HYG – BUY pattern approaching / here UPDATE 04/10/20

HYG at a crucial level … KEY

04/10/2020 – trust everyone has a blessed and peaceful weekend. also, please keep staying safe. check in if you have the chance …

couple weeks ago, we showed VERY important support on the HYG and detailed how we can find a pattern by simply Projecting, Extending and Retracing. Where the ratio’s all come together then, well, support or resistance SHOULD (operative word) appear. as I have discussed on this blog, a bunch, it’s all PROBABILITY. No idea which will work or which won’t …in this case support held, the BYG liquidation stopped and the market rallied! GREAT … where are we now.

if you want to go down the worm hole which is Elliott Wave then first pay attention to the corrections! Learn em’ and then try to count subwaves for the rest of your life. I have found the EWT to be very helpful in CORRECTIVE PATTERN ID’ing. The most common? A three wave move that is against the overall trend.

we finished a 3 wave SELL PATTERN on Thursday and, if this level holds then expect the stocks to sell off again. note on the chart below … that’s a MONSTER BULLISH gap … pay attention to this ETF!

note the blue arrow projection – it’s equal in BOTH PRICE AND TIME. the market hit the 84.04 level and now, if the pattern works, it should start back down. a gap down below the gap (bearish island reversal) or a big move back thru it is not a good sign.

HYG is getting thumped. as people who are just starting to read my blog or are long time followers you recognize that, for me, it’s all about patterns. period.

don’t try to use any fundamentals (don’t understand them and not smart enough to …) and just try to find patterns. I love patterns … why? because, they give you a really good set of benchmarks or maps of where you are … when they work, you know where you are and, conversely, when they don’t you also know where you are …HYG is so important to the global financial structure.

i’m up early doing some blogging on the west coast and nothing is going on so I’ll say the 66-69 level is a KEY support level / BUY pattern on HYG. It needs to hold at these levels or things are going to get ugly. (like they aren’t already) buy how did we get 66-69?

P – E – R – PROJECT, EXTEND, RETRACE there are other methods to hone in on this level – square of 9, cycles work, etc. But doing a quick PER gives us a nice level and it’s early this AM so I’ll just leave it at her for now …folks, in the world of patterns it doesn’t get much better than this .. we have 6 ratio’s all coming together in the area highlighted below. trust me that equals a big deal. losing this level and something is definitely a foot at the circle K. that sure is a TON of thrust coming into this level … it does warn of a potential failure of this pattern

PROJECT

Orange: .618 ab=cd and Blue: ab=cd

EXTEND: took three key lows (rectangles) and extended fro those points … 2.236 is square root of 5

RETRACE – there she is, the .786 retrace right in/around the key level

EEM – big BUY pattern

note, we finished a very nice BUY pattern on the EEM yesterday. it was nice in both PRICE and TIME.

it ‘held’ in/around 38’s but is plowing into a pretty big daily gap. additionally, the THRUST into this level was pretty significant. any further weakness below the 38’s is significant for EEM.

also, note .841 level is based on the equal octave scale of music. 1/.841 = 1.1892 or D#.

watch this one closely …

EEM and HYG

So, guess, of late, all the rage is the EEM new bull market.

VERY HARD to believe but … let’s remove the subjectivity and pull out some patterns:

EEM:

  • banging right into .618/.786 retracement confluence – usually very strong R or S. in this case R.
  • Note – a basic projection takes us up into the 45-46 area
  • Double trend line resistance

HYG – high yield debt

  • note, it’s been hanging at the .618 for basically 4 months … sure looks like it wants to break out higher.

IF HYG breaks the .618 expect the EEM to target the upper zone of the red box …

IF HYG does not break above the .618 and starts back down THEN perhaps the EEM will start down from current levels.

either way, believe we can goose a little more in the EEM world and the HYG world but .. stiff resistance ahead.

Also, note how correlated HYG (high yield DEBT) is w/ the EMERGING MARKETS (EEM) … hmmmmmmmm

Bart

 

Sheep, Milk and the Kiwi …updated 03/23/2017 and the power of the RSI M’s and W’s

03/23/2017 – note this pattern on the KIWI.

Certainly looks like it ‘wants’ to go down and tag the level shown.  last night I blogged about “cotton” banging into the first portion of the pretty big gap and it appears (please see below) that the “Milk Non-Fat Futures” has completed an upward correction and will plumb the lows again.

also, was taught a few years ago .. to watch the M and W’s on the RSI. This PATTERN when broken “usually” leads to some pretty powerful moves. I’ve highlighted past M’s in yellow below on the KIWI.  See the M pattern setting up right now?

so, the thesis is we have a move lower in cotton, non-fat milk and that will cause the KIWI to move lower into the zone depicted below.

this thesis doesn’t even begin to hold water UNTIL the EEM stops rising – which could make it problematic. as shown, you can see how we are banging right into the ‘biggest’ measured move UP since 2011 (purple dashed arrow) and were also playing the polarity game.  (S becomes R and R becomes S).  Also, note we have overlapping .618/.786 at 42.

((sqrt 27.66)+1)^2 = 39.17 so we are half way around the circle at these levels.

it’s all probability, choose your poison and then choose a stop.

Bart

 

_______________________________________________________

7:1 sheep to people ratio in New Zealand
7:1 sheep to people ratio in New Zealand

In New Zealand, there is roughly 7 sheep to every person.  They have a lot of sheep and sheep = cotton, correct?   The country has the highest density of sheep per capita in the world.  However, this year has seen the sheep numbers fall to their lowest level in 75 years.

Around 1987 farmers to took to dairy farming and that overtook conventional sheep farming which until then had been the backbone of the New Zealand Economy.  Take a look at the chart below … at most inflection points in Cotton Futures the KIWI followed suite.

 

KIWI and Cotton Futures .. they turn together
KIWI and Cotton Futures .. they turn together

 

Mooooo
Mooooo

As discussed above, the dairy industry is the backbone of the economy.  Prices have plunged.

http://www.wsj.com/articles/new-zealand-dairy-farmers-hope-for-relief-in-globaldairytrade-auction-1434442028

Below is a chart showing Class III Milk future w/ the KIWI overlaid on top of it. Note, milk futures have completed a buy pattern so prices “should” start back up and therefore KIWI can potentially find some support.  Emerging Market Currencies are at an extreme low w/ regard to sentiment.

note the brown line (KIWI vs USD) and how it tracks milk ...
note the brown line (KIWI vs USD) and how it tracks milk …

The next chart below is of Non Fat Milk futures (continuous monthly) and note the synchronization of tops and bottoms.  These are the lowest prices in decades ….

Milk Nonfat Dry lowest in decades ...
Milk Nonfat Dry lowest in decades …

 

Here’s the KIWI today … decimated sentiment for EM Currencies, RECORD low dairy prices, cotton hanging in there and a big old thump into very oversold bullish divergence .. it’s going to start up today or soon.

 

KIWI vs USD Monthly
KIWI vs USD Monthly

so this looks so PROMISING but when I put the EEM (Emerging Market ETF) w/ the KIWI overlaid on top of it I see a very nice symmetry BUT I also see a CLIFF OF SUPPORT that the EEM is about to fall off.  OUCH ….

Main20150807175226

EEM:

note EEM and pay attention closely. IF WE ACCELERATE THRU THE 4+ YEAR SUPPORT THEN EM FX SHOULD FOLLOW …playing a bounce for the FX so this is a major area to watch for Risk and Reward …

 

Emerging Markets, EM Currencies, Patterns and an example

I’ve posted, more than once, how I really love when a market makes 3 waves to a new high or low and then fails in the opposite direction. It’s the classic “expanded flat” and – if you can get the C wave right – it’s a great trade to take to new highs or new lows.

the chart below is of the USD vs Singapore:

  • note the highlighted box – see how the market goes up into a new high in three waves?  CLASSIC B wave ….
  • note the monstrous bearish divergence

Page_16-03-18_08-16-15

Here’s the potential count:

Page_16-03-18_08-23-21

note:

  • in the past, it didn’t have bullish divergence at the lows to get going so we are either finishing wave ‘c’ and/or we have one more wave to go down into the 1.618*a = c w/ the blue measured move arrow.
  • either way, believe we are coming to the end.

Page_16-03-18_08-28-25

note:

  • the subdivison of the circle part down doesn’t lead to a “clean” 5 waves down into these lows so I’ll watch for an UP/DOWN sequence to complete.  this could be the low BUT my bias is the UP/DOWN into the low before entering a position.

what does this mean for the Emerging Markets Equity Exposure?

below is the Singapore Dollar (as an example) withe EEM overlaid INVERTED in the blue line.

Page_16-03-18_08-31-22

NOTE – very strong correlation to EM Currencies and EM Equities

Here’s the EEM:

Page_16-03-18_08-37-17

Note:

  • .707 retrace and 1.4142 extension caught the lows ….see math on chart
  • blue measured move arrows are complete – see how that corresponds to the low in Singapore Dollar?
    • however, the red measured move seems to be the next logical target IF the up/down scenario plays out
      • also, note how the measured move takes us back up to the year long support cliff

SO, now for the “if-then”

IF the US Dollar is finding the low against the Singapore Dollar THEN the EEM bounce is coming to an end.

Bart

PS — had to do it … JNK and EEM sure look alike.  I wonder why ….. 🙂

Page_16-03-18_08-41-12

Sheep, Milk and the Kiwi …

7:1 sheep to people ratio in New Zealand
7:1 sheep to people ratio in New Zealand

In New Zealand, there is roughly 7 sheep to every person.  They have a lot of sheep and sheep = cotton, correct?   The country has the highest density of sheep per capita in the world.  However, this year has seen the sheep numbers fall to their lowest level in 75 years.

Around 1987 farmers to took to dairy farming and that overtook conventional sheep farming which until then had been the backbone of the New Zealand Economy.  Take a look at the chart below … at most inflection points in Cotton Futures the KIWI followed suite.

 

KIWI and Cotton Futures .. they turn together
KIWI and Cotton Futures .. they turn together

 

Mooooo
Mooooo

As discussed above, the dairy industry is the backbone of the economy.  Prices have plunged.

http://www.wsj.com/articles/new-zealand-dairy-farmers-hope-for-relief-in-globaldairytrade-auction-1434442028

Below is a chart showing Class III Milk future w/ the KIWI overlaid on top of it. Note, milk futures have completed a buy pattern so prices “should” start back up and therefore KIWI can potentially find some support.  Emerging Market Currencies are at an extreme low w/ regard to sentiment.

note the brown line (KIWI vs USD) and how it tracks milk ...
note the brown line (KIWI vs USD) and how it tracks milk …

The next chart below is of Non Fat Milk futures (continuous monthly) and note the synchronization of tops and bottoms.  These are the lowest prices in decades ….

Milk Nonfat Dry lowest in decades ...
Milk Nonfat Dry lowest in decades …

 

Here’s the KIWI today … decimated sentiment for EM Currencies, RECORD low dairy prices, cotton hanging in there and a big old thump into very oversold bullish divergence .. it’s going to start up today or soon.

 

KIWI vs USD Monthly
KIWI vs USD Monthly

so this looks so PROMISING but when I put the EEM (Emerging Market ETF) w/ the KIWI overlaid on top of it I see a very nice symmetry BUT I also see a CLIFF OF SUPPORT that the EEM is about to fall off.  OUCH ….

Main20150807175226

EEM:

note EEM and pay attention closely. IF WE ACCELERATE THRU THE 4+ YEAR SUPPORT THEN EM FX SHOULD FOLLOW …playing a bounce for the FX so this is a major area to watch for Risk and Reward …

 

Inflection point for bearish or bullish EEM / FXI now

August 30, 2014: the CLIFF NOTES is we are at a crucial point for the EEM, FXI and Copper. Patterns suggest a bearish stance is prudent.

The bottom line is the neckline shown in FXI and EEM did not break and a very strong rally has taken place.  That being said, BASED ON THE VERY BEARISH COUNT OF COPPER ON A LONG TERM BASIS, believe the EEM, FXI and Copper should start back down again.  The charts will show the PATTERNS. Right now, I remain BEARISH on the FXI and the EEM because of the LONG TERM TOP in COPPER.  Note, divergence is present in the recent price action. So, even thought they (FXI, EEM) have been linked very strongly to Copper, this linkage could be broken and they are now decoupled. With recent price action this is a distinct possibility.  Let’s see if the patterns shown on EEM and FXI fail before we come to this conclusion.

note the CLOSE correlation of Copper and EEM for a "pretty long" time
note the CLOSE correlation of Copper and EEM for a “pretty long” time

 

FXI sell pattern ...
EEM sell pattern …

FXI sell pattern complete
FXI sell pattern complete

Here is the bottom line of these markets (EEM/FXI, COPPER) – If the point labeled 5 below was NOT the high (but a little higher on copper around 5 is the actual target) then these patterns will fail and we’ll see another move higher and I will update new targets. RIGHT NOW – behave/manage risk like the 5 on the chart below is 5 – and folks it’s a long term 5 – then the EEM, FXI and Copper securities should be starting down in/around here.  DOES THAT MAKE SENSE?  Enjoy the Labor Day weekend w/ family and friends.

please see this post to see why the high in copper is so important: http://bartscharts.com/2013/12/20/the-copper-script/ 

note a POTENTIAL for an ENORMOUS top in place for Copper 1,2,3,4,5
note a POTENTIAL for an ENORMOUS top in place for Copper 1,2,3,4,5

 

one last, note below the relative strength RATIO of EEM / SPY. Since 2010, on a relative basis the EEM has been getting smoked by the S&P500 as a whole.  Also, note that the .618 retrace supported, for a while, but the broke and is now the REASON for the resistance.  A little lower (blue shaded rectangle) is a NICE target to potential watch for a flow of funds into the EEM.  Would hold off for now BUT do watch closely as we did break above the  median trend line (like in the end of 2012 – which was defeated – blue arrow) and we should start down now w/ the SELL patterns present.

Relative Strength of EEM / SPY
Relative Strength of EEM / SPY

Rock on, ok?

Bart



 

March 13, 2014:

CLIFF NOTES: the move in copper should not be surprising // we are correcting a multi-decade 5 waves up complete.  This has shown to put pressure on emerging markets and china.  All according to the script.

if you would like to search for “copper” on this blog you will see that we have had a bearish stance for a good couple of years. A strong case can be made that Copper finished a multi-year 5 waves UP and is now undergoing a potentially very violent correction.  if you also click on this link you will see the correlation between FXI (chinese ETF) and EEM (emerging markets ETF) and Copper : http://bartscharts.com/2014/02/01/copper-and-the-emerging-markets-eem-etf/ also here are the highs and lows in Copper: http://bartscharts.com/2013/12/20/the-copper-script/

The most recent breakdown in copper does not play well for FXI or EEM.

Main20140313202002 Main20140313201747 Main20140313202242

Emerging Markets and Crude …

CLIFF NOTES: note on the EEM chart below the “time” and “price” pattern that has completed for time but, perhaps, we’ll got up and see 45 as the target. This is very key as it has held the EEM back for over a year. The basic concept of polarity is shown w/ regard to the blue arrows.  Now, take a look at the second chart – it’s Crude  and EEM on top of each other. They have moved pretty closely together … so, now, the EEM chart get’s interesting. Our thesis is that the EEM pattern will fail – which will send Crude higher OR it will work causing a sell off in the EEM here or around 45 and therefore exert pressure on Crude Oil. Note, Crude closed at the .786 last week ..

Nothing to do, yet.  But watch these levels .. .closely.

Main20140622212743 Main20140622211541 Main20140622212055

 

Update on Copper, Emerging Markets and China

CLIFF NOTES: the move in copper should not be suprising // we are correcting a multi-decade 5 waves up complete.  This has shown to put pressure on emerging markets and china.  All according to the script.

if you would like to search for “copper” on this blog you will see that we have had a bearish stance for a good couple of years. A strong case can be made that Copper finished a multi-year 5 waves UP and is now undergoing a potentially very violent correction.  if you also click on this link you will see the correlation between FXI (chinese ETF) and EEM (emerging markets ETF) and Copper : http://bartscharts.com/2014/02/01/copper-and-the-emerging-markets-eem-etf/ also here are the highs and lows in Copper: http://bartscharts.com/2013/12/20/the-copper-script/

The most recent breakdown in copper does not play well for FXI or EEM.

Main20140313202002 Main20140313201747 Main20140313202242