Tag Archives: Technical Analysis S&P 500

Cartography Corner – November 2019

J. Brett Freeze and his firm Global Technical Analysis (GTA) provides RIA Pro subscribers Cartography Corner on a monthly basis. Brett’s analysis offers readers a truly unique brand of technical insight and risk framework. We personally rely on Brett’s research to help better gauge market trends, their durability, and support and resistance price levels.

GTA presents their monthly analysis on a wide range of asset classes, indices, and securities. At times the analysis may agree with RIA Pro technical opinions, and other times it will run contrary to our thoughts. Our goal is not to push a single view or opinion, but provide research to help you better understand the markets. Please contact us with any questions or comments.  If you are interested in learning more about GTA’s services, please connect with them through the links provided in the article.

The link below penned by GTA provides a user’s guide and a sample of his analysis.

GTA Users Guide


A Review of October

Random Length Lumber Futures

We begin with a review of Random Length Lumber Futures (LBX9, LBF0) during October 2019. In our October 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for October are:

  • o M4         447.90
  • o M1         407.70
  • o PMH       393.50
  • o Close      367.10
  • MTrend   364.03
  • M3           363.20
  • M2         357.10             
  • PML        348.10                         
  • M5           316.90

Active traders can use 363.20 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

In our October edition, we anticipated a breakout from consolidation and recognized our ignorance as to which direction by highlighting, “The lumber market has been building energy for the next substantial move for four quarters and four months, respectively.  Relative to our technical methodology, it is a 50-50 proposition as to which direction.”

Figure 1 below displays the daily price action for October 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first eight trading sessions were spent with Lumber oscillating around our isolated pivot level of 363.20.  Longs and shorts were battling to establish a sustained directional move away from equilibrium at MTrend: 364.03. 

Astute readers will notice that the low price of the month was realized at the price of 357.50.  That price was four ticks above October’s M2 level of 357.10.  M2 was the first monthly support level under our isolated pivot.

The following seven trading sessions were spent with Lumber making an assault upon, and settling above, September’s high at PMH: 393.50.  The final eight trading sessions saw Lumber achieve and exceed our isolated resistance level at M1: 407.70.

Conservatively, active traders following our analysis had the opportunity to capture most of the trade up which equated to an approximate 10.5% profit. 

Figure 1:

E-Mini S&P 500 Futures

We continue with a review of E-Mini S&P 500 Futures during October 2019.  In our October 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for October are:

  • M4                 3275.75
  • M1                 3037.25
  • M3                 3032.25
  • PMH              3025.75
  • M2               3002.25      
  • Close             2978.50
  • MTrend         2952.81     
  • PML               2889.00     
  • M5                2763.75

Active traders can use 3037.25 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 2952.81 as the downside pivot, whereby they maintain a flat or short position below that level.

Figure 2 below displays the daily price action for October 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  We commented in October, “… the slope of the Weekly Trend could be in the initial stage of forming a rounded top.”  The first two- and one-half trading sessions of October saw the market price descend 123.50 points from September’s settlement price.  The decline accelerated once it settled below our isolated pivot level at MTrend: 2952.81.

The low price for the month was realized (early in the session) on Thursday, October 3rd at the price of 2855.00.  Please pay attention to the commentary that follows next, as it highlights the importance of our multi-time-period analysis.  The Weekly Downside Exhaustion level for the week of September 30th was at W5: 2868.00.  Once our Weekly Downside Exhaustion level was reached, we were immediately anticipating a two-week high to occur over the following four to six weeks.  This was reason one to cover any shorts.  Quarterly Trend for the fourth quarter of 2019 resides at 2840.92.  As we have communicated before, this is the most important level in our analysis and, at a minimum, we expect Quarterly Trend to be defended vigorously on the first approach.  This was reason two to cover any shorts.  By the time of the market’s close on October 3rd, the price had rotated back above September’s low price at PML: 2889.00.  The following five trading sessions were spent with the market price oscillating between MTrend: 2952.81, now acting as resistance, and support at PML: 2889.00.

On October 11th, the market price ascended above and settled above MTrend: 2952.81.  This afforded the market the opportunity to make an assault on our next isolated resistance level at M2: 3002.25.  Two trading sessions later, on October 15th, the market price achieved a high price of 3003.25.  This is notable because it achieved the two-week high that we were anticipating from October 3rd.   The following five trading sessions were spent with the market price oscillating around our isolated resistance level at M2: 3002.25.

On October 23rd, the market price settled above M2 and began its final ascent into the October 30th FOMC meeting.  It is worth noting that the market did not settle above our isolated upside pivot level at 3037.25 prior to October 30thWith one trading session remaining in October, common sense suggested waiting for November’s analysis to be produced in lieu of committing capital on the day of the FOMC meeting.

Humbly offered, our analysis captured the trade down early in the month, the rally into the pre-FOMC high, and the significant pivots in between.

Figure 2:

November 2019 Analysis

We begin by providing a monthly time-period analysis of E-Mini S&P 500 Futures (ESZ9).  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Daily Trend             3038.39       
  • Current Settle         3035.75
  • Weekly Trend         2980.58       
  • Monthly Trend        2950.42       
  • Quarterly Trend      2840.92

In the quarterly time-period, the chart shows that E-Mini S&P 500 Futures have been “Trend Up” for three quarters.  Stepping down one time-period, the monthly chart shows that E-Mini S&P 500 Futures have been “Trend Up” for five months.  Stepping down to the weekly time-period, the chart shows that E-Mini S&P 500 Futures have been “Trend Up” for three weeks.  The relative positioning of the Trend Levels is bullishly aligned.  The market price is above all of them (with exception of Daily Trend) which is bullish as well.

In the monthly time-period, the “signal” was given in August 2019 to anticipate a two-month high within the following four to six months.  That two-month high was realized in October 2019, with the trade above 3025.75.

 

Support/Resistance:

In isolation, monthly support and resistance levels for November are:

  • M4                 3221.00
  • M3                 3093.00
  • M1                 3084.25
  • PMH              3055.00
  • Close             3035.75     
  • MTrend         2950.42
  • PML               2855.00     
  • M2                 2821.00    
  • M5                2684.25

Active traders can use 3055.00 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 2950.42 as the downside pivot, whereby they maintain a flat or short position below that level.

New Zealand Dollar Futures

For the month of November, we focus on New Zealand Dollar Futures (“Kiwi”).  We provide a monthly time-period analysis of 6NZ9.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Quarterly Trend    0.6640           
  • Current Settle       0.6416
  • Daily Trend           0.6382           
  • Monthly Trend      0.6361           
  • Weekly Trend        0.6354

As can be seen in the quarterly chart below, Kiwi is in “Consolidation”.  Stepping down one time-period, the monthly chart shows that Kiwi has been “Trend Down” for four months.  Stepping down to the weekly time-period, the chart shows that Kiwi has been “Trend Up” for three weeks.

In the monthly time-period, the “signal” was given in August 2019 to anticipate a two-month high within the following four to six months.  That two-month high can be realized in November 2019 with a trade above 0.6462.

Our first priority in performing technical analysis is to identify the beginning of a new trend, the reversal of an existing trend, or a consolidation area.  With that in mind, we chose to focus on Kiwi for the month of November.  Since its peak in 2Q2017, Kiwi has traded down in five of the previous eight quarters.  In the calendar year 2019, it has only traded up in three months out of ten.  But something caught our attention… Monthly Trend for November has “quietly tiptoed” beneath the market.  In our judgment, the risk-reward is favorable for anticipating a trend reversal.    

Support/Resistance:

In isolation, monthly support and resistance levels for November are:

  • M4         0.6627
  • M3         0.6558
  • PMH       0.6444
  • M1         0.6426
  • Close       0.6416
  • MTrend   0.6361
  • PML        0.6215             
  • M2         0.6169                         
  • M5           0.5968

Active traders can use 0.6361 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

 

Summary

The power of technical analysis is in its ability to reduce multi-dimensional markets into a filtered two-dimensional space of price and time.  Our methodology applies a consistent framework that identifies key measures of trend, distinct levels of support and resistance, and identification of potential trading ranges.  Our methodology can be applied to any security or index, across markets, for which we can attain a reliable price history.  We look forward to bringing you our unique brand of technical analysis and insight into many different markets.  If you are a professional market participant and are open to discovering more, please connect with us.  We are not asking for a subscription; we are asking you to listen.

Cartography Corner – October 2019

J. Brett Freeze and his firm Global Technical Analysis (GTA) provides RIA Pro subscribers Cartography Corner on a monthly basis. Brett’s analysis offers readers a truly unique brand of technical insight and risk framework. We personally rely on Brett’s research to help better gauge market trends, their durability, and support and resistance price levels.

GTA presents their monthly analysis on a wide range of asset classes, indices, and securities. At times the analysis may agree with RIA Pro technical opinions, and other times it will run contrary to our thoughts. Our goal is not to push a single view or opinion, but provide research to help you better understand the markets. Please contact us with any questions or comments.  If you are interested in learning more about GTA’s services, please connect with them through the links provided in the article.

The link below penned by GTA provides a user’s guide and a sample of his analysis.

GTA Users Guide


A Review of September

U.S. Treasury Bond Futures

We begin with a review of U.S. Treasury Bond Futures (USZ9) during September 2019. In our September 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for September are:

  • M4         181-00
  • M1         176-26
  • M3         174-29
  • PMH       166-30
  • Close        165-08
  • MTrend    157-17
  • M2         157-02             
  • PML        154-31                          
  • M5            152-28

Active traders can use 166-30 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

In our September edition, we anticipated weakness and cautioned, “Short-time-period-focused market participants. . . Caveat Emptor.”  Figure 1 below displays the daily price action for September 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first nine trading sessions were spent with bonds descending in price by seven points and twenty-two thirty seconds.  Ours was a most timely warning. 

Astute readers will notice that the low price of the month was realized at the price of 157 18/32.  That price was one tick above September’s Monthly Trend level of 157 17/32.  Monthly Trend was also the first monthly support level offered by our analysis.   Another prime example of the importance of Monthly Trend as a significant pivot level.

The final eleven trading sessions were spent with bonds retracing as much as 75% of the initial decline.

Active traders following our analysis had the opportunity to capture the entire trade down, which equated to a $7,687.50 profit per contract.  Once Monthly Trend held, drawing from their understanding of our analysis, they also would have known it was worth using the Monthly Trend to acquire a long position with a well-defined stop in place (clustered support at Monthly Trend / M2) to limit risk.

Figure 1:

E-Mini S&P 500 Futures

We continue with a review of E-Mini S&P 500 Futures during September 2019.  In our September 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for September are:

  • M4                 3073.00
  • PMH              3014.25
  • M1                 2999.00
  • MTrend        2924.92
  • Close            2924.75      
  • M3                 2867.25
  • PML               2775.75     
  • M2                 2596.00    
  • M5                2522.00

Active traders can use 2924.92 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Figure 2 below displays the daily price action for September 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first nine trading sessions of September saw the market price ascend 101.00 points from August’s settlement price.  The gains accelerated once it settled above our isolated pivot level at MTrend: 2924.92.  The high price for the month was realized on September 13th, the exact same day that the low price in bonds was achieved.       

The purpose of every trading month is to surpass the high or low of the previous trading month.  As can be seen in Figure 2, the high price for August 2019 was at PMH: 3014.25.  The price action exceeded PMH: 3014.25, running the “obvious brothers’” buy-stops in the process.  However, the market did not settle above that level which signaled that it was time for active traders following our analysis to take profits on their purchases.

On September 20th, the market price rotated and settled back below M1: 2999.00, now acting as support.  If active traders following our work had not previously sold their long positions, they should have on that day. The final six sessions of September were spent with the market price declining back towards Monthly Trend.

Active traders following our analysis had the opportunity to capture the initial trade up, which equated to a $4,412.50 profit per contract.

Figure 2:

October 2019 Analysis

We begin by providing a monthly time-period analysis of E-Mini S&P 500 Futures (ESZ9).  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Weekly Trend         2989.90       
  • Current Settle         2978.50
  • Daily Trend             2974.61       
  • Monthly Trend        2952.81       
  • Quarterly Trend      2840.92

In the quarterly time-period, the chart shows that E-Mini S&P 500 Futures have been “Trend Up” for three quarters.  Stepping down one time-period, the monthly chart shows that E-Mini S&P 500 Futures have been “Trend Up” for four months.  Stepping down to the weekly time-period, the chart shows that E-Mini S&P 500 Futures are in “Consolidation”.

Like we commented in August, the slope of the Weekly Trend could be in the initial stage of forming a rounded top.  Also, the market price has settled below Weekly Trend for two consecutive weeks.  Weekly Trend for this week is at 2989.90.  This deserves focus from short time-period-focused market participants.  A trend change in the short time-period is often a precursor to a trend change in the longer time-period(s).  We will watch closely to see if this occurs, bolstering the case for a topping pattern.

Support/Resistance:

In isolation, monthly support and resistance levels for October are:

  • M4                 3275.75
  • M1                 3037.25
  • M3                 3032.25
  • PMH              3025.75
  • M2               3002.25      
  • Close             2978.50
  • MTrend         2952.81     
  • PML               2889.00     
  • M5                2763.75

Active traders can use 3037.25 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 2952.81 as the downside pivot, whereby they maintain a flat or short position below that level.

Random Length Lumber Futures

For the month of October, we focus on Random Length Lumber Futures.  Lumber prices are often seen as an indicator of economic activity due to its widespread use in real estate.  Regardless of whether you may trade lumber, the analysis and price action of lumber may provide some clues as to the future direction of the economy.  We provide a monthly time-period analysis of LBX9.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Weekly Trend        376.33          
  • Daily Trend            370.83
  • Current Settle        367.10          
  • Quarterly Trend     366.80          
  • Monthly Trend       364.03

As can be seen in the quarterly chart below, lumber is in “Consolidation”.  Stepping down one time-period, the monthly chart shows that lumber has been “Trend Up” for four months.  Stepping down to the weekly time-period, the chart shows that lumber has been “Trend Up” for three weeks.

In the quarterly time-period, the lumber market realized its last “substantial” price move (lower) in 3Q2018.  It has been consolidating since.  In the monthly time-period, the lumber market realized its last “substantial” price move from February 2019 to May 2019.  It has been consolidating since.  Astute readers will also notice that the current market price is resting just above BOTH Quarterly Trend and Monthly Trend.  The lumber market has been building energy for the next substantial move for four quarters and four months, respectively.  Relative to our technical methodology, it is a 50-50 proposition as to which direction.  As noted earlier, once this direction reveals itself, we may be simultaneously gifted with an indication of the state of the economy.

Support/Resistance:

In isolation, monthly support and resistance levels for October are:

  • M4         447.90
  • M1         407.70
  • PMH       393.50
  • Close      367.10
  • MTrend   364.03
  • M3           363.20
  • M2         357.10             
  • PML        348.10                         
  • M5           316.90

Active traders can use 363.20 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Summary

The power of technical analysis is in its ability to reduce multi-dimensional markets into a filtered two-dimensional space of price and time.  Our methodology applies a consistent framework that identifies key measures of trend, distinct levels of support and resistance, and identification of potential trading ranges.  Our methodology can be applied to any security or index, across markets, for which we can attain a reliable price history.  We look forward to bringing you our unique brand of technical analysis and insight into many different markets.  If you are a professional market participant and are open to discovering more, please connect with us.  We are not asking for a subscription; we are asking you to listen.

Cartography Corner – September 2019

J. Brett Freeze and his firm Global Technical Analysis (GTA) provides RIA Pro subscribers Cartography Corner on a monthly basis. Brett’s analysis offers readers a truly unique brand of technical insight and risk framework. We personally rely on Brett’s research to help better gauge market trends, their durability, and support and resistance price levels.

GTA presents their monthly analysis on a wide range of asset classes, indices, and securities. At times the analysis may agree with RIA Pro technical opinions, and other times it will run contrary to our thoughts. Our goal is not to push a single view or opinion, but provide research to help you better understand the markets. Please contact us with any questions or comments.  If you are interested in learning more about GTA’s services, please connect with them through the links provided in the article.

The link below penned by GTA provides a user’s guide and a sample of his analysis.

GTA Users Guide


In addition to the normal format in which we review last month’s commentary and present new analysis for the month ahead, we provide you with interesting research on long-term market cycles.

A Review of August

Silver Futures

We begin with a review of Silver Futures (SIU9/SIZ9) during August 2019. In our August 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for August are:

  • M4         18.805
  • M1         17.745
  • M3           17.469
  • PMH       16.685
  • Close        16.405
  • M2           15.265
  • MTrend   15.263             
  • PML          14.915                        
  • M5            14.205

Active traders can use 16.685 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Figure 1 below displays the daily price action for August 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first five trading sessions were spent with silver ascending to and settling above, our isolated pivot level at PMH: 16.685.  Silver’s rally, which began in June, extended significantly in August. 

The following twelve trading sessions were spent with silver consolidating with an upward bias, testing our clustered resistance levels at M3: 17.469 and M1: 17.745.  On August 26th, silver settled above M1: 17.745 and proceeded over the following three trading sessions to test our Monthly Upside Exhaustion level at M4: 18.805.   The high price for August 2019 was achieved on August 29th at 18.760, a difference from M4 of 0.24%.

 Active traders following our analysis had the opportunity to capture a 12.4% profit.

 

Figure 1:

E-Mini S&P 500 Futures

We continue with a review of E-Mini S&P 500 Futures during August 2019.  In our August 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for August are:

  • M4                3330.25
  • M2                3182.25
  • M1                3089.75
  • PMH              3029.50
  • M3               3020.25      
  • Close             2982.25
  • PML               2955.50     
  • M5                 2941.75    
  • MTrend         2897.03

Active traders can use 3029.50 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Figure 2 below displays the daily price action for August 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first four trading sessions of August saw the market price collapse 206.50 points from July’s settlement price.  The descent accelerated once our isolated support levels at PML: 2955.50 and M5: 2941.75 were breached.  When August Monthly Trend at MTrend: 2897.03 was breached, the descent accelerated again.      

The remaining trading sessions of August 2019 were spent with the market price oscillating between 2817.00 (roughly) and our isolated support level at M5: 2941.75, now acting as resistance.  As can be seen in Figure 2, there were essentially five swing trades during the remainder of August, three up and two down.  Each swing covered approximately 125 points.

The war between bulls and bears continues with the battles becoming fiercer.

Figure 2:

September 2019 Analysis

We begin by providing a monthly time-period analysis of E-Mini S&P 500 Futures (ESU9).  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Monthly Trend        2924.92       
  • Current Settle         2924.75
  • Daily Trend             2905.47       
  • Weekly Trend         2884.92       
  • Quarterly Trend      2727.50

In the quarterly time-period, the chart shows that E-Mini S&P 500 Futures are in “Consolidation”.  Stepping down one time-period, the monthly chart shows that E-Mini S&P 500 Futures have been “Trend Up” for three months.  Stepping down to the weekly time-period, the chart shows that E-Mini S&P 500 Futures are in “Consolidation”.

We commented in August:

“We would like to point out the slope of the Weekly Trend has been forming a rounded top over the previous three weeks.  Weekly Trend is currently developing at 2996.58 for the week of August 5, 2019.  If that developing level holds (or develops lower), the topping process will be complete (in the weekly time-period) as 2996.58 is lower than this week’s Weekly Trend level of 2999.83.  Also, a weekly settlement this week below 2999.83 will end the current eight-week uptrend.”

The formation of the rounded top in the Weekly Trend was an excellent indicator of the directional turn in the short time period. 

Support/Resistance:

In isolation, monthly support and resistance levels for September are:

  • M4                 3073.00
  • PMH              3014.25
  • M1                 2999.00
  • MTrend        2924.92
  • Close            2924.75      
  • M3                 2867.25
  • PML               2775.75     
  • M2                 2596.00    
  • M5                2522.00

Active traders can use 2924.92 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

U.S. Treasury Bond Futures

For the month of September, we focus on U.S. Treasury Bond Futures (“bonds”).  We provide a monthly time-period analysis of USZ9.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Daily Trend            165-20          
  • Current Settle        165-08
  • Weekly Trend        164-22          
  • Monthly Trend       157-17          
  • Quarterly Trend     147-27

As can be seen in the quarterly chart below, bonds have been “Trend Up” for three quarters.  Stepping down one time-period, the monthly chart also shows that bonds have been “Trend Up” for nine months.  Stepping down to the weekly time-period, the chart shows that bonds have been “Trend Up” for five weeks.

The condition was met in August 2019 that makes us anticipate a two-month low within the next four to six months.  That would be fulfilled with a trade below 152-28 in September 2019.  This is the second “signal” that has been given since this nine-month uptrend began.  The first was given in December 2018 and the two-month low was realized three months later.  In the week of July 29th, the condition was met that made us anticipate a two-week low within the next four to six weeks from that week.  The market is entering the fifth week of that time window and a two-week low can be realized this week with a trade below 162-06.

Like the rounded top highlighted in E-Mini S&P 500 futures in the August 2019 edition of The Cartography Corner, the Weekly Trend in bonds is beginning to take on the same curvature.  Short-time-period-focused market participants. . . Caveat Emptor.

 

Support/Resistance:

In isolation, monthly support and resistance levels for September are:

  • M4         181-00
  • M1         176-26
  • M3         174-29
  • PMH       166-30
  • Close        165-08
  • MTrend    157-17
  • M2         157-02             
  • PML        154-31                          
  • M5            152-28

Active traders can use 166-30 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

 

Equity Cycle, 1799 – 2061

What if the basis of causation in human affairs, economics, and markets is embedded in the law of vibration of nature?  Sound, light, and heat are all forms of vibration.  Sound is energy vibrating at a frequency that the ear can perceive.  Light is energy vibrating at a frequency that the eye can perceive.  Heat is energy that vibrates at a frequency that our internal thermometers can perceive.  Radiation that penetrates the Earth’s atmosphere causes proven psychological changes in people.

My dog barking at 2:30 each afternoon does not cause the mailman to deliver the mail to my house.  However, when my dog barks at 2:30 each afternoon, I can reliably trust that the mail is being delivered.  Similarly, it is not necessary for the market participant to answer in-depth questions of how or why, with regards to causation.  It is only necessary to answer the question of correlation and, if a correlation exists, what are the results?  Market participants of old, including W.D. Gann, Louise McWhirter, Donald Bradley, and others, not only recognized but successfully utilized the law of vibration across many individual markets.

We spent significant time collecting, organizing, and processing planetary data in the identification and construction of the composite equity cycle graphed on the following three pages.  The composite equity cycle is comprised of six individual cycles, each with a different phase, amplitude, and length.  The average cycle length is 13.5 years.

Our data series of the nominal equity index level spans 220 years, with a low value of 2.85 and high value of 26,864.27.  We faced the challenge of how to graphically present this data series in the most aesthetic manner.  We started by graphing lognormal values, but the result did not “tell the story” in a legible way.  We finally were enlightened (thank you, Jack) to present a rolling return.  The benefit of using a rolling return is that the range of values is relatively narrow and presents itself well graphically.  We set the length of the rolling return equal to the average cycle length.

The first graph displays the cycle over the entire time period, 1799 – 2061.

The second graph highlights the peaks in the cycle and how well they line up with peaks in the rolling 13.5Y annualized return in the Dow Jones Industrial Average.  The dashed lines represent anticipated future peaks.

The third graph highlights the troughs in the cycle and how well they line up with troughs in the rolling 13.5Y annualized return in the Dow Jones Industrial Average.  The dashed lines represent anticipated future troughs.

Compelling.

CLICK TO ENLARGE

Summary

The power of technical analysis is in its ability to reduce multi-dimensional markets into a filtered two-dimensional space of price and time.  Our methodology applies a consistent framework that identifies key measures of trend, distinct levels of support and resistance, and identification of potential trading ranges.  Our methodology can be applied to any security or index, across markets, for which we can attain a reliable price history.  We look forward to bringing you our unique brand of technical analysis and insight into many different markets.  If you are a professional market participant and are open to discovering more, please connect with us.  We are not asking for a subscription; we are asking you to listen.

Cartography Corner – August 2019

J. Brett Freeze and his firm Global Technical Analysis (GTA) provides RIA Pro subscribers Cartography Corner on a monthly basis. Brett’s analysis offers readers a truly unique brand of technical insight and risk framework. We personally rely on Brett’s research to help better gauge market trends, their durability, and support and resistance price levels.

GTA presents their monthly analysis on a wide range of asset classes, indices, and securities. At times the analysis may agree with RIA Pro technical opinions, and other times it will run contrary to our thoughts. Our goal is not to push a single view or opinion, but provide research to help you better understand the markets. Please contact us with any questions or comments.  If you are interested in learning more about GTA’s services, please connect with them through the links provided in the article.

The link below penned by GTA provides a user’s guide and a sample of his analysis.

GTA Users Guide


A Review of July

Investment Grade Corporate Bond ETF    

We begin with a review of the Investment Corporate Bond ETF (LQD) during July 2019. In our July 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for July are:

  • M4         130.59
  • M1         128.04
  • M3           127.91
  • PMH       124.44
  • Close        124.37
  • M2           122.54                
  • MTrend   120.69             
  • PML          120.41                        
  • M5            119.99

Active traders can use 124.44 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 122.54 as the downside pivot, whereby they maintain a flat or short position below it.    

Figure 1 below displays the daily price action for July 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first three trading sessions were spent with LQD challenging and settling above, our isolated upside pivot level at PMH: 124.44.  However, that early strength failed. 

On July 5th the market price gapped lower, rotating back below our isolated upside pivot level.  Over the next seven trading sessions, the market price continued its descent towards our isolated downside pivot level at M2: 122.54.  The low price for July 2019 was achieved on July 16th at 122.71.

Over the following eleven trading sessions, LQD ascended back to our isolated upside pivot level at PMH: 124.44.  Essentially, the entire month was spent in a two-point “range-trade” bounded by our pivot levels. This was partially a result of anticipation of the July 31, 2019 FOMC policy announcement. 

Figure 1:

E-Mini S&P 500 Futures

We continue with a review of E-Mini S&P 500 Futures during July 2019.  In our July 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for July are:

  • M4                3188.50
  • M3                3136.00
  • M1                2977.25
  • PMH              2969.25          
  • Close             2944.25     
  • MTrend        2872.83
  • PML               2728.75     
  • M2                 2707.50    
  • M5                 2496.25

Active traders can use 2977.25 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Figure 2 below displays the daily price action for July 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first two trading sessions of July saw the market price oscillate above and below our isolated pivot level at M1: 2977.25 intra-session, with the July 2nd settlement above that level  

The remaining trading sessions of July 2019 were spent with the market price oscillating between our isolated pivot level at M1: 2977.25 and our isolated Quarterly resistance level at Q2: 3019.00.  Like LQD, the entire month was spent in a “range-trade” in anticipation of the July 31, 2019 FOMC policy announcement.  In the last two hours of trading after the July 31st FOMC meeting the entire month’s range (essentially) was traversed and held.

Figure 2:


August 2019 Analysis

We begin by providing a monthly time-period analysis of E-Mini S&P 500 Futures.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Daily Trend             3007.42       
  • Weekly Trend         2999.83
  • Current Settle         2982.25       
  • Monthly Trend        2897.03       
  • Quarterly Trend      2727.50

The relative positioning of the Trend Levels, as shown above, is aligned in the most bullish posture possible.  However, our overall characterization of E-Mini S&P 500 Futures is “mixed”, as the market price has fallen below both the Daily Trend and Weekly Trend.  Also, as discussed below, the Weekly Trend appears to be completing a topping process.

In the quarterly time-period, the chart shows that E-Mini S&P 500 Futures are in “Consolidation”.  Stepping down one time-period, the monthly chart shows that E-Mini S&P 500 Futures are in “Consolidation”.  Stepping down to the weekly time-period, the chart shows that E-Mini S&P 500 Futures have been “Trend Up” for eight weeks.

We would like to point out the slope of the Weekly Trend has been forming a rounded top over the previous three weeks.  Weekly Trend is currently developing at 2996.58 for the week of August 5, 2019.  If that developing level holds (or develops lower), the topping process will be complete (in the weekly time-period) as 2996.58 is lower than this week’s Weekly Trend level of 2999.83.  Also, a weekly settlement this week below 2999.83 will end the current eight-week uptrend.

Support/Resistance:

In isolation, monthly support and resistance levels for August are:

  • M4                3330.25
  • M2                3182.25
  • M1                3089.75
  • PMH              3029.50
  • M3               3020.25      
  • Close             2982.25
  • PML               2955.50     
  • M5                 2941.75    
  • MTrend         2897.03

Active traders can use 3029.50 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Silver Futures

For the month of August, we focus on Silver Futures.  We provide a monthly time-period analysis of SIU9.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Daily Trend            16.459          
  • Current Settle        16.405
  • Weekly Trend        15.870          
  • Monthly Trend       15.263          
  • Quarterly Trend     15.173

As can be seen in the quarterly chart below, Silver is in “Consolidation”.  Stepping down one time-period, the monthly chart also shows that Silver is in “Consolidation”.  Stepping down to the weekly time-period, the chart shows that Silver is in “Consolidation”.  Despite the aggressive move higher in price this past month, it is not definitive that this most recent move is not transitory, like the December 2018 – January 2019 experience.  That brief and aggressive move higher in price was immediately followed by a four-month decline that dropped below the December 2018 low price.

The condition was met the week of July 22, 2019 that makes us anticipate a two-week low within the next three to five weeks.  That would be fulfilled with a trade below 15.190 this week.  The condition was met in July 2019 that makes us anticipate a two-month low within the next four to six months.  That would be fulfilled with a trade below 14.570 in August 2019.  In 2Q2019 the condition was met that made us anticipate a two-quarter high within the next four to six quarters.  That was fulfilled with the trade above 16.300 in July 2019.

While Silver certainly had a good month, in our judgment, it has some technical concerns on a weekly and monthly basis to contend with.

Support/Resistance:

In isolation, monthly support and resistance levels for August are:

  • M4         18.805
  • M1         17.745
  • M3           17.469
  • PMH       16.685
  • Close        16.405
  • M2           15.265
  • MTrend   15.263             
  • PML          14.915                        
  • M5            14.205

Active traders can use 16.685 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Summary

The power of technical analysis is in its ability to reduce multi-dimensional markets into a filtered two-dimensional space of price and time.  Our methodology applies a consistent framework that identifies key measures of trend, distinct levels of support and resistance, and identification of potential trading ranges.  Our methodology can be applied to any security or index, across markets, for which we can attain a reliable price history.  We look forward to bringing you our unique brand of technical analysis and insight into many different markets.  If you are a professional market participant and are open to discovering more, please connect with us.  We are not asking for a subscription; we are asking you to listen.

Cartography Corner – July 2019

J. Brett Freeze and his firm Global Technical Analysis (GTA) provides RIA Pro subscribers Cartography Corner on a monthly basis. Brett’s analysis offers readers a truly unique brand of technical insight and risk framework. We personally rely on Brett’s research to help better gauge market trends, their durability, and support and resistance price levels.

GTA presents their monthly analysis on a wide range of asset classes, indices, and securities. At times the analysis may agree with RIA Pro technical opinions, and other times it will run contrary to our thoughts. Our goal is not to push a single view or opinion, but provide research to help you better understand the markets. Please contact us with any questions or comments.  If you are interested in learning more about GTA’s services, please connect with them through the links provided in the article.

The link below penned by GTA provides a user’s guide and a sample of his analysis.

GTA Users Guide


A Review of June

U.S. Dollar Index Futures  

We begin with a review of U.S. Dollar Index Futures during June 2019. In our June 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for June are:

  • M4         100.155
  • M1         98.435
  • PMH        98.260
  • M3           98.131
  • Close        97.666
  • M2            97.255           
  • MTrend  97.119
  • PML          96.810                        
  • M5            95.535

Active traders can use 98.260 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 97.119 as the downside pivot, whereby they maintain a flat or short position below it.

Figure 1 below displays the daily price action for June 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first four trading sessions were spent with U.S. Dollar Index Futures breaching our isolated downside pivot levels at M2: 97.255 and the downside pivot (MTrend): 97.119.  On the fifth trading session, the market price closed below May’s low price at PML: 96.810 and sustained below that level for the following four trading sessions.

On June 14th the market price rotated back above May’s low price and, over the next two trading sessions, tested our isolated support levels at MTrend: 97.119 and M2: 97.255, now acting as resistanceThat test failed.

Over the following four trading sessions, U.S. Dollar Index Futures achieved our downside exhaustion level at M5: 95.535.  The final four trading sessions in June were spent with the market price trading slightly above our downside exhaustion level.

The realized error between our isolated downside exhaustion level at M5: 95.535 and June’s low price equaled 0.18%.    

Figure 1:

E-Mini S&P 500 Futures

We continue with a review of E-Mini S&P 500 Futures during June 2019.  In our June 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for June are:

  • M4                3078.00
  • M1                2966.00
  • PMH             2961.25
  • MTrend        2849.28
  • Close             2752.50     
  • PML               2750.00
  • M2                2655.50     
  • M3                 2556.50    
  • M5                 2543.50

Active traders can use 2750.00 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Figure 2 below displays the daily price action for June 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first trading session of June saw the market price test our isolated pivot level at PML: 2750.00 intrasession, with the low price for June being realized at 2728.75.  Early weakness was overcome by strength and E-Mini S&P 500 Futures closed higher for the session.  The price action for that day is a good reminder of why market participants should judgmentally emphasize closing levels, relative to upside and downside pivots when initiating positions.  The market price closed within 0.50 points of our isolated pivot, with mechanical shorts suffering a fifty-point loss the following day while those respecting daily closing levels were spared.  

The following four trading sessions were spent with the market price ascending to, and closing above, our first isolated resistance level at MTrend: 2849.28.  The following ten trading sessions saw the market price continue its ascent, with our clustered resistance levels at PMH: 2961.25 and M1: 2966.00 being achieved and slightly exceeded intrasession on June 21stHowever, the market price did not close above those levels.

The final five trading sessions saw the market price pull back from (three sessions) and re-approach (two sessions) our clustered resistance levels.

Figure 2:


July 2019 Analysis

We begin by providing a monthly time-period analysis of E-Mini S&P 500 Futures.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Current Settle         2944.25       
  • Daily Trend             2931.61
  • Weekly Trend         2923.12       
  • Monthly Trend        2872.83       
  • Quarterly Trend      2727.50

In our June 2019 edition of The Cartography Corner, we wrote the following:

We would like to bring your attention to two important points with respect to the Trend Levels.  First, the relative positioning of the trend levels is beginning to align in a very bearish manner.  Daily is below Weekly.  Weekly is below Monthly.  The final alignment that would increase our concern further is to have Quarterly at the top of the order.  The second point is that June Monthly Trend rose relative to May Monthly Trend.  The significance of this is that it informs us that there remain many “trapped” longs at prices 3.5% higher than the current settlement price.  May’s weakness introduced significant pressure on them.

What a difference a month’s price action can make.  The relative positioning of the Trend Levels, as shown above, is aligned in the most bullish posture possible.

In the quarterly time-period, the chart shows that E-Mini S&P 500 Futures are in “Consolidation”.  Stepping down one level in time-period, the monthly chart shows that E-Mini S&P 500 Futures are in “Consolidation”.  Stepping down to the weekly time-period, the chart shows that E-Mini S&P 500 Futures have been “Trend Up” for four weeks.

Within the context of the market price relative to the trend levels and the relative positioning of the trend levels to one another, technical analysis of E-Mini S&P 500 Futures is bullish.  The need for a two-month high that we highlighted in last month’s commentary was realized in June.

Facts are facts… and the fact is that the market is not sustaining weakness.  It is a trader’s market, prone to swift and violent price swings.  We are not abandoning our idea of being in the time window for a sustained reversal to occur.  However, we are increasing our respect for the possibility of continued strength.

There are two facets of this market that we are certain of:

  1. Energy is building and a large and sustained move is imminent.
  2. Our analysis will accurately identify the landmarks along the way.

Support/Resistance:

In isolation, monthly support and resistance levels for July are:

  • M4                3188.50
  • M3                3136.00
  • M1                2977.25
  • PMH              2969.25
  • Close             2944.25     
  • MTrend        2872.83
  • PML               2728.75     
  • M2                 2707.50    
  • M5                 2496.25

Active traders can use 2977.25 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Investment Grade Corporate Bond ETF

For the month of July, we focus on the Investment Corporate Bond ETF.  We provide a monthly time-period analysis of LQD.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Current Settle        124.37          
  • Daily Trend            123.90
  • Weekly Trend        122.90          
  • Monthly Trend       120.69          
  • Quarterly Trend     117.42

As can be seen in the quarterly chart below, LQD is in “Consolidation”.  Stepping down one time-period, the monthly chart shows that LQD has been “Trend Up” for six months.  Stepping down to the weekly time-period, the chart shows that LQD has been “Trend Up” for seven weeks.

Support/Resistance:

In isolation, monthly support and resistance levels for July are:

  • M4         130.59
  • M1         128.04
  • M3           127.91
  • PMH       124.44
  • Close        124.37
  • M2           122.54
  • MTrend   120.69             
  • PML          120.41                        
  • M5            119.99

Active traders can use 124.44 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 122.54 as the downside pivot, whereby they maintain a flat or short position below it.

Technical analysis of LQD is bullish.  Having said that, there are bearish technical factors to be cognizant of.  The condition was met on a quarterly basis in 1Q2019 that makes us anticipate a two-quarter low within the next three to five quarters.  That can be achieved this quarter with a trade below 112.78.  The condition was also met on a monthly basis in January 2019 that makes us anticipate a two-month low in July.  That can be achieved this month with a trade below 118.29.  Lastly, the condition was met on a weekly basis, the week of May 27th that makes us anticipate a two-week low within the next two weeks.  That can be achieved this week with a trade below 121.62.

Figure 3:

Figure 3 above displays an LQD monthly candlestick chart for the period of January 2005 through June 2019.  Inversely overlaid is the spread between Moody’s Seasoned Baa Corporate Bond Yields and the Bank Prime Rate, measured in basis points.  As Charles Gave explains:

“Artificially depressed prime rates below the natural rate of corporate credit have allowed banks to generate ‘artificial’ money, kept zombie companies alive, but most of all permitted most viable corporations to engage in ‘financial engineering’ such as issuing debt to repurchase stocks, all of which are predicated on cheap borrowing costs continuing indefinitely, the risk, of course, is that the credit-funded party ends once the curve inverts… When the private sector curve inverts, the zombie companies will fail, capital spending will be cut, workers will be laid off, and the economy will move into recession.”

In 2006, the spread reached a trough of -205 basis points.  We believe that the spread today, currently at -103 basis points will not be able to reach the 2006 level.  We also believe the pending market repricing in LQD could be much more exaggerated than the thirty-three-point decline experienced during the Great Financial Crisis.  We ask that you reflect upon the following:

  • In 2006, the Bank Prime Rate equaled 8.25% and Moody’s Seasoned Baa Corporate Bonds yielded 6.20%. Today those levels are 5.50% and 4.47%, respectively.  (Our next step is to normalize the spread relative to rate levels.)
  • The size of the corporate bond market in 2006 totaled $4.9 trillion. As of the end of 2018, it totaled $9.2 trillion.
  • As detailed by Michael Lebowitz in The Corporate Maginot Line, “50% of BBB companies, based solely on leverage, are at levels typically associated with lower rated companies. If 50% of BBB-rated bonds were to get downgraded, it would entail a shift of $1.30 trillion bonds to junk status. To put that into perspective, the entire junk market today is less than $1.25 trillion, and the subprime mortgage market that caused so many problems in 2008 peaked at $1.30 trillion.

Summary

The power of technical analysis is in its ability to reduce multi-dimensional markets into a filtered two-dimensional space of price and time.  Our methodology applies a consistent framework that identifies key measures of trend, distinct levels of support and resistance, and identification of potential trading ranges.  Our methodology can be applied to any security or index, across markets, for which we can attain a reliable price history.  We look forward to bringing you our unique brand of technical analysis and insight into many different markets.  If you are a professional market participant and are open to discovering more, please connect with us.  We are not asking for a subscription, we are asking you to listen.

Cartography Corner – June 2019

J. Brett Freeze and his firm Global Technical Analysis (GTA) provides RIA Pro subscribers Cartography Corner on a monthly basis. Brett’s analysis offers readers a truly unique brand of technical insight and risk framework. We personally rely on Brett’s research to help better gauge market trends, their durability, and support and resistance price levels.

GTA presents their monthly analysis on a wide range of asset classes, indices, and securities. At times the analysis may agree with RIA Pro technical opinions, and other times it will run contrary to our thoughts. Our goal is not to push a single view or opinion, but provide research to help you better understand the markets. Please contact us with any questions or comments.  If you are interested in learning more about GTA’s services, please connect with them through the links provided in the article.

The link below penned by GTA provides a user’s guide and a sample of his analysis.

GTA Users Guide


A Review of May

Euro FX Futures  

We begin with a review of Euro FX Futures during May 2019. In our May 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for May are:

  • M4         1.1587
  • PMH       1.1386
  • MTrend   1.1333
  • Close        1.1267
  • M3            1.1245
  • M1            1.1237           
  • PML        1.1157
  • M2            1.1129                       
  • M5            1.0779

Active traders can use 1.1386 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 1.1237 as the downside pivot, whereby they maintain a flat or short position below it.

Figure 1 below displays the daily price action for May 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first ten trading sessions were spent with Euro FX Futures oscillating below and above our clustered support levels at M3: 1.1245 and M1: 1.1237

On the eleventh trading session, circled in the chart, the market price again closed below our isolated downside pivot at M1: 1.1237.  Euro FX futures proceeded to decline over the following six trading sessions to our isolated support level at M2: 1.1129.  The low price for the month was realized on May 23rd at a price of 1.1127.  Astute observers will notice the decline halted exactly at the “cliff’s edge”, as our analysis suggested a  -3.14% gap down to the Monthly Downside Exhaustion level at M5: 1.0779 existed below.

With market participants not liking what they saw over the “cliff’s edge”, the market price saw a sharp rally over the remainder of the May 23 trading session and the May 24 trading session back to our isolated support levels at M1:1.1237 and M3: 1.1245, now acting as resistance.

Over the following three trading sessions, the market price abruptly declined back to M2: 1.1129.  The low settlement price for the month was realized on May 30th at a price of 1.1150.  The final trading session of May saw Euro FX Futures rally slightly from the low.  In the month of June 2019, the “cliff’s edge” resides at 1.1097, below which our analysis suggests a -2.10% gap lower exists.

Our analysis identified the relevant support and resistance levels, while capturing the entire month’s realized range.    

Figure 1:

 

E-Mini S&P 500 Futures

We continue with a review of E-Mini S&P 500 Futures during May 2019.  In our May 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for May are:

  • M4              3186.50
  • M3              3059.25
  • M1              3047.00
  • M2             2962.50
  • PMH          2956.50         
  • Close          2948.50
  • PML            2844.50        
  • MTrend      2828.81        
  • M5             2823.00

Active traders can use 2962.50 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Figure 2 below displays the daily price action for May 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first trading session of May saw the market price test our isolated pivot level at M2: 2962.50 early in the session, with the high price being realized at 2961.25.  Early strength was overcome by weakness and E-Mini S&P 500 Futures never regained their footing.

The following eight trading sessions were spent with the market price declining to, and through, our isolated Downside Exhaustion level at M5: 2823.00.  On May 14th, 15th, and 16th, the market price rallied back above our isolated support levels at M5: 2823.00, MTrend: 2828.81, and PML: 2844.50, now acting as resistanceThat three-session period was essentially the only opportunity for market participants to “sell strength”.  The following ten trading sessions saw the market price decline again, with our Downside Exhaustion level at M5: 2823.00 being exceeded by 73.00 points.

May’s price action is a great example of the benefit of our multi-time frame approach to technical analysis.  The red dashed lines included in Figure 2 are quarterly support levels isolated by our analysis.  Astute readers will notice the market paused its descent at Q1: 2787.25 before approaching Quarterly Trend at QTrend: 2718.86.


June 2019 Analysis

We begin by providing a monthly time-period analysis of E-Mini S&P 500 Futures.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Monthly Trend        2849.28       
  • Weekly Trend         2823.72
  • Daily Trend             2779.08       
  • Current Settle         2752.50       
  • Quarterly Trend      2718.86

We would like to bring your attention to two important points with respect to the Trend Levels.  First, the relative positioning of the trend levels are beginning to align in a very bearish manner.  Daily is below Weekly.  Weekly is below Monthly.  The final alignment that would increase our concern further is to have Quarterly at the top of the order.  The second point is that June Monthly Trend rose relative to May Monthly Trend.  The significance of this is that it informs us that there remain many “trapped” longs at prices 3.5% higher than the current settlement price.  May’s weakness introduced significant pressure on them.

In the quarterly time-period, the chart shows that E-Mini S&P 500 Futures are in “Consolidation”.  Stepping down one level in time-period, the monthly chart shows that E-Mini S&P 500 Futures are in “Consolidation”, after having been “Trend Up” for four months.  Stepping down to the weekly time-period, the chart shows that E-Mini S&P 500 Futures have also been “Trend Down” for four weeks.

Within the context of the market price relative to the trend levels and the relative positioning of the trend levels to one another, technical analysis of E-Mini S&P 500 Futures is bearish.  Having said that, there is one bullish technical factor to be cognizant of.  The condition was met in May 2019 that makes us anticipate a two-month high within the next four to six months.  That would be achieved this month with any trade above 2961.25.  Our judgment is that it will occur in the latter part of the time window and at lower levels.

We espoused the following in our May 2019 edition and remain convicted of this view today.  “Despite the bullish technical condition mentioned above, we continue to view this time window and price area as the last and best opportunity to sell longs (get short), anticipating an extended decline in both time and price.  Based upon historical occurrences, we are willing to remain patient until late May / early June before re-assessing our anticipation of a reversal.”

The reversal arrived on schedule.      

Support/Resistance:

In isolation, monthly support and resistance levels for June are:

  • M4                3078.00
  • M1                2966.00
  • PMH             2961.25
  • MTrend        2849.28
  • Close             2752.50     
  • PML               2750.00
  • M2                2655.50     
  • M3                 2556.50    
  • M5                 2543.50

Active traders can use 2750.00 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

U.S. Dollar Index Futures

For the month of June, we focus on U.S. Dollar Index Futures.  We provide a monthly time-period analysis of DXM9.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Daily Trend            97.946          
  • Weekly Trend        97.675
  • Current Settle        97.666          
  • Monthly Trend       97.119          
  • Quarterly Trend     95.784

As can be seen in the quarterly chart above, U.S. Dollar Index Futures have been “Trend Up” for four quarters.  Stepping down one time-period, the monthly chart shows that U.S. Dollar Index Futures have been “Trend Up” for three months.  Stepping down to the weekly time-period, the chart shows that U.S. Dollar Index Futures have been “Trend Up” for three weeks.

Technical analysis of U.S. Dollar Index Futures is unequivocally bullish.  Having said that, there is one bearish technical factor to be cognizant of.  The condition was met in 2Q2018 that makes us anticipate a two-quarter low by the end of 4Q2019.  That would be achieved this quarter with any trade below 94.470.

Support/Resistance:

In isolation, monthly support and resistance levels for June are:

  • M4         100.155
  • M1         98.435
  • PMH        98.260
  • M3           98.131
  • Close        97.666
  • M2            97.255           
  • MTrend  97.119
  • PML          96.810                        
  • M5            95.535

Active traders can use 98.260 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 97.119 as the downside pivot, whereby they maintain a flat or short position below it.

Summary

The power of technical analysis is in its ability to reduce multi-dimensional markets into a filtered two-dimensional space of price and time.  Our methodology applies a consistent framework that identifies key measures of trend, distinct levels of support and resistance, and identification of potential trading ranges.  Our methodology can be applied to any security or index, across markets, for which we can attain a reliable price history.  We look forward to bringing you our unique brand of technical analysis and insight into many different markets.  If you are a professional market participant and are open to discovering more, please connect with us.  We are not asking for a subscription, we are asking you to listen.

Cartography Corner – May 2019

J. Brett Freeze and his firm Global Technical Analysis (GTA) provides RIA Pro subscribers Cartography Corner on a monthly basis. Brett’s analysis offers readers a truly unique brand of technical insight and risk framework. We personally rely on Brett’s research to help better gauge market trends, their durability, and support and resistance price levels.

GTA presents their monthly analysis on a wide range of asset classes, indices, and securities. At times the analysis may agree with RIA Pro technical opinions, and other times it will run contrary to our thoughts. Our goal is not to push a single view or opinion, but provide research to help you better understand the markets. Please contact us with any questions or comments.  If you are interested in learning more about GTA’s services, please connect with them through the links provided in the article.

The link below penned by GTA provides a user’s guide and a sample of his analysis.

GTA Users Guide


A Review of April

Ultra-Long Bond Futures  

We will begin with a review of Ultra-Long Bond Futures during April 2019. In our April 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for April are:

  • M4             178-25
  • M3             176-13
  • M1             175-00
  • PMH          168-30
  • Close         168-00
  • MTrend    162-08            
  • PML        158-03
  • M2            157-03                       
  • M5            153-10

Active traders can use 168-30 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Figure 1 below displays the daily price action for April 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  During the first three trading sessions of April, the market price declined 3 points and 9/32nds on a settlement basis.  The price action in early April is a stark reminder of the importance of waiting for the Previous Month High or Previous Month Low to be surpassed, before initiating new longs (PMH) or new shorts (PML).

Over the next five trading sessions, Ultra-Long Bond Futures achieved marginally higher prices, within the context of a consolidation area.  The April 10th trading session settled at the price of 165-14.  The lower boundary of that consolidation area was penetrated during the very next trading session.

Over the following four trading sessions, the market price declined an additional 1 point and 21/32nds on a settlement basis.  The intra-day low on April 17th and the low price of the month were achieved at the price of 162-08.  Our April Monthly Trend Level at MTrend: 162-08 stopped the decline in its tracks.

The final eight trading sessions were spent with Ultra-Long Bond futures rebounding higher off April Monthly Trend.  The final settlement price was 164-09, 1 point and 31/32nds higher than MTrend: 162-08.

Figure 1:

E-Mini S&P 500 Futures

We continue with a review of E-Mini S&P 500 Futures during April 2019.  In our April 2019 edition of The Cartography Corner, we wrote the following:

In isolation, monthly support and resistance levels for April are:

  • M4              3051.25
  • M1              2918.00
  • M3              2890.75
  • PMH           2866.00
  • Close          2837.75        
  • M2              2772.25
  • MTrend     2729.08         
  • PML            2726.50        
  • M5             2639.00

Active traders can use 2866.00 as the upside-pivot, whereby they maintain a long position above that level.   Active traders can use 2772.25 as the downside-pivot, whereby they maintain a flat or short position below it.

Figure 2 below displays the daily price action for April 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first trading session of April saw the market price settle above our isolated pivot level at the Previous Month High, PMH: 2866.00.  E-Mini S&P 500 futures never looked back.

Four sessions later, on April 5th, the market price traded and settled above our second isolated resistance level at M3: 2890.75.  The following four trading sessions saw E-Mini S&P Futures consolidate, centered around that level.  On April 12th, the upper boundary of that consolidation area was penetrated.

The following five trading sessions saw the market price consolidate again, with the boundaries of the consolidation area essentially being M1: 2918.00 and M3: 2890.75.   On April 23rd, the upper boundary of that consolidation area was penetrated.

The final five trading sessions were spent with E-Mini S&P 500 Futures achieving a marginal new high.  April’s settlement price equaled 2948.50, a new all-time high.

Figure 2:


May 2019 Analysis

We begin by providing a monthly time-period analysis of E-Mini S&P 500 Futures.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Current Settle         2948.50       
  • Daily Trend             2940.53
  • Weekly Trend         2912.31       
  • Monthly Trend        2828.81       
  • Quarterly Trend      2718.86

Of all the levels included in our output, Quarterly Trend is the most important, because it is more secular in nature.  The market price settled back above Quarterly Trend in 1Q2019, leaving the market in “Consolidation”.

Stepping down one level in time-period, the monthly chart shows that E-Mini S&P 500 Futures have been “Trend Up” for four months.  Stepping down to the weekly time-period, the chart shows that E-Mini S&P 500 Futures have also been “Trend Up” for seven weeks.

Within the context of the market price relative to the trend levels and the relative positioning of the trend levels to one another, technical analysis of E-Mini S&P 500 Futures is bullish.   

We have written extensively about our anticipation of a two-month high being needed in E-Mini S&P 500 Futures.  We anticipated it occurring in the month of March and it was realized during the second trading session of the month.  The rally from the December 2018 low has completed its objective, and then some.  Despite the bullish technical condition mentioned above, we continue to view this time window and price area as the last and best opportunity to sell longs (get short), anticipating an extended decline in both time and price.  Based upon historical occurrences, we are willing to remain patient until late May / early June before re-assessing our anticipation of a reversal.

We communicated in April our recognition of the risk of a new all-time high, and that high has been achieved.  This has led to multiple discussions with our clients and other market participants regarding right-tail risk, or the risk of the market ascending well above its current record high.  While we remain cognizant of right-tail risk, in our judgment, the realized price behavior of the U.S. Dollar, High-Grade Copper, and WTI Crude Oil (to a lesser extent) combined do not support that outcome.  If market participants are convinced of sustained-and-increasing domestic-and-global economic strength, then we posit that those asset classes offer better opportunities going forward.

Support/Resistance:

In isolation, monthly support and resistance levels for May are:

  • M4              3186.50
  • M3              3059.25
  • M1              3047.00
  • M2             2962.50
  • PMH          2956.50         
  • Close          2948.50
  • PML            2844.50        
  • MTrend      2828.81        
  • M5             2823.00

Active traders can use 2962.50 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Euro FX Futures

For the month of May, we focus on Euro FX Futures.  We provide a monthly time-period analysis of 6EM9.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Quarterly Trend     1.1497          
  • Monthly Trend       1.1333
  • Weekly Trend        1.1293          
  • Current Settle        1.1267          
  • Daily Trend            1.1222

As can be seen in the quarterly chart above, Euro FX Futures have been “Trend Down” for four quarters.  Stepping down one level in time-period, the monthly chart shows that Euro FX Futures have been “Trend Down” for three months.  Stepping down to the weekly time-period, the chart shows that Euro FX Futures are in “Consolidation”.

Technical analysis of Euro FX Futures is unequivocally bearish.  Having said that, there is one technical factor that gives us caution.  The condition was met in 2Q2018 that makes us anticipate a 2-quarter high within the next two quarters.  That would be achieved this quarter with any trade above 1.1695.

Support/Resistance:

In isolation, monthly support and resistance levels for May are:

  • M4         1.1587
  • PMH       1.1386
  • MTrend   1.1333
  • Close        1.1267
  • M3            1.1245
  • M1            1.1237           
  • PML        1.1157
  • M2            1.1129                       
  • M5            1.0779

Active traders can use 1.1386 as the upside-pivot, whereby they maintain a long position above that level.  Active traders can use 1.1237 as the downside-pivot, whereby they maintain a flat or short position below it.

Summary

The power of technical analysis is in its ability to reduce multi-dimensional markets into a filtered two-dimensional space of price and time.  Our methodology applies a consistent framework that identifies key measures of trend, distinct levels of support and resistance, and identification of potential trading ranges.  Our methodology can be applied to any security or index, across markets, for which we can attain a reliable price history.  We look forward to bringing you our unique brand of technical analysis and insight into many different markets.  If you are a professional market participant and are open to discovering more, please connect with us.  We are not asking for a subscription, we are asking you to listen.

Cartography Corner – April 2019

J. Brett Freeze and his firm Global Technical Analysis (GTA) provides RIA Pro subscribers Cartography Corner on a monthly basis. Brett’s analysis offers readers a truly unique brand of technical insight and risk framework. We personally rely on Brett’s research to help better gauge market trends, their durability, and support and resistance price levels.

GTA presents their monthly analysis on a wide range of asset classes, indices, and securities. At times the analysis may agree with RIA Pro technical opinions, and other times it will run contrary to our thoughts. Our goal is not to push a single view or opinion, but provide research to help you better understand the markets. Please contact us with any questions or comments.  If you are interested in learning more about GTA’s services, please connect with them through the links provided in the article.

The link below penned by GTA provides a user’s guide and a sample of his analysis.

GTA Users Guide


A Review of March

Palladium Futures  

We will begin with a review of Palladium Futures during March 2019. In our March 2019 edition of The Cartography Corner, we wrote the following, with emphasis given to bolded excerpts:

In isolation, monthly support and resistance levels for March are:

  • M4             1861.5
  • M3             1703.1
  • M1             1655.2
  • PMH          1525.8
  • Close         1501.5
  • M2          1416.3             
  • MTrend    1306.7
  • PML           1303.2                       
  • M5             1210.0

Active traders can use 1525.8 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Figure 1 below displays the daily price action for March 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  During the first eleven trading sessions of March, the market price oscillated within a 68.5-point range.  The price remained below February’s high price at PMH: 1525.8.

On March 18th, the market price traded and settled above February’s high price.  Over the next three trading sessions, Palladium Futures achieved marginally higher prices, with the high settlement-price for the month of March achieved on March 20th and the high price reached March 21stThe decline that followed was truly awe-inspiring.

Over the following five trading sessions, the market price declined 251.2 points or 15.9% on a settlement basis.  The decline halted at our clustered-support area at MTrend: 1306.7 / PML: 1303.2.  The final trading session saw Palladium Futures bounce marginally from that clustered-support area.  In our judgment, the correction of the parabolic rise in Palladium futures is in its early stages.

Figure 1:

E-Mini S&P 500 Futures

We continue with a review of E-Mini S&P 500 Futures during March 2019.  In our March 2019 edition of The Cartography Corner, we wrote the following, with emphasis given to bolded excerpts:

In isolation, monthly support and resistance levels for March are:

  • M4              3189.50
  • M2              2923.00
  • M1              2919.00
  • M3              2865.00            
  • PMH           2814.00        
  • Close          2784.75
  • PML            2680.75        
  • M5              2652.50       
  • MTrend      2640.42

Active traders can use 2814.00 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Figure 2 below displays the daily price action for March 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first six trading sessions of March were spent with the market price exceeding (intra-day, March 4th) and subsequently declining hard (approximately 100 points) off our isolated upside-pivot level at PMH: 2814.00.

Three sessions later, on March 13th, the market price traded and settled above our isolated upside-pivot level at PMH: 2814.00.  The following six trading sessions saw E-Mini S&P Futures ascend to our isolated resistance level at M3: 2865.00.  The high price for the month was achieved on March 21st at the price of 2866.00.

The final six trading sessions were spent with the price declining back to, and oscillating around, February’s high price at PMH: 2814.00.

Figure 2:

 


April 2019 Analysis

We begin by providing a monthly time-period analysis of E-Mini S&P 500 Futures.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Current Settle         2837.75       
  • Daily Trend             2819.22
  • Weekly Trend         2817.56       
  • Monthly Trend        2729.08       
  • Quarterly Trend      2718.86

As can be seen in the quarterly chart above, the impressive twelve-quarter uptrend ended in 4Q2018.  As we have stated many times, of all the levels included in our output, Quarterly Trend is the most important, because it is more secular in nature.  The market price settled back above Quarterly Trend in 1Q2019, leaving the market in “Consolidation”.

Stepping down one level in time-period, the monthly chart shows that E-Mini S&P 500 Futures have been “Trend Up” for three months.  Stepping down to the weekly time-period, the chart shows that E-Mini S&P 500 Futures have also been “Trend Up” for three weeks.

Within the context of the market price relative to the trend levels and the relative positioning of the trend levels to one another, technical analysis of E-Mini S&P 500 Futures is bullish.   

We have written extensively about our anticipation of a two-month high being needed in E-Mini S&P 500 Futures.  We anticipated it occurring in the month of March and it was realized during the second trading session of the month.  The rally from the December 2018 low has completed its objective.

We continue to view this time window and price area as the last and best opportunity to sell longs (get short), anticipating an extended decline in both time and price.  Based upon historical occurrences, we will know in the next month or so if we are correct in our timing.

We recognize the risks from here as binary: either the market is going to decline substantially or it will achieve new all-time highs.

Support/Resistance:

In isolation, monthly support and resistance levels for April are:

  • M4              3051.25
  • M1              2918.00
  • M3              2890.75
  • PMH           2866.00
  • Close          2837.75        
  • M2              2772.25
  • MTrend     2729.08         
  • PML            2726.50        
  • M5             2639.00

Active traders can use 2866.00 as the upside-pivot, whereby they maintain a long position above that level.   Active traders can use 2772.25 as the downside-pivot, whereby they maintain a flat or short position below it.

Ultra-Long Bond Futures

For the month of April, we focus on Ultra-Long Bond Futures.  We provide a monthly time-period analysis of UBM9.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Current Settle        168-00          
  • Daily Trend            167-29
  • Weekly Trend        164-19          
  • Monthly Trend       162-08          
  • Quarterly Trend     159-12

As can be seen in the quarterly chart above, Ultra-Long Bond Futures are in “Consolidation”.  With a quarterly settlement above 159-12 this quarter, Ultra-Long Bond Futures will be “Trend Up”Stepping down one level in time-period, the monthly chart shows that Ultra-Long Bond Futures have been “Trend Up” for four consecutive months.  Stepping down to the weekly time-period, the chart shows that Ultra-Long Bond Futures have been “Trend Up” for four weeks.

Technical analysis of Ultra-Long Bond Futures is unequivocally bullish.  Having said that, there is one technical factor that gives us caution.  The condition was met in March that makes us anticipate a 2-month low within the next four to six months.

Support/Resistance:

In isolation, monthly support and resistance levels for April are:

  • M4             178-25
  • M3             176-13
  • M1             175-00
  • PMH          168-30
  • Close         168-00
  • MTrend    162-08            
  • PML          158-03
  • M2            157-03                       
  • M5            153-10

Active traders can use 168-30 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

It is worth noting that it is somewhat unusual for stocks and bonds to be as well correlated in price as we saw in the first quarter. The stock market rally and accompanying sharp decline in yields, along with some yield curve inversions, are implying two different fundamental economic stories. We believe that if you can determine which one is right you will have much success over the coming few months.  We caution ourselves regarding the delicate balance between conviction and stubbornness with the following:

Stubbornly maintaining a position based on fundamental analysis in the face of adverse technical indicators and an adverse price trend constitutes a quick method of running up substantial trading losses.  In short, do not ignore the technical action of the market no matter how fundamentally-oriented a trader you could be.

Summary

The power of technical analysis is in its ability to reduce multi-dimensional markets into a filtered two-dimensional space of price and time.  Our methodology applies a consistent framework that identifies key measures of trend, distinct levels of support and resistance, and identification of potential trading ranges.  Our methodology can be applied to any security or index, across markets, for which we can attain a reliable price history.  We look forward to bringing you our unique brand of technical analysis and insight into many different markets.  If you are a professional market participant and are open to discovering more, please connect with us.  We are not asking for a subscription, we are asking you to listen.

Cartography Corner – March 2019

J. Brett Freeze and his firm Global Technical Analysis (GTA) provides RIA Pro subscribers Cartography Corner on a monthly basis. Brett’s analysis offers readers a truly unique brand of technical insight and risk framework. We personally rely on Brett’s research to help better gauge market trends, their durability, and support and resistance price levels.

GTA presents their monthly analysis on a wide range of asset classes, indices, and securities. At times the analysis may agree with RIA Pro technical opinions, and other times it will run contrary to our thoughts. Our goal is not to push a single view or opinion, but provide research to help you better understand the markets. Please contact us with any questions or comments.  If you are interested in learning more about GTA’s services, please connect with them through the links provided in the article.

The link below penned by GTA provides a user’s guide and a sample of his analysis.

GTA Users Guide


A Review of February

WTI Crude Oil Futures

We will begin with a review of WTI Crude Oil Futures during February 2019. In our February 2019 edition of The Cartography Corner, we wrote the following, with emphasis given to shaded excerpts:

In isolation, monthly support and resistance levels for February are:

  • M4             68.38
  • M3             62.17
  • M1             56.19
  • PMH          55.37
  • Close         53.79
  • MTrend     51.28             
  • M2             46.34
  • PML           44.35                         
  • M5             34.15

Active traders can use 56.19 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 51.28 as the downside pivot, whereby they maintain a short or flat position below it.

Figure 1 below displays the daily price action for February 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  During the first seven trading sessions of February, the market price declined to our isolated downside-pivot level at MTrend: 51.28.  However, that support level held and the price promptly began to rally.

Over the following five trading sessions, the price ascended to and closed above, our isolated upside-pivot level at M1: 56.19.  With February 19th’s settlement price of 56.45, the buy signal for active traders was given.

After achieving marginal-high-closing prices over the next three trading sessions, WTI Crude Oil Futures declined, and settled, below M1: 56.19.  The final three trading sessions were spent with the price ascending back to and closing above that level.

Active traders following our work completed two trades during the month, with one losing trade and one winning trade.  Using settlement prices, the resulting loss equaled 1.23%.      

Figure 1:

 

E-Mini S&P 500 Futures

We continue with a review of E-Mini S&P 500 Futures during February 2019.  In our February 2019 edition of The Cartography Corner, we wrote the following, with emphasis given to shaded excerpts:

In isolation, monthly support and resistance levels for February are:

  • M4              3105.00
  • M3              2903.75
  • PMH           2709.00
  • Close          2704.50
  • MTrend      2631.83        
  • M1              2604.00
  • M2              2564.00       
  • PML            2438.50        
  • M5              2063.00

Active traders can use 2709.00 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Figure 2 below displays the daily price action for February 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  The first six trading sessions of February were spent with the market price trading on either side of our isolated upside-pivot level at PMH: 2709.00.  The buy signal for active traders was given on February 4th, with that session closing at 2721.25.  That position was closed on February 7th, with that session closing at 2704.00.

Three sessions later, on February 12th, the buy signal for active traders was given again.  The market never looked back, with the high price for the month achieved on February 25th at 2814.00.  For consistent readers of our work, 2814.00 should have significance (more on this follows).  The two-month high we have been anticipating since the December lows would have been achieved on any trade above that price.

The final three trading sessions were spent with the price drifting lower.

Active traders following our work completed two trades during February, with one losing trade and one winning trade.  Using settlement prices, the resulting gain equaled 0.83%.

Figure 2:


March 2019 Analysis

We begin by providing a monthly time-period analysis of E-Mini S&P 500 Futures.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Daily Trend             2789.64       
  • Current Settle         2784.75
  • Weekly Trend         2748.14       
  • Quarterly Trend      2710.78       
  • Monthly Trend        2640.42

As can be seen in the quarterly chart above, the impressive twelve-quarter uptrend ended in 4Q2018.  As we have stated many times, of all the levels included in our output, Quarterly Trend is the most important, because it is more secular in nature.  With one month remaining in the first quarter of 2019, we are keenly focused on whether the market price will settle the current quarter back above Quarterly Trend (2710).

Stepping down one level in time-period, the monthly chart shows that E-Mini S&P 500 Futures are now in “Consolidation”, after having been “Trend Down” for three months.  Stepping down to the weekly time-period, the chart shows that E-Mini S&P Futures have been “Trend Up” for eight weeks.

Technical analysis of E-Mini S&P 500 Futures suggests that the market has turned lower for a sustained downtrend, despite this rally off the December 2018 low.

In our January 2019 edition we wrote, “Currently, we anticipate a 2-month high…”  The time window for that 2-month high is in the next two months if February’s matching of December’s high at 2814.00 does not qualify.  We are not aware of a 2-month high being matched exactly in our historical data across markets.  Regardless, in order to achieve it in March, the market price would need to trade above 2814.00.

The market does not need to immediately “crash” after the 2-month high is achieved.  Although most historical occurrences have seen a prompt reversal into the next leg of the larger decline, there are instances where the market has held steady (pushed slightly higher) for a month or two after the 2-month high was achieved.  Please review the analysis in our January 2019 edition of The Cartography Corner.

Support/Resistance:

In isolation, monthly support and resistance levels for March are:

  • M4              3189.50
  • M2              2923.00
  • M1              2919.00
  • M3              2865.00
  • PMH           2814.00        
  • Close          2784.75
  • PML            2680.75        
  • M5              2652.50       
  • MTrend      2640.42

Active traders can use 2814.00 as the pivot, whereby they maintain a long position above that level and a flat or short position below it. Given the track record of the 2-month high, we suggest strong discipline below 2814.

Palladium Futures

For the month of March, we focus on Palladium Futures.  We provide a monthly time-period analysis of PAM9.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Current Settle        1501.5          
  • Daily Trend            1500.1
  • Weekly Trend        1395.5          
  • Monthly Trend       1306.7          
  • Quarterly Trend     1033.6

As can be seen in the quarterly chart above, Palladium Futures are in “Consolidation”.  With a quarterly settlement above 1033.6 this quarter, Palladium Futures will be “Trend Up”Stepping down one level in time-period, the monthly chart shows that Palladium Futures have been “Trend Up” for seven consecutive months.  Stepping down to the weekly time-period, the chart shows that Palladium Futures have been “Trend Up” for nine weeks.

Technical analysis of Palladium Futures is unequivocally bullish.  In fact, Palladium is currently the strongest market of all markets that we analyze.  Having said that, there are two technical factors that give us caution.  The condition was met in January that makes us anticipate a 2-month low within the next three to five months.  Also, the slope of the Monthly Trend since the rally started in August 2018 is increasing at a sharply-increasing rate.  The ascent is taking on a parabolic nature.

Support/Resistance:

In isolation, monthly support and resistance levels for March are:

  • M4             1861.5
  • M3             1703.1
  • M1             1655.2
  • PMH          1525.8
  • Close         1501.5
  • M2          1416.3             
  • MTrend    1306.7
  • PML           1303.2                       
  • M5             1210.0

Active traders can use 1525.8 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

Summary

The power of technical analysis is in its ability to reduce multi-dimensional markets into a filtered two-dimensional space of price and time.  Our methodology applies a consistent framework that identifies key measures of trend, distinct levels of support and resistance, and identification of potential trading ranges.  Our methodology can be applied to any security or index, across markets, for which we can attain a reliable price history.  We look forward to bringing you our unique brand of technical analysis and insight to many different markets.  If you are a professional market participant and are open to discovering more, please connect with us.  We are not asking for a subscription, we are asking you to listen.

Cartography Corner – February 2019

J. Brett Freeze and his firm Global Technical Analysis (GTA) provides RIA Pro subscribers Cartography Corner on a monthly basis. Brett’s analysis offers readers a truly unique brand of technical insight and risk framework. We personally rely on Brett’s research to help better gauge market trends, their durability, and support and resistance price levels.

GTA presents their monthly analysis on a wide range of asset classes, indices, and securities. At times the analysis may agree with RIA Pro technical opinions, and other times it will run contrary to our thoughts. Our goal is not to push a single view or opinion, but provide research to help you better understand the markets. Please contact us with any questions or comments.  If you are interested in learning more about GTA’s services, please connect with them through the links provided in the article.

The link below penned by GTA provides a user’s guide and a sample of his analysis.

GTA Users Guide


A Review of January

Euro FX Futures

We will begin with a review of Euro FX Futures during January 2019. In our January 2019 edition of The Cartography Corner, we wrote the following, with emphasis given to bolded excerpts:

In isolation, monthly support and resistance levels for January are:

  • M4             1.1900
  • M3             1.1723
  • M1             1.1605
  • PMH          1.1575
  • Close         1.1523
  • MTrend     1.1437           
  • M2             1.1392
  • PML           1.1321                       
  • M5             1.1097

Active traders can use 1.1575 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 1.1437 as the downside pivot, whereby they maintain a short or flat position below it.

Figure 1 below displays the daily price action for January 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  During the first trading session of January, the price traded, and settled, below our isolated downside pivot at MTrend: 1.1437.  The sell signal for active traders was given.

However, our next isolated support level at M2: 1.1392 stopped the decline and, beginning the next trading session, Euro FX Futures generally rallied for five consecutive sessions.  With January 9th’s settlement price of 1.1610, the buy signal for active traders was given.

After achieving the high price for the month on January 10th, Euro FX Futures declined for eight of the following ten trading sessions.  (The sell signal for active traders was given, yet again, January 18th.)  The low price in January was reached on January 24th at 1.1338.

The final five trading sessions were spent with the price ascending back towards, but not reaching, our isolated resistance level at PMH: 1.1575.

Active traders following our work completed three trades during the month, with 2 losing trades and one being scratched.  Using settlement prices, the resulting loss equaled 0.82%.      

Figure 1:

 

E-Mini S&P 500 Futures

We continue with a review of E-Mini S&P 500 Futures during January 2019.  In our January 2019 edition of The Cartography Corner, we wrote the following, with emphasis given to bolded excerpts:

In isolation, monthly support and resistance levels for January are:

  • M4             3002.00
  • PMH          2814.00
  • M1             2810.00
  • MTrend     2677.03
  • Close          2505.25        
  • PML            2313.00
  • M3             2252.25        
  • M2             2000.00        
  • M5             1808.00

Active traders can use 2814.00 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 2313.00 as the downside pivot, whereby they maintain a flat or short position below it.

Given the still-relatively-large distance between monthly levels, we suggest using the weekly levels each week to guide us through the month of January.

Figure 2 below displays the daily price action for January 2019 in a candlestick chart, with support and resistance levels isolated by our methodology represented as dashed lines.  With exception of January’s Monthly Trend level, our monthly levels were so far removed from January’s price range that they are not included on the chart.  However, we have included the first quarter’s Quarterly Trend level.

In lieu of our standard commentary, we wish to highlight 2 observations.  The first, which can be used as a rule, is the following.  When market prices get abnormally extended away from Monthly Trend, as they were at December’s low, they normally will attempt to rally back to Monthly Trend.  We always expect a rejection on the first test of that level and a fierce battle between longs and shorts on subsequent attempts.  The 2 circles on the graph highlight the test of January’s Monthly Trend in the first candle and the solid rejection of that level in the second candle.  In the first instance, that rejection was worth 60 points.  In the second instance, that rejection was worth 50.25 points.  110 points will pay the light bill.

A mentor of ours used to say, “Markets make three drives to a high.”  The two rejections of, and subsequent penetration through, January’s Monthly Trend level are a clear example of this, which leads to our second observation.  Despite having closed above Monthly Trend, and the associated noise surrounding market participant expectations of Federal Reserve policy, the market’s ascent stopped directly in front of Quarterly Trend (2710).  As stated in the above discussion regarding Monthly Trend, we expect a rejection on the first test of that quarterly level and a fierce battle between longs and shorts on subsequent attempts.  A quarterly settlement above that level would be significant in our judgment and, although not anticipated, we would respect it.

Active traders following our work completed no trades during January.

Figure 2:


February 2019 Analysis

We begin by providing a monthly time-period analysis of E-Mini S&P 500 Futures.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Quarterly Trend      2710.78       
  • Current Settle         2704.50
  • Daily Trend             2668.50       
  • Monthly Trend        2631.83       
  • Weekly Trend          2620.28

As can be seen in the quarterly chart above, the impressive twelve-quarter uptrend ended in 4Q2018.  As we have stated many times, of all the levels included in our output, Quarterly Trend is the most important, because it is more secular in nature.  Only one month into the new quarter and the market price is testing Quarterly Trend from below.  Perhaps Chairman Powell, as witnessed by his apparent U-turn in monetary policy, understands its significance, but we digress…

Stepping down one level in time-period, the monthly chart shows that E-Mini S&P 500 Futures are now in “Consolidation”, after having been “Trend Down” for three months.  Stepping down to the weekly time-period, the chart shows that E-Mini S&P Futures have been “Trend Up” for four weeks.

Technical analysis of E-Mini S&P 500 Futures suggests that the market has turned lower for a sustained downtrend, despite this rally off the December 2018 low.

In our January 2019 edition we wrote, “In the intermediate-term, we anticipate a rally possibly back to clustered-resistance at Monthly Trend and Quarterly Trend, MTrend: 2677.03 / QTrend: 2710.78.”  Additionally, we wrote, “Currently, we anticipate a 2-month high…”  The time window for that 2-month high is in the next one to three months, with our focus on March.  In order to achieve it in February, the market price would need to trade above 2814.00.

So far, our anticipation has proved correct.

Support/Resistance:

In isolation, monthly support and resistance levels for February are:

  • M4              3105.00
  • M3              2903.75
  • PMH           2709.00
  • Close          2704.50
  • MTrend      2631.83        
  • M1              2604.00
  • M2              2564.00       
  • PML            2438.50        
  • M5              2063.00

Active traders can use 2709.00 as the pivot, whereby they maintain a long position above that level and a flat or short position below it.

WTI Crude Oil Futures

For the month of February, we focus on WTI Crude Oil Futures.  We provide a monthly time-period analysis of CLH9.  The same analysis can be completed for any time-period or in aggregate.

Trends:

  • Quarterly Trend     65.29            
  • Current Settle        53.79
  • Daily Trend            53.79            
  • Weekly Trend        52.43            
  • Monthly Trend       51.28

As can be seen in the quarterly chart above, WTI Crude Futures are in “Consolidation”.  Having settled below Quarterly Trend in 4Q2018, the most recent five quarter uptrend endedStepping down one level in time-period, the monthly chart shows that WTI Crude Oil Futures have been “Trend Down” for four consecutive months.  Stepping down to the weekly time-period, the chart shows that WTI Crude Oil Futures have been “Trend Up” for three weeks.

Technical analysis of WTI Crude Oil Futures suggests that the market has turned lower for a sustained downtrend, despite this rally off the December 2018 low.

We have been anticipating a 2-month high since November and any trade above January’s high price will fulfill that expectation.  

Support/Resistance:

In isolation, monthly support and resistance levels for February are:

  • M4             68.38
  • M3             62.17
  • M1             56.19
  • PMH          55.37
  • Close         53.79
  • MTrend     51.28             
  • M2             46.34
  • PML           44.35                         
  • M5             34.15

Active traders can use 56.19 as the upside pivot, whereby they maintain a long position above that level.  Active traders can use 51.28 as the downside pivot, whereby they maintain a short or flat position below it.

Summary

The power of technical analysis is in its ability to reduce multi-dimensional markets into a filtered two-dimensional space of price and time.  Our methodology applies a consistent framework that identifies key measures of trend, distinct levels of support and resistance, and identification of potential trading ranges.  Our methodology can be applied to any security or index, across markets, for which we can attain a reliable price history.  We look forward to bringing you our unique brand of technical analysis and insight to many different markets.  If you are a professional market participant and are open to discovering more, please connect with us.  We are not asking for a subscription, we are asking you to listen.