StockCharts.com - Blogs

While commodities still seem nestled in the doldrums, recently a few have started to move higher.

But more importantly, the global stock indices are making moves to higher ground looking like a global sustainable bull market is more likely.

At one mid month view in April near the US lows, their were 7 global markets back under the 20 Month MA. Currently, only 2 are. What is more important is that a lot of commodities track the $SSEC (Shanghai) market. The $SSEC has now started to push higher again. This gives me more faith that a bull market is starting up.

As well, the $DAX and the $FTSE have joined America in breaking above the 2007 highs. The $BSE (India) is trying to break through some resistance up around the old highs as well. I thought it might wait until June for the next thrust higher, but it appears these foreign markets are starting to push up in May.

There are still a lot of major markets trapped below resistance but above the 20 Month MA like the $TSX, $AORD, $CAC, $KOSPI, $HSI. But more and more, it looks like this global inflation push could start working through. $WTIC is still trapped inside a range but the oil stocks on the US are moving up and above. 

Without a doubt, the push in Europe sees even the Italian and Spanish markets above the 20 Month MA which are not listed above. So Europe is well underway, and now the emerging markets appear to be syncing with the USA. Maybe the commodity countries can get on the train. Currently, the strength of the $USD is holding them back.

Good Trading,

Greg Schnell, CMT.

I can't help wonder if the miners will finally get a bid here.

Gold has started some major rallies in May before. Currently it just feels so unloved, especially with the US dollar soaring higher every day. I see no reason to jump on a bull trade in $Gold which is a great reason to be aware!  Maybe if it tests the April low and can make a double bottom bounce? It seems a stretch at best. Here are the major global miners.

You can see the trend in the miners has followed the $SSEC pretty close. 

I also put CAT on this chart as it recently shot up $10 a share. Everything is playing with the 10 week line. Will it prove to be resistance or the chance to get onboard at a nice level? I think some signals out of the $SSEC and the $USD will be the ultimate clues.  The miners still look weak when they all hook down on the last reading.

Stay tuned for a breakout or be wary of a continued push down. That 10 week line can be an important area. May has been a month where Gold makes a low. While I definitely don't expect one, it is probably just when we should! However, 2011 showed that the commodity erosion was just getting started in May.

Good Trading,

Greg Schnell, CMT

This is the picture of how the energy markets have performed over the last 6 days.
You will notice the date in the top left corner. This chart included the Monday May 13th close.

The $USD recently went on a tear over the last few days.

This chart of the currencies that make up the $USD has been shown before. I have not reset the trendlines since publishing the chart in April. But look what is happening relative to the trendlines.

You can see the Yen lost support at 100 where it had rallied from multiple times in April. That level has been lost. We'll see if it regains its momentum.

The British Pound continues to gap above and below the 154 level. Today its back below. This chart will be interesting to watch at the green trendline. Will it get support or fall through it? You can also see on the far left the market bounced off the 153 level so this is an important support point on the chart. It is also testing the bottom of the uptrend since March. 

The Canadian Dollar rallied up to parity (100) and is now turning down again. Comparing this with the Aussie chart lower will be important for commodity clues. Will it follow the Aussie lower or will it get support at the green trendline? There are a lot of interesting points on this chart. Currently it is making higher highs and higher lows. 

The blue trendline on the Aussie ended up being particularly important. It fell below and backtested back up to it. It made a sideways trading range marked by the green lines. It avalanched yesterday through the 9 month support level and gapped lower today..

The Swissie also rallied off the March low and tried to turn up. Today it has resumed its test of the large head/shoulder pattern. This green line looks to be in jeopardy and is an important currency to watch. The Swiss 10 year bond is extremely low in yield compared to the US so money seems destined to flow towards the USD.

The Euro appears to be a couple of weeks behind the Swiss as it is still up near the highs of the right shoulder. Today it moved below the support of late April. Will it continue to move towards the neckline? The rapid action has taken 2 cents off the Euro in the last 2 days.

The Swedish Krona completed the Head/shoulders pattern in April but continued to fight back and forth across the 152 level. The move down today has fallen below again. The gap was also resistance in the rallies.

Lets look at the wider view again. Stunningly interesting places on the long term charts.

These currency moves continue to be big as they move across major technical levels. Currencies affect bond flows, commodity prices and equity prices as we have seen in Japan. 

Good trading,

Greg Schnell, CMT. 

Crude has been leading the Russell lately.

This high correlation is very important if crude starts to let go.

Good Trading,

Greg Schnell, CMT

One of the greatest feats of technical analysis is not its simple execution of reading a single chart. That is the basic building block. The real beauty of Technical Analysis is reading hundreds of charts and building a story that meshes together across them. In blogs, this art is difficult as you get a few pieces in each blog but not a great macro story.

Recently I blogged about the equity markets on a short term 60 minute basis. Occasionally I go on about the macro markets on a monthly basis. Before that was the symmetry across the currencies. Before that was the symmetry across the commodities. So while I try to add them all together to make a distinctive story, the reader may not be able to parse them together in a panorama like my mind is constantly working at.

So let me summarize my main thesis as taught by John Murphy and Martin Pring in their intermarket analysis work. Some of their teachings along with my own learnings make up the following paragraph.

Long bull markets in equities are global. Bear markets are also global. Trends in commodity industries filter across the globe. Trends in bond markets filter across the globe. Trends in currencies filter across the globe. While we can have a brief rest from the global view, eventually either the world starts doing better or everything starts to slow down. If you agree with that then lets review a few things.

1) The BRIC countries have weak equity charts.

2) The commodity prices are all snapping major 4 year trendlines. Is Oil next?

3) The commodity countries made their equities highs in 2011.

4) The US currency looks like it is about to break up and out of a 4 year downtrend.  This is bearish for commodities.

5) The US market continues to outperform the world in stock market equity performance.

6) Recently Japan has surged onto the scene. This wouldn't be the first attempt by Japan to break out of the demographic headwind they have in their country. 

7) Timing is everything. Not only do you have to have the direction right, but you need to have the timing right.

Sometimes, the market can mask internal weakness and all of a sudden it lets go. Today, the charts are are at an interesting location relative to themselves and the others.

First of all, here is the chart.

So I have placed the indexes in order of strongest to weakest based on the 60 minute chart.

So the chart is $TRAN but everything else was stronger so $TRAN ended up on the bottom.

The $COMPQ is trying to take out old highs and has been here for about 6 hours now.

The $SPX is a little weaker. It is testing the support level right under the highs of the market back on April 11.

The $INDU is weaker still and is just trying to stay above the last two rally attempts. Not really as close to the previous high. Roughly 100 points away.

The $RUT is starting to make wider and wider swings with lower highs and lower lows. That trend is being tested right now.

Lastly, the $TRAN has  lower highs and lower lows like the $RUT.  The last low took longer to base and was slightly higher than the previous low. 

What does this mean? Well, the trend is weakening as these start to wobble. Obviously some sectors are stronger than others. If the rotation can occur to move into the industrial and material sectors, we have a good shot at going higher. Stocks like Ford and Magna are trying to break out from recent resistance. We are at an interesting inflection point. We'll see where we go from here.

Good Trading,

Greg Schnell, CMT.

This is the chart of three month T-Bills. When investors are looking for short term safety, they go here.

As they buy, it pushes the yield down. You can see .5 has been an interesting level. This week we have moved below it in almost a straight line down for the past 8 weeks.

I would encourage you to click on the chart and see the large scale. It is my notepad that I write macro ideas on. Some of them never become a problem, like the free parking during the fiscal cliff discussions.  But we've headed lower for 8 weeks now after a failed breakout at 1.20. Usually below this level is very concerning. 

You can see the Full Sto's have retraced back below 50. The T-Bill /notes /  bond markets are twitchy here.

Good Trading,

Greg Schnell, CMT.

There is a remarkable amount of confluence on the currency charts right now. To a new investor, there might not be much there. But for technical pattern traders, this is literally lining up to be a blockbuster May.

I want to show a pair of charts I showed once before. They have all reset to a very interesting place on the charts.. Let's start with the last year, then we'll zoom out to the big picture. I'll comment on each price plot below.

I think even James Bond might have been rattled by the moves in commodities today. 

Margin calls rolled across Silver and Gold. Natgas , Silver and Gold all had changes in margin requirements announced by the CME. Copper made new one year lows, but closed above the level.

The precious metal companies were crushed. The NUGT 3X ETF lost 50% in a few days. The miners were taken to the boiler room. TCK/B.TO made 4 year lows today but managed to close above the previous lows. $TSX looked like a tornado hit it, as it swirled down continuously into the close. We would have to say wow! If there was a  silver, concrete lining, it closed above 12000.  Lets plow through some charts.

You can see the substantial breakdown that occurred and how pivotal the Friday close was.