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Showing posts from August, 2016

Buyers Step In Late

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Sellers had looked to press in early trading, but buyers were again there to bid markets higher as they approached last week's spike lows. The net result leaves things as they were with Friday's jobs data the next opportunity to move the needle. The S&P may look to tag the 50-day MA if sellers get another swing on this. If buyers are able to continue with today's afternoon action then a tag of 2,200 should be feasible as part of this rally.

Little Change

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I'm waiting for bears to step in and reverse the nascent breakout but it hasn't happened yet. The intraday range was tight and the change relative to yesterday was small. This left little to add. The S&P still has three 'sell' triggers in MACD, On-Balance-Volume and ADX to work off before the rally resumes.

Buyers Step Up

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A respectable day for markets, unwinding much of the damage caused by Friday's selling. Volume was down, which softened the day's buying. The S&P had the best of the action, which was a little against expectations for Tech/Semiconductors to drive the gain.

A Wild Day: Profit Takers Take To The Streets

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Yellen's speech pushed markets both up and down, but probably left more minds stuck in indecision than offered a clear path forward. Markets don't like indecision, which gives bears and weak longs an opportunity to sell. There are still key support levels to break, but recent weeks of tight action could lead to an unraveling. The S&P finished as registered distribution with new 'sell' triggers in On-Balance-Volume and Directional Indicator. The index has been stuck in a relative downward turn since July (against Small Caps). This index is offering the clearest 'sell' signal.

Modest Selling

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Yesterday's buying likely caught shorts out, but later weakness may have encouraged profit taking today. The damage was relatively light and only served as a warning. For example, the S&P didn't lose breakout support and selling volume was light

Small Caps Breakout

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Markets made a break higher, although only the move for Small Caps stuck.  The Russell 2000 managed to finish with a new closing high and is very close to a fresh MACD trigger 'buy'. There was a significant gain in relative performance of Small Caps against Large Caps and Tech.

Meh Part II

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The week started much like past week's finished with a whole lot of nothing. No volume, no action, no outlook. At least the S&P is holding breakout support. Watch for 'sell' triggers in +DI/-DI and On-Balance-Volume. The Nasdaq managed to gain a little, waiting for traders to break it out of its range.

Semiconductors Continue To Advance

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Markets continued with their sideways pattern in a refusal to succumb to easy profit taking.  The exception looks to be the Semiconductor Index which continued to advance. The only disappointing aspect to the Semiconductor Index is the failure in the MACD to kick higher. It's not a deal breaker as price action and other technicals are very healthy.

S&P Breakout Support Holds

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The weak start didn't deliver a rout in markets. Instead, after the obligatory first half-hour of trading came the (bullish) reversal which lasted the rest of the day.  The overall picture hasn't changed, with the S&P stuck inside a narrow range, but a panic sell-off looks less likely now. Buyers look keen to defend drops below 2,170 in the S&P.  Volume climbed to register accumulation, despite general holiday volumes. Bulls will want to see a fresh MACD 'buy' to confirm an end to an effective 7-week consolidation.  Aggressive traders can look to the 20-day MA for buying opportunities and/or trailing stops.

Profit Taking

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While volume climbed to rank as distribution there wasn't a significant relative loss for markets.  However, the selling perhaps marks an indication that the summer lull is a maximum for the Brexit recovery. Today's selling started yesterday and continued through the day. The S&P shows this with the Inverse Hammer followed by today's red candlestick combo. The support line from the Jobs Data breakout hasn't been breached and this may be enough to keep longs in their positions. However, a weak open tomorrow could open the flood gates, and a loss of 2,160 may see others pile in.

Guest Post: What's Next for GBP/USD and USD/JPY?

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GBP/USD A better day for sterling versus the dollar, as cable inched up to the $1.30 handle after the UK’s official statistics office said inflation crept up to 0.6% in July from 0.5% in June. This stemmed losses that had seen cable drop below $1.29 on Monday. Sterling was flat versus the euro as the pound was slightly higher against its major peers, recording its first session gain in two weeks. But sentiment is still pretty bearish. Net shorts at the CFTC are at the highest in years and JPMorgan says cable should slip to $1.25. More data out this week will offer fresh impetus – retail sales, average earnings and employment figures on the way. USD/JPY Sentiment towards the greenback is also looking decidedly bearish. USD/JPY plunged below the 100 mark but quickly recovered after William Dudley, the New York Fed president, said the FOMC could still vote to hike interest rates in September. The dollar was still down almost 1% against the yen as economic reports disappointed

Little To Add

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Not much to say after Friday's action. Instead, I will take a look at some of the longer term charts. Of these, bears look to have an edge. The relationship between consumer discretionary and staples stocks has been in a slow decline, which in the past has led to big sell offs, but the market has refused to buckle and is trading in a manner much like it did in 2006. If the latter pattern was to repeat it could be another year before sellers regain control.

Dow Edges A Closing Breakout

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Holiday trading action continues with little on offer. The Dow followed action of its peers by edging higher (on a closing basis) of July highs. Technicals haven't quite confirmed with both MACD and OBV still in the red.

Friday's Jobs Boost Holds

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Getting back into the groove with my vacation behind me. Friday's jobs data gave markets a healthy boost into the weekend past to help reverse profit taking from last week. These gains have held for the early part of this week too, although with end-of-summer still a month away it's hard to see where the next boost will come from.  Having said that, there isn't a reason to short, and taking some profits wouldn't hurt, but there is no clear sell signal either. The S&P successfully navigated 2,100 in July and is building a new support level around 2,070. Technicals are drifting a little, but from a position of strong bullishness. Relative performance is perhaps the only concern, but this is only because Small Caps are in a more bullish state.

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