China’s big decline providing a sweet entry point?
by kimblechartingsolutions - September 13th, 2018 8:17 am
Courtesy of Chris Kimble.
CLICK ON CHART TO ENLARGE
While the S&P 500 and many indices in the states are trading near all-time highs, the same thing can’t be said for stocks in China! Since the highs in February, the Shanghai Index (SSE) has declined nearly 25%.
Could this large percentage decline be presenting an opportunity/entry point for aggressive bargain hunters? Yes!
The decline has the SSE index testing the bottom of its 3-year trading range and 5-year rising support at (1), while momentum is now the lowest since the 2009 lows at (2).
Setting a stop just below the dual support test at (1) looks to be a nice entry point for aggressive traders open to owning hard hit assets.
Stops are very much needed at this price point, as the next key horizontal support comes into play at the 20,000 level, which is a large percentage below current prices!!!
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Silver creating a “Double Bottom” pattern?
by kimblechartingsolutions - September 12th, 2018 9:37 am
Courtesy of Chris Kimble.
CLICK ON CHART TO ENLARGE
Could Silver be creating a long-term “Double Bottoming” pattern over the past 3-years? Let’s investigate the possibility and what it would take for the potential bullish pattern to fail.
Before we get started let me make this point clear; the trend in Silver since the highs in 2011 remains down!
This chart looks at Silver on a monthly basis over the past 45-years, where we applied Fibonacci retracement levels to its 1980 highs and 1993 lows. The 23% Fibonacci retracement level comes into play at the $14 level.
The 23% level was hit a couple of years (2016), where a 40% counter-trend rally took place. Weakness since the counter-trend high has it testing the 23% level again at (1), where it could be creating a “Double Bottom” formation. While it is testing this key retracement level for the 2nd time, smart money silver hedgers have a huge bet in play it will rally.
What would eliminate the potential that that Double bottom pattern failed? A simple break of the 23% level!
If you would like to invest in Gold, Silver, Copper and the Miners, we would be honored if you were a Metals Member. We are of the opinion some of the best opportunities/inflection points in years for the metals sector are in play!
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Dow & Yields testing multi-decade breakout levels
by kimblechartingsolutions - September 11th, 2018 9:35 am
Courtesy of Chris Kimble.
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This chart looks at the Dow Jones Industrials Average and the Yield on the 10-year note on a monthly basis for several decades.
The top chart looks at the Dow since 1927 and the bottom chart looks at yields since 1994.
The Dow has spent the majority of the past 65-years inside of rising channel (1) while yields have spent the majority of the past 18-years inside of falling channel (2).
The Dow and Yields are both testing breakout levels at the same time at each (3).
The last two times each faced channel breakouts at the same time was 2000 and 2007 at each (A), where each happened to peak.
Just Saying; Both are testing key breakout levels at the same time!!! Should breakouts take place, a strong bullish message to stocks and bearish for bonds!
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Tech Leadership testing key breakout test
by kimblechartingsolutions - September 10th, 2018 10:14 am
Courtesy of Chris Kimble.
CLICK ON CHART TO ENLARGE
Since the 2009 lows, Semiconductor ETF (SMH) has gained nearly 50% more than the S&P 500 (see upper left chart).
The rally off the 2009 lows has it testing the highs of 2000, as it is creating what looks like a narrowing pennant pattern since the 2018 highs in March.
After hitting the highs 6-months ago, SMH has created a series of lower highs and higher lows inside of pennant pattern (2).
Each of the highs has created bearish reversal patterns (bearish wicks), while the lows have done the opposite (bullish wicks/reversals).
How this leader resolves the narrowing pennant pattern will send an important message to the broad markets! Keep a close eye on SMH in the weeks ahead!
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Weekly Market Recap Sep 09, 2018
by Chart School - September 10th, 2018 5:30 am
Courtesy of Blain.
We wrote in last week’s recap: “One would think the indexes are a bit extended short term”. And indeed, a rest and consolidation occurred as both the S&P 500 and NASDAQ pulled back to their 20 day moving averages. (The Russell 2000 did as well but it was not overextended going into the week)
Friday President Trump said the U.S. had tariffs ready to go on another $267 billion in Chinese goods, on top of tariffs on $200 billion in goods the administration is now preparing.
“I think investors were hopeful that we clearly made progress with Mexico [on trade] and Canada seemed to be within a line of sight…and I think investors were saying ‘Maybe we won’t get the fireworks with China and clearly there is disappointment, right now,” said Diane Jaffee, senior portfolio manager at TCW.
Keep an eye on emerging markets – we’ve seen rustling out of Turkey, Argentina, South Africa, etc – it’s still pretty quiet out there but in 1997 a market dislocation hit due to an event in Thailand of all places so the general weakness we are seeing in many emerging markets won’t matter – until it does.
A team led by Marko Kolanovic, global head of macro quantitative and derivatives strategy at J.P. Morgan, blamed the weakness in global markets to a “risk-off” mode with investors seeking to minimize their exposure to risky assets such as stocks amid concerns about contagion from emerging markets as well as the impact of the stronger U.S. dollar and higher interest rates.
The difference between U.S. and emerging-market stock performance this year has been stark. According to Bespoke Investment Group, the divergence between emerging markets and the U.S. stands at a 14-year high, and while this kind of extremity has in the past been followed by a period of mean revision, Deutsche Bank recently wrote that the problems in emerging markets are so severe that a rebound may not be in the cards.
Amazon followed…
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Stocks Cycle Downward Right On Schedule
by Zero Hedge - September 7th, 2018 10:10 am
Courtesy of Dana Lyons
Since working off its early year correction, the U.S. stock market has been on one of those inexorable runs that we’ve seen on so many occasions in recent years. Such runs have seen the market essentially steamroll any and all potential pitfalls that may arise. This recent run has been no exception as the stock rally has basically remained bulletproof to any exogenous hazards (real or fake). But just when the market is on this roll, even breaking out to new highs and apparently incapable of going down, a bout of selling strikes, seemingly out of nowhere. However, if we look a little deeper, perhaps we shouldn’t be surprised by the recent weakness.
The Presidential Cycle refers to the pattern of behavior in stock prices throughout the four years of a presidential term. Specifically, stocks tend to be strong during certain periods of a president’s term and weaker during others. And while there are many factors influencing stock prices during a particular period of a particular presidential term, the cycle has been one of the more historically consistent seasonal patterns.
This may be relevant to the current weakness because, on average, the worst performing month of the cycle, historically, has been September of year 2, i.e., the current month.
As the chart shows, since 1900, September of year 2 of the Presidential cycle has returned an average of -1.43%, slightly worse than September of year 3, February and September of year 1 and May of year 4.
Again, there are many factors that determine the market’s return in a particular month. And returns for a particular month in a particular year will not always match its historical average. That’s what makes an “average”. But to the extent that any month of the cycle can be relied upon to be weak, it is this September of the 2nd year of the Presidential cycle.
But just how reliable is it? And does the market’s recent level of conformity to the historical cycle enhance the pattern’s reliability? And to the extent that it does, what does it imply about the market’s potential path going forward?
In a Premium post at The Lyons Share, we discuss the current year’s performance…
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S&P to follow Gold’s path, questions Joe Friday
by kimblechartingsolutions - September 7th, 2018 8:54 am
Courtesy of Chris Kimble
Is it possible that the S&P could follow the path Gold took 7-years ago this week or will it be “different this time?”
Seven years ago this week, Gold had experienced a 9-year rally, taking it to its Fibonacci 261% level based upon the highs and lows at each (1) in the left chart above. Once it hit the 261% level, it stopped on a dime and started a long-term downtrend, where it is now a third lower than 2011 levels.
We applied Fibonacci extension levels to the 2007 monthly highs and 2009 lows at each (3). The S&P has experienced a 9-year rally, taking it up to its 261% extension level at (4).
Joe Friday Just The Facts – The S&P is facing an important 261% extension level test after a 9-year rally similar to what Gold did in 2011. The big question for the S&P is this….Will it be different this time?
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European Stocks Are At A Critical Technical Support Level
by Zero Hedge - September 6th, 2018 9:10 am
Courtesy of Dana Lyons
Several key equity trendline tests are underway across the European region.
The past few editions of our #TrendlineWednesday feature on Twitter have not exactly been the most intriguing we’ve ever posted. In fact, it has been a challenge at times recently to even find enough candidates to publish the feature. This week, however, is a different story. Compelling trendline developments abound in the financial markets – with no area sporting more critical trendline tests than the European equity markets. Here is a sample of some of those key tests underway.
The STOXX Europe 600 Index is testing its post-2009 Up trendline…again.
The German DAX is also testing its post-2009 Up trendline…again.
And the French CAC-40 is testing its post-Brexit Up trendline.
Each of these developments is worthy of its own dedicated blog post. The fact that we are observing coordinated trendline tests across those key markets tells us that this is potentially a key juncture. So is this another buying opportunity – or have these markets worn out the support of their respective trendlines?
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If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Thanks for reading!
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Catalysis for a US Dollar Collapse & Gold Blastoff in play?
by kimblechartingsolutions - September 6th, 2018 8:55 am
Courtesy of Chris Kimble.
CLICK ON CHART TO ENLARGE
Is it possible that the US Dollar could be creating a multi-year topping pattern, while Gold is creating a multi-year bottoming pattern? I would understand if the majority feels it is almost “impossible,” as the long-term trend for Gold is down and the long-term trend for King Dollar is up!
This chart looks at Gold and the US Dollar on a monthly basis over the past 20-years.
What are the odds that Gold is creating a major bottoming pattern and King Dollar is creating a topping pattern? Very low at this time.
Even though the odds are low that Gold is bottoming and King Dollar is topping, it remains possible that both could be creating major reversal patterns over the past three years!
To prove that major reversals are in play, Gold would need to rally above $1,357 and the US Dollar would need to break below 88.
If are interested in trading or taking advantage of rare pattern setups in Gold, Silver, Miners or Copper, check out our very popular Metals Research Membership.
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Catalyst for a US Dollar Collapse & Gold Blastoff in play?
by kimblechartingsolutions - September 6th, 2018 8:55 am
Courtesy of Chris Kimble.
CLICK ON CHART TO ENLARGE
Is it possible that the US Dollar could be creating a multi-year topping pattern, while Gold is creating a multi-year bottoming pattern? I would understand if the majority feels it is almost “impossible,” as the long-term trend for Gold is down and the long-term trend for King Dollar is up!
This chart looks at Gold and the US Dollar on a monthly basis over the past 20-years.
What are the odds that Gold is creating a major bottoming pattern and King Dollar is creating a topping pattern? Very low at this time.
Even though the odds are low that Gold is bottoming and King Dollar is topping, it remains possible that both could be creating major reversal patterns over the past three years!
To prove that major reversals are in play, Gold would need to rally above $1,357 and the US Dollar would need to break below 88.
If are interested in trading or taking advantage of rare pattern setups in Gold, Silver, Miners or Copper, check out our very popular Metals Research Membership.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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