This is great
h/t Barry
Source:
Expert technical analysis of financial markets by JC Parets
by JC
by JC
How about that for underperformance?
The most widely followed benchmark for the Commodities Market is the Reuters/Jefferies CRB Index. It has underperformed the S&P500 every single month since last September. In other words, when US Stocks are going lower, commodities are getting hit even harder. And when times are good and stocks are going higher, commodities can’t keep up:
The current levels for the $CRB Index relative to the S&P500 haven’t been seen since 2007. Other than some extreme oversold readings in this particular ratio, we haven’t seen any evidence of an upcoming reversal in trend.
The price of Crude Oil has been decimated, down over 23% just in the last 3 months. This is by far the largest component of the commodities benchmark, representing close to a quarter of the entire index. With Crude prices down to levels not seen since early August, this is going to be one area we will be watching closely. Again, like the index itself, other that some oversold readings, we still aren’t seeing any indication of a reversal. At least not yet; just lower lows and lower highs. A reversal higher in Crude Oil should bode well for the commodities index, but it doesn’t mean that we’ll start to see the CRB outperform the US Stock Market.
Some of us like pairs trades and this is one trend that has certainly been working. Now, from a macro perspective, what does this tell us about the intermarket picture? I think these markets are showing us that global market participants are trying to avoid the added volatility that comes with commodities. It makes sense I suppose, with all of the extra uncertainty around the globe.
What do you guys think?
Also See:
Commodities Testing Key Support Levels (Allstarcharts March 10, 2012)
Tags: $DJP $SPY $CRB $SPX $CR_F $ES_F $CR_F
by JC
How about this for a Chart of the Day?
With 10-year Treasury Note yields reaching an all-time low of 1.43% Friday, this is something that we have to put into perspective. The chart below shows US Interest rates going back 220 years, to at time when this country was just getting started. This is some chart.
(Click Chart to Embiggen)
It has almost a 100% correlation to the Federal Reserve’s daily constant maturity series. Construction is explained at Bianco Research.
From WSJ:
With the 10-year yield below 1.5%, some traders said it is hard to predict how low the yield could fall, because in a sentiment-driven market, panic buying could push the yield down further.
“We are in uncharted territory” in terms of yields, said Kevin Walter, head of Treasury trading at BNP Paribas. “The 10-year yield could hit 1.4% very quickly if sentiment continues to worsen.”
UBS analysts, who put out a call several weeks ago that Treasury yields are still too high, said their model shows a fair value of 1.2% for the 10-year yield, though they admitted that level “sounds too aggressive,” and that “something in the 1.40% neighborhood [for the yield] makes sense to us.”
Wow…
Sources:
What Is The All-Time Low 10-Year Yield? (Ritholtz)
US Jobs Data Send 10-Year Treasury Yield Below 1.5% (WSJ)
Tags: $TNX $ZN_F
by JC
My friend Richard Ross was on CNBC on Friday talking numbers with Maria Bartiromo. And when asked about the recent break of the 200-day moving average in the S&P500, Rich suggests buying this dip, not selling. In fact, with all the grim economic headlines, indiscriminate panic driven selling and extreme sentiment, the technician at Auerbach Grayson thinks this is the type of market action that bottoms are made of.
I tend to agree with his statement that if it were just this easy to come in and sell the market whenever you break the 200-day moving average we would all be retired, and this simply is not the case. He further suggests that we’re more likely to see a false breakdown below the 200 day, that could create a fast move in the opposite direction. In this case, a reversal higher.
Interesting stuff:
Nice job Rich
Source:
Talking Numbers: S&P500, Dow & Nasdaq (CNBC)
Tags: $SPX $QQQ $DJIA
by JC
Today we’re looking at Volume in the S&P500 broken down by price ranges. As we often do, we’ll use the ETF $SPY to try keep things simple. This volume by price indicator allows us to use high volume price points to find potential support and resistance levels in the market. By looking for areas with heavier volume, we can find prices where there is an elevated level of interest from market participants. These levels are representative of former supply and demand equilibrium.
Take a look at where the most $SPY shares changed hands over the last 2 years:
This key resistance area from 2011, where all of those shares were traded, was finally taken out early this year. Now on its first retest, this former supply zone would be a logical area for some demand to be found. Remember, there is memory and wisdom in price.
by JC
These are not the sectors that should lead in a bull market. When S&Ps are making new highs, you want to see Discretionaries, Technology, Financials and the commodity based areas also outperforming the major averages. In May we saw the complete opposite – and the Stock Market struggled. Healthcare, Consumer Staples, and Utilities all showed their leadership qualities over the past month.
This is a chart of each of the S&P Sector ETFs relative to the S&P500. Notice the clear outperformance in the defensive names:
We talk about sector rotation here all the time. But we’re seeing the importance of this before our very eyes. If US Equity averages are going to put in a key bottom, rotation needs to follow.
I’ll be waiting for relative outperformance in these key sectors as confirmation that we should be putting money to work into risk assets.
Tags: $XLF $XLY $XLP $XLV $XLU $XLI $XLK $XLE $XLB
by JC
Ryan Detrick over at Schaeffer’s has definitely become one of my favorite technicians over the last few years. He’s consistent with his methodology and does some excellent work, specifically with sentiment. He sat down for a chat with Jeff Macke on Yahoo Breakout this week and thinks this might be a good time to start putting some money to work.
Check it out:
(Make it a full screen; charts will look much clearer)
Nice job Ryan
Source:
Negative Sentiment Gives Green Light To Buy Stocks Now: Detrick (Yahoo! Breakout)
Tags: $IWM $SPY $QQQ
by JC
We’ve seen these before and I love finding them. The ‘False Move’ is by far and away my favorite trade setup. The reason is really simple: a defined amount of limited risk with an infinite profit potential (theoretically). So let’s get right into it:
We’re looking at the popular iShares FTSE China 25 Index Fund ($FXI). We know that this 33 and change level is very important support that held back in the 4th quarter of last year. This new found support created the higher low that helped take $FXI to 6-month highs earlier this year. More importantly this price also represents the 61.8% Fibonacci retracement from those key October lows that we always talk about in most of the major averages.
Interesting how the price briefly breached those key levels before quickly reversing. This is the sort of action that gets me going in the morning. This is why I do what I do. This is why I study price. To find stuff like this.
So let’s take a closer look. This next chart shows just the last few months. What stands out to me are the lower lows made in price last week while momentum had already turned up. In other words, while price was still trending lower, momentum was putting in a higher low (See RSI Explained):
If this was indeed a false breakdown, I would expect a fast and powerful move higher in $FXI. This would certainly be a positive for US Equities and other risk assets. The risk is defined and the profit potential has no ceiling. But the positive implications on a more macro level cannot be denied. New lows in $FXI and we’ll know there’s a big problem out there and we’ll get much more defensive. But for now, these are extremely bullish developments.
Also See:
Was That a False Breakdown in Precious Metals? (Allstarcharts Jan 3, 2012)