“I think this is a song of hope …” Robert Plant Live Stairway to Heaven

The S&P 500 has been climbing a stairway to Heaven ..

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folks coming into 2015 we had some pretty strong patterns appearing.  some worked and some didn’t – isn’t that what we expect? that being said, it was prudent to be cautious due to their presence.

here’s what I posted around a year ago:

“Let’s don’t jump up and down and scream the BEAR MARKET is here till this chariot of the bulls breaks a swing low.”

so, while we’ve sold off for the past couple days let’s not go crazy.  we have broken ONE swing low and that’s it, and it’s ONLY a weekly.  WE HAVE NOT BROKEN A MONTHLY SWING LOW.

so, keep it ALL context of the big picture.  We break a swing low on a MONTHLY and then a second then we have “issues.”

but for now, EVERYONE knows this puppy was on steroids and need some shaking out so let’s look for a pattern to BUY on a weekly (hint hint – it needs to breathe a bit) and if a bear I would still be very cautious.

what do we know and see … ?

  • we know a weekly swing low is about to be taken out and we’ll know that ONLY WITH THE CLOSE TOMORROW … we also know this has NEVER happened since March 2009 bull market began.

so, here’s the logic:

  • if weekly close below a swing low … get defensive.
  • if not, then keep in mind, we have pressure on the downside and it probably needs to breathe down so just chill …

enjoy the post below .. you’ll see some of the patterns were early, some were spot on.  that’s not the point .. the entire post below is around the market action around a SWING LOW or SWING HI and to respect them — very very strongly.

let me know if you have any questions.

chart below is the ES .. note the red horizontal swing lows. those have never been broken on close. it might happen tomorrow …

Bart

S&P Futures Swing Lows since 2009
S&P Futures Swing Lows since 2009

 

 

 


chariot-topper

As we have discussed multiple times in this venue, the move since 2009 has been one heck of a ride.  This chariot of stock market emotion is, literally, off the charts.  It is at an extreme that has surpassed 1929, 2000 and 2007.  For the past 6 months it has defied the powerful cycles and patterns we follow.  However, we are at another “potential” inflection point and based on this weeks price action the chariot appears to be running out of gas.  So, objectively, the cycles and patterns we follow appear to be working.  Let’s don’t jump up and down and scream the BEAR MARKET is here till this chariot of the bulls breaks a swing low.

djia march 15 2014

Below you’ll see a quick demonstration of the Dow Jones Industrial Average from 2002-2009.  No patterns shown but just an example of the power of the swing low.  Take note, when we lose one swing low there is usually some selling and then it bounces back and, here’s the key point, it fails to make a new high.  Price might congest in this area (going either direction – up or down) and then it starts down.  One thing to watch is “usually” the third swing low. When that gives away, selling is vicious.  So, as much as we see MAJOR patterns completing let’s not get to confident.  THE MAJOR US INDICES HAVE NOT BROKEN ONE SWING LOW IN 5 YEARS.  Over the coming weeks, pay attention to these swing lows and swing highs (note the VIX chart – not one swing high has been taken out since 2007!)
swings
VIX SWING HIGHS
Also, note the Dollar Index swing low track record and the very thin neckline that is coming into play a little lower.  We’ve reached some daily extremes in metals (Gold, Silver) and the Euro and Pound.  Sentiment means nothing when a multi year extreme is taken out and one that has been tested roughly 10 times since 2012.  Folks, a lot of stops are hiding beneath 78-79 on the dollar index.  Certainly hope support holds here …
Dollar Index Swings
so, keep an eye on the swing lows and highs over the coming days and weeks … note price action after a first or second swing low is taken out and, seriously consider safety if/when a 3rd long term swing low is taken out to the up or down side ….
CHINESE YUAN 3152014
DJU March 15 2014 utility and industrials
dow jones transports march 15 2014
COPPER CORRELATIONFXI 032014 EEM 03152014

EURO vs USD cross roads

TRADE the spot currency market … as a CTA I deploy capital in the spot FX market.

I am hawking the EURO and, quite frankly, it’s at a crossroads.  Why?

1) the BEARISH sentiment is at a MAJOR extreme … we have to take that into account.

2) I feel “pretty” confident on the count shown below. (1,2,3)  There IS another move down …

3) the cross roads is – have we completed the a-b-c OR do we have one more leg up?  I am in the camp of one more leg up simply because of TIME. the last correction took a month and we still have another week to go.  all that being said, we need to hold in/around here to go back UP into my desired short area.  the work for that short area is below …if we don’t rally from in/around here then it’s “probably” off to the races.

4) also, posted the EXACT low on the EURO via the square out technique here: http://www.seeitmarket.com/euro-time-price-square-call-bottom-13830/ the fact that we had the square out also tells me go higher.

guess we’ll just have to WAIT and see …rock on, ok?

Bart

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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

quick look at China

in what appears to be the largest IPO ever ALIBABA should be coming to the street …pushing the limits of 20 BB it’s something to be watched.  Not for the John Q Public but for the banks Credit Suise, Goldman, Morgan Stanley, etc. are going to make 100’s of millions on this one.  So, I don’t think they will let this one go by the wayside …

ALIBABA
ALIBABA

but here’s what’s interesting … we have the Chinese Yuan FX pair causing quite the unwind and a representative ETF, FXI, of China is on a clff …here, take a look:

Main20140427180543 Main20140427180214

this sure is an amazing dance to watch … kind of reminds me of the Blackstone (BX) IPO .  These two charts should tell you the story:

Main20140427180842 Main20140427180948

the bears are getting hungry and this IPO is going to be one heck of a show. the biggest IPO in history couldn’t possibly end up w/ the same fate as BX? Could it …?  Stay tuned …

 

around the world …. the song remains the same

cliff notes: not one new high across the world.  Malaysia has given it a good try, but has not “on close” exceeded it’s 2007 high.  the song remains the same …  http://www.youtube.com/watch?v=CcYZlRWWxO0

EWW Mexican ETF March 22 2014 EWM Malaysia EWA Australia March 22 2014 CNY Yuan March 22 2014 EWH Hong Kong March 22 2014 EWC Canada March 22 2014 ACWI Global Equity ETF March 22 2014 FXI China March 22 2014 EWQ France EWG Germany ETF EWU UK March 22 2014 EWJ Japan March 22 2014 EWY Korea March 22 2014 EWT Taiwan ETF EWZ Brazil ETF EZA South Africa March 22 2014 Main20140322103557

Swing Low, Sweet Chariot ….

chariot-topper

As we have discussed multiple times in this venue, the move since 2009 has been one heck of a ride.  This chariot of stock market emotion is, literally, off the charts.  It is at an extreme that has surpassed 1929, 2000 and 2007.  For the past 6 months it has defied the powerful cycles and patterns we follow.  However, we are at another “potential” inflection point and based on this weeks price action the chariot appears to be running out of gas.  So, objectively, the cycles and patterns we follow appear to be working.  Let’s don’t jump up and down and scream the BEAR MARKET is here till this chariot of the bulls breaks a swing low.

djia march 15 2014

Below you’ll see a quick demonstration of the Dow Jones Industrial Average from 2002-2009.  No patterns shown but just an example of the power of the swing low.  Take note, when we lose one swing low there is usually some selling and then it bounces back and, here’s the key point, it fails to make a new high.  Price might congest in this area (going either direction – up or down) and then it starts down.  One thing to watch is “usually” the third swing low. When that gives away, selling is vicious.  So, as much as we see MAJOR patterns completing let’s not get to confident.  THE MAJOR US INDICES HAVE NOT BROKEN ONE SWING LOW IN 5 YEARS.  Over the coming weeks, pay attention to these swing lows and swing highs (note the VIX chart – not one swing high has been taken out since 2007!)
swings
VIX SWING HIGHS
Also, note the Dollar Index swing low track record and the very thin neckline that is coming into play a little lower.  We’ve reached some daily extremes in metals (Gold, Silver) and the Euro and Pound.  Sentiment means nothing when a multi year extreme is taken out and one that has been tested roughly 10 times since 2012.  Folks, a lot of stops are hiding beneath 78-79 on the dollar index.  Certainly hope support holds here …
Dollar Index Swings
so, keep an eye on the swing lows and highs over the coming days and weeks … note price action after a first or second swing low is taken out and, seriously consider safety if/when a 3rd long term swing low is taken out to the up or down side ….
CHINESE  YUAN 3152014
DJU March 15 2014 utility and industrials
dow jones transports march 15 2014
COPPER CORRELATIONFXI 032014 EEM 03152014

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

FXI … wonderful set-up coming. be patient ..

we have taken a look at the FXI and it’s set of “lower highs” since 2011.  we have also taken a look at it’s relationship to Copper and how they have ebbed and flowed w/ synergy. what we haven’t done is step back and analyze the BULLISH case for the FXI.  YES, I am posting something that could be a major BUY set up.  However, it still needs to fall a good 50% in nominal terms.  from 37 to 22.

why the bullish case?  go back to the low in 2009?  From 19 to 48 we can count 5 wave UP.  In the context of wave counting that is either a wave 1 or an A wave that will form a 5-3-5 correction.  labeled a-b-c.  either way, we have a nice BUY in/around the 22-25 area that, if the count is correct, take out 48 and perhaps even higher.

so, stay tuned.  w/ MAJOR long term patterns occurring w/ in the US and Global Equity market certainly appears a good thump could be coming but what an amazing set up to BUY…

FXI BULLISH opportunity
FXI BULLISH opportunity

Copper and China

the count (long term) for copper appears to have completed a very well defined 5 wave move … if this is correct, then perhaps we have a little larger rally to kiss the neckline and then down into much lower prices.  why is this important to China?  well, from a chart view they are aligned extremely nicely.  so, IF Copper is going to go down THEN so should FXI if the correlation holds …

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