Overview
Bonds - Dangle their toes over the edge
Stocks - Break to new highs
Commodities - Hang tough
Currencies - Endure USD indecision
Bonds
TNX
The US 10yr. Treasury Yield threw a head fake last week with a strong close above .90 only to drop back below that key level by week's end. This chart really sums up how challenging the markets have been recently.
5yr. T-Note
I tried trading the 5yr. on the long-side earlier in the year. It appears to be forming a topping pattern, but if rates are rising and treasury prices are dropping, then the maturities further out on the curve will most likely lead the way.
10yr. T-Note
I'm interested to see how the 10yr. T-Note responds to the 136^22 - 136^30 zone. Once that level is reached we could easily see continued consolidation.
30yr. T-Bond
The 30yr. T-Bond produced a classic whipsaw with Thursday's price action closing back above 171^00. Though Wednesday's candle gapped down, the close was not convincing and carried a message of caution. It's easy to see that now.
Stocks
Unlike US Treasury Yields and the USD, equities (both domestic and international) made some decisive moves this past week.
SPY-MDY-SLY
The first chart is a triptych of large-caps (SPY), mid-caps (MDY) and small-caps (SLY). In this chart I want to point out the participation of MDY and SLY over the past month, highlighted by green arrows. The participation that we have seen over the last month was absent earlier this year in August. That absence coincided with the SPY pulling back from new highs and consolidating. Now that we're seeing broader market participation, from small and mid-caps, the current rally in the SPY might be more sustainable.
S&P 1500
Put them all together in the S&P 1500 Index, and we get a new all-time, weekly closing high!
S&P 500
The S&P 500 Index posted a new all-time, weekly closing high. I highlighted a possible bearish divergence in momentum with a red line. I don't think this a divergence. I think its too stretched and that February 2020 and November 2020 belong to two completely different universes. However, it would be nice to have an RSI reading >70 when hitting new ATHs.
I really don't like this chart. The grey zone drives me crazy, but I wanted to highlight where the the S&P 500 futures have been consolidating in relation to their Feb. '20 highs. Unlike the Nasdaq, the S&P 500 has oscillated around those early 2020 highs, not above them. Also, unlike the Nasdaq, the S&P 500 broke out of its consolidation to new all-time, weekly closing highs this week.
Nasdaq 100
Nasdaq futures continue to coil well above the Feb. '20 highs.
Dow
Dow futures continue to grind away under those early 2020 highs. It appears a small flag might be forming just below resistance. Will demand finally overtake overhead supply?
Russell 2000
The Russell 2000 pulled into Friday's close posting a new all-time, weekly closing high. A bullish flag could be forming between 1700.00 and 1750.00, providing an opportunity to jump on board.
ACWI
The ACWI, All Country World Index, is the benchmark for global equity performance. Not the strongest weekly candle, but still an all-time, weekly closing high. I do not believe last weeks candle constitutes a hanging man candlestick.
Nikkei 225
Last week the Nikkei 225 posted its highest weekly close since the Spring of 1991. Wow.
Here are just a couple of other Asian equity indexes that are showing strength on an absolute basis:
Y9999
The Taiwan Stock Exchange made new ATHs with a strong close on Friday.
Nifty 50
The Nifty 50 has moved back above the long term trendline as well as early 2020 highs. This past week posted an all time, weekly closing high.
Commodities
The theme for commodities this past week was "hang tough." These next couple weeks could really be a test.
Precious Metals
I want to start off with a couple ratio charts to help put the current price action in precious metals into context.
Silver/Gold
Below is the Silver/Gold ratio chart. It registers the enthusiasm and fervor for risk taking endeavors in the precious metals space (like IWM/SPY for US equities). It's basically high beta compared to low or lower volatility. This past summer we had a massive thrust in this ratio, and over the last couple months both Gold and Silver have been recovering as they consolidate. Just like its individual components the Silver/Gold ratio is catching its breath while consolidating above support. This ratio points out that the current environment of sideways consolidation in precious metals makes sense and that support is intact. I believe the next major leg up in precious metals will be accompanied by another strong up move in this ratio.
Gold/DJIA
Similarly, I find the Gold/DJIA ratio chart bullish for Gold and precious metals as a whole. The fact that Gold is bottoming relative to the DJIA when stocks around the world are breaking to new ATHs is very promising. I can see this ratio breaking out to the upside in an environment where both stocks and precious metals are doing well.
Gold
If the current support levels do not hold in Gold, then the next major area of support will be around 1760.00 at the 161.8% Fib expansion level. When and if Gold closes above 2070.00 the next logical target lies at the 2550.00 at the 423.8% Fibonacci expansion level.
Keeping an eye on the 1850.00 level on the daily chart.
Silver
The support level in Silver is around 22.50 and the 38.2% Fibonacci retracement level from its recent highs.
Platinum
I haven't included Platinum in past weeks since it has lagged Silver and Gold. Once Platinum can close above 1025.00 things could get interesting.
Grains
With all the drama and indecision in the markets last week, especially in the USD and US Treasuries, I feel like the US grain market put in an admirable performance. It was nothing spectacular like equities, but it had its high points and lots of promise.
Soybean Oil
Soybean Oil was the stand-out last week with a big breakout and a strong weekly candle. I would like to see a weekly close above 38.25, clearing the 2016 highs, in the next couple weeks.
The daily chart shows a breakout above resistance on strong momentum within a bullish momentum regime. That's what we like to see.
Soybean Meal
Soybean Meal continues to hang above the 50.0% Fib retracement level. We could see price action remain range bound between 378.0 and 407.0 in coming weeks.
Meal holding above support on the daily chart. I'm hoping for a short duration flag or pennant formation.
Soybeans
Soybeans are approaching a significant area of resistance. Fibonacci retracement levels taken from different swing highs line-up around 1175^0. The same level supported the 2013 decline and halted the 2016 rally. It's a significant level with lots of price memory. It will be very interesting to see how price reacts.
The 14 period RSI on the daily chart could be signaling fatigue in the current rally, but with a reading >70 its hard to complain.
Chicago Wheat
Last week Chicago Wheat found support around former resistance. I believe the coming week is very important for the direction of wheat prices headed into year's end.
A break below Friday's low would be a sell signal, and a break above 616^0 would be a buy signal for me.
KC Wheat
It appears KC Wheat could be putting in a pennant on the daily chart. I like trading these short duration continuation patterns to either pyramid a current position or catch a missed breakout.
Corn
Like Soybean Oil, Corn is flying in the face of Commercial Hedgers holding a large net short position, as mentioned in a post last week. Unlike Soybean Oil, Corn did not hold above its breakout level of 420^0 by the close in Friday. However, the AVWAPs continue to hold as support.
Again, not a huge fan of trendlines, but the trendline below has repeatedly acted as support. Unfortunately the integrity of boundaries become compromised the more they are tested. Possible bearish divergence on the 14 period RSI.
Sweet Stuff
Sugar is forming a nice base on the weekly chart. Hopefully a trade presents itself on the daily chart before it breaks above 15.50.
OJ
The weekly chart of Orange Juice looks promising.
Currencies
The Dollar Index continues to bounce within a range, and has made trading many USD crosses a challenge. However, it seems the USD has more direction against non-DXY components, and of course opportunities in non-USD crosses exist.
DXY
DXY found support around 92 last week. Even though my bias remains bearish for the USD, it could be forming a reversal pattern.
EUR/USD
When I look at the weekly chart of the EUR/USD my bias is towards the upside.
USD/CHF
Of all the DXY components the CHF is still one of my favored options for shorting the USD. The primary trend is to the downside and the chart is relatively clean.
CAD$
This past week the CAD$ tried to close above the .7700 level but failed. The .7700 and .7500 levels are very important for the CAD$.
USD/JPY
Another failed move. The volatility and indecision in the Yen put me on the sidelines.
USD/NOK
The USD/NOK broke down from an 8 week rectangle early in the week, only to close back within the pattern on Friday.
USD/ISK
Possible breakout or another failed move? The 134.800 level in USD/ISK would confirm the breakdown.
NZD/USD
However, there are a number of USD crosses that have more direction. The NZD has completed a classic H&S Bottom with an abbreviated right shoulder. It could run into some resistance around .6940 at the 2019 highs.
USD/ZAR
The South African Rand completed a H&S Continuation pattern with a downward slanting neckline. The target lies in the 14.9000 area.
USD/KRW
USD/KRW weekly chart...from failed moves come fast moves.
USD/THB
The coil in the Thai Baht did not produce the right shoulder of a H&S Bottom pattern. Rather, it decisively broke to the downside. In retrospect, the numerous contact points along the lower boundary of the coil versus the two, well-defined contact points at the upper boundary was a hint of continuation not reversal.
Some set-ups I like in non-USD crosses:
GBP/AUD
The GBP/AUD could be forming a H&S Bottom. A daily close above 1.8480 would signal a breakout for me.
EUR/GBP
The EUR/GBP continue to slug it out within a massive range. I will keep an eye out for any patterns developing on the daily chart.
EUR/CAD
The EUR/CAD definitely has my attention. My focus will be on the 1.5700 - 1.5800 area in the coming weeks and months.
Crypto
Bitcoin
Bitcoin ran-up against the 138.2% Fibonacci expansion level and paused this week. If you're not incorporating Fibonacci analysis into your process, you're missing out! It's fun and rewarding. If you're interested Constance Brown has written an excellent book on the topic, you can check it out on the resources page.
Ethereum
After finding support at prior resistance, next stop for Ethereum is 585.00.
Litecoin
65.00 is my level to get a jump on Litecoin, but 142.50 is my confirmation level. A massive gulf in price lies between those two levels.
In the coming weeks I would like to expand the scope of the Weekly Report, and possibly focus on each individual asset class more in depth during the week. I don't know what that would look like, but it's an idea. For now I will focus on the markets I'm most likely to trade.
Thanks for reading! If you have any questions or comments, please feel free to contact me at ianculley@culleycharts.com
DISCLAIMER: All information and opinions expressed by Culley Charts are strictly that, and should not be construed as investment advice. Market participation comes with inherent risk, and the responsibility of managing this risk lies solely with each individual investor.
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