Here are a few thoughts and charts of several markets that may be worth monitoring over the coming days and weeks to gauge potential market strength, sentiment and direction…
The first charts are Daily charts of the YM, ES, NQ, TF, & NKD.
You can see that 3400 is an important level for the NQ to hold on any future decline that may lie ahead. As well, the TF will have to break through and hold above some resistance at 1150 to re-enter its major rising channel. The ES is nearing an all-time high, while the YM has a bit further to go yet in that regard. Volumes have been much higher lately.
The NKD will have to hold above 14000, lest it be the subject of a further major correction (as confirmed on the next Weekly chart of the NKD, and as I mentioned in my post of January 2, 2014)…one that may bear a close watch to see if such a scenario also drags the US futures indices down, as well, along with the next Weekly chart of the USD/JPY forex pair…a drop and hold below 101.00 on this pair would suggest further weakness ahead).
Each candle on the following chart of the EEM (Emerging Markets EFT) represents 3 days. The current candle began last Thursday and will close this Tuesday. It has approached a major confluence of resistance at a double mid-point of two regression channels around the 40.00 level. There have recently been extremely high volumes, signalling a potential large move in the making, one way or the other. A rally and hold above the 42.00 level could signal further strength ahead, while a failure to gain a solid foothold above 40.00 could signal great weakness ahead.
The following Weekly chart of the EUFN (European Financials ETF) shows that this ETF has been climbing along a rising 50% Fibonacci fanline since April of 2013 and is approaching a recent all-time high. A failure to continue rising at this steep pace around this fanline could signal that the steam has run out of this move and that buyers are taking profits. High volumes over the past several weeks suggests that a large move may be imminent, one way or the other.
I’ve written several posts recently concerning ratio charts of the SPX:VIX. The following updated Daily ratio chart of the SPX:VIX shows a “crack-and-snap” market action below and back above major support around the 100.00 level. A failure of this ratio to hold above the immediate shorter-term 130.00 support level could signal a retest of 85.00, and a failure to hold this next major support level could signal a much larger correction ahead for the SPX and a re-ignition of the momentum of fear to accelerate to or surpass all-time highs, which was nearly the case a week and a half ago.
The following Weekly chart of Oil shows that price is hovering around a major resistance/support level of 100.00. It has quite a distance to rally to around the 115.00 level before it even re-enters the major rising channel that began in 2009. Watch for any further rallies on higher volumes to, potentially, push price up to such a level.
The next Daily ratio chart of WTIC:SPX shows that a rally and hold above 0.0550, with a subsequent rise to test the 200 MA at 0.0581, may confirm the beginnings of such a rally in Oil, a decline in the SPX, and possibly a rise to 0.0700 or higher on this ratio chart.
All-in-all, we may see quite a volatile year ahead for the major indices with some wild swings in both directions. The SPX:VIX ratio chart should be a good general indicator as to whether fear is overtaking or overshadowing any buying in the SPX…a drop in the Momentum indicator on my chart will indicate that fear is outpacing the buying. At the moment, the following 60-day 60-minute ratio chart of the SPX:VIX shows that fear has been outpacing the recent buying since February 7th.
Best of luck for the coming short week (Note: US and Canadian markets are closed due to their respective holidays on Monday).