Further to my last weekly market update, here is a summary of where money flow ended for Week 5 of March 2012.
The Weekly charts below of YM, ES, NQ & TF show that YM, ES & NQ made a higher close and TF made a slightly lower close than the prior week. The uptrending channel is still holding as support and direction for the Weekly timeframe…although the TF closed on the lower channel…one to watch, again, for potential developing weakness.
I'll reiterate what I said in my last weekly market update…if the Major Indices are going to continue a convincing rally from here, it will be important for the Russell 2000 to break (convincingly) and hold above its February highs to provide added fuel. A failed breakout could lead to the onset of weakness, not only in this index, but also in the others.
The three Daily charts below depict support and resistance levels on the percentage of Stocks Above 20-Day, 50-Day, and 200-Day Averages.
Stocks Above 20-Day Average closed lower than last week and below the 60% support level…one to watch for possible further weakness below what is now resistance, once again.
Stocks Above 50-Day Average closed lower than last week and are in between the 70% resistance level and 50% support level…one to watch for possible further weakness.
Stocks Above 200-Day Average closed slightly lower than last week, but are still holding above the 70% support level…one to watch to see if it continues to hold as support.
The closing levels on all these three charts are lower than the prior week. I'd conclude that, in the short and medium term, stocks remain mildly bullish, and in the longer term, stocks remain bullish…but, as was the case last week, all are still on negative watch for further potential weakness.
The VIX gained on the week by 8.7%, as shown on the graph below. Further to the comments in my last weekly market update, the Daily ratio chart below of the SPX:VIX shows that the SPX failed to break out to the upside and fell back into the bottom of the consolidation range. Negative divergences are in place on the RSI, MACD, and Stochastics, which suggest further weakness may be in store for the SPX…one to watch, along with the VIX.
As shown on the graph below of the Industry Groups, most closed lower, once again, with Brokers, Gold/Silver, and Oil Services the biggest losers, while Biotech gained on the week.
As shown on the graph below of the Major Sectors, there was a flight to the defensive sectors, while money flowed out of risk…with the biggest losses in Energy, Financials, and Materials.
As shown on the graph below, losses were made by the Commodities, Agricultural, U.S. Financials, European Financials, and Chinese Financials ETFs…once again, the European Financials ETF was the biggest loser…one to watch for possible continued weakness…particularly in view of the comments made in my post of March 22nd with respect to rising volatility in Foreign ETFs.
China's Shanghai Stock Exchange Index continued its decline and has closed below its major support of 2300, as shown on the Daily chart below. There is still no sign of a reversal of the downtrending RSI, MACD, and Stochastics indicators, suggesting further downside to, perhaps, near-term minor support in the region of 2200.
As shown on the graph below, losses were made in Gold, Oil, Silver, and Copper…with Oil incurring the heaviest losses.
The following four Weekly charts of Gold, Oil, Silver, and Copper show support and resistance levels…ones to watch.
As shown on the graph below of the Major Indices, the Dow Utilities made a minor gain, once again, while all the others lost, with the Russell 2000 the biggest loser. The Emerging markets ETF (EEM) was a big loser again this week, and I would refer you to the comments noted in my last weekly market update on the BRIC countries.
As shown on the currency graph below, the Aussie $ and Canadian $ were the biggest losers, again, with minor losses in the Euro. Minor gains were made in the British Pound and U.S. $. The Aussie $ and Canadian $ are ones to watch for potential increasing weakness on any further declines in Gold and Oil.
Any turnaround in Copper to the upside (and on China's Index and Financials ETF) may negatively impact the U.S. $…one to watch. I'd also look for either continued weakness in the Euro and the European Financials ETF, or a turnaround to the upside. Any bounce in these may, ultimately, be short-lived, if the U.S. does, in fact, enter a recession by the middle of this year, as outlined in my post of March 27th.
Enjoy your weekend!