Sunday, December 31, 2017
Saturday, December 30, 2017
2017 Market Wrap-Up
This post will outline how the U.S. Major Indices, Major Sectors, S&P 500 Index and the SPX:VIX Ratio performed throughout 2017 and how they ended the year.
The following four charts of the S&P 500 Index will depict how 2017 ended, on a yearly, quarterly, monthly, and weekly basis.
Each candle on the following chart represents a period of one year.
2017 extended gains made in 2016, mostly remained above 2250, and finished the year on an extremely bullish candle. Momentum hit an all-time high on this timeframe by year-end.
Each candle on the following chart represents a period of one quarter.
Each of the four 2017 quarters gained on the prior one, without much of a pullback in each. Momentum has yet to make a new swing high on this timeframe since it peaked in 2014.
Each candle on the following chart represents a period of one month.
With the exception of March, each candle closed higher, with a bit more candle overlap. Momentum also closed out the year at an all-time high on this timeframe.
Each candle on the following chart represents a period of one week.
There are several minor pullbacks evident throughout 2017 and some profits were taken in the last two weeks. Momentum dipped a couple of times, but remained above zero, and ended in strong uptrend.
The following four charts of the SPX:VIX Ratio will depict how 2017 ended, on a yearly, quarterly, monthly, and weekly basis.
Each candle on the following chart represents a period of one year.
2017 extended gains made in 2016, and finished the year on an extremely bullish candle (illustrating low volatility), as it closed about 20 points off its all-time high. Momentum hit an all-time high on this timeframe by year-end.
Each candle on the following chart represents a period of one quarter.
Volatility rose on this timeframe, as evidenced by the long tailed candles, as price remained, essentially, above 150. All candles, except Q4, closed higher. Momentum hit an all-time high in Q3 and remains strong.
Each candle on the following chart represents a period of one month.
Half of the 12 candles closed higher (on moderate volatility), but the general trend is still up. Momentum is still in strong uptrend on this timeframe, as an all-time swing high was made in October.
Each candle on the following chart represents a period of one week.
Zigzag price action illustrates higher volatility on this timeframe, as some profit-taking occurred several times this year, but remains in uptrend. Momentum closed the year below zero, after spiking to an all-time high at the end of October.
SPX
The SPX is mashed up against major resistance in the form of an external Fibonacci retracement level, as shown on the Monthly chart below. It's also trading above a +2 standard deviation level of a long-term uptrending Regression Channel (formerly major resistance/now support around 2600).
Such a channel breakout has not occurred since it began at its lows of 2009, so any further buying that occurs at/above these levels would be unusual and, potentially, lead to over-exuberant parabolic spikes.
The next major support level sits at 2485 (a confluence of two external Fibonacci retracement levels and the +1 channel deviation level. A pullback of 7% from its 2017 closing price of 2673 would send it down to that level.
SPX:VIX Ratio
Price on the following Monthly ratio chart of SPX:VIX closed in the lower half of the long-term uptrending (green) channel.
It will be important for price on this ratio to reach and hold above the 280 major resistance level, and for the SPX to hold above its near-term 2600 major support level, in support of a convincing argument that favours the sustained entry of the SPX into a new bull-market phase.
Otherwise, if price drops and holds below major support at 200, expect volatility to increase dramatically and weakness to set in on the SPX.
2017 was a year of low to moderate volatility (depending on the timeframe), but managed to generate steady quarterly gains in the SPX through to year-end. In last year's Market Forecast for 2017, I had anticipated an increase of around 11% in equities, in general, as well as low volatility. In fact, the S&P 500 Index closed out the year 19.42% higher (20.16% at its highest for the year on December 18).
Technology and Large Caps led the markets to new highs throughout the year (supported by a strong Financials sector), while Small Caps made modest gains, in comparison.
Next year's U.S. mid-term Congressional election, coupled with two to three possible interest rate hikes, will likely generate an increase in market uncertainty and volatility. So, we may see larger weekly swings occur, and, possibly, a 7% pullback at some point, to generate an overall increase of about half of what we saw in 2017...to propel the SPX approximately 10% higher to around 2940 by year-end.
In closing, I'd mention that my Market Forecast for 2018 can be found at this link for further details. Since writing that post, the following record-breaking news arose:
The S&P 500 Index came within 5 points of hitting 2,700 and the Nasdaq Composite Index hit 7,000 on December 18. In my post of November 26, 2016, I had projected an SPX target of 2,700 (in anticipation of the 2020 Presidential election), so, to see it nearly hit three years early illustrates what an unusually strong year this has been).
President Trump signed the Tax Cuts and Jobs Act on December 22 (the new lower corporate rate of 21% will take effect January 2018). Following this, many major companies announced pay raises and bonuses for employees, as well as plans to hire more workers and increase infrastructure spending.
U.S. MAJOR INDICES
The following 1-year daily charts and year-to-date percentage-gained/lost graph show that all Major Indices, except Utilities, are trading well above their 50-day moving average, and that Technology made the most gains, followed by Transports, Large-Caps, Small Caps, and, Utilities.
MAJOR SECTORS
The following 1-year daily charts and year-to-date percentage-gained/lost graph show that all Major Sectors, except Utilities, are also trading above their 50-day moving average, and that Technology gained the most, followed by Materials, Industrials, Consumer Cyclicals, Financials, Health Care, Consumer Staples and Utilities, while Energy ended, essentially, flat, at -0.89%.
S&P 500 INDEX
The following four charts of the S&P 500 Index will depict how 2017 ended, on a yearly, quarterly, monthly, and weekly basis.
Each candle on the following chart represents a period of one year.
2017 extended gains made in 2016, mostly remained above 2250, and finished the year on an extremely bullish candle. Momentum hit an all-time high on this timeframe by year-end.
Each candle on the following chart represents a period of one quarter.
Each of the four 2017 quarters gained on the prior one, without much of a pullback in each. Momentum has yet to make a new swing high on this timeframe since it peaked in 2014.
Each candle on the following chart represents a period of one month.
With the exception of March, each candle closed higher, with a bit more candle overlap. Momentum also closed out the year at an all-time high on this timeframe.
Each candle on the following chart represents a period of one week.
There are several minor pullbacks evident throughout 2017 and some profits were taken in the last two weeks. Momentum dipped a couple of times, but remained above zero, and ended in strong uptrend.
SPX:VIX RATIO
The following four charts of the SPX:VIX Ratio will depict how 2017 ended, on a yearly, quarterly, monthly, and weekly basis.
Each candle on the following chart represents a period of one year.
2017 extended gains made in 2016, and finished the year on an extremely bullish candle (illustrating low volatility), as it closed about 20 points off its all-time high. Momentum hit an all-time high on this timeframe by year-end.
Each candle on the following chart represents a period of one quarter.
Volatility rose on this timeframe, as evidenced by the long tailed candles, as price remained, essentially, above 150. All candles, except Q4, closed higher. Momentum hit an all-time high in Q3 and remains strong.
Each candle on the following chart represents a period of one month.
Half of the 12 candles closed higher (on moderate volatility), but the general trend is still up. Momentum is still in strong uptrend on this timeframe, as an all-time swing high was made in October.
Each candle on the following chart represents a period of one week.
Zigzag price action illustrates higher volatility on this timeframe, as some profit-taking occurred several times this year, but remains in uptrend. Momentum closed the year below zero, after spiking to an all-time high at the end of October.
SUPPORT & RESISTANCE LEVELS
SPX
The SPX is mashed up against major resistance in the form of an external Fibonacci retracement level, as shown on the Monthly chart below. It's also trading above a +2 standard deviation level of a long-term uptrending Regression Channel (formerly major resistance/now support around 2600).
Such a channel breakout has not occurred since it began at its lows of 2009, so any further buying that occurs at/above these levels would be unusual and, potentially, lead to over-exuberant parabolic spikes.
The next major support level sits at 2485 (a confluence of two external Fibonacci retracement levels and the +1 channel deviation level. A pullback of 7% from its 2017 closing price of 2673 would send it down to that level.
SPX:VIX Ratio
Price on the following Monthly ratio chart of SPX:VIX closed in the lower half of the long-term uptrending (green) channel.
It will be important for price on this ratio to reach and hold above the 280 major resistance level, and for the SPX to hold above its near-term 2600 major support level, in support of a convincing argument that favours the sustained entry of the SPX into a new bull-market phase.
Otherwise, if price drops and holds below major support at 200, expect volatility to increase dramatically and weakness to set in on the SPX.
CONCLUSIONS
2017 was a year of low to moderate volatility (depending on the timeframe), but managed to generate steady quarterly gains in the SPX through to year-end. In last year's Market Forecast for 2017, I had anticipated an increase of around 11% in equities, in general, as well as low volatility. In fact, the S&P 500 Index closed out the year 19.42% higher (20.16% at its highest for the year on December 18).
Technology and Large Caps led the markets to new highs throughout the year (supported by a strong Financials sector), while Small Caps made modest gains, in comparison.
Next year's U.S. mid-term Congressional election, coupled with two to three possible interest rate hikes, will likely generate an increase in market uncertainty and volatility. So, we may see larger weekly swings occur, and, possibly, a 7% pullback at some point, to generate an overall increase of about half of what we saw in 2017...to propel the SPX approximately 10% higher to around 2940 by year-end.
A LOOK INTO THE FUTURE
Of course, I realize that a forecast is, simply, one possibility of many. However, it can be a useful tool in order to track, assess and learn from one's future successes and failures on a short, medium and long-term basis. And, it can be modified/updated during its duration, depending on world and domestic influences at the time.
I wish you good health and prosperity in 2018!
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| Happy New Year 2018! |
Thursday, December 28, 2017
Tuesday, December 26, 2017
$72.00 WTI Crude Oil?
As noted on the following Monthly chart, 72.00 (40% Fibonacci retracement level) could be the next major target for WTI Crude Oil.
Price briefly hit the 60.00 level today (Tuesday) and is trading above two levels of major support -- 54.66 (23.6% Fib retracement level) and 48.00 (price and channel centreline support).
As long as price can re-take 60.00 and hold above that level, there's a good chance we may see it climb to its next major resistance level of 72.00.
On a shorter (weekly) timeframe, price will, first, need to hold above 57.41 (200-week moving average) and 55.00 (price support), inasmuch as there is very high volatility below.
In addition, on a Daily timeframe, watch for a bullish crossover to form on the PMO indicator, the recent crossover to hold on the MACD, the RSI to hold above 50.00, and price to remain above the 50-day moving average at 56.02.
Price briefly hit the 60.00 level today (Tuesday) and is trading above two levels of major support -- 54.66 (23.6% Fib retracement level) and 48.00 (price and channel centreline support).
As long as price can re-take 60.00 and hold above that level, there's a good chance we may see it climb to its next major resistance level of 72.00.
On a shorter (weekly) timeframe, price will, first, need to hold above 57.41 (200-week moving average) and 55.00 (price support), inasmuch as there is very high volatility below.
In addition, on a Daily timeframe, watch for a bullish crossover to form on the PMO indicator, the recent crossover to hold on the MACD, the RSI to hold above 50.00, and price to remain above the 50-day moving average at 56.02.
Friday, December 22, 2017
Merry Christmas 2017
The Queen's Christmas Message December 25, 2017
Merry Christmas Mr. Bean 😊
Thursday, December 21, 2017
BITCOIN Fatigue
* See UPDATES below...
Presented without comment (prices as at 12:40 pm ET December 21)...
Presented without comment (prices as at 12:40 pm ET December 21)...
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| BITCOIN Daily chart |
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| BITCOIN Futures CBOE Daily chart |
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| BITCOIN Futures CME Daily chart |
* UPDATE December 22 (Daily charts as at 11:55 am ET)...
...still fatigued as 10,000 nearly hit and 46% value lost from its all-time high in just six days...
* UPDATE December 24 @ 1:10 pm ET...
Bearish Head & Shoulders pattern forming on Bitcoin 60 minute chart...10,000 is downward-sloping neckline and major support...more weakness ahead or bear trap?
OR, maybe this is just 3 Xmas trees...😉
* UPDATE December 27 @ 11:50 pm ET...
We could see some fireworks if BITCOIN falls and holds below 13,582ish (apex of intersecting channel medians on 60 min. chart)...
* UPDATE December 29...
Not only is volatility present in BITCOIN trading activity, but also in real-life situations associated with this crypto (or, more appropriate moniker, "klepto") currency...
* UPDATE January 12, 2018...
BITCOIN continues to struggle, as political debates continue regarding its demise...
...still fatigued as 10,000 nearly hit and 46% value lost from its all-time high in just six days...
* UPDATE December 24 @ 1:10 pm ET...
Bearish Head & Shoulders pattern forming on Bitcoin 60 minute chart...10,000 is downward-sloping neckline and major support...more weakness ahead or bear trap?
OR, maybe this is just 3 Xmas trees...😉
* UPDATE December 27 @ 11:50 pm ET...
We could see some fireworks if BITCOIN falls and holds below 13,582ish (apex of intersecting channel medians on 60 min. chart)...
* UPDATE December 29...
Not only is volatility present in BITCOIN trading activity, but also in real-life situations associated with this crypto (or, more appropriate moniker, "klepto") currency...
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| Source: ZeroHedge |
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| Source: ZeroHedge |
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| BITCOIN Weekly (December 30 @ 3:05 am ET) |
* UPDATE January 12, 2018...
BITCOIN continues to struggle, as political debates continue regarding its demise...
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| BITCOIN Monthly January 12, 2018 @ 1:00 pm ET |
Monday, December 18, 2017
Will The Dow Reach 25,000?
* See UPDATES below...
The Dow 30 Index is fast approaching 25,000, as shown on the following Monthly chart, and has gained 35.23% since the 2016 U.S. Presidential Election, as shown on the graph below.
The big question is, in the eight trading days left before the end of the year, can it gather another 207 points to break through to this milestone this year?
Keep an eye on the Momentum, RSI and MACD indicators shown on the Weekly chart below. At the moment, they're in strong uptrend, favouring the buyers.
Perhaps, if the Republican tax bill is passed in Congress this week, we'll see that feat realized, as bulls look to close out the month and the year on a high note, inasmuch as markets love Big Round Numbers. For example, the Nasdaq Composite Index hit 7,000 for the first time today, and the S&P 500 Index came within 5 points of hitting 2,700, as shown on their Monthly charts below.
* UPDATE December 20...
Following Congressional approval of the Tax Cuts and Jobs Act today, many major companies announced pay raises and bonuses for employees, as well as plans to hire more workers and to increase infrastructure spending...in spite of Nancy Pelosi's pronouncement of this bill as "Armageddon."
As for Ms. Pelosi's "crumbs," if the Democrats had their way, there would have been no tax plan and zero tax benefits in store for all Americans (since they all voted against this bill in both the House and Senate).
* UPDATE December 22...
President Trump signed the Tax Cuts and Jobs Act today...
Tune in this time next year to gauge the effects of this historic event on anticipated growth in the economy, GDP, jobs, income, pensions, infrastructure repairs/spending, national defense, stock markets, etc.
The Dow 30 Index is fast approaching 25,000, as shown on the following Monthly chart, and has gained 35.23% since the 2016 U.S. Presidential Election, as shown on the graph below.
The big question is, in the eight trading days left before the end of the year, can it gather another 207 points to break through to this milestone this year?
Keep an eye on the Momentum, RSI and MACD indicators shown on the Weekly chart below. At the moment, they're in strong uptrend, favouring the buyers.
Perhaps, if the Republican tax bill is passed in Congress this week, we'll see that feat realized, as bulls look to close out the month and the year on a high note, inasmuch as markets love Big Round Numbers. For example, the Nasdaq Composite Index hit 7,000 for the first time today, and the S&P 500 Index came within 5 points of hitting 2,700, as shown on their Monthly charts below.
* UPDATE December 20...
Following Congressional approval of the Tax Cuts and Jobs Act today, many major companies announced pay raises and bonuses for employees, as well as plans to hire more workers and to increase infrastructure spending...in spite of Nancy Pelosi's pronouncement of this bill as "Armageddon."
As for Ms. Pelosi's "crumbs," if the Democrats had their way, there would have been no tax plan and zero tax benefits in store for all Americans (since they all voted against this bill in both the House and Senate).
* UPDATE December 22...
President Trump signed the Tax Cuts and Jobs Act today...
Sunday, December 17, 2017
BITCOIN 20,000?...Will It...Won't It?
Bitcoin nearly reached 20,000, so far, today...December's range is already 10,520.90 points and it's not even the end of the month yet, with 14 days still left...
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| Monthly chart |
Meanwhile, Bitcoin CBOE Futures just spiked above 20,000 a few minutes ago...
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| Daily chart |
It would appear that the sky's the limit until this accelerating crypto currency bubble bursts.
* UPDATE December 19...
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| Source: ZeroHedge |
* UPDATE December 20...
Here's what four days' worth of trading looks like, so far, on this Monthly chart of CME Bitcoin Futures (a picture is worth 4,215 words...its range, so far)...
...and nine days' worth of trading on this Monthly chart of CBOE Bitcoin Futures...
...and BITCOIN has yet to hit 20,000 (as shown on its Monthly chart).
