% retrace (most impressive). The NDX does have a history of very deep wave 2 retraces, but this is ridiculous. There is one last resistance zone within the context of a P1 retrace. If it moves through it on any kind of strength, then I would highly doubt the P2 count for NDX, and call the Cycle Degree X more likely (which I am tempted to do right now). And if the NDX is in a Cycle X, then are the rest of the indicies also in a Cycle X, as I layed out the possibility for here? Examination of the Large Technical Landscape / Possible Paths. Could be, but one step at a time:



For a more sober comparison, look at the SPX. It did break previous resistance and is now testing the 62% retrace. But it is doing so on negative divergence and weakening internals.

Bob's Your Uncle

Per my post today Zooming Out, the SPX daily chart is looking like it is ... er .... retaining water? for the short term.

.... Well if the SPX is retaining water, then the FTSE is downright bloated.

Look at the FTSE RSI, MACD, and Stochastics, take a short position and Bob's Your Uncle :)

Thoughts on the Euro, the Dollar, and a Long Term EUR/USD Count

Protechtor has a very nice long term EUR/USD count here: EUR/USD Longer Term View going back to 2007/2008. It prompted me to go back and review my long term EUR/USD count.

It is not secret that I am bearish on the US Dollar, both fundamentally and technically. For my fundamental picture, see here: Thoughts on the US Dollar, Analysis of the USDX Long Term, Follow up on the Gold Blog and actually I wrote a post on my other blog today that discussed this topic in more detail (inflationary policies by the Fed, debt saturation, why stocks will fall in an inflationary environment / stagflation): Debt Saturation

And there is another big reason why I am bearish on the Dollar long term: the EUR/USD count.

Now don't get me wrong. I am not Euro bull at all (being bearish the Dollar does not make me a de facto Euro bull. There are much better currencies out there). But there is a very interesting long term fundamental stack up between the Euro and the Dollar:

The Federal Reserve Note (the US Dollar)

-- The Dollar is governed by the Fed who is headed by politicians posing as economists and will *always* turn to the politically expedient action of debt monetization. Despite any rhetoric to the contrary, these are the Fed's actions. Until this is proof to the contrary, this should be the assumed going forward position.
-- "But the monetizing cannot keep up with the rate that debt is collapsing and therefore we will have deflation" ... I don't buy this for a second. QE-I was the opening salvo, and if you don't think there will be a QE-II then I think you will be surprised.
-- Essentially the US Dollar will be treated by our policymakers as economic toilet paper, who are not inflation hawks and will continue to perpetuate the myth that monetary inflation = price inflation and if we don't experience price inflation then monetary inflation is "ok" (THIS IS **WRONG!!!**. Monetary Inflation is a cause and price inflation is an effect. And like any cause and effect in economics there is a lag. By the time price inflation is generally detectable, the rampant monetary inflation will have created vast amounts of damage. These cycles have occurred many times and will occur again)

The Euro

-- Right now the Eurozone is a mess of failing economies and unhealthy economic activity
-- But painting Europe with a broad brush is not only misleading, it is incorrect
-- Germany is not only by far the strongest economies in Europe, it is one of the strongest economies in the world. Germany is a saving society. The Mittelstand companies (small/medium firms, mostly family owned) is exactly the economic model that most of the western world should be following. High exports and a strong currency.
-- So let me lay out this for a scenario: The Euro continues to have problems based on the constituent parties that have economies in rough shape (Greece, Spain, Portugal, etc.). But Germany and Switzerland, and to a lesser extent France and Belgium are in much better shape. What if the Euro morphs into a "consolidated" Euro based on the currencies of the stronger economies
-- While still fraught with problems, I would still say on a relative basis the Euro has more future opportunity to become stronger than the US Dollar. Especially as the ECB is much more hawkish on inflation than the Fed.

Compounding the fact that in the world of Debt Saturation, economies and currencies that are based on real goods (such as the Canadian Dollar and the Australian Dollar) will outperform the US Dollar.

So, based on this argument, and the links at the beginning of the post, I am bearish on the US Dollar Index, and a number of Dollar currency pairs for the long term, and am more bullish on the Euro than the Dollar (not enough to *actually* be bullish, just as a relative measure) over the long term.

Here is the technical picture of the EUR/USD that backs up that story:



The move from 200-2008 looks like a very clear 5-wave move and we are in the middle of an ABC zigzag retrace.

The EUR/USD could do a double bottom for the C wave at ~1.20 (50% retrace), but I believe it will make a run for the support zone at 1.12 (62% retrace).

This means my long term forecast for the US Dollar is down (and no, that is *not* bullish for stocks over the long term as I explain here, as the stock market and the Dollar will resume their long term stance, which is positive correlation)

Death and ....

I apologize for not being able to put any analysis together this weekend, but I was working on my tax return (always a good time .... yeah, you sound convinced... :) ).

Looking at the FTSE Daily chart and it definitely looks like it could be rolling over. A few topping candle and overbought MACD, RSI, and Stochastics.

Is it the top of P2 or just a Minor Wave? I have no idea, lets just see how it unfolds first and then we can evaluate.



10:22 current SPX count



11:55 current US Dollar count

FTSE Schmootsie II

Following up on the FTSE (see: FTSE Schmootsie).

The FTSE stopped at a perfect 62% retrace with a nice bearish reversal candle. Now a reversal candle only signals potential reversal. But if we get some follow through tomorrow ... watch out.

Stochastics are also in the overbought territory. Also the DAX has a bearish candle sitting in the same spot.

This definitely bears watching.

FTSE Schmootsie

AussieKen and I were discussing moves on the FTSE recently http://marketthoughtsandanalysis.blogspot.com/2010/02/pee-wars.html#comment-35010748. I keep tabs on a number of international indices on a regular basis (see this series of posts: A Trip Around the Globe III: A Look at a Few International Indices) but I had not done an actual EW count of the FTSE in quite some time.

So AussieKen piqued my interest. I see that the current 5 wave move down followed by the correction up is probably clearer here than on any other index. The FTSE peaked a few days earlier than the rest of the indices with a nice reversal bar. And the Minute 2 down in Minor 1 is very clear (not small / ambiguous like the rest of the indices). Everything looks beautifully proportional including the Minor 2 wave.

A nearly perfect impulse down and retrace back up. Thanks AussieKen!!

A Trip Around the Globe III: A Look at a Few International Indices

I see London I see France .... :)

Here are a Few Charts, Globetrotter Style!

Original - A Trip Around the Globe: A Look at a Few International Indices - Dec 10, 2009
Second Trip - A Trip Around the Globe II: A Look at a Few International Indices - Jan 18, 2010

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First stop Europe. The DAX, arguably the leader of the European Stock Markets, had its first scary drop in Nov/Dec (labeled as "Yowza"). The it has its next drop out of the second wedge which I labeled in my last post as "Swei Yowza". Since then? ... nothing bullish, that's for sure. Stink-o-rama! (Don't worry, there are *much* stinkier indices coming up :) ) The indicators are approaching oversold on the daily chart, so I would not be surprised by a bounce soon. But I think that is all it will be, a short term bounce. I think these chart patterns are forecasting a *lot* more downside.



Next stop, India!

From my last post: The BSE has had an *impressive* rise off the bottom, but its rally has maintained a distinct wedge shape (other indices have mostly morphed into a rolling top). There was a sharp pullback and then a rebound. And like the DAX above, the breakout of the first wedge is itself a wedge. I think there is a correction in the close future for the Sensex. This is a good one to keep your eye on.

And what happened since then? A HUGE gap down out of the wedge and a sell off of almost 10%! And is it done? Not a chance. Like I say on the notes in the chart, the 200 day will easily be tested, as will will support at 14000. That is another 13% down from where I am writing this.

Beyond that, I don't know. The BSE has a much stronger long term chart than the rest of the international indices (especially the United States), so I don't think the magnitude of its correction overall will be as bad as it is here. Stay tuned.



Next stop, the Far East! I have spent a lot of time writing about Asian Markets, please look through my posts for more observations: Asia

First look is at the HSI. Not looking so hot my friends. It is a heavy mix of Asian/Chinese stocks and Financials. And financials are far from healthy at the moment. The HSI has two crotches and it is getting kicked in both of them at the same time.

From my last post: It looks like a large ending diagonal. There was a breakdown, move up to the lower channel line and another breakdown. Then *another failed trendline retest (which didn't even come close to recapturing the broken trendline)*. I think this chart is saying "lots of trouble ahead". This is probably one of the most imminently bearish charts I have seen yet for a major index.

Imminently bearish was right!! Holy schnikeys. Since my last post the index dropped 8%!!. And the Head and Shoulders top that I identified broke the neckline. This projects a move down to at least 19000 (another 5% move down). It is currently sitting on the 200 day MA, so don't be surprised by a bounce here. In fact the most likely scenario is that it will retest the broken neckline from underneath. I will be very surprised if it actually recaptures it. I also think the chance of that being the bottom is approximately 0.0%. This continues to be a *very* bearish chart, and the more recent price action I see on it, the more bearish I get.




Next is South Korea. It is coming up on major resistance. It tried once and was tossed back hard.

From my last post: But now the pattern is turning bullish again. What was a down channel is now looking like a bullish flag with a break out above. It pushed through the lower resistance zone and is now consolidating. So here is the question: does it break through and try for the upper resistance zone? or does it turn down here making a double top? The indicators are suggesting bearishness, but not overly so. I don't have a super strong opinion on this chart.

Well it did indeed get tossed back from the top of the lower resistance zone. Not just a little, but definitively. It does looks exactly like a double top. So last time I did not have a strong opinion on this chart. I do now. And it is quite bearish. I think it will easily test the 200 day MA, but beyond that, I think it will try for the support zone at 1350. We will see how fast it gets there, and that should give us some clues for the long term trend.



China / via the Shanghai exchange. Read the notes, they tell the story. The only think I will add is that it is currently sitting at the bottom of the red support zone. If it breaks definitively below that, there is no meaningful support until about 2000 (about a 33% drop from where it currently is) .... yeah. Yikes is the word I would use.



Next Tokyo. I have written Several posts on the NIKKEI.

NIKKel, I Deserve at Least $0.06 For This Analysis, If I had a NIKKel for ...., and Long Term Count of NIKKEI back in Sept. We had an expected / predicted downturn since my last post. It is now sitting at the support of the 50 day MA. 200 day MA is close by and I think that will be tested soon as well. Beyond that is the support line at 9000 (12% down from the current price). I would definitely expect a bounce there, but 12% is a big drop in the meantime. Looks like a nice chart to short.




Next stop, South America! The Brazilian BVSP is putting on an *impressive* run!!

From last time: Holy Cow! Will it make a new all time high? I think the odds are definitely on its side. But look at the weekly chart, the momentum is definitely not on the BVSP's side. I think there will be a correction of some magnitude (too early to tell the size) before it puts in a new all-time high. Which I still put very good odds on. The recent move is much too strong to ignore.

We did indeed get weakness the past couple of weeks. The stochastics and MACD broke down like I was indicating. The drop since my last post was about 5%. And I don't think the correction is done. There is a strong support area around 60000 (about another 8% down). My guess is that there would be a bounce there. Beyond that, we will see. But I still consider this to be an impressive move, and a retest of 60000 to me says "correction" not "trend change".



Back to the USA. Looking at the weekly chart of the SPX, two words come to mind: tired and weak. Lots of negative divergence on the indicators, especially the money flow. And the top of this rally is looking very rounded indeed. Since my last post in December the size and quality of the rally has been pretty weak. This chart does NOT look bullish.

That was what I said last time. This time: more of the same. I have no idea why people are buying this chart. The CMF had its first weekly negative print in over a year!!. Breadth stinks!! The stochastics are approaching 50, and if it crosses it will head to 20 it very short order (this has serious bearish implications).

This break out of the wedge looks like Galileo dropping a cannonball off the edge of the tower of Pisa. If I was prone to motion sickness I would be vomiting all over my computer screen. ... Oh wait a second, I am... excuse me.

A Trip Around the Globe II: A Look at a Few International Indices

I see London I see France .... :)

Here are a Few Charts, Globetrotter Style!

This is an updated version of the post A Trip Around the Globe: A Look at a Few International Indices - Dec 10, 2009

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First stop Europe. The DAX, arguably the leader of the European Stock Markets, had its first scary drop in Nov/Dec (labeled as "Yowza"). Since then it began to rally again and put in a higher high. ... Yet ... the sideways breakout of the large diagonal is itself a diagonal. This chart portends (to me at least) a pretty substantial correction soon (probably in the next couple of weeks). I think it could easily market the start of a major downtrend as well, but lets stick with first things first.



Next stop, India! The BSE has had an *impressive* rise off the bottom, but its rally has maintained a distinct wedge shape (other indices have mostly morphed into a rolling top). There was a sharp pullback and then a rebound. And like the DAX above, the breakout of the first wedge is itself a wedge. I think there is a correction in the close future for the Sensex. This is a good one to keep your eye on.



Next stop, the Far East! I have spent a lot of time writing about Asian Markets, please look through my posts for more observations: Asia

First look is at the HSI. Not looking so hot my friends. It is a heavy mix of Asian/Chinese stocks and Financials. And financials are far from healthy at the moment. It looks like a large ending diagonal. There was a breakdown, move up to the lower channel line and another breakdown. Then *another failed trendline retest (which didn't even come close to recapturing the broken trendline)*. I think this chart is saying "lots of trouble ahead". This is probably one of the most imminently bearish charts I have seen yet for a major index.




Next is South Korea. It is coming up on major resistance. I tried once and was tossed back hard. But now the pattern is turning bullish again. What was a down channel is now looking like a bullish flag with a break out above. It pushed through the lower resistance zone and is now consolidating. So here is the question: does it break through and try for the upper resistance zone? or does it turn down here making a double top? The indicators are suggesting bearishness, but not overly so. I don't have a super strong opinion on this chart.



China / via the Shanghai exchange. Read the notes, they tell the story.



Next Tokyo. I have written Several posts on the NIKKEI.

NIKKel, I Deserve at Least $0.06 For This Analysis last week, If I had a NIKKel for ....) Nov 29, where I identified the potential H&S setup, and Long Term Count of NIKKEI back in Sept... Yet that H&S setup turned out to be bogus. Ahhh well, just part of the game. The current move was a strong breakout but the momentum is severely slowing. Looks ready for a small correction. Beyond that there are no clear indications.




Next stop, South America! The Brazilian BVSP is putting on an *impressive* run!! Holy Cow! Will it make a new all time high? I think the odds are definitely on its side. But look at the weekly chart, the momentum is definitely not on the BVSP's side. I think there will be a correction of some magnitude (too early to tell the size) before it puts in a new all-time high. Which I still put very good odds on. The recent move is much too strong to ignore.




Back to the USA. Looking at the weekly chart of the SPX, two words come to mind: tired and weak. Lots of negative divergence on the indicators, especially the money flow. And the top of this rally is looking very rounded indeed. Since my last post in December the size and quality of the rally has been pretty weak. This chart does NOT look bullish.