Sunday, August 16, 2015

Market Index Report: Possibly The Last Ascent Before Autumn

I am still optimistic about the coming weeks and divergences are appearing prominently in Energy, Emerging Markets and Gold Miners. Please appreciate that a correction is still on the horizon, but not until around mid-September to October. Just to reiterate what I many other writer's have noticed in the markets lately:
  1. We've seen very low volumes which means the decline has been driven by small investors and not institutional ones.
  2. VIX continues to decline.
  3. The NASDAQ and S&P are still showing signs of strength.
  4. The DOW looks set to enter wave 2 which is 'up' of a larger wave 'down. 
Divergence abounds on the RSI indicators for many major index ETF's. I believe this is the beginning of a three wave counter trend that should take us through to October whereupon the decline we have seen up until this point shall resume, most probably until March.

  • SPX is looking like a weak long/buy
  • The RSI(5) has broken up and the RSI(14) is still positive.
  • We are precariously positioned in a rapidly shrinking triangle but after Friday's strong showing for now I feel like it will continue to break up.

 U.S. Dollar: $USD
  • U.S. dollar is listed as a neutral
  • My call for a fall in the U.S. dollar was correct and we have now come up to support in my current ascending channel. A break above the dotted resistance line connecting previous highs in March and April has not been breached. 
  • I don't really know where it goes from here so I'm guessing a bounce but then short when 97.5 is reached.

Crude Oil Index: $WTIC
  • Crude is listed as a speculative long/buy.
  • You will notice the divergence that has begun to emerge on the RSI(5). This is not a long term trend change but rather a counter-trend ascent that should be taken advantage of.
Biotechnology: IBB
  • IBB is listed as a neutral.
  • Support on the RSI(14) was breached but divergence has clearly emerged on the RSI(5). 

Brazil: BZQ
  • BZQ is listed as a speculative long/buy.
  • Divergence has strengthened.

China: FXI
  • FXI is listed as a speculative long/buy.
  • Since my last recommendation this hasn't really gone anywhere so let's see how this plays out for one more week.
  • The RSI(5) and RSI(14) have a decent 'buy' signal shown. 
  • Upper limit set around $44.

Emerging Markets: EEM
  • EEM is listed as a speculative long/buy.
  • Like China, EEM is also showing the familiar completed five-wave-down-pattern. I am also expecting a three-wave-counter trend to unfold before the decline resumes. 
  • This picture coincides nicely with my previous expectation of a weak U.S. dollar in the coming week.

Energy: XLE
  • XLE is listed as a long/buy.
  • The second low has gone in and a strong setup has appeared on the RSI(5) and RSI(14).
  • Near term weakness I believe has concluded. The ascent we predicted has materialized and a brief retracement will now take place followed by it's continued ascent.

Europe: VGK
  • VGK is now listed as a speculative long/buy.
  • Was it Greece? Dunno but VGK is looking good!

Gold Miners: GDX
  • GDX is listed as a speculative long/buy.
  • The early part of next week will likely be focused on continuing to work off some over-bought conditions but support should be found along the support lines shown on the RSI and chart.
India: PIN
  • PIN is now listed as a neutral

Latin America: ILF
  • Latin America hasn't been commented on much in the past but is looking like a great long/buy (for the time being at least).
  • Emerging markets are generally showing the beginning of a counter-trend three wave ascent.

Real Estate: IYR
  • IYR is listed as a strong buy.
  • I was previously neutral on real-estate after it had been overbought but the EMA's are positioned like it's going to explode next week.

Russia: RSX
  • RSX is a speculative long/buy
  • I think we've seen the first part of a turn-around for Russia with the low put in on August 27th which was just outside the Keltner channel. The near term weakness in Russia I believe has come to an end.

Semiconductors: SMH
  • Listed as a long/buy.
  • Excellent 'buy' signals made on the RSI(5) and RSI(14) and near term weakness I believe has ended.
  • We are still in wave one of the three-wave-counter-trend up.

High Yield Short: SJB
  • SJB has also been omitted but I though would benefit from being highlighted this week.
  • Short term SJB is looking like a short/sell
  • I really like the long-term prospect for shorting junk bonds.

U.S. Treasuries: TLT
  • TLT is listed as a short/sell.
  • Coincident with U.S. dollar weakness would be a fall in treasuries. On the 30 minute chart a huge sell signal has appeared.
  • We're coming up to a gap that may or may not be filled along with some upward resistance appearing on the RSI(5). 

Jakob Richardson © 2015