Indices

[Caseynotes]

S&P sits just under 3000 and poised to move higher.

Daily chart;

[Caseynotes]

This one for all you bears out there, low liquidity since Feb, see chart.

[Caseynotes]

Dow already heading towards the highs, Dax has some ground to make up, Ftse trying higher off a solid base.

Daily charts;

[Caseynotes]

Dow sails on leaving the weaker hands behind, after Powell's testimony to congress the July 31st rate cut seems assured and nothing major on the calendar before then to upset the cart which all probably means it's time to put the crash helmet on.

[Caseynotes]

Dow looking for continuation upward while Ftse follows Dax looking for support. Indices correlation broken down as US pushes ahead, EU with GDP and production worries, UK with Brexit uncertainty and Asia watching China GDP slip on the trade war. 

Interesting article below on the 12 month flat Euro and what that means for other markets.

https://investinghaven.com/markets-stocks/currency-market-history-euro-flat-12-months/

[Caseynotes]

Dax and Ftse both putting in daily reversal candles yesterday while Dow drifts upward after the strong push through resistance last week. Asian markets struggle with China concerns.

[Caseynotes]

H4 charts and Dow holding a bull flag while Dax and Ftse well correlated trying to make up lost ground and Nikkei continues to fall away.

The S&P daily put in it's first red candle for 6 days though Fed speak yesterday continued along the lines of a small rate cut in 2 weeks time.

[Caseynotes]

All starting the day looking for support, from the daily chart Dax has a recent low at 12166 and Ftse at 7482.

Dow has some support here at 27130 or below at 27030.

Below on the S&P daily and of particular note to this sell off is the low volume which is more indicative of profit taking rather than a strong uptake of new sell entry orders. 

 

[Caseynotes]

Daily's and Dow heading back up towards the highs and the others are following, Ftse needs to clear 7527 again and Dax is back up to 12300 which may provide some resistance.

A look at the S&P H4 and an up trendline from mid June gets a forth touch.

[Caseynotes]

Weekly charts and Dow puts in a inside pause candle while Dax has a bear continuation. Ftse stuck in range flag and Nikkei coiling in a triangle.

S&P daily trying for support off 2966 but may take a look at the stronger level just below at 2958.

[Caseynotes]

Directional continuation yesterday and this morning with continued expectation of Fed and ECB taking the lower rates line, Asian market most relieved.

Daily charts;

[Caseynotes]

Interest rate change expectations;

ECB on Thursday,  FOMC next week Wednesday,  BoE next week Thursday.

ForexFlow @forexflowlive

36m

Interest rate expectation update:

-Jul #FOMC 25bp cut 84.5%, 50bp 15.5%.

-Jul #ECB 61.1% unch, 38.9% 10bp cut.

-Aug #BOE unch 97.4%, 2.6% 25bp cut

-Sep #BOC 90.2% unch, 9.8% 25bp cut 

[Caseynotes]

What to expect, well you should always expect a directional candle to be followed by a directional continuation candle, does that always happen, no, it just usually does. 

There is a limit to what can be,

a directional candle can only be followed by a directional continuation candle, an inside pause candle or a reversal candle.

An inside pause candle can only be followed by a directional continuation or a reversal candle (ignore a double pause).

A reversal candle can only be followed by a directional continuation or an inside pause candle.

Probability always favours continuation, if you are always expecting a reversal then you are just plain mad 🙂

Dow arrives back at the ATH by way of a series of directional continuation candles.

 

[Caseynotes]

Worth comparing today's S&P and Dow, Dow hit by the heavily weighted Boeing (9% of Dow total) losing 2.8% is costing Dow some 70 points.

H1 charts;

[Caseynotes]

Dow hurt by poor data from Boeing and Caterpillar watched S&P make a new all time high yesterday but is still within reach of it's own top.

Dax has the important 12660 within reach and the ECB presser today may provide a push. Ftse a mixed day with new PM in place but strong support below at 7473 and Nikkei tagging the weekly chart resistance level 21824.

[Caseynotes]

Fears for Deutsche Bank and the possibility of a ECB rate cut today.

Holger Zschaepitz @Schuldensuehner

21m

A further rate cut would be catastrophic, especially for German banks. Goldman estimates that 20bps cut (effectively what mkt has priced in between now and Sep), would trigger aggregate losses in 32 banks they cover of €5.6bn, about a 6% cut to profits. (Chart via @DiMartinoBooth)

 

[Kodiak]

1 hour ago, Caseynotes said:

Fears for Deutsche Bank and the possibility of a ECB rate cut today.

Holger Zschaepitz @Schuldensuehner

21m

A further rate cut would be catastrophic, especially for German banks. Goldman estimates that 20bps cut (effectively what mkt has priced in between now and Sep), would trigger aggregate losses in 32 banks they cover of €5.6bn, about a 6% cut to profits. (Chart via @DiMartinoBooth)

 

"

What else can the ECB do?

Draghi has always talked about “mitigation” of negative rates -- and that doesn’t have to mean tiering. One option might be for the ECB to start buying bank bonds, which would lower lenders’ funding costs as a way to offset the impact of another deposit-rate cut,"

 

https://www.bloomberg.com/news/articles/2019-07-23/ecb-rate-cut-plan-puts-worried-banks-on-lookout-for-sweeteners

[dmedin]

'Buying bonds' from the banks means giving the banks free money.

Which the banks then use to sustain dividends.

Why not cut out the middle man and just have the central bank give out free money to the shareholders directly.

Jeez.  

[Caseynotes]

Dow puts in a nice big bear directional bar yesterday but bounced off confirmed support. Today's bar can only be one of either directional continuation (down), inside pause or reversal bar back up. US GDP data 1:30pm will probably decide it.

Dax trying for support off 12300 and Ftse looking to secure support at 7473.

S&P daily not so affected by yesterday's turmoil and already on the way to recovery.

Daily chart; 

[Caseynotes]

From yesterday;

"Fear grips Wall Street as stocks retreat from all-time highs to levels not seen since yesterday afternoon"

Hipster @Hipster_Trader

 

"S&P 500 (number of) All-Time Highs by Decade...

1930-39: 0

1940-49: 0

1950-59: 141

1960-69: 224

1970-79: 35

1980-89: 190

1990-99: 310

2000-09: 13

2010-19: 219* (*<half year remaining in decade)"

Charlie Bilello @charliebilello

[Caseynotes]

Bull drive into all time highs going into the weekend sure sign of big money strength and confidence, you should have been the buying the dips not shorting the highs ..., for the last three and a half years actually.

S&P daily.  

[Caseynotes]

Been an interesting week for the indices and a slight divergence has developed between Dow and the S&P that's worth taking a closer look at. The big news over the last week was the big US company's quarterly earnings releases which for the most part were good but a couple of big misses really hit because of the price-weighted Dow.

Boeing saw a slump on the back of the 737 MAX crash and subsequent groundings and Caterpillar retreated due to slowing orders from the US shale oil fields. Boeing was down 2.8% and as it has a 9% weighting cost the index 70 points. Caterpillar's 4.5% decline (3.3% Dow weighting) cost the index more than 40 points.

So looking at the Dow chart below and comparing it to the S&P chart above we see the Dow consolidating at the highs while the S&P drives on, both obviously bullish though.

More earnings out next week and 2 on Tuesday (after market close) to watch out for are AMD and Apple, both on Nasdaq.

Another interesting feature when markets reach their highs is that the retail crowd always goes short, been watching it for years, they never seem to learn. Novice traders always seem to think that the objective is to pick major turning points on a chart and they always get stung. The real objective to pick points for continuation, let the big players decide when it's time to turn and follow.

As in the chart a couple of posts above this is the 12th ATH this year (over 100 times in the last 5 years) but each time you are guaranteed to see this positioning by retail clients,

 and over a hundred times in the last 5 years they've been wrong.

 

 

[Caseynotes]

Dow Friday's bar was an inside pause signalling uncertainty, could see next a check of support just below at 27061 or a move towards that ATH resistance level that held all last week 27400, others to follow direction. 

[Caseynotes]

Ftse getting a boost as GBPUSD sinks lower as traders see a WTO deal Brexit increasingly likely.

H4 charts;

[Caseynotes]

Ftse continues to climb as GBPUSD continues to decline. Dow has short term resistance at 27275 to conquer if it's to continue this leg up, Dax in a similar situation with resistance at 12475.

S&P sits poised to break higher (daily chart).

H4 charts; 

[Caseynotes]

Without doubt the most important S&P chart ever, S&P vs Pundits 2012 - 2018;

 

[Caseynotes]

Dow continues it's short term consolidation in touch with the all time highs, Dax hoping to have found support after very poor EU business climate data, Ftse trying support off the broken weekly chart resistance level and Nikkei stuck in the Asian doldrums as China's econ continues to slowly sink in the mire of the war it's having with it's best customer. 

Daily charts;

[Caseynotes]

Now you might look at this chart and say to yourself well that's clearly long-term bullish, mid-term bullish and short-term neutral, chart reading is quite simple after all. And you'd be right, but there'll always be someone to tell you that actually it's bearish, seen it countless times on this forum since early 2016, but why?

The answer is always the same, people will look at the same thing and perceive a different picture, it always comes down to bias, you see what you want to see, you curve fit the picture to fit your bias without thinking it should be the other way round, people are lead by their bias and it distorts their vision which is what makes it such a bad thing. 

What do people really want to see in a blatant bullish chart like that? They want to see a top, they want to get in early for the great bear correction and they jump in short.

Further back in this thread I posted a chart of the number of times the S&P has posted an all time high for each year and since the start of 2016 there have been about a hundred, each time there's a new ATH and the hint of a correction someone jumps on the forum to call the top. They always say it's time to get in before the crowd, the smart money is getting out, but here's the funny thing, every time I look at the IG client sentiment it always shows a very large percentage of IG clients are short. It's not contrarian to go short on a roll off the ARH because that's exactly what the retail crowd do, every single time, and always about 70% of them. And how many times have retail been right of those 100 ATHs, none. If you're looking for reasons why 74% if retail clients lose money you are looking at the number one right there.

 

[Caseynotes]

LOL, Powell is in big trouble now, market didn't like the mon pol statement and especially didn't like his presser speech.

[Caseynotes]

twitter alive with the realisation Powell hasn't got a clue what he's talking about. see pic below is typical.