Weekly view of SPY, GLD, and UUP

The SPY continues to go higher on the weekly chart with no sign of letting up. Long term sentiment remains bullish. Click on image to enlarge.

A top in the GLD can be seen to have been put in the last week of November on this weekly chart. Note the Doji-Shooting Star candlestick pattern that marked the top. Click on image to enlarge.


I use the UUP as a proxi for the US Dollar. The weekly UUP chart shown here made a tweezers bottom the last two weeks of November. Click on image to enlarge.

Market Summary

It may be possible that the lows we see here are the lows from which the market makes its rally forward but I don't think so. Still we have been going sideways for more than 5 weeks and most likely have a band of support keeping the market up. I have made a line on the weekly chart portion of the image below which is approximately the lows of the candles on the hourly portion of the image. Short and intermediate term sentiments are still bearish. Click on image to enlarge.

From the list of tracked indexes the natural gas ETF UNG made the biggest gains for the week up 10.97%. The China ETF FXI was down the most off -4.77%. Click on table to enlarge.

Market Summary

What is going on with this market? We have had five gap days in this market in as many weeks according to my count around this 110-111 level in the SPY. We had a sentiment change from bullish to bearish back to bullish again. Can we really be bullish now? I have heard reports 4th Quarter GDP estimates have been raised to 4% and that certainly would be bullish. However, we have all the warning signs to consider. Click on image to enlarge.

What are the warning signs? If we look at the chart below of the S&P 500 we will notice that we are currently at about the same level as we were at the top of the market in mid October yet we did make a new high in November and again in December. Other markets, however, did not make new highs in November and December. Various asset classes have been topping out and going lower even while the S&P 500 made new highs. Could this recent high at 1119.13 on the S&P 500 on 12/04 be the high for the year? Click on image to enlarge.

As can be seen the US Dollar has broke above the 50 day moving average and held for several days. Let us not forget that the bottom in the stock market in March was accompanied by a top in the dollar and that there is an inverse relationship between the two. Click on image to enlarge.

Markets that have topped include the housing market index $HGX on 9/17. The XLF index with a high on 10/14. The $CRB index topped on 10/21. Oil topped on 10/21 and currently closed below $70 per barrel. The EURO topped on 11/25. And the GLD gold index made a high on 12/3 at 119.54 but has fallen off sharply since then. For the week the UNG Natural Gas ETF which was very oversold was up 10.76%. Other markets were flat or in the red. Click on image to enlarge.

Down we go

Short and Intermediate term sentiment has turned bearish. Note the gap lower marked by the blue oval. The US Dollar has firmly held above its 50 day moving average. This could be a good place to go short the market with a tight stop. Click on image to enlarge.

Market Summary

Climbing a wall of worry, that is what bull markets do. Bull markets are defined by the trend of the longer weekly and monthly time frames. A wall of worry is defined by the trend, or lack of a clearly defined trend, in the shorter hourly and 4-hour time frames. We are clearly in a bull market having this last week made an outside key reversal to the upside when compared to the prior week's candlestick on the weekly chart. Only the very short term hourly chart is displaying a pink background and this is what I call the wall of worry. The 240 Minute chart is my short term chart and it is clearly still in the bullish camp. Click on image to enlarge.

China's FXI was once again the most bullish for the week up 5.15% followed by the Russell Small Cap index at 4.43%, and the Emerging Market EEM at 4.26%, all very impressive. Clearly the leaders in this cyclical bull market are continuing to lead. The biggest loser by far was the Natural Gas ETF UNG down -12.11% for the week and the most down YTD at -65.18%. Friday's better than expected Non-Farm Payroll (NFP) employment report gave the US Dollar reason to rally which it did getting above its 50 day moving average for the first time since last April and with a corresponding drop in the price of oil and gold. The US Dollar is key to this market and if we see some follow through next week on the dollar to the upside I expect to see the stock market roll over and move south. Gold was down Friday -$45.20 to close at $1162.40per ounce. The GLD gapped lower Friday leaving a two day Island top. Interest rates gapped up higher on Thursday on the 10 Year Treasury Note $TNX and continued higher Friday. Next week is critical for many of these markets and we will continue to watch these numbers closely. Click on table to enlarge.

The Bulls have it

I have noticed a cycle for the last several months in which the market begins a rally at the beginning of the month, peaks about 3 weeks later around the time of options expiration, and then decline for the last few days of the month and then repeats. December is off to a good start with short-term sentiment back to bullish as prices gaped up higher once again causing the background color on the right side of the image below to turn green and leaving a two day Island Bottom on the chart. Click on image to enlarge.

Market Summary

The SPY failed at the 110 price level and looks to be headed lower. In a move similar to the gap up opening of this shortened trading week, Friday saw a dramatic gap down move leaving a second Island Top formation in as many weeks. The news that Dubai World was putting off payment on a $59 Billion dollars in debt that was released to the media when US markets were closed for the Thanksgiving holiday sent world futures markets falling rather dramatically. Though markets regained composure when they re-opened off their worst levels still there was a gap down and that shook up investor confidence especially in the banking sector. Market short term sentiment has again turned bearish and market volatility shot up 20% on Friday.

In the image below on the 240 minute chart both the gap up and gap down are noted by the blue ovals. The prices between the ovals represents what may be called a Bull Trap, if in fact prices continue to decline. The Weekly chart shows what is called a Tweezers Top formation on the two recent red weekly candles at 111.69 and that is a reversal chart pattern. This means that there is significant resistance at that level and the path for least resistance for the markets is to trade lower, at least in the short term. I heard Warren Buffett recently say, "The next hour is uncertain but the long term is fairly certain." and the long term is still bullish. Click on image to enlarge.

The biggest gainer this week was the natural gas ETF UNG up nearly 10% for the week, though it is off the most for the year at -60% YTD. The biggest loser for the week was the China ETF FXI down -3.49%. Click on table to enlarge.

SPY holds the 110 level

In a rather dramatic gap up opening as illustrated by the blue oval in the image below short term market sentiment made an abrupt reversal back to bullish. As noted by a trader friend the day after Thanksgiving is historically bullish. Click on image to enlarge.

Market Summary

Short term market sentiment as illustrated by the background color of the right side of the image below has turned bearish. Although prices did get above the 110 area of resistance that price did not hold and a failure at that point could signal a reversal in the market trend. Click on image to enlarge.

I have added the PowerShares DB US Dollar Index Bullish (UUP)to the list below to start tracking the US Dollar. It is well know that when the US Dollar goes up the stock market goes down and visa versa. It is interesting to note that the UUP is green in the 1 Week and 4 Week columns, although just barely in the 4 Week column. This could be a double bottom in the dollar or just a bounce. Which it is we will just have to wait and see. Click on table to enlarge.

NASDAQ Island Top

The image below shows that there is a three-day Island Top on the NASDAQ Composite Index and that is a bearish sign for US markets. An Island Top is formed by a gap up which we had on Monday, and is followed by a gap down which we had today. Since we have made a higher high this month than last month and we have broken the trend line from the October lows it appears the market is rolling over and will be testing those lows to find support. Click on image to enlarge.

Mid-Week Review

The market continues its march upward and broke out of the 110 resistance area which should now act as support. The next target is the 112 area. The market is in an uptrend and looks to continue in that direction. However, markets tend to test support and resistance areas and which way it goes we will just have to wait and see. Click on image to enlarge.

Market Summary

The market made a new high this week and closed off its recent high at the high end of the 104.00 - 110.00 range on the SPY. However, market prices also look to be rolling over and could make a pull back. There is a gap on the daily chart in the image below noted by the blue dot. Should the market gap lower that would create an island top and that would be very bearish. Click on image to enlarge.

Of the markets followed the EEM and FXI continued to perform the best on a weekly basis. Gold is continuing to make new all time highs. To me this reflects a lack of confidence in currencies, particularly the US Dollar. India just purchased 200 tons of gold last week from the IMF. It was the biggest single purchase of gold by a central bank in the past 30 years and could be seen as a signal governments around the world are becoming uncomfortable about the sliding value of the dollar. Click on image to enlarge.

Top of the range

While the intermediate term, as depicted by the green background color on the Daily chart in the image below, has turned bullish price remains in a six point range from 104.00 to 110.00 on the SPY. A breakout above this range would be very bullish as a break below this range would be bearish. There are divergences with indicators such as the RSI but the market continues to march higher. It is my understanding that today is a Bradley turn date. See here Which side of this range we break out to we will just have to wait and see. Click on image to enlarge.

Market Summary

It was a very bullish week in the market as seen in the image below. It was still however a week with a lower high and lower low than the week before. If this last weeks low is broken to the downside that would be very bearish. Unemployment figures were released showing unemployment standing at 10.2%. That number is expected to rise by some analyst though it is considered a lagging indicator of the recovery of the economy. Short term and long term the sentiment is bullish. Click on image to enlarge.

The table below shows that China FXI lead the pack to the upside up nearly 6% last week followed by the Emerging Market EEM up 5.5%. Gold also was a big winner this last week breaking the $1100.00 per ounce level intraday on Friday at $1101.40. Click on table to enlarge.

Market Summary

The GDP (Gross Domestic Product) is the the broadest measure of economic activity and reflects a measure of all goods and services produced in a country during a period of time. Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. The advance quarterly GDP report was released Thursday for Q3 and showed a 3.5% growth rate and an end to the recession according to the GDP. Prior results are as follows: Q2 GDP 2009 -0.7%, Q1 GDP 2009 -6.4%, Q4 GDP 2008 -5.4%, Q3 GDP 2008 -2.7%. The good news of the first positive results in the GDP in a year sent the markets up on Thursday only to see all those gains given up and then some on Friday with a strong sell off.

The image below is my current market timing model. It is a composite reflecting different time frames with the background color of the chart reflecting the trend in the respective time frame. As the background color, either pink or light green, shifts to the left of the image that trend, either up or down, is established. The gap open higher on Thursday, noted by the colored oval on the hour chart, was completely filled on Friday as prices continued their move to the downside. Sentiment is bearish on the short and intermediate term but bullish long term. Click on image to enlarge.


The chart below is of the monthly NASDAQ and shows October having the first monthly decline in prices on the NASDAQ since February. While the trend is still to the upside it must maintain prior support levels as indicated by prior months lows to keep moving to the upside. The market may be in the process of turning down and we will have to watch this closely. Click on chart to enlarge.

The table below shows the price performance of the followed ETFs over several time frames. As can be seen all markets were down for the week with EEM and $RUT leading to the downside. Click on table to enlarge.

Continued Selling

The markets have continued the selling from last week and now the intermediate term has become bearish with the break of the 20 day moving average. The XLF gave a two day Island Top formation on Oct.14-15 and the financials have sold off from there. The image below is of the SPY and is a composite of four time frames: Weekly, Daily, 4 Hours and 1 Hour. The trend is indicated by the color of the background in the respective time frame. Click on image to enlarge.

Market Summary

Tops in markets tend to be rounded because of investor psychology. Both tops and bottoms represent investor sentiment and tops grow and are maintained by HOPE while bottoms display the crowd at the exit fleeing due to FEAR. The bi-polar swing between hope(or complacence) and fear is what makes up the periodic waves we see. Bottoms tend to be sharp because the desire to give up fear is so strong. Tops tend to be rounded because the desire to keep hope is so strong. Every bear market starts as a correction. We have the beginning of a correction on the very short term time frame however we are well above the 20 period moving average on the daily chart and the weekly chart is showing it made a higher high and higher low than the previous week. Click on image to enlarge.


China continues to be the bullish leader this past week with the FXI up 2.76%, the most for the markets covered here. Click on table to enlarge.

Market Summary

Stock options expire on the 3rd Saturday of the month so that the 3rd Friday of the month is usually very volitile. As can be seen in the image below there was a sell off Friday which may be the beginning of a correction to the downside. The 4th panel in the image below is the hourly chart which is my very short-term view of the market and can be seen with a pink background indicating a downtrend in that time frame. All other time frames continue to remain bullish. Click on image to enlarge.

It was a strong up week for oil (USO up 8.85%) and gas (UGA up 11.06%). Basic Materials, up 4.4% for the week, continues to be the sector in the lead with the $CRB (Commodity Research Bureau Index) breaking out to the upside indicating inflationary pressures on commodities. Gold made a new high this week on Wednessday at 1070.70. Click on table to enlarge.

Market Summary

We are headed higher. All markets moved to the upside last week with FXI up the most at 8.55% which is alot by any standards. However, to balance the equation, we must remember that October is famous for black days: Black Thursday (Oct. 24, 1929), and Black Monday (Oct. 19, 1987). More recently, October 2008 yielded a nearly 17% drop in the S&P 500. Click on image to enlarge.

All of the markets covered were up for the week. Click table to enlarge.

The performance of the sectors for the past week shows Basic Materials and Financial taking the lead. Click on image to enlarge.

Long, Intermediate, and Short-term Bullish

We have turned back up once again and have the bullish background green in all time frames. Sentiment is bullish. Click on image to enlarge.

Short-term bullish rebound bars

While the image below does not represent a change in sentiment on my part it does accurately reflect the Top Stories headline Stocks Snap Losing Streak and clearly shows that the market has bounced off of its recent lows while still maintaining a short and intermediate term bearish bias. Short term bias would change to bullish above 104.68 and intermediate term bias becomes bullish at 105.25. Click on image to enlarge.

Looking at FXI (the iShares FTSE/Xinhua China 25 Index) with a similar chart layout shows it is close to a short-term breakout to the upside. I watch this one closely as it has proven to be a leader on breakouts and breakdowns. Which way it goes from here we will just have to wait and see. Click on chart to enlarge.

Market Summary

As can be seen in the image below the pink background to the series of charts in the image is moving to the left. Now the hourly, 240 minute, and daily chart have the pink background color that indicates a downtrend. If the daily trend continues to the downside the pink background will move to the left on the daily chart and eventually the weekly chart will get a pink background as well. The image represents a spectrum going from long term to short term and the background color represents the trend. We are short term going down with the beginning of the intermediate term also going down. I have placed a sentiment meter on my blog here called My Current Sentiment. It will be updated when the trend changes. Click on image to enlarge.

Only the commodity indexes of Gasoline, Gold, and Oil were up for the week. I have added the FXI index to allow following China. Click on table to enlarge.

Market Summary

In the image below I consider the Weekly chart the long term view, the Daily chart the intermediate view and the 240 and 60 minute charts the short term view. Not a good week in the market last week. We are in the red on the short term but green on the long term and just barely green on the intermediate. We are about to roll over on the intermediate term. Is this just a small pull back or the beginning of a larger correction is the question. We will have to wait and see. Click on image to enlarge.

The clear winner in these markets year-to-date is the EEM emerging market etf up 45 percent. As it has been leading to the upside keep an eye on this one to see if it leads to the downside. Click on table to enlarge.

Market Timing

Markets overshoot to both the upside and the downside but the trend is the best indicator we have as to where the market is going. The image below shows the trend in the background color of each of the four charts for four time frames: Weekly, Daily, 240 minutes, and 60 minutes. Having all these time frames together in one image helps show and break down the turning of the market from going up to going down and in what time frame. A corrective trend is occurring within a larger bull market if we focus on the two charts on the right side of the image, the 240 minute and 60 minute time frame, with the pink background color. Click on image to enlarge.

Will Gold breakout?

The chart below is a 2 year daily price chart of $GOLD showing a massive base formation and a chart pattern that looks like a massive inverted head-and-shoulders formation. $GOLD is coming up to its 2009 high which is also the neckline resistance at the $1007.00 area. Should $GOLD go above this area it is very bullish for $GOLD but a bad sign for our nation and our economy. While gold has been said to be a hedge against inflation its true value may be as a hedge against geopolitical uncertainty. Should the stock market roll over and head south for any length of time I think that would increase the fear level which also correlates with rising gold prices. We will have to keep an eye on this one. Click on chart to enlarge.

5th Wave Top

5th-Wave top in the XLF shown here. Many other indices showing a 5th-Wave pattern.

Market Summary

The chart below is a 6 month daily chart of the S&P 500 with an indicator I developed called MovingAverageStopBC which is set with the SMA 20 as the stop point which changes the background color of the chart. While we are in an uptrend according to the light green background color of the chart the market has been going sideways for the last several days. This type of chart pattern is called a high base formation which is a bullish chart pattern. However, the last several high base chart patterns have failed to produce breakouts. Click on chart to enlarge.

Forign markets can give us an indication of the global economy of which we are a part and the Chinese market has been leading to the upside in the current rally. The Chinese market has been in a correction since the beginning of August and closed on Friday on the 50 day moving average. If that market goes below the 50 day moving average that could be a bad sign for our market. We are heading into the seasonally weak time of the market in September so a correction in our market is a possibility. We will just have to wait and see.

Declaration of Independence

Market Summary

While the weekly performance shows all markets except natural gas in the green it is rather deceptive as the markets actually sold off substantially from the highs for the week. The markets were not able to break above the prior weeks highs and closed near the lows for the week. And while gasoline, oil, and the emerging markets did make impressive gains to the upside the major indices were essentially flat for the week. This gives support to the bearish camp and the markets could sell off substantially in the near future. Uptrend lines have been broken and the smart money which usually trades in the last hour of the day showed heavy selling pressure especially on Friday before the long weekend. Next week being a short week could show continued selling pressure. Click on table to enlarge.

The sector performance continues to improve compared with last week. Basic Materials made impressive gains and Financials are nearly flat for the year to date period. Click on graph to enlarge.

There were several significant news events this last week not the least of which was the downgrade of the UK sovereign debt by Standard & Poor’s from stable to negative citing an increasing debt-to-GDP ratio. In turn, this spurred a sharp decline in the dollar and Treasuries on concern that the US may also face a negative outlook on its AAA rating. For the week, the dollar fell 3.6% and is down over 11% against a basket of other currencies since early March. The drop in the dollar gave commodities a boost with crude prices surging and the CRB index gaining 3.3%. Next week the US Treasury is selling 100 billion dollars in bonds: $40bn of two-year notes on Tuesday, $35bn of five-year bonds on Wednesday, and $25bn of seven-year debt on Thursday. Traders are watching closely to see what percent is being purchased by the US government itself in the effort to monetise its debt.

The chart below is a 3 month daily chart of the S&P 500 with a proprietary indicator I recently developed showing when prices cross the 20 period Simple Moving Average. As can be seen where the chart background color turns light green on March 12 it remained above the 20 SMA until Thursday May 21st when prices broke down below the moving average and the background again turned the pink color. This is an indication of price weakness. How far down we go we will just have to wait and see. Click on chart to enlarge.