November 2012 Big Picture Update

Part of my trading business has me look at the big picture of markets and select commodities and currencies to guide my investment and trading activities.  This tracking is due to my belief that trading systems tend to work well in certain market conditions, while other market conditions require a different strategy or an adjustment in focus. This tracking also allows me to track longer-term trends which are used for my longer-term investment strategies.

Disclaimer

These market updates are based on my own beliefs and are not meant for predictive purposes. These updates are research that I am doing for my own investing and thus are provided for educational purposes only. Trading and investing involves substantial risk of loss and is not suitable for everyone. It is possible to lose all or more of your initial investment. Information shared here is for educational purposes only.

Index Report

S&P500

 

Looking at the S&P500, we broken through the support level at 1395 and are now finding support at the 200 day moving average. We are quite far outside of the Bollinger Bands and the Williams %R is firmly in oversold territory. This gives a possible short term rally over the next day or so back to the 1395 area, where we will have to watch and see if we will find resistance. Additionally, the ADX has started to slope upward, indicating the possibility of a bearish trend starting.

 

The S&P500 E-mini contract Weekly Volume Profile shows a fair amount of volume happening at 1378 and 1393 areas. This means we have acceptance of prices at these areas and so we are likely to test higher to see if we can get acceptance higher. Key levels to watch are the weekly composite low volume nodes (LVN) at 1384 and 1395. Rejection of the 1384 area will likely mean a rotation downward to the CHVN at the 1345 area.

SQN Market Type Report

S&P500

 

The SQN(100) Market Type shows that we are now Neutral Normal with the SQN value falling and volatility rising quickly. Increased volatility indicates a higher probability of a bearish market type which is probably where we are headed mid-term.

The SQN(25) Market Type show we are already in a Strong Bear Normal market. This means our trading system will need to be able to take advantage of the possibility of more volatile markets with larger downward moves but the possibility of large upward moves as well.

 

The VIX shows that volatility has been creeping up, finding resistance at 20.  So while our volatility has been moving up, we are not at bearish volatility levels yet. A break of the 20 level would give us a good indication that we are headed for more bearish territory.

Gold/Silver

 

 

Gold and Silver have been in a channel for the past 2 months. The 50 month Moving Average has acted as support in the past and thus a small retracement down would bring us back to that level. Do note that the previous 2 violations have gone right through the 50 month MA. However on the daily side, the 30 day MA is sloped downward and the lower band has acted as resistance in the past. However another drop would put us back in oversold territory on the Willams %R.

USD/CAD

 

Given that I am Canadian, I like to track the USD/CAD currency pair to see if there is a trend. We have been in an uptrend since September meaning the Canadian Dollar has been strengthening against the US Dollar and now is pretty much at parity again. However, parity has been a support and resistance level as thus the possibility of a retracement down or possible sideways action at this level is high.

 

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