This is Getting Really Boring...

Money Flow in 2013 in the Major Indices

The first percentage gained/lost graph below shows gains made, so far, in 2013 for the Major Indices. The Dow Transports leads in gains with nearly 13%, the Dow 30 and Russell 2000 are closely tied for second place, followed by the S&P 500, Dow Utilities, and Nasdaq 100.

The second percentage gained/lost graph shows gains made for only the month of February until Wednesday's close. The Dow Transports has been the leader this month, while the Dow 30, S&P 500, and Dow Utilities all outperformed the Russell 2000. The Nasdaq is only slightly above break-even.

This tells me that market participants have recently been favouring large-cap, more defensive, stocks over riskier, high-beta small-cap and tech stocks, as they have been grinding higher toward their all-time high levels. I'll be watching to see if money begins to start flowing into small-cap and tech stocks any time soon to signal that the markets are willing to take on more risk that may be needed to push all of the Major Indices to new all-time highs and sustain that kind of momentum going forward for the balance of the year. Otherwise, we could see some serious profit-taking and pullback begin in the not-too-distant future in all Indices.

What's the Catalyst?

The long and short of it is the markets are range-bound. The question is, what's the catalyst to move them up or down (outside of and away from the range)...convincingly and for any sustained period of time?

More Bank Cuts Disprove Fed's Assertions on Job Creation

Today's announcement by JP Morgan Chase to cut up to 4,000 jobs in 2013 (see Reuters article), further disproves the Fed's assertions that their monetary policy since 2009 has been geared towards job creation.

There have also been mass job cuts at a multitude of other banks, such as 11,000 announced at Citigroup in December 2012 (on top of 96,500 job cuts already announced from 2007 to 2011, as reported in this Reuters article) and 16,000 at Bank of America, as I wrote about in this post of September 20, 2012.

Presumably the Banks, who are the first beneficiaries of the Fed's monetary policy, do not support the Fed's goal...makes me wonder, who does support it and whether or not it's actually working, despite what data says about the mild drop, thus far, in unemployment.

This UPDATE February 27th from Reuters shows even more Bank job cuts to come:

Italian General Election 2013

As far as I'm aware, the following is the latest information on the (preliminary) Italian general election results...you can find Wikipedia's entire article at this link, and further corroboration is provided in this Bloomberg article.

With Bersani winning a majority in the Italian Chamber of Deputies, but no party winning an outright majority in the Senate, the result is a hung parliament.

At the time of my writing this post around noon EST on Tuesday, Italy's stock market closed down 799.79 points (-4.89%), and European, Asian, Indian and other world markets are down, as shown below...hardly surprising as world markets have pulled back slightly from their (overbought) four-year highs.

We'll see where world markets (and institutional confidence) go from here, in the short term, as they analyze potential effects on their global investments, and as final election results become known in more detail. If Italy does, indeed, have a hung parliament, the EU and ECB will, once again, have to swing into damage-control mode, putting them in a "defensive" stance...hardly conducive to support pushing (and, more importantly, convincingly sustain) European markets higher above their recent four-year highs.

Coping With Losses -- In Life and In Trading

No doubt, everyone has experienced some kind of loss over the years. Its consequences can be quite painful.

Last Monday (February 18th) my male pussycat, Smudge, who was 14 years old, passed away. He was with me from the age of 8 weeks. He's been my companion and comforter for the past two years since my husband died, and since Smudge's sister died three years ago. My family of four is now a family of one.

Within the space of four short days from when I first took Smudge to the Vet's (on February 15th) to his passing, I experienced a roller-coaster of emotions beginning with:

• worry (as I suspected he was gravely ill);
• which progressed to extreme panic and fear (of not knowing what decisions I'd have to make and the ensuing consequences);
• and then moved on to profound sadness;
• and then to numbness and disbelief;
• and, now, to somewhere just slightly above (and more positive than) numbness, as I come to terms with what has happened and where I go from here.

These range of emotions, as well as losing those whom I love, have re-enforced the old saying that "nothing lasts forever." People, events, places, things, and stuff, in general, are transitory and are not ours to keep or possess, but, simply, to borrow and enjoy while they are in our lives. I'm finally realizing that to yearn for something or someone that is in our past (and gone) is not a healthy place to be...it uses up valuable energy and weakens my abilities to, firstly, decide what it is that I desire in life now, and, secondly, from recognizing it and acting on when it tries to show up and become a part of my new life.

You may wonder why I'm writing about this in my trading Blog. I realized today that I've experienced these same emotions when I've made trading losses.

• First, the worry each morning (as a daytrader) that I won't be able to make money that day;
• second, extreme panic and fear that I won't know what to do if the trade goes against me;
• third, profound sadness when I've lost a trade;
• fourth, numbness and disbelief that this loss happened to me;
• and fifth, somewhere more positive than numbness as I try to assess the trade and move on to the next opportunity.

There has to be more progression from the fifth state (in my life and in trading)...to that of being in a state of "having and happiness" (since the "Law of Attraction" works without fail and we will get more of what we have or are experiencing in life). It won't do me any good to beat myself up over my loss or yearn for its return by trying to "make up for that loss on the next trade." That never works. It only clouds my judgement and puts me in a state of "not having something that I can never have" (the lost trade)...not a good place to be as it's, simply, a dead-end.

I think I can accomplish that sixth state...my health, happiness, and welfare depend on moving to that level. I know that I have the ability to more forward. I also know that I'm capable of making the right decisions at the right time and that it's so very important to not worry that I can't...I had to make a spit-second decision on Monday and did so without a second thought...oddly enough, I wasn't experiencing fear when I made that decision...I knew it was the right thing to do...and I'm still here...I don't need any more proof than that (that I can do the right thing at the right time, again and again, in life and in trading).

Perhaps you can recall a time when you made a split-second decision and knew that it was the right one...hang onto that experience/feeling and know that you can and will make the right decision at the right time in all areas of your life...do not worry that you can't, because you already have and you can do so again, at all times. It will keep you sane. Stay in the moment, accept things as they are, deal with them (knowing that you can), be grateful for what you do have, and move forward toward your desires, for they do exist (as unformed probabilities of existence)...look for them and they will eventually show up and you'll recognize them when they do...then, and only then, you'll know what to do (not a moment before)...it will feel natural and easy and will be the best option (for you) in the world. Everything will work out in the end...it always does, if you allow it.

I may add more to this article from time to time as more is revealed to me on this subject in the days/weeks/months ahead. In the meantime, I thank you for taking the time to read what I've shared, and I wish each one of you a happy, stress-free, rewarding, and exciting life! :-)

The following little snippet was e-mailed to me by my "personal cheerleader" (my dear sister-in-law) just as I was finishing this article, but hadn't yet posted it. Amazed, I thought it was timely and pertinent to my post, so I've included it here...co-incidence or the "Law of Attraction" at work?

P.S. December 22, 2015: I think, perhaps, that the mysterious "Sixth State" includes leading a balanced life, including a balanced approach to all things...I've certainly been trying to keep that in the back of my mind as I go about my daily activities, and it has helped me in many ways...may that continue.

Money Flow for February Week 3

Further to my last Weekly Market Update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• VIX and SPX:VIX Ratio
• RUT:RVX Ratio
• Advance/Decline Issues Index
• Number of Stocks Above 20-50-200-Day Moving Averages
• NYSI Summation Index
• 30-Year Bonds
• U.S. $
• China's Shanghai Index

6 Major Indices

As shown on the Weekly charts and 1-Week percentage gained/lost graph below of the Major Indices, gains were made in the Dow Utilities, while the Nasdaq 100, Russell 2000, and S&P 500 experienced varying degrees of loss. The Dow 30 and Dow Transports were, essentially, flat on the week.

9 Major Sectors

As shown on the Weekly charts and 1-Week percentage gained/lost graph below of the Major Sectors, the largest gains were made in Consumer Staples, followed by Utilities. The largest losses were made in Materials, followed by Cyclicals, Energy, Industrials, and Technology. Health Care and Financials were flat overall.

VIX and SPX:VIX Ratio

There was a slight increase in volatility, which abated somewhat by Friday's close, as shown on the Daily chart of the VIX.

I wrote on Thursday that a break and hold below 95.00 on the Weekly SPX:VIX ratio chart and the zero level on the Momentum indicator could indicate that a big decline is in store for the SPX.

As you can see on this updated chart below, the SPX bounced into Friday's close. 95.00 is still holding as major support, along with the zero level on Momentum, so Thursday's comments are still valid.

RUT:RVX Ratio

I also wrote on Thursday that a break and hold below 50.00 on the Weekly RUT:RVX ratio chart and the zero level on the Momentum indicator could indicate that a big decline is in store for the RUT.

As you can see on this updated chart below, the RUT also bounced into Friday's close. 50.00 is still holding as major support, along with the zero level on Momentum, so Thursday's comments are still valid.

Furthermore, price on the Russell 2000 e-mini Futures Index (TF) also held (for the most part) and closed above the 900.00 level, as shown on the updated 60 min (market hours only) chart below. As I said on Thursday, a break and hold below 900.00 could signal much more weakness to come, depending on whether we see increasing volumes on the decline.

I would, however, draw your attention to Friday's post regarding the TF. I'd reiterate that bulls and bears alike may be in for some nasty maneuvers in the zone between 892 and 912 on this Index, until price price breaks and holds out of this area one way or the other, as shown on the updated 4 Hour chart below.

Advance/Decline Issues Index

I last wrote about the Advance/Decline Issues Index on January 25th. I had mentioned that any closes above the -1000 level appear to represent general buying opportunities, and that if we started to see more Weekly closes below that level, it may be signifying that some serious selling has begun in equities.

The Weekly chart below of this Index shows that weekly closes are still occurring well above that level, with most of them above the zero level since the last week in December 2012. This past week was no exception. This tells me that there are still buyers in the equity market.

Number of Stocks Above 20-50-200-Day Moving Averages

The following three Daily charts depict the Number of Stocks Above their 20-50-200-Day Moving Averages. There is still room for all stocks, in general, to continue moving up before they run into major resistance/overbought levels. However, in the shorter-term, stocks may stall once the 65.00 level is reached on the 20-Day Moving Average chart, as price may be influenced by the downtrending 20-day moving average.

NYSI Summation Index

There has been a bearish cross of the Stochastics indicator on the Weekly chart below of the NYSI Summation Index, hinting that there may be a pullback in the SPX. However, the SPX may experience a bit more buying, pushing the NYSI higher to around the 2012 highs before we see a pullback in this Index...caution is warranted on both the bull and bear side of the trade.

30-Year Bonds

Price is holding slightly below major support, as shown on the 5-Year Weekly chart below of 30-Year Bonds. Whether it is forming a bear flag remains to be seen. A close, hold and rally above this resistance level would negate such a formation, but wouldn't guarantee that price won't breach this level once more. Despite the large volumes of the past few weeks, the drop below this resistance level has been small in comparison.

U.S. $

As shown on the 5-Year Weekly chart below of the U.S. $, price continued to rally this past week to close just below major resistance at 82.00. A break and hold above this level could send it higher to 82.78 and 83.45. Near-term support lies around its 50 weekly sma at 80.76 and a bit lower at 80.00.

China's Shanghai Index

Following China's New Year's celebrations (the markets were closed for one week), the Shanghai Index fell when it re-opened this past week, as shown on the Daily chart below. Near-term support sits in the vicinity of 2300-2250. 

Summary

In summary, it appears that equity markets positioned themselves more defensively this past week (buying into the "defensive" Sectors, Bonds, and the U.S. $, while taking some profits in higher-risk sectors), possibly in response to Wednesday's FOMC minutes, and in anticipation of the results of the upcoming budget talks, which revolve around "sequestration" that will otherwise take effect next Friday. No doubt, markets are also awaiting the results of the elections in Italy this weekend and the ensuing reaction of markets in Europe and China. Also on tap next week, is month-end and its attendant machinations. Furthermore, market participants will likely be listening for any kind of clarification from Ben Bernanke (if he's questioned about it) on when the Fed may alter its bond-buying program when he testifies before the Senate Banking Committee this Tuesday and the House Financial Services Committee on Wednesday.

With so much at issue, we will likely see a further increase in intraday volatility for the coming week(s), which is why I'll be watching the charts above for clues in overall equity strength or weakness. We may also see whether market participants begin to support Gold, Platinum, the Commodities Sector, and the AUD/USD, as I wrote about earlier in the week here, which may have an influence on equities, as well.

Have a great weekend and good luck next week!

Nothing Like Leaving Things Until the Last Minute!

Those in charge who make decisions that are guided by intuition and based on the acceptance of the reality of the situation, together with a desire to resolve it, will make enlightened decisions that finalize this matter, while those who make ego-based decisions will not deal with the matter and will "kick the can down the road," once again. We'll soon see where the collective political thoughts/desires lean on this issue.

Bull/Bear Trap Zone on the TF?

Bulls and bears alike may be in for some nasty maneuvers in the zone between 892 and 912 on the Russell 2000 e-mini Futures Index (TF), until price breaks and holds out of this area one way or the other, as shown on the 4 Hour chart below.

RUT:RVX Ratio

Price has fallen and is trading around major support at 50.00 and the Momentum indicator is still above zero on the following Weekly ratio chart of RUT:RVX. A break and hold below 50.00 and the zero level could signal that a big decline is in store for the RUT.

A look at a 60 min (market hours only) chart of the Russell 2000 e-mini Futures Index (TF) shows that price is currently trading in the vicinity of its lower channel, Monthly Volume Profile POC (pink horizontal line), and Monthly VWAP (yellow). A break and hold below 900.00 could signal much more weakness to come, depending on whether we see increasing volumes on the decline (note yesterday's and today's volume spikes).

SPX:VIX Ratio

Price has fallen to just above major support at 95.00 and the Momentum indicator is still above zero on the following Weekly ratio chart of SPX:VIX. A break and hold below 95.00 and the zero level could signal that a big decline is in store for the SPX.

I'm mindful of my last comments on the VIX.

Minutes of January 29/30, 2013 FOMC Meeting

The minutes of the January 29/30, 2013 FOMC meeting were released today. You can find the entire transcript at this link.

This excerpt from the minutes contains their Vote and official Statement that was released that day (my take on this is at the end of this post):

Gold, Platinum, Comodities ETF, & AUD/USD

1580 is pretty significant support for Gold. A break and hold below could send it down to 1500, as shown on the Weekly chart below.

By the way, a bearish (50 & 200) moving average "Death Cross" is forming today on the Daily timeframe, hinting at further weakness, unless it resolves itself soon.

Platinum failed to break out and hold above this large triangle and is swirling around its 5-Year Weekly Volume Profile POC. Further weakness could send it down to its confluence level of the 50 & 200 smas and lower triangle (note that we have a very recent bearish "Death Cross" formation on this timeframe, so price has not yet been resolved to the upside).

Further to my post of February 19th, price has fallen today on the Commodities ETF (DBC). We'll see if the 50 sma (red) holds on the Weekly timeframe at 27.66.

I'm also watching price action on the AUD/USD Forex pair as it swirls around its Weekly 50 sma before it breaks out of its trading range.

In conclusion, I'd say that Commodities, in general, are in "neutral territory," with a hint of further weakness waiting in the wings, and the Weekly 50 smas playing a role in either providing solid support, or giving way for this Sector and commodity currency (Aussie $) to weaken further.

Update on Commodities & AUD/USD

I last wrote about Commodities and the AUD/USD Forex pair on January 20th.

Since then, the Commodities ETF (DBC) broke above trendline resistance, and is attempting to bounce after a re-test of near-term support, as shown on the Weekly chart below. Near-term resistance is the upper Weekly Bollinger Band at 28.70. A break and hold above that level could signal a new rally in store for Commodities, in general.

Additionally, the AUD/USD Forex pair is bouncing off its lower Weekly Bollinger Band and a major support level. A hold above the 50 sma (red) could send it up to its mid or upper Bollinger Band.

YM, ES, NQ & TF Range Update

So far today (as of 12:30pm), the YM, ES, and TF are attempting to break and hold above their respective trading ranges, as shown on the 60 min (market hours only) charts below. The NQ, however,  remains a laggard as trading continues within its range.

Meanwhile, the EUR/USD has advanced modestly, so far, this week, as shown on the Weekly chart below. It remains above its major support level of 1.3255ish, as I last discussed in my post of February 7th, but below its 200 sma (pink). Until we see price regain and hold above the 200 sma, with the 50 sma (red) crossing above the 200 sma, it's still under the bearish influences of an existing, longer-term moving average Death Cross formation.

We'll see if further support/buying comes into play this week on these four E-mini Futures Indices and the Euro, or whether any meaningful weakness enters in one to, potentially, negatively influence the others.

Money Flow for February Week 2

Further to my last Weekly Market update, this week's update will look at:

• 6 Major Indices
• 9 Major Sectors
• 30-Year Bonds
• U.S. $

6 Major Indices

As shown on the Weekly charts and 1-Week percentage gained/lost graph below of the Major Indices, the largest gains were made in the Russell 2000, followed by the Dow Transports. The S&P 500 and Dow 30 were, essentially, flat, and there were minor losses in the Dow Utilities and Nasdaq 100.

As I mentioned last week, I was going to be watching to see if the Nasdaq and Utilities played catch-up...they didn't.

9 Major Sectors

As shown on the Weekly charts and 1-Week percentage gained/lost graph below of the Major Sectors, the largest gains were made in Industrials, Financials, Consumer Discretionary, and Consumer Staples. There were losses in Technology, while Materials, Energy, Health Care, and Utilities were, basically, flat.

These tell me that there was not much strength in the overall equity markets this past week...more of a pause in a lengthy (and, potentially, exhausted) uptrend.

30-Year Bonds

Price closed slightly below last week's close, as shown on the 5-Year Weekly chart below of 30-Year Bonds. It remains just below major resistance. Despite the large volumes of the past few weeks, the drop below this resistance level has been small in comparison.

U.S. $

As shown on the 5-Year Weekly chart below of the U.S. $, price continued to rise this past week to close just below the 50 sma (red) and the 50% Fibonacci retracement level. A break and hold above this confluence resistance point may propel the dollar to 82.00, or higher.

Summary

This is a short review, as not much happened in equities this past week. 

Going forward, I'll be watching Technology, the U.S. $, and 30-Year Bonds, as discussed above, together with the 60 min trading ranges on the 4 Major E-mini Futures Indices and the Euro (as I discussed earlier in the week here) for possible negative or positive influences on the U.S. equity markets, BUT being mindful of this potential VIX scenario. We may also see hints of strength or weakness when trading resumes in China this coming week.

Have a great long weekend and good luck next week!

Euro-Drag

The Euro is down today (after weaker-than-anticipated European, German, French and Italian GDP data was released pre-market) and is producing a drag on European Financials, as shown on the two ratio charts below. The EUFN:SPX ratio shows that the European Financials are weakening...price is below the 50 sma today and still below the longer-term uptrend. The Euro:SPX ratio is sitting just below major support. Ones to watch to see if the Euro weakness persists and whether it produces a drag on U.S. equities.

Meanwhile, the Bull/Bear standoff continues as we await a breakout/down, as shown on the 60 min (market hours only) charts below of the 4 major E-mini Futures Indices.

Perhaps we'll see more definitive movement after Monday's holiday.

The Uptrend Continues

The slow, grinding uptrend continues on the YM, ES, NQ & TF, as shown on the 60 min (market hours only) charts below...I'd have to see a series of lower highs and lows before I'd call an end to it.

Update on the Russell 2000 e-Mini Futures Index (TF)

I last wrote about the Russell 2000 e-Mini Futures Index (TF) on January 2nd.

Since then, it has been slowly grinding higher and has made a small gain of 48.50 points, as shown on the 60 min (market hours only) chart below...very often retracting (repeatedly) small moves up (shaking out long and short positions), as it inches its way to a potential target of 970.00 by the end of this month.

Unless the pace and size of any further upside moves picks up from here, I can see that it won't make this target by that date...it wouldn't be hit until the latter part of March, if it continued to cling to the mid-channel level.

We'll see if serious buyers enter any time soon to move this index at a quicker pace than it has seen of late, in anticipation of some kind of resolution of the "Fiscal Cliff" issue by March.