Fed Stimulus "Canaries" About to Croak?

I last wrote about the Fed Monetary Stimulus "Canaries" in my post of December 16, 2014. As a reminder, I chose six of them (ETFs) in order to determine their relative strength/weakness against their respective Stock Market Index, since they may have held clues for further accumulation in riskier assets due to respective Central Bank stimulus programs.

So that we can compare their current relative strength/weakness, I've provided the following 5-Year Daily ratio charts for each "Canary."

OBSERVATIONS

XLF:SPX -- U.S. Financials ETF (XLF) has, basically, traded lock-step with the SPX. A recent breakout has failed and brought price back below major resistance. We'll need to see price retake the 0.0121 level, first, then 0.0122, if XLF is going to resume an outperformance of the SPX...however, the RSI failed to make a higher swing high relative to the higher swing price high, so I'm doubtful that we'll see the XLF move higher before it, potentially, retests the 200 MA.

EUFN:STOX50 -- European Financials ETF (EUFN) was underperforming the European Index (STOX50) until mid-March of this year, but has rallied and has consolidated in between the 50 and 200 MAs. Price action is still under the bearish influences of a moving average Death Cross formation, so it is subject to reversal if it fails to break out and hold above major resistance at 0.0073 and a bullish moving average Golden Cross forms.

GXC:SSEC -- Chinese Financials ETF (GXC) has drastically underperformed the Shanghai Index (SSEC) since July of 2014. The shockwave that I warned against in my above-noted post did occur in this ETF, but had the opposite effect on the Index, once the major support level of 0.025 was broken...however, once the last support level of 0.022 was broken, we started to see the Index weaken and, ultimately, implode. A strong Index is only as good as its financials to support it, in the long run, so we'd need to see price reclaim (and hold above) 0.025 and higher; otherwise, I'd look for considerable weakness ahead in the Index, as I warned here.

XHB:SPX -- Homebuilders ETF has, essentially, traded sideways (along with the SPX) since January of this year. We'll need to see a solid breakout and hold above 0.0180 to convince bulls that this ETF was going to outperform for the remainder of this year...we may see a brief pop until such time as the Fed raises interest rates.

RTH:SPX -- Retail ETF has outperformed the SPX since mid-June of this year, after retreating from its highs in March. So far, price has retested and failed to break out and hold above those highs, which it will need to do in order to regain its leadership...otherwise, it's in danger of falling back to its 200 MA, or lower (to erase all of its gains for 2015).

EEM:SPX -- Emerging Markets ETF has continued to underperform the SPX and has, in fact, broken below this year's major support level. Once again, we see price under the bearish influences of a moving average Death Cross formation...price would need to reclaim (and hold above) 0.022 and a bullish moving average Golden Cross form; otherwise, we could very well see an acceleration of downside pressure occur on EEM.

SUMMARY

• Chinese and European Financials are very weak and do not support their respective Indices
• U.S. Financial ETF is at a crossroads and looks like it's in for some weakness
• Homebuilders ETF is up against considerable resistance and could be in for some weakness
• Retail ETF is pushing on a string at these all-time highs and overbought levels
• Emerging Markets ETF is falling off a cliff

CONCLUSIONS

It would appear that these six "Canaries" are about to fall (further, in some cases) off their perch...charts worth monitoring to see where the cracks begin or widen to suggest that the effectiveness of these Central Banks' policies has run its course.

30-Year U.S. Bonds at Crossroads

The following 1-Year Daily chart of 30-Year U.S. Bonds ($USB) shows that a bearish moving average Death Cross has recently formed -- warning that lower prices may be in store. However, the rising RSI indicates building strength from May through July.

Near-term major resistance lies at 155.00, while longer-term major support sits at 150.00, as shown on the following 5-Year Daily chart. We may see price break through both sides of this 150.00-155.00 consolidation zone before market participants make a final decision "for" or "against" this bond...watch to see which side of 50.00 that the RSI, either, aligns with, or diverges from, that final choice to confirm sustainability of that direction.

The key to direction may lie in how well the U.S. $ performs in the near-term. The following 5-Year Daily chart of $USD compares price action to $USB. Price has, basically, moved in tandem on both of these instruments since mid-2013. The RSI is still in an uptrend from May and above the 50.00 level on $USD, and major price resistance lies at 98.00.

However, the following 5-Year Daily ratio chart of $USD:$USB shows that, recent attempts by $USD to break and hold above the 98.00 price level have been futile, while buying has strengthened each time in $USB. I'd watch the 0.630 major support level on this chart to see if the U.S. $ can regain a bullish bias...a breakout and hold above 0.660, together with a move on the RSI back above the 50.00 level would reinforce that scenario.

China's Shanghai Index: The Falling Knife

* See UPDATES below...

Further to my post of June 8th, here's what has happened, since then, on China's Shanghai Index.

After making a slightly higher high of 5178.19 on June 11th, it has since plunged to a low today (July 8th) of 3421.53 to close at 3507.19...slightly above its 200 Day Moving Average -- making a loss of 1671 points from high to close, thus far.

The first level of major supports sits around 3000...the next around 2500...a solid break and hold below 2000 could cause major panic in markets around the world.

So far, attempts by the Chinese Central Bank to intervene and stop this falling knife have failed...we'll see if this market can find any stability at any of the above-noted levels. There are no "buy" signals at this time on the RSI, MACD, and Stochastics indicators -- rather, they are still bearish, although quite oversold; however, the extreme bearish force of the MACD, in particular, should be respected, as we could, very well, see much more selling in the short term.

* UPDATE July 27, 2015:

* UPDATE August 25, 2015:

Major support now sits in between 2750 and 2500, as price has closed below 3000 today -- now major resistance.

* UPDATE September 7, 2015:

China's Shanghai Index is about to experience a bearish moving average Death Cross...likely by tomorrow's or Wednesday's close. The RSI and PMO indicators are indicating further weakness to come.

At the moment, price (after bouncing back from its price noted in my above UPDATE) is trading at just above the major support level of 3000...a drop and hold below could, very well, see price falling back to somewhere in between 2750 and 2500, or 2000, or even lower. If price holds above 3000, we may see price rally to retest the Death Cross around 3700, before we see further weakness and lower swing lows...however, failure to close the gap below 3500 would likely spell major trouble for this index and see price plunge rather quickly to new lows for 2015.

* UPDATE September 8, 2015:

Bearish moving average Death Cross formed today...yesterday's comments (noted above) apply...