Market comments
US equities
ST trend - down (oversold)
IT trend - down
LT trend - down
The NASDAQ and the Russell 2000 had the 6/6 exhaustion as top, but the NYSE composite and the S&P continued to a new high on the 17th before dropping.
Tons of TA indicators show this to be an IT top. I lined them up by order of loudness (how loud they rang)
1. Sentiment
- AAII extreme (I mean screaming) bullish sentiment at the top
- P/C extreme (really scary) ratios around the top
2. Ewave
- Completed abc correction count from the October low (C being a 5er)
- Corrective pattern all the way up (courtesy Velociraptor)
- Intraday impulse (trending) patterns down after the top.
3. Oscillators
- McClellan oscillator and NH/NL both agree that there is a lot more potential downside on the IT move (courtesy Donald Sew)
4. Pattern
- Candlesticks: Look at the WEEKLY (Mon-Fri) candlesticks chart of the Naz/NDX and see a shooting star on the week of the 6/6 , which was also a long legged doji, followed by another doji and two small bodies. So we had four small bodies in a row, and if this week is black that's a reversal. In fact the whole month of June was a shooting star doji. This could develop to an evening star on a monthly basis which would spell big trouble to the markets.
- 6/6 is now recognized by most chartists as exhaustion (Hey, you heard it here first) and from there the pattern is clearly trending down on the ST
- Confirmation that a longer term top has been made is by the unconfirmed high in the S&P / NYSE - unconfirmed both by volume and by the other indices.
- Sector rotation was quite evident around the top with one day the Naz is down and the Dow up and the next day it's the other way around.
5. MA
- 13dMA was crossed down and turned down, proved to be resistance when crossed up intraday but not on closing basis (the market is ST trending down), 13 dMA also shows the clear abc on the A wave from October to November and the clear 5 waves on the C leg from March to June.
- 13 and 52 weeks MAs were deemed bullish (most chartists use exponential 40-200 days which I consider less accurate) when the crossover up occured but my understanding is that this is/was a correction to the entire move from the y2k highs so this was bound to happen. The only LT question which remains open is wether this abc from the October lows was the entire correction or just the A leg, or putting it to price movement - are we going to a new low or just a retest from above and another IT leg up before the secular bear continues?
I think I missed a few less significant (in my toolbox) indicators like the VIX that also went to extreme levels, but I think the picture is clear enough.
On 6/11 I had a long post almost ready with most of what is written here but then the power jumped and I lost it, but I still managed to wave my arms and shout in a shorter post that I count as another bingo (although I talked about the S&P which did make a higher high after that - so technically I was a week early in calling a market turnaround, again.)
Edit: It looks like today could be a ST reversal since the S&P hadn't had a chance to test the highs. IMO it's going to be a lower high and the down trend will continue next week.
Japan
ST trend - up (overbought probably completed)
IT trend - up (overbought looking for 2-3 weeks correction)
LT trend - UP!
The Nikkei 225 has IMO made a LT bottom and started on what can easily be a 2-3 years bull market. ST it went too far so an entry point should be picked carefully, something closer to 8600 would be nice, but longer term one should buy and hold. I missed the 7900 area entry point by inches and had to watch this , mind you, Japanese stocks index(!) rise another 15% in just over a month.
Japanese 10 years bond has turned around, too, and I think we're going to see higher LT rates (lower bonds) in the coming years, (that's an easy call, they couldn't get much lower then the 0.4% 10yr rate low they recently made).
BTW the Nikkei dividend yield was more then twice the 10yr rate for a months, topping at almost 3 times! Tell that to the analysts and market strategists that say US stocks are positioned well for a LT rally.
Gold
ST trend - up
IT trend - up (needs more confirmation)
LT trend - up
Looks like the bull should continue from somewhere around here (latest low 343) or just a bit lower around 341.
A close over 363.5 will confirm the uptrend is at work and will indicate higher highs (400+) down the road, which will IMO carry higher momentum then the previous leg up, as in my count we should begin on the 3 of 3 wave of the LT up trend.
Arik |
