Sunday, August 09, 2015

Market Index Report: $SPX, $USD, IBB, IYR, SMH, TLT, EWZ, BZQ, XLE, XLF, XLP, FXI, RSX, XTN

We have just finished a 'down' week and yet I am somehow optimistic about the coming weeks. Rest assured, a correction is on the horizon, but not until around mid-September to October. Several writers in the blogosphere have made some interesting observations about the recent decline which I will paraphrase:
  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.'
Previously I declared my "hot picks" to be semiconductors, gold juniors, China, and energy and those recommendations remain but the buy signals have taken a little longer than anticipated to materialize. All of this is predicated on a fall in the U.S. dollar which is of course bullish for China and emerging markets. 

  • SPX is looking like a weak long/buy
  • Please be aware that we are precariously positioned at the moment. Yes we are in an ascending channel and the EMA(14) is over the (EMA 34) but there is currently a divergence between the RSI(5) and (RSI 14). The RSI(14) suggests the longer term trend is up but the recent lower-high on the RSI(5) suggests that Monday and Tuesday will be crucial.
  • The RSI(14) is signalling a 'buy.' 

 U.S. Dollar: $USD
  • U.S. dollar is listed as a short/sell
  • Any downturn in the U.S. dollar is good for everyone else. The RSI(5) just put in a lower high signalling a possible decline and RSI(14) has the U.S. currently sitting at support.

Biotechnology: IBB
  • IBB is listed as a neutral.
  • I was correct about IBB's ascent since I last posted however in that time a crucial support on the RSI(14) has been breached.
  • We are approaching a long term support line so next week is crucial if we expect a bounce.

Brazil: BZQ
  •  BZQ is listed as a speculative lone/buy.

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 next week.
  • Don't for one second think that this recommendation is an endorsement for the general health and security of the Chinese market, it's not! All that I think has happened is we have seen the "five wave down" (noted with two lows, one outside the Keltner channel) followed by a three wave counter-trend up. After this counter trend rally the decline will continue. 
  • The RSI(5) and RSI(14) have a decent 'buy' signal shown. 
  • Upper limit set to around $44.

Consumer Staples: XLP
  • XLP is listed as a short/sell.

Emerging Markets: EEM
  • EEM is listed as a speculative long/buy.
  • Again, my call on China and emerging markets was a week early. A crucial support has been found on the RSI(14) which I think will hold.
  • 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.

Europe: VGK
  • VGK is now listed as a speculative long/buy.

India: PIN
  • PIN is listed as a long/buy
  • I'm really hoping that gap is filled so we'll have to see this week.

Real Estate: IYR
  • IYR is listed as a neutral.
  • IYR has emerged from our bullish declining wedge but now finds itself stuck by a resistance line set by a previous high back in June. 
  • IYR has also undertaken a five-wave-down-pattern and now finds itself paused in the second part of its' three-wave ascent. 
  • I'm expecting some oscillation between $73.50 and $75.0 for the near-term.

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.

Transportation: XTN
  • XTN is listed as a speculaitve short/sell.
  • Downside is expected in XTN next week with the second part of the three wave ascent taking place.   
  • I believe a higher low will be put in on the RSI(5) and RSI(14).

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