My biggest decision today...

My biggest decision today was wondering whether to talk about a lot of markets and put up a lot of charts since it's the end of the month, or whether I should just talk about some stuff.

I decided not to put up charts since I'm sure you all know where the markets ended today...I will, however, say that, today, the YM, ES, NQ & TF again rejected a bid to move much further above the pivot high set in mid-August (which I spoke about in yesterday's post below).

That leaves some words from me on some stuff...

I simply want to re-enforce the idea that until there is a concerted and cohesive effort (with a successful outcome) by all world country's leaders (and their governments) to resolve a variety of issues related to debt and credit problems, the slowdown in consumer demand and consumption, protectionist trade issues, and the continued problem of high unemployment, the result will be a continued dwindling of confidence within the business community and the general public. In such an environment, we'll continue to see choppy and volatile markets across all sectors and in all countries for some time to come. Of that, I am certain.

So, not only will I keep a close watch on various market sectors, but also on world leaders and their resolve and actions (or lack thereof) to work together to fix these issues. Any country is only as healthy as its government policies and actions and its results (which must be accountable to and measurable for its electorate...which is absolutely necessary in a true democracy). As long as there is no harmony amongst countries (or even within each country), there will always be uncertainty and volatile times ahead (and not just in the markets).

Mr. Sarkozy said that the Eurozone is not sick...the opposite of sick is healthy. So far, I would  not put "healthy" and "Eurozone" in the same sentence because of the discord amongst the countries within the E.U. I'd say the same for the U.S. because of the discord within the political parties...and I see this becoming worse as the focus of politicians turns to the election next year which always brings about a division amongst party goals and policies (not to mention the downright dirty politics that always arises).

If the markets are looking to governments and their leaders for stability and healthy progress on these problematic economic and fiscal issues, they will definitely be disappointed if the leaders and their parties continue along their current self-serving and unproductive and downright destructive paths.

So, how do I daytrade in such a volatile and unpredictable environment...with fierce observation and agility, and the ability to change my conclusions about probabilities and results in an instant.

The ability for change and harmony exists...of that, I'm also certain.

My second biggest decision today is what to have for dinner...

Hanging the markets out to dry...

Below is a 4-hourly chartgrid of the YM, ES, NQ & TF...we can see how the markets have been pulled up and are "hanging out to dry" after their whoosh down the waterslide which began in July...beginning with a bounce on August 8th after the U.S. credit rating downgrade by Standard & Poor's.

A closer look at this chartgrid shows that, today, the YM, ES, NQ & TF rejected a bid to move much further above the pivot high set in mid-August and have, so far, moved about 78.6% of the initial bounce from their pivot low set on August 21 (August 22 for the TF). A matching 100% move up would place price at:
11820 for YM
1241 for ES
2264 for NQ
737.70 for TF
N.B. These prices are confluent with their overhead resistance levels for the YM, ES & TF...the NQ has already encroached into this level and nearly reached the 100% level today...we'll see if this was the NQ's "last hurrah" or not over the next few days/weeks.

One of the gauges I'll use to see whether or not these e-mini futures indices advance any further, is a cluster of Volatility Indices. As can be seen on the Daily chartgrid below, they are holding just above their pivot lows set in mid-August, which have formed near-term support.

The markets may be expecting a "helping hand" from the Fed at their upcoming September meeting, so they may just bounce around in this latest large range until a clearer direction is formed, along with institutions'/traders'/investors' opinions...and, by that time, they may have a clearer picture of the financial and fiscal situation in Europe and perhaps of politicians' intentions in the U.S. We may not see a larger, more meaningful move until more information is forthcoming. However, in the absence of any encouraging news, the markets may just resume their slippery ride down the waterslide and break below their lows of this year.

The real reason that Ben has scheduled a 2-day Fed meeting in September...

US$...the currency that no-one wants...

While they vacation and go into their dream-like stupor until next year's election is over, the U.S. "powers-that-be" seem to be content to watch the US$ slip further down into the "abyss" as shown on the Weekly chart below...

While Gold holds above the current month's Volume Profile Point of Control of 1773.90 and the Monthly VWAP of 1763.70 after bouncing off a Fibonacci confluence level of 1700ish as shown on the Daily chart below:

What we have in store for us...

What I got out of Ben's speech today...



And where does that leave us...

And back to "situation normal"...

So...





The dust may need to settle after next Monday's close...

The dust may need to settle on the YM, ES, NQ & TF after next Monday's close before we get a clearer view of further direction...below is a 3-day chartgrid which shows that these e-mini futures indices are forming a symmetrical triangle in the lower one-third of their drop from the highs in July. The current 3-day candle began today and will close on Monday. I would consider a triangle consolidation at the lows after a drop to be a bearish continuation...will see which way the triangle breaks (and possibly retests) before continuing in either direction.

My best wishes for Steve Jobs...

I wish Steve Jobs well in his future pursuits...AAPL has come a long way under his creativity, passion, perseverance, and brilliance!

Fibonacci Confluence on Gold...

Overlayed on the Daily chart below of Gold are several Fibonacci fan lines, external Fib lines, and Fib extensions. Currently, price is in between two 61.8% Fib fan lines (one beginning in October 2008 and the other beginning in August 2009). Below these fan lines are prior horizontal Fibonacci confluence levels that were resistance and are now near-term support levels...the closest level is around 1700, followed by 1660ish and 1590ish. Price reversed yesterday after hitting a Fib confluence level around 1900.

I would add that the Monthly Pivot Point in effect for August (from July's data) is 1581.60 and August's Monthly Volume Profile Point of Control is 1595.50.

The Monthly Pivot Point in effect for September (from August's data so far) is 1757.50 and September's Monthly Volume Profile Point of Control (from August's data so far) is 1773.90.

So, the first level of support is around the current price, followed by 1700ish, and so on., as mentioned in the first paragraph.

Longer term, the next Fibonacci confluence above 1900 is around 2250ish as shown on the Daily chart below.

Setting a fine example?...

Thanks to a fellow trader, I read this article which was printed in the Rolling Stone today:

The link to the article, in its entirety, is below:

http://www.rollingstone.com/politics/blogs/taibblog/obama-goes-all-out-for-dirty-banker-deal-20110824

Japan's NKD trying to hold at near-term support...

Japan's Nikkei 225 Futures Index (NKD) is trying to hold at near-term confluence support (see Daily chart below) after a Moody's downgrade of its governments debt by one notch to Aa3 today..."blaming a build-up of debt since the 2009 global recession and revolving-door political leadership that has hampered effective economic strategies"...see Reuter's full article for details:  http://www.reuters.com/article/2011/08/24/us-japan-rating-idUSTRE77N01620110824?feedType=nl&feedName=usbeforethebell

As I mentioned in last Saturday's post, should the NKD continue down, the next support level is around 8200.

Put your brolly up!

So, when it rains on your parade...

Just put your brolly up...

Or, just go naked!

It's all about perspective...reality or illusion?

As we can see on the 4-hourly charts below of the YM, ES, NQ & TF, the markets are quite capable of rallying a great deal in a day (we'll see it they can now hold above their shorter-term downtrending regression channel "mean")...so why do they need QE3?...really?...and who says they're in need of it and why?...if it's because "they've" mismanaged their financial affairs, why should "they" be rewarded? I say, let all politicians lead by example and do what's necessary to bring each of their respective country's financial affairs under control...if they've got the will...they are, after all, accountable to their electorate...and, surely, they've got the human resources available to help guide them through such a process...if they haven't (on both counts), then we're all doomed.

Some will see ships and some will see a bridge...

Life's a puzzle to me...I just try to work on it one day at a time to try and make improvements in my life that will benefit me (and perhaps even spin off and help someone else in the process)...

Markets spinning their wheels...

Basically, the YM, ES, NQ & TF have been spinning their wheels in a sideways trend since last Thursday as shown on this 4-hourly chart:

Until a break and hold outside of this range occurs (with conviction and possibly a retest), expect more range trading. I would add that the shorter-term regression channel that I mentioned in yesterday's post is now downtrending on all 4 e-minis...however, price remains in between the -1 deviation level and the channel "mean" in the range.

Today's view of YM, ES, NQ & TF during market hours...

Below is a 4-hourly chartgrid of the YM, ES, NQ and TF. Overlayed on it are longer and shorter-term regression channels. I've referred to these channels on this timeframe in prior posts recently. I would note that the shorter-term channel has shifted from uptrend to downtrend today on the NQ and TF, while the ES has flattened out. Currently, price is hovering around the -1 deviation level on all 4 e-minis on the shorter-term channel. A break (and hold below) the -2 deviation level with conviction would be bearish and could set up a second leg down...particularly below the swing low set on August 8...I would also add that this "hammer" hasn't been retested yet...in my opinion, it needs to be retested because it was set outside of market hours and doesn't hold much weight.

Some days I do everything well...

How the EEM and NKD closed out the week...

My post on Thursday provided information on the EEM and the NKD...the following is simply a follow-up to that post.

Each candle on the chart below of the EEM (Emerging Markets Index) represents 3 days...the current candle closed on Friday. It has broken and closed below the neckline of the former H&S pattern (41.66) and engulfs the prior two candles after a backtest of the -2 deviation level of the uptrending regression channel that it broke through on the "gap breakaway" candle that began on August 4. This candle pattern is indicative of a continuation to the downside.

Below is a Daily chart of the NKD (Nikkei 225 Futures Index). Friday's candle closed below the downtrend line from the "pink diamond" pattern that I described in Thursday's two posts. Should the NKD continue down, the next support level is around 8200.

The last chart below is a 3-day chart of the NKD...it shows more clearly the potential for a continuation to the downside.

The downward momentum is still accelerating on both the EEM and the NKD...will see how next week plays out.

How this OPEX period closed for the YM, ES, NQ & TF

Below is a chartgrid of the YM, ES, NQ and TF. Each candle represents a one-month OPEX period. The current candle closed today.

Overlayed on each chart are:

•  a regression channel which begins at the high close around mid-2007
• a Fibonacci retracement taken from the 2007 high to the 2009 low in the case of the YM and ES, and taken from the 2009 low to this year's high in the case of the NQ and TF
• a sideways channel broken into thirds within the Fib retracement high/low boundaries

In terms of relative weakness of closing price as measured against the above studies within the realms of the one-month OPEX timeframe:

• the ES led as it closed just below its 50% retracement level and just above its downtrending "mean"
• the YM is next in line on the weakness scale as it closed just above its 50% retracement level and its downtrending channel "mean"
• the TF is third as it closed just below its 38.2% retracement level and its uptrending channel "mean"
• the NQ closed the strongest above its 38.2% retracement level and just below its uptrending channel "mean"
• the YM, ES and TF are currently within their middle one-third of their sideways channel, while the NQ is still in the upper one-third, albeit near the lower portion
• all four are still above the 2010 lows (which lie near a Fib retracement level...the TF is closest to its 2010 low of 584.30)

Below are Daily charts of the YM, ES, NQ and TF.

Overlayed on each chart are:

• a downtrending regression channel which begins at the high close of this year
• a Fibonacci retracement taken from the highs of this year
• a sideways channel broken into thirds within the Fib retracement high/low boundaries

However, I'll provide comments on relative weakness of current price as measured against the studies within the realms of a 4-hourly timeframe, as shown on the charts below, since they provide a further breakdown of what's going on in the Daily charts:

Overlayed on each chart are:

• a downtrending regression channel which begins at the high close of this year
• an uptrending regression channel which begins at the low close of this year
• a Fibonacci retracement taken from the highs of this year
• a sideways channel broken into thirds within the Fib retracement high/low boundaries

With respect to relative weakness, all four are roughly equal in terms of where they are in relationship to their shorter channel, their Fibonnaci retracement level, and their sideways channel. However, because the NQ made a higher close much later in the year, its downtrending regression channel is much steeper than on the other three e-minis, and price closed just below its "mean," whereas, price closed in between the -1 and -2 deviation levels on the other three e-minis. I would, therefore, say that the NQ is showing relative strength in this timeframe because of this...however, a break and (and hold) below the -2 deviation of the shorter uptrending regression channel and the lows of this year, would be bearish for all four e-minis and could begin a second leg down within the longer downtrending regression channel.

I would add that there is quite a lot of support below current closing price as depicted on the first chartgrid above. It may be that price retraces somewhat before making another move to the downside...however, the large price moves of late have been news driven, particularly with respect to Europe, so any moves could continue to be quite volatile and defy traditional technical analysis. I'll be watching the various VIXs closely for further clues in increasing vs. decreasing volatility, as well as upward vs downward price momentum and velocity of momentum, and volumes on the four e-minis (and their regard for or disregard of technical analysis) in the days and weeks to come.

Downtrend Gap Continuations?

Today's gap down on quite a few ETFs could become a "Gap Continuation" from their recent declines which began in July...if so, the following ETFs that gapped down today, could fall the same amount on this second leg down that they fell on their first leg down. It remains to be seen as to whether this will play out or not...but this is something I'll keep an eye on over the next few days.

Further to my post yesterday, here is how Day 2 of this 3-Day chart of EEM ended today...it broke below the former neckline of the former H&S pattern (41.66)...will see how it closes out tomorrow and whether it continues to form more weakness under this price level.

Further to this morning's post on the NKD, here is how it closed on the Daily chart today...it's sitting on the downtrend line from the "pink diamond" pattern that I mentioned in my post...another index I'll be watching over the next few days to see whether weakness continues to build, particularly if price falls below this trendline again.

Furthermore, I'll be watching the price action on the 4-hour charts below of the YM, ES, NQ & TF...in terms of relative weakness, the NQ is leading, followed by the TF, ES, and YM. An escalating move below the -2 deviation levels on both the shorter and the longer regression channels could confirm my gap continuation theory/scenario on the ETFs above.

Finally, I'll continue to watch these instruments on the Daily chartgrid below and will look for continued market cohesiveness in terms of weakness in equities (in particular, financials), commodities, Oil, EUR/USD, TNX & TYX vs. strength in Gold, the US$ and the VIXs (as referred to in my post on August 15).

Japan's Nikkei 225 Futures Index showing relative weakness...

Japan's 225 Futures Index is showing relative weakness today to the YM, ES, NQ & TF...see Daily chart below: 

It has had difficulties holding above the 10,000 level which it broke immediately after the earthquake in March of this year. An odd formation occurred afterwards...a "diamond" pattern (pink) emerged on subsequent price action, but not in the traditional sense in that price formed on the outside of the diamond rather than on the inside...nonetheless, price briefly popped above the diamond's apex, then has been falling with the YM, ES, NQ & TF since July 22. Today, price is retesting last Tuesday's lows, as well as the declining pink trendline which forms part of this pink diamond. It will be interesting to see where it closes today and what happens tomorrow.

EEM tumbled after wavering...

My post on the Emerging Markets index, EEM, on June 24 refers:  http://strawberryblondesmarketsummary.blogspot.com/2011/06/emerging-markets-index-is-wavering.html

Since that date, the index broke below a "diamond" pattern that had formed and tumbled back below a former neckline of a H&S pattern that had broken to the downside in August 2008 (at 41.66ish), as shown on the updated chart below. Each candle represents 3 days and the current candle began today. At the moment, price has popped back up above 41.66 and is currently trading at the -2 deviation level of the shorter regression channel that began in May of 2010 and below the "mean" of the longer regression channel that began in October of 2007.

This is another index that I'll be watching, along with the others mentioned in this week's and last week's posts, in order to gauge overall market weakness vs. strength. At the moment, it is more weak than strong...but will become even weaker when it breaks and holds below 41.66 again.

You're only as strong as your weakest link...

Would you support this restaurant if this happened to you? What would the manager do if all patrons felt that way and stopped coming? Could the manager run the restaurant on his own if all his waiters were like this? Perhaps the waiter's complacent attitude is a reflection of the manager's.

I pose similar questions about the sustainability of the Eurozone...there are weak links and there is a lot of complacency...Greece and a few others come to mind. Could Germany carry the ball? Two world wars were fought because Germany had ideas about taking over and running Europe...perhaps they end up dominating economically this time...but what's to be gained by that? A lot of debt forced on the Germans with no growth to sustain it in the long run...in fact, a drag on its reserves and civil war would result. Unless there is a concerted effort by all countries in the Eurozone to pull together and support each other in their efforts to deal with debt issues and actively develop and pursue new areas of sustainable growth, it will fail.

A similar fate will fall onto the rest of the world's countries unless they start working together to deal with debt issues and actively develop and pursue new areas of meaningful and sustainable growth...not simply produce "the latest and greatest cell phone." But first, each country must start looking after their own "weak links"...high unemployment, for one...starvation in some countries...and genocide in others.

Just like the human body...it cannot function and prosper properly if it has a weak heart or severe problems with its skeletal framework...it must be fixed and nourished.

More thoughts on where to begin to fix this problem are in my previous post:  http://strawberryblondesmarketsummary.blogspot.com/2011/07/holy-grail-and-maslows-hierarchy-of.html