$95.00 or $85.00 target?...both are major support levels, as shown on the Weekly chart below.
So far, price has been unable to break above major resistance (with volatility increasing within a broadening triangle formation), so it suggests that a top may be forming with further downside to follow.

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The following 5-Year Daily chart depicts Light Crude Oil (as the primary instrument in candle format) and the S&P 500 Index (as the secondary instrument shown as a black line). There was a drastic shift in sentiment between these two markets when they began to diverge in mid-October, 2014.

While the price of Oil is making lower swing lows in its depressed downtrend -- and, in fact, made a new 5-year low today (December 7th) -- the RSI and PMO indicators have been making higher swing lows but have yet to make higher swing highs. So, while we're seeing possible hints of higher prices to come at some point in the future, it may be awhile yet before prices begin to stabilize, first. High-than-normal volumes this year haven't yet produced stable prices and may have contributed to the large swings in between 37.50 and 62.50 that we've been seeing. Until we see a sustained drop in volumes, we will likely see Oil continue to plunge to further new lows and/or persist in its wild daily erratic bearish and bullish spikes.

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I can't get too excited about possible market follow-through in any one direction on the S&P 500 Index unless and until price breaks and holds either above 150 or below 100 on the SPX:VIX Daily ratio chart below.

Currently, price is still in what I call the "Major Conflict Zone." Yes, I realize it's a huge range, but that's the way 2015 has gone. In my opinion, I think 2016 will see greater volatility and much larger swings than we've seen this year...hang onto your (Santa) hats, folks!

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At 7:45 am ET on Thursday, December 3rd, markets will know what the ECB will do with its interest rates until its next meeting in 2016. Mario Draghi will give a press conference at 8:30 am ET to explain the details.

Based on the Year-to-Date graph below, which shows how Europe's Major Indices have fared compared with U.S. Major Indices in 2015, I'd wonder why the ECB would think that it has to pour on more QE stimulus, as many media pundits are predicting...we'll see what happens.

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Further to my post of November 17th, a bounce next (at the 40 MA...3433) and sustained rally to new highs, thereafter, is critical for China's Shanghai Index.

Otherwise,  a break and hold below the 40 MA will signal that the bearish scenario (that I outlined in the above post) is imminent, in my opinion...all three indicators on the Daily chart below of SSEC  now display "SELL" signals.

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In my last update of September 8th, I noted that a bearish moving average Death Cross had formed on the Daily chart and price closed at 3170.45. Since that date, price moved sideways for over a month before it, finally, rallied to where it closed today (Tuesday) at 3604.80.

I have the following observations on the 2-year Daily chart below:

  • both gaps down in August have now been filled
  • a bearish Head & Shoulders has formed on the MACD Histogram, hinting of weakness ahead
  • price is approaching a triple confluence major resistance level around 3750 (comprised of the 200 MA, major downtrend line, and a 40% Fibonacci retracement level)
  • a re-test of a 200 MA is not uncommon after a Death Cross has formed and price usually drops  afterwards, often to new lows
I wouldn't be surprised to see some major selling come in sometime soon on this index to, possibly, take price down to around 2500, or lower (what would be Wave 5 for Elliott Wave enthusiasts).
Read more...
S P 500 Index: Naughty or Nice?

The Momentum indicator has crossed below the zero level on the following Monthly chart of the S&P 500 Index (SPX), hinting of further weakness ahead.
Major support sits around the 1700 level (confluence of the  50 MA and the 40% Fibonacci retracement level -- taken from the October 2011 lows).

S P 500 Index: Naughty or Nice?


Price on the following Monthly ratio chart of the SPX:VIX rallied at the end of today (Friday) to close just above the 100 level -- which is a major bull/bear line-in-the-sand level.

The Momentum indicator is still well below the zero level, also hinting of further weakness ahead for the SPX.

S P 500 Index: Naughty or Nice?


Price on the following Daily chart of the World Market Index did eventually drop to re-test the 1600 level, which was mentioned as a possibility in my above-referenced posts. It, subsequently, bounced and has now fallen back and closed below what was near-term major price support (now major resistance) at 1700 and the 200 MA.

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Notwithstanding the bearish moving average Death Cross that has now formed on the Japanese Nikkei Index, all three indicators are hinting of higher prices, as shown on the 5-year Daily chart below.

At the moment, major resistance sits at 19000, while minor support is at 17000, with major support at 16000. I'd watch the RSI, in particular, to see whether it can rise (and stay) above the 50.00 level. If so, we may see price spike to 19000 before consolidating -- then, either, attempt to penetrate above (and reverse) the moving average cross-over and rally to, potentially, new highs, or drop to new lows around the 16000 level. Otherwise, a hold below 50.00 on the RSI may see price plunge as low as 16000 (or lower), first.

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Just to add to confusion regarding what future direction the FOMC may take regarding whether or not to raise interest rates in 2015, we see this tweet last night...

Fed Double-Talk


I would just remind readers that Janet Yellen's comments last night are HER comments and are NOT the official Fed Policy Statement that was released at their last meeting on September 17th. In their Release, they stated that...

"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term."  

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The following 1-Year Daily comparison chart has the Dow 30 plotted on as the baseline. You can see that the SPX, NDX & RUT have, for the most part, outperformed the Dow this year.

We'll see if market participants are willing to keep buying into riskier assets in the NDX and RUT (since they're currently outpacing the SPX), or whether money will start flowing back into the larger-cap stocks.

My own feeling is that if (big) money starts fleeing the NDX and RUT (risk), we could, finally, see the SPX and Dow (and other world markets) follow...especially, emerging markets, Japan and China. So, I'd watch for any signs of fresh, large-scale dumping of "risk" on this comparison chart.

Will Markets Take On More Risk?


With the VIX currently elevated and sitting just above major support (the zone between 20.00 and 25.00), we could, very well, see some large-scale risk-dumping occur (with continued wild, volatile price swings) before markets settle down (when the VIX falls back below 20.00).

Read more...

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