Further to my last weekly market update, this week’s update will look at
charts and graphs for:
- 6 Major U.S. Indices
- 9 Major U.S. Sectors
- S&P 500 Index, EU Stoxx 50 Index, and Shanghai Index
- U.S., European, and Chinese Financial ETFs
As can be seen from the
following Weekly charts and 1-week graph, all 6 Major
Indices closed the week higher.
As shown on the
Weekly charts and 1-week graph below, 8 of the 9 Major
Sectors closed the week higher…Utilities had a minor
loss. The majority of the gains occurred in the riskier, Offensive
Sectors.
In light of Thursday’s
announcement by the Fed to begin a new round of open-ended
monetary stimulus, in addition to their current program, and a commitment to
keep interest rates low until mid-2015, I’ll use a combination
of Fibonacci tools to gauge where support and resistance levels
lie as the markets react to the news over the next days/weeks/months.
For now, I’ll look at Daily charts of just the Dow 30,
S&P 500, Nasdaq 100, and Russell 2000 Indices to get a very broad
view of the equity markets.
Included on the following four charts are
two sets of Fibonacci retracement levels which begin at their
June lows and at the September lows of this
year. I’ve shown two additional levels…a 25% and a 75% level (yellow lines)
since I also wanted to divide both of these Fibonacci ranges into quarters to
see where price falls within each level so that I can determine the level of
bullishness/bearishness in this timeframe. I also want to see how much time is
spent in each quarter in order to determine the approximate velocity of
sentiment…i.e. divide the number of days spent into the price range of the
pertinent quarter, which is pretty evident by just glancing at each
chart.
Price closed on Friday within the upper 1/4 of both the June and
the September ranges. As such, they are short-term and medium-term
moderately bullish. Near-term support lies at the September 25%
level (i.e. 13484.20 for DJI, 1455.02 for SPX, 2835.10 for NDX, and
852.19 for RUT), followed by each subsequent Fibonacci level of that smaller
range.
A break and hold below the 25% level of the June
Fibonacci range (i.e. 13248.70 for DJI, 1422.57 for SPX, 2760.01 for
NDX, and 833.81 for RUT) would then see the 40/50/60% Fibonacci levels come into
play as potential support levels of that larger range.
You can see that
the NDX has spent more time in its upper 1/4 of the larger June
range than the others, suggesting that Technology weathered September’s pullback
better than they did.
On a long-term basis, and as can
be seen from the first chartgrid above, the
NDX is at a new all-time high since its dot-com high in 2000,
the RUT is very close to setting an all-time high, and the
DJI and SPX are approaching their all-time highs set in 2007,
but still have more ground to cover. The markets may not pull back much until
those highs are reached.
The next
Year-to-date graph shows that the NDX has led
in terms of overall percentage gained, whereas the following 10-day
graph shows that the RUT leads, so far, for the month
of September…two indices to watch to see if weakness enters either one
in the short term to, potentially, lead the others down (particularly the RUT
since it’s just below its all-time high and subject to the forces of major
resistance here).
The next
Daily chart shows price action over the past 3 years on the
U.S., European, and Chinese stock markets, as depicted by
the SPX, EURO STOXX 50, and SSEC Indices. The Chinese
market has severely diverged/lagged and is one to watch for either a turnaround
or further weakness, potentially causing a drag on the other
markets.
In this
regard, I thought it would be prudent to monitor their respective
Financial ETFs…XLF, EUFN, and GXC, which are
shown on the following 3-year Daily chart. The Chinese
Financial ETF is showing more signs of stability in comparison with its Index.
In fact, it began to show signs of moving more in tandem with
the other two ETFs from the June lows, as shown on the last three
charts (from June lows, September’s action, and the price action of the past two
days).
I’ll be following these three ETFs over the next
days/weeks to looks for signs of weakness in any one which may influence the
strength of the other two in order to gauge, in a broad sense, the
market’s global sentiment toward and commitment in equities.
Any major financial crisis that may arise/worsen in either one of these
three countries/unions may spark additional monetary stimulus by the
Fed.
Enjoy your weekend
and good luck next week!
