Money Flow for July Week 2

Further to my last weekly market update, here is my commentary on the long, medium, and short-term trend/risk appetite of the 4 Major Indices and 9 Major Sectors relative to their Monthly, Weekly, and Daily charts, respectively. Please refer to that post for an explanation of how my "BULLISH/BEARISH" and "RISK ON/RISK OFF" labels are derived.

Chartgrid #1 depicts a Monthly timeframe of the 4 Major Indices (Dow 30, S&P 500, Nasdaq 100, and Russell 2000)...my comments refer to the current month's (July's) candle.

• "BULLISH" so far this month for all 4 Indices.
• "RISK OFF" so far this month on the Dow, S&P, and Nasdaq. "RISK ON" on the Russell. Still room for these indices to rally to their upper Bollinger Band if they stay above the "MEAN."
• Long term, the Russell is lagging in strength and is the one to watch, as a drop below its "MEAN" could send it down to the lower Bollinger Band and pull the others down with it. The S&P is in imminent danger of a bearish moving average "Death Cross" formation occurring on this timeframe...one to watch for market reaction. High-wave spinning top candles depict market indecision on this timeframe.

Chartgrid #2 depicts a Weekly timeframe of the 4 Major Indices...my comments refer to this past week's candle.

• "BEARISH" for the Dow, S&P, and Nasdaq. "BULLISH" for the Russell.
• "RISK ON" for the Dow & S&P. "RISK OFF" for the Nasdaq and Russell. 3 are in danger of falling to their lower Bollinger Band if they stay below the "MEAN."
• Medium term, the Russell is leading in strength (barely) and is the one to watch, as a drop below its "MEAN" could drag all of them to their lower Bollinger Band. The blended action of the last 2 candles depicts market indecision on this timeframe.

Chartgrid #3 depicts a Daily timeframe of the 4 Major Indices...my comments refer to Friday's candle.

• "BULLISH" for the Dow, S&P, and Russell. "BEARISH" for the Nasdaq.
• "RISK ON" on Friday on all 4 Indices.
• Short term, the Nasdaq is lagging in strength and is the one to watch as a hold below its "MEAN" could send it and the others down to its lower Bollinger Band, or lower...otherwise, look for more upside movement in all 4 Indices to, potentially, the upper Bollinger Band, or higher.

The 2 graphs below show money flow for the 9 Major Sectors during the current month, so far, as well as the past week...XLY (Consumer Discretionary), XLK (Technology), XLI (Industrials), XLB (Materials), XLE (Energy), XLP (Consumer Staples), XLV (Health Care), XLU (Utilities), and XLF (Financials).

You can see that the markets have begun building an advance in the Energy (XLE) and Financials (XLF) Sectors, as well as the Defensive Sectors (XLP, XLV, and XLU).

Chartgrid #4 depicts a Monthly timeframe of the 9 Major Sectors...my comments refer to the current month's candle.

• "BULLISH" so far this month for XLY, XLK, XLP, XLV, and XLU. "BEARISH" for XLI, XLB, XLE, and XLF.
• "RISK ON" so far this month for XLE, XLP, and XLU. "RISK OFF" for XLY, XLK, XLI, XLB, XLV, and XLF.
• Long term, XLF (Financials Sector) is still the weakest of the 9 Sectors and is the one to watch for either increasing weakness or strength, and is at a crossroads with its steeply downtrending 50 sma. The Defensive Sectors (XLP, XLV, and XLU) are still under the heaviest accumulation from their 2009 lows.

Chartgrid #5 depicts a Weekly timeframe of the 9 Major Sectors...my comments refer to this past week's candle.

• "BULLISH" for XLP, XLV, and XLU. "BEARISH" for XLY, XLK, XLI, XLB, XLE, and XLF.
• "RISK ON" for XLE, XLP, XLV, XLU, and XLF...reflecting the build in the advance as noted in my comments above. "RISK OFF" for XLY, XLK, XLI, and XLB.
• Medium term, XLP (Consumer Staples Sector) is the one to watch to see if it continues to outperform next week...XLF (Financials) is also the one to watch as it's the only one that is under the influence of a bearish moving average "Death Cross" formation on this timeframe. The Defensive Sectors (XLP, XLV, and XLU) are still under the heaviest accumulation from the beginning of this year.

Chartgrid #6 depicts a Daily timeframe of the 9 Major Sectors...my comments refer to Friday's candle.

• "BULLISH" for XLY, XLB, XLE, XLP, XLV, XLU, and XLF. "BEARISH" for XLK and XLI.
• "RISK ON" for all 9 Sectors.
• Short term, XLB (Materials Sector) and XLE (Energy) are ones to watch as they're under the influnce of a bearish moving average "Death Cross" formation on this timeframe...XLI (Industrials) and XLF (Financials) are also worth watching to see if a "Death Cross" forms on these (the crossover on XLI is imminent). The Defensive Sectors (XLP, XLV, and XLU) are still under the heaviest accumulation on the Daily timeframe as they're the furthest above their 50 sma...ones to watch to see if price reverts back to the the 50 sma, or even lower, potentially dragging the other Sectors further down, as well.

Further to my post of July 10th, the 4-Hour chartgrid below of the YM, ES, NQ & TF shows that price closed above the two intersecting 50% Fibonacci fan lines with the horizontal support levels of 12460 for YM, 1327.50 for ES, 2578 for NQ, and 778 for TF. The NQ just squeaked above by 0.25 and is the one to watch next week for either a strengthening advance or the development of weakness at this level.

As I mentioned in that post, if price cannot hold above this support level on these e-mini futures indices, they are in danger of dropping down to or below the June lows.

In summary, this next week hosts a number of important events, namely:

• July 17 - 10:00 am - Ben Bernanke speaks before Senate Banking Committee (semi-annual monetary policy testimony)
• July 18 - 10:00 am - Ben Bernanke speaks before House Financial Services Committee (semi-annual monetary policy testimony)
• July 18 - 2:00 pm - Beige Book Report
• July 20 - OPEX

No doubt, market participants will be listening intently to Mr. Bernanke's remarks for any hint of "QE and monetary stimulus," to which I referred in my post of Friday 13th...we'll see how the markets react.

Enjoy your weekend and good luck next week!