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The broker/dealer index continues to be an absolute honey of a pattern. I’m not trading this directly (nor am I acquainted with any way to do so), but I do think the clarity of this bearish setup makes the $XBD a steadfast ally of the bears. So long as it remains below that broken wedge – – and, ideally, slips hard away from its completed apex – – I think this will help resume weakness in the overall market very soon.
I’ve been very taken by midlines lately, which are the perfectly-in-between lines between the lines which define a channel. The longer the channel is, the more importance they, and their midlines, have. I noticed that the NASDAQ 100 index is sporting one of these, and we closed precisely at that major resistance level on Friday.
Below are five exchange traded funds which, unlike those I’m including in my “Hercules” post this weekend, seem to be at the cusp of resuming their downtrends, now that the “Jensen Huang says things are good” mega-rally is over. We have the emerging markets:
I’ve been having a good look at the longer term correlation between Crypto & equity indices and it is a strong one that has been impressively consistent over the last 8 years. The chart below just covers the last five years of SPX vs BTUSD (Bitcoin) but you can see that the upswings and downswings tend to be correlated, and going back to 2016 the big highs on both are decently matched, with a strong tendency for Crypto to turn down before equities do.
I was asked a couple of weeks ago whether this might be happening again, with Crypto having topped a few months ago and SPX, NDX and Dow all looking as though a significant high might be close. I’ve looked at that and would say that it would be more typical for the two highs to be within a month of each other, though there is a possibly comparable period as BTCUSD was forming a bull flag for ten months or so in 2019-20 with the C wave down during the 2020 COVID crash.
(more…)Let’s take a look at the biggest, oldest, and most important ETF on the planet: the SPY. In particular, there is an ascending channel on the SPY that goes back a full sixteen years (!!!) whose midline is, I believe, quite potent.
Over the course of 2024, the SPY has spent the majority of its time beneath the midline, with a couple of brief exceptions (in the ovals). The relationship of the SPY to the midline is more in the form of resistance, as I’ve emphasized with the arrows below.
Zoomed in this close, one cannot appreciate the longevity of the channel and its midline, but I believe these otherwise invisible levels have power.
