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Stocks Level Off; Await CPIThe S&P 500 has continued to retrace, leveling off around 3810. We are seeing good support here confirmed by green triangles on the KRI. The Kovach OBV has flatlined, suggesting we need more momentum to come through before anything exciting happens. We will need to wait for CPI to be released at 8:30 AM EST. As we discussed yesterday, the markets are awaiting this data point, and will likely be quiet until then across all asset classes. All eyes are on this print, as we neared double digits last time, and recent European CPI had a similar reading. If we are able to rally, then 3937 is a likely ceiling. If we selloff further, then 3737 should be considered a floor.
FX:SPX500Short
by quantguy
Stocks Await Inflation DataStocks retraced as anticipate yesterday. We fell exactly to the intermediary level of support we suggested yesterday, at 3825. The Kovach OBV has topped and rounded off, suggesting the weak momentum we saw last week has dissipated for now. We won't expect to see any significant moves, as the markets are anticipating CPI data tomorrow. With all eyes being on inflation and the print expected to potentially read in the double digits as per the last reading and in Europe , this could spell another hit for stocks tomorrow. If we are able to rally, then 3937 is a likely ceiling. If we selloff further, then 3737 should be considered a floor.
FX:SPX500Short
by quantguy
SPX Daily TA Neutral BullishSPX Daily neutral with a bullish bias. Recommended ratio: 52% SPX, 48% Cash. * June CPI report is scheduled for release at 830am on 07/13 and the consensus estimate is 8.8%, if the number comes in higher than that (which many pundits are predicting) then a market sell-off is to be expected. The Euro continues to bleed as it approaches parity with USD for the first time in 20 years as USD and RUB both edge higher. Oil, Gold, Cryptos, Treasuries and Equities are all down as global inflation numbers keep coming in higher; the VIX is also higher. UK Prime Minister Boris Johnson resigned; Sri Lanka's economy is currently collapsing due to bankruptcy as their nation endures food and fuel shortages; Iran appears to be pushing forward with uranium enrichment while strengthening Yemeni ties - making Israel, UAE and Saudi Arabia become increasingly fearful and potentially willing to collaborate defensively; Russia is gradually expanding through the Donbas region (with Donetsk being one of the last strongholds to prevent annexation of the Eastern Oblast) while Lithuania enters the fray by blocking trade/transit between Russia and Kaliningrad - Putin also recently stated that the offensive against Ukraine has barely begun; and lastly the situation between China and Taiwan appears to be escalating month to month while mainland China is still dealing with 'Zero-Covid' and recent civil unrest from Chinese bank clients who have had their assets frozen. That said, the bearish catalysts keep piling up as financial markets continue looking for a bottom; so at this point in time it's reasonable to say that financial markets are still at the whim of the Federal Reserve, and because the Fed isn't done moving to a 'restrictive monetary policy' it's therefore reasonable to assume that there is more potential downside. However, it's prudent to remain vigilant because of one question, at what point have financial markets already priced in a recession?* Price is currently testing the uptrend line from 06/16 at ~$3850 after being rejected by the lower trendline of the descending channel from August 2021 at ~$3925 for a second time in a month. Volume remains Moderate and is currently on track to break a five day streak of buyer dominance if it can close today's session in the red; according to Volume Profile, Price is also currently facing resistance at the third largest supply/demand zone on the chart. Parabolic SAR flips bearish at $3725, this margin is neutral at the moment. RSI is currently trending down at 46 after being rejected by 52.68 resistance for the second time in a month; the next support is at 38. Stochastic is currently crossing over bearish at 91 as it risks falling out of the 'bullish autobahn zone'; the next support is at 76. MACD remains bullish and is currently testing the uptrend line from March 2020 at ~-$35 as resistance while also still technically testing -44 resistance; if MACD is rejected at the uptrend line and then falls back below -44, this would be very bearish. ADX is beginning to form a soft trough at 19 as Price is seeing some recent selling pressure, this is mildly bearish. If Price is able to bounce off of the uptrend line from 06/16 at ~$3850 then it will likely retest the lower trendline of the descending channel from August 2021 at $3938 minor resistance . However, if Price breaks down out of the uptrend line from 06/16 at ~$3850, then it will likely retest $3707 minor support . Mental Stop Loss: (one close below) $3815.
SP:SPX
by dailytaguy
Can The Stock Rally Sustain?Stocks appear to be running into resistance at 3909, after a slow trek upwards from the 3700's. The rally was labored, with resistance confirmed at every technical level along the way by red triangles on the KRI. We are seeing a bit of a retracement, to 3867, with support confirmed by a green triangle on the KRI. The Kovach OBV has been bullish, but does appear to be rounding off. This fact, combined with the weakness of last week's rally, suggests we may be in for another selloff. If so, we could retrace the entire rally to 3737, which should be considered a floor. The level 3825 is a reasonable intermediary level of support. If we are able to break out, then 3937, a relative high, will surely provide resistance.
FX:SPX500Short
by quantguy
Eurostoxx Ultimate Pivot PointsReading charts is just one part of trading a bear market, another highly significant part is a solid understanding of market psychology, heuristics and biases. Having spent 14 years in a QE fuelled bull market where there were few inexplicable events and certainly no major forced liquidation events, it is easy to understand why so many participants get so excited about two days of asset flows out of commodities and into tech names. Yes, the market can go higher from here, yes it can go lower, but calling a major bottom and repeatedly getting attached to these short squeezes is all part of the psychological conditioning that has been happening to many over the last 14 years. Therefore we would suggest waiting for extremes where there is nobody else left to buy or sell, this is where the odds are stacked firmly in one's favour. Patience. Discipline. And more patience.
TVC:SX5E
by Newcomb_Analytics
How Will Stocks Begin July?Stocks have begun July with a whimper so far, maintaining a very narrow range after selling off from the 3900's. We have found support in the mid 3700's, but appear to be forming a bear flag pattern. Volatility has consolidated which may portend a breakout. If so, we could make a run for the 3900's again, with 3825 and 3937 likely targets to the upside. If we sell off from here, then 3645 is a likely floor. The Kovach OBV has started to uptick slightly, which could indicate a bull divergence.
FX:SPX500
by quantguy
SPX Daily TA Neutral BearishSPX Daily neutral with a bearish bias. Recommended ratio: 45% SPX, 55% Cash. * Core PCE Price Index came out today (at 830am not 1230pm like I had incorrectly posted in previous TA's) and was lower than forecasted at 4.7% vs 4.8% and .2% lower than last month's reading (4.9%), this is reflective of the Fed conducting QT + rate hikes and all but confirms that the Fed will raise another 75bps on July 27th. CPI is due to be reported at 830am (EST) on 07/13 and will provide additional guidance to markets regarding how effective the Fed's tightening and hawkishness is and whether they need to be more or less aggressive heading into the end of the year. Aside from a few stocks, everything is down; Gold, USD, energy, crypto, equities and treasuries are all down. Russia's Deputy Security Council Chairman (and former President) Dmitry Medvedev today reiterated that increased Western sanctions against Russia can qualify as international acts of aggression that can justify war . NATO is continuing to expand with the addition of Finland and Sweden and have agreed to modernized Ukraine's military + bolster NATO presence on the Eastern Flank. Russia Foreign Minister Sergei Lavrov stated today that a new Iron Curtain is currently being built and that Russia vows to remove dependence on the EU in all critical sectors . It has become quite apparent that this NWO is here to stay but not quite as clear as to whether or not it will prompt WW3. While all this is going on, China vows to "smash to smithereens" any Taiwanese efforts to gain independence and has reiterated their warning for any collusion with the US . China also continues to aggressively assert ownership of the South China Sea which is home to $3 trillion of trade transit yearly (and shared by Vietnam, Philippines, Brunei, Malaysia, Indonesia and Singapore) and East China Sea which is home to numerous natural gas fields (and shared by Taiwan, South Korea, and Japan). Though it seems that markets have priced in a continuation of QT and rate hikes, there are numerous bearish catalysts lurking in the background that make the market sentiment lean bearish at the moment.* Price is currently trending down at $3800 after being rejected by the lower trendline of the descending channel from August 2021 (~$3950) as resistance. Volume is currently Low and on track to break a three day streak of seller dominance if it can close today's session in the green. Parabolic SAR flips bearish at $3670, this margin is neutral at the moment. RSI is currently trending down slightly at 43, the next support is at 38. Stochastic is currently crossing over bearish at 65 after being rejected by 76 resistance, the next support is at 48. MACD remains bullish and is currently trending up slightly at -67 as it attempts to reestablish support at -76 minor support. ADX is currently trending sideways at 23 as Price begins to fall again, this is neutral at the moment; if ADX starts trending up as Price continues down this would be bearish. If Price is able to bounce here then it will likely retest the lower trendline of the descending channel from August 2021 at ~$3950 . However, if Price continues to break down here, it will likely retest $3706 minor support before potentially going lower to test $3508 minor support. Mental Stop Loss: (two consecutive closes above) $3900.
SP:SPX
by dailytaguy
Stocks Press LowerStocks pressed lower as we anticipated yesterday. The S&P 500 was hanging on by a thread yesterday at 3825, and sure enough, support caved, and we were able to test lower levels. We crossed a vacuum zone to find support at 3758. We currently appear to be finding support there, confirmed by a green triangle on the KRI. If support does not hold here, we anticipate 3658 or 3645 to hold as a floor. If we are able to rally, then watch for resistance at 3825, with 3937 a likely ceiling.
FX:SPX500Short
by quantguy
1
GDP to Weigh on StocksStocks took a dive from the high 3900's. We identified 3909 as a likely target in the previous report, and a brief rally was able to hit this target and then some, coming just shy of the 4000 handle, and retracing just shy of a 0.618 Fibonacci retracement of the selloff from the 4000's back in early June. We have since retreated to support at 3825, which is a relative high and strong technical level from a relative high on June 15th. We appear to be hanging on by a thread and the Kovach OBV has slumped. If momentum does not pick up, then we could test lows at 3645. US first quarter GDP came out contractionary , and the second quarter is not looking much better. Recall that two quarters of shrinking GDP is what many use as the definition of a recession.
FX:SPX500Short
by quantguy
SPX Daily TA Neutral BullishSPX Daily TA neutral with a bullish bias. Recommended ratio: 55% SPX, 45% Cash. *Equities, crypto, USD, gold all are getting off to a rough start this session while treasuries and energy started the week off with a boost. Global inflation numbers are continuing to print higher, Russia defaulted on their foreign debt for the first time since 1918 because many developed countries are not accepting the Russian Ruble, NATO is increasing military high-ready support forces for Ukraine to 300k , and 3AC has defaulted on a $670m loan from Voyager Digital . Key dates this week: 3rd Q1 GDP estimate due 830am (EST) on 06/29 and Core PCE Price Index report due at 12:30 (EST) on 06/30 .* Price is currently testing $3938 minor resistance which coincides with the lower trendline of the descending channel from August 2021. Volume is currently Moderate (low) and on track to break a five day streak of buyers dominance if it can close today's session in the red. Parabolic SAR flips bearish at $3637, this margin is mildly bearish. RSI is currently trending sideways at 48 as Price is encountering a critical resistance at this level; the next RSI resistance is at 52.68. Stochastic remains bullish and is currently trending up at 68 (after blowing past 48.08 resistance) as it approaches a test of 76.29 resistance. MACD remains bullish for a second consecutive session and is currently testing -76.22 resistance, if it breaks above this level then the next resistance is at -43.84. ADX is currently trending down at 24 as Price continues pushing up, this is mildly bullish. If Price is able to break above $3938 minor resistance and reclaim support at the lower trendline of the descending channel from August 2021 (~$3960), then it will likely retest $4175 resistance. However, if Price is rejected here at this critical resistance, it will likely retest $3706.52 minor support before potentially heading lower. Mental Stop Loss: (one close below) $3800.
SP:SPX
by dailytaguy
Stocks Testing Relative HighsThe S&P 500 has steadily risen, though this rally looks very weak. We have gredually made higher highs, and are currently encroaching upon a relative high at 3825. The Kovach OBV appears quite bullish, which could indicate there is more in the tank for stocks. If we are able to breakout further, we could solidify the mid 3800's, with 3909 a likely ceiling. Since we are at relative highs, watch for momentum at open. If it is insufficient to break through current levels, then a retracement is likely with 3758 a likely support level and 3645 a likely floor.
FX:SPX500Short
by quantguy
SPX Daily TA Cautiously BullishSPX Daily cautiously bullish. Recommended ratio: 70% SPX, 30% Cash. *The US Dollar (and treasuries and bonds), energy and commodities take a tumble as equities and crypto get a boost from a lower PMI and a successful Federal Reserve bank Stress Test with hopes that inflation can start to slow down before the Core PCE report due on 06/30/22. All things considered, this is still just a technical relief rally (with just a bit of room to run) until it crosses certain levels in a sustained fashion.* Price is currently trending up at $3795 as it aims to retest the lower trendline of the descending channel from August 2021 at ~$3900 as resistance. Volume remains moderate and has favored buyers for four consecutive sessions now, indicating that there is significant support at $3706. Parabolic SAR flips bullish at $3938 minor resistance, this is mildly bullish at the moment. RSI is currently trending up at 41 after testing 38.06 support and bouncing, this reconfirms that the uptrend line from 01/27/22 is still intact; the next resistance is at 52.68. Stochastic remains bullish and is currently trending up at 37 as it is currently breaking above 18.32 resistance; the next resistance is at 48.08. MACD is currently trending up slightly at -100 as it looks to complete a trough and break above -86.76 to form a bullish crossover; the next resistance (minor) is at -76.22. ADX is currently trending sideways at 27 and forming a soft peak as Price continues to push upward, this is neutral at the moment; if ADX can begin trending down as Price continues up then it would be bullish. If Price is able to continue higher then it will likely retest the lower trendline of the descending channel from August 2021 at ~$3938 minor resistance. However, if Price breaks down here, it will likely retest $3706 minor support before potentially heading lower to test $3508 minor support. Mental Stop Loss: (one close below) $3706.
SP:SPX
by dailytaguy
S&P 500 Breakout??The S&P 500 has continued to range establishing an upper bound at 3792, confirmed by red triangles on the KRI. We have been edging up with higher lows, and volatility has consolidated suggesting we are gearing up for a breakout. The Kovach OBV is still pretty bullish, suggesting a bullish divergence and possible bull breakout. If so, we must clear 3825 before attempting higher levels. The level 3792 is providing strong resistance and if we fail to break it at open we are likely to reject it in which case 3694 is a likely target.
FX:SPX500Short
by quantguy
SPX Daily TA Neutral BullishSPX Daily neutral with a bullish bias. Recommended ratio: 51% SPX, 49% Cash. *Fed Chair Jerome Powell testified before the Senate Banking Committee today and to no one's surprise reiterated the Fed's 'reaction function' (comprised of quantitative tightening and a higher federal funds rate (FFR)) working like it's supposed to. He mentioned that the market reacted appropriately by pricing in future rate hikes and repeated that the Fed will continue to move expeditiously (go beyond neutral) to bring Core PCE inflation down from ~5% to their target of 2%; according to Powell beyond neutral is beyond 2.5% FFR, the current FFR target rate is 1.5%-1.75%. With direct endorsement from Powell, the crypto and equity markets are correct in thinking FFR will be at or above 3.5% EOY (75bp July to 2.5%, 50-75bp September to 3%-3.25%, 25-50bp October to 3.25%-3.75%, 25-50bp to 3.5%-4.00%); obviously certain events can expedite or delay this but it seems like markets are beginning to price in the reality of a recession. It is important to remember that by the time the economy recognizes that it is in a recession, financial markets will already be pricing in the road to recovery. In other words, the economy is usually last to feel a recession. That said, it's still to premature to call a bottom (Jim Cramer hasn't told us to sell everything yet) but we could perhaps be in store for a short term rally. PMI report will be released tomorrow at 945am (EST) and Core PCE Inflation report will be released 06/30 at 830am (EST).* Price is currently trending sideways at $3759 after closing above $3706.52 minor support for a second consecutive session. Volume remained Moderate and has favored buyers for three consecutive sessions now. Parabolic SAR flips bullish at $3983, this margin is mildly bullish. RSI is currently trending sideways at 38.06 resistance as it attempts to flip it to support. Stochastic remained bullish for a second consecutive session and is currently testing 18.32 resistance. MACD remains bearish and is currently trending sideways at -105 as it continues to form a trough; it would need to break above -81 in order to cross over bullish. ADX is currently trending sideways at 27 as Price continues to decide whether to bounce here at $3706.52 minor support or go down lower, this is neutral at the moment. If Price is able to continue up from here then it will likely retest the lower trendline of the descending channel from August 2021 at ~$3900 as resistance. However, if Price breaks down below $3706.52 minor support, it will likely retest $3508.14 minor support for the first time since November 2020. Mental Stop Loss: (one close below) $3706.52.
SP:SPX
by dailytaguy
Buffet Indicator insightsDespite the recent downturn in the equity market, the Total Market Cap over GDP - also known as Buffet Indicator - clearly shows that there still might be a significant market crash ahead. Assuming the market will reach the " Fairly valued " territory, it means that a further 25% decline is to be expected. Assuming instead that the market will ultimately become " Significantly Undervalued " - as it happened after both most recent market crashes (except after COVID due to the massive Fed intervention) - we should expect a further 50% decline.
FRED:WILL5000PRFC
by a.b