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Weekly charts and an interesting Friday. Red weekly bars all round, it was all going good til Friday though Dax started heading down on Thursday with very poor PMIs, Then on Friday US PMIs were down on expectations though still in positive territory, then mid-day the treasury yield curve inversion breaking news and the selling continued as longs built up over the week were exited before the weekend. Ftse gave up all Mon-Thurs gains plus some as did the others. More interesting news that came out after the US close was that there would be no further indictments from the Mueller inquiry which is finally wrapping up, so no chance of a Trump impeachment on that score. That may make an impression when markets open and provide a boost, but if the fall continues the level to keep an eye on is the Dow support at 25214.

Included is the S&P daily, worth keeping an eye on this as well to see if it can turn the 2812.85 resistance level recently broken into support.

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In the post above I wrote how the news of the inverted yield curve broke mid day Friday and may have contributed to the continuation down for the indices Friday afternoon, but before you all pile in short Monday morning there are a few important points to consider.

While it's true that the inverted yield curve (10y/1y) often precedes a recession, in the last recession of 2007 it preceded it by nearly a full 2 years. As an indicator that might be stretching it a bit. In fact the average lead time of the 9 recessions since the 1950's is 14 months, so you might want to take your finger off the sell button just for the moment.

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Pic 2 is also interesting and shows a following recession is not a dead cert and also that currently the inversion has only just touched into negative territory. And in pic 3 we see that the more widely used 10y/2y has not inverted at all (yet?). 

Like all indicators it's indicating possibilities, something to be aware of, until there's price action confirmation I would keep the finger off the trigger.

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Weekend Dow gets an early boost from the just released official summary of the Mueller report (also mentioned in the Sat morning post above). Trump (and all connected to him) no evidence of any Russian collusion or obstruction of justice.

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A small gap up on the Dow but quickly cancelled by an Asia inspired continuation down. Dow resting on 25373 with the above mentioned important weekly support level not far below at 25214 while there is prior support turned possible resistance above at 25503. 

Dax in a similar position resting on 11284 but below that is a long drop down to the weekly support at 10861, above is prior support turned possible resistance at 11404.

Ftse has dropped down into clear space with support at 7080 and resistance above at 7262.

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On 25/01/2019 at 10:19, Kodiak said:

DAX daily

Lot of resistance around 11 700 ish

 

 

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DAX Weekly

The rally stopped at the old neckline

Lets see whats happens? if this rally since christmas is the real thing or just a bearmarket rally?

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Edited by Kodiak
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On 19/03/2019 at 08:49, Caseynotes said:

Dax pushing up to 11719 again, note this is a big support level turned resistance from 1 year ago. A break upward could start a larger move. Ger Econ Sentiment data out at 10 am.

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Yes @Kodiak, the first head and shoulders can be said to have played out though not quite making the full measured move while the inverse H&S broke the neckline last week but got stomped on by the bad Ger manu PMI on Thursday. Nothing much news wise except maybe brexit or US GDP data this Thursday to give it a push either way at the mo.

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Mid day Dax and the early down move stopped at 11267, the move up capped at 11390 then a pullback and now another attempt to move higher.

H1 chart;

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Dow, Dax and Ftse have halted the climb back up to make a base camp, Dow stalling around 25600 on it's climb up after Friday's fall, Dax tagged the 11404 mentioned in yesterday mornings post. Fste stopped at 7207. The London open should show direction from here.

Nikkei was doing well until an hour ago when it suffered a large gap down seemingly on the CPI data release dropping to 0.4% from 0.5%. 

US consumer sentiment today at 2 pm. 

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RE; the yield curve inversion, an interesting take on the US 10 y Treasury. Monthly charts.

Mike Valletutti, CTA @marketmodel

Textbook retest after textbook rejection at 200 MA Yield lows are in. $TNX $TBT

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S&P looking to go higher today after the long tailed doji bar yesterday, currently back at 2812.85.

Daily chart;

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Dow with a similar high volume reversal candle on the daily chart . Dax looking towards 11404 again.

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Indices continue the haul upward this morning. Dow heading towards 25795 with support at 25540.

Dax looking towards 11569 having just broken through resistance 11447.

Ftse in a similar position trying to break up through 7222 to head onto 7262.

Draghi is speaking at 8 am and the Brexit circus rumbles on, not much else on the calendar today.

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The 8 am London open saw everyone pushed back though starting to gain some traction now on the climb back up to the highs of this morning.

H1 charts;

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US Final GDP q/q numbers today 12:30 could cause a stir, 2.4% expected.

Markets still not sure of direction and continue somewhat range bound. Heading up again early morning but will the London open reverse that as it did yesterday.

H1 and Dow daily charts;

 

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Tried to the upside on the London open today but didn't far any better. Dow and Dax reversing at recent prior high and now heading back to their start position.

Ftse making a bid for the weekly resistance level 7262 before falling back.

US GDP 12:30.

US open 1:30

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Our indices got a lift overnight seemingly off the back of news that Trump was extending the period for ongoing negotiations with China. Dow, Dax and Ftse are nudging up to short term resistance levels so will be looking for a break higher and push upward.

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Dow and Dax manage to push up through near term resistance, Ftse left behind snagged on the brexit vote today.

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Today is week, month and quarter end, so watch out for end flows. Also, UK onto British Summer Time Sunday and so back to the usual US market open and close time by the UK clock. 

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All 4 gapped up on Sunday open after a strong bull weekly bar and heading to test weekly resistance levels so should be a fun week and US NFP to cap it off on Friday.

Dow currently checking the prior high at 26113 with the monthly chart resistance level just above at 26241.

Dax spent last week daily checking support before inching higher, no strong resistance til 11824 but EU PMIs this week could cause problems.

Ftse will be looking to continue on towards weekly chart resistance at 7370.

 

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As mentioned in the EMEA brief  " S&P 500 gained 0.7% to 2,834.40 - posting its best performing quarter since 1998 as it rose 13.1% for the period."

Yet SSI for S&P is 69% short, as it has been for all of March (at least, see previous posts).

Overbought doesn't mean sell, it's actually a trend continuation signal, dropping out of overbought may indicate time to think about taking profits.

In the same way, heading into resistance does't mean sell, you should be cautious but levels are made to be broken and strong momentum gives price a fair chance of doing that.

Picking tops and bottoms is a specialist art, part time retail traders nearly always get it wrong and sitting waiting for major reversals in multi year bull runs is just plain daft.

It's not wise to buy directly into resistance but it's not wise to sell directly into it either. Retail traders like to rush in then when caught out sit on losing trades for as long as possible hoping it might turn round but finally exiting when they just can't stand the pain anymore.

Let price decide what it's going to do and then try to catch the ride to the next level of contention.

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Edited by Caseynotes
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Interesting COT data Friday. Dow increasing net long large speculator interest while S&P and Nasdaq, which had both flipped short have now both flipped back to being large speculator net long.

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For those who think Brexit is having an impact on the FTSE and FTSE Mid (more for the facts GBP devaluations can make an easy trade available on the arguably global FTSE index)

Short on time? Here's your quick Brexit summary:

Theresa May has suffered a substantial parliamentary defeat on a third attempt to pass her Brexit deal through parliament.

The prime minister had sought approval for her deal on the UK’s withdrawal from the EU on what had long been scheduled to be Brexit day.

MPs voted by 286 to 344 against the EU divorce treaty, which if passed would have opened the way to Britain leaving the EU on a revised date of May 22.

Speaking after the result, Mrs May said: “The implications of the House’s decision are grave.”

“The legal default now is that the United Kingdom is due to leave the European Union on 12 April. In just 14 days’ time.”

Amid speculation she could be forced to call a general election, she added: “I fear we are reaching the limits of this process in this House.”

In immediate response to the deal’s defeat, Donald Tusk, the president of the European Council of EU member states, called an emergency EU debate.

“In view of the rejection of the Withdrawal Agreement by the House of Commons, I have decided to call a European Council on 10 April. #Brexit,” he said on Twitter.

Britain is now due to leave the EU on April 12 without a deal unless Mrs May can persuade the 27 other EU leaders to grant a further extension in the Article 50 exit process. This would, however, require the UK to take part in European Parliament elections in May.

Got this from the FT's brexit roundup emails which I would recommend to all. Very good.

 

Edited by cryptotrader

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also inflation in America is very much under control, in fact too much. The Fed tries to keep the personal consumption expenditure (PCE) index at 2%. The Fed raised rates 9 times since December 2015 in anticipation of inflation rising. Falling core inflation may be seen as a sign of a weaker economy, but components can cyclically follow the business cycle (restaurant meals) or not (health care). The chart below shows not much has changed in either. Where is the cyclical inflation given America’s strong labour market?

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Are Community users aware of our 'Momentum Report' ? May be interesting for some...

"The S&P 500 index reversed back to gains to end the last week of Q1 2019 up 1.2%. This brings the quarterly gain to 13.1%, a record not seen since Q3 2009 and tails the 14.0% drop in Q4 2018. A quarter where investors both bought into the riskier equities and picked up the safer bonds had been characterized in part by the brief returns of a goldilocks situation. This is with inflation pausing, central bankers being supportive and the market looking towards hopes of US-China trade resolution to aid growth. The question going into Q2, however, is whether these gains can be sustained.

The inversion of the yield-curve from the previous week had been one capturing the market’s attention into the end of the month as growth concerns mounted. That said, warnings of over-reading into the distorted bond market warrants the need from us to be cautious and this is likewise for the reversion to normal for the 3-month/10-year yield spread last Friday. Watching the series of economic data in the fresh week as prices on the S&P 500 index remain adrift. In particular, Monday’s ISM manufacturing, retail sales and Friday’s labour market updates will be key to watch for. Amid the backdrop of growth worries, positive readings coming through would be ones to help. US-China trade talks also resume this week in Washington awaiting updates on this geopolitical influence for markets. "

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