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The markets have lost much of their glossy sparkle during the past one-year period, both globally and in the U.S, and are in need of a major "touchup."
Further to my last weekly market update, this week's update will take a look at global and domestic markets to assess strength vs. weakness in each group during the past one-year period, as well as the past week.
Without a concerted strengthening in the Financials/Banks, it will be difficult for the Major Indices to continue to garner a meaningful rally, particularly in view of the comments I made in my post of July 19th.
The Daily charts below show market action, so far, as I write this mid-day on Friday…not an impressive or supportive showing in the Financials Sector and Banks.
Intraday volatility is building slightly in the VIX, as well, as the SPX:VIX ratio pair trades under 82.50 at the moment.
I've drawn a Fibonacci retracement on the Daily chart below of the SPX:VIX ratio pair and have identified a potential Inverse Head & Shoulders pattern.
The first external Fib level of 127.2% at a price level of 92.30ish happens to lie at a confluence/apex of trendline resistance…just above current price.
If the SPX is to move higher, it will have to capture this level and remain above…in this regard, it will be important that the neckline hold at 82.50ish.
However, as can be seen from the Quarterly chart below, that won't be an easy task, as efforts to move much higher since 2004 have been met with profit-taking and choppiness.
Unless some kind of major liquidity injection is forthcoming into the markets soon (e.g. cash on the sidelines), I expect more of the same (profit-taking and choppiness) at current levels on the SPX. However, that will depend on market participant confidence, which seems to have eroded.
The Weekly charts below of the YM, ES, NQ & TF show that price has popped above the mid-Bollinger Band as I write this just after noon on Thursday.
At the moment, I'd place general near-term support at this level, which is 12777 for YM, 1354.50 for ES, 2625.50 for NQ, and 792 for TF.
If these levels hold, potential targets are their upper Bollinger Band, or higher…otherwise, I'd look for price to fall, once again, to their lower Bollinger Band/50 sma (red), or lower.
Where is Oil headed? A clue may lie in the AUD/USD forex pair Weekly chart.
As you can see from the three Weekly charts below of the Commodities ETF (DBC), AUD/USD, and Oil, the Aussie $ closed above 1.03 on Tuesday, and price now sits just above a confluence of its mid-Bollinger Band ("mean"), the 50 sma (red), and a price apex level of 1.0274 (which also happens to sit near the left shoulder of a potential large and unwieldy Head & Shoulders formation). It's important that this confluence level hold as support in order that the Aussie $ may continue upward to, potentially, its upper Bollinger Band or higher.
Price on Oil sits just below a Fibonacci confluence level of 90.18 and just above the bottom of a large uptrending channel. Should the Aussie $ continue to rally, we may see Oil reach its "mean" at 94.89 (which is also a confluence of the 50% Fibonacci retracement level, the mid-Bollinger Band, and the 50 sma) or continue higher to, potentially, its upper Bollinger Band.
Furthermore, it wouldn't hurt to see DBC hold above its mid-Bollinger "mean" and continue its trek up to its confluence level of 27.47 or higher in support of these moves.
A failure to move higher on one of these three could well negatively influence the others…worth watching all of them to see if any weakness develops.
