Tough on Trade …

Wilbur Ross’s confirmation hearing yesterday highlighted the tough-trade attitude of the new administration in the US.  That could mean emerging markets being impacted in 2017 …

Emerging Market ETF (EEM) – Daily Chart

The recent upward chopping price action on the daily chart has clearly been overlapping and to me that means it is a corrective pattern … that implies that the next move is likely lower for EEM (or higher for the multiple inverse ETFs that exist for emerging markets).

Emerging Market ETF (EEM) – 240 Minute Chart

My audio alert is set at the 240-min chart’s ATR level of $36.07.

Cheers … Leaf_West

Biotech Update …

Notwithstanding a possible Donald Trump tweet attacking the sector that could come at any time, the Biotech sector could be one of the areas that drive the overall market higher over the next couple of weeks.  Here are the charts …

Biotech Sector ETF (IBB) – Daily Chart

The biotech sector has broken above its ATR resistance level with a strong move here early in 2017 … the bull-flag looking consolidation since that break on Jan 9th is, to me, “confirming” that break/signal of the desire to move higher.

Biotech Sector ETF (IBB) – 240 Minute Chart

If you look more closely at the bull-flag consolidation, you can see a possible completed ABC corrective pattern.  That implies that a move higher could begin in short order.

IBB Components – Ranked by WTD % Performance

If we are about to make a move higher, the recently better performing stocks are likely to continue to lead the sector higher.

IBB Components – Ranked by Market Capitalization

Of course, the sector’s performance will be in large part determined by the largest cap components … the biggest stock AMGN has a great looking bull-flag on both the daily and 240-min charts.

Cheers … Leaf_West

Getting Closer (Part 2) …

If the market is going to pop tomorrow and start that expansion phase that I have written about with my last couple of posts, the bullish momentum hammer candles on the daily charts are another source of good trading candidates.

Bullish momentum hammer candles are hammer candles that close in at least in the top 25% of the prior day’s trading range (or above).  The hammer candle shape indicates that sellers lost the battle with the buyers during the current day, and the position of today’s candle relative to yesterday’s trading range sets up a nice squeeze of the obvious stops placed by the shorts who sold the prior day.  Momentum traders also will jump on these names if they can take out today/yesterday’s high.

BDX – Daily Chart

BDX is a perfect momentum hammer candle … it comes during the likely end to a bull flag consolidation that is “confirming” a break of the daily ATR resistance level back 4 days earlier.  The SPY Relative Strength indicator has crossed back above its 20EMA & signal line and volume has been picking up.  Giddy Up!

Cheers … Leaf_West

Getting Closer …

Last night I wrote a post about how to me, the S&P 500 Index was getting really close to having completed its daily chart’s consolidation pattern (click here to read that post) … today the market grinded sideways while we waited for the FOMC’s beige book report (2pm) and Janet Yellen’s economic speech (3pm).  The market did perk up towards the end of the day and the medium intra-day charts (15 & 60-min) now look like they could be coming out of the daily consolidation pattern. Continue reading

The Rubber is About to Hit the Road …

Since peaking on December 13, 2016, the S&P 500 index has basically done nothing … bulls had been saying that the market was waiting for the bank earnings to be reported and that would be what allows the market to blast off on its next move.  It appears that is not happening right from the get go of those earnings reports.  Now those same pundits are saying that we are just waiting until after the Presidential inauguration this Friday – after looking at the daily chart for the SPY ETF, I would have to agree that a bigger move is coming and probably coming soon.

S&P 500 Index ETF (SPY) – Daily Chart

The daily chart is clearly in an uptrend since the US Presidential election in early November … until we get a break of the daily ATR support level and a confirmation of that break, I would have to say that traders need to stay bullish as we make our way up to Francisco’s Elliott Wave 2017 targets (2350 and 2625ish).  Having said that, while we wait for the next expansion move higher, the market is trying to confuse traders with the sideways price action and the “bearish” looking indicators that tend to form in that type of price action.

The first of my “bearish” indicators here is my 20SMA line – it is just about to cross below its 8SMA signal line ($225.88 vs $225.85) … I use cross-overs of the 20SMA on the daily chart as a general possible early trend change warning signal.

The next indicator that is trying to confuse short-term traders is the Volume Zone Oscillator (VZO) … this indicator is riding right on top of the zero line which separates bullish and bearish price action.  We just crossed below the zero line, and the bulls need to see this get back above zero here soon.

The price momentum and squeeze indicator has us in the 9th day of a price squeeze … expansion follows contraction, so get ready for some bigger intra-day moves here soon.

Next is the Moving Average Spread indicator … this indicator crossed below its signal line on December 27th, and has been hugging this line since then.  If price action is going to turn bullish, this indicator needs to cross back above its signal line.  If it begins to separate from the signal line, that would confirm a more cautious/bearish posture for short-term traders.

The Directional Indicators have been crossing back and forth several times over the past month … that is typical of a range style consolidation.  The DI- indicator has however, just crossed back above the DI+ indicator and crossed above the 25-level which I regard as the threshold for when a price trend is possibly trending.

Finally, despite all of those confusing signals, I always like to default back to the price action (which is bullish and calling for a continuation move here soon) and my trend strength histogram – the histogram has pulled back from its mid-December peak and is now just a couple of points above the “official” contraction warning (< 0).  After you get a strong move higher followed by a sideways consolidation, this histogram is a great tool to time the beginning of the next move out of that consolidation.  To me, we are within days of starting the next move in the market.

Bottom Line – Despite the few chart indicators that are a little bearish here, the bigger picture is that price has made a bullish expansion move higher followed by sideways consolidation … traders need to stay bullish here as odds are good that we get some type of expansion effort higher out of this sideways chop.  The trend strength histogram is telling us that we are within days of the expansion, so keep your eyes open on the medium term charts to get a good signal of when that expansion is beginning in earnst.

Cheers … Leaf_West

AAPL Update (Part 2) …

I wrote a blog piece on AAPL’s shorter term/intermediate term wave count back on January 11th (click here) … my read of the shorter-term wave structure was that we were possibly pushing into a nice wave 3 high as we make the “normal” pre-earnings push in the stock price of a leading high-tech company.  I thought I should also update the longer-term charts for AAPL here as well … Continue reading

US$ Update …

I last updated the US$ outlook back on January 2nd as part of a piece that was looking forward into 2017.  The big message from that posting was that the US$ looked like it was pushing into a level where the second wave of a 3-wave weekly price structure was likely to complete.  Here is the updated weekly chart from that posting …

US Dollar – Weekly Chart #1

Price looks like it may have turned lower right before my $104.25ish target … that is easier to see on the daily chart.

US Dollar – Daily Chart

The last thrust up that started this past fall looked to me to be a final thrust out of a triangle consolidation pattern.  Thrusts typically complete with a 3-wave structure … that looks like it happened with the push to the recent high that pushed into the 100% target price of the triangle pattern.

Thrusts that complete a bigger price pattern typically retraces at a minimum back to the triangle breakout level (about $96) …

US Dollar – Weekly Chart #2

The 61.8% level in the SLOT support zone is right at about $96.50 … again right near the level price broke out on that final thrust.

Bottom Line – Everyone is expecting the US$ to continue ripping higher as Trump takes over the Presidency.  That may not happen as smoothly as consensus is thinking and I think we may have just started a Wave 2 corrective move on the weekly US$ chart.  That is one of the reasons why gold/gold equities and oil may outperform during Q1 2017.

Cheers … Leaf_West

Gold Miner Update …

One of my best trades from 2016 was a short of NUGT … I currently have some small positions in GDX, and a “huge” battle with my nemesis Francisco, on the direction of GDX over the next two weeks.  Notwithstanding my desire for GDX/NUGT to stay flat or pull-back slightly over the next 10 days, I think that the upside potential going forward for GDX is quite “huge” (thanks to the Donald for that phrase).

Before we get to how the future looks in more detail, let’s look back at the wave structures that have been made so far … Continue reading