Each candle on the SPX chart below represents 1/4 of one year.

  • Q1 2015 is a spinning top candle (indecision)
  • Q2 2015 is a shooting star (bearish warning)
  • Q3 2015 is a bearish engulfing (bearish but needs a confirmation lower close)
  • Q4 2015 is a bullish piercing pattern reversal candle, but such a candle is more effective after a decent drop, rather than stuck in a consolidation pattern at all-time highs
  • Q1 2016 is a bearish hanging man (bearish but also needs a confirmation lower close on the next candle)
  • Q2 2016 is an important candle, which will close this Thursday, June 30th, as it could be the bearish reversal confirmation candle that's needed for the Q1 candle -- a lower close is required
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If currency markets continue to experience high volatility with a strengthening US dollar, I think equity markets, including North American markets, will follow suit.

So, I'll keep a close eye on those as potential canaries in the coal mine; e.g., to see whether the spread continues to widen (downward) between the SPX and the Pound:USD Forex pair, as shown on the Year-to-Date comparison chart below (the Pound lost 8.75% last Thursday and Friday).

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Further to my UPDATES noted on my last post, a massive Head & Shoulders pattern has formed on this GBP/USD Monthly chart...catastrophy awaits as price flirts with the neckline.

The BREXIT Vote Wins...A Catastrophy Awaits


But, the FTSE 100 Index closed the week 234 points higher than last week...Weekly chart below...

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In advance of Britain's "Brexit" or "Bremain" vote on Thursday, June 23, the British Pound has gained momentum as of last week. 

The current price of the GBP/USD Forex pair is 1.4581, as shown on the Monthly chart below. It will need to break and stay above that level and, potentially retest 1.50, which represents the next long-term resistance level.

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If WTIC Crude Oil breaks below it's current (very tight) uptrend line, watch for the Canadian Loonie to tank.
As shown on the following 5-Year Daily chart comparing the two, they normally trade lock-step. Note the recent divergence of the Loonie starting in April and the fact that the RSI and MACD have fallen below the 50 level...which are hinting of further weakness ahead for Oil.

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What a mess! A drop and hold below 100 will signal that a big downdraft is in store for equities, as shown on the following Monthly SPX:VIX ratio chart.

Further background information can be found at this last post on the ratio.

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In my post of December 29, 2015, I stressed the importance of the Financials ETF (XLF) in, potentially, propelling the SPX to an increase of 5-6% for 2016.

You can see from the Daily ratio chart below of XLF:SPX, that price weakened considerably afterwards and fell to new lows not seen since 2012.

Price is attempting to stabilize above that low, but all three indicators are still in downtrend and display new "SELL" signals, and price action is still under the bearish influence of the Death Cross formation of the moving averages.

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Further to my posts of January 29 and February 17 (& March 3 update), price action on the SPX:VIX ratio has rallied and is now in between major support of 150 and major resistance at 160, as shown on the following monthly chart. The momentum indicator has also risen above the zero level and is hinting of higher prices to come at some point on this longer term timeframe.

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New "BUY" signals have just formed on the RSI, MACD and PMO indicators for:

  • SPX:VIX ratio: Price still needs to cross and remain above the 100 level, as outlined in my post of January 29th, and, thus, is still aimless and directionless within the "Uncommitted Zone."
 
New Buy Signals for Equities
 

As WTIC Crude Oil goes, so goes Deutsche Bank, as shown on the 5-Year Daily comparison chart below.

Banks and Oil Don't Mix


Right after the opening bell this morning, DB made a new 5-year low of 15.95, as shown on the Daily chart below. There's no confirmation of a reversal in sight, technically, yet for DB, although the RSI may be hinting at a bit of a slowdown in the plunge.

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