Category Archives: Uncategorized

Helicopter view as of 26/05/14

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Long time since I’ve been able to come back to the bigger picture. Since last time I traded mostly individual equity derivatives as the bigger indexes were ranging in a consolidation pattern where risks are pretty high comparing to the rewards. We nearly the end of May and by time no loud impacts on tapering that continued all recent months.
I tried to combine all together high level views and nominate risk factors that may adversely impact one of the longest rallies that still continues.
First one if the AUD to CAD ratio that considered general rick on indicator
20140523 AUD Risk on
It starts collapsing mid -April and broke long time support clearly. Negative factor.

The other one is an old bullish sentiment indicator 20140523 BPSPX
Clearly falling into the sell mood territory. Negative factor +2

The next indicates overall amount of stocks pushing higher and they ratio recently broke down the trend expressing limiting stoks at the moment contributing to the index growth.
20140523 Breath
Negative factor+3

The next one is an emerging markets ETF that contributed a lot to the recent turbulence that though did not affect negatively the trend.
20140523 CEW
Despite reaching it’s critical support I cannot take it negative and rather take for neutral. Negative factor stays +3

Entirely different story in debt notes from China comparing to US Tres notes. The upward trend broken long time ago and since continues it’s down progress.20140523 China
I’d say it’s a clear negative factor influential to local market in Australia hindering growth of XMM and big mining players. Negative +4

One of the classical indicators is the comparison of discretionary to cyclical companies performance. Normally it represents attitude of the biggest funds to invest either into growing or defensive stock groups.
20140523 Cyclicals
Right at the moment it breaks through to downside and very negative underlying market indicator. Negative +5

Next is the market deterioration oscillator
20140523 Detoriation
I would take it cautiously as it might be used only accompanied with more authoritative signs but even there the impulse rolls out into the negative swing that deviates from the major indexes impulse. Negative +6

The other indicator the represents the risk on/off attitude of the large monies is this one
20140523 EMB Risk
In general it continued to deteriorate this year along with the developing rally and recently made an impressive reversal into positive. Negative goes down to +5

Next two is the market appetite to junk bonds
20140523 Junk Bonds

20140523 Junk to Shares
Negative reversal is clear here. Negative +6

One of my favorites if NYSI Slow Sto. normally it comes way before trend retracements and has very solid indication of the underlying market performance.
20140523 NYSI
Right at the moment it shows mid zone reversal and normally warned on the most sharp declines in the past.
Very negative, +7

Common risk measure is NZD performance vs USD, in general currency has not solid economy behind and considered fully speculative.
20140523 NZD In my view this stays neutral with some tendency to decline very soon.

This one I am less familiar but used by the hedge funds and simialr.
20140523 Percent Above 200MA
Right at the moment it diverges negatively and I tentatively leave it neutral for a time being.

This one is quite complex but used by many systems as a sell indicator if falls below 5
20140523 Sell Signal
Right at the moment it just crossed 5 and I consider the sell bell has sounded here. Negative +8

this one is one of the important and less known. It takes comparison of small caps in the index versus big players. normally it;s like an army in the advance. If it comes in one move the advance is very solid. When parts of the army lagging the same speed as the generals do, it produces gaps in the line and the whole move is no longer healthy.
20140523 Small Caps Perf
They swayed away from each other since March and this is very indicative of the dangers to the rally advance. Very negative, +9

General measure of bonds vs stocks expresses the same change of the attitude towards more defensive repositioning.
20140523 SPY-TLT
Negative +10

If we look at the VIX long and short term view, right at the moment the potential for the selloff is enormous and whether it will be used by the market is subject to get an answer within next 2-3 trading days.
20140523 VIX Weekss
20140523 VIX Days

On overall my feeling is the glory days of the market advance are nearly over and the correction may be very close.
I do not expect first sell-off to be extremely intense, multi-year trends are not broken in one day, however the overall view presents the market with the degraded performance and soaring risks. I am not much following general news or the economy analysis, the TA view of the market normally enough to understand the big money headwinds, their direction and right at the moment it presents interesting short opportunities to consider.
ASX looking to have unfinished job at 5100 levels and another hit to the lower channel line might break it eventually and trigger the intense price change targeting the lower levels.
20140523 XJO channels

20/02/2014 view (XJO, XMM, XFJ)

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10 days green
ASX is at the key reversal now and here is another load of charts as of 19/02 trades closure
S&P 200
6 months
20140219 XJO 6 months
12 months
20140219 XJO 12 months
and the 10 years view
20140219 XJO 10 years
- we are again at the key resistance now

No doubt the local market is driven by 2 biggies – mining and banks. Last bounce is fueled by mining, finances were lagging to keep up the the same speed.
Financial sector
6 months
20140219 XFJ 6 months
12 months
20140219 XFJ 12 months
and the helicopter view
20140219 XFJ 10 years

Mining (BHP made a major break out from the year long ranging, RIO is within the same raising channel)
6 months
20140219 XMM 6 months
12 months
20140219 XMM 12 months
high view
20140219 XMM 10 years

so with XJO we have now a topping negative divergence in RSI, sloping down MACD and the raising channel break
4hrs chart
20140219 XJO 3 months - 4hrs

11/02/14 View (XJO, shares)

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XJO points to retest upper resistance.
The acceleration of the recent rally can be well attributed to the sell-off scenario and low volumes look very suspicious, it will well exhaust RSI by the time reaching it and drain out the last value investors. The general down trend still in play.
6 months
20140210 XJO 12 monthsl channels
12 months
20140210 XJO 6 monthsl channels

Despite I expected lower bounce level the short position has been played out ok and closed now.
MQG, CBA closed at SL.
RIO still consolidates and short position is neutral
Keeping an eye on the overbought NCM and progress of MQG decline to re-enter.
WTIC is not yet confirmed.
AUD is well in progress aiming .92 and not wellbaked for reversal.

29/01/2014 View (AUD)

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Very quick one on possible scenarios for AUD.
AS in classical EW that applies well to declines 1-2-3 might already in place where big 3 might not yet reached in the bigger scale.
If so, we might see the bounce coming soon but the biggest move is still ahead.
20140128 FXA weks